Preview
Kurt D. Hendrickson, State Bar No. 251509
1 Karl A. Schweikert, State Bar No. 291497
KDH Law
2 2101 Stone Blvd., Suite 115
West Sacramento, CA 95691
3 916.993.5226 Electronically Filed
Email address: Kurt@KDHendrickson.com 6/28/2021 4:58 PM
4 Superior Court of California
Attorney for STEVEN A. SWANGER, KENNETH A. County of Stanislaus
5 SWANGER, BRENDA GILLUM, SWAN
CONSTRUCTION, SWAN INVESTMENTS, INC., Clerk of the Court
6 SWANGER PROPERTIES, LLC, NORTHERN By: Christine Zulim, Deputy
CALIFORNIA INVESTMENTS, L.P., and RICHARD
7 NORTHCUTT
8 SUPERIOR COURT OF CALIFORNIA
9 IN AND FOR THE COUNTY OF STANISLAUS
10 CAPITAL EQUITY MANAGEMENT GROUP, CASE NO. 2009158
INC.,
11
Plaintiff,
12 POINTS AND AUTHORITIES IN
v. SUPPORT OF DEFENDANTS’
13 MOTION TO QUASH SUBPOENAS
DEUCES TECUM AND FOR
14 STEVEN. A SWANGER, et al., MONETARY SANCTIONS
15 Defendants.
16 DATE: July 27, 2021
TIME: 8:30 a.m.
17 STEVEN A. SWANGER, et al., DEPT: 22
18 Cross-Complainants, Fourth Amended Complaint Filed July
18, 2019
19 v.
20 CAPITAL EQUITY MANAGEMENT GROUP,
INC., a California Corporation, et al.,
21
Cross-Defendants.
22
23
24
25
I. INTRODUCTION
26
Defendants STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA GILLUM,
27
SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER PROPERTIES, LLC,
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 NORTHERN CALIFORNIA INVESTMENTS, L.P., and RICHARD NORTHCUTT
2 (“Defendants”) seek to quash several subpoenas duces tecum issued by Plaintiff CAPITAL EQUITY
3 MANAGEMENT GROUP, INC. (“CEMG”) regarding a broad variety of records ostensibly related
4 to a non-party, The Foster Advantage, Inc. In multiple categories of requests, these subpoenas seek
5 potentially confidential consumer records protected by the right of privacy with respect to the
6 Defendants.
7 The subpoenas, as drafted by CEMG, are so overbroad and overburdensome as to amount to
8 an abuse of the discovery process. They fail to include an affidavit attesting to the materiality of the
9 requests, they fail to include notices to consumers of the individuals also included within the scope
10 of their overbroad request, they seek investigation related to 182 separate properties, and they seek
11 a variety of documents related to the Defendants without concern for the Defendants’ right to privacy.
12 In the end, the request, along with two pages of instructions and definitions amount to an abuse of
13 the discovery process.
14 II. LEGAL STANDARD
15 Code of Civil Procedure section 1985, subsection (b) requires:
16 “(b) A copy of an affidavit shall be served with a subpoena duces tecum issued before
trial, showing good cause for the production of the matters and things described in the
17 subpoena, specifying the exact matters or things desired to be produced, setting forth
in full detail the materiality thereof to the issues involved in the case, and stating that
18 the witness has the desired matters or things in his or her possession or under his or
her control.”
19
Code of Civil Procedure section 1985.3, subsection (a)(1) defines personal records as:
20
(1) “Personal records” means the original, any copy of books, documents, other
21 writings, or electronically stored information pertaining to a consumer and which are
maintained by any “witness” which is a physician, dentist, ophthalmologist,
22 optometrist, chiropractor, physical therapist, acupuncturist, podiatrist, veterinarian,
veterinary hospital, veterinary clinic, pharmacist, pharmacy, hospital, medical center,
23 clinic, radiology or MRI center, clinical or diagnostic laboratory, state or national
bank, state or federal association (as defined in Section 5102 of the Financial Code),
24 state or federal credit union, trust company, anyone authorized by this state to make
or arrange loans that are secured by real property, security brokerage firm, insurance
25 company, title insurance company, underwritten title company, escrow agent licensed
pursuant to Division 6 (commencing with Section 17000) of the Financial Code or
26 exempt from licensure pursuant to Section 17006 of the Financial Code, attorney,
accountant, institution of the Farm Credit System, as specified in Section 2002 of
27 Title 12 of the United States Code, or telephone corporation which is a public utility,
as defined in Section 216 of the Public Utilities Code, or psychotherapist, as defined
28 in Section 1010 of the Evidence Code, or a private or public preschool, elementary
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
school, secondary school, or postsecondary school as described in Section 76244 of
1 the Education Code.
