Shrewsbury Mgmt., Inc. v. Superior Court of Santa Clara Cnty.

• Decision Date: 11 March 2019
• Docket Number: H043166
• Citation: 32 Cal.App.5th 1213,244 Cal.Rptr.3d 595
• Court: California Court of Appeals Court of Appeals
• Parties: SHREWSBURY MANAGEMENT, INC., Petitioner, v. The SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent; Mark Boucher et al., Real Parties in Interest.

32 Cal.App.5th 1213

244 Cal.Rptr.3d 595

SHREWSBURY MANAGEMENT, INC., Petitioner,

v.The SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent;

Mark Boucher et al., Real Parties in Interest.

H043166

Court of Appeal, Sixth District, California.

Filed March 11, 2019

Counsel for Petitioner Shrewsbury Management, Inc.: Herzlich & Blum, Jerome Jay Blum, Encino

Counsel for Real Parties in Interest Mark Boucher, Nicholas Aegis, LLC, Zenophon Trading, LLC: Omni Law Group, Trevor Joseph Zink, San Jose

BAMATTRE-MANOUKIAN, J.

I. INTRODUCTION

Petitioner Shrewsbury Management, Inc. (Shrewsbury), is the judgment creditor of a $ 1,385,601.27 judgment entered against real party in interest Mark Boucher. In connection with a judgment debtor examination of Boucher under Code of Civil Procedure section 708.110,¹ and seeking information about his finances, Shrewsbury moved for an order directing Wells Fargo Bank (Wells Fargo) to comply with a subpoena duces tecum requesting it to produce bank records for two entities over which Boucher allegedly had signatory authority, real parties in interest Nicholas Aegis, LLC (Nicholas Aegis) and Zenophon Trading, LLC (Zenophon). Shrewsbury believed that Boucher was using Nicholas Aegis and Zenophon to conceal his assets. The trial court denied Shrewsbury’s motion after determining that a subpoena duces tecum may be issued to a third party but must be tethered to an examination of that third party as set forth under section 708.120.

On appeal, Shrewsbury argues that the scope of testimony and documents sought from a third party witness is not limited by section 708.120 when the subpoena is issued under section 708.130 and is tethered to a judgment debtor examination under section 708.110. Shrewsbury thus claims that the subpoena duces tecum issued to Wells Fargo permitted a broad scope of inquiry into Boucher’s business affairs and that the trial court erred in denying its motion for an order directing Wells Fargo’s compliance with the subpoena.

We determine that a subpoena duces tecum may be issued to a third party in connection with a judgment debtor examination under section 708.110, and we will issue a preemptory writ of mandate directing the trial court to vacate its order denying Shrewsbury’s motion and to conduct further proceedings.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Judgment and Postjudgment Discovery Motions

On March 19, 2010, the Orange County Superior Court entered a judgment of $ 1,385,601.27 in favor of Maynard Garber and against Boucher. The court also ordered that the judgment be assigned from Garber to Shrewsbury.

In January 2015, Shrewsbury filed an application for Boucher’s appearance and examination. In a supporting affidavit, Shrewsbury’s counsel stated that Boucher’s last known address was in Los Altos, California, so the application was filed in Santa Clara County Superior Court under section 708.160, subdivision (c). The trial court granted the application and ordered Boucher to appear for an examination. Shrewsbury also filed an application for Boucher’s wife to appear for an examination as a third party under section 780.120. She was ordered to appear for an examination by the court.

On June 1, 2015, Shrewsbury’s counsel issued a subpoena duces tecum directing Wells Fargo to produce certain bank records pertaining to Boucher and his wife. In issuing the subpoena, Shrewsbury’s counsel used the standard Judicial Council form for civil subpoenas, which referenced sections 1985 et seq. Among other items, Shrewsbury sought production of all documents, forms, and memoranda pertaining to applications for bank accounts where Boucher or his wife were signatories or had ever acted as signatories. The subpoena duces tecum called for Wells Fargo to produce the requested documents on July 14, 2015, the date set for Boucher’s continued judgment debtor examination.

Both Nicholas Aegis and Zenophon, which had Wells Fargo bank accounts that Boucher allegedly had some connection to, objected to Shrewsbury’s subpoena for production of records from Wells Fargo. Nicholas Aegis alleged that it was owned by Boucher’s son and was established by Boucher’s grandmother to finance her grandson’s education. Nicholas Aegis further claimed that its bank records were not relevant and that production of the bank records would violate its privacy rights. Zenophon alleged that it was owned by Boucher’s father-in-law and, like Nicholas Aegis, asserted that its bank records were not relevant and that obtaining the records from Wells Fargo would infringe upon its privacy rights. Both Nicholas Aegis and Zenophon claimed that Boucher had no financial, beneficial, or any other interest in their operations.

