Court Opinion

ID: 9896912
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:03:53.064111+00
Date Added: 2024-06-11T09:14:52.692194
License: Public Domain

Filed 11/14/23 UBO Holdings v. Oldham CA1/3
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                DIVISION THREE

 UBO HOLDINGS,
           Plaintiff and Respondent,                                     A165914
 v.                                                                      (San Mateo County
 ANDREW OLDHAM et al.                                                    Super. Ct. No. 21-CIV-01962)

           Defendants and Appellants.

         Andrew Oldham, Jennifer Siem, and Oldham Professional Group (OPG;
collectively, defendants) appeal an order awarding plaintiff UBO Holdings
(UBO)1 $17,333 in sanctions against defendants’ counsel, Brewer Offord &
Pedersen LLP (Brewer), after UBO partially succeeded on eight motions to
compel discovery. Defendants contend Brewer acted with substantial
justification in withholding discovery, the amount of sanctions was arbitrary
and punitive, and there was no finding Brewer advised them to engage in
misuse of the discovery process. (Code Civ. Proc., § 2023.030, subd. (a);
undesignated statutory references are to this code.) We disagree and thus
affirm.

         1 Plaintiff Michael Szelenyi assigned to UBO all his rights, title, and

interest in the sanctions award, and we subsequently substituted UBO as
respondent in this appeal. For clarity, we refer to Szelenyi as the plaintiff.
                                                               1
                               BACKGROUND
      reVIS, Inc. (reVIS), a real estate consultant corporation, was formed in
2019 to provide lead generation, marketing, branding, and promotional
services to the real estate industry. Szelenyi was its chief executive officer
and a director, Oldham was the chief financial officer, and Siem was the
corporate secretary. In addition, Oldham and Siem respectively served as
corporate secretary and chief executive officer of OPG. According to Szelenyi,
OPG orally agreed in 2019 to pay reVIS 100 percent of gross commission
income from any real estate transactions closed by Oldham or Siem; 50
percent of the gross commission income from any real estate transactions
closed by any other OPG real estate agent for which reVIS provided a lead;
and 50 percent of the gross commission income from any real estate
transaction closed by any real estate agent that joined OPG after reVIS was
formed.
      According to Szelenyi, however, Oldham and Siem excluded from their
gross commission income calculations certain payments Siem was required to
make to a third party, and they neglected duties owed to reVIS. Moreover,
Oldham implemented a revised agreement reducing the commission due to
reVIS for sales by Siem or Oldham to 25 percent; reduced the commission due
to reVIS for sales by all other OPG real estate agents arising from a reVIS
lead to 25 percent; and eliminated commission for sales by real estate agents
hired after reVIS was formed. This occurred even though no one from reVIS
signed the revised agreement. And Oldham and Siem took control of all the
management, databases, and email software services used by reVIS.
      Szelenyi filed a shareholder derivative lawsuit on behalf of reVIS,
against defendants. Szelenyi alleged defendants breached an oral contract

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for reVIS’s referral fee and breached their fiduciary duties when a revised,
written contract was formed with new terms added to the agreement.
      In October 2021, Szelenyi served defendants with requests for
production of documents, requests for admission, form interrogatories, and
special interrogatories. Defendants responded on December 9, after Szelenyi
agreed to a series of extensions. On January 13, 2022, Szelenyi sent
defendants a letter identifying concerns with the discovery responses and
requesting supplemental responses by January 19. Brewer agreed to
supplement certain limited responses, but it did not provide a date by which
the responses would be produced. Brewer also refused to extend Szelenyi’s
deadline to file motions to compel with respect to responses still in dispute or
responses they agreed to supplement. And when defendants served
supplemental responses, they did not provide responses to certain agreed-
upon requests for production. An informal discovery conference in February
with a court commissioner failed to resolve all the discovery issues in dispute.
      In March 2022, Szelenyi filed eight motions to compel further responses
to a total of 43 requests for production and 55 special interrogatories. The
documents and information sought included real estate transactions closed by
OPG agents; monetary transfers between and among defendants and
Szelenyi; reVIS’s and OPG’s finances, corporate structure, business
operations, and employees; and communications relating to Szelenyi.2

