Preview
ELECTRONICALLY FILED
Superior Court of California
County of Santa Barbara
1 REICKER, PFAU, PYLE & McROY LLP
1421 State Street, Suite B Darrel E. Parker, Executive Officer
2 Santa Barbara, CA 93101 8/24/2021 6:24 PM
Tel (805) 966-2440 By: Narzralli Baksh, Deputy
3 Fax (805) 966-3320
Robert B. Forouzandeh, State Bar No. 247177
4 rforouzandeh@rppmh.com
5 Attorneys for Defendants/Cross-Complainants DAVID SNIDER; SNIDER INVESTMENTS, LLC;
SNIDER INTERESTS, LLC; SNIDER FAMILY DYNASTY TRUST; SNIDER FAMILY DYNASTY
6 TRUST I DATED 5/1/2007; MORONGO EQUITY PARTNERS I, LLC; MORONGO EQUITY
PARTNERS II, LLC; And Specially Appearing for Non-Parties MORONGO BUSINESS PARK, INC.
7 and MILLSIDE CENTRE, LLC
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SANTA BARBARA—ANACAPA DIVISION
10 ECO PROPERTY GROUP, LLC, a limited Case No. 19CV04971
liability company, Judge Thomas P. Anderle
11
Plaintiff, REPLY TO OPPOSITION TO MOTION TO
12 v. QUASH SUBPOENAS OR
ALTERNATIVELY FOR A PROTECTIVE
13 SNIDER INVESTMENTS, LLC, a limited ORDER
liability company, DAVID SNIDER, an
14 individual, and DOES 1-50 inclusive, Date: August 31, 2021
Time: 10:00 a.m.
15 Defendants. Dept: 4
________________________________________
16 Discovery Disputes Assigned to R.A. Carrington;
AND RELATED CROSS ACTIONS. Oral Argument on August 31, 2021 at 8:00 a.m.
17
18
19 Defendants David Snider; Snider Investments, LLC (“SIL”); Snider Interests, LLC; Robin Snider,
20 as Trustee of the Snider Family Dynasty Trust and the Snider Family Dynasty Trust I dated 5/1/2007;
21 Morongo Equity Partners I, LLC (“MEPI”); Morongo Equity Partners II, LLC (“MEPII”) and specially
22 appearing non-parties, Morongo Business Park, Inc. (“MBI”) and Millside Centre, LLC (“MCL”) (MBI
23 and MCL are collectively referred to as “Non-Party Objectors” and all moving parties are collectively
24 referred to as “Objecting Parties”) submit this Reply to ECO Property Group, LLC's (“ECO”) Opposition
25 to Objecting Parties’ Motion to Quash Subpoenas or Alternatively for a Protective Order. 1
26 1
At the parties’ July 6, 2021 Case Management Conference, the Court appointed Discovery Referee R.A.
27 Carrington but authorized the present Motion to be filed in order to halt the third party production until
this Motion could be decided. This Motion and all related pleadings have been submitted to Mr.
28 Carrington, who is set to hear oral argument on this matter on August 31, 2021. ECO’s Opposition and
this Reply are simply being filed with the Court since the original Motion was also filed.
1
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 I. INTRODUCTION
2 ECO’s Opposition does nothing to justify the unreasonable and oppressive nature of its
3 Subpoenas which would effect a dramatic invasion of various parties’ and non-parties’ financial privacy.
4 First, ECO’s Opposition mischaracterizes its 18 Subpoenas by repeatedly suggesting that it
5 merely seeks records from “two banks.” (See Opp. at p. 5:7-8, 7:24-25, 8:12-13.) Nevertheless, ECO’s
6 bubblegum portrayal is betrayed by Exhibits A–R to the Motion which contain the 18 distinct Subpoenas
7 propounded seeking the entirety of the financial and bank records of nine separate entities and
8 individuals over a five year period.
9 Second, conspicuously absent from ECO’s Opposition is any attempted explanation for ECO’s
10 prior blatant misstatements to the Court that “[t]he majority of written discovery has already been
11 conducted” and that “Plaintiff’s remaining written discovery will be limited to follow up on prior
12 production and general building II cost and sale information, all of which will be substantially limited in
13 scope and breadth and targeted to relevant and material information.” (Mar. 24, 2021 ECO Case Mgmt.
14 Stmt. at p. 2, italics added and underline original.) Despite telling the Court that discovery was all but
15 finished, ECO’s entire Opposition is devoted to hand-wringing concerning its “thwarted” discovery
16 efforts and imploring that it “has been denied access to crucial financial information for nearly two
17 years.” (Opp. at p. 7.) ECO was either misleading the Court then, or it is doing so now.
18 Third, ECO’s legal arguments demonstrate that its Subpoenas could easily be narrowed in a way
19 that would permit ECO the discovery it desires while minimizing the intrusion into Objecting Parties’
20 privacy rights and without prying into wholly unrelated financial affairs outside the scope of discovery.
21 If ECO’s arguments concerning the relevance of the financial information are legitimate, then at a
22 minimum, ECO’s Subpoenas could be quickly and easily narrowed to capture only those transactions
23 between and among the Objecting Parties which are related to MEPI and/or Building 1. In fact, seven of
24 the nine objecting parties have no interest in or relation to MEPI, ECO, or Building 1 – they conduct
25 business on wholly unrelated ventures and properties – yet ECO somehow believes their confidential
26 financial records are fair game without any restriction whatsoever.
27 Fourth, ECO’s Opposition is premised upon lobbing unsupported accusations and baseless
28 assertions and misstating the Court’s prior rulings.
2
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 Accordingly, the Objecting Parties respectfully request the Discovery Referee quash these
2 Subpoenas, or in the alternative, that the Discovery Referee (a) issue a protective order narrowing the
3 scope of these Subpoenas and (b) conduct an in camera review to consider the Objecting Parties’
4 objections on a document-by-document basis.
5 II. ARGUMENT
6 A. Even if ECO’s 18 Subpoenas Implicate Two Banks, the 18 Subpoenas Are Overbroad
7 and Not Reasonably Calculated to Lead to Discovery of Admissible Evidence
8 ECO cannot sweep away the unreasonable breadth of its Subpoenas by recasting them as seeking
9 records from “two banks.” (See Opp. at p. 5:7-8, 7:24-25, 8:12-13.) Although the Subpoenas happen to
10 be directed to Wells Fargo and US Bank, ECO demands that those two banks produce all documents in
11 the banks’ possession concerning nine separate and distinct individuals and legal entities. And ECO’s
12 definition of documents is unbound by logic or reason by requesting documents “including but not
13 limited to monthly statements, account records, wire transfer documents, debit and credit memos, deposit
14 statements, withdrawal statements, and credit or debit card statements reflecting banking activities,
15 including but not limited to deposits, withdrawals, or wire/online transfers for the savings and checking
16 accounts held by [individual or entity] from 2016 to the present.” (See Motion Exs. A–R.) In effect,
17 ECO is asking to see each and every financial transaction carried out by these nine individuals and
18 entities over a five year period.
19 ECO’s Subpoenas are not given credit by virtue of the fact that these nine distinct individuals and
20 entities happen to use similar banks. ECO’s argument is premised on the idea that its 18 Subpoenas on
21 parties and non-parties are necessarily reasonable simply because they are served only on two financial
22 institutions. By that logic, a party could subpoena the bank records of 18 Chase customers and claim that
23 its 18 Subpoenas were reasonable because they were only served on one bank. ECO’s Subpoenas are
24 improper because their scope is overbroad, not because of the number of banks that were targeted or the
25 requests that were submitted.
26 ///
27 ///
28 ///
3
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 B. ECO Talks Out of Both Sides of Its Mouth Concerning Its Compelling Need for
2 Discovery
3 Either ECO’s arguments in its Opposition are fictitious, or ECO was misleading the Court when
4 it told the Court that “[t]he majority of written discovery has already been conducted” and that
5 “Plaintiff’s remaining written discovery will be limited to follow up on prior production and general
6 building II cost and sale information, all of which will be substantially limited in scope and breadth and
7 targeted to relevant and material information.” (Mar. 24, 2021 ECO Case Mgmt. Stmt. at p. 2, underline
8 original.)