2
Code of Civil Procedure section 1985.3 subsection (a)(2) defines a consumer as:
3
“(2) “Consumer” means any individual, partnership of five or fewer persons,
4 association, or trust which has transacted business with, or has used the services of,
the witness or for whom the witness has acted as agent or fiduciary.”
5
6 Code of Civil Procedure section 1987.1, subsection (a) authorizes a motion to quash:
“(a) If a subpoena requires the attendance of a witness or the production of books,
7 documents, electronically stored information, or other things before a court, or at the
trial of an issue therein, or at the taking of a deposition, the court, upon motion
8 reasonably made by any person described in subdivision (b), or upon the court's own
motion after giving counsel notice and an opportunity to be heard, may make an order
9 quashing the subpoena entirely, modifying it, or directing compliance with it upon
those terms or conditions as the court shall declare, including protective orders. In
10 addition, the court may make any other order as may be appropriate to protect the
person from unreasonable or oppressive demands, including unreasonable violations
11 of the right of privacy of the person.”
12 III. FACTUAL BACKGROUND
13 On or about May 21, 2021, CEMG issued a subpoena upon First Foundation, Inc., of
14 Sacramento, California (“FF-Sac Subpoena”). (Exhibit A; Declaration of Karl A. Schweikert in
15 Support of Motion to Quash (“Schweikert Decl.”), ¶ 1.)
16 On or about May 21, 2021, CEMG issued a subpoena upon First Foundation, Inc., of Irvine,
17 California (“FF-Irvine Subpoena”). (Exhibit B; Schweikert Decl., ¶ 2.)
18 On or about May 21, 2021, CEMG issued a subpoena upon First Northern Bank of Dixon, of
19 Dixon, California (“First Northern Subpoena”). (Exhibit C; Schweikert Decl., ¶ 3.)
20 On or about May 21, 2021, CEMG issued a subpoena upon Old Republic Title Co., of San
21 Francisco, California (“Old Republic Subpoena”). (Exhibit D; Schweikert Decl., ¶ 4.)
22 On or about May 25, 2021, CEMG issued a subpoena upon Trifecta Real Estate, Inc., of
23 Modesto, California (“Trifecta Subpoena”). (Exhibit E; Schweikert Decl., ¶ 5.)
24 IV. LEGAL ARGUMENT
A. The Subpoenas Contain Unreasonable and Oppressive Demands For
25 Documents.
26 The requests of CEMG are burdensome and oppressive in that they request large quantities
27 of files and require the respondent to review large quantities of files and compare those documents
28 to numerous categories that both overlap and repeat prior requests. Unfortunately, the requests are
3
POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 not just limited to third-party discovery about a non-party, they also seek all documents related to all
2 Defendants as well, imposing an even greater burden upon the responding third-party.
3 In Mannino v. Superior Court (1983) 142 Cal.App.3d 776, 778, the court noted with respect
4 to discovery that “We are also aware the discovery process is subject to frequent abuse and, like a
5 cancerous growth, can destroy a meritorious cause or defense....” By 1997, the court in Calcor Space
6 Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 221, noted the feared cancer “is spreading
7 and judges must become more aggressive in curbing these abuses. Courts must insist discovery
8 devices be used as tools to facilitate litigation rather than as weapons to wage litigation. These tools
9 should be well calibrated; the lancet is to be preferred over the sledge hammer.” Calcor dealt with a
10 third-party subpoena duces tecum that was overbroad and overburdensome. The Calcor court noted
11 that although the description, as individually identified, was “particularlized” on its face, the request
12 effectively forced the respondent “to search its extensive files, at many locations, to see what it can
13 find to fit [the requestor’s] definitions, instructions, and categories.” (Id. at p. 222.)
