Alison E Chase vs Brian M Metcalf et al

Case Number

21CV02245

Case Type

Hearing Date / Time

Fri, 11/03/2023 - 10:00

Nature of Proceedings

CMC; Petition: Quash Foreign Subpoena

Tentative Ruling

Alison E. Chase v. Brian M. Metcalf, et al.               

Case No. 21CV02245

           

Hearing Date: November 3, 2023                                           

HEARING:              Plaintiff’s Petition to Quash Foreign Subpoena for Production of Business Records Issued to Boeing Employees’ Credit Union

ATTORNEYS:        For Plaintiff, Cross-Defendant, and Cross-Complainant Alison E. Chase: Jennifer Gillon Duffy, Rimon, P.C.

                                    For Defendant, Cross-Complainant, and Cross-Defendant Brian M. Metcalf: Jason W. Wansor, R. Scott Mullen, Rogers, Sheffield & Campbell, LLP

TENTATIVE RULING:

For all reasons discussed herein, plaintiff’s petition to quash subpoena is denied with the following conditions imposed by the court:

1. Except upon further order of the court, the subpoena shall be limited in time from the opening of the account in 2017, to March 29, 2021. This limitation is without prejudice should further discovery reveal that transactions from BECU, following that date, are relevant to this action.
2. The financial records shall only be revealed to Metcalf’s attorneys, their staff, their experts, and the court. The financial records shall only be used for purposes of this lawsuit. Portions of the financial records, and their contents, may only be revealed to Metcalf to the extent that the information is directly related to claims in this matter. Any information not directly related to claims in this matter, shall be thoroughly redacted prior to revealing any relevant financial information to Metcalf.

Background:

This is an action for partition by sale of real property. Plaintiff is Alison E. Chase. Defendants are Brian M. Metcalf and Pentagon Federal Credit Union. (Pentagon Federal Credit Union has since been dismissed.) As alleged in the Second Amended Complaint (SAC) filed by plaintiff on December 16, 2021, by grant deed dated March 20, 2018, Gary Gordon, Trustee of the Edmond W. Gordon Separate Property Trust, transferred title to real property located at 1790 Eucalyptus Hill Road, Santa Barbara, California (the property) to plaintiff and defendant as joint tenants. Plaintiff and defendant each hold an undivided one-half fee simple interest in the property. Pentagon Federal Credit Union is the owner of a $1,252,000 note secured by a deed of trust on the Property. After the parties’ relationship ended, plaintiff suggested to defendant that they list the property for sale. Defendant allegedly refused. Plaintiff then requested that defendant pay plaintiff the equity in the property proportionate to her ownership interest. Defendant, again, allegedly refused. As tenant-in-possession, defendant has allegedly excluded plaintiff from the property by changing the locks to the residence without plaintiff’s consent. Finally, defendant has allegedly failed and refused to provide plaintiff with a copy of the notice of sale, assignment, and transfer of note that was issued after the property was refinanced and the note secured by the property was transferred from the original lender to Pentagon Federal Credit Union. The SAC alleges a single cause of action for partition by sale of real property. Defendant answered the SAC and cross-complained against plaintiff. In his operative first amended cross-complaint (FACC), defendant alleges causes of action for (1) constructive fraud, (2) fraud by misrepresentation, (3) negligence, (4) breach of contract, (5) promissory estoppel, (6) breach of fiduciary duty, (7) accounting, (8) declaratory relief, (9) unjust enrichment, and (10) equitable indemnity. The court sustained plaintiff’s demurrer to the third and tenth causes of action for negligence and equitable indemnity without leave to amend. Plaintiff filed an answer to the FACC on February 15, 2022, and on the same date, filed a cross-complaint to the FACC against defendant. Chase’s cross-complaint alleges causes of action for (1) breach of contract, (2) promissory estoppel, (3) fraud, (4) breach of fiduciary duty, (5) ouster, (6) conversion, (7) unjust enrichment, and (8) accounting. Among her other prayers for relief, Chase seeks exemplary damages.

