Opinion
F076025
06-15-2020
CBA INTERNATIONAL, LLC, Plaintiff and Appellant, v. MARK NAKATA et al., Defendants and Respondents.
George J. Vasquez for Plaintiff and Appellant. Thornton Law Group and Douglas V. Thornton for Defendants and Respondents, Eufracio Ortiz, Maria Ortiz, and Circle of Confidence Growers, LLC. Wild, Tipton & Carter, Tracy A. Agrall and Bruce M. Brown for Defendants and Respondents, Mark Nakata, Ted Nakata, MMN Farm Management, LLC, and Nakata Sales and Marketing.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Fresno Super. Ct. No. 15CECG00428)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Kristi Culver Kapetan, Judge. George J. Vasquez for Plaintiff and Appellant. Thornton Law Group and Douglas V. Thornton for Defendants and Respondents, Eufracio Ortiz, Maria Ortiz, and Circle of Confidence Growers, LLC. Wild, Tipton & Carter, Tracy A. Agrall and Bruce M. Brown for Defendants and Respondents, Mark Nakata, Ted Nakata, MMN Farm Management, LLC, and Nakata Sales and Marketing.
-ooOoo-
On February 9, 2015, appellant CBA International, LLC ("CBA" or "plaintiff") filed a complaint against respondents, among others. As explained further below, the complaint was based largely on two transactions: a purchase of agricultural real estate involving CBA and the Nakata respondents, and a subsequent agreement for the Ortiz respondents to grow pistachio trees for CBA. Shabbir Chaudhry, who handled the transactions on behalf of CBA, and respondent Mark Nakata (Nakata) testified to substantially different versions of the events surrounding these transactions. In our view, both Nakata and Chaudhry made claims in their trial testimony that were of questionable credibility. However, judgment below was entered in favor of respondents. Viewing the evidence in favor of the judgment, we conclude appellant's contentions must be rejected and affirm the judgment.
We also reverse an order granting a motion to quash a subpoena and imposing sanctions.
STATEMENT OF THE CASE
The complaint alleged causes of action under the following headings: breach of contract, common count, negligence, fraud (intentional misrepresentation), fraud (concealment), fraud (false promise), fraud (negligent misrepresentation), conversion, intentional interference with contractual relations, conspiracy, breach of fiduciary duty and constructive fraud, quiet title, and unfair business practices. The intentional interference and fiduciary duty causes of action were alleged against Nakata only. The remaining causes of action were alleged against all defendants.
In December 2015, CBA subpoenaed United Security Bank for documents relating to the banking transactions of respondent Circle of Confidence Growers, LLC (an entity owned by the Ortiz respondents), from January 1, 2013 through December 31, 2015. The Ortizes filed a motion to quash the subpoena, which the court granted.
A court trial was held in October 2016. The court found in favor of respondents and entered judgment accordingly.
FACTS
Nakata met with Gabriel Olmos and Michael Cook to discuss flipping properties. Nakata told them he had a property that he could "get locked up into a contract and then find a potential buyer for after it was in escrow and then ... sell it to another person for slightly higher ...."
C.P.A. Frank Zabaleta testified that in August or September 2012, he received a "cold call" from Nakata. Nakata asked if Zabaleta was interested in selling a property Zabaleta owned. The property consisted of 13 lots totaling roughly 440.87 acres. Nakata said he had a buyer or potential buyer for the property.
Nakata brought a written offer to Zabaleta dated October 17, 2012. The offer identified Cook as the buyer. Around November 29, 2012, Nakata brought a second written offer for the property to Zabaleta. The offer listed the buyer as "Michael Cook or assignee." Nakata did not explain who Michael Cook was other than saying he was a potential buyer. Nor did Nakata identify any anticipated assignees. Zabaleta accepted the second offer at a price of $1,102,175 or $2,500 per acre.
Olmos testified that because they intended to flip the property, Cook did not intend to purchase the property for himself. Nakata, however, testified that Cook was the person looking to purchase the property and "controlling what was going on."
