John W Ambrecht vs Marc A DePaco et al

Case Number

24CV00773

Case Type

Hearing Date / Time

Fri, 10/18/2024 - 10:00

Nature of Proceedings

CMC; Motion to Compel

Tentative Ruling

For all reasons discussed herein, the motion of plaintiff to compel defendant and cross-complainant Mark DePaco to provide further responses to plaintiff’s special interrogatories, set one, is granted in part. On or before November 8, 2024, defendant Mark DePaco shall serve verified further responses to plaintiff’s special interrogatory nos. 1, 5, and 7, without objections overruled herein. The Court awards sanctions in favor of plaintiff John W. Ambrecht and against defendant and cross-complainant Mark DePaco and his counsel, in the amount of $ 4,747.50, payable to plaintiff’s counsel. Payment of sanctions is due by November 18, 2024.

Background:

In the operative first amended complaint (FAC) filed in this action on April 15, 2024, plaintiff John W. Ambrecht (Ambrecht) alleges five causes of action against defendants Mark A. DePaco (DePaco) and DT Law Partners, LLP, (DT Law): (1) breach of contract; (2) conversion; (3) breach of fiduciary duty; (4) accounting; and (5) elder abuse. As alleged in the FAC:

Ambrecht is an 80 year old attorney whose law practice deals primarily with estate planning. (FAC, ¶ 8.) In June 2021, Ambrecht joined DT Law pursuant to an agreement under which Ambrecht would keep his book of business and receive 100 percent of collected billables less agreed upon overhead costs. (Id. at ¶ 9.) Under the agreement, neither DePaco nor DT Law would make any profit from Ambrecht’s clients during the time that Ambrecht continued to work, and for any matter Ambrecht brought in but did not work on, Ambrecht would receive 20 percent of the fees collected from that client.. (Id. at ¶¶ 10 & 12.) In 2022 and 2023, DePaco and DT Law collected money from Ambrecht’s clients but did not remit amounts owed to Ambrecht. (Id. at ¶ 13.)

On June 7, 2024, DePaco and DT Law filed an answer to the FAC generally denying its allegations and asserting twenty-three affirmative defenses.

Also on June 7, 2024, DePaco, DT Law, and Renee C. DePaco (Renee) filed a cross-complaint alleging eight causes of action: (1) breach of contract {against Ambrecht only); (2) fraud and deceit (against Ambrecht, Leticia Martinez [Martinez], and Ambrecht & Martinez, LLP [AML]); (3) negligent misrepresentation (against Ambrecht, Martinez, and AML); (4) conversion (against Ambrecht only); (5) intentional interference with contractual relationships (against Ambrecht, Martinez, and AML); (6) breach of the implied covenant of good faith and fair dealing (against Ambrecht, Martinez, and AML); (7) breach of fiduciary duty (against Ambrecht only); and (8) intentional infliction of emotional distress (against Ambrecht only). (Note: Due to common surnames, the Court will refer to certain parties by their first names to avoid confusion.)

On July 17, 2024, Ambrecht filed a motion for an order compelling DePaco to provide further responses, without objections, to Ambrecht’s set one special interrogatory (SI) nos. 1, 2, 5, and 7 (the motion to compel), which is opposed by DePaco.

On July 25, 2024, DePaco, DT Law, and Renee filed a first amended cross complaint (the FACC) alleging six causes of action: (1) breach of contract (against Ambrecht only); (2) conversion (against Ambrecht only); (3) breach of fiduciary duty (against Ambrecht only); (4) intentional infliction of emotional distress (against Ambrecht only); (5) fraud (against Martinez only); and (6) conversion (against Ambrecht and AML). As alleged in the operative FACC:

In November 2020, Ambrecht approached DT Law about a potential integrated working relationship between AML and DT Law. (FACC, ¶ 13.) In December 2020, Ambrecht and DT Law discussed an arrangement whereby DT Law would acquire at its own cost and make available to Ambrecht and his team, a suite (Suite J) which adjoined the leased office from which DT Law operates its business, in exchange for Ambrecht reimbursing DT Law for the cost of Suite J, collecting his own client fee revenue, paying his own operating costs, and transitioning Ambrecht’s book of business to DT Law once Ambrecht wound down his practice. (Id. at ¶ 15.) On July 1, 2021, Ambrecht relocated his practice to Suite J pursuant to the parties’ agreed upon arrangement. (Id. at ¶ 17.)