9 Choosing the ostrich approach, ECO’s Opposition makes no attempt to explain its prior
10 misrepresentations and, instead, argues that it has been deprived of this “crucial financial information for
11 nearly two years.” (Opp. at p. 7.) ECO claims that it has “a compelling need for these documents
12 because [it] cannot properly prepare for trial or potential settlement without them.” (Opp. at p. 5.) ECO
13 goes so far as to assert that “there cannot be a fair resolution of the lawsuit” unless it obtains five years’
14 worth of financial and bank records from these nine parties and non-parties, even though ECO told the
15 Court just a few months ago that “[t]he majority of written discovery has already been conducted” and
16 that any remaining discovery would be “substantially limited in scope and breadth.” (Mar. 24, 2021
17 ECO Case Mgmt. Stmt. at p. 2.)
18 ECO’s statements are irreconcilable. It was either misleading the Court when it made those
19 statements, or it is misleading it now regarding the “crucial” nature of these documents which it claims to
20 have been trying tirelessly to obtain.
21 C. ECO’s Opposition Evidences That Its Subpoenas Could Easily Be Narrowed
22 ECO takes great pains to muddle its uncomplicated theories. In short, ECO argues that its
23 Subpoenas seek documents that are relevant to admissible evidence including: (1) verifying whether the
24 SIL contribution was made, (2) determining whether payments were legitimate, (3) obtaining certainty
25 concerning the cost of construction, (4) tracing and verifying that ECO’s contribution was spent on
26 Building 1, (5) conducting an accounting of the ReProp loan proceeds, and (6) ferreting out evidence of
27 misappropriation, embezzlement, or commingling. (See Opp. at pp. 8–12.)
28
4
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 ECO’s Subpoenas could easily be narrowed in a way that would permit ECO the discovery it
2 desires while minimizing the intrusion into Objecting Parties’ privacy rights and without prying into the
3 wholly unrelated financial affairs of Objecting Parties that are outside the scope of discovery. The
4 concept is simple: if ECO believes that SIL did not make a contribution, or that payments were not
5 legitimate, or that construction costs are unclear, or that ECO’s contribution was not spent in a certain
6 way, or that the ReProp loan requires an accounting, or that evidence of misappropriation,
7 embezzlement, or commingling exists, then ECO simply needs to ask for documents concerning those
8 concepts. For example:
9 i. Determining Whether or Not the SIL Contribution Was Made and Is Legitimate
10 SIL has already produced a spreadsheet showing where and how the contribution was made,
11 along with copies of cancelled checks and wire/ACH transfer receipts, to substantiate that spreadsheet. If
12 ECO challenges any of those transactions, then it could limit its Subpoenas to seek the financial records
13 pertinent to those transactions.
14 ii. Concerning the Cost of Construction and Determining Whether Payments Were
15 Legitimate
16 SIL previously produced thousands of pages of invoices from vendors along with ACH/wire
17 receipts and cancelled checks showing payments to those vendors. If ECO believes that any of those
18 payments were not made or not legitimate, then it could limit its Subpoenas to seek the financial records
19 pertinent to those transactions.
20 iii. Verifying That ECO’s Contribution Was Spent on Building 1
21 This argument is the biggest red herring of all. There is no dispute that the “ECO Contribution”
22 was paid to the Client Trust Account of SIL’s former counsel (not one of the parties whose records are
23 sought) and that counsel disbursed the funds thereafter. None of the Objecting Parties’ bank records
24 would show the ECO Contribution because the ECO Contribution was not paid directly to any of the
25 Objecting Parties. If ECO believes that SIL’s counsel disbursed any funds to any of the Objecting
26 Parties, then it could limit its Subpoenas to seek the financial records pertinent to those transactions.
27 ///
28 ///
5
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 iv. Conducting an Accounting of the ReProp Loan Proceeds
2 ECO mischaracterizes this Court’s prior Order. (See Singh Decl., Ex. H.) The Court simply
3 ordered David Snider and SIL to account for any of the cash out proceeds from the ReProp 2 Loan that
4 are “currently” in David Snider’s and/or SIL’s possession, if any. The Court did not order an accounting
5 of past uses of those funds. Its Order also had no bearing on the other seven Objecting Parties.
6 In response, David Snider submitted a declaration to the Court stating that he had never received
7 any of the proceeds from the ReProp 2 Loan and that SIL had received a portion of such but had returned
8 all of the cash out proceeds from the ReProp 2 Loan back to ReProp and had caused the ReProp 2 Loan
9 balance to be lowered to the permitted $1,000,000 balance of the ReProp 1 Loan. 2 A true and correct
10 copy of the Declaration of David Snider filed with the Court on May 12, 2021 is attached as Exhibit A
11 and incorporated herein.
12 If ECO does not believe this to be true, then it could propound discovery requests to David Snider
13 asking what the current loan balance is on the ReProp 2 Loan and where the funds which resulted in the
14 reduction of the ReProp 2 Loan balance originated from.
15 v. Ferreting Out Evidence of Misappropriation, Embezzlement, or Commingling
16 ECO has previously received thousands of pages of documents from DHS2, LLC – the only
17 tenant of MEPI and at Building 1 – showing how much rent it has paid for Building 1 to MEPI. Also,
18 ECO has received escrow closing statements and other documentation via subpoena to the escrow
19 company showing where the proceeds from the sale of a portion of Building 1 from MEPI to Fiore were
20 paid. These amounts reflect the entirety of all payments that MEPI has ever received or been entitled to.
21 Any “misappropriation” or “embezzlement” or “commingling” would have arisen from these payments,
22 and ECO could narrow its Subpoenas to cover those payments and/or any transactions between the
23 Objecting Parties and DHS2, LLC or the escrow company, if any.
24 The fact that ECO previously managed to organize and propound more than 3,400 discovery
25 requests demonstrates how benign it would be for ECO to narrow its Subpoenas to cover the handful of
26 categories described above.
27 2
The ReProp 2 Loan refinanced the ReProp 1 Loan and also had cash out proceeds that were paid to
28 SIL. The ReProp 1 Loan of $1,000,000 was expressly authorized in writing by ECO when it signed the
First Amended Operating Agreement for MEPI which specifically authorized that loan.
6
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 Similarly, if “the Subpoenas are essentially to review the financial transactions of one person,
2 Snider, and his various alter egos”, as ECO suggests (Opp. at p. 12), then the Subpoenas could be limited
3 to any transactions between and among those nine entities and individuals 3 as opposed to seeking all
4 bank records of each entity and individual for a five plus year period.
5 D. ECO Misrepresents Counsel’s Prior Statements and Lobs Baseless Accusations
6 Disguised as Facts
7 In the same way that ECO seeks to recast its Subpoenas as merely “two requests,” ECO’s
8 Opposition contains numerous unsupported accusations and baseless assertions.
9 First, ECO baldly proclaims that “[t]here is ample evidence showing Snider created fraudulent
10 documents,” but in support of that assertion, ECO attaches two unauthenticated and unverified exhibits
11 containing purported ReProp documents and simply titles the exhibits as “fake” leases and operating
12 agreements. Nevertheless, simply calling a document that was produced by a third party “fake” does not
13 make it so. There is no authentication from ReProp regarding who created the documents, who received
14 them, from whom they were obtained, or any other foundational prerequisites.
15 ECO’s Opposition does not even attempt to provide a shred of an explanation concerning their
16 foundation, authenticity, what makes the documents “fake,” or in what universe, if any, the documents
17 could plausibly support that “Snider created fraudulent documents.” (Opp. at p. 14.) Instead, ECO
18 simply asserts that the documents constitute “ample evidence” and conveniently titles them with the
19 word “fake.” This conclusory and self-serving argument is entirely without justification and should be
20 afforded no merit.
21 Second, ECO asserts that counsel for Objecting Parties claimed that “none of the documents were
22 discoverable because ‘it is none of your business.’” (Opp. at p. 8, citing Singh Decl. ¶ 19 4.) This
23 statement is not only blatantly false but is also disproven by the written meet and confer letter submitted
24 by counsel for Submitting Parties prior to filing the Motion and which was attached as an exhibit to the
25 underlying Motion. Specifically, Exhibit S to the Motion proposed that “[i]f ECO narrowly tailor[ed] its
26
3
27 The idea that Robin Snider in her trustee capacity of the Snider Family Dynasty Trust could be an “alter
ego” of another individual does not make sense and is a legal fallacy.
28 4
Objecting Parties presume that ECO intended to cite to ¶ 21 of the Singh Decl. rather than ¶ 19.