      2 Szelenyi sought an order compelling Oldham to provide code-

compliant responses to the following requests for production: all documents
relating to Oldham’s payments to reVIS (No. 4); documents related to
payments Oldham made or received from OPG (Nos. 6 & 7); documents
relating to real estate transactions Oldham closed (Nos. 8 & 9); all
communications regarding reVIS (No. 24); documents related to OPG’s
ownership and government submissions (Nos. 31, 32 & 34); and reVIS’s
financial statements (No. 35).
                                       3
According to Szelenyi, rather than providing appropriate responses to the
requests for production — that they would comply, lacked the ability to
comply, or objected to the demand — defendants responded they would
ascertain whether they possessed responsive documents. (§ 2031.210, subd.
(a).) Brewer did not provide verified supplemental responses. Szelenyi also
argued defendants refused to respond to interrogatories within the
permissible scope of discovery, provided terse responses rather than detailed
information, and refused to provide any information regarding real estate
transactions closed by OPG real estate agents, even though that information
was critical to the case. Szelenyi requested $25,980 in monetary sanctions
against defendants and Brewer.
      Several months after Szelenyi filed his motions to compel — but before
the hearing — defendants provided supplemental responses to 18 requests
for production and 29 interrogatories.3 Defendants thereafter filed

      For OPG, Szelenyi sought additional responses for the following
requests for production: OPG payments made to or received from reVIS (Nos.
4 & 5); real estate transactions closed by OPG (Nos. 6, 7, 9 & 10); documents
related to OPG’s board of directors and shareholders (Nos. 11, 12 & 13); OPG
payments made to or received from Siem and Oldham (Nos. 14 & 22–25); and
communications referring to or relating to Szelenyi (No. 27).
      For reVIS, Szelenyi sought additional responses for the following
requests for production: payments reVIS made to or received from OPG, or
made to Siem or Szelenyi (Nos. 4, 5, 6, 8 & 9); reVIS’s financial statements
(No. 18); and documents referring or relating to Szelenyi (No. 28).
      In terms of interrogatories, Szelenyi sought information from reVIS
regarding reVIS’s monetary transfers made to OPG (Nos. 1–3); real estate
transactions closed by OPG agents (Nos. 5–8), reVIS’s shareholders, directors
and service providers (Nos. 9–12, 14 & 16); and reVIS’s bank accounts (No.
17). He sought similar additional interrogatory responses from Siem.
      3 This included providing all communications between Oldham and

Siem or any person referring to reVIS, and all documents regarding Oldham
or Siem’s ownership of OPG shares and documents relating to OPG
shareholders. Additional interrogatory responses included descriptions of the
                                      4
oppositions to the motions to compel, arguing many of the requests were moot
based on the recently produced documents and responses, and the remaining
requests were irrelevant, overbroad, burdensome, and infringed on their
rights to privacy. For example, they argued a request seeking any and all
documents related to real estate transactions closed by defendants, payments
to OPG by the remaining defendants, and commission paid by OPG to
defendants’ broker from September 1, 2019 to present were overbroad,
unlimited as to time and scope, and not reasonably particularized.
         The trial court partially granted Szelenyi’s motions.4 It rejected 20
requests for production, noting the requested documents were not reasonably
particularized as to each category. For example, the court stated, requesting
documents “ ‘relating to or referring to’ ” various general matters was not a
reasonably particularized demand. The court did, however, grant one
request — concluding OPG’s objections were meritless — and partially
granted three requests — requiring OPG to provide agendas and meeting
minutes, as well as emails regarding Szelenyi, because doing so was not
unduly burdensome. The court limited documents to be produced to
September 1, 2019 to November 30, 2020 without prejudice to Szelenyi
requesting additional responsive documents after that time period if such
documents are necessary.
         In addition, the trial court determined defendants’ supplemental
responses to 24 interrogatories rendered moot Szelenyi’s motion on those

business relationships between all defendants, identities of officers and
employees of OPG from September 1, 2019 to present, identification of all
positions Oldham and Siem held at reVIS, and identification of persons who
provided services to OPG or reVIS.
         4 The court issued a tentative ruling that it further refined in a final

order.

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particular requests. Although the court denied several of Szelenyi’s
interrogatory requests as unreasonably overbroad or because defendants had
fully answered the interrogatories, it ultimately granted Szelenyi’s request
for further responses to 18 interrogatories.5 The court imposed sanctions on
Brewer, explaining the motions to compel were occasioned by counsel’s
actions, not those of defendants. But because Szelenyi was only partially
successful, the court reduced the sanction amount to $17,333.
                                DISCUSSION
      Defendants argue the trial court abused its discretion by imposing
monetary sanctions on their counsel. We disagree — the record demonstrates
the court’s decision was not arbitrary, capricious, or whimsical. (Kwan
Software Engineering, Inc. v. Hennings (2020) 58 Cal.App.5th 57, 73 [abuse of
discretion standard of review for discovery sanctions orders].)
      Courts may impose a range of penalties for “misuse of the discovery
process,” including monetary sanctions. (§ 2023.030; Cedars–Sinai Medical
Center v. Superior Court (1998) 18 Cal.4th 1, 12.) Relevant here, misuse of