14 The court in Calcor warned:
15 “Because of the potential for promiscuous discovery imposing great burdens, even
though ultimately the probative value of the discovered material may be questionable,
16 trial judges must carefully weigh the cost, time, expense and disruption of normal
business resulting from an order compelling the discovery against the probative value
17 of the material which might be disclosed if the discovery is ordered. A carelessly
drafted discovery order may result in cost and inconvenience far outweighing the
18 potential usefulness of the material ordered to be produced. Because of the difficulty
in drawing clear lines as to what is and what is not proper, this danger is particularly
19 great with respect to orders requiring the production of materials.”
20 (Ibid.)
21 The Trifecta Subpoena seeks 19 categories of documents with any relation to 182 separate
22 transactions over four-years. Despite ostensibly referencing non-party Foster Advantage and non-
23 party Cindy Foster, the request seeks all documents referring to any property, regardless of identity.
24 The last two request specifically seek documents related to Defendants (e.g. emails or writings
25 involving the Defendants) without relation to the titular non-party company named in the subpoena.
26 The FF-Sac Subpoena and the FF-Irvine Subpoena are identical and seek ten different
27 categories of documents over a four-year period with respect to a non-party. They seek all documents
28 with any relation or even describing one of 182 separate properties. They seek all documents with
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 any relation or even describing one of 156 transactions within a quick books report. That they are
2 identical in and of itself requires duplication of effort within the same company.
3 The First Northern Subpoena repeats the requests of the FF-Sac and FF-Irvine Subpoenas
4 with a different recipient, but still regarding a non-party.
5 The Old Republic Subpoena seeks 7 categories of documents, two of which actually seek all
6 documents that reference in any way any of the Defendants. Each of the 7 categories must be applied
7 to a search of any of 182 separate properties for a duration of four years.
8 As a result, these requests are overbroad and overburdensome as prohibited by Code of Civil
9 Procedure section 1987.1, subsection (a), and the subpoenas should be quashed.
10 B. The Subpoenas Demand Consumer Records Without Compliance With The
Notice To Consumer Requirements
11
12 A subpoena that seeks consumer records must comply with the requirements of Code of Civil
13 Procedure section 1985.3, subsection (b) which requires a notice to consumer of the subpoena.
14 Defendants Kenneth Swanger, Steve Swanger, Brenda Gillum, Swan Construction, Richard
15 Northcutt, and Northern California Investments, L.P. meet the definition of a consumer. (Code Civ.
16 Proc., § 1985.3, subd. (a)(2).) A personal record is a record of a consumer held by any “witness”
17 which includes: “…a state or national bank, a trust company, anyone authorized by this state to make
18 or arrange loans that are secured by real property…” (Code Civ. Proc., § 1985.3, subd. (a)(1).) Each
19 of the companies subjected to these subpoenas fit within this definition. Although four of the five of
20 the subpoenas claim to be regarding “The Foster Advantage, Inc.,” the subpoenas seek all documents
21 involving any Defendant. The Trifecta Subpoena, does not identify itself as seeking documents
22 related to a single entity and instead clearly applies to all documents related to any Defendant.
23 As a result, consumer records are being sought from witnesses that are listed as those
24 maintaining consumer records. As a result, CEMG was required by statute to serve a notice to
25 consumer upon the Defendants, an action it failed to perform. Thus, the subpoenas are invalid and
26 must be quashed.
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 C. The Subpoenas Fail To Include An Affidavit As To The Materiality Of The
Records Requested.
2
3 Code of Civil Procedure section 1985, subsection (b) requires an affidavit to accompany the
4 subpoena duces tecum providing a showing of good cause for the production of the matters and
5 things described in the subpoena. It requires the materiality to the issues involved in the case to be
6 set forth in full detail. (Ibid.) In 1945, the California Supreme Court decided McClatchy Newspapers
7 v. Superior Court of Sacramento County (1945) 26 Cal.2d 386, which involved an alleged
8 defamatory statement regarding a political candidate penned by the newspaper. Specifically, it
9 alleged the plaintiff had engaged in a series of real estate transactions that were prohibited by
10 Sacramento’s charter for elected officials. To support its contention, the newspaper issued subpoenas
11 duces tecum to several banks and real estate businesses seeking all records related to the plaintiff.