On March 29, 2023, Metcalf issued a deposition subpoena for production of business records to Boeing Employees’ Credit Union (BECU), with detailed instructions, requesting five categories of Chase’s financial records. There is no time limitation on the requests and no limitations on the requested documents. The documents sought include “without limitation any bank account, deposit account, savings account, checking account, check registers and checks, wire transfer records, money market account, investment account, brokerage account, securities account, certificate of deposit account, trust certificate, or application for a loan or other type of credit” and documents “including without limitation all statements, check registers and checks, and wire transfer records for account number [xxxx].” (Duffy Dec., ¶ 2 & Exh. B.) On March 31, 2023, Chase’s counsel sent a letter to Metcalf’s counsel stating that the records are irrelevant because Chase has not put her financial condition at issue. (Duffy Dec., ¶ 3 & Exh. C.) On April 5, 2023, Metcalf’s counsel sent a letter to Chase’s counsel claiming that the financial records are relevant because they will show: (1) “[T]he parties’ respective contributions to the down payment of the house.”; (2) “Ms. Chase’s claim that Mr. Metcalf owed her a debt at the time of purchase.”; (3) “[T]he parties agreement to split the cost of inspections.”; (4) “[W]ho was responsible for certain expenses.”; (5) [W]ho owned and was responsible for the family car.”; (6) “[C]hildcare expenses and payment of them.”; and (7) “[T]he parties’ respective banking practices and handling of accounts, plus additional and conclusory claims.” (Duffy Dec., ¶ 4 & Exh. D.) The bank accounts at issue were opened in “late Summer or early Fall 2017.” (Chase Dec., ¶ 2.)

Following several additional discussions regarding limiting the scope of the subpoena and possibly entering into a stipulated protective order, the parties were unable to resolve their dispute.

Chase filed the present Petition to quash subpoena on June 15, 2023, arguing that “the Subpoena: (1) seeks Ms. Chase’s personal banking and financial records, which are irrelevant to the matters at issue in this case, except for the issue of Ms. Chase’s reimbursement and offset claims, for which she has already produced all supporting documentation; (2) violates Ms. Chase’s constitutional right to privacy; and (3) is designed purely to harass and annoy Ms. Chase.” (Notice of Petition, p. 2, ll.11-18.)

Metcalf opposes the Petition, arguing that the financial records are reasonably calculated to lead to the discovery of admissible evidence and that they are relevant because, among other things: “The documents covered by the subpoena include ordinary bank account records that were requested from Chase through discovery in January 2023 pertaining to her claims in this action which are predominantly based on: 1) hundreds of individual payments she allegedly made from accounts held at BECU from 2017 to the present; 2) financial support that she asserts she was entitled to receive from Metcalf, and; 3) an accounting for all of these transactions and amounts.” (Opposition, p. 4, ll. 18-24.)

Analysis:

“If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, 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.” (Code Civ. Proc., § 1987.1, subd. (a).)

“The state has two substantial interests in regulating pretrial discovery. The first is to facilitate the search for truth and promote justice. The second is to protect the legitimate privacy interests of the litigants and third parties. [Citation.] “ ‘The interest in truth and justice is promoted by allowing liberal discovery of information in the possession of the opposing party. [Citation.] The interest in privacy is promoted by restricting the procurement or dissemination of information from the opposing party upon a showing of ‘ “good cause.” ’ [Citations.]” The trial court is in the best position to weigh fairly the competing needs and interests of parties affected by discovery. [Citation.]” (Stadish v. Superior Court (1999) 71 Cal.App.4th 1130, 1145.)

“A trial court must be mindful of the Legislature’s preference for discovery over trial by surprise, must construe the facts before it liberally in favor of discovery, may not use its discretion to extend the limits on discovery beyond those authorized by the Legislature, and should prefer partial to outright denials of discovery.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 540.)

“Unless otherwise limited by order of the court in accordance with this title, any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action. Discovery may be obtained of the identity and location of persons having knowledge of any discoverable matter, as well as of the existence, description, nature, custody, condition, and location of any document, electronically stored information, tangible thing, or land or other property.” (Code Civ. Proc., § 2017.010.)

“In accordance with the liberal policies underlying the discovery procedures, doubts as to relevance should be resolved in favor of permitting discovery.” (National Steel Products Co. v. Superior Court (1985) 164 Cal.App.3d 476, 493.)

Chase argues: “The only possible relevance these records have in this action is to Ms. Chase’s claims for reimbursement and offset from the Property sale proceeds. However, Ms. Chase has already identified for Mr. Metcalf and his counsel her 12 specific categories of claims for reimbursement and offset, and has provided them with a detailed accounting of those claims, as well as all supporting documentation, including her bank records (redacted to remove unrelated transactions).” (Petition, p. 4, ll. 22-27; see also, Duffy Dec., ¶ 1.) In contrast, Metcalf claims: “[T]he subpoena to BECU became necessary because Chase refuses to produce any of these documents in response to party discovery.” (Opposition, p. 18, ll. 16-17.) The court is unsure which party is being truthful and what bank records, if any, have been produced.

