Case Name:??? James J. M?Guinness v. Steven Johnson, et al.
Case No.:??????? 2013-1-CV-239996
Motions for: (1) Orders Staying Depositions and Quashing Deposition Subpoenas; or, in the Alternative, (2) For Protective Orders; and (3) For Sanctions by Plaintiff/Cross-Defendant James J. M?Guinness and Cross-Defendant/ Cross-Complainant Scott Stuart
Plaintiff James J. M?Guinness (?M?Guinness?) alleges defendant Steven Johnson (?Johnson?) engaged in self-dealing and concealment in the operation of a small residential construction company, defendant Think It, Love It, Construct It, Inc. dba TLC Builders, Inc. (?TLC?), in which Johnson and M?Guinness are officers, directors, and one-third shareholders. (Complaint, ?1.)? Plaintiff M?Guinness alleges defendant Johnson has, among other things, taken complete control of TLC?s operations, will not meaningfully communicate with other shareholders, locked plaintiff M?Guinness out of the TLC office, misapplied/wasted TLC property, caused TLC to enter into multiple contracts in which defendant Johnson had a financial interest without disclosure, and unilaterally blocked TLC?s delivery of plans to a customer. (Complaint, ??11 and 14.)
On January 23, 2013, plaintiff M?Guinness filed a complaint against defendants Johnson and TLC asserting causes of action for:
- Involuntary Corporate Dissolution
- Breach of Fiduciary Duties
- Fraudulent Concealment
- Unjust Enrichment
- Appointment of Receiver and/or Preliminary Injunction
On February 28, 2013, defendant Johnson filed an answer to the complaint and also filed a cross-complaint against the other shareholders of TLC, M?Guinness and Scott Stuart (?Stuart?).? Johnson?s cross-complaint asserts causes of action for:
- Breach of Fiduciary Duties
- Conversion
- Breach of Contract
- Accounting
On April 4, 2013, plaintiff/cross-defendant M?Guinness filed a demurrer to Johnson?s cross-complaint, joined in by cross-defendant Stuart on April 18, 2013.? On April 19, 2013, Johnson filed a first amended cross-complaint adding TLC as a cross-defendant and including an additional fifth cause of action for common count ? money had and received.
On May 21, 2013, defendant/ cross-defendant TLC filed an answer to Johnson?s cross-complaint and also filed its own cross-complaint against M?Guinness, Stuart, and Johnson seeking declaratory relief.
On May 24, 2013, cross-defendant Stuart and plaintiff/cross-defendant M?Guinness separately filed answers to Johnson?s first amended cross-complaint.? Stuart also filed his own cross-complaint against Johnson and TLC asserting causes of action for:
- Involuntary Corporate Dissolution
- Breach of Fiduciary Duties
- Fraud
- Unjust Enrichment
- Preliminary Injunction
On May 31, 2013, M?Guinness, Stuart, and TLC filed a joint motion to disqualify Johnson?s counsel.
On June 14, 2013, TLC filed its answer to plaintiff M?Guinness?s complaint and Stuart?s cross-complaint.? On the same date, M?Guinness filed an answer to TLC?s cross-complaint.? On June 19, 2013, Stuart filed an answer to TLC?s cross-complaint.? On July 1, 2013, Johnson filed an answer to Stuart?s cross-complaint.? On July 15, 2013, Johnson filed an answer to TLC?s cross-complaint.
On September 20, 2013, the court (Hon. Kirwan) issued an order denying the joint motion to disqualify Johnson?s counsel.? On January 14, 2014, M?Guinness, Stuart, and TLC filed a notice of appeal of the court ruling denying the motion to disqualify Johnson?s counsel.
On September 23, 2015, Johnson filed a motion for summary judgment.? On October 13, 2015, M?Guinness filed a notice of an order from the Sixth District Court of Appeal staying the action during the pendency of writ and appellate proceedings.
On December 30, 2015, the Sixth District Court of Appeal, in a published opinion, reversed this court?s ruling denying the motion to disqualify Johnson?s counsel.? On March 1, 2016, the Sixth District Court of Appeal issued a remittitur.
On April 20, 2016, the court (Hon. McGowen) issued an order granting the joint motion to disqualify Johnson?s counsel.
On April 29, 2016, M?Guinness, Stuart, and TLC jointly filed a motion for sanctions against defendant/cross-complainant/ cross-defendant Johnson.? On June 24, 2016, the court (Hon. McGowen) issued an order denying M?Guinness, Stuart, and TLC?s joint motion for sanctions.? On or about August 24, 2016, M?Guinness, Stuart, and TLC filed a petition for writ of mandate, prohibition, supersedeas and/or other appropriate relief with the Sixth District Court of Appeal challenging this court?s ruling denying their motion for sanctions.[1]
Discovery Dispute
In this action, M?Guinness was deposed on May 1 ? 2, 2013.[2]? Stuart was deposed on May 2, 2013.[3]? On August 26, 2014, M?Guinness was deposed in Santa Clara County Superior Court, case number 114CV258588, Think It, Love It, Construct It, Inc. v. Casas, Riley & Simonian, LLC et al. (?Malpractice Action?),[4]? On August 27, 2014, Stuart was deposed in the Malpractice Action.[5]
Following the disqualification of Johnson?s original counsel, Johnson retained new counsel who, on August 19, 2016, served M?Guinness and Stuart with notices of oral deposition to occur on September 8, 2016.[6]
Between August 31, 2016 and September 2, 2016, counsel for M?Guinness and Stuart sent emails to Johnson?s counsel objecting to the depositions and seeking a stipulated stay pending resolution of the appellate relief sought by M?Guinness, Stuart, and TLC.
