Carina Perry v. Linda Perry, et al

Case Number

24CV01064

Case Type

Hearing Date / Time

Wed, 04/30/2025 - 10:00

Nature of Proceedings

1. Motion of Defendant Linda Perry to Modify Deposition Subpoenas for Production of Business Records 2. Motion of Defendant Linda Perry to Quash Deposition Subpoena for Production of Business Records

Tentative Ruling

For Plaintiff Carina Perry: John J. Thyne, III, Brant K. Berglund, Thyne Taylor Fox Howard, LLP 

                                   

For Defendant Linda Perry: Julia C. McBride, McBride Law Group, P.C.

For Defendant Philinda SB, LLC: No Appearance

RULING

For the reasons set forth herein:

1. Defendant Linda Perry’s motion to modify the deposition subpoenas for production of business records served on First Republic Bank and JP Morgan Chase Bank, is denied.

2. Defendant Linda Perry’s motion to quash deposition subpoena for production of business records served on Santa Barbara County Federal Credit Union is denied. However, the date-range of the documents produced shall be modified to encompass “all records from March 31, 2005, through the date of production.”

a. Any records obtained by way of the subpoena shall be subject to a protective order. Absent further order of the court, the records may not be used or disseminated for any purpose other than this action.

3. The trial date of 5/28/25 is confirmed; all trial documents including trial briefs, witness lists [with time estimates], exhibit lists, in limine motions; customized jury instructions and jury verdict forms due May 21. Do not stipulate to continue the case; it was filed more than a year ago. The Court has reserved 9½ trial days for the case: 5/29; 5/30; 6/2 [½ day]; 6/3; 6/4; 6/5; 6/9/ 6/10; 6/12; 6/13 = 9 ½ days.

Background

This action commenced on February 26, 2024, by the filing of the original complaint by plaintiff Carina Perry (“plaintiff”) against defendants Linda Perry (“defendant”) and Philinda SB, LLC (“Philinda” or the “LLC”).

On June 26, 2024, plaintiff filed her operative first amended complaint (“FAC”) against defendant and Philinda, setting forth causes of action for: (1) Breach of Duty of Loyalty; (2) Breach of Duty of Care; (3) Breach of Duty of Good Faith and Fair Dealing; (4) Financial Abuse of an Elder; (5) Constructive Fraud; (6) Unjust Enrichment; (7) Accounting; and (8) Involuntary Dissolution Under Corporations Code Section 17707.03.

As alleged in the FAC:

Defendant is the managing member and 65.9 percent owner of Philinda. (FAC, ¶ 1.) The subject of this action is real property located at 930 Philinda Avenue, Santa Barbara (“the property”). (FAC, ¶ 3.)

In 2005, Rosario Perry (who is defendant’s late husband and plaintiff’s brother), defendant, and plaintiff purchased the property on March 31, 2005. (FAC, “overview of the action” & ¶ 5.)

The agreement regarding the property included:

“The Carina Perry Trust, Leslie Sherman Trustee will invest $15,000 (one hundred fifty thousand dollars) which funds will be used as part of the down payment of the purchase price of the property. It is anticipated that Rosario will obtain a loan which requires a 25% down payment, plus closing costs. The purchase price of the property is $1,725.000 and the down payment with closing costs is approximately $440,000.

“Rosario and Linda Perry will buy the apartment building in their own name, and will thereafter transfer it to an LLC within 30 days. Rosario will be the Manager of the LLC and in charge of management of the apartment building and processing the condominium conversion process through the City of Santa Barbara. The Carina Perry Trust, Leslie Sherman Trustee will be made a member of the LLC. Rosario shall set up a bank account in the name of the LLC, which account shall be used only for 930 Philinda. This account and all its books, shall be open for inspection at any time by Carina Perry Trust, Leslie Sherman Trustee, and its agents.” (FAC, ¶ 6.)

On April 26, 2005, the agreement was amended to state that Rosario and defendant’s capital contribution was $265,000, with an ownership interest of 60 percent, and The Carina Perry Trust’s capital contribution was $150,000 with an ownership interest of 34 percent. (FAC, ¶ 8.)

Plaintiff believes that Rosario transferred his share in the LLC to defendant in anticipation of filing for bankruptcy prior to 2013. (FAC, ¶ 9.) Defendant and plaintiff became the sole members of the LLC. (Ibid.) Tax records going back to 2013, show that defendant held exclusive ownership of 65.9 percent of the LLC, while plaintiff owned the remaining 34.1 percent. When Rosario engaged in transactions on behalf of the LLC, after 2013, he did so as defendant’s agent. (Ibid.)

After Rosario’s death on April 8, 2022, defendant, through her attorney, claimed that plaintiff had not been a member of the LLC since “2012 or 2013.” (FAC, ¶ 11.) Defendants’ claim is contradicted by evidence of plaintiff’s continuous membership in the LLC since 2005, including that plaintiff consistently received annual K-1 statements until they abruptly stopped in 2019. (Ibid.)

Following Rosario’s passing, plaintiff repeatedly attempted to contact defendant to address issues related to the LLC, especially plaintiff’s concerns about not receiving any accounting or distributions. (FAC, ¶ 13.) Despite these attempts, plaintiff was unable to get in contact with defendant, whom, she suspected, changed her telephone number and was avoiding contact with plaintiff. (FAC, ¶ 14.) After retaining an attorney, the parties engaged in discussions and negotiations, through counsel, but were unable to resolve their dispute. (Ibid.)