7
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 Subpoenas in order to seek only those materials that may be directly relevant to the claims or defenses in
2 this case, and for which ECO has a compelling need, then the need for the motion for protective order
3 could be eliminated.” (Declaration of Robert B. Forouzandeh (“Forouzandeh Decl.”), filed in support of
4 Motion, Ex. S at p. 3.) The Declaration also refutes this assertion by declaring that when counsel met
5 and conferred telephonically, “[Forouzandeh] offered several different options and methods by which
6 ECO could narrow the scope of its Subpoenas in order to obtain the information that it seeks that would
7 also be within the permissible scope of discovery and would minimize the intrusion on the Objecting
8 Parties’ privacy rights.” (Forouzandeh Decl. at ¶ 23.)
9 Third, ECO claims that “[i]n its prior rulings, this Court has already ruled Snider entities do not
10 have a fundamental right to privacy and ECO need not show direct relevance for the material sought.”
11 (Opp. at p. 13.) This statement is patently false. As the Court expressly stated in its April 6, 2021 Order,
12 even if entities’ right to privacy is not “fundamental,” the Court acknowledged the legitimate privacy
13 interests in a corporation’s financial affairs in its ruling which ECO conveniently attaches as Exhibit H to
14 its Opposition (but ignores in its argument):
15 The right to privacy has been interpreted by the courts to extend both to individuals and
corporations. See, e.g., Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652,
16 656 (“[T]he right of privacy extends to one’s confidential financial affairs.”); Ameri-
Medical Corporation v. Workers’ Compensation Appeals Board (1996) 42 Cal.App.4th
17 1260, 1287-1288 (“Although corporations have a lesser right to privacy than human
beings . . . some right to privacy exists.”)
18
19 (Singh Decl., Ex. H at p. 5.)
20 Fourth, the cases cited by ECO in support of its assertion that California permits discovery of
21 parties’ and third parties’ financial and bank records are not applicable here. Hecht, Solberg, Robinson,
22 Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579 concerned causation and
23 damages in a legal malpractice case and the relevance of financial information concerning the
24 collectability of an underlying judgment. Playboy Enterprises, Inc. v. Superior Court (1984) 154
25 Cal.App.3d 14 concerned allegations by Cheech & Chong that their former accountants, financial
26 advisors, and business managers persuaded them to enter into an unfavorable contract without disclosing
27 to them that they had a financial interest in the company. There, however, the court’s analysis focused
28 on the applicability of constitutional protection to newspersons. Finally, ECO cites Babcock v. Superior
8
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 Court (1994) 29 Cal.App.4th 721 as illustrative of the principal that California permits discovery of bank
2 records. By ECO’s own admission, however, the court only permitted discovery of 18 months of bank
3 records, as opposed to the five years of bank records sought here. Moreover, Babcock also stands for the
4 proposition that the Court can conduct an in camera review of the bank records where a party seeks to
5 protect the privacy interests of her client. (See id. at p. 727.)
6 Finally, ECO’s citation to these cases is not helpful because Objecting Parties do not assert that
7 banking or financial records can never be subject to discovery. Instead, Objecting Parties are asserting
8 that when discovery of banking or financial records are sought, the discovery method sought must be
9 narrowly tailored to only seek information that is directly relevant to the claims and defenses of the
10 parties to that particular action. ECO’s Subpoenas seek each and every financial transaction of each of
11 the nine Objecting Parties over a five year period – despite the fact that all of them, except MEPI, are
12 regularly transacting business on issues and matters that have nothing to do with MEPI, Building 1, or
13 this dispute.
14 Fifth, the existence of the Protective Order does not broaden the scope of permissible discovery
15 or vitiate the requirement to narrowly tailor discovery requests concerning confidential information.
16 Simply because a protective order is in place does not mean parties are allowed unfettered access to any
17 and all irrelevant and/or confidential information about parties and non-parties alike. As set forth in
18 Section 12.2 of the Protective Order, “By stipulating to the entry of this Protective Order, no Party
19 waives any right it otherwise would have to object to disclosing or producing any information or item on
20 any ground.” (Singh Decl., Ex. Q at p. 12.)
21 Instead, the sole function of the Stipulated Protective Order is to ensure that, in the event
22 confidential information is subject to permissible discovery (i.e. directly relevant), that when that
23 confidential information is produced and/or disclosed, it is subject to the protections set forth in the
24 Protective Order in order to keep that information confidential from public disclosure.
25 III. CONCLUSION
26 ECO’s 18 Subpoenas, which have not been limited or narrowed in any way, are overbroad and
27 seek the discovery of documents and information unrelated to this matter by seeking each and every
28 banking transaction of the Objecting Parties for over a five year period. As a result, the Subpoenas seek
9
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
1 information that is beyond the scope of permissible discovery and unnecessarily violate the Objecting
2 Parties’ rights to privacy and should be quashed for the reasons asserted above. In the alternative, the
3 Discovery Referee should (a) issue a protective order narrowing the scope of these Subpoenas and (b)
4 conduct an in camera review to consider the Objecting Parties’ objections on a document-by-document
5 basis.
6
7 DATED: August 24, 2021 REICKER, PFAU, PYLE & McROY LLP
8
9 By _____________________________________________
Robert B. Forouzandeh
10 Attorneys for Defendants/Cross-Complainants
DAVID SNIDER; SNIDER INVESTMENTS, LLC;
11
SNIDER INTERESTS, LLC; SNIDER FAMILY
12 DYNASTY TRUST; SNIDER FAMILY
DYNASTY TRUST I DATED 5/1/2007;
13 MORONGO EQUITY PARTNERS I, LLC;
MORONGO EQUITY PARTNERS II, LLC
14 And Specially Appearing for Non-Parties
15 MORONGO BUSINESS PARK, INC. and
MILLSIDE CENTRE, LLC
16
17
18
19
20
21
22
23
24
25
26
27
28
10
REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS
OR ALTERNATIVELY FOR A PROTECTIVE ORDER
EXHIBIT A
1 REICKER, PFAU, PYLE & McROY LLP ELECTRONICALLY FILED
1421 State Street, Suite B Superior Court of California
2 Santa Barbara, CA 93101 County of Santa Barbara
Tel (805) 966-2440 Darrel E. Parker, Executive Officer
3 Fax (805) 966-3320 5/12/2021 8:03 PM
Robert B. Forouzandeh (Bar No. 247177) By: Elizabeth Spann, Deputy
4 rforouzandeh@rppmh.com
Kevin Nimmons (Bar No. 261577)
5 knimmons@rppmh.com
Meghan Woodsome (Bar No. 272459)
6 mwoodsome@rppmh.com
7 Attorneys for Defendants SNIDER INVESTMENTS, LLC and DAVID SNIDER
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SANTA BARBARA—ANACAPA DIVISION
10
11 ECO PROPERTY GROUP, LLC, a limited Case No. 19CV04971
liability company, Judge Thomas P. Anderle
12
Plaintiff,
13 v. SUPPLEMENTAL DECLARATION OF
DAVID SNIDER FOR THE
14 SNIDER INVESTMENTS, LLC, a limited ACCOUNTING OF LOAN PROCEEDS
liability company, DAVID SNIDER, an
15 individual, and DOES 1-50 inclusive,
16 Defendants.
____________________________________
17
AND RELATED CROSS ACTION.
18
19
20 I, DAVID B. SNIDER, declare as follows:
21 1. I have personal knowledge of the matters set forth below, except as to matters
22 stated on information and belief, and as to those matters, I believe them to be true.
23 2. At all materials times herein, I have been the Manager of SNIDER
24 INVESTMENTS, LLC ("SIL"), a defendant in this action. I am also personally a defendant in
25 this action.
26 3. On February 23, 2021, the Court ordered that SIL and I provide an accounting
27 of all proceeds, currently in possession of SIL or myself, from the loan dated May 16, 2019, by
28 Reprop Investments, Inc. to Morongo Equity Partners I, LLC ("MEPI") (the "Second Loan")
SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN
PROCEEDS: Page 1
1 which MEPI subsequently distributed a portion of its proceeds to its member SIL ("Loan
2 Proceeds").
3 4. On March 16, 2021, I submitted my initial Declaration accounting for the Loan
4 Proceeds that were at that time believed to be in SIL's possession.
5 5. As indicated therein, due to the fact that only 20% of the Loan Proceeds were
6 segregated at the time of receipt, along with the fact that nearly two years have passed, it was
7 difficult to perform a complete and accurate accounting of what money that SIL still had in its
8 possession that were from the Loan Proceeds.
9 6. As the Court stated in its February 23, 2021 Ruling, the First Amended and
10 Restated Operating Agreement for MEPI ("FAOA"), which Plaintiff contends is the governing
11 document of MEPI, allowed for SIL to cause MEPI to take out a $1,000,000 loan "for the
12 purpose of building a building and all costs associated with the construction, design and
13 financing therewith…" ("First Loan"). The Second Loan was used in part to refinance the First
14 Loan – a construction loan - to a lower interest rate and turn it into permanent financing. The
15 Second Loan's principal balance was $2,500,000, which means that if Plaintiff's position is
16 validated at trial, the excess balance of the Second Loan was $1,500,000 more than what was
17 expressly authorized in the FAOA ("Excess Loan Amount").
