KNM Outdoor Tribe, LLC v. Roulette William Smith

"Defendant has failed and refused, and continues to fail and refuse, to perform the conditions of the Purchase Agreement on his part in that he refuses to execute a conveyance of the Property as provided in the Purchase Agreement." (Complaint, P. 8.)

"Plaintiff has requested mediation in accordance with paragraph XVIII(a) of the Purchase Agreement. Defendant has refused to participate." (Complaint, P. 9.)

On July 25, 2023, Smith filed his answer to the complaint admitting some of the allegations, denying some of the allegations, and setting forth 20 affirmative defenses.

Also on July 25, 2023, Smith filed a cross-complaint against KNM and Scott Wilkinson (Wilkinson) asserting causes of action for: (1) civil assault and battery; (2) fraud; (3) negligent misrepresentation; (4) elder abuse; and (5) declaratory relief.

As alleged in the cross-complaint: "On or about April 30, 2023, Defendant SCOTT WILKINSON initiated a Zoom call with Cross-Complainant. Participants included Cross-Complainant ROULETTE SMITH, Nicole Smith, Todd Smith, SCOTT WILLKINSON, Mr. WILKINSON's fiancé Melody, and some of WILKINSON'S adult children." (Cross-Complaint, P. 9.)

"During the April 30, 2023 Zoom call, Mr. WILKINSON discussed his proposed ideas for purchasing the PROPERTY. Cross-Complainant did not agree to Mr. WILKINSON's proposals. Ms. WILKINSON invited Mr. SMITH to dinner the following evening, at a Japanese restaurant in Santa Barbara (which upon information and belief is named 'Oku')." (Cross-Complaint, P. 10.)

"On May 1, 2023, Cross-Complainant attended a dinner with Cross-Defendant and others. A large amount of Japanese beer was consumed by all parties. At the end of the dinner, Cross-Defendant WILKINSON insisted that Cross-Complainant sign a written 'sales contract' to sell his interest in the PROPERTY." (Cross-Complaint, P. 11.)

"Prior to the dinner, Cross-Complainant SMITH had never seen a 'sales agreement' of any kind from Mr. WILKINSON, nor did he review the sales contract that Cross-Defendant had prepared that evening. Mr. SMITH told Mr. WILKINSON at the dinner that Cross- Complainant was not prepared to sign a contract at that time, because the parties had not reached agreement on several necessary terms, and because Cross-Complainant required any contracts to be reviewed and approved by legal counsel and by his adult children." (Cross-Complaint, P. 12.)

"At the May 1, 2023 dinner, Mr. WILKINSON physically grabbed Cross-Complainant's hand while Mr. SMITH was holding a pen. While holding SMITH's hand, WILKINSON attempted to forge Cross-Complainant's signature on the last page of the agreement, above the blank line for his signature. Mr. SMITH once again told Cross-Defendant in definitive terms that he would not sign the purported agreement." (Cross-Complaint, P. 13.)

"Upon learning that Cross-Complainant would not execute the purported contract, Mr. WILKINSON wrote the words 'I Intend to Sale to Scott' at the bottom of the page . . .. Cross-Defendant WILKINSON also wrote the phrase '* This precedes Mr. Smith + Todd + Nicole reviewing to ensure legal entity [sic],' along with several arrows and a circle." (Cross-Complaint, P. 14.)

"Cross-Complainant signed his actual signature inside the circle, next to the statement 'I Intend to Sale to Scott . . .' as a letter of intent. In so doing, Cross-Complainant memorialized his willingness to sell the PROPERTY, but only after the remaining terms had been agreed upon by the parties, and after the entire contract had been reviewed and approved by Cross-Complainant's legal counsel, and by his adult children Todd and Nicole." (Cross-Complaint, P. 15.)

Analysis: Motion for Leave to File First Amended Answer to Complaint Smith seeks to amend the answer to add the affirmative defenses of unconscionability and impossibility. No other substantive changes are requested.

Pursuant to Code of Civil procedure section 473(a)(1), the court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading. The court's discretion will usually be exercised liberally to permit amendment of the pleadings. (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.) The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified. (Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.) "In particular, liberality should be displayed in allowing amendments to answers, for a defendant denied leave to amend is permanently deprived of a defense." (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159.)

By way of opposition, KNM simply states: "If the court grants the motion, Plaintiff would ask that trial be continued two months to late November or early December to allow interrogatories to be served and any follow up depositions taken in the two new defenses." Trial is currently scheduled to begin on September 28, 2026.

The court will grant Smith's motion. Any request for a trial continuance by KNM will require a noticed motion.

Motion to Compel By way of the Notice of Motion, Smith moves to compel further responses from Wilkinson to RFPs, set three, Nos. 13, 24, 28, 31, 32, 33, 34, 36, 37, 38, and 39. Smith moves to compel further responses from KNM to RFPs, set two, Nos. 7, 8, 9, 10, 11, 13, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28, 29, 30, 31, 33, 34, 35, and 36. [Note: there are multiple additional responses that are included in the separate statements that are not included in the notice of motion.]

All of the requests pertain to financial information such as tax returns, pay stubs, W2 forms, 1099 forms, credit reports, profit and loss statements, balance sheets, etc.

Smith argues that the request for the financial documents is proper because: "The subject document requests seek documents which support Plaintiff KNM's ability to fulfil its own contractual obligations under the purported contract, i.e. the initial downpayment of $300,000, and multiple subsequent payments extending 15 years from the closing date, all totaling $3,100,000 million dollars."

