Todd Wooten, et al. v. Ron Donaire, et al

Case Number

22CV01147

Case Type

Hearing Date / Time

Wed, 02/21/2024 - 10:00

Nature of Proceedings

1) Plaintiff’s Mtn to Compel Resp to Written Discovery and Prod of Docs by Def Jeff Pescatello and Req for Sanctions; and, 2) Plaintiff and Cross-Defendant Todd Wooten’s Mtn for Order Awarding Attorneys’ Fees Against Cross-Complainant DelPlaya Media, Inc.

Tentative Ruling

For Plaintiff and Cross-Defendant Todd Wooten and Cross-Defendants Maureen Wooten and VRTCAL Markets, Inc.: Robert A. Curtis, Aaron L. Arndt, Jordan A. Liebman, Foley Bezek Behle & Curtis, LLP 

                                   

For Defendants Jeff Pescatello, John Williams, and Ron Donaire: Robert B. Forouzandeh, Andrew Hazlett, Reicker, Pfau, Pyle & McRoy LLP

For Defendant (as nominal Defendant) and Cross-Complainant DelPlaya Media, Inc.: John J. Thyne III, Thyne Taylor Fox Howard, LLP

                                                

RULING

 For the reasons set forth herein:

1. Plaintiff’s motion to compel responses to written discovery and production of documents and request for sanctions is granted as follows:

1. 1. Counsel for the parties shall meet and confer, either in person or via video conference, regarding deficiencies in Jeff Pescatello’s responses to written discovery and production of documents, no later than February 29, 2024.
   2. Defendant Jeff Pescatello shall file amended responses, along with copies of all responsive documents, without objection except as to privilege, no later than March 14, 2024.
   3. Monetary sanctions, in the amount of $3,120.50, are awarded in favor of Plaintiff Wooten and against Jeff Pescatello and his counsel of record, jointly and severally, to be paid to counsel for Plaintiff on or before March 14, 2024.

2. Plaintiff and cross-Defendant Todd Wooten’s motion for order awarding attorney fees in favor of Plaintiff and cross-Defendant, and against cross-complainant DelPlaya Media, Inc., is granted in the amount of $98,413.50, payable to Plaintiff’s counsel on or before March 14, 2024.

3. The trial date of 4/10/24 is confirmed. Do not request a continuance. The events leading up to the filing of the complaint go back to 2019; the case was filed in 3/2022; the trial date was set for 9/20/23; it was continued last August to 4/10/24 at the request of counsel. All pretrial documents, in limine motions, jury instructions, witness lists, exhibit lists; jury verdict forms to be submitted 4/3/24; Pretrial Orders will be sent out prior to the Pretrial Conference on 4/10/24 at 11:30 am; trial dates are: 4/11; 4/12; 4/15; 4/16; 4/18; 4/19; 4/22; 4/23; 4/25; 4/26 = 10 days.

Background

On March 23, 2022, Plaintiff Todd Wooten filed his original complaint in this action, against Defendants Ron Donaire, Jeff Pescatello, John Williams, and DelPlaya Media, Inc. (DelPlaya) asserting four causes of action for: (1) breach of fiduciary duty; (2) conversion; (3) misappropriation of trade secrets; and (4) usurpation of corporate opportunity.

On October 4, 2022, DelPlaya filed a cross-complaint against Wooten, his wife Maureen Wooten, and VRTCAL Markets, Inc. (VRTCAL), (collectively “cross-Defendants”).

On November 14, 2022, DelPlaya filed a first amended cross-complaint (FACC) and on February 24, 2023, DelPlaya filed a second amended cross-complaint (SACC) for: (1) Conversion; (2) Misappropriation of trade secrets; (3) Breach of fiduciary duty; and (4) Breach of settlement agreement.

As alleged in the SACC, Wooten was employed by DelPlaya to develop technology that would allow DelPlaya to provide video and display ad serving, to operate a video and display ad marketplace, to insert video ads into electronic media, and to obtain and operate a “BidSwitch” connection that would allow DelPlaya to access the Google ad platform and other ad buyers. (SACC, ¶ 20.) Wooten developed the ad technology and applied for and procured a BidSwitch connection on behalf of DelPlaya but failed to deliver it to DelPlaya and failed to register a copyright for the technology on DelPlaya’s behalf. (Id. at ¶¶ 21-25.) Instead, at the direction of Maureen who is an officer, director, and shareholder of VRTCAL, Wooten formed VRTCAL and diverted and transferred DelPlaya’s documents, customer lists, the BidSwitch connection, and a contract to VRTCAL. (Id. at ¶¶ 22, 26.)