B. The Motion for an Order Directing Compliance with the Subpoena and the Court’s Order

In July 2015, Shrewsbury filed a motion for an order directing Wells Fargo to comply with Shrewsbury’s subpoena duces tecum and produce the requested documents. Shrewsbury claimed that Boucher had a financial interest in both Nicholas Aegis and Zenophon and that the subpoena was appropriately issued under section 708.130, which provides that witnesses in proceedings enforcing money judgments may be required to appear and testify before the court or a referee in the same manner as if at trial.

In a declaration supporting the motion, Shrewsbury’s counsel stated that Boucher had completed a questionnaire in connection with his judgment debtor examination. On the questionnaire, Boucher had indicated that he and his wife were currently either a director, shareholder, officer, member, or managing member of Nicholas Aegis and Zenophon. Boucher had also indicated that he owned Nicholas Aegis, Zenophon paid some of his expenses, and he possessed signatory authority over both entities’ accounts.

Nicholas Aegis and Zenophon opposed Shrewsbury’s motion, arguing that Boucher had no financial or other interest in the respective companies, the bank records sought were not relevant, and the subpoenas invaded the privacy rights of the companies and their owners with respect to their bank records. Moreover, both entities insisted that Shrewsbury had previously attempted to obtain their bank records by a subpoena, but that the subpoena had been quashed by the Orange County Superior Court. According to the Orange County Superior Court’s order, Shrewsbury had sought records through a deposition subpoena under sections 2020.410 through 2020.440, which are part of the Civil Discovery Act (§ 2016.010 et seq.). Nicholas Aegis and Zenophon requested that the trial court take judicial notice of the Orange County Superior Court’s order quashing Shrewsbury’s prior subpoena.

On September 22, 2015, the Santa Clara County Superior Court issued an order denying Shrewsbury’s motion for an order directing compliance with its subpoena duces tecum. In the same order, the court granted Nicholas Aegis’s and Zenophon’s request for judicial notice of the Orange County Superior Court order quashing the prior subpoena. The trial court found the Orange County Superior Court’s order "persuasive" and expressed "disappoint[ment]" that Shrewsbury had failed to disclose or discuss its prior unsuccessful efforts to obtain the records in question.

Next, the trial court addressed the merits of Shrewsbury’s argument that it was authorized to issue a subpoena duces tecum to Wells Fargo under section 708.130. The court determined that although section 708.130 provides that a witness may be compelled to appear and testify in a postjudgment proceeding in the same manner as if at trial, " ‘most courts require that a CCP § 708.130 witness examination be used incident to a concurrent examination under CCP § 708.110 or § 708.120.’ " The trial court concluded that " CCP § 708.120, which must be read in conjunction with § 708.130, establishes a procedure through which a judgment creditor may apply ex parte for an order authorizing an examination in court of a third party who ‘has possession or control of property in which the judgment debtor has an interest or is indebted to the judgment debtor in an amount exceeding two hundred fifty dollars.’ ( CCP § 708.120(a).) While a subpoena duces tecum may be issued in connection with such an examination, it must be ‘tethered to’ an examination of the third party itself, not someone else. ( Fox Johns Lazar Pekin & Wexler , APC v . [Superior Court ] (2013) 219 Cal.App.4th 1210, 1222 .) ‘[T]he examination of a third party under section 708.120 is limited to exploring the third party’s possession of the judgment debtor’s property or any debt owed the judgment debtor,’ and the scope of documents requested in a third-party subpoena issued in connection with such an examination ‘must be similarly curtailed.’ "

Thus, the trial court determined that "[u]nder the statutory scheme Shrewsbury can only obtain post-judgment discovery through interrogatories and inspection demands propounded upon the Judgment Debtor, or through third-party subpoenas issued in connection with an examination of the third party pursuant to CCP § 708.120, which must be limited in scope to encompass documents pertaining to the third party’s possession of the Judgment Debtor’s property or debt owed to him."

III. DISCUSSION

A. Appealability

Before we address the merits of Shrewsbury’s arguments, we first determine the appealability of the trial court’s postjudgment discovery order.

The language of section 904.1, subdivision (a)(2) suggests that all postjudgment orders made after an appealable judgment are appealable. However, the California Supreme Court has articulated several additional prerequisites that must be met to find a postjudgment order appealable: "the issues raised by the appeal from the order must be different from those arising from an appeal from the judgment" ( Lakin v . Watkins Associated Industries (1993) 6 Cal.4th 644, 651, 25 Cal.Rptr.2d 109, 863 P.2d 179 ) and " ‘the order must either affect the judgment or relate to it by enforcing it or staying its execution’ " ( id . ...