On October 16, 2023, defendant admitted that plaintiff is a 34 percent owner of the LLC, and that defendant is the managing member and 66 percent owner of the LLC. (FAC, ¶ 16.) Defendant represented that she would begin sending plaintiff periodic accountings showing the inflows and outflows of the business and make member distributions as possible. (Ibid.) Defendant’s attorney stated that an appraisal would be obtained within 30 days in order to begin the process of selling the property so that plaintiff could obtain her interest in liquid funds. (Ibid.)

Plaintiff has not received any accounting or updates regarding the LLC’s records, the appraisal, or the sale of the property, nor has she received any distributions of the LLC’s income. (FAC, ¶ 17.)

On January 24, 2025, plaintiff issued deposition subpoenas for production of business records (“subpoenas”) to Santa Barbara County Federal Credit Union, First Republic Bank, and JP Morgan Chase Bank, National Association. Each of the subpoenas seeks: “Any and all banking records, including but not limited to statements of electronic and miscellaneous deposits, card purchases/withdrawals, electronic and miscellaneous withdrawals, checks paid, etc.,” for “any and all” dates.

Defendant moves to modify the subpoenas served on First Republic Bank, and on JP Morgan Chase Bank, on the grounds that the requested records are not relevant to the subject matter of the litigation, and the subpoenas are grossly overbroad in scope and time. Defendant seeks to modify the date of the subpoenas to April 7, 2022, to the present.

Defendant moves to quash the subpoena served on Santa Barbara County Federal Credit Union on the grounds that the requested records are not relevant to the subject matter of the litigation, they are protected by privacy laws and provisions, and the subpoena is grossly overbroad in scope and time.

Plaintiff opposes the motions.

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.)

Motion to Modify Subpoenas

to First Republic Bank and JP Morgan Chase Bank

Corporations Code section 17704.10, subdivisions (a) and (b), provides:

“(a) Upon the request of a member or transferee, for purposes reasonably related to the interest of that person as a member or a transferee, a manager or, if the limited liability company is member-managed, a member in possession of the requested information, shall promptly deliver, in writing, to the member or transferee, at the expense of the limited liability company, a copy of the information required to be maintained by paragraphs (1), (2), and (4) of subdivision (d) of Section 17701.13, and any written operating agreement of the limited liability company.

“(b) Each member, manager, and transferee has the right, upon reasonable request, for purposes reasonably related to the interest of that person as a member, manager, or transferee, to each of the following:

“(1) To inspect and copy during normal business hours any of the records required to be maintained pursuant to Section 17701.13.

“(2) To obtain in writing from the limited liability company, promptly after becoming available, a copy of the limited liability company’s federal, state, and local income tax returns for each year.”

Plaintiff, as a member of the LLC, is unquestionably entitled to the financial records of the LLC. The records requested from First Republic Bank and JP Morgan Chase Bank (accounts for the LLC) are not only likely to lead to the discovery of admissible evidence, but plaintiff has a statutory right to copies of those records.

Defendant provides no legally sound argument why the subpoenas should be modified. The only recognizable argument that defendant presents is that any action against Rosario Perry is time-barred. Other than that, defendant simply cites code sections but does not apply them to any facts present here. The passing of Rosario Perry (the previous member manager), in April 2022, is wholly irrelevant. This lawsuit is not against Rosario’s estate. Plaintiff is plainly seeking records to prove all her causes of action against defendant and Philinda, including whether the LLC generated profits, expenses of the LLC, how any profits or expenses were distributed or paid, and any improper use of LLC funds.

Defendants motion to modify the subpoenas will be denied. As plaintiff did not seek any sanctions in connection with opposing defendant’s motion to modify the subpoenas, no sanctions will be imposed against defendant for filing the motion to modify.

Motion to Quash Subpoena

to Santa Barbara County Federal Credit Union

The records sought, by way of the subpoena to the Santa Barbara County Federal Credit Union, pertain to defendant’s personal bank account. As noted above, defendant argues that the records are not relevant or likely to lead to the discovery of admissible evidence, and that the subpoenas seek documents protected by defendant’s privacy rights.

In addition to re-presenting the arguments made in opposition to the motion to modify the other subpoenas, plaintiff argues that defendant has admitted that she has used the personal account to pay LLC expenses, which, would lead one to believe that there is a strong likelihood that LLC funds were also deposited into defendant’s personal accounts.

The letter that plaintiff relies on for her argument, is from January 29, 2025, and states:

“During our meeting, you and I discussed that Linda used her personal account for some Philinda transactions, and that the statements showing those transactions were the most heavily redacted items we produced (redacted for personal, non-Philinda-related information). Let me clarify that Linda deposited Philinda rent only into the Philinda account. She paid many expenses from her personal account, and transferred her personal funds into the Philinda account for large expenditures that the Philinda account balance could not cover. She believes she did not ever deposit Philinda rent into her personal account.” (Berglund Decl., ¶ 6.)

Article 1, section 1 of the California Constitution provides: “All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.”

“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.)

Here, defendant’s financial records are directly relevant to the causes of action contained in the FAC. Defendant has admitted to using her personal account to transfer funds into the LLC’s accounts. Further, defendant does not definitively deny that she deposited Philinda rents into her personal account. Rather, she stated that she did not believe she did.

In balancing defendant’s right to privacy with the legitimate and important countervailing interest of disclosure of defendant’s bank account information, the court finds that the circumstances weigh heavily in favor of disclosure and that there has been shown no feasible alternative to that disclosure. However, the court does find that the timeframe is unreasonable. As defendant’s bank transactions prior to the purchase of the Philinda property, on March 31, 2005, are unlikely to lead to the discovery of admissible evidence, the subpoena will be modified to include only records from the timeframe of March 31, 2005, to the date of production. Further, the personal financial information of defendant will be subject to a protective order that precludes their use or dissemination for any purpose other than this action.