18 7. In my prior declaration, I indicated that SIL would be paying down a portion of
19 the Second Loan by $1,055,871.27. Since that time, after further analysis, even though SIL did
20 not believe it was currently in possession of any more of the Loan Proceeds, SIL proceeded to
21 pay down the entire Excess Loan Amount ($1,500,000) on behalf of MEPI, which has resulted
22 in MEPI having its liability on the Second Loan, and also the lien encumbering MEPI's real
23 property, reduced by the entirety of the Excess Loan Amount. In the reasoning for its Order, the
24 Court indicated that "[t]he loss of the proceeds of [the Excess Loan Amount in Second Loan]
25 would hamper MEPI's ability to remove that encumbrance and put the property at risk." That
26 risk has now been eliminated.
27 8. By returning the entirety of the Excess Loan Amount to the lender to pay off the
28 entirety of the Excess Loan Amount on behalf of MEPI, the encumbrance on MEPI's real
SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN
PROCEEDS: Page 2
1 property has been reduced by the entire Excess Loan Amount and the new principal balance of
2 the Second Loan is $1,000,000 which matches the authorized loan amount set forth in the
3 FAOA. Having done this, there is now no chance that the Excess Loan Amount can be lost
4 and/or not reduced from MEPI's liability on the Second Loan. Accordingly, MEPI has not and
5 will not be harmed in any way by the fact that the Second Loan was initially taken out in excess
6 of the $1,000,000 principal amount of the First Loan which was an amount expressly authorized
7 under the FAOA.
8 9. SIL still contends that the FAOA is invalid because it was rescinded and that
9 MEPI's initial taking out of the full amount of the Second Loan and paying out the Excess Loan
10 Amount to SIL as a member distribution was proper in light of SIL's rescission of the FAOA at
11 issue in this case. Nonetheless, without admitting any liability, SIL is providing the
12 consideration above in an abundance of caution and out of deference to this Court's February
13 23, 2021 Ruling.
14 I declare under penalty of perjury under the laws of the State of California that the
15 foregoing is true and correct.
16
17 Dated: May 6, 2021
18 ________________________________
David B. Snider
19
20
21
22
23
24
25
26
27
28
SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN
PROCEEDS: Page 3
1 PROOF OF SERVICE
2 STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA
3
I am employed in the County of Santa Barbara, State of California. I am over the age of
4 18 and not a party to the within action; my business address is 1421 State Street, Suite B, Santa
Barbara, California 93101.
5
On May 12, 2021, I served the following document described as SUPPLEMENTAL
6 DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN PROCEEDS on
the interested parties in this action as follows:
7
8 SEE ATTACHED SERVICE LIST
9 by electronic transmission to the email addresses listed above or on the
attached service list. The transmission of which was completed without
10 error.
11 by placing the document listed above in a sealed envelope with postage
thereon fully prepaid, in the United States mail at Santa Barbara,
12 California addressed as set forth above or on the attached service list.
by causing personal delivery of the document listed above to the person
13 at the address as set forth above or on the attached service list.
14 by placing the document listed above in a sealed envelope and depositing
the original thereof in a box or other facility regularly maintained by the
15 express service carrier, or by delivering it to an authorized courier or
driver authorized by the express service carrier to receive documents, in
16 an envelope or package designated by the express carrier with delivery
fees paid or provided for to the address listed above or on the attached
17 service list.
by placing the document listed above in a sealed envelope with postage
18 thereon fully prepaid, in the United States Mail at Santa Barbara,
California at the address list above or on the attached service list. I am
19 readily familiar with the firm's practice of collection and processing
correspondence for mailing. Under that practice, it would be deposited
20 with U.S. postal service on that same day with postage thereon fully
prepaid at Santa Barbara, California in the ordinary course of business. I
21 am aware that on motion of the party served, service is presumed invalid
if postal cancellation date or postage meter date is more than one day
22 after date of deposit for mailing in affidavit.
23
I declare under penalty of perjury under the laws of the State of California that the
24 foregoing is true and correct. Executed on May 12, 2021, at Santa Barbara, California.
25 ___________________________________
Catrine Casper
26
27
28
1 SERVICE LIST
2
Shahrokh Sheik Jason D. Annigan
3
Charanjit Singh James T. Ryan
4 Weinberg Gonser LLP Annigian Ryan LLP
10866 Wilshire Boulevard, Suite 1650 114 North Indian Hill Boulevard, Suite E
5 Los Angeles, CA 90024 Claremont, CA 91711
shahrokh@weinberg-gonser.com jason@arllp.com
6 charanjit@weinberg-gonser.com jr@arllp.com
7 debora@weinberg-gonser.com
8
Nathan C. Rogers Howard Hall
9 Rogers Sheffield & Campbell, LLP Taylor Dalton
427 East Carrillo Street Hall Griffin
10 Santa Barbara, CA 93101 1851 East First Street, 10th Floor
11 nathan@rogerssheffield.com Santa Ana, CA 92705-4052
hdhall@hallgriffin.com
12 tdalton@hallgriffin.com
13
John Armstrong
14 Armstrong Law Group
23232 Peralta Drive
15 Suite 102
Laguna Hills, CA 92653
16 john@armstronglaw.group
17
18
19
20
21
22
23
24
25
26
27
28
1 PROOF OF SERVICE
2 STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA
3
I am employed in the County of Santa Barbara, State of California. I am over the age of 18 and
4 not a party to the within action; my business address is 1421 State Street, Suite B, Santa Barbara,
California 93101.
5
On August 24, 2021, I served the following document described as: REPLY TO OPPOSITION
6 TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE
ORDER on the interested parties in this action as follows:
7
8 SEE ATTACHED SERVICE LIST.
9 by electronic transmission to the email addresses listed above or on the
attached service list. The transmission of which was completed without
10 error.
11 by placing the document listed above in a sealed envelope with postage
thereon fully prepaid, in the United States mail at Santa Barbara,
12 California addressed as set forth above or on the attached service list.
by causing personal delivery of the document listed above to the person
13 at the address as set forth above or on the attached service list.
14 by placing the document listed above in a sealed envelope and
depositing the original thereof in a box or other facility regularly
15 maintained by the express service carrier, or by delivering it to an
authorized courier or driver authorized by the express service carrier to
16 receive documents, in an envelope or package designated by the express
carrier with delivery fees paid or provided for to the address listed above
17 or on the attached service list.
by placing the document listed above in a sealed envelope with postage
18 thereon fully prepaid, in the United States Mail at Santa Barbara,
California at the address list above or on the attached service list. I am
19 readily familiar with the firm’s practice of collection and processing
correspondence for mailing. Under that practice, it would be deposited
20 with U.S. postal service on that same day with postage thereon fully
prepaid at Santa Barbara, California in the ordinary course of business. I
21 am aware that on motion of the party served, service is presumed invalid
if postal cancellation date or postage meter date is more than one day
22 after date of deposit for mailing in affidavit.
23
I declare under penalty of perjury under the laws of the State of California that the foregoing is
24 true and correct. Executed on August 24, 2021, at Santa Barbara, California.