The arrangement agreed to by the parties was modified in July 2021 when DT Law assumed, in exchange for an administrative fee, many of Ambrecht’s direct operational costs and streamlined Ambrecht’s billing and collections to permit Ambrecht to start process of winding down AML. (FACC, ¶¶ 19 & 21.) By August 2021, DT Law was the direct employer of Ambrecht’s team. (Id. at ¶ 20.)

Ambrecht never paid the administrative fee to DT Law. (FACC, ¶ 21.) DT Law also discovered that Ambrecht had directed his personnel to transfer certain payment obligations to DT Law without DT Law’s approval or knowledge. (Id. at ¶ 22.)

The parties’ arrangement was again modified in August 2021, which required a written amendment to the partnership agreement of DT Law to admit Ambrecht into the partnership as an income only, non-equity partner. (FACC, ¶¶ 25-26.) As a non-equity partner, Ambrecht received guaranteed monthly payments without regard to billable hours or collections, and DT Law was willing to provide certain discretionary compensation to Ambrecht, reflecting that DT Law was directly liable for all costs, expenses, management, and operations leaving Ambrecht free to wind down AML’s operations. (Id. at ¶¶ 28-31.) Following the amendment to the partnership agreement, Ambrecht was not liable for any business loss of DT Law nor entitled to any profit generated by DT Law apart from the discretionary payments. (Id. at ¶ 33.)

After the amendment to the partnership agreement, Ambrecht demanded that DT Law provide services to clients with whom DT Law had no fee or representation agreements, failed to assist with any clients or potential clients of DT Law, focused only on his own client income, and refused to bring in any new clients to DT Law. (FACC, ¶¶ 34-39.) Ambrecht also asserted politically conservative right wing views and conspiracy theories which caused fright, grief, shame, humiliation, embarrassment, anger, worry, and anxiety to the staff of DT Law. (Id. at ¶¶ 40-41.)

After partner David Tappeiner left DT Law, Ambrecht asserted he was entitled to 100 percent of the income from Ambrecht’s clients, misrepresented communications from Tappeiner regarding whether Ambrecht was entitled to a share of the general profits of DT Law, defrauded DT Law into making discretionary 2023 year-end bonus payments for personnel who had already planned their departure, refused to review or approve client pre-bills from October 2023 through December 2023 while continuing to receive guaranteed monthly payments, threatened DT Law with regard to the collection of certain accounts receivable, informed clients not to pay DT Law because it belonged to AML, failed to satisfy insurance obligations, saddled DT Law with costs that DT Law would not have assumed without Ambrecht’s book of business, and departed from DT Law with Beverly Robison (Robison) and Martinez to commence the full time operation of AML. (FACC, ¶ 46.)

The motion to compel:

In support of the motion to compel, Ambrecht submits the declaration of his counsel, R. Chris Kroes (Kroes), who declares that the SI were served on DePaco on April 16, 2024. (Kroes Decl., ¶ 2 & Exh. 1.) Following Kroes granting DePaco a three week extension of time to respond, Kroes received DePaco’s responses to the SI on June 6, 2024. (Id. at ¶¶ 3-4 & Exh. 2.)  

On June 7, 2024, Kroes wrote a letter to DePaco discussing purported inadequacies and deficiencies in the responses and objections of DePaco to the SI, to which DePaco failed to respond. (Kroes Decl., ¶ 5 & Exh. 3.) On June 12, 2024, attorney Richard Carter (Carter) wrote to Kroes advising that Carter was associating into the action and requesting additional time to respond to Kroes’ June 7, 2024, letter, which Kroes granted. (Id. at ¶¶ 6-7 & Exhs. 4-5.) The parties engaged in further communications regarding the DePaco responses to the SI on June 21, 2024. (Id. at ¶¶ 8-10.) DePaco has not addressed Ambrecht’s concerns regarding the responses, and has not provided further responses, to the SI. (Id. at ¶ 11-12.)