Nakata testified to a different version of the facts. Nakata said he simply relayed messages between Cook, who was trying to buy the property, and Zabaleta. However, in e-mails to Zabaleta, Nakata would say things like, "[I] have been working on the terms with the buyer" and "I will forward a message to my buyer." Nakata claimed at trial that he did not know who the ultimate buyer would be, and that only Cook and Olmos knew. Nakata said he should have said, "we" in the e-mail rather than "I."
On March 18, 2013, Zabaleta signed a purchase agreement dated March 15, 2013, and sent it to Nakata.
By June, escrow for the sale of the Zabaleta property still had not been opened, and Zabaleta was growing frustrated. Zabaleta had an existing lease under which someone was farming on the property. Due to the pending sale, Zabaleta did not want to have the lessee plant another crop - "[s]o we basically just had everything on hold."
When asked if Nakata was representing him as a real estate professional at this point, Zabaleta testified, "I don't know if I would go that far. I was under the impression he was representing a buyer as their representative, whatever capacity and he was negotiating on their behalf to me."
Nakata provided Zabaleta a second purchase contract, which Zabaleta signed on July 24, 2013. The contract provided for the same purchase price of $2,500 per acre. However, this purchase contract identified the buyer as "MMN Farm Management LLC [(MMN)], and or assignees." This was the first document Zabaleta saw identifying MMN as the buyer.
Cook had "backed out" of the deal in late 2012 or early 2013. Cook said he did not "feel good" about Nakata. Nakata claimed Cook exited the deal because he wanted too much money.
At the end of the contract was a signature block that reads: "MMN Farm Management L.L.C. and or assignees (Buyer)." By the time of trial, Zabaleta believed the signature that appears on the contract above that designation belongs to Olmos. However, in July 2013 when Zabaleta signed the contract, he "probably" did not know that.
There was an "addendum" to the contract appearing immediately below the signature block. The addendum provided that "Buyer" (i.e., MMN) would deposit $10,000 to open escrow and $290,000 to close escrow. The addendum also provided that $802,175 of the purchase price would be seller financed and laid out the terms of the financing.
Nakata signed a separate addendum dated July 27, 2013, that referenced Nakata receiving a "commission" in the amount of 5 percent of the gross sale. Nakata testified that his lawyer told him he could not receive a commission, so he ultimately proceeded without commission.
MMN Purchases Approximately 96 Acres from Mendozas
Around the same time, MMN purchased an approximately 96-acre property from Raquel and Irma Mendoza for approximately $2,250 per acre. According to Nakata, the Mendoza property was "contiguous" with the Zabaleta property. However, Chaudhry indicated there was a separate five-acre property dividing the Mendoza and Zabaleta properties.
Nakata Meets Chaudhry
Meanwhile, around May or June of 2013, a real estate agent had introduced Nakata to Shabbir Chaudhry with CBA International. Nakata told Chaudhry he was a consultant who helped farmers "get the crops better, get the better production, and things of that nature." Chaudhry did not have farming experience but was interested in planting pistachio trees.
Shabbir Chaudhry testified he is a member of appellant CBA International. However, a document filed with the Secretary of State in 2016, lists Chaudhry's brother as the "sole member" of the LLC. Eventually, Chaudhry admitted that no legal documents show that he has any ownership interest in CBA.
Nakata showed Chaudhry three properties, including the combined Zabaleta-Mendoza properties (i.e., the "subject property"). Chaudhry testified he did not learn the subject property was in fact two separate properties sold by separate owners until much later. Nakata provided a printout that contained a price for each property. The price listed for the subject property was $4,500 per acre.
Chaudhry decided to pursue the subject property. Chaudhry called Nakata and asked if the property was still available. The two discussed acquiring the property and how to plant pistachios on it.
Chaudhry testified Nakata told him there was "plenty of water available and also [a] canal next to it and we can get all the water we want." Yet, this turned out to be untrue. The canal was owned by a separate company, and the "[a]verage person cannot get the water from it."
Nakata disputed Chaudhry's account, testifying that he (Nakata) told Chaudhry that the water district had a canal running along the north side of the property, and that the large canal viewable from the property was privately owned by another company.