On September 2, 2016, M?Guinness and Stuart served objections to Johnson?s deposition notices.[7]
On September 8, 2016, M?Guinness and Stuart filed this motion for (1) orders staying depositions and quashing deposition subpoenas; or in the alternative, (2) for protective orders, and (3) for sanctions.
- Request for Judicial Notice.
In support of their motions, M?Guinness and Stuart request judicial notice of court records from the Malpractice Action.? Specifically, M?Guinness and Stuart request judicial notice of the complaint and first amended complaint failed in that action.? Evidence Code section 452, subdivision (d) states that the court may take judicial notice of ?[r]ecords of any court of this state.?? This section of the statute has been interpreted to mean that the trial court may take judicial notice of the existence of the court?s own records. Evidence Code section 452 and 453 permit the trial court to ?take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached?in the documents such as orders, statements of decision, and judgments?but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.? (People v. Woodell (1998) 17 Cal.4th 448, 455.)
Accordingly, plaintiff/cross-defendant M?Guinness and cross-defendant/cross-complainant Stuart?s request for judicial notice in support of motions for (1) orders staying depositions and quashing deposition notices; or, in the alternative, (2) for protective orders; and (3) for sanctions is GRANTED.? The court takes judicial notice of the existence of the documents, not necessarily the truth of any matters asserted therein.
- MGuinness and Stuart?s motion for protective order is GRANTED.
M?Guinness and Stuart cite Code of Civil Procedure section 2025.610 which states, in relevant part:
(a) Once any party has taken the deposition of any natural person, including that of a party to the action, neither the party who gave, nor any other party who has been served with a deposition notice pursuant to Section 2025.240 may take a subsequent deposition of that deponent.
(b) Notwithstanding subdivision (a), for good cause shown, the court may grant leave to take a subsequent deposition, and the parties, with the consent of any deponent who is not a party, may stipulate that a subsequent deposition be taken.
Since they have already been deposed, M?Guinness and Stuart contend Johnson is not entitled to take their further depositions.? Pursuant to Code of Civil Procedure section 2025.420, M?Guinness and Stuart now seek a protective order that their depositions not be taken at all.
In opposition, Johnson argues that precluding him from conducting subsequent depositions of M?Guinness and Stuart would be unfair in view of their counsel?s stance that Johnson?s new counsel is not entitled to view or use the M?Guinness and Stuart?s deposition testimony.? In a letter dated February 4, 2016, M?Guinness and Stuart?s counsel suggests Johnson?s new counsel ?start from scratch and take its own depositions.?[8]? Nor did M?Guinness and Stuart?s counsel agree to allow Johnson?s new counsel to use their depositions from the Malpractice Action as if they were taken in this action.? Under these circumstances, Johnson contends there is good cause for the court to grant him leave to depose M?Guinness and Stuart.
In reply, M?Guinness and Stuart apparently concede that Johnson is entitled to use ?the two prior depositions to the extent such use is allowed by the CCP, the Evidence Code, and the California Rules of Professional Conduct.?? There has been no ruling on the admissibility of M?Guinness and/or Stuart?s deposition testimony.? Thus, there is no basis for Johnson to conclude that they have been prevented from using M?Guinness and/or Stuart?s prior deposition testimony.? For that reason, the court does not find good cause to grant Johnson leave to take any further deposition of M?Guinness or Stuart.
M?Guinness and Stuart?s motion for a protective order is GRANTED.? The subsequent depositions of M?Guinness and Stuart shall not be taken at all.
In addition, M?Guinness and Stuart request monetary sanctions pursuant to Code of Civil Procedure section 2025.420, subdivision (h) which states, ?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 for a protective order, 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.?? In view of the circumstances presented in this motion, the court finds Johnson acted with substantial justification in opposing the motion and the court finds further that the imposition of sanctions would be unjust.? Accordingly, M?Guinness and Stuart?s request for monetary sanctions is DENIED.
[1] See ?4 and Exh. C to the Supplemental Declaration of Ned M. Gelhaar in Support of Motions, etc.
[2] See ?2 and Exh. A to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[3] See ?3 and Exh. B to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[4] See ?4 and Exh. C to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[5] See ?5 and Exh. D to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[6] See ?8 and Exh. G to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[7] See ?10 and Exh. I to the Declaration of Ned M. Gelhaar in Support of Motions, etc.
[8] See ?6 and Exh. 1 to the Declaration of James L. Dawson in Support of Defendant and Cross-Complainant Steven Johnson?s opposition, etc.