Analysis:

A party responding to interrogatories must respond separately to each interrogatory by either “[a]n answer containing the information sought to be discovered”, “[a]n exercise of the party’s option to produce writings”, or “[a]n objection to the particular interrogatory. (Code Civ. Proc., § 2030.210, subd. (a)(1)-(3).) Each response to interrogatories “shall be as complete and straightforward as the information reasonably available to the responding party permits.” (Code Civ. Proc. §2030.220, subd. (a).)

If an interrogatory cannot be answered completely, it must be answered to the extent possible. (Code Civ. Proc., § 2030.220, subd. (b); Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783, superseded by statute on another ground as stated in Guzman v. General Motors Corp. (1984) 154 Cal.App.3d 438, 444 (Deyo) [“a party may not provide deftly worded conclusionary answers designed to evade a series of explicit questions”].) If the responding party does not have sufficient personal knowledge to enable that party to respond fully to the interrogatory, that party shall so state. (Code Civ. Proc., § 2030.220, subds. (b) & (c).) That party, however, “shall make a reasonable and good faith effort to obtain the information by inquiry to other natural persons or organizations, except where the information is equally available to the propounding party.” (Id., subd. (c).)

On receipt of responses to interrogatories, the propounding party may move for an order compelling further responses if the propounding party deems that the responses are “evasive or incomplete,” or if the objections are “without merit or too general.” (Code Civ. Proc., §2030.300, subd. (a)(1) & (3).)

“A motion concerning interrogatories … must identify the interrogatories … or requests by set and number.” (Cal. Rules of Court, rule 3.1345, subd. (d).) The notice and the separate statement submitted in support of the motion to compel identifies SI nos. 1, 2, 5, and 7, which request, respectively, that DePaco identify each client of DT Law for the last seven years, set forth all facts to support DePaco’s allegation that Ambrecht “colluded with” Robison, list DT Law’s gross revenue for each of the past seven years, and identify each employee of DT Law for the last seven years. (Sep. Stmt. at pp. 3-5.)

SI nos. 1 and 5:

In his responses to SI nos. 1 and 5, DePaco asserts objections that these SI are “overbroad, unduly burdensome, and oppressive, not relevant to the subject matter of this litigation, nor reasonably calculated to lead to the discovery of admissible evidence.” (Sep. Stmt. at pp. 3 & 5.) DePaco does not provide a substantive response to SI nos. 1 or 5 apart from the objections described above.

A party resisting discovery bears the burden to show cause justifying its objections. (Williams v. Superior Court (2017) 3 Cal.5th 531, 541, 549 (Williams); West Pico Furniture Co. of Los Angeles v. Superior Court (1961) 56 Cal.2d 407, 422 (West Pico).) Ambrecht contends that DePaco has failed to provide a separate statement justifying each of DePaco’s objections to SI nos. 1 and 5. California Rules of Court, rule 3.1345 requires that a motion involving the content of a discovery request or response be accompanied by a separate statement which must be filed and served with the discovery motion. (Cal. Rules of Court, rule 3.1345(a) & (c).) Ambrecht fails to cite, and the Court is not aware of, any court rule which requires a party opposing a discovery motion to file and serve a responding separate statement such as the statement described in California Rules of Court, rule 3.1345.

In the memorandum submitted in support of the opposition of DePaco to the motion to compel, DePaco contends that DT Law was not formed until 2020, that the present dispute relates only to compensation for work done for Ambrecht’s clients in 2022 and 2023 and the gross and net revenue for these clients, and does not involve the clients of DT Law. DePaco further contends that accounting records for Ambrecht’s clients for the two years in dispute which includes tax returns for 2022 and 2023 were produced by DePaco. For these reasons, DePaco argues, SI nos. 1 and 5 are overbroad to the extent they seek information regarding DT Law’s clients or revenue from these clients, and not likely to lead to the discovery of admissible evidence.