"Unless otherwise limited by order of the court in accordance with this title, any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action. Discovery may be obtained of the identity and location of persons having knowledge of any discoverable matter, as well as of the existence, description, nature, custody, condition, and location of any document, electronically stored information, tangible thing, or land or other property." (Code Civ. Proc., Sec. 2017.010.)

"A trial court must be mindful of the Legislature's preference for discovery over trial by surprise, [and] must construe the facts before it liberally in favor of discovery. . ." (Williams v. Superior Court (2017) 3 Cal.5th 531, 540.)

Code of Civil Procedure, section 2031.010 provides, in pertinent part: "(a) Any party may obtain discovery . . . by inspecting, copying, testing, or sampling documents, tangible things, land or other property, and electronically stored information in the possession, custody, or control of the party on whom the demand is made. "(b) A party may demand that any other party produce and permit the party making the demand, or someone acting on the demanding party's behalf, to inspect and to copy a document that is in the possession, custody, or control of the party on whom the demand is made."

"The party to whom a demand for inspection, copying, testing, or sampling has been directed shall respond separately to each item or category of item by any of the following: "(1) A statement that the party will comply with the particular demand for inspection, copying, testing, or sampling by the date set for the inspection, copying, testing, or sampling . . . "(2) A representation that the party lacks the ability to comply with the demand for inspection, copying, testing, or sampling of a particular item or category of item, or "(3) An objection to the particular demand for inspection, copying, testing, or sampling." (Code Civ. Proc. Sec. 2031.210, subd. (a).)

"Financial Privacy," "Medical Privacy," and "Personal Privacy" are not technically categories of privilege. However, many financial documents, medical documents, and other personal information can be withheld based on the sensitivity of such personal information. "Although admissibility is not a prerequisite to discoverability, a heightened standard of discovery may be justified when dealing with information which, though not privileged, is sensitive or confidential." (Volkswagen of America, Inc. v. Superior Court (2006) 139 Cal.App.4th 1481, 1492.)

"Beginning with Webb v. Standard Oil Co., supra, 49 Cal.2d 509, 319 P.2d 621, a series of California Supreme Court and Court of Appeal decisions have considered the scope of various statutory provisions which prohibit the administrators and employees of state agencies responsible for the collection of taxes from disclosing information in tax returns. (See Schnabel v. Superior Court (1993) 5 Cal.4th 704, 718-722, 21 Cal.Rptr.2d 200, 854 P.2d 1117 [corporate income tax and payroll tax returns]; Webb v.

Standard Oil Co., supra, at p. 512, 319 P.2d 621 [income tax returns]; Sav-On Drugs v. Superior Court (1975) 15 Cal.3d 1, 6, 123 Cal.Rptr. 283, 538 P.2d 739 [sales tax returns]; Crest Catering Co. v. Superior Court (1965) 62 Cal.2d 274, 42 Cal.Rptr. 110, 398 P.2d 150 [employment tax returns].) In each of those cases, the respective statute has been held to establish an implied privilege against compelled disclosure in civil proceedings to which the taxpayer is a party. (Schnabel v. Superior Court, supra, at p. 719, 21 Cal.Rptr.2d 200, 854 P.2d 1117.)

The rationale for this extension of the protection beyond the literal terms of the statutes was first articulated in Webb v. Standard Oil Co., supra, 49 Cal.2d at page 513, 319 P.2d 621, where the court explained: " 'The effect of the statutory prohibition is to render the returns privileged, and the privilege should not be nullified by permitting third parties to obtain the information by adopting the indirect procedure of demanding copies of the tax returns.' " While no reported decisions have extended the privilege to estate tax returns, we see no reason not to do so." (Deary v.

Superior Court (2001) 87 Cal.App.4th 1072, 1077 - 1078.)

"[T]he [tax return] " 'privilege is not absolute.' " [Citation.] Rather, the privilege " 'will not be upheld' " in three situations: when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. . . ." ' " [Citation.]" (Li v. Yan (2016) 247 Cal.App.4th 56, 67.)

By way of the complaint, KNM seeks specific performance of the sale of the property. By way of the purchase agreement, that is attached as Exhibit A to the complaint, payments by KNM were to be $280,000 by May 4, 2023, $500,000 by June 1, 2023, monthly payments of $10,000 beginning July 1, 2023 for 15 years, and a balance payment of $500,000 by May 1, 2030.

"[I]t is axiomatic that to obtain specific performance, a buyer must prove not only that he was ready, willing and able to perform at the time the contract was entered into but that he continued ready, willing and able to perform at the time suit was filed and during the prosecution of the specific performance action. [Citations.]" (C. Robert Nattress & Associates v. Cidco (1986) 184 Cal.App.3d 55, 64.)

Cumulatively, the requests are extremely intrusive and request essentially all financial documents of KNM and Wilkinson for several years. While Smith is certainly entitled to conduct a reasonable, limited, amount of discovery to determine whether KNM was in a financial position to perform on the contract, from the time the suit was filed and during the prosecution of this action, it does not entitle Smith to intrude into every aspect of KNM's and Wilkinson's financial affairs. Given the sensitive nature of financial documents, an incremental approach is more appropriate.

The court will limit the requests pursuant to Code of Civil Procedure section 2017.010. KNM and Wilkinson will be ordered to produce all documents that they contend evidences KNM's ability to perform its financial obligations under the contract that is the subject of this action, from May 4, 2023, through the present. Should this, or other, discovery disclose a legally sufficient reason for doing so, Smith is not precluded from propounding additional follow-up discovery. Any documents produced in response will be subject to a protective order.

Tentative Ruling: Matter of Sebastiano and Carole Sterpa Trust

Tentative Ruling: Matter of Sebastiano and Carole Sterpa Trust