      5 Among other things, those interrogatories include requiring

defendants to identify all monetary transfers they have received from reVIS,
and for reVIS to identify all monetary transfers it made to OPG, by loan
amount, date, lender, borrower, and terms. In addition, defendants were
ordered to identify all real estate transactions closed by OPG, Oldham, or
Siem, the monetary transfers made to reVIS from those transactions; all
monetary transfers OPG, Oldham, or Siem made to a third party relating to
those transactions; all monetary transfers received by Oldham or Siem from
OPG relating to those transactions; and all bank accounts maintained by
OPG. Siem, OPG, and reVIS were ordered to provide reasons for each
monetary transfer received from each other. OPG was ordered to identify its
present and former bank accounts by name of financial institution, account
number, the date the account was opened, date the account closed, and if
applicable, the identity of each person authorized to sign checks or access the
account.
                                       6
the discovery process includes unsuccessfully opposing without substantial
justification a motion to compel further discovery responses. (§ 2023.010,
subds. (e), (h).) Courts must impose monetary sanctions against the party,
person, or attorney who unsuccessfully opposes the motion to compel further
responses unless the party acted with substantial justification or there were
other circumstances that make the sanction unjust. (City of Los Angeles v.
PricewaterhouseCoopers, LLC (2022) 84 Cal.App.5th 466, 498.)
                                        I.
      Defendants contend their counsel acted with substantial justification in
objecting to Szelenyi’s discovery requests. Specifically, Brewer opposed
various requests as not reasonably particularized or limited in time or scope,
thus posing an undue burden. (§ 2031.030, subd. (c)(1).) According to
defendants, the trial court ultimately agreed because it denied all but four of
Szelenyi’s requests for production as not being reasonably particularized.
It further limited the scope of Szelenyi’s interrogatories to the time period of
September 2019 to November 2020, rather than September 2019 to the
present. The court, defendants argue, denied 90 percent of Szelenyi’s
requests for production and 53 percent of Szelenyi’s interrogatories, thus
demonstrating their objections were substantially justified — “clearly
reasonable because [they were] well grounded in both law and fact” — even
though the court did not make that express finding. (Doe v. United States
Swimming, Inc. (2011) 200 Cal.App.4th 1424, 1434.) Not so.
      As a preliminary matter, we infer the trial court made all findings
necessary to support its order — as relevant here, that defendants acted
without substantial justification in opposing the discovery requests —
provided those findings are supported by the record. (Reedy v. Bussell (2007)
148 Cal.App.4th 1272, 1292.) Moreover, there is no requirement the court

                                        7
make an explicit finding the defendants did not act with substantial
justification. (Parker v. Wolters Kluwer United States, Inc. (2007)
149 Cal.App.4th 285, 294.) “[T]his is implied in the order awarding
sanctions.” (Ibid.) Thus, we infer the finding that defendants did not act
with substantial justification in the absence of an express finding on that
point.
         More importantly, the trial court’s ultimate denial of a portion of
Szelenyi’s discovery requests does not demonstrate that defendants’
objections were substantially justified. (Doe v. United States Swimming, Inc.,
supra, 200 Cal.App.4th at p. 1435 [party opposing sanctions bears the burden
demonstrating substantial justification]; Mattco Forge, Inc. v. Arthur Young
& Co. (1990) 223 Cal.App.3d 1429, 1437.) Courts may impose sanctions on
motions to compel that are partially granted. (Mattco Forge, at p. 1437.)
Here, Szelenyi moved to compel responses to 43 requests for production and
55 special interrogatories — a total of 98 discovery requests. For 69 of these
requests, Szelenyi obtained the sought discovery — 47 requests for which
defendants produced supplemental responses after Szelenyi filed his motions
to compel, and 18 interrogatories and four requests for production the court
granted — constituting approximately 70 percent of the discovery requests.
Although defendants use different percentages, the relevant number here is
the total number of requests where Szelenyi succeeded. Thus, defendants are
required to demonstrate they had substantial justification in opposing those
69 requests, not the number of discovery requests the court ultimately
rejected. (Ibid.) Defendants cannot.
         To begin, only after Szelenyi filed a motion to compel and several
months had passed, defendants served further responses to 18 of Szelenyi’s
requests for production and 29 of Szelenyi’s special interrogatories, a total of