Nakata testified that he told Chaudhry "at the very beginning" of their relationship that MMN was an entity under which Nakata operated his farm management business; and that MMN was the seller of the subject property. In their "original conversation" about the property, Nakata told Chaudhry that he was not a real estate agent, and that "the only way I can participate in a real estate transaction is through a double escrow."
In contrast, Chaudhry testified Nakata did not say his company, MMN, had the property under contract. Chaudhry thought MMN was "the CPA guy's company" (presumably referring to Zabaleta). Chaudhry assumed Nakata was acting as his (Chaudhry's) agent. However, Chaudhry admitted Nakata never told him he was acting as Chaudhry's agent. Nor did Nakata ever tell Chaudhry he was a real estate agent or broker.
Chaudhry's Version of Negotiations
Chaudhry testified that he asked Nakata what he should offer for the property. Nakata told Chaudhry he should "start low" with his offer and "go from there." Nakata recommended starting with an offer of $2,000 per acre. Chaudhry agreed to make an offer for $2,000 per acre.
About a week later, Nakata told Chaudhry the sellers were not impressed by his offer. Nakata told Chaudhry to increase the offer to $2,500 per acre. Relying on Nakata's statements, Chaudhry offered $2,500 per acre.
Nakata told Chaudhry the sellers were "not moving." Nakata recommended increasing the offer to $3,000 per acre. Chaudhry did not know that Nakata had the Zabaleta property "locked up" for $2,700 per acre. Chaudhry increased his offer to $3,000 per acre.
Three or four days later, Nakata told Chaudhry the sellers "came down" to $4,250 per acre. Nakata recommended Chaudhry increase his offer to $3,500 per acre, which he did. A couple days later, Nakata said the sellers "counter[ed]" at $4,000 per acre. Nakata recommended to "meet in the middle" by offering $3,750 per acre, to which Chaudhry agreed.
Nakata's Testimony Regarding Negotiations
Nakata testified that Chaudhry/CBA was his client during negotiations with Zabaleta. However, Nakata also said he was trying to "help" both CBA and "the sellers" (apparently referring to Zabaleta and the Mendozas).
Nakata testified that Chaudhry made an offer of $2,000 per acre or "something like that." Nakata brought the offer to Olmos, who replied, "Absolutely not." Nakata testified that every time Chaudhry made an offer, Nakata would bring the offer to Olmos and discuss it with him. Olmos contradicted Nakata's testimony on this point, saying Nakata never came to him identifying CBA's offer and seeking his input. Olmos testified he had no input on the parameters of the deal and that Nakata made all pricing decisions on behalf of MMN.
Olmos Disassociates from MMN
Olmos disassociated from MMN in the fall of 2013. When he left, he took $80,000 out of MMN's bank account. When asked why, Olmos testified, "Well, I had a few deals that we were working on. So any interest I was to collect later on, through MMN, I figured to take ...." Olmos informed Nakata he had taken the money. Nakata responded that he was "unhappy but he was okay."
As noted above, a deal was eventually reached at $3,750 per acre. Nakata did not disclose the price difference between what MMN paid and what Chaudhry was paying.
Zabaleta testified Nakata never told him that Nakata himself was a beneficiary of the negotiations between the two of them. However, Zabaleta later testified that he "kind of basically figured out [Nakata] was involved because of the name of the entity[, MMN]. I didn't know exactly why he was necessarily buying or that he was buying it. But I assumed it was just put together, the package for a buyer." However, Zabaleta said he did not know Nakata "was not negotiating with me on the up and up." Zabaleta would not have gone through with the sale if he had known the sales price from MMN to CBA.
Purchase Agreement with Chaudhry
A purchase agreement dated July 23, 2013, was prepared whereby Chaudhry, his brother, and/or their assignees would buy the subject property for $2,017,050 or $3,750 per acre. According to Chaudhry, Nakata said that he had prepared the purchase agreement. Nakata testified, however, that he and Olmos prepared it together. Nakata also testified that he sent a copy of the agreement to Chaudhry's attorney.
The purchase agreement referred to the subject property as "Land Owned by M.M.N. LLC." However, MMN's own purchase contract with Zabaleta was not fully signed until August 19, 2013. When asked at trial why the contract dated July 23, 2013, said MMN owned the land, Nakata said, "I can't answer that" and that Olmos "has to answer that."
