MyECheck Inc (fka MYEC)

[PhenixBleu]

CASE UPDATE - SST Motion for Protective Order GRANTED

Overview

This case presents a multi-party business dispute. Plaintiff MyECheck, Inc. (“MEC”) alleges its former CEO, defendant Zalunardo, falsified an employment agreement purportedly entitling him to MEC shares and that he purported to transfer these shares to defendant Maciora in 2015 and 2016, paying de minimis consideration because he knew the shares were fake. MEC further alleges Maciora and others maintain that a draft proposal to issue MEC shares to certain employees, which was never ratified, legitimizes the transfers to Maciora. It is further alleged that Maciora wrongfully obtained and disseminated MEC’s confidential information in violation of a non-disclosure agreement and in an attempt to extort money and stock from MEC and its officers. According to MEC, Maciora has also harassed MEC’s shareholders, employees, auditors, business partners and investors to disrupt operations and to extort money but ultimately causing MEC shares to lose significant value and disrupting important business relationships. MEC asserts a number of causes of action against Maciora and others for securities fraud in violation of Corporations Code §25400(D), breach of contract, intentional interference with prospective economic advantage/contractual relations, and violation of Business & Professions Code §17200 et seq.

Maciora has filed a cross-complaint in which he alleges that in July 2016 MEC’s alter-ego, cross-defendant Edward Starrs, contacted Jason Bogutski of SST. At that time, Maciora had filed suit against SST, MEC’s stock transfer agent. Starrs “instructed [SST] to settle with Maciora through a settlement agreement in which Maciora would be issued 66,666,666 shares of MyECheck through a real and 100% genuine paper stock certificate signed by Edward Starrs and a representative of [SST] and that Maciora would be listed in the shareholder registrar as a registered shareholder.” Maciora alleges that Starrs told Bogutski that “when the day came that Maciora would choose to sell his stock, the cross-defendants would tell any buyer that Maciora obtained his shares through fraudulent and forged employment agreements and Maciora’s shares were therefore fraudulent” and SST agreed to the plan. The settlement agreement was signed by SST and Maciora. In August 2016 SST sent Maciora 3 stock certificates which added up to 66,666,666 shares of MEC. Maciora then attempted to sell the stocks and contacted Bogutski to issue a stock certificate in saleable form. Maciora alleges that SST and others interfered with his attempt to sell his shares.In February 2020 Maciora issued a notice of deposition of SST on various subjects, along with requests for production of documents. The notice specifies the deposition will take place at 350 University Avenue in Sacramento.

SST now moves for a protective order requiring the deposition occur in Dallas County, Texas since SST does not have any office, employee or other physical presence in the State of California but instead conducts all of its business out of its single business office located in Addison, Texas. SST notes that Maciora, who is acting in pro per, resides in New York State and must travel across the country to take SST’s deposition in Sacramento and suggests that having the deposition in Texas will lessen the distance both Maciora and SST will need to travel but Maciora has stated “under no circumstances will I agree to take a deposition in Dallas. That won’t happen.” SST also requests monetary sanctions against Maciora in the amount of $2,100 for his unreasonable refusal to consider an alternative location for the deposition of SST, which has necessitated this motion.

Maciora opposes, arguing first that SST’s moving papers were “not properly served” in compliance with Code of Civil Procedure §1013(c). The opposition also asserts that his deposition notice complies with the requirements of Code of Civil Procedure §2025.250 and that a court may order a deposition occur at a different location but only “if it is within a distance permitted by Sections 2025.250 and 2025.260.”

Subdivision (d) of 2025.250 provides that if an organization has not designated a principal office in California, the deposition shall at the option of the noticing party take place either in the county where the action is pending or within 75 miles of any of the organization’s business offices in California, and thus, the opposition maintains that the subject deposition “must take place in the county of Sacramento.”

Finally, Maciora requests that if the Court finds proper notice of this motion, the hearing be continued four weeks so he can file “a vigorous opposition and request for sanctions.”