12 After opining that:
13 “A party or witness has a constitutional right to be free from unreasonable searches and
seizures, and it is therefore incumbent upon the one seeking an inspection to show clearly
14 that he has a right thereto and that the constitutional guaranties will not be infringed. Hence,
the affidavit in support of the demand for inspection must identify the desired books, papers
15 and documents and it must clearly show that they contain competent and admissible evidence
which is material to the issues to be tried. The affiant cannot rely merely upon the legal
16 conclusion, stated in general terms, that the desired documentary evidence is relevant and
material.” (Id. at p. 396)
17
18 The Court continued finding that despite an affidavit that described the plaintiffs
19 involvement in multiple business and financial transactions, that “Nowhere in the affidavit is there
20 any more specific averment as to the contents of any one or more of those papers and documents,
21 or as to what facts, if any, would or could be proved thereby.” (Id. at pp. 3987-398.) The California
22 Supreme Court quashed the subpoenas as failing to “specifically describe any papers or documents,
23 or their contents, but [the subpoena] merely refers to various financial and business transactions,
24 and avers generally that the records thereof, in the hands of the respective witnesses, are relevant
25 and material.” (Id. at p. 398.)
26 CEMG must include an affidavit that identifies specific papers and documents and identify
27 how those documents, documents related to a non-party being sought from a third-party, would be
28 material to the case at hand. Given the extensive discovery already executed by CEMG, the
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 materiality bar is exceedingly high. In effect, the California Supreme Court held that you cannot
2 simply force production of third-party documents because you want them, you must provide a
3 sufficient affidavit to support the materiality of the request. CEMG may not simply blindly
4 reference types of documents and generally assert they are relevant.
5 Within the five subpoenas at issue, no averment of any kind exists with respect to this key
6 policy issue adopted by our Legislature. These subpoenas should be quashed.
7 D. The Subpoenas Unnecessarily Impinge On Defendants’ Right of Privacy
8 At various points within the subpoenas, each subpoena issued about a non-party eventually
9 seeks any and all documents related to the Defendants within the possession of the third-party.
10 Because the request lacks particularity, Defendants are left to wonder what potentially private
11 information is within the files of the entities being subpoenaed. This is an unreasonable invasion of
12 the individual and corporate rights of privacy in California. Although individuals have a
13 constitutional right of privacy, corporation’s rights of privacy are addressed by a balancing test –
14 “whether the discovery ‘appears reasonably calculated to lead to the discovery of admissible
15 evidence’ is balanced against the corporate right of privacy.” (Cal. Const., art. 1, § 1; SCC
16 Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 755-756.) Were an affidavit
17 present to explain the materiality in advance, perhaps the risk could be identified. However, no
18 such affidavit exists. As a result, if the subpoenas are allowed to move forward, Defendants request
19 they be subject to a protective order and Defendants’ review prior to its delivery to CEMG to
20 determine if further protective orders need to be applied or the production be prohibited.
21 E. Defendants Should Be Awarded Their Reasonable Expenses.
22 Pursuant to Code of Civil Procedure section 1987.2, the court may award reasonable
23 expenses including attorney fees incurred in bringing a motion to quash if the subpoena was
24 oppressive. CEMG’s complete failure to provide notices to consumer, required affidavits, and the
25 subpoena’s expansive scope all promote the award of reasonable expenses in this case.
26 V. CONCLUSION
27 These subpoenas should be quashed as completely failing to comply with the Code of Civil
28 Procedure regarding third-party subpoenas duces tecum. CEMG’s request, focused on third-party
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POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
1 records regarding a non-party, will cause unnecessary expense to third parties that do business with
2 Defendants. In effect, punishing businesses frequented by Defendants for their association with
3 Defendants. This abuse of the discovery system is improper. Further, despite naming a non-party as
4 the target, the requests include requests about multiple consumers without notify consumers of the
5 records they were requesting. The requests fail to provide an affidavit of materiality nor to
6 sufficiently describe the requested material in a manner required by the California Supreme Court.
7 The subpoenas should be quashed.
8
9 Date: June 28, 2021 KDH Law
10
11 /s/ Karl A. Schweikert
Karl A. Schweikert, attorney for STEVEN A.