25
___________________________________
26 Catrine Casper
27
28
1 SERVICE LIST
2 BY EMAIL:
3
Shahrokh Sheik Jason D. Annigan
4 Charanjit Singh James T. Ryan
Weinberg Gonser LLP Annigian Ryan LLP
5 10866 Wilshire Boulevard, Suite 1650 114 North Indian Hill Boulevard, Suite E
Los Angeles, CA 90024 Claremont, CA 91711
6 shahrokh@weinberg-gonser.com jason@arllp.com
7 charanjit@weinberg-gonser.com jr@arllp.com
debora@weinberg-gonser.com
8
Nathan C. Rogers Howard Hall
9 Rogers Sheffield & Campbell, LLP Taylor Dalton
427 East Carrillo Street Hall Griffin
10
Santa Barbara, CA 93101 1851 East First Street, 10th Floor
11 nathan@rogerssheffield.com Santa Ana, CA 92705-4052
hdhall@hallgriffin.com
12 tdalton@hallgriffin.com
13 John Armstrong
Armstrong Law Group
14
23232 Peralta Drive, Suite 102
15 Laguna Hills, CA 92653
john@armstronglaw.group
16
17 BY EMAIL, with courtesy copy by U.S. MAIL:
18
RA Carrington
19 565 Sheffield Drive, Ste 1
Santa Barbara, CA 93108
20 ratc@cox.net
21
22
23
24
25
26
27
28
Preview
ELECTRONICALLY FILED Superior Court of California County of Santa Barbara 1 REICKER, PFAU, PYLE & McROY LLP 1421 State Street, Suite B Darrel E. Parker, Executive Officer 2 Santa Barbara, CA 93101 8/24/2021 6:24 PM Tel (805) 966-2440 By: Narzralli Baksh, Deputy 3 Fax (805) 966-3320 Robert B. Forouzandeh, State Bar No. 247177 4 rforouzandeh@rppmh.com 5 Attorneys for Defendants/Cross-Complainants DAVID SNIDER; SNIDER INVESTMENTS, LLC; SNIDER INTERESTS, LLC; SNIDER FAMILY DYNASTY TRUST; SNIDER FAMILY DYNASTY 6 TRUST I DATED 5/1/2007; MORONGO EQUITY PARTNERS I, LLC; MORONGO EQUITY PARTNERS II, LLC; And Specially Appearing for Non-Parties MORONGO BUSINESS PARK, INC. 7 and MILLSIDE CENTRE, LLC 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SANTA BARBARA—ANACAPA DIVISION 10 ECO PROPERTY GROUP, LLC, a limited Case No. 19CV04971 liability company, Judge Thomas P. Anderle 11 Plaintiff, REPLY TO OPPOSITION TO MOTION TO 12 v. QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE 13 SNIDER INVESTMENTS, LLC, a limited ORDER liability company, DAVID SNIDER, an 14 individual, and DOES 1-50 inclusive, Date: August 31, 2021 Time: 10:00 a.m. 15 Defendants. Dept: 4 ________________________________________ 16 Discovery Disputes Assigned to R.A. Carrington; AND RELATED CROSS ACTIONS. Oral Argument on August 31, 2021 at 8:00 a.m. 17 18 19 Defendants David Snider; Snider Investments, LLC (“SIL”); Snider Interests, LLC; Robin Snider, 20 as Trustee of the Snider Family Dynasty Trust and the Snider Family Dynasty Trust I dated 5/1/2007; 21 Morongo Equity Partners I, LLC (“MEPI”); Morongo Equity Partners II, LLC (“MEPII”) and specially 22 appearing non-parties, Morongo Business Park, Inc. (“MBI”) and Millside Centre, LLC (“MCL”) (MBI 23 and MCL are collectively referred to as “Non-Party Objectors” and all moving parties are collectively 24 referred to as “Objecting Parties”) submit this Reply to ECO Property Group, LLC's (“ECO”) Opposition 25 to Objecting Parties’ Motion to Quash Subpoenas or Alternatively for a Protective Order. 1 26 1 At the parties’ July 6, 2021 Case Management Conference, the Court appointed Discovery Referee R.A. 27 Carrington but authorized the present Motion to be filed in order to halt the third party production until this Motion could be decided. This Motion and all related pleadings have been submitted to Mr. 28 Carrington, who is set to hear oral argument on this matter on August 31, 2021. ECO’s Opposition and this Reply are simply being filed with the Court since the original Motion was also filed. 1 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 I. INTRODUCTION 2 ECO’s Opposition does nothing to justify the unreasonable and oppressive nature of its 3 Subpoenas which would effect a dramatic invasion of various parties’ and non-parties’ financial privacy. 4 First, ECO’s Opposition mischaracterizes its 18 Subpoenas by repeatedly suggesting that it 5 merely seeks records from “two banks.” (See Opp. at p. 5:7-8, 7:24-25, 8:12-13.) Nevertheless, ECO’s 6 bubblegum portrayal is betrayed by Exhibits A–R to the Motion which contain the 18 distinct Subpoenas 7 propounded seeking the entirety of the financial and bank records of nine separate entities and 8 individuals over a five year period. 9 Second, conspicuously absent from ECO’s Opposition is any attempted explanation for ECO’s 10 prior blatant misstatements to the Court that “[t]he majority of written discovery has already been 11 conducted” and that “Plaintiff’s remaining written discovery will be limited to follow up on prior 12 production and general building II cost and sale information, all of which will be substantially limited in 13 scope and breadth and targeted to relevant and material information.” (Mar. 24, 2021 ECO Case Mgmt. 14 Stmt. at p. 2, italics added and underline original.) Despite telling the Court that discovery was all but 15 finished, ECO’s entire Opposition is devoted to hand-wringing concerning its “thwarted” discovery 16 efforts and imploring that it “has been denied access to crucial financial information for nearly two 17 years.” (Opp. at p. 7.) ECO was either misleading the Court then, or it is doing so now. 18 Third, ECO’s legal arguments demonstrate that its Subpoenas could easily be narrowed in a way 19 that would permit ECO the discovery it desires while minimizing the intrusion into Objecting Parties’ 20 privacy rights and without prying into wholly unrelated financial affairs outside the scope of discovery. 21 If ECO’s arguments concerning the relevance of the financial information are legitimate, then at a 22 minimum, ECO’s Subpoenas could be quickly and easily narrowed to capture only those transactions 23 between and among the Objecting Parties which are related to MEPI and/or Building 1. In fact, seven of 24 the nine objecting parties have no interest in or relation to MEPI, ECO, or Building 1 – they conduct 25 business on wholly unrelated ventures and properties – yet ECO somehow believes their confidential 26 financial records are fair game without any restriction whatsoever. 27 Fourth, ECO’s Opposition is premised upon lobbing unsupported accusations and baseless 28 assertions and misstating the Court’s prior rulings. 2 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 Accordingly, the Objecting Parties respectfully request the Discovery Referee quash these 2 Subpoenas, or in the alternative, that the Discovery Referee (a) issue a protective order narrowing the 3 scope of these Subpoenas and (b) conduct an in camera review to consider the Objecting Parties’ 4 objections on a document-by-document basis. 5 II. ARGUMENT 6 A. Even if ECO’s 18 Subpoenas Implicate Two Banks, the 18 Subpoenas Are Overbroad 7 and Not Reasonably Calculated to Lead to Discovery of Admissible Evidence 8 ECO cannot sweep away the unreasonable breadth of its Subpoenas by recasting them as seeking 9 records from “two banks.” (See Opp. at p. 5:7-8, 7:24-25, 8:12-13.) Although the Subpoenas happen to 10 be directed to Wells Fargo and US Bank, ECO demands that those two banks produce all documents in 11 the banks’ possession concerning nine separate and distinct individuals and legal entities. And ECO’s 12 definition of documents is unbound by logic or reason by requesting documents “including but not 13 limited to monthly statements, account records, wire transfer documents, debit and credit memos, deposit 14 statements, withdrawal statements, and credit or debit card statements reflecting banking activities, 15 including but not limited to deposits, withdrawals, or wire/online transfers for the savings and checking 16 accounts held by [individual or entity] from 2016 to the present.” (See Motion Exs. A–R.) In effect, 17 ECO is asking to see each and every financial transaction carried out by these nine individuals and 18 entities over a five year period. 19 ECO’s Subpoenas are not given credit by virtue of the fact that these nine distinct individuals and 20 entities happen to use similar banks. ECO’s argument is premised on the idea that its 18 Subpoenas on 21 parties and non-parties are necessarily reasonable simply because they are served only on two financial 22 institutions. By that logic, a party could subpoena the bank records of 18 Chase customers and claim that 23 its 18 Subpoenas were reasonable because they were only served on one bank. ECO’s Subpoenas are 24 improper because their scope is overbroad, not because of the number of banks that were targeted or the 25 requests that were submitted. 26 /// 27 /// 28 /// 3 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 B. ECO Talks Out of Both Sides of Its Mouth Concerning Its Compelling Need for 2 Discovery 3 Either ECO’s arguments in its Opposition are fictitious, or ECO was misleading the Court when 4 it told the Court that “[t]he majority of written discovery has already been conducted” and that 5 “Plaintiff’s remaining written discovery will be limited to follow up on prior production and general 6 building II cost and sale information, all of which will be substantially limited in scope and breadth and 7 targeted to relevant and material information.” (Mar. 24, 2021 ECO Case Mgmt. Stmt. at p. 2, underline 8 original.) 