Case Update - MEC v Kenneth Maciora et al
Item 2 2016-00202624-CU-SL
MyECheck, Inc. vs. Kenneth Maciora
Nature of Proceeding: Motion to Compel Further Responses to Special Interrogatories - Scheduled November 14, 2018
Filed By: Maciora, Kenneth
** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel / opposing party in propria persona of the specific interrogatory(ies) or issue(s) on which oral argument is sought.
** Defendant and Cross-Complainant Kenneth Maciora’s (Maciora) motion to compel further responses to his first set of special interrogatories is GRANTED in part and DENIED in part.
Overview
The court previously described this case as follows:
This case presents a multi-party business dispute. In the 3AC, 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 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.
The 3AC contains 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 B&P Code §17200 et seq. (See 3/28/18 Order on Demurrer.)
Maciora filed a cross-complaint against MEC (and others) for multiple causes of action. The cross-complaint contains allegations that MEC and the other cross-defendants, including Cross-Defendant Edward G. Starrs (Starrs), are each other’s alter egos.
As a cross-complainant, Maciora served MEC with his first set of special interrogatories on 5/08/18. (He had served special interrogatories in his capacity as defendant but was entitled to serve additional special interrogatories as a cross complainant.)
MEC served objections and responses on 6/07/18. Maciora filed this
motion on 9/04/18, but the court directed him and opposing counsel to resume efforts and at an informal resolution. Among other things, MEC had served some amended responses to the interrogatories after Maciora filed the motion. The parties have now narrowed the motion substantially. The court commends them
for their efforts. The special interrogatories that require the court’s attention are Nos. 6 and 18-21.
Discussion
Special Interrogatory No. 6 GRANTED
Special Interrogatory No. 6 reads: “Identify all MyEcheck employees who possessed MyEcheck ATM cards, debit cards and credit cards broken down into years 2014, 2015, 2016, and 2017.” MEC initially objected without providing a substantive response. In an amended response, MEC identified Starrs as one possessing an MEC credit card and debit card, but it rested on its objections that the interrogatory is otherwise irrelevant and not reasonably calculated to lead to discovery of admissible evidence.
The burden was on MEC to justify its objections. Given Maciora’s alter ego allegations, the identities of those with MEC credit cards or debit cards is reasonably calculated to lead to evidence as to whether MEC’s funds were used for an alleged alter ego’s purposes. As a result, the objections are overruled, and MEC must provide a further amended response.
Special Interrogatory No. 18 DENIED
This interrogatory reads: "Describe in detail the reason for each ATM withdrawal out of MyEcheck bank accounts and what the use was for those withdrawals?" MEC objected that the interrogatory is overbroad and unduly burdensome (among other things), and the objections are sustained. No further response is required.
It appears that, during the meet-and-confer process, Maciora agreed to narrow the call of the interrogatory. MEC was not required to answer an interrogatory other than the one propounded. The court expresses no opinion about the merits of a different
version of Special Interrogatory No. 18.
Special Interrogatory No. 19 DENIED
This interrogatory reads: “Identify all Mycheck employees who have met Matthew Hansen in the years 2014, 2015, 2016, and 2017.” In the cross-complaint, Maciora alleges that Matthew Hansen is one of Starr’s alter egos. (X-Compl., ¶ 24.) Maciora further alleges that Starr used the Hansen identity to commingle MEC’s funds with those of another cross-defendant. (See id., ¶ 41.) That being said, the first set of special interrogatories defines “Matthew Hansen” as an individual whose name is spelled nine different ways. MEC objects that this definition renders the interrogatory is vague and ambiguous, and the objections are sustained. Maciora offered to redefine the interrogatory, but MEC was only required to respond to the interrogatory actually served. No further response is required.
Special Interrogatories Nos. 20 and 21 GRANTED
These interrogatories read, respectively: "Describe in detail the reason for any transactions and/or charges which appear on MyEcheck bank statements from Gregg's Pool Works and identify the office address of where any work was done by Gregg's Pool Works;” and "Describe in detail the reason for any transactions and/or
charges which appear on MyEcheck bank statements from Merry Maids and identify the office address where any work was done by [Merry Maids].”
MEC raised the following objections to each: "RESPONDING PARTY objects to this interrogatory because it interrogatory fails to comply with Code of Civil Procedure section 2030.030 subdivision (b) as the PROPOUNDING PARTY has exceeded the limit of special interrogatories. RESPONDING PARTY also objects to this interrogatory on the basis that it is duplicative of other discovery propounded in this action, it is vague, ambiguous and overly broad as to scope and time, and it is harassing, unduly burdensome, and an abuse of the discovery process. Moreover, the interrogatory calls for a legal conclusion and seeks information protected by the attorney-client communication privilege and/or attorney work product doctrine. In addition, plaintiff objects on the grounds that this interrogatory seeks information relating or pertaining to expert consultation, which is premature at this stage of the litigation. Further, RESPONDING PARTY objects to the extent that this interrogatory would necessitate the preparation in the making of a compilation, abstract, audit, or summary of
or from documents. RESPONDING PARTY also objects to this interrogatory on the grounds that it is irrelevant to the subject matter of the instant litigation, and the information sought is not reasonably calculated to lead to the discovery of admissible evidence. Lastly, RESPONDING PARTY objects to this interrogatory to the extent that it seeks the disclosure of information and reference to documents that are proprietary in nature and or contain confidential information.
With one exception discussed below, the objections are overruled. In the Joint Statement filed on 10/19/18, MEC only defends its objections with an argument that the requests are directed at alter ego allegations that do not go to the heart of any legal claim. To support this argument, MEC cites two cases acknowledging that discovery of an adversary’s financial information can result in abuse. (See Jt. Stmt. at 18:4-6.) However, these cases do not hold that discovery directed at alter ego allegations is presumptively abusive, and MEC has not demonstrated that responses
to the subject interrogatories would result in abuse. For that reason, MEC must provide amended responses containing substantive information.
The court agrees with MEC, however, that it possesses some interest in maintaining the confidentiality of its financial transactions. The court thus orders Maciora not to disclose the amended responses to Special Interrogatories Nos. 20 and 21, or the information contained therein, to anyone other than a party in this case, the court and its staff, court reporters providing services in this case, and experts or others assisting Maciora in this case.
Sanctions
No monetary sanctions are awarded.
Disposition
The motion is granted in part and denied in part on the terms above. To the extent the motion is granted, MEC is directed to serve verified amended responses, without overruled objections, no later than 12/05/18.
The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.
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