“The state Constitution expressly grants Californians a right of privacy. [Citation.] Protection of informational privacy is the provision’s central concern. [Citation.] In [Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1], we established a framework for evaluating potential invasions of privacy. The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citation.] The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” (Williams, supra, 3 Cal.5th 531at p. 552.)

“The right to privacy under article I, section 1 of the California Constitution ‘extends to one’s confidential financial affairs . . ..’ [Citation.] This right embraces confidential financial information in ‘whatever form it takes, whether that form be tax returns, checks, statements, or other account information.’ [Citation.]” (Overstock.com, Inc. v. Goldman Sachs Group, Inc. (2014) 231 Cal.App.4th 471, 503.)

“Although admissibility is not a prerequisite to discoverability, a heightened standard of discovery may be justified when dealing with information which, though not privileged, is sensitive or confidential.” (Volkswagen of America, Inc. v. Superior Court (2006) 139 Cal.App.4th 1481, 1492.)

Among the relevant allegations of Chase’s cross-complaint (CCC) are numerous financial transactions, including the down payment on the property, debt owed to Chase by Metcalf, costs of inspections, costs of keeping a home and raising a child, utility costs, refinancing costs, and costs to rectify permitting and zoning issues on the property. In total, Chase seeks $506,375.43 in reimbursements, credits, and offsets. (Duffy Dec., ¶ 1 & Exh. A.) Chase does not deny that the BECU account was used for things for which she is now seeking reimbursement and offset. She states; “The only possible relevance these records have in this action is to Ms. Chase’s claims for reimbursement and offset from the Property sale proceeds.” (Petition, p. 4, ll. 22-23.) Despite her argument to the contrary, Chase has put her finances at issue in this matter and has admitted relevance of the bank records.

In weighing Chase’s right to privacy against Metcalf’s countervailing interest of disclosure, the court finds that the information before it weighs heavily in favor of disclosure. Chase’s claims, and Metcalf’s defenses, are largely dependent on Chase’s financial records. As such, the petition to quash the subpoena will be denied.

            Protective Order

In the alternative, Chase seeks a protective order that: “(1) narrows the timeframe of the Operative Subpoena so that it seeks only those records dated prior to March 29, 2021 (the date the parties separated), since there is no plausible relevance to any of Ms. Chase’s BECU transactions after this date; and (2) due to the private nature of the banking records sought, designates all documents produced pursuant to the Operative Subpoena as ‘Attorneys’ Eyes Only,’ and barring disclosure of the documents or their contents to Mr. Metcalf.” (Notice of Petition, p. 2, ll. 20-25.)

“[T]he trial court retains “ ‘authority to control discovery, including its right to issue, modify, or vacate protective orders.’ ” [Citation.]” (Randy’s Trucking, Inc. v. Superior Court of Kern County (2023) 91 Cal.App.5th 818, 846, fn. 18.)

“[W]here a party is compelled in civil discovery to reveal financial information because the information is relevant to the subject matter of a claim for punitive damages, that party is, upon his motion, presumptively entitled to a protective order that the information need be revealed only to counsel for the discovering party or to counsel’s representative, and that once so revealed, the information may be used only for the purposes of the lawsuit. The burden is upon the opposing party to establish a substantial reason why the order should be denied. That reason must be related to the lawsuit.” (Richards v. Superior Court (1978) 86 Cal.App.3d 265, 272.)

Chase argues: “[T]he Operative Subpoena is overbroad in seeking any of Ms. Chase’s banking records after the parties separated on March 29, 2021. After this date, Ms. Chase did not make payments of any Property/household expenses to any third party (her payments went directly to Mr. Metcalf), and, therefore, any of Ms. Chase’s banking transactions after March 2021 cannot possibly be relevant to Ms. Chase’s reimbursement claims (or any other claim in this action).” (Petition, p. 13, ll. 15-20; see also Chase Dec., ¶ 8.) Based on this representation, and in balancing the parties’ competing interests, it is reasonable to limit the subpoena to a time frame from the opening of the account in 2017, to March 29, 2021. This limitation is without prejudice should further discovery reveal that transactions from BECU, following that date, are relevant to this action.

As there appears to be a great deal of animosity between the parties, the court finds that there is a potential that Chase’s financial information could be improperly used. As such, except upon further order of the court, the financial records obtained from BECU will be subject to a protective order as follows: (1) The financial records shall only be revealed to Metcalf’s attorneys, their staff, their experts, and the court. (2) Portions of the financial records, and their contents, may only be revealed to Metcalf to the extent that the information is directly related to claims in this matter. Any information not directly related to claims in this matter, shall be thoroughly redacted prior to revealing any relevant financial information to Metcalf.