Escrow and Surrounding Events
Initially, North American Title was going to be used as the escrow company for the three escrows (i.e., Zabaleta's sale to MMN; Mendoza's sale to MMN; and MMN's sale to CBA). Nakata told Chaudhry to take a $25,000 check to North American Title Company and to sign some papers there. Chaudhry signed the purchase agreement without reading it and submitted the $25,000 check. Chaudhry saw that MMN, LLC was the seller, but he did not know that MMN was Nakata's company. Chaudhry thought MMN was "the CPA guy's company." In contrast, Nakata testified that he told Chaudhry that MMN was the entity Nakata used to conduct his farm management business.
North American Title wanted to disclose both sales prices to all parties. While Nakata knew he had to disclose the fact that a double escrow was occurring, he objected to the disclosure of the actual prices. Escrow with North American Title was cancelled, and another escrow was opened with Fidelity National Title.
According to Chaudhry, Nakata told him to pick the $25,000 check back up from North American Title Company and take it to a different title company. Nakata said, "Screw them. They taking [sic] too long." Chaudhry complied.
The escrows were opened with Fidelity National Title Company. Before escrow with Fidelity closed, Zabaleta received a phone call from Fidelity's escrow officer. She asked if Zabaleta was aware the transaction involved a double escrow. According to Zabaleta, that was the first time he learned of the double escrow. Zabaleta asked if his deed of trust would remain in first position if a double escrow was used. The escrow officer replied affirmatively and said there would be no problem. Zabaleta was "okay" with the double escrow because he was going to get paid, regardless of who was ultimately going to buy the property. However, Zabaleta did not know the price differential between the two sales, which "might have changed [his] opinion of the double escrow."
The escrow officer did not remember making the call, but acknowledged the transaction occurred "quite a while ago."
Nakata testified that he did in fact tell Zabaleta that he intended to pursue a double escrow. Nakata suggested that maybe Zabaleta forgot that he had told him about the double escrow.
Zabaleta received a seller's financial closing statement at the close of escrow. It contained the following line item: "Nakata Sales and Consulting for payment, 6,945.28." Zabaleta assumed the line item was Nakata's commission. However, Zabaleta did not have a contract with Nakata Sales and Consulting.
According to Nakata, he received payment from the sellers through escrow for work he did for them including analyzing the property and performing a soil test. In addition to the $6,945.28 received from the Zabaletas through escrow, Nakata Sales and Consulting also received $5,456.81 from the Mendozas. The latter amount is exactly 2.5 percent of the sales price of the Mendoza property (rounded to the nearest cent). Nakata testified that if this amount constituted 2.5 percent of the sales price, that would be a "total coincidence."
Chaudhry testified that Nakata told him that Chaudhry's brother should sign the escrow paperwork. Chaudhry said he himself could sign because he has a power of attorney. Nakata said, "No. The title company is making a big issue of it." Chaudhry's brother ultimately signed the escrow paperwork without Chaudhry present.
In contrast, Nakata claimed he never told Chaudhry that his brother had to sign the escrow documents. Nakata testified that Fidelity's escrow officer is the one who told Chaudhry his brother had to sign.
Among the closing documents for the sale was a double escrow disclosure document. The document discloses that a double escrow is occurring. The document does not disclose both sales prices. Chaudhry's brother signed the double escrow disclosure on behalf of CBA. However, Chaudhry himself did not review the closing documents, including the double escrow disclosure, before close of escrow.
Olmos signed a series of escrow documents on behalf of MMN. According to Olmos, Nakata said he wanted Olmos to sign because Nakata "didn't want it to appear as though a conflict of interest [sic] ... for another side deal he had going on ...."
Chaudhry paid $625,000 at the close of escrow. Up through the time of closing, Chaudhry thought the seller of the property was "some CPA guy."
Summary of Sales Prices
In summary, MMN bought the approximately 96-acre Mendoza property for $2,250 per acre and sold it to CBA for $3,750 per acre. MMN bought the approximately 440-acre Zabaleta property for $2,500 per acre and sold it to CBA for $3,750 per acre. Nakata never disclosed the amounts of these price differentials to Chaudhry.