9 Choosing the ostrich approach, ECO’s Opposition makes no attempt to explain its prior 10 misrepresentations and, instead, argues that it has been deprived of this “crucial financial information for 11 nearly two years.” (Opp. at p. 7.) ECO claims that it has “a compelling need for these documents 12 because [it] cannot properly prepare for trial or potential settlement without them.” (Opp. at p. 5.) ECO 13 goes so far as to assert that “there cannot be a fair resolution of the lawsuit” unless it obtains five years’ 14 worth of financial and bank records from these nine parties and non-parties, even though ECO told the 15 Court just a few months ago that “[t]he majority of written discovery has already been conducted” and 16 that any remaining discovery would be “substantially limited in scope and breadth.” (Mar. 24, 2021 17 ECO Case Mgmt. Stmt. at p. 2.) 18 ECO’s statements are irreconcilable. It was either misleading the Court when it made those 19 statements, or it is misleading it now regarding the “crucial” nature of these documents which it claims to 20 have been trying tirelessly to obtain. 21 C. ECO’s Opposition Evidences That Its Subpoenas Could Easily Be Narrowed 22 ECO takes great pains to muddle its uncomplicated theories. In short, ECO argues that its 23 Subpoenas seek documents that are relevant to admissible evidence including: (1) verifying whether the 24 SIL contribution was made, (2) determining whether payments were legitimate, (3) obtaining certainty 25 concerning the cost of construction, (4) tracing and verifying that ECO’s contribution was spent on 26 Building 1, (5) conducting an accounting of the ReProp loan proceeds, and (6) ferreting out evidence of 27 misappropriation, embezzlement, or commingling. (See Opp. at pp. 8–12.) 28 4 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 ECO’s Subpoenas could easily be narrowed in a way that would permit ECO the discovery it 2 desires while minimizing the intrusion into Objecting Parties’ privacy rights and without prying into the 3 wholly unrelated financial affairs of Objecting Parties that are outside the scope of discovery. The 4 concept is simple: if ECO believes that SIL did not make a contribution, or that payments were not 5 legitimate, or that construction costs are unclear, or that ECO’s contribution was not spent in a certain 6 way, or that the ReProp loan requires an accounting, or that evidence of misappropriation, 7 embezzlement, or commingling exists, then ECO simply needs to ask for documents concerning those 8 concepts. For example: 9 i. Determining Whether or Not the SIL Contribution Was Made and Is Legitimate 10 SIL has already produced a spreadsheet showing where and how the contribution was made, 11 along with copies of cancelled checks and wire/ACH transfer receipts, to substantiate that spreadsheet. If 12 ECO challenges any of those transactions, then it could limit its Subpoenas to seek the financial records 13 pertinent to those transactions. 14 ii. Concerning the Cost of Construction and Determining Whether Payments Were 15 Legitimate 16 SIL previously produced thousands of pages of invoices from vendors along with ACH/wire 17 receipts and cancelled checks showing payments to those vendors. If ECO believes that any of those 18 payments were not made or not legitimate, then it could limit its Subpoenas to seek the financial records 19 pertinent to those transactions. 20 iii. Verifying That ECO’s Contribution Was Spent on Building 1 21 This argument is the biggest red herring of all. There is no dispute that the “ECO Contribution” 22 was paid to the Client Trust Account of SIL’s former counsel (not one of the parties whose records are 23 sought) and that counsel disbursed the funds thereafter. None of the Objecting Parties’ bank records 24 would show the ECO Contribution because the ECO Contribution was not paid directly to any of the 25 Objecting Parties. If ECO believes that SIL’s counsel disbursed any funds to any of the Objecting 26 Parties, then it could limit its Subpoenas to seek the financial records pertinent to those transactions. 27 /// 28 /// 5 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 iv. Conducting an Accounting of the ReProp Loan Proceeds 2 ECO mischaracterizes this Court’s prior Order. (See Singh Decl., Ex. H.) The Court simply 3 ordered David Snider and SIL to account for any of the cash out proceeds from the ReProp 2 Loan that 4 are “currently” in David Snider’s and/or SIL’s possession, if any. The Court did not order an accounting 5 of past uses of those funds. Its Order also had no bearing on the other seven Objecting Parties. 6 In response, David Snider submitted a declaration to the Court stating that he had never received 7 any of the proceeds from the ReProp 2 Loan and that SIL had received a portion of such but had returned 8 all of the cash out proceeds from the ReProp 2 Loan back to ReProp and had caused the ReProp 2 Loan 9 balance to be lowered to the permitted $1,000,000 balance of the ReProp 1 Loan. 2 A true and correct 10 copy of the Declaration of David Snider filed with the Court on May 12, 2021 is attached as Exhibit A 11 and incorporated herein. 12 If ECO does not believe this to be true, then it could propound discovery requests to David Snider 13 asking what the current loan balance is on the ReProp 2 Loan and where the funds which resulted in the 14 reduction of the ReProp 2 Loan balance originated from. 15 v. Ferreting Out Evidence of Misappropriation, Embezzlement, or Commingling 16 ECO has previously received thousands of pages of documents from DHS2, LLC – the only 17 tenant of MEPI and at Building 1 – showing how much rent it has paid for Building 1 to MEPI. Also, 18 ECO has received escrow closing statements and other documentation via subpoena to the escrow 19 company showing where the proceeds from the sale of a portion of Building 1 from MEPI to Fiore were 20 paid. These amounts reflect the entirety of all payments that MEPI has ever received or been entitled to. 21 Any “misappropriation” or “embezzlement” or “commingling” would have arisen from these payments, 22 and ECO could narrow its Subpoenas to cover those payments and/or any transactions between the 23 Objecting Parties and DHS2, LLC or the escrow company, if any. 24 The fact that ECO previously managed to organize and propound more than 3,400 discovery 25 requests demonstrates how benign it would be for ECO to narrow its Subpoenas to cover the handful of 26 categories described above. 27 2 The ReProp 2 Loan refinanced the ReProp 1 Loan and also had cash out proceeds that were paid to 28 SIL. The ReProp 1 Loan of $1,000,000 was expressly authorized in writing by ECO when it signed the First Amended Operating Agreement for MEPI which specifically authorized that loan. 6 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 Similarly, if “the Subpoenas are essentially to review the financial transactions of one person, 2 Snider, and his various alter egos”, as ECO suggests (Opp. at p. 12), then the Subpoenas could be limited 3 to any transactions between and among those nine entities and individuals 3 as opposed to seeking all 4 bank records of each entity and individual for a five plus year period. 5 D. ECO Misrepresents Counsel’s Prior Statements and Lobs Baseless Accusations 6 Disguised as Facts 7 In the same way that ECO seeks to recast its Subpoenas as merely “two requests,” ECO’s 8 Opposition contains numerous unsupported accusations and baseless assertions. 9 First, ECO baldly proclaims that “[t]here is ample evidence showing Snider created fraudulent 10 documents,” but in support of that assertion, ECO attaches two unauthenticated and unverified exhibits 11 containing purported ReProp documents and simply titles the exhibits as “fake” leases and operating 12 agreements. Nevertheless, simply calling a document that was produced by a third party “fake” does not 13 make it so. There is no authentication from ReProp regarding who created the documents, who received 14 them, from whom they were obtained, or any other foundational prerequisites. 15 ECO’s Opposition does not even attempt to provide a shred of an explanation concerning their 16 foundation, authenticity, what makes the documents “fake,” or in what universe, if any, the documents 17 could plausibly support that “Snider created fraudulent documents.” (Opp. at p. 14.) Instead, ECO 18 simply asserts that the documents constitute “ample evidence” and conveniently titles them with the 19 word “fake.” This conclusory and self-serving argument is entirely without justification and should be 20 afforded no merit. 21 Second, ECO asserts that counsel for Objecting Parties claimed that “none of the documents were 22 discoverable because ‘it is none of your business.’” (Opp. at p. 8, citing Singh Decl. ¶ 19 4.) This 23 statement is not only blatantly false but is also disproven by the written meet and confer letter submitted 24 by counsel for Submitting Parties prior to filing the Motion and which was attached as an exhibit to the 25 underlying Motion. Specifically, Exhibit S to the Motion proposed that “[i]f ECO narrowly tailor[ed] its 26 3 27 The idea that Robin Snider in her trustee capacity of the Snider Family Dynasty Trust could be an “alter ego” of another individual does not make sense and is a legal fallacy. 28 4 Objecting Parties presume that ECO intended to cite to ¶ 21 of the Singh Decl. rather than ¶ 19. 