12 SWANGER, KENNETH A. SWANGER,
13 BRENDA GILLUM, SWAN CONSTRUCTION,
SWAN INVESTMENTS, INC., SWANGER
14 PROPERTIES, LLC, NORTHERN CALIFORNIA
INVESTMENTS, L.P., and RICHARD
15 NORTHCUTT
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Preview
Kurt D. Hendrickson, State Bar No. 251509 1 Karl A. Schweikert, State Bar No. 291497 KDH Law 2 2101 Stone Blvd., Suite 115 West Sacramento, CA 95691 3 916.993.5226 Electronically Filed Email address: Kurt@KDHendrickson.com 6/28/2021 4:58 PM 4 Superior Court of California Attorney for STEVEN A. SWANGER, KENNETH A. County of Stanislaus 5 SWANGER, BRENDA GILLUM, SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., Clerk of the Court 6 SWANGER PROPERTIES, LLC, NORTHERN By: Christine Zulim, Deputy CALIFORNIA INVESTMENTS, L.P., and RICHARD 7 NORTHCUTT 8 SUPERIOR COURT OF CALIFORNIA 9 IN AND FOR THE COUNTY OF STANISLAUS 10 CAPITAL EQUITY MANAGEMENT GROUP, CASE NO. 2009158 INC., 11 Plaintiff, 12 POINTS AND AUTHORITIES IN v. SUPPORT OF DEFENDANTS’ 13 MOTION TO QUASH SUBPOENAS DEUCES TECUM AND FOR 14 STEVEN. A SWANGER, et al., MONETARY SANCTIONS 15 Defendants. 16 DATE: July 27, 2021 TIME: 8:30 a.m. 17 STEVEN A. SWANGER, et al., DEPT: 22 18 Cross-Complainants, Fourth Amended Complaint Filed July 18, 2019 19 v. 20 CAPITAL EQUITY MANAGEMENT GROUP, INC., a California Corporation, et al., 21 Cross-Defendants. 22 23 24 25 I. INTRODUCTION 26 Defendants STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA GILLUM, 27 SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER PROPERTIES, LLC, 28 1 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 NORTHERN CALIFORNIA INVESTMENTS, L.P., and RICHARD NORTHCUTT 2 (“Defendants”) seek to quash several subpoenas duces tecum issued by Plaintiff CAPITAL EQUITY 3 MANAGEMENT GROUP, INC. (“CEMG”) regarding a broad variety of records ostensibly related 4 to a non-party, The Foster Advantage, Inc. In multiple categories of requests, these subpoenas seek 5 potentially confidential consumer records protected by the right of privacy with respect to the 6 Defendants. 7 The subpoenas, as drafted by CEMG, are so overbroad and overburdensome as to amount to 8 an abuse of the discovery process. They fail to include an affidavit attesting to the materiality of the 9 requests, they fail to include notices to consumers of the individuals also included within the scope 10 of their overbroad request, they seek investigation related to 182 separate properties, and they seek 11 a variety of documents related to the Defendants without concern for the Defendants’ right to privacy. 12 In the end, the request, along with two pages of instructions and definitions amount to an abuse of 13 the discovery process. 14 II. LEGAL STANDARD 15 Code of Civil Procedure section 1985, subsection (b) requires: 16 “(b) A copy of an affidavit shall be served with a subpoena duces tecum issued before trial, showing good cause for the production of the matters and things described in the 17 subpoena, specifying the exact matters or things desired to be produced, setting forth in full detail the materiality thereof to the issues involved in the case, and stating that 18 the witness has the desired matters or things in his or her possession or under his or her control.” 19 Code of Civil Procedure section 1985.3, subsection (a)(1) defines personal records as: 20 (1) “Personal records” means the original, any copy of books, documents, other 21 writings, or electronically stored information pertaining to a consumer and which are maintained by any “witness” which is a physician, dentist, ophthalmologist, 22 optometrist, chiropractor, physical therapist, acupuncturist, podiatrist, veterinarian, veterinary hospital, veterinary clinic, pharmacist, pharmacy, hospital, medical center, 23 clinic, radiology or MRI center, clinical or diagnostic laboratory, state or national bank, state or federal association (as defined in Section 5102 of the Financial Code), 24 state or federal credit union, trust company, anyone authorized by this state to make or arrange loans that are secured by real property, security brokerage firm, insurance 25 company, title insurance company, underwritten title company, escrow agent licensed pursuant to Division 6 (commencing with Section 17000) of the Financial Code or 26 exempt from licensure pursuant to Section 17006 of the Financial Code, attorney, accountant, institution of the Farm Credit System, as specified in Section 2002 of 27 Title 12 of the United States Code, or telephone corporation which is a public utility, as defined in Section 216 of the Public Utilities Code, or psychotherapist, as defined 28 in Section 1010 of the Evidence Code, or a private or public preschool, elementary 2 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH school, secondary school, or postsecondary school as described in Section 76244 of 1 the Education Code. 2 Code of Civil Procedure section 1985.3 subsection (a)(2) defines a consumer as: 3 “(2) “Consumer” means any individual, partnership of five or fewer persons, 4 association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.” 