Motion to Quash Discovery Subpoena
# Case Name Tentative 49 Quickpay Funding, LLC vs. Puma Courier LLC
25-01493520 Motion to Quash Discovery Subpoena
Defendant Scott Kaufman moves to quash the subpoenas issued to AvidBank and Citibank, N.A. by Plaintiff QuickPay Funding, LLC. The parties’ meet and confer efforts have narrowed the dispute to two requests in each subpoena, Request for Production No. 12 and Request for Production No.
13. The court MODIFIES Request for Production No. 12 to limit identification to all DI Overnite dba Deliver IT (“DI Overnite”) accounts or to accounts identified as receiving transfers from or sending transfers to DI Overnite accounts held by AvidBank or Citi Private Bank where Scott Kaufman or Joseph Varraveto is a signatory from January 1, 2024, to the present. The motion is DENIED as to Request for Production No.
13.
A nonparty may be required to appear to give oral testimony in a deposition and/or to produce documents by serving the nonparty with a subpoena with sufficient time in advance to allow the nonparty a reasonable opportunity to travel to the place of deposition and/or to locate and produce any designated documents. (See Code Civ. Proc., §§ 1985, 1987, 2020.220.) “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things . . . at the taking of a deposition, the court, upon motion reasonably made . . . 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.” (Code Civ. Proc., § 1987.1, subd. (a).)
The Deposition Subpoena for Production of Business Records issued to AvidBank and the Deposition Subpoena for Production of Business Records issued to Citi Private Bank each include 19 Requests for Production. (Motion, Exhs. A and B.) The parties agree that only Request for Production Nos. 12 and 13 remain at issue.
In determining whether requested discovery violates state constitutional privacy rights, courts apply the framework established in Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1
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Here, Plaintiff seeks to obtain financial information from Defendant Scott Kaufman. Kaufman has a legally protected privacy interest in their financial documents. (Cal. Const., art. I, § 1; Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 656 [“the right of privacy extends to one’s confidential financial affairs as well as to the details of one’s personal life”].) It is also clear that the Kaufman has “a reasonable expectation of privacy under the [particular] circumstances” (Hill, supra, 7 Cal.4th at p. 50) and that production of the subject financial information would be a serious invasion of privacy.
Because Kaufman has met the threshold requirement to demonstrate that the requested productions threaten a serious invasion of privacy, the burden shifts to Plaintiff to identify interests in favor of disclosure that outweigh the invasion of privacy. (See Williams, supra, 3 Cal.5th at p. 557 [describing the shifting burdens in applying the Hill framework]; Tom v. City and County of San Francisco (2004) 120 Cal.App.4th 674, [“Because we conclude that respondents carried their burden of demonstrating a serious invasion of their reasonable privacy interests, the burden shifted to the City to show ‘that the invasion of privacy is justified because it substantively furthers one or more countervailing interests’ ”].)
Request for Production No. 12 requests: DOCUMENTS sufficient to identify all accounts held by [AVIDBANK/CITI PRIVATE BANK] where SCOTT KAUFMAN OR JOSEPH VARRAVETO is a signatory from January 1, 2024, to the present.
The Second Amended Complaint (“SAC”) alleges, inter alia, Plaintiff entered into a factoring relationship with Defendant Puma Courier LLC (“Puma”) and Puma’s guarantors. (SAC ¶ 1.) Plaintiff purchased invoices from Puma for courier services performed for various account debtors, including Defendant DI Overnite dba Deliver IT (“DI Overnite”). (Id.) Although DI Overnite initially paid Plaintiff directly on factored invoices, subsequent invoices remained unpaid by Deliver IT. (Id.) The SAC alleges Puma, its principals, Deliver IT, Kaufman, and Joseph Varraveto agreed to bypass Plaintiff, divert payments on factored invoices away from Plaintiff, and allow Puma to collect on receivables that had already been sold and assigned to Plaintiff. (Id.)
