Assaf v. Super. Ct. CA2/1

Filed 5/28/15 Assaf v. Super. Ct. CA2/1 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

ELIAS ASSAF et al., B260319

Petitioners, (Los Angeles County Super. Ct. No. BD563252) v.

THE SUPERIOR COURT OF LOS ANGELES COUNTY,

Respondent;

IRLANDA RACHED et al.,

Real Parties in Interest.

ORIGINAL PROCEEDINGS in mandate. Holly J. Fujie, Judge. Petition granted. Andrew F. Kim and Robert M. Ungar, for Petitioners. No appearance for Respondent. Smaili & Associates, Adam K. Obeid and Jihad M. Smaili, for Real Parties in Interest. _______________________________

Because a husband in marital dissolution proceedings was alleged to have wrongfully transferred community assets to third parties, the superior court ordered the third parties to produce unredacted copies of their individual and corporate tax returns. They petitioned for writ relief directing the trial court to vacate its order on the ground that tax returns are privileged. We grant the petition. Tax returns are generally protected from compelled production, but an exception exists where they belong to a party to marital dissolution proceedings. Although that exception also permits discovery of the tax information of a corporation closely held by a party, it does not apply to unrelated third parties. 1 BACKGROUND In 2009, Irlanda Rached filed marital dissolution proceedings against her husband, Victor Chalfoun. She later dismissed the proceedings. A few months later, Chalfoun sold a community property asset, a company called Power Auto Insurance Services (Power Auto), to Elias and Zeina Assaf (together, the Assafs) for $1,000. Power Auto was resold two years later for a price in excess of $2 million. In 2012, Rached filed another marital dissolution action against Chalfoun. She also filed a separate civil action in 2013 against Chalfoun and the Assafs in the Orange County Superior Court, alleging Chalfoun fraudulently transferred Power Auto and other marital assets to the Assafs without her knowledge or consent. The parties represent that the Orange County action has been stayed pending resolution of the dissolution proceedings. In the dissolution proceeding, Rached subpoenaed the deposition of Zeina Assaf and demanded records pertaining to the Power Auto transfer and other transactions involving Chalfoun. Zeina was deposed on October 2, 2014, but was unable to recall much that was pertinent and refused to provide the requested documents. After Rached 1 Our summary of the factual background is drawn from the pleadings and other documents included in the exhibits to the petition. Nothing in this opinion should be construed as a resolution of a disputed issue of fact or as a determination that certain facts are undisputed.