7 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 Subpoenas in order to seek only those materials that may be directly relevant to the claims or defenses in 2 this case, and for which ECO has a compelling need, then the need for the motion for protective order 3 could be eliminated.” (Declaration of Robert B. Forouzandeh (“Forouzandeh Decl.”), filed in support of 4 Motion, Ex. S at p. 3.) The Declaration also refutes this assertion by declaring that when counsel met 5 and conferred telephonically, “[Forouzandeh] offered several different options and methods by which 6 ECO could narrow the scope of its Subpoenas in order to obtain the information that it seeks that would 7 also be within the permissible scope of discovery and would minimize the intrusion on the Objecting 8 Parties’ privacy rights.” (Forouzandeh Decl. at ¶ 23.) 9 Third, ECO claims that “[i]n its prior rulings, this Court has already ruled Snider entities do not 10 have a fundamental right to privacy and ECO need not show direct relevance for the material sought.” 11 (Opp. at p. 13.) This statement is patently false. As the Court expressly stated in its April 6, 2021 Order, 12 even if entities’ right to privacy is not “fundamental,” the Court acknowledged the legitimate privacy 13 interests in a corporation’s financial affairs in its ruling which ECO conveniently attaches as Exhibit H to 14 its Opposition (but ignores in its argument): 15 The right to privacy has been interpreted by the courts to extend both to individuals and corporations. See, e.g., Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 16 656 (“[T]he right of privacy extends to one’s confidential financial affairs.”); Ameri- Medical Corporation v. Workers’ Compensation Appeals Board (1996) 42 Cal.App.4th 17 1260, 1287-1288 (“Although corporations have a lesser right to privacy than human beings . . . some right to privacy exists.”) 18 19 (Singh Decl., Ex. H at p. 5.) 20 Fourth, the cases cited by ECO in support of its assertion that California permits discovery of 21 parties’ and third parties’ financial and bank records are not applicable here. Hecht, Solberg, Robinson, 22 Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579 concerned causation and 23 damages in a legal malpractice case and the relevance of financial information concerning the 24 collectability of an underlying judgment. Playboy Enterprises, Inc. v. Superior Court (1984) 154 25 Cal.App.3d 14 concerned allegations by Cheech & Chong that their former accountants, financial 26 advisors, and business managers persuaded them to enter into an unfavorable contract without disclosing 27 to them that they had a financial interest in the company. There, however, the court’s analysis focused 28 on the applicability of constitutional protection to newspersons. Finally, ECO cites Babcock v. Superior 8 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 Court (1994) 29 Cal.App.4th 721 as illustrative of the principal that California permits discovery of bank 2 records. By ECO’s own admission, however, the court only permitted discovery of 18 months of bank 3 records, as opposed to the five years of bank records sought here. Moreover, Babcock also stands for the 4 proposition that the Court can conduct an in camera review of the bank records where a party seeks to 5 protect the privacy interests of her client. (See id. at p. 727.) 6 Finally, ECO’s citation to these cases is not helpful because Objecting Parties do not assert that 7 banking or financial records can never be subject to discovery. Instead, Objecting Parties are asserting 8 that when discovery of banking or financial records are sought, the discovery method sought must be 9 narrowly tailored to only seek information that is directly relevant to the claims and defenses of the 10 parties to that particular action. ECO’s Subpoenas seek each and every financial transaction of each of 11 the nine Objecting Parties over a five year period – despite the fact that all of them, except MEPI, are 12 regularly transacting business on issues and matters that have nothing to do with MEPI, Building 1, or 13 this dispute. 14 Fifth, the existence of the Protective Order does not broaden the scope of permissible discovery 15 or vitiate the requirement to narrowly tailor discovery requests concerning confidential information. 16 Simply because a protective order is in place does not mean parties are allowed unfettered access to any 17 and all irrelevant and/or confidential information about parties and non-parties alike. As set forth in 18 Section 12.2 of the Protective Order, “By stipulating to the entry of this Protective Order, no Party 19 waives any right it otherwise would have to object to disclosing or producing any information or item on 20 any ground.” (Singh Decl., Ex. Q at p. 12.) 21 Instead, the sole function of the Stipulated Protective Order is to ensure that, in the event 22 confidential information is subject to permissible discovery (i.e. directly relevant), that when that 23 confidential information is produced and/or disclosed, it is subject to the protections set forth in the 24 Protective Order in order to keep that information confidential from public disclosure. 25 III. CONCLUSION 26 ECO’s 18 Subpoenas, which have not been limited or narrowed in any way, are overbroad and 27 seek the discovery of documents and information unrelated to this matter by seeking each and every 28 banking transaction of the Objecting Parties for over a five year period. As a result, the Subpoenas seek 9 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER 1 information that is beyond the scope of permissible discovery and unnecessarily violate the Objecting 2 Parties’ rights to privacy and should be quashed for the reasons asserted above. In the alternative, the 3 Discovery Referee should (a) issue a protective order narrowing the scope of these Subpoenas and (b) 4 conduct an in camera review to consider the Objecting Parties’ objections on a document-by-document 5 basis. 6 7 DATED: August 24, 2021 REICKER, PFAU, PYLE & McROY LLP 8 9 By _____________________________________________ Robert B. Forouzandeh 10 Attorneys for Defendants/Cross-Complainants DAVID SNIDER; SNIDER INVESTMENTS, LLC; 11 SNIDER INTERESTS, LLC; SNIDER FAMILY 12 DYNASTY TRUST; SNIDER FAMILY DYNASTY TRUST I DATED 5/1/2007; 13 MORONGO EQUITY PARTNERS I, LLC; MORONGO EQUITY PARTNERS II, LLC 14 And Specially Appearing for Non-Parties 15 MORONGO BUSINESS PARK, INC. and MILLSIDE CENTRE, LLC 16 17 18 19 20 21 22 23 24 25 26 27 28 10 REPLY TO OPPOSITION TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER EXHIBIT A 1 REICKER, PFAU, PYLE & McROY LLP ELECTRONICALLY FILED 1421 State Street, Suite B Superior Court of California 2 Santa Barbara, CA 93101 County of Santa Barbara Tel (805) 966-2440 Darrel E. Parker, Executive Officer 3 Fax (805) 966-3320 5/12/2021 8:03 PM Robert B. Forouzandeh (Bar No. 247177) By: Elizabeth Spann, Deputy 4 rforouzandeh@rppmh.com Kevin Nimmons (Bar No. 261577) 5 knimmons@rppmh.com Meghan Woodsome (Bar No. 272459) 6 mwoodsome@rppmh.com 7 Attorneys for Defendants SNIDER INVESTMENTS, LLC and DAVID SNIDER 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SANTA BARBARA—ANACAPA DIVISION 10 11 ECO PROPERTY GROUP, LLC, a limited Case No. 19CV04971 liability company, Judge Thomas P. Anderle 12 Plaintiff, 13 v. SUPPLEMENTAL DECLARATION OF DAVID SNIDER FOR THE 14 SNIDER INVESTMENTS, LLC, a limited ACCOUNTING OF LOAN PROCEEDS liability company, DAVID SNIDER, an 15 individual, and DOES 1-50 inclusive, 16 Defendants. ____________________________________ 17 AND RELATED CROSS ACTION. 18 19 20 I, DAVID B. SNIDER, declare as follows: 21 1. I have personal knowledge of the matters set forth below, except as to matters 22 stated on information and belief, and as to those matters, I believe them to be true. 23 2. At all materials times herein, I have been the Manager of SNIDER 24 INVESTMENTS, LLC ("SIL"), a defendant in this action. I am also personally a defendant in 25 this action. 26 3. On February 23, 2021, the Court ordered that SIL and I provide an accounting 27 of all proceeds, currently in possession of SIL or myself, from the loan dated May 16, 2019, by 28 Reprop Investments, Inc. to Morongo Equity Partners I, LLC ("MEPI") (the "Second Loan") SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN PROCEEDS: Page 1 1 which MEPI subsequently distributed a portion of its proceeds to its member SIL ("Loan 2 Proceeds"). 3 4. On March 16, 2021, I submitted my initial Declaration accounting for the Loan 4 Proceeds that were at that time believed to be in SIL's possession. 5 5. As indicated therein, due to the fact that only 20% of the Loan Proceeds were 6 segregated at the time of receipt, along with the fact that nearly two years have passed, it was 7 difficult to perform a complete and accurate accounting of what money that SIL still had in its 8 possession that were from the Loan Proceeds. 