Analysis

Service. Code of Civil Procedure §1005 establishes the requisite notice for the present motion and subdivision (b) states in pertinent part:

Unless otherwise ordered..., all moving and supporting papers shall be served and filed at least 16 court days before the hearing. ... However, if the notice is served by...express mail, or another method of delivery providing for overnight delivery, the required 16-day period of notice before the hearing shall be increased by two calendar days. Section 1013, which extends the time within which a right may be exercised or an act may be done, does not apply to a notice of motion, papers opposing a motion, or reply papers governed by this section. ...(Underline added for emphasis.)

Given that §1005(b) expressly states that §1013 “does not apply to a notice of motion,” Maciora’s reliance on §1013(c)’s language (i.e., “...any period of notice and any right or duty to do any act or make any response within any period or on a date certain after service of the document served by Express Mail or other method of delivery providing for overnight delivery shall be extended by two court days” (underline added for emphasis)) is misplaced and this Court must therefore reject his suggestion that SST failed to properly serve the moving papers. Likewise, the opposition’s contention that SST’s service of the moving papers via FedEx (dropping them off at a FedEx location on Saturday, 7/11/2020 and being delivered to Maciora on the following Monday) was “not overnight delivery” falls short in light of

(1) §1013(c)’s express provision that “service is complete at the time of the deposit” to the “express service carrier” and

(2) Code of Civil Procedure §10 deeming every Sunday a “holiday” and Maciora admitting receipt of the moving papers on the next business day, Monday, 7/13/2020.

Code of Civil Procedure §2025.250. This statute provides in pertinent part:(a) Unless the court orders otherwise under Section 2025.260, the deposition of a natural person...(b) The deposition of an organization that is a party to the action shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the organization’s principal executive or business office in California, or within the county where the action is pending and within 150 miles of that office.(c) Unless the organization consents to a more distant place, the deposition of any other organization shall be taken within 75 miles of the organization’s principal executive or business office in California.(d) If an organization has not designated a principal executive or business office in California, the deposition shall be taken at a place that is, at the option of the party giving notice of the deposition, either within the county where the action is pending, or within 75 miles of any executive or business office in California of the organization.(Underline added for emphasis.)Subdivisions (b) - (d) each presuppose that the deponent organization has at least one executive or business office located in California but none of these provisions actually addresses the scenario presented here where the deponent organization has not merely failed to designate a “principal executive or business office in California” but rather simply has no office of any type in California (and therefore is unable to designate a “principal executive or business office in California”). Accordingly, the Court is not convinced that §2025.250(d) controls the location of the proposed deposition of SST and the outcome of this motion.In the end, this Court can find no legitimate justification for requiring SST to travel from its sole business office which is located in Texas to Sacramento for this deposition particularly when Texas is closer to Maciora’s own New York home and when there is ongoing surge in Covid-19 cases, indisputably making travel far more risky than in the past. It is worth adding that the granting of the requested protective order is also consistent with the provisions of Code of Civil Procedure §1989, stating that a witness who is not a resident of the State of California is not obliged to attend as a witness before any court, judge, justice or any other officer. (See also, Toyota Motor Corporation v. Superior Court (2011) 197 Cal.App.4th 1107, 1113 [“section 1989 applies not only to those witnesses obliged to attend as witnesses in court proceedings, but those witnesses obliged to give testimony by deposition before deposition officers”].)

Continuance

As noted above, the opposition requests that if the Court finds proper notice of the moving papers, the hearing be continued four weeks so Maciora can file “a vigorous opposition and request for sanctions.” As Maciora has already had a full and fair opportunity to prepare “a vigorous opposition and request for sanctions” in advance of the current hearing date, the Court finds no grounds which warrant a continuance of the hearing on the present motion.

Disposition

For the reasons explained above, SST’s motion for protective order requiring its deposition to take place in Dallas County, Texas is GRANTED. SST’s request for monetary sanctions is DENIED since the Court is unable to conclude that Maciora’s opposition was not substantially justified under the circumstances.This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)