                                          8
47 requests. Indeed, the court expressly stated defendants’ supplemental
interrogatory responses rendered Szelenyi’s requests moot. Defendants’
disclosure of additional documents and responses just before filing their
opposition to the motion to compel does not render the responses
substantially justified. Rather, courts may award sanctions even when
requested discovery was provided to the moving party after a motion to
compel was filed. (Cal. Rules of Court, rule 3.1348(a); Sauer v. Superior
Court (1987) 195 Cal.App.3d 213, 230 [“ ‘Belated compliance with discovery
orders does not preclude the imposition of sanctions . . . Last-minute tender of
documents does not cure the prejudice to opponents nor does it restore to
other litigants on a crowded docket the opportunity to use the courts’ ”].)
      For the remaining 51 discovery requests, the trial court granted 18 of
Szelenyi’s interrogatories. The court could rationally conclude defendants’
relevance objection to interrogatories — those seeking information regarding
real estate transactions closed by OPG and the resulting monetary transfers
OPG made to reVIS — lacked justification. (Foothill Properties v.
Lyon/Copley Corona Associates (1996) 46 Cal.App.4th 1542, 1557.) Szelenyi
alleged defendants did not pay all required commissions. Information
regarding closed real estate transactions and resulting monetary transactions
was relevant. (Garamendi v. Golden Eagle Ins. Co. (2004) 116 Cal.App.4th
694, 712, fn. 8 [for discovery, information is relevant if it reasonably assists a
party in evaluating the case, facilitating settlement or preparing for trial].)
That the court ultimately limited the time frame for those interrogatories to a
period ending in November 2020 does not demonstrate Szelenyi’s request was
overbroad, as defendants contend. The court expressly stated the time
limitation did not indicate the information beyond November 2020 was not

                                        9
discoverable. Instead, the court acknowledged Szelenyi could seek that
information later in the litigation.
      Similarly, the trial court partially granted Szelenyi’s requests for
production — requiring defendants to produce agendas and meeting minutes
regarding OPG’s directors and shareholders, payments OPG made or received
from Oldham and Siem, and OPG communications referring to or relating to
Szelenyi. The court determined defendants’ objections to one request for
production were meritless. It rejected another because defendants had not
persuasively demonstrated that searching through 34 months of emails for
communications regarding Szelenyi would be unduly burdensome. Rather
than demonstrating those objections were substantially justified, defendants
focus on the requests for production the court denied. To repeat, that is not
the relevant inquiry. (Mattco Forge, Inc. v. Arthur Young & Co., supra,
223 Cal.App.3d at p. 1437.) Defendants fail to demonstrate they acted with
substantial justification as to the discovery requests the court granted.
                                        II.
      Defendants contend the sanctions amount was unreasonable, arbitrary,
and punitive. We disagree.
      Monetary sanctions for misuse of discovery cannot be imposed as
punishment. (City of Los Angeles v. PricewaterhouseCoopers, LLC, supra,
84 Cal.App.5th at p. 499.) They must be compensatory and not exceed
reasonable expenses incurred in bringing the motion to compel, such as
attorney fees, filing fees, referee fees, and other costs. (§ 2023.030, subd. (a);
Ghanooni v. Super Shuttle (1993) 20 Cal.App.4th 256, 262 (Ghanooni).)
Nothing in the record here indicates the expenses incurred were
unreasonable or punitive.

                                        10
      In support of the motion for sanctions, Szelenyi’s counsel filed a
declaration summarizing work on the motions to compel. An associate
attorney at the firm spent 45 hours drafting and revising the eight motions to
compel, the supporting papers, as well as drafting a declaration detailing the
discovery exchanges with Brewer. Based on the Fitzpatrick Matrix and
locality adjustments, the associate counsel with 17 years of experience
charged $500 per hour for a total of $22,500. (Syers Properties III, Inc. v.
Rankin (2014) 226 Cal.App.4th 691, 702 [hourly rates were supported by
adjusted billing matrix].) A partner at the firm spent four hours drafting and
revising the motions to compel and the supporting papers. At an hourly rate
of $750, the partner charged a total of $3000. With the locality adjustments,
the rates charged were actually below those for attorneys with the same
years of experience in the San Francisco Bay Area. And rather than
awarding Szelenyi’s counsel the full requested fees, the trial court reduced
the amount to $17,333, “representing the partial success of the motions.”
Given evidence that Szelenyi’s counsel’s rates were less than others in the
San Francisco Bay Area, the amount awarded is less than what could have
been awarded.
      Defendants argue we must vacate the sanctions award because the
expenses incurred were unreasonable based on the attorneys’ purportedly
unreasonable hourly rates. And according to defendants, it cannot be
reasonably true Szelenyi’s counsel spent 45 hours on the motions —
Szelenyi’s counsel, so the argument goes, merely submitted eight nearly
identical motions to compel along with eight nearly identical supporting
declarations. This ignores the standard of review — we do not reweigh
evidence when reviewing attorney fee awards. (Weber v. Langholz (1995)
39 Cal.App.4th 1578, 1587.) While defendants submitted a declaration