DePaco appears to effectively concede that SI nos. 1 and 5 seek information that is discoverable to the extent these interrogatories include within their scope the identity of and revenue received from Ambrecht’s clients during time periods alleged in the parties’ pleadings. As “the nature of the information sought is apparent, the proper solution is to provide an appropriate response[]” to SI nos. 1 and 5. (Deyo, supra, 154 Cal.App.3d at p. 444.) DePaco has failed to provide any response to SI nos. 1 and 5 including with respect to information relevant to the clients of Ambrecht.

In addition, “. . .some burden is inherent in all demands for discovery.” (West Pico, supra, 56 Cal.2d at p. 418.) Though a court may limit discovery to the extent it determines that its burden outweighs the likelihood that the information sought will lead to the discovery of admissible evidence, the party opposing discovery “has an obligation to supply the basis for this determination.” (Williams, supra, 3 Cal.5th at p. 549; Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 431; Code Civ. Proc., § 2017.020, subd. (a).)

An objection based on burden “must be sustained by evidence showing the quantum of work required, while to support an objection of oppression there must be some showing either of an intent to create an unreasonable burden or that the ultimate effect of the burden is incommensurate with the result sought.” (West Pico, supra, 56 Cal.2d at p. 417.) In the opposition to the motion to compel, DePaco offers no reasoned factual or legal argument showing that, to the extent SI nos. 1 and 5 seek information which is discoverable with respect to Ambrecht’s clients for the years DePaco contends are at issue in this litigation, these SI are intended to create an unreasonable burden that is disproportionate to the results sought by Ambrecht. For these and all reasons further discussed above, DePaco’s wholesale failure to provide any substantive response to SI nos. 1 and 5 including with respect to information relating to Ambrecht’s clients over a two year period which DePaco contends are in dispute is improper. For these same reasons, DePaco has failed to justify his objections to SI nos. 1 and 5.

Furthermore, “[i]n the context of discovery, evidence is ‘relevant’ if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement. Admissibility is not the test, and it is sufficient if the information sought might reasonably lead to other, admissible evidence.” (Glenfed Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117, original italics.) Though the allegations of both the FAC and the FACC suggest that DT Law’s revenue for the years 2022 and 2023 only is at issue in this litigation, the allegations of the FAC and FACC further described above on their face involve the revenue of DT Law with respect to all clients of DT Law.

For example, in the FACC, DePaco contends that DT Law would have benefitted from Ambrecht’s assistance with “any” clients, including “potential clients”, of DT Law, and failed to bring any new clients. (FACC, ¶ 35.) The FACC also includes allegations that Ambrecht failed to concern himself with the general profitability or business health of DT Law. (Ibid.) DePaco also alleges that Ambrecht claimed an entitlement to the general profits of DT Law, including all of DT Law’s client income. (Id. at ¶¶ 45-46.) These examples are intended to be illustrative but not exhaustive. Considering these allegations, DePaco has failed to show that SI nos. 1 and 5 are not relevant to the subject matters involved in this litigation. (See Code Civ. Proc., § 2017.010 [a party may obtain discovery of matters “relevant to the subject matter involved in the pending action”].)

For all reasons discussed above, DePaco has failed to demonstrate a legally sufficient excuse for failing to provide any substantive response to SI no. 1 or 5. Therefore, the Court will overrule the objections of DePaco to SI nos. 1 and 5, grant the motion as to SI nos. 1 and 5, and order DePaco to serve verified code compliant further responses to these SI without the objections overruled herein.

SI no. 2:

In the response to SI no. 2, DePaco asserts that this SI is “not relevant to this action nor reasonably calculated to lead to the discovery of admissible evidence.” (Sep. Stmt. at p. 4.) DePaco contends that the FACC does not include a cause of action for intentional interference with contract as alleged in the original cross-complaint, and does not include any allegations regarding Robison. Because SI no. 2 requests facts to support an allegation that Ambrecht colluded with Robison, DePaco argues, the information sought in this SI is no longer relevant.