Payments Due on Zabaleta Seller-Financing
Nakata paid Zabaleta the first payment due on the seller-financed note. Zabaleta did not question why Nakata was paying him, rather than "the buyer." Zabaleta "assumed the note was with MMN" and that MMN had been ultimately the entity that was paying him. Zabaleta was "fine with" the payments coming from Nakata.
Another payment was due on the seller-financed note in July 2015. Zabaleta had to threaten to foreclose on the property due to late payment. Partial payment of $10,000 was finally made in December 2015 and the rest of the payment due (i.e., $60,000) was not paid until February 2016.
As of Zabaleta's testimony on October 6, 2016, he was stilled owed a payment on the note that had been due back on July 21, 2016. On September 23, 2016, Zabaleta sent a notice of default to MMN and Nakata.
Postclosing Events
After closing, Chaudhry wanted to prepare the farm to plant pistachio trees.
Conflicting Testimony Concerning Relationship and Payments Between CBA to Nakata
According to Chaudhry, he and Nakata agreed that Nakata would be farm manager for CBA and would do "whatever was necessary for us to get to the point where we can plant the trees and move on." Whenever Nakata did "leg work" for the property, Chaudhry would pay him. For example, Chaudhry paid $3,222 pursuant to an invoice from Nakata Sales & Consulting dated May 5, 2014. Chaudhry also paid $2,000 pursuant another invoice from Nakata Sales & Consulting, also dated May 5, 2014, for the line item "deposit - consulting contract."
In contrast, Nakata testified that Chaudhry did not pay the two invoices at all. Indeed, Nakata testified that Chaudhry never hired him as a consultant, even though Nakata presented him a consulting contract.
Search for a Nursery; Subsequent Events
Nakata took Chaudhry around to several nurseries. The nurseries had greenhouses, tractors and a "bunch of trees." However, none of the nurseries had trees available for sale in 2013 or 2014. Chaudhry wanted to plant as soon as possible. Nakata suggested "we grow our own" Pistachio trees from seed. Nakata said, "[W]e need to secure the seeds first" and then "I'll find a nursery." Chaudhry gave Nakata a check, who used it to buy 50,000 seeds from a nursery. A week or so later, which happened to be in December 2013, Nakata told Chaudhry he had found a nursery. Nakata said it was a "great" nursery, and that they "grow everything." Nakata said it was a "pretty big nursery."
Nakata contacted respondents Eufracio and Maria Ortiz about them starting a nursery. On January 8, 2014, Nakata brought a nursery contract he drafted to the Ortizes whereby they would grow 50,000 trees for a stated price of $5.25 per tree for CBA. The Ortizes had no experience growing pistachio trees or running a business, but Nakata said he would "guide" the Ortizes "in everything." Eufracio thought it sounded like a good business opportunity, so he agreed to grow the trees and signed the contract. Eufracio understood that the nursery contract required that he purchase insurance that covered crop losses. The Ortizes signed the contract on January 8, 2014.
Eufracio Ortiz had been a "fieldworker" in agriculture but had not worked with pistachio trees.
Separately, Eufracio and Nakata agreed that Eufracio would pay Nakata $2,500 per month for Nakata's guidance. The Ortizes gave Nakata an initial retainer of $2,500 for consulting services. However, Nakata did not "bill" the Ortizes for the subsequent monthly payments. Nakata said he refrained from billing the Ortizes because of the present lawsuit and that they would discuss it after the lawsuit was over. As a result, the Ortizes did not pay Nakata for the ongoing consulting services after the initial retainer. Nakata helped Eufracio and Maria create the nursery's business entity, Circle of Confidence Growers, LLC in February 2014.
Nakata then brought the nursery contract to Chaudhry. The stated price of $5.25 per tree was more than $1 per tree less than what Chaudhry would have paid for budded trees. The nursery contract required all the trees be provided in two-gallon plastic sleeves. The contract further required that the trees be three and a half feet tall "or greater" by March 2015. The contract required that the Ortizes follow all of Nakata's nutritional recommendations.