                                       11
opposing sanctions below, it merely detailed communications between
opposing counsel regarding service of discovery responses. They failed to
submit a counterdeclaration disputing the reasonableness of the billing rates
or hours expended. (Ghanooni, supra, 20 Cal.App.4th at p. 262; PLCM
Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 [an experienced trial
judge is best situated to determine the value of professional services rendered
in court].) In those circumstances, “the court’s finding as to reasonable
expenses is supported by the uncontradicted evidence.” (Ghanooni, at
p. 262.)
      Defendants’ assertion that the amount awarded was arbitrary and
punitive because the trial court failed to provide any specific calculations or
written findings is meritless. The “discovery statutes do not require the
court’s order to ‘recite in detail’ the circumstances justifying the award” or
“make findings at all.” (Ghanooni, supra, 20 Cal.App.4th at p. 261.) In any
event, the court stated the $17,333 in sanctions reflected defendants’ success
in opposing approximately one-third of the motions to compel. This number
is properly reflected in the record. Szelenyi’s motions to compel sought
responses on 98 discovery requests. Szelenyi prevailed on 69 requests — 47
requests for which defendants served further responses after the motion to
compel was filed, and 22 requests the court granted in whole or in part —
constituting 70 percent of the motion to compel. It is reasonable to conclude
the court further reduced that number because it partially denied some of the
22 requests based on objections that the requests were not reasonably
particularized or overly burdensome. (Vo v. Las Virgenes Municipal Water
Dist. (2000) 79 Cal.App.4th 440, 447 [presumption order awarding fees is
correct on appeal].) In total, Szelenyi was successful on approximately two-
thirds of his motions to compel.

                                       12
      To the extent defendants suggest this number was punitive because the
court indicated the sanctions award could increase if they reargued the
tentative ruling, we disagree. Reasonable expenses includes the time counsel
spends researching and preparing the motion to compel, as well as time spent
in court in connection with the motion. (Mattco Forge, Inc. v. Arthur Young &
Co., supra, 223 Cal.App.3d at p. 1438 [attorney time spent in court
responding to arguments considered reasonable expenses].) Rearguing the
sanctions ruling is “clearly part and parcel of the underlying discovery
dispute” that could increase Szelenyi’s attorney fees. (Ibid.) Reasonably
viewed, the court’s statement simply informed defendants of this possibility.
The amount awarded was not an abuse of discretion.
                                      III.
      Defendants argue the trial court improperly imposed monetary
sanctions against their counsel after finding Szelenyi’s motions to compel
were necessitated by counsel, not the client. We disagree.
      Courts may issue monetary sanctions against any attorney advising a
party to engage in the misuse of the discovery process. (§ 2023.030,
subd. (a).) To reverse, the attorneys must demonstrate they had not advised
the client to engage in conduct resulting in sanctions. (Ghanooni, supra,
20 Cal.App.4th at p. 261.) Brewer fails to do so. Szelenyi sought sanctions
against both defendants and Brewer. The declaration Brewer submitted in
opposition contained no evidence or argument addressing whether
defendants’ refusal to produce responses to certain discovery requests was
not based on the advice of their attorneys. (Ibid.) On this record, the court

                                      13
did not abuse its discretion in concluding the discovery misuse was driven by
counsel rather than their clients.6
                                DISPOSITION
      The order imposing monetary sanctions is affirmed. Szelenyi is
entitled to recover costs on appeal.

      6 While this appeal was pending, Szelenyi filed a motion to sanction

Brewer for pursuing a frivolous appeal. (Cal. Rules of Court, rule
8.276(a)(1).) We deny the request. An appeal is frivolous “only when it is
prosecuted for an improper motive—to harass the respondent or delay the
effect of an adverse judgment—or when it indisputably has no merit—when
any reasonable attorney would agree that the appeal is totally and
completely without merit.” (In re Marriage of Flaherty (1982) 31 Cal.3d 637,
650.) Although we affirm the trial court’s sanctions order, there is no
indication the appeal is frivolous.
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                                 _________________________
                                 Rodríguez, J.

WE CONCUR:

_________________________
Tucher, P. J.

_________________________
Petrou, J.

A165914

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