9 6. As the Court stated in its February 23, 2021 Ruling, the First Amended and 10 Restated Operating Agreement for MEPI ("FAOA"), which Plaintiff contends is the governing 11 document of MEPI, allowed for SIL to cause MEPI to take out a $1,000,000 loan "for the 12 purpose of building a building and all costs associated with the construction, design and 13 financing therewith…" ("First Loan"). The Second Loan was used in part to refinance the First 14 Loan – a construction loan - to a lower interest rate and turn it into permanent financing. The 15 Second Loan's principal balance was $2,500,000, which means that if Plaintiff's position is 16 validated at trial, the excess balance of the Second Loan was $1,500,000 more than what was 17 expressly authorized in the FAOA ("Excess Loan Amount"). 18 7. In my prior declaration, I indicated that SIL would be paying down a portion of 19 the Second Loan by $1,055,871.27. Since that time, after further analysis, even though SIL did 20 not believe it was currently in possession of any more of the Loan Proceeds, SIL proceeded to 21 pay down the entire Excess Loan Amount ($1,500,000) on behalf of MEPI, which has resulted 22 in MEPI having its liability on the Second Loan, and also the lien encumbering MEPI's real 23 property, reduced by the entirety of the Excess Loan Amount. In the reasoning for its Order, the 24 Court indicated that "[t]he loss of the proceeds of [the Excess Loan Amount in Second Loan] 25 would hamper MEPI's ability to remove that encumbrance and put the property at risk." That 26 risk has now been eliminated. 27 8. By returning the entirety of the Excess Loan Amount to the lender to pay off the 28 entirety of the Excess Loan Amount on behalf of MEPI, the encumbrance on MEPI's real SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN PROCEEDS: Page 2 1 property has been reduced by the entire Excess Loan Amount and the new principal balance of 2 the Second Loan is $1,000,000 which matches the authorized loan amount set forth in the 3 FAOA. Having done this, there is now no chance that the Excess Loan Amount can be lost 4 and/or not reduced from MEPI's liability on the Second Loan. Accordingly, MEPI has not and 5 will not be harmed in any way by the fact that the Second Loan was initially taken out in excess 6 of the $1,000,000 principal amount of the First Loan which was an amount expressly authorized 7 under the FAOA. 8 9. SIL still contends that the FAOA is invalid because it was rescinded and that 9 MEPI's initial taking out of the full amount of the Second Loan and paying out the Excess Loan 10 Amount to SIL as a member distribution was proper in light of SIL's rescission of the FAOA at 11 issue in this case. Nonetheless, without admitting any liability, SIL is providing the 12 consideration above in an abundance of caution and out of deference to this Court's February 13 23, 2021 Ruling. 14 I declare under penalty of perjury under the laws of the State of California that the 15 foregoing is true and correct. 16 17 Dated: May 6, 2021 18 ________________________________ David B. Snider 19 20 21 22 23 24 25 26 27 28 SUPPLEMENTAL DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN PROCEEDS: Page 3 1 PROOF OF SERVICE 2 STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA 3 I am employed in the County of Santa Barbara, State of California. I am over the age of 4 18 and not a party to the within action; my business address is 1421 State Street, Suite B, Santa Barbara, California 93101. 5 On May 12, 2021, I served the following document described as SUPPLEMENTAL 6 DECLARATION OF DAVID SNIDER RE: ACCOUNTING OF LOAN PROCEEDS on the interested parties in this action as follows: 7 8 SEE ATTACHED SERVICE LIST 9 by electronic transmission to the email addresses listed above or on the attached service list. The transmission of which was completed without 10 error. 11 by placing the document listed above in a sealed envelope with postage thereon fully prepaid, in the United States mail at Santa Barbara, 12 California addressed as set forth above or on the attached service list. by causing personal delivery of the document listed above to the person 13 at the address as set forth above or on the attached service list. 14 by placing the document listed above in a sealed envelope and depositing the original thereof in a box or other facility regularly maintained by the 15 express service carrier, or by delivering it to an authorized courier or driver authorized by the express service carrier to receive documents, in 16 an envelope or package designated by the express carrier with delivery fees paid or provided for to the address listed above or on the attached 17 service list. by placing the document listed above in a sealed envelope with postage 18 thereon fully prepaid, in the United States Mail at Santa Barbara, California at the address list above or on the attached service list. I am 19 readily familiar with the firm's practice of collection and processing correspondence for mailing. Under that practice, it would be deposited 20 with U.S. postal service on that same day with postage thereon fully prepaid at Santa Barbara, California in the ordinary course of business. I 21 am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day 22 after date of deposit for mailing in affidavit. 23 I declare under penalty of perjury under the laws of the State of California that the 24 foregoing is true and correct. Executed on May 12, 2021, at Santa Barbara, California. 25 ___________________________________ Catrine Casper 26 27 28 1 SERVICE LIST 2 Shahrokh Sheik Jason D. Annigan 3 Charanjit Singh James T. Ryan 4 Weinberg Gonser LLP Annigian Ryan LLP 10866 Wilshire Boulevard, Suite 1650 114 North Indian Hill Boulevard, Suite E 5 Los Angeles, CA 90024 Claremont, CA 91711 shahrokh@weinberg-gonser.com jason@arllp.com 6 charanjit@weinberg-gonser.com jr@arllp.com 7 debora@weinberg-gonser.com 8 Nathan C. Rogers Howard Hall 9 Rogers Sheffield & Campbell, LLP Taylor Dalton 427 East Carrillo Street Hall Griffin 10 Santa Barbara, CA 93101 1851 East First Street, 10th Floor 11 nathan@rogerssheffield.com Santa Ana, CA 92705-4052 hdhall@hallgriffin.com 12 tdalton@hallgriffin.com 13 John Armstrong 14 Armstrong Law Group 23232 Peralta Drive 15 Suite 102 Laguna Hills, CA 92653 16 john@armstronglaw.group 17 18 19 20 21 22 23 24 25 26 27 28 1 PROOF OF SERVICE 2 STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA 3 I am employed in the County of Santa Barbara, State of California. I am over the age of 18 and 4 not a party to the within action; my business address is 1421 State Street, Suite B, Santa Barbara, California 93101. 5 On August 24, 2021, I served the following document described as: REPLY TO OPPOSITION 6 TO MOTION TO QUASH SUBPOENAS OR ALTERNATIVELY FOR A PROTECTIVE ORDER on the interested parties in this action as follows: 7 8 SEE ATTACHED SERVICE LIST. 9 by electronic transmission to the email addresses listed above or on the attached service list. The transmission of which was completed without 10 error. 11 by placing the document listed above in a sealed envelope with postage thereon fully prepaid, in the United States mail at Santa Barbara, 12 California addressed as set forth above or on the attached service list. by causing personal delivery of the document listed above to the person 13 at the address as set forth above or on the attached service list. 14 by placing the document listed above in a sealed envelope and depositing the original thereof in a box or other facility regularly 15 maintained by the express service carrier, or by delivering it to an authorized courier or driver authorized by the express service carrier to 16 receive documents, in an envelope or package designated by the express carrier with delivery fees paid or provided for to the address listed above 17 or on the attached service list. by placing the document listed above in a sealed envelope with postage 18 thereon fully prepaid, in the United States Mail at Santa Barbara, California at the address list above or on the attached service list. I am 19 readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice, it would be deposited 20 with U.S. postal service on that same day with postage thereon fully prepaid at Santa Barbara, California in the ordinary course of business. I 21 am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day 22 after date of deposit for mailing in affidavit. 23 I declare under penalty of perjury under the laws of the State of California that the foregoing is 24 true and correct. Executed on August 24, 2021, at Santa Barbara, California. 25 ___________________________________ 26 Catrine Casper 27 28 1 SERVICE LIST 2 BY EMAIL: 3 Shahrokh Sheik Jason D. Annigan 4 Charanjit Singh James T. Ryan Weinberg Gonser LLP Annigian Ryan LLP 5 10866 Wilshire Boulevard, Suite 1650 114 North Indian Hill Boulevard, Suite E Los Angeles, CA 90024 Claremont, CA 91711 6 shahrokh@weinberg-gonser.com jason@arllp.com 7 charanjit@weinberg-gonser.com jr@arllp.com debora@weinberg-gonser.com 8 Nathan C. Rogers Howard Hall 9 Rogers Sheffield & Campbell, LLP Taylor Dalton 427 East Carrillo Street Hall Griffin 10 Santa Barbara, CA 93101 1851 East First Street, 10th Floor 11 nathan@rogerssheffield.com Santa Ana, CA 92705-4052 hdhall@hallgriffin.com 12 tdalton@hallgriffin.com 13 John Armstrong Armstrong Law Group 14 23232 Peralta Drive, Suite 102 15 Laguna Hills, CA 92653 john@armstronglaw.group 16 17 BY EMAIL, with courtesy copy by U.S. MAIL: 18 RA Carrington 19 565 Sheffield Drive, Ste 1 Santa Barbara, CA 93108 20 ratc@cox.net 21 22 23 24 25 26 27 28