The contract provided that CBA would pay $5.25 per tree, the sum of which would be spread across four payments. The amount of trees was subsequently increased from 50,000 to 60,000 trees, which meant a total price of $315,000.
Chaudhry testified he would not have hired the Ortizes if he had known they were not experienced growers. In contrast, Nakata testified that he did tell Chaudhry the Ortizes had no nursery experience. Nakata assured Chaudhry that he (Nakata) would "help ... out" the Ortizes.
The nursery contract had already been signed by respondents Maria and Eufracio Ortiz when Nakata brought it to Chaudhry. Chaudhry signed the contract and his signature is dated January 25, 2014. Chaudhry gave Nakata a check for around $6,000 or $7,000 at signing.
Seeds are Planted
The Ortizes planted 50,000 seeds in February 2014 and the additionally ordered 10,000 seeds in April. Eufracio used $120,000 received from CBA to purchase grow lights, dishes to grow seeds, bags of clean dirt, hoses, buckets, PVC piping, galvanized piping, sprinklers, connectors, resistors, shovels, screws, welding materials, machines, fertilizer, and a cement mixer. Also, the nursery paid about $40,000 in rent for the 16 to 18 months it operated.
Payment from CBA to Ortizes
Chaudhry wrote a check from CBA to "Circle of Confident Growers" for $62,500 dated March 10, 2014. Nakata is the one who told Chaudhry to make the check out to Circle of Confidence Growers.
Seller Financing Payment Due July 1, 2014
A payment to Zabaleta under the seller financing agreement for the land purchase was due July 1, 2014. In mid- or late-June, Nakata called Chaudhry and told him payment was due. Chaudhry asked, " 'What's the rush? Payment is not due until July 1st. And, by the way, how come you are calling me and why not the sellers [i.e., Zabaleta] calling me and demanding?' " Nakata said, " 'Well, since I put the deal together for them, they [are] asking me to call you.' " Nakata testified that he did not recall this phone conversation.
Nakata told Chaudhry to mail the check to MMN Farms Management, LLC. Chaudhry testified he still did not know Nakata owned MMN at this point. Chaudhry wrote a check to MMN dated July 1, 2014, in the amount of $100,000.
Chaudhry received a letter on or about July 2, 2014. At the top, the letter was addressed to CBA International, LLC and indicated it was "from" MMN Farm Management LLC. The body of the letter said CBA International LLC had missed its first installment payment regarding the Alpaugh property. The signature block read: "Sincerely, Mark Nakata." Nakata testified he wrote the letter. Chaudhry said he threw the letter in the trash because he had already made the payment.
Second Installment Payment under Nursery Contract
Maria Ortiz sent an invoice for the second installment payment to Chaudhry on July 1, 2014. She did not receive payment from CBA, so Nakata loaned Circle of Confidence Growers $15,000 via a check dated July 18, 2014.
The loan was never repaid. However, as of trial, Nakata still expected the Ortizes to pay the loan back.
Nursery Operations Continue
Meanwhile, the Ortizes were growing the trees under Nakata's guidance. Nakata advised the Ortizes on what "earth" to buy, as well as the type and amount of fertilizer to apply. The Ortizes followed Nakata's directives to the letter.
At some point, Eufracio informed Nakata that not all of the 60,000 seeds were "born" (i.e., germinated). Out of the 60,000 seeds, around 45,000 of them germinated. The nursery contract required at least a 90 percent germination rate (90 percent of 60,000 is 54,000). In order to fulfill the nursery contract with CBA, Eufracio ordered (through Nakata) 18,000 pistachio trees from S&J Nursery (S&J) at a cost of $73,800. Eufracio paid for $20,000 of this cost via his own credit cards, and Nakata paid for the rest of the balance. The invoice for the 18,000 trees indicated they were sold to MMN Farm Management, LLC.
According to Chaudhry, in early August 2014, Nakata recommended that the budding of the trees should be done at the farm rather than the nursery. And since Circle of Confidence would no longer be doing the work associated with budding the trees, Nakata told Chaudhry to deduct $0.50 per tree (i.e., $30,000) from the second payment under the nursery contract. Chaudhry said, "If you think that's better, that's fine."