Though Ambrecht does not dispute that the allegation regarding alleged collusion between Ambrecht and Robison has been removed, Ambrecht contends that the FACC was filed after the motion to compel was at issue. For this reason, Ambrecht argues, neither the motion to compel nor the request for sanctions are moot.

As Ambrecht does not appear to dispute that the request stated in SI no. 2 is no longer relevant to the subject matter of this litigation, the Court will narrow the scope of the motion to compel as to SI no. 2 to the issue of sanctions as further discussed below.

SI no. 7:

In his response to SI no. 7, DePaco identifies, without objection, the following persons employed by DT Law for the last seven years: Renee; Robison; Martinez; Elizabeth Seidel; Jill Lopez; Elizabeth Mackey-Sall; and Markkris Norris. (Sep. Stmt. at p. 6.) Ambrecht contends that the response of DePaco to SI no. 7 is deficient because DePaco has failed to include, with respect to each employee identified in DePaco’s response, an address or phone number for each employee.

DePaco contends that because counsel for Ambrecht also represents Martinez in this action, Ambrecht is in possession of contact information for this employee. DePaco further contends that additional persons identified in the response to SI no. 7 were each employed by AML such that Ambrecht may contact these persons if necessary. In addition, DePaco asserts that Ambrecht and his counsel are in possession of contact information for Renee and Elizabeth Seidel obtained through the course of this litigation. DePaco does not include this information in his response to SI no. 7.

Notwithstanding whether Ambrecht is in possession of information sought in SI no. 7, DePaco is required to answer this interrogatory in full, and to the extent DePaco is unable to respond fully to SI No. 7 for reasons noted in the opposition to the motion to compel, “the answers should reveal all information then available to the party. If a person cannot furnish details, he should set forth the efforts made to secure the information. He cannot plead ignorance to information which can be obtained from sources under his control.” (Deyo, supra, 84 Cal.App.3d at p. 782 [also noting that “a person may be forced to disclose the identity and location of persons having knowledge of particular relevant facts”].) Because the response of DePaco to SI no. 7 is not full and complete, if fails to comply with code requirements. Therefore, the Court will grant the motion as to SI no. 7 and order DePaco to serve a verified further response.
 

Sanctions:

“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 a further response to interrogatories, 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., § 2030.300, subd. (d).)

DePaco has failed to demonstrate any justification for asserting “objections-only” responses to SI nos. 1 or 5, or for failing to respond fully and completely to SI no. 7. In addition, though SI no. 2 requests information relating to a subject matter which the parties do not appear to dispute is no longer at issue in this litigation, DePaco offers no information to justify his failure to provide any substantive code compliant response prior to or after the filing of the FACC. Because DePaco has engaged in a misuse of the discovery process by making unmeritorious objections without substantial justification and by failing to provide code compliant full and complete responses to the SI at issue, an award of sanctions against DePaco is warranted to compensate Ambrecht for expenses incurred in bringing the motion to compel.

“[A] trial court has discretion to reduce the amount of fees and costs requested as a discovery sanction in order to reach a reasonable award.” (Cornerstone Realty Advisors, LLC v. Summit Healthcare Reit, Inc. (2020) 56 Cal.App.5th 771, 791.) Notwithstanding that an award of sanctions is justified under the circumstances present here, the Court finds that the amount of attorney fees claimed by Ambrecht is excessive. The amount of the sanctions needs to reflect the reasonable expenses incurred as a result of the misuse of the discovery process. While the Court agrees that counsel for Ambrecht necessarily spent time preparing the motion to compel and may spend time to prepare for oral argument, the sanctions sought by Ambrecht also include time for a second attorney to review and revise the motion to compel. In addition, the issues presented in the motion to compel are not complex, and the number of discovery requests at issue is not voluminous. Under the circumstances present here including the Court’s experience with addressing attorney fee issues, the Court finds that 7.5 hours of time at the reasonable hourly rate of $625, for a total of $ 4,687.50, constitutes the reasonable amount of attorney fees incurred as a result of the filing of the present motion and DePaco’s misuse of the discovery process for which monetary sanctions are appropriately awardable. The Court will also award filing fees incurred by Ambrecht in the amount of $60.