5 6 Code of Civil Procedure section 1987.1, subsection (a) authorizes a motion to quash: “(a) If a subpoena requires the attendance of a witness or the production of books, 7 documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion 8 reasonably made by any person described in subdivision (b), or upon the court's own motion after giving counsel notice and an opportunity to be heard, may make an order 9 quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In 10 addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations 11 of the right of privacy of the person.” 12 III. FACTUAL BACKGROUND 13 On or about May 21, 2021, CEMG issued a subpoena upon First Foundation, Inc., of 14 Sacramento, California (“FF-Sac Subpoena”). (Exhibit A; Declaration of Karl A. Schweikert in 15 Support of Motion to Quash (“Schweikert Decl.”), ¶ 1.) 16 On or about May 21, 2021, CEMG issued a subpoena upon First Foundation, Inc., of Irvine, 17 California (“FF-Irvine Subpoena”). (Exhibit B; Schweikert Decl., ¶ 2.) 18 On or about May 21, 2021, CEMG issued a subpoena upon First Northern Bank of Dixon, of 19 Dixon, California (“First Northern Subpoena”). (Exhibit C; Schweikert Decl., ¶ 3.) 20 On or about May 21, 2021, CEMG issued a subpoena upon Old Republic Title Co., of San 21 Francisco, California (“Old Republic Subpoena”). (Exhibit D; Schweikert Decl., ¶ 4.) 22 On or about May 25, 2021, CEMG issued a subpoena upon Trifecta Real Estate, Inc., of 23 Modesto, California (“Trifecta Subpoena”). (Exhibit E; Schweikert Decl., ¶ 5.) 24 IV. LEGAL ARGUMENT A. The Subpoenas Contain Unreasonable and Oppressive Demands For 25 Documents. 26 The requests of CEMG are burdensome and oppressive in that they request large quantities 27 of files and require the respondent to review large quantities of files and compare those documents 28 to numerous categories that both overlap and repeat prior requests. Unfortunately, the requests are 3 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 not just limited to third-party discovery about a non-party, they also seek all documents related to all 2 Defendants as well, imposing an even greater burden upon the responding third-party. 3 In Mannino v. Superior Court (1983) 142 Cal.App.3d 776, 778, the court noted with respect 4 to discovery that “We are also aware the discovery process is subject to frequent abuse and, like a 5 cancerous growth, can destroy a meritorious cause or defense....” By 1997, the court in Calcor Space 6 Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 221, noted the feared cancer “is spreading 7 and judges must become more aggressive in curbing these abuses. Courts must insist discovery 8 devices be used as tools to facilitate litigation rather than as weapons to wage litigation. These tools 9 should be well calibrated; the lancet is to be preferred over the sledge hammer.” Calcor dealt with a 10 third-party subpoena duces tecum that was overbroad and overburdensome. The Calcor court noted 11 that although the description, as individually identified, was “particularlized” on its face, the request 12 effectively forced the respondent “to search its extensive files, at many locations, to see what it can 13 find to fit [the requestor’s] definitions, instructions, and categories.” (Id. at p. 222.) 14 The court in Calcor warned: 15 “Because of the potential for promiscuous discovery imposing great burdens, even though ultimately the probative value of the discovered material may be questionable, 16 trial judges must carefully weigh the cost, time, expense and disruption of normal business resulting from an order compelling the discovery against the probative value 17 of the material which might be disclosed if the discovery is ordered. A carelessly drafted discovery order may result in cost and inconvenience far outweighing the 18 potential usefulness of the material ordered to be produced. Because of the difficulty in drawing clear lines as to what is and what is not proper, this danger is particularly 19 great with respect to orders requiring the production of materials.” 20 (Ibid.) 21 The Trifecta Subpoena seeks 19 categories of documents with any relation to 182 separate 22 transactions over four-years. Despite ostensibly referencing non-party Foster Advantage and non- 23 party Cindy Foster, the request seeks all documents referring to any property, regardless of identity. 