However, Nakata testified that Chaudhry failed to provide the requisite bud material. Therefore, Chaudhry had "no choice but to try to bud the trees in the field."
On August 3, 2014, Nakata e-mailed Maria. He said that using bamboo was not necessary because grafting was not going to be done in the greenhouse. Nakata explained at trial that bamboo was used to hold up new growth of the tree. Nakata acknowledged that the nursery ultimately did not use bamboo, as required by the nursery contract.
On August 11, 2014, Circle of Confidence Growers recorded a notice of completion. (See Civ. Code, § 3093.) Nakata accompanied the Ortizes to the county recorder's office to record the notice. Nakata also provided the Ortizes with certain addresses used in the notice of completion.
The notice of completion listed CBA as the "owner" and stated, "The nature of the property interest or estate of the owner is 60,000 UCB-I pistachios." In fact, the nursery only had 43,000 pistachio trees at the time.
The notice of completion stated Circle of Confidence Growers had germinated, grown and transplanted the pistachio trees. The notice stated that work had been completed on July 1, 2014. However, on July 13, 2014, Maria e-mailed Nakata saying they "still have like 12-15 thousand plants that need to be transplanted from [the] green house."
Maria sent several e-mails to Nakata around this time, expressing concern that they were "behind" with the trees. However, Nakata testified that he believed Maria was incorrect and that they were not behind.
Maria sent a second invoice to Chaudhry for the second installment payment on August 12, 2014. Chaudhry wrote a check to Circle of Confidence Growers for $45,000 dated August 14, 2014.
October 2014 Meeting Between Chaudhry and Nakata
In or around October 2014, Chaudhry was in his brother's office when he saw an envelope from Nakata. Chaudhry wondered why the envelope was on his brother's desk and opened it. Chaudhry used Google to search for the acronym "MMN" and saw a result that said, "Mark Masao Nakata." According to Chaudhry, this came as a complete surprise. Chaudhry testified he had "completely trusted this guy," and he was now "totally baffled" and "extremely pissed off." Chaudhry called Nakata and asked him to come to the office. Chaudhry asked Nakata, " 'Who [sic] is MMN?' " Nakata replied, " 'That's a company I'm part of.' " Chaudhry asked, " 'Did you sell me this property?' " Nakata's face "started turning colors." Chaudhry repeated, " 'Did you sell me this property?' " Chaudhry continued, " 'Did you sell me this property? All along you were negotiating, I thought, on my behalf. Had I known you were the seller, I wouldn't have negotiated with you.' " Chaudhry asked, " 'What about that CPA guy? You said CPA selling me the farm.' " Nakata had no answer. Chaudhry told Nakata "to get the 'F' out of my office," and the two never spoke again.
Nakata had a different recollection of the meeting with Chaudhry. According to Nakata, he asked Chaudhry why he had not started to develop the property yet. Nakata asked Chaudhry, " 'Do you have the money to do this?' " Chaudhry, "blew up" and told Nakata to get out of his office. Nakata claimed Chaudhry did not ask him at the meeting whether he was truly the seller of the property.
According to Chaudhry, he began to wonder if Nakata had also acted improperly with respect to the nursery deal. He contacted respondent Maria Ortiz and introduced himself as "Shabbir Chaudhry from CBA International." Chaudhry said her nursery should have 60,000 of his trees. She responded, " 'No, I don't.' " She reiterated that she did not have 60,000 pistachio trees at the nursery. Five minutes later, she called back and said she did in fact have his 60,000 pistachio trees at the nursery.
According to Maria, she texted Chaudhry a picture of the pistachio trees and said, " 'Confirming your total order is 60,000 pistachio trees. Here are pictures.' " In fact, there were not 60,000 trees at the nursery at that time. Maria testified that what she meant by the text message was that "we were working hard to provide his 60,000 trees." Also, the nursery had already ordered the additional 18,000 trees which, when combined with the trees at the nursery, would total 60,000 trees.
Nakata testified that this actually totaled more than 60,000 trees, and that he sold the excess trees to a third party. Nakata believed it was 6,000 trees "or something" like that, and that they were sold for some $7 per tree.