Wooten concealed the conversion of the ad technology and BidSwitch connection and claimed that the BidSwitch connection belonged to VRTCAL. (SACC, ¶ 27.) Once Wooten had developed the ad technology and BidSwitch connection, Wooten formed VRTCAL, tested the technology on DelPlaya’s servers, resigned from DelPlaya, and began using DelPlaya’s technology to directly compete with DelPlaya. (Id. at ¶¶ 3, 12, 29, 42.) In reliance on Wooten’s representations that he had turned over all property owned by DelPlaya, Williams and Pescatello entered into a settlement agreement with Wooten which includes a release in Wooten’s favor, and which was procured based on Wooten’s failure to disclose that he had stolen ad technology, documents, customer lists, and the BidSwitch connection from DelPlaya. (Id. at ¶¶ 30, 32-40.) On March 30, 2023, Wooten, Maureen, and VRTCAL filed an answer to the SACC generally denying its allegations and asserting thirty-five affirmative defenses.

On June 22, 2023, Wooten filed a motion for an order disqualifying Robert Forouzandeh and the law firm of Reicker, Pfau, Pyle & McRoy LLP, from representing Donaire, Pescatello, and Williams in this matter on the grounds that Wooten consulted Forouzandeh as a prospective client and that, in the course of that consultation, Wooten disclosed confidential information material to the present action. The motion for disqualification was denied on August 23, 2023.

On September 15, 2023, Wooten served requests for production of documents (set three) and special interrogatories (set one) on all Defendants. Due to Pescatello not responding to the discovery, Wooten filed the present motion to compel responses on January 17, 2024. Following the filing of the motion, Pescatello apparently served responses on January 18, 2024. Wooten still contends that the responses are deficient. Pescatello did not file an opposition to the motion, but he late-filed a “response to reply” on February 16, 2024. Such a filing is improper, and it will not be considered.

On October 4, 2023, summary judgment was entered in favor of Wooten as to DelPlaya’s SACC. Wooten now seeks fees in the amount of $224,042.00 pursuant to the breach of contract cause of action contained therein.

Analysis

Motion to Compel

“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.)

Code of Civil Procedure, section 2030.010 provides, “(a) Any party may obtain discovery within the scope delimited by Chapter 2 (commencing with Section 2017.010), and subject to the restrictions set forth in Chapter 5 (commencing with Section 2019.010), by propounding to any other party to the action written interrogatories to be answered under oath. (b) An interrogatory may relate to whether another party is making a certain contention, or to the facts, witnesses, and writings on which a contention is based. An interrogatory is not objectionable because an answer to it involves an opinion or contention that relates to fact or the application of law to fact, or would be based on information obtained or legal theories developed in anticipation of litigation or in preparation for trial.”

Code of Civil Procedure, section 2031.010 provides, in pertinent part:

“(a) Any party may obtain discovery . . . by inspecting, copying, testing, or sampling documents, tangible things, land or other property, and electronically stored information in the possession, custody, or control of the party on whom the demand is made.

“(b) A party may demand that any other party produce and permit the party making the demand, or someone acting on the demanding party’s behalf, to inspect and to copy a document that is in the possession, custody, or control of the party on whom the demand is made.

“Within 30 days after service of interrogatories, the party to whom the interrogatories are propounded shall serve the original of the response to them on the propounding party, unless on motion of the propounding party the Court has shortened the time for response, or unless on motion of the responding party the Court has extended the time for response.” (Code Civ. Proc., § 2030.260, subd. (a).)

“Within 30 days after service of a demand for inspection, copying, testing, or sampling, the party to whom the demand is directed shall serve the original of the response to it on the party making the demand, and a copy of the response on all other parties who have appeared in the action, unless on motion of the party making the demand, the Court has shortened the time for response, or unless on motion of the party to whom the demand has been directed, the Court has extended the time for response.” (Code Civ. Proc., § 2031.260, subd. (a).)

“If a party provides an untimely interrogatory response that does not contain objections and that sets forth legally valid responses to each interrogatory, the untimely response might completely or substantially resolve the issues raised by a motion to compel responses under section 2030.290. Even in such cases, however, the trial Court retains the authority to hear the motion. (See Cal. Rules of Court, rule 3.1030(a) [“ ‘The Court may award sanctions under the Discovery Act in favor of a party who files a motion to compel discovery, even though . . . the requested discovery was provided to the moving party after the motion was filed’ ”].) Whether a particular response does resolve satisfactorily the issues raised by a motion is a matter best determined by the trial Court in the exercise of its discretion, based on the circumstances of the case. In many cases involving untimely responses, the propounding party will take the motion off calendar or narrow its scope to the issue of sanctions. If the propounding party proceeds with the motion, however, the trial Court has the discretion to rule on the motion. The trial Court might compel responses without objection if it finds no legally valid responses have been provided to one or more interrogatories; it might deny the motion to compel responses as essentially unnecessary, in whole or in part, and just impose sanctions; it might treat the motion as one under section 2030.300 and either determine that further answers are required, or order the propounding party to “ ‘meet and confer’ ” (§ 2030.300, subd. (b)) and file a separate statement (Cal. Rules of Court, rule 3.1020(a)(2), (c)); or it might take the motion off calendar, thereby requiring the propounding party to file a motion under section 2030.300.” (Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 408-409.)

