Motion to Compel Production
4 Martinez vs. Mercedes- Benz USA, LLC
2024-01444685
1. Motion to Compel Arbitration 2. Case Management Conference
Mercedes-Benz USA, LLC’s motion to compel Plaintiff Iriz Y. Gonzalez Martinez to submit her claims to binding contractual arbitration is granted. MBUSA is a stated Third Party Beneficiary to the lease agreement containing the arbitration agreement.
This action is stayed pending resolution of the arbitration.
The Court sets an arbitration review hearing for February 1, 2027 at 9:00 a.m. in this department.
MBUSA request for judicial notice is denied.
Martinez’s request for judicial notice is granted.
MBUSA to give notice.
5 Saadeh vs. Bdair
2022-01248722
Motion to Compel Production
Defendants Mohamed Bdair and Goldenlinens, LLC’s Motion to Compel Plaintiff Belal Saadeh’s Further Responses to Request for Production of Documents, Set One – Request Nos. 12 and 13 is GRANTED in part. (Code Civ. Proc. § 2031.310.)
As part of his damages, Plaintiff alleges Defendants’ conduct resulted in inaccurate tax filings and tax penalties. (FAC ¶¶ 25–28, 91.) Moreover, in response to Form Interrogatory No. 8.1, Plaintiff was asked whether he attributed any loss of income or earning capacity to the incident. Plaintiff responded: “Yes, loss of profits and excess tax liability resulting from the business operations of MB Home Linen & More, the company usurped by Defendants.”
Defendants served document demands seeking evidence of Plaintiff’s tax damages.
• Request for Production No. 12: Documents evidencing tax-related damages Plaintiff allegedly sustained; and • Request for Production No. 13: Correspondence with any tax preparers or professionals relating to the alleged tax damages.
Plaintiff objected to the production of such documents on the grounds of the attorneyclient privilege, work product, premature expert discovery, relevant, privacy, and taxreturn privilege, and produced no documents.
“Tax returns are privileged from disclosure. The tax return privilege ‘is not absolute’ and ‘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 v. Morris, Polich & Purdy, LLP (2019) 30 Cal.App.5th 1087, 1098 [cleaned-up].)
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Defendants seek to invoke the second of the above exceptions. In Wilson v. Superior Court (1976) 63 Cal.App.3d 825 (Wilson), the Plaintiff brought suit against accountants whom she alleged had “negligently and improperly advised her on the tax consequences of a sale of real property,” leading to her damages. (Id. at 827.) The Court in Wilson explained: “By her complaint, plaintiff has placed in issue the existence and the content of her tax returns and the tax consequences of the computations thereon.
The gravamen of her lawsuit is so inconsistent with the continued assertion of the taxpayer’s privilege as to compel the conclusion that the privilege has in fact been waived.” (Id. at 830.) “To permit plaintiff to produce evidence of the contents of those returns...while successfully resisting their disclosure on grounds of privilege would be manifestly unfair to defendants. Accordingly, plaintiff can either maintain her lawsuit or the confidentiality of her returns, but not both.” (Ibid.)
Unlike Wilson, this action concerns a business dispute involving fraud and breach of an agreement. However, as part of his damages Plaintiff alleges Defendants’ conduct resulted in inaccurate tax filings and tax penalties. While the court agrees Plaintiff’s tax-related damages are relevant to Plaintiff’s claims, they are not the “gravamen” of his lawsuit. Therefore, Plaintiff has not waived the tax return privilege at this time.
But the implication of the tax return privilege does not render other documents related to Plaintiff’s tax related damages immune from discovery. “The fact that financial records are difficult to obtain or that a tax return would be helpful, enlightening or the most efficient way to establish financial worth is not enough.” (Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 276.)
Accordingly, the motion is GRANTED as follows: Within 30 days, • Plaintiff is to provide a further verified response to Request Nos. 12 and 13. • Request Nos. 12 and 13 are limited to the years 2018-2020. • To the extent a privilege is claimed, Plaintiff is to produce a privilege log, reasonably identifying the document (date, author, recipient, subject matter) and the claimed privilege. • At this time, Plaintiff is not ordered to produce his tax returns. However, the Court reserves the right to reconsider the issue if additional facts are discovered which make the tax returns necessary to substantiate Plaintiff’s claim of tax-related damages.
Plaintiff’s request for monetary sanctions is DENIED.
Moving Parties shall give notice.