Judge: Andrew E. Cooper, Case: 23CHCV02186, Date: 2024-04-29 Tentative Ruling

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Case Number: 23CHCV02186    Hearing Date: April 29, 2024    Dept: F51

MOTION FOR TERMINATING SANCTIONS

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Motion Filed: 3/21/24

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MOVING PARTY: Plaintiff/Cross-Defendant Marlene Moretti (“Plaintiff”)

RESPONDING PARTY: Defendants/Cross-Complainants Ruben Romero; and Del Sur Corporation dba Camino Real Mortgage Bankers (collectively, “Defendants”)

NOTICE: OK¿

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RELIEF REQUESTED: A terminating sanction dismissing or striking Defendants’ answer and cross-complaint, and monetary sanctions against Defendants and their counsel in the amount of $4,560.00.

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TENTATIVE RULING: The motion is granted in part. The Court imposes $900.00 in monetary sanctions against Defendants and/or their counsel.

Plaintiff is reminded to review the 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. When e-filing documents, parties must comply with the “TECHNICAL REQUIREMENTS” which are set forth at page 4, line 4 through page 5, line 12 of the Court’s 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil (particularly bookmarking declarations and exhibits). (CRC 3.1110(f)(4).) Failure to comply with these requirements in the future may result in papers being rejected, matters being placed off calendar, matters being continued so documents can be resubmitted in compliance with these requirements, documents not being considered and/or the imposition of sanctions.

BACKGROUND¿ 

This action involves a business dispute between Plaintiff and Defendants, in which Plaintiff alleges that Defendants shut Plaintiff out from her 50% shareholder and director interest in Del Sur Corporation.

On 7/24/23, Plaintiff filed her complaint, alleging against Defendants the following causes of action: (l) Breach of Written Contract; (2) Conversion; (3) Breach of Fiduciary Duty; (4) Accounting; (5) Removal of Director; and (6) Injunctive Relief.

On 12/18/23, Defendants filed their answer and cross-complaint against Plaintiff, alleging the following causes of action: (1) Declaratory Relief; (2) Breach of Fiduciary Duty; and (3) Ejectment. On 12/21/23, the parties executed a stipulation and order for the appointment of a discovery referee.

The Court has made implemented several orders during the pendency of this case including the appointment of a discovery referee. 

On 3/21/24, Plaintiff filed the instant motion. On 4/16/24, Defendants filed their opposition thereto. On 4/22/24, Plaintiff filed her reply.

ANALYSIS

The Court may issue terminating or monetary sanctions, upon noticed motion, “against anyone engaging in conduct that is a misuse of the discovery process.” (Code Civ. Proc. § 2023.030.) However, “A trial court must be cautious when imposing a terminating sanction because the sanction eliminates a party’s fundamental right to a trial, thus implicating due process rights. … Although in extreme cases a court has the authority to order a terminating sanction as a first measure … a terminating sanction should generally not be imposed until the court has attempted less severe alternatives and found them to be unsuccessful and/or the record clearly shows lesser sanctions would be ineffective.” (Lopez v. Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604 [internal citations omitted].)

Here, Plaintiff argues that terminating and monetary sanctions are warranted against Defendants and their counsel because defendant “Ruben has engaged in willful and egregious spoliation of evidence by causing the mass deletion of emails that were subject to discovery and were directly relevant to the claims and defenses at issue in this lawsuit.” (Pl.’s Mot. 1:6–8.) Plaintiff further argues that “Ruben has also blatantly lied to Plaintiff and her attorney as a means to avoid the deposition of Paz Carbajal, a key non-party witness in this action with respect to Defendants’ own claims of Plaintiff’s diminished shareholder interest.” (Id. at 1:11–13.)

A.    Deleted Emails

Plaintiff contends that Defendants should be sanctioned because defendant Ruben Romero deleted thousands of company emails which would have been directly relevant to the instant litigation. “Plaintiff was advised by the Company’s IT manager, Daniel Garcia, that ‘post-August 2023’, he observed a significant mass deletion of emails from various employees of the Company.” (Id. at 2:5–6, citing Ex. F to Moretti Decl.) Plaintiff contends that “in an email from the IT manager dated March 20, 2024, the IT manager confirms that Ruben Romero was responsible for the deletion of thousands of Company emails without explanation.” (Id. at 2:10–12, citing Ex. G to Moretti Decl.) Furthermore, “the IT manager noted that the emails were ‘moved to deleted items and hard-deleted.’” (Id. at 2:16–17.) Plaintiff therefore argues that “Ruben Romero has engaged in willful spoliation of evidence that is directly relevant to this litigation,” and “unfairly and dishonorably deleted evidence as a means to deny Plaintiff discovery. This constitutes discovery abuse of the worst degree.” (Id. at 7:17–19; 8:4–5.)

Defendants argue in opposition that the emails were deleted because the server’s mailbox size had been exceeded, and “only after assuring that backup copies of all emails had been retained, Romero deleted numerous emails from the Outlook server to permit the company to continue to send and receive emails.” (Defs.’ Opp. 2:14–16.) Defendants further contend that “these ‘deleted’ emails have been restored and saved on a local Del Sur computer hard drive and are completely accessible.” (Id. at 2:16–17.) Defendants additionally raise that “from December 24, 2023, through January 13, 2024, [plaintiff] Marlene Moretti deleted 2098 Del Sur emails, and Johnny Romero deleted 1822 Del Sur emails.” (Id. at 4:2–4, citing Ex. 2 to Defs.’ Opp.)