24 The last two request specifically seek documents related to Defendants (e.g. emails or writings 25 involving the Defendants) without relation to the titular non-party company named in the subpoena. 26 The FF-Sac Subpoena and the FF-Irvine Subpoena are identical and seek ten different 27 categories of documents over a four-year period with respect to a non-party. They seek all documents 28 with any relation or even describing one of 182 separate properties. They seek all documents with 4 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 any relation or even describing one of 156 transactions within a quick books report. That they are 2 identical in and of itself requires duplication of effort within the same company. 3 The First Northern Subpoena repeats the requests of the FF-Sac and FF-Irvine Subpoenas 4 with a different recipient, but still regarding a non-party. 5 The Old Republic Subpoena seeks 7 categories of documents, two of which actually seek all 6 documents that reference in any way any of the Defendants. Each of the 7 categories must be applied 7 to a search of any of 182 separate properties for a duration of four years. 8 As a result, these requests are overbroad and overburdensome as prohibited by Code of Civil 9 Procedure section 1987.1, subsection (a), and the subpoenas should be quashed. 10 B. The Subpoenas Demand Consumer Records Without Compliance With The Notice To Consumer Requirements 11 12 A subpoena that seeks consumer records must comply with the requirements of Code of Civil 13 Procedure section 1985.3, subsection (b) which requires a notice to consumer of the subpoena. 14 Defendants Kenneth Swanger, Steve Swanger, Brenda Gillum, Swan Construction, Richard 15 Northcutt, and Northern California Investments, L.P. meet the definition of a consumer. (Code Civ. 16 Proc., § 1985.3, subd. (a)(2).) A personal record is a record of a consumer held by any “witness” 17 which includes: “…a state or national bank, a trust company, anyone authorized by this state to make 18 or arrange loans that are secured by real property…” (Code Civ. Proc., § 1985.3, subd. (a)(1).) Each 19 of the companies subjected to these subpoenas fit within this definition. Although four of the five of 20 the subpoenas claim to be regarding “The Foster Advantage, Inc.,” the subpoenas seek all documents 21 involving any Defendant. The Trifecta Subpoena, does not identify itself as seeking documents 22 related to a single entity and instead clearly applies to all documents related to any Defendant. 23 As a result, consumer records are being sought from witnesses that are listed as those 24 maintaining consumer records. As a result, CEMG was required by statute to serve a notice to 25 consumer upon the Defendants, an action it failed to perform. Thus, the subpoenas are invalid and 26 must be quashed. 27 28 5 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 C. The Subpoenas Fail To Include An Affidavit As To The Materiality Of The Records Requested. 2 3 Code of Civil Procedure section 1985, subsection (b) requires an affidavit to accompany the 4 subpoena duces tecum providing a showing of good cause for the production of the matters and 5 things described in the subpoena. It requires the materiality to the issues involved in the case to be 6 set forth in full detail. (Ibid.) In 1945, the California Supreme Court decided McClatchy Newspapers 7 v. Superior Court of Sacramento County (1945) 26 Cal.2d 386, which involved an alleged 8 defamatory statement regarding a political candidate penned by the newspaper. Specifically, it 9 alleged the plaintiff had engaged in a series of real estate transactions that were prohibited by 10 Sacramento’s charter for elected officials. To support its contention, the newspaper issued subpoenas 11 duces tecum to several banks and real estate businesses seeking all records related to the plaintiff. 