CMBG Advisors, Inc. v. Luis Faura, et al.

(Pomona Courthouse South: Dept. G) August 27, 2026 DEPARTMENT G LAW AND MOTION RULINGS The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Luis Faura and Manuel G. Fernandez's Motions to Quash Subpoenas and for Protective Orders Joinder: Nonparties Dean G. Rallis, Esq. and Hahn & Hahn, LLP Respondent: Plaintiff CMBG Advisors, Inc.

Defendants Luis Faura and Manuel G. Fernandez's Motions to Quash Subpoenas and for Protective Orders are GRANTED IN PART and DENIED IN PART.

BACKGROUND

This is an action for breach of fiduciary duty arising from the defendants' roles as corporate officers of a business. C&F Foods, Inc. (C&F) was the parent company of C&F Foods Logistics Services, Inc. (C&F Logistics) and Arizona Flexible Packaging, Inc. (Arizona Packaging), companies engaged in food packing and export. Defendant Luis Faura (Faura) served as C&F's president, chief executive officer, and member of the board of directors while defendant Manuel G. Fernandez (Fernandez) served as C&F's secretary and chairman of the board of directors.

Between 2013 and 2020, Faura and Fernandez (collectively, Defendants) allegedly conducted numerous business transactions to C&F's detriment for their own personal benefit and for the benefit of separate companies they created. On January 15, 2020, on behalf of C&F, C&F Logistics, and Arizona Packaging (collectively, Assignors), Faura made plaintiff CMBG Advisors, Inc. (CMBG) the assignee for the benefit of Assignors' creditors. CMBG alleges Defendants also transferred C&F's assets to their other companies without CMBG's consent.

On January 11, 2023, CMBG filed the Complaint, alleging a single cause of action for breach of fiduciary duty against Defendants. On July 20, 2026; July 27, 2026; and August 3, 2026, Defendants filed these motions to quash subpoenas and for protective orders. On August 14, 2026, CMBG filed the opposition, and on August 20, 2026, Defendants filed the reply. The motions are set for hearing on August 27, 2026.

REQUESTS FOR JUDICIAL NOTICE

Defendants request that the court take judicial notice of a motion and a reply filed in the United States Bankruptcy Court for the Central District of California. The court may take judicial notice of the records of any court of record in the United States. (See Evid. Code, Sec. 452, subd. (d)(2).) Thus, the court takes judicial notice of the requested records.

ANALYSIS

Defendants move to quash subpoenas served on Investment Property Exchange, Inc. (IPX), Hutchinson & Bloodgood, LLP (H&B), Eckenrod Tax & Accounting Services, LLP (Eckenrod), Hahn & Hahn, LLP (Hahn), and Dean G. Rallis, Esq. (Rallis), or alternatively, request protective orders for the information sought. For the following reasons, the motions are GRANTED IN PART and DENIED IN PART.

Legal Standard

Any party whose records are subject to subpoena may challenge the validity of the subpoena by way of a motion to quash. (See Code Civ. Proc., Sec.Sec. 1985.6; 2025.410, subd. (c).) Under Code of Civil Procedure section 1987.1, a court "may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon such terms or conditions as the court shall declare." (Code Civ. Proc., Sec. 1987.1, subd. (a).) The court may also make any other order as may be appropriate to protect the person from unreasonable or oppressive demands such as unreasonable violations of the right of privacy. (See ibid.)

Discussion

In three separate motions, Defendants challenge subpoenas served on (1) IPX, (2) H&B and Eckenrod, and (3) Hahn and Rallis.

Motion to Quash IPX Subpoena

Defendants argue that the information sought by the deposition subpoena for IPX is irrelevant and not calculated to lead to the discovery of admissible evidence. The court disagrees. In accordance with the liberal policies underlying the discovery procedures, California courts are broad-minded in determining whether discovery is reasonably calculated to lead to admissible evidence. (See Pacific Telephone & Telegraph Co. v. Super. Ct. (1970) 2 Cal.3d 161, 172; see also Pettie v. Super. Ct. (1960) 178 Cal.App.2d 680, 687.)

As a practical matter, it is difficult to define at the discovery stage what evidence will be relevant at trial, so the party seeking discovery is entitled to substantial leeway. (See Pacific Telephone & Telegraph Co., supra, at 172; Emphasis added.) Courts resolve any doubt in favor of permitting discovery. (See id. at 173; see also Norton v. Super. Ct. (1994) 24 Cal.App.4th 1750, 1761, stating, "if an error is made in ruling on a discovery motion, it is better that it be made in favor of granting discovery of the nondiscoverable rather than denying discovery of information vital to preparation or presentation of the party's case or to efficacious settlement of the dispute.")

That being said, "[t]he court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence." (Code Civ. Proc., Sec. 2017.020, subd. (a).) The challenged requests in the deposition subpoena for IPX seek "all documents and communications between [IPX] and [Defendants]," "all documents and communications between [IPX] and [Defendants] relating to the sale or purchase of real property," and "all documents and communications between [IPX] and [Defendants] relating to [IPX] serving as a qualified intermediary." (7/20/2026 Mashoof Decl., Exh. 1, pp. 6-7.)

Defendants contend that CMBG "has brought this suit to purportedly redress alleged harm to . . . C&F, yet still seeks irrelevant financial information from Defendants and other entities they control, regardless of any relation to C&F. . . ." (7/20/2026 Mot. P&A, p. 5.) Even though the deposition subpoena is broad, Defendants' deposition testimony suggests that Defendants sold properties through IPX, and it is not yet clear whether the transferred asserts originated from C&F. (See Opp., pp. 9-10, citing Weber Decl., Exhs. B-C.) As such, the court finds the deposition subpoena is reasonably calculated to lead to the discovery of admissible evidence that the transferred assets originated from C&F.

Alternatively, Defendants argue that the information sought by the deposition subpoena implicates their right to privacy. The court disagrees. An individual's right of privacy is protected by the California Constitution. (See Cal. Const., Art. I, Sec. 1.) In ruling on discovery motions, the court must balance the privacy claims of the responding party with the requesting party's need for the information. (See Schnabel v. Super. Ct. (1993) 5 Cal.4th 704, 718-722.) The responding party, as the party asserting the right of privacy, bears the initial burden of demonstrating (1) a legally protected privacy interest, (2) an objectively reasonable expectation of privacy in the given circumstances, and (3) a threatened intrusion that is serious. (See Williams v.

Super. Ct. (2017) 3 Cal.5th 531, 552.) If this standard is met, requesting party must then show that the requested documents are "directly relevant" to the litigation. (Tylo v. Super. Ct. (1997) 55 Cal.App.4th 1379, 1387.)

For the first Williams requirement, "[i]ndividuals have a legally recognized privacy interest in their personal financial information." (Internat. Federation of Prof. & Technical Engineers v. Super. Ct. (2007) 42 Cal.4th 319, 330.) For the third Williams requirement, Defendants contend that the disclosure of information for all of Defendants' businesses, including those not directly related to C&F, constitutes a "serious" intrusion. (See 7/20/2026 Mot. P&A, p. 7.) However, for the second Williams requirement, Defendants failed to demonstrate an objectively reasonable expectation of privacy in the given circumstances.

Since Defendants did not meet their initial burden under Williams, the burden does not shift to CMBG to show that the requested documents are directly relevant to the litigation. However, even if the burden shifted to CMBG, the court finds that the documents are directly relevant, given that CMBG's principal allegations are that Defendants used and transferred C&F's assets to their other businesses for their own benefit. Thus, the court determines that CMBG's need for the information outweighs Defendants' right to privacy in IPX's business records relating to Defendants' transfers. Therefore, the motion to quash deposition subpoena as to IPX is DENIED.

As for Defendants request for a protective order in the event the court orders production of the subject documents, the court agrees that a protective order is required. Since the information sought from IPX is financial in nature, the produced documents must be covered by a protective order. Pursuant to Code of Civil Procedure, Sec.1987.1(a), the court orders compliance with the deposition subpoena subject to a protective order executed by the parties.

Motion to Quash H&B and Eckenrod Subpoenas

Defendants argue that the information sought by the deposition subpoenas for H&B and Eckenrod are protected from disclosure by the taxpayer privilege. The court agrees. Personal tax returns are privileged from disclosure. (See Strawn v. Morris, Polich & Purdy, LLP (2019) 30 Cal.App.5th 1087, 1098.) This privilege is rooted in California's taxation statutes, which prohibit state tax officials from disclosing tax return information. (See Webb v. Standard Oil Co. (1957) 49 Cal.2d 509, 512-513.) California courts have interpreted these provisions as creating a privilege against the compelled disclosure of both state and federal tax returns in civil litigation. (See Schnabel v. Super. Ct. (1993) 5 Cal.4th 704, 719.)

The tax return privilege will not be upheld when "(1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved." (Strawn, supra, at 1098, internal citation omitted.) "A trial court has broad discretion in determining the applicability of a statutory privilege." (Weingarten v. Super. Ct. (2002) 102 Cal.App.4th 268, 274.) The challenged requests in the deposition subpoenas for H&B and Eckenrod seek Defendants' tax returns and all documents, communications, and workpapers related to Defendants' tax returns. (See 7/27/2026 Mashoof Decl., Exh. 1, pp. 6-11.)

Defendants contend that there is no exception that permits disclosure of information covered by the taxpayer privilege. (See 7/27/2026 Mot. P&A, pp. 5-7.) The court agrees.

CMBG concedes that the information sought is privileged, but argues that the privilege is not absolute. (See Opp., p. 8, stating that CMBG "acknowledges the taxpayer privilege and [its] importance, but the . . . taxpayer privilege [is] not absolute.") Instead, CMBG contends that the gravamen of the lawsuit is inconsistent with the privilege. (See Opp., p. 8.) The gravamen of a lawsuit is inconsistent with the privilege when a party "has placed in issue the existence and the content of [their] tax returns and the tax consequences of the computations thereon." (Wilson v. Super. Ct. (1976) 63 Cal.App.3d 825, 830.) According to CMBG, Defendants allegedly treated the assets of C&F and the related entities as their own, which they expect to be reflected in Defendants' tax returns. (See Opp., p. 8.)

Nevertheless, the court recognizes that permitting the disclosure of privileged information in this case would go against the purpose of the taxpayer privilege, which is "to encourage voluntary filing of tax returns and truthful reporting of income." (Strawn, supra, 30 Cal.App.5th at 1098.) Thus, the deposition subpoena seeks information protected by the taxpayer privilege with no applicable exception permitting discosure. Therefore, the motion to quash the deposition subpoenas as to H&B and Eckenrod is GRANTED. Since the court decides this motion on the issue of the taxpayer privilege, the parties' arguments as to the right of privacy and relevance are HELD IN ABEYANCE.

Motion to Quash Hahn and Rallis Subpoenas

Defendants argue that the information sought by the deposition subpoenas for Hahn and Rallis are protected from disclosure by the attorney-client privilege and the work product doctrine. The court agrees. Pursuant to the attorney-client privilege, "the client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer. . . ." (Evid. Code, Sec. 954.) "[T]here are no exceptions to the privilege unless expressly provided by statute. . . . The privilege is absolute and disclosure may not be ordered, without regard to relevance, necessity or any particular circumstances peculiar to the case." (Chubb & Son v. Super. Ct. (2014) 228 Cal.App.4th 1094, 1103, cleaned up.)

Furthermore, under the work product doctrine, "[a] writing that reflects an attorney's impressions, conclusions, opinions, or legal research or theories is not discoverable under any circumstances." (Code Civ. Proc., Sec. 2018.030, subd. (a).) Any other attorney work product is not discoverable "unless the court determines that denial of discovery will unfairly prejudice the party seeking discovery in preparing that party's claim or defense or will result in an injustice." (Code Civ. Proc., Sec. 2018.030, subd. (b).)

The challenged requests in the deposition subpoenas for Hahn and Rallis seek business records and testimony from Defendants' former counsel in a previous case and current counsel in a related case. (See 8/3/2026 Mashoof Decl., Exhs. 1-2.) "Depositions of opposing counsel are presumptively improper, severely restricted, and require extremely good cause--a high standard." (Carehouse Convalescent Hospital v. Super. Ct. (2006) 143 Cal.App.4th 1558, 1562, cleaned up.) "California applies a three-prong test in considering the propriety of attorney depositions. First, does the proponent have other practicable means to obtain the information? Second, is the information crucial to the preparation of the case? Third, is the information subject to a privilege?" (Id. at 1563.)

CMBG does not address in its opposition whether it has other practicable means to obtain the information sought, does not assert that the information is crucial to its case, and does not claim that the information is not subject to privilege. (See Opp., pp. 11-13; see also Moulton Niguel Water Dist. v. Colombo (2003) 111 Cal.App.4th 1210, 1215, stating that "[c]ontentions are waived when a party fails to support them with reasoned argument and citations to authority.") Thus, the court finds the deposition subpoenas seek information that is protected by the attorney-client privilege and the work product doctrine. Therefore, the motion to quash deposition subpoenas as to Hahn and Rallis is GRANTED. Since the court decides this motion on the issue of the attorney-client privilege and the work product doctrine, the parties' arguments as to relevance are HELD IN ABEYANCE.

Additionally, since both parties addressed issues related to the disqualification of counsel Dean Rallis, Esq.'s, and pursuant to CMBG's request, the court will SET an ORDER TO SHOW CAUSE RE: DISQUALIFICATION OF COUNSEL.

CONCLUSION

For these reasons, the motion to quash subpoena and for protective order as to nonparty Investment Property Exchange, Inc. is DENIED. The court orders compliance with the deposition subpoena subject to a protective order executed by the parties.

The motion to quash subpoena and for protective order as to nonparties Hutchinson & Bloodgood, LLP and Eckenrod Tax & Accounting Services, LLP is GRANTED.

The motion to quash subpoena and for protective order as to nonparties Hahn & Hahn, LLP and Dean G. Rallis, Esq. is GRANTED.

An ORDER TO SHOW CAUSE RE: DISQUALIFICATION OF COUNSEL is SET for a date to be determined at the hearing in Department G (Pomona).

Case Number: 25PSCV01266 Hearing Date: August 27, 2026 Dept: G Defendant