Plaintiff argues in reply that “Ruben’s declaration contains no actual proof of this ‘Mailbox Size Limit Exceeded’ notification. Further, Ruben does not include any evidence to support his allegation that Outlook will disable the ability to send or receive emails unless emails are deleted.” (Pl.’s Reply 2:16–18.) Plaintiff further argues that “to the extent Defendants argue that Plaintiff is responsible for spoliation of evidence … those issues are not before the court and have no bearing on the clear spoliation of evidence and discovery misuses by Ruben Romero as set forth in the Motion.” (Id. at 4:10–12.) The Court agrees with Plaintiff that her own alleged deletion of company emails is not properly before the Court at this juncture.

The Court further notes that Defendants do not dispute Plaintiff’s contention that Romero deleted the emails cited in Plaintiff’s motion. To the extent that “the emails were indeed backed-up, it begs the question of (1) why the IT Manager did not make Plaintiff aware of this, and (2) why Plaintiff, a co-owner of the Company, has no idea of when and where this storage of deleted emails occurred.” (Id. at 2:23–26.) The Court therefore finds that Defendants have engaged in the misuse of the discovery process through Romero’s uncontested deletion of relevant company emails. However, the Court declines to issue terminating sanctions against Defendants for this misuse of the discovery process, as it finds that Defendants’ conduct does not rise to the level of misconduct warranting terminating sanctions, as this Court has yet to unsuccessfully impose “less severe alternatives.” (Lopez, 246 Cal.App.4th at 604.)

B.     Deposition of Paz Carbajal

Plaintiff further bases the instant motion on Defendants’ failure to comply with Plaintiff’s attempts to depose non-party witness Paz Carbajal. Plaintiff maintains that “the deposition of Ms. Carbajal is important because Defendant Ruben Romero has taken the (contradictory) position that Plaintiff allegedly transferred her shares in Del Sur Corporation many years ago, such that Plaintiff is no longer a 50% shareholder. Plaintiff, who plainly disputes this contention, therefore sought to depose Ms. Carbajal regarding her alleged shareholder interest and the transfer of shares that Ruben contends occurred in 2005.” (Pl.’s Mot. 8:19–23.)

On 2/8/24, Ms. Carbajal was served with a deposition subpoena to appear for her deposition scheduled for 2/29/24. (Decl. of JT Fox ¶ 2.) “Ms. Carbajal lives under the direct care/supervision of Defendant Ruben Romero and does not speak English, such that Ruben is in a position to advise others regarding her availability.” (Id. at ¶ 3.) “Following multiple attempts to confirm the deposition of Ms. Carbajal, on February 27, 2024, Defendants’ counsel represented on a phone call … that Ms. Carbajal had broken her hip, and was currently unable to attend a deposition.” (Id. at ¶ 4.) “As of the date of this Motion, neither Plaintiff nor Plaintiff’s counsel have received any substantive response from Defendants or Ms. Carbajal regarding Ms. Carbajal’s availability for deposition, nor have they been provided with a doctor’s letter corroborating Ms. Carbajal’s alleged hip injuries.” (Pl.’s Mot. 5:6–9.)

In opposition, Defendants argue that “while this office has attempted to assist in resolving this discovery issue, it has no influence or control over Ms. Carbajal. She is an 86-year-old senior who on December 23rd, suffered multiple pelvic fractures as a result of a fall.” (Defs.’ Opp. 4:15–17, citing Ex. 3 to Defs.’ Opp.) Defendants proffer Ms. Carbajal’s purported medical report from her hospital stay following her pelvis fractures. (Ex. 3 to Defs.’ Opp.)

Plaintiff argues in reply that “now, at the final hour, Defendants produce a hearsay medical report of Ms. Carbajal’s alleged injuries sustained back in December 2023, and seek to shift all blame to Plaintiff for simply doing what she needs to secure a deposition to prove up her case.” (Pl.’s Reply 4:27–5:2.)

The Court notes that Plaintiff has filed a motion to compel the attendance of Ms. Carbajal at her noticed deposition, with a hearing date for that motion set for 5/16/24. To that extent, the Court defers to that hearing date the issue of sanctions for Defendants’ involvement, if any, in Ms. Carbajal’s failure to appear for her deposition.

C.    Monetary Sanctions

Plaintiff requests monetary sanctions in the total amount of $4,560.00 to be imposed on Defendants and their counsel. This amount accounts for: (1) 10 hours of Plaintiff’s counsel’s time spent preparing the instant motion, reply, and oral argument at hearing, at counsel’s hourly rate of $450.00 per hour; and (2) a $60.00 filing fee; and (4) an anticipated 1 additional hour to appear at the instant hearing. (Fox Decl. ¶ 11.) Based on its foregoing analysis, the Court finds it reasonable to impose monetary sanctions against Defendant in the amount of 900.00.

CONCLUSION¿ 

The motion is granted in part. The Court imposes $900.00 in monetary sanctions against Defendant.