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Tentative Ruling
Judge Thomas Anderle
Department 3 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107


Coast Rehabilitation Services Inc vs The Dorton Firm PC

Case No: 1370065
Hearing Date: Tue Jul 30, 2013 9:30

Nature of Proceedings: Motion Compel to Produce Records Pursuant to Deposition Subpoena

Motion to Compel Production of Business Records Pursuant to Deposition Subpoena; Request for Attorney’s Fees RULING Plaintiff’s motion to compel production of business records is granted. Union Bank, N.A., is ordered to produce defendant’s client trust account records and business account records as set forth herein. Plaintiff is awarded attorney’s fees and costs in the amount of $2,010.00. BACKGROUND In this action, plaintiff Coast Rehabilitation Services, Inc. sued defendant The Dorton Firm, PC, for breach of contract after defendant failed to pay plaintiff’s invoices. On June 24, 2011, the court entered judgment for plaintiff and against defendant in the amount of $62,249.99, including prejudgment interest, costs, and attorney’s fees. The judgment was affirmed on appeal on February 11, 2013. On June 25, 2013, the court awarded plaintiff $15,293.69 in attorney’s fees and costs on appeal. In an attempt to execute on the judgment, plaintiff served a deposition subpoena for production of business records on Union Bank, N.A. The subpoena seeks production of defendant’s monthly bank statements for its client trust account (No. XXXXXX5374) and its business account (No. XXXXXX3785). On June 28, 2013, defendant served plaintiff and Union Bank with its objections to the subpoena. In an earlier motion to quash filed by defendant (heard on January 17, 2012), the court directed Union Bank to comply with a deposition subpoena for production of defendant’s bank records except any records relating to client trust accounts. The court found that the latter records could potentially include private client financial information. Plaintiff now moves the court for an order compelling Union Bank to produce defendant’s client trust account records directly to the court for an in camera review and to produce defendant’s business account records directly to plaintiff. Defendant opposes the motion. ANALYSIS Defendant initially challenges plaintiff’s motion to compel on the ground that the court lacks authority under Code of Civil Procedure Section 1987.1 to provide the requested relief. The court disagrees. Section 1987.1 provides, in relevant part: “(a) If a subpoena requires . . . the production of books, documents, electronically stored information, or other things . . . at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), . . . may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person. “(b) The following persons may make a motion pursuant to subdivision (a): “(1) A party.” Thus, Code of Civil Procedure Section 1987.1 can be utilized by a party when seeking an order to quash, modify, or comply with a subpoena. In this case, plaintiff is asking the court for an order compelling Union Bank to comply with the subject deposition subpoena (though on somewhat modified terms). In its opposition, defendant complains that plaintiff failed to serve a notice to consumer with its subpoena, but this is incorrect. A notice to consumer was served on defendant on May 30, 2013, along with the subpoena. (Young Dec., ¶3, Ex. B.) Defendant next argues that plaintiff’s motion to compel should be denied because plaintiff failed to meet and confer prior to bringing the motion, as required by Code of Civil Procedure Section 2023.010(i). However, Section 2023.010(i) only obligates parties to meet and confer “if the section governing a particular discovery motion requires the filing of a declaration stating facts showing that an attempt at informal resolution has been made.” Code of Civil Procedure Section 1987.1 does not require that the parties meet and confer before a motion to compel is filed and therefore there was no requirement for plaintiff to meet and confer with defendant. Defendant points to the meet and confer requirement in Code of Civil Procedure Section 2025.450 in support of its position, but that code section only applies to depositions of parties, not to third-party deposition subpoenas for the production of business records. Defendant next argues that collateral estoppel prevents plaintiff from raising the issue of the production of defendant’s client trust account records. Under the doctrine of collateral estoppel, a party is prevented from relitigating an issue where (1) the issue sought to be precluded from relitigation is identical to that decided in a former proceeding, (2) the issue was actually litigated in the former proceeding, (3) the issue was necessarily decided in the former proceeding, and (4) the decision in the former proceeding was final on the merits. Lucido v. Superior Court (1990) 51 Cal.3d 335, 341. Here, this court previously ruled on a motion to quash heard on January 17, 2012 that defendant’s client trust account records were not to be disclosed. (Young Dec., Ex. A, Order, Jan. 17, 2012.) While defendant is correct regarding the prior ruling, plaintiff has presented compelling evidence that defendant is commingling its business account funds with its client trust account funds in order to prevent execution on the business account. (Commingling of funds is a violation of Rule 4-100 of the Rules of Professional Conduct.) After obtaining copies of defendant’s business account records, plaintiff discovered that defendant has been moving funds into its business account from its client trust account to coincide with charges to the business account. Since October 2011, defendant’s client trust account has been the principal source of deposits into its business account, with each deposit only being sufficient to cover a pending charge to the business account. (Young Dec., Ex. E, pp. 10-27.) In September 2012, for example, defendant transferred funds from its client trust account 20 times over a 24-day period, totaling $18,200.00, to cover $18,366.67 in charges to the business account. (Id., p. 21.) Clearly, defendant is “parking” general funds in its client trust account and then transferring the funds to its business account on an as needed basis to prevent the funds from sitting too long in the business account and being subject to execution. Plaintiff has the right to execute on funds in defendant’s business account. “Except as otherwise provided by law, all property of the judgment debtor is subject to enforcement of a money judgment.” Code Civ. Proc. §695.010(a). The court will therefore grant plaintiff’s motion and order Union Bank to produce defendant’s client trust account records (No. XXXXXX5374) for the period July 1, 2011 to the present. The records shall be produced directly to the court for an in camera review to determine if defendant is commingling its general funds with its clients’ funds. Although client financial information is generally protected by the right to privacy, the court “must balance the right of civil litigants to discover relevant facts against the privacy interests of persons subject to discovery.” Vinson v. Superior Court (1987) 43 Cal.3d 833, 842. The privacy interests of defendant’s clients will be sufficiently protected because the records will be reviewed in camera. The court also orders Union Bank to produce directly to plaintiff defendant’s business account records (No. XXXXXX3785) for the period February 1, 2013 to the present. Both sets of records (client trust account and business account) shall be produced within 15 days of service of this order on Union Bank. As the prevailing party at trial, and pursuant to Civil Code Section 1717, plaintiff is awarded its fees and costs in the sum of $2,010.00. These are the expenses plaintiff incurred in bringing the motion. (Young Dec., ¶10.) Defendant is ordered to pay the fees and costs within 10 days.
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