Kaufman is alleged to be an owner, officer, director, and/or Chief Executive Officer of DI Overnite. (Id. at ¶ 7; see also Garcia Decl. ¶ 5.) Kaufman, Plaintiff alleges, personally participated in or approved the change in remittance conduct and ensuing diversion of payments. (Id. at ¶ 17.) The SAC also alleges Kaufman converted some monies owed to Plaintiff for Kaufman’s own financial benefit. (SAC ¶ 27.) Kaufman and Varraveto have separately represented to Plaintiff that the other has absconded with funds that would have been used to pay Plaintiff. (Id. at ¶¶ 27, 46.)
Plaintiff relies on the important interest in ascertaining the truth in legal proceedings and argues that the requested discovery is directly relevant to the claims and defenses. (See Alch v. Superior Court (2008) 165 Cal. App. 4th 1412, 1426-1427.) Plaintiff’s discovery is directed at tracing or locating funds that were allegedly procured by Kaufman’s misdirection of DI Overnite payments that should have been remitted to Plaintiff, Kaufman’s and Varraveto’s alleged absconsion with the funds, and their diversion DI Overnite’s corporate assets. (Garcia Decl. ¶ 4.)
Plaintiff may reasonably seek documents identifying accounts where Scott Kaufman or Joseph Varraveto is a signatory from January 1, 2024, to the present. However, Request for Production No. 12 is limited to identification of DI Overnite accounts, or to accounts identified as receiving transfers from or sending transfers to DI Overnite accounts.
Request for Production No. 13 requests: DOCUMENTS evidencing all transfers made between DI OVERNITE, SEACOAST PARTNERS, TFORCE, SCOTT KAUFMAN and/or JOSEPH VARRAVETO from January 1, 2024, to the present.
Defendant Seacoast Capital Partners IV L.P. (“Seacoast”) is alleged to be a private equity investor who manages and controls the financial decisions of DI Overnite. (SAC ¶ 39.)
The SAC alleges Defendant TForce Logistics West, LLC (“TForce”) contracted with the Americal Red Cross to provide courier services, subcontracted with DI Overnite for those services, and subsequently subcontracted with Puma for the services. (SAC ¶ 33.) TForce was obligated by its contract with the American Red Cross to ensure DI Overnite was capitalized, could meet is financial obligations, and was a reputable company. (Id. at ¶ 37.) Plaintiff alleges TForce failed to conduct the required due diligence and, as a result, continued to pay DI Overnite, which absconded with or diverted the funds. (Id.)
Plaintiff shall be permitted to seek documents indicating the money transferred between Kaufman, Varraveto, and the identified entities, DI Overnite, Seacoast Partners, and TForce. Such documents could reasonably shed light on the nature of the entities at issue, their connection to the alleged misconduct, and the fate of Plaintiff's funds. Plaintiff's specific need for the discovery outweighs Kaufman’s generalized interests in financial privacy, particularly in light of Plaintiff’s agreement to an appropriate protective order. “Protective measures, safeguards, and other alternatives may minimize the privacy intrusion. ‘For example, if intrusion is limited and confidential information is carefully shielded from disclosure except to those who have a legitimate need to know, privacy concerns are assuaged.’ ” (Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 371.)
To the extent Defendant Kaufman requests sanctions, sanctions are denied because the notice of motion did not comply with Civil Procedure Code § 2023.040. Thus, sanctions are unauthorized.
Plaintiff to give notice.
51 County Records Research, Inc. vs. Nguyen
24-01447153 Motion for Leave to File Cross Complaint
Defendant Albert Nguyen’s unopposed motion for leave to file a Cross- Complaint is GRANTED.
A party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) or (b). (Code Civ. Proc. § 428.50, subd. (c).) If the proposed cross-complaint is permissive, leave of court may be granted “in the interests of justice” at any time during the course of the action. (Id.) There is a liberal policy regarding the filing of cross-complaints.
Code of Civil Procedure section 428.10 governs permissive cross-complaints. It provides in relevant part: “A party against whom a cause of action has been asserted ... may file a cross-complaint setting forth [¶] ... [¶] (b) Any cause of action he has against a person alleged to be liable thereon, whether or not such person is already a party to the action, if the cause of action asserted in his crosscomplaint (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him.” (Code Civ. Proc., § 428.10, subd. (b).)