As Pescatello has provided responses, although untimely, the Court will order the parties to meet and confer further as set forth above. Because the responses were provided, it is not currently clear what issues remain besides the limited examples given by Wooten in his reply brief. The Court has reviewed the responses, provided with Wooten’s reply brief, and finds that the boiler plate objections are unfounded and improper.  Following the meet and confer process, Pescatello shall provide amended responses, without objections except as to privilege.

Monetary sanctions will be awarded in favor of Wooten and against Pescatello and his counsel in the amount of $3,120.50.

The Court “shall impose a monetary sanction . . . against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response to a demand, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., § 2031.310.)

“Except as provided in subdivision (d), the Court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel compliance with a demand, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., § 2031.320, subd. (b).)

“The Court may award sanctions under the Discovery Act in favor of a party who files a motion to compel discovery, even though no opposition to the motion was filed, or opposition to the motion was withdrawn, or the requested discovery was provided to the moving party after the motion was filed.” (Cal. Rules of Court, rule 3.1348(a).)

The Court has no basis on which to determine that Pescatello acted with substantial justification or that other circumstances would make the imposition of sanctions unjust.

Attorney Fees

Wooten moves for an award of attorneys’ fees in the amount of $224,042.00 against DelPlaya pursuant to Civil Code section 1717 and the contractual attorneys’ fees provision in the Confidential Separation and General Release Agreement dated February 5, 2016. There is no real dispute that Wooten was the prevailing party on the contract claim and no real dispute that the Confidential Separation and General Release Agreement entitles Wooten to at least some amount in attorney fees.

“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.

“Where a contract provides for attorney’s fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.

“Reasonable attorney’s fees shall be fixed by the Court, and shall be an element of the costs of suit.

“Attorney’s fees provided for by this section shall not be subject to waiver by the parties to any contract which is entered into after the effective date of this section. Any provision in any such contract which provides for a waiver of attorney’s fees is void” (Civ. Code, § 1717, subd. (a).)

 The contractual attorneys’ fees provision in the Confidential Separation and General Release Agreement provides:

“If any action is required to enforce or interpret this Agreement, the prevailing party shall be

entitled to recover their reasonable attorney’s fees and costs.”

Todd Wooten is the only cross-Defendant that is a party to the Confidential Separation and General Release Agreement. DelPlaya correctly argues that the contract claim in the SACC is based upon arguments that Wooten violated the terms of the severance agreement and is not based upon other issues that are common to the other causes of action.

“[T]he fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California Courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [citation] The reasonable hourly rate is that prevailing in the community for similar work. [citation] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [citation] Such an approach anchors the trial Court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [citation].” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)

“[T]he verified time statements of the attorneys, as officers of the Court, are entitled to credence in the absence of a clear indication the records are erroneous.” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)

“[T]rial Courts must carefully review attorney documentation of hours expended” in assessing reasonable and necessary attorney fees. (Ketchum v. Moses (2001) 24 Cal.4h 1122, 1132.)

“[T]he [party] ... seeking fees and costs ‘bear[s] the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.’ [Citation.]’” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320.) “To that end, the Court may require [a] Defendant . . . to produce records sufficient to provide ‘a proper basis for determining how much time was spent on particular claims.’ [Citation.]” (Ibid.) “The evidence should allow the Court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. [Citation.]” (Ibid.)

“A trial Court may not rubber stamp a request for attorney fees, but must determine the number of hours reasonably expended.” (Donahue v. Donahue (2010) 182 Cal.App.4th 259, 271.)

“[I]n the absence of such crucial information as the number of hours worked, billing rates, types of issues dealt with and appearances made on the client’s behalf, the trial Court is placed in the position of simply guessing at the actual value of the attorney’s services. That practice is unacceptable and cannot be the basis for an award of fees.” (Martino v. Denevi (1986) 182 Cal.App.3d 553, 558, italics added.)

The Court finds the hourly rates charged by Wooten’s attorneys reasonable and comparable to other attorneys of similar skill and experience. However, Wooten has failed to establish entitlement to a portion of fees claimed. The invoices attached as exhibit 5 to the Curtis declaration are overly redacted to the point that it is impossible to determine what exactly was performed and if the tasks were reasonable, necessary, and related to the breach of contract cause of action. For example: there are numerous entries that simply state things such as, “Review [REDACTED];” and “Research [REDACTED].” These types of entries are insufficient to show entitlement to those fees. Additionally, there are several entries that appear unnecessarily duplicative. For example: There are two entries, by different timekeepers on February 8, 2023, for review of tentative ruling regarding demurrer to the cross-complaint, and there are two entries on February 24, 2023, for review of DelPlaya’s second amended cross-complaint. Again, from two separate timekeepers. There are several other incidents of duplicative billing that will not be allowed.

While Wooten is correct that some of the tasks, such as much of the discovery, are not capable of being separated as between the contract claim and other claims, some of the tasks, such as the disqualification motion, are capable of being separated. The entries that are not related to the breach of contract claim will not be allowed.

After thoroughly reviewing the invoices submitted by Wooten, the Court determines that the reasonable amount of fees related to defending the cross-complaint, relative to the breach of contract cause of action, is $98,413.50. That amount will be allowed.