Chaudhry decided to visit the nursery. According to Chaudhry, he was "shock[ed]" to find that the nursery had a "little warehouse" and trees of all different sizes in "very, very poor condition." Chaudhry concluded the nursery operation was a "joke," and felt he had been defrauded by Nakata again. While Nakata had told him the nursery grew various types of trees, there were no other trees except those belonging to CBA.
According to Eufracio, there were 43,000 to 44,000 trees at the nursery at the time. The trees ranged in size, some were "big" and others were "small" as in about 18 inches tall. Eufracio estimated 5,000 of the trees were 18 inches or smaller because they had been planted at a different time. A greenhouse was also being built at the nursery.
Eufracio testified that he told Chaudhry that there were about 44,000 trees and that he (Eufracio) had ordered 18,000 more. However, Chaudhry testified that the Ortizes did not inform him they were purchasing more trees to supplement the shortfall. Chaudhry told the Ortizes he was not going to make further payments under the nursery contract.
Chaudhry met with Maria and Eufracio Ortiz in early November. By the time of the meeting, Chaudhry had paid the Ortizes around $120,000. Chaudhry asked the Ortizes if they had worked at a nursery before, and they responded, "[N]o." Chaudhry asked their background, to which Maria responded she had worked in a department store, and Eufracio responded that he was a truck driver.
James Hose's Testimony
At some point after the relationship between Chaudhry and Nakata had soured, Chaudhry called James Hose. Chaudhry told Hose he had recently declined an offer of $8,000 per acre for the property. Chaudhry also told Hose that the trees at the nursery were not growing evenly - some were 16 inches tall and others were 30 inches tall.
The Ortizes told Chaudhry that Nakata was "handling the insurance" for the nursery. The nursery did obtain an insurance policy, but Chaudhry understood it to be a liability insurance policy in Nakata's name; not a crop insurance policy with CBA as the beneficiary. Nakata himself testified he had "no idea" why the policy lists "Mark Nakata" as a named insured. Chaudhry believed this failure to obtain proper insurance was a breach of the nursery contract.
Chaudhry retained an attorney who had "experts" examine the trees at the nursery. The experts advised that the trees be transplanted to a professional nursery because "maybe" some of the trees could be salvaged. Chaudhry testified that he tried to gain access to the trees, but Judge Black denied access. Instead, Judge Black ordered that the trees be sold, and the proceeds placed in a "special account." Chaudhry claimed that some of the money in the special account was subsequently spent, in violation of a court order. Chaudhry said he believed there should be about $271,000 in the account currently. However, Chaudhry has not seen any bank statements showing how much money is in the account.
The record before us contains little concerning this portion of the litigation, which neither party challenges on appeal. Presumably, Chaudhry was referring to the Honorable Judge Donald Black of the Fresno County Superior Court, who handled the motion to quash the subpoena.
Chaudhry testified he believes that if his 60,000 trees had been grown properly, they would have been worth $8 per tree. Chaudhry said his lawsuit is not seeking to recover the money he already paid to the Ortizes, but rather only the money in the trust account.
Eufracio testified he believes he is entitled to $150,000 from the trust account because of the "work" he "put into" the nursery.
CBA Fails to Make Payment on the Subject Property in 2015; Subsequent Events
Chaudhry did not make payment on the note for the subject property in 2015. In early 2016, he received a notice of default. The notice of default identified Mid Valley Services, Inc. ("Mid Valley") as the trustee, substituted trustee, or agent for the trustee of the Deed of Trust. Prior to the receiving the notice, Chaudhry had not been familiar with Mid Valley. He had never received any notice indicating the deed of trust had been transferred to Mid Valley.
In fact, Mid Valley had purchased the deed of trust on the subject property from Nakata for $110,000 in August 2014. Under their agreement, Nakata could repurchase the deed of trust for $110,000. However, he needed to pay Mid Valley $1,222.29 per month to retain this repurchase option. Initially, the repurchase window was set to terminate on September 1, 2015, but that window was subsequently extended.
In conducting due diligence before purchasing the note, Mid Valley had the property appraised. The appraised value of the property