12 After opining that: 13 “A party or witness has a constitutional right to be free from unreasonable searches and seizures, and it is therefore incumbent upon the one seeking an inspection to show clearly 14 that he has a right thereto and that the constitutional guaranties will not be infringed. Hence, the affidavit in support of the demand for inspection must identify the desired books, papers 15 and documents and it must clearly show that they contain competent and admissible evidence which is material to the issues to be tried. The affiant cannot rely merely upon the legal 16 conclusion, stated in general terms, that the desired documentary evidence is relevant and material.” (Id. at p. 396) 17 18 The Court continued finding that despite an affidavit that described the plaintiffs 19 involvement in multiple business and financial transactions, that “Nowhere in the affidavit is there 20 any more specific averment as to the contents of any one or more of those papers and documents, 21 or as to what facts, if any, would or could be proved thereby.” (Id. at pp. 3987-398.) The California 22 Supreme Court quashed the subpoenas as failing to “specifically describe any papers or documents, 23 or their contents, but [the subpoena] merely refers to various financial and business transactions, 24 and avers generally that the records thereof, in the hands of the respective witnesses, are relevant 25 and material.” (Id. at p. 398.) 26 CEMG must include an affidavit that identifies specific papers and documents and identify 27 how those documents, documents related to a non-party being sought from a third-party, would be 28 material to the case at hand. Given the extensive discovery already executed by CEMG, the 6 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 materiality bar is exceedingly high. In effect, the California Supreme Court held that you cannot 2 simply force production of third-party documents because you want them, you must provide a 3 sufficient affidavit to support the materiality of the request. CEMG may not simply blindly 4 reference types of documents and generally assert they are relevant. 5 Within the five subpoenas at issue, no averment of any kind exists with respect to this key 6 policy issue adopted by our Legislature. These subpoenas should be quashed. 7 D. The Subpoenas Unnecessarily Impinge On Defendants’ Right of Privacy 8 At various points within the subpoenas, each subpoena issued about a non-party eventually 9 seeks any and all documents related to the Defendants within the possession of the third-party. 10 Because the request lacks particularity, Defendants are left to wonder what potentially private 11 information is within the files of the entities being subpoenaed. This is an unreasonable invasion of 12 the individual and corporate rights of privacy in California. Although individuals have a 13 constitutional right of privacy, corporation’s rights of privacy are addressed by a balancing test – 14 “whether the discovery ‘appears reasonably calculated to lead to the discovery of admissible 15 evidence’ is balanced against the corporate right of privacy.” (Cal. Const., art. 1, § 1; SCC 16 Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 755-756.) Were an affidavit 17 present to explain the materiality in advance, perhaps the risk could be identified. However, no 18 such affidavit exists. As a result, if the subpoenas are allowed to move forward, Defendants request 19 they be subject to a protective order and Defendants’ review prior to its delivery to CEMG to 20 determine if further protective orders need to be applied or the production be prohibited. 21 E. Defendants Should Be Awarded Their Reasonable Expenses. 22 Pursuant to Code of Civil Procedure section 1987.2, the court may award reasonable 23 expenses including attorney fees incurred in bringing a motion to quash if the subpoena was 24 oppressive. CEMG’s complete failure to provide notices to consumer, required affidavits, and the 25 subpoena’s expansive scope all promote the award of reasonable expenses in this case. 26 V. CONCLUSION 27 These subpoenas should be quashed as completely failing to comply with the Code of Civil 28 Procedure regarding third-party subpoenas duces tecum. CEMG’s request, focused on third-party 7 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH 1 records regarding a non-party, will cause unnecessary expense to third parties that do business with 2 Defendants. In effect, punishing businesses frequented by Defendants for their association with 3 Defendants. This abuse of the discovery system is improper. Further, despite naming a non-party as 4 the target, the requests include requests about multiple consumers without notify consumers of the 5 records they were requesting. The requests fail to provide an affidavit of materiality nor to 6 sufficiently describe the requested material in a manner required by the California Supreme Court. 7 The subpoenas should be quashed. 8 9 Date: June 28, 2021 KDH Law 10 11 /s/ Karl A. Schweikert Karl A. Schweikert, attorney for STEVEN A. 12 SWANGER, KENNETH A. SWANGER, 13 BRENDA GILLUM, SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER 14 PROPERTIES, LLC, NORTHERN CALIFORNIA INVESTMENTS, L.P., and RICHARD 15 NORTHCUTT 16 17 18 19 20 21 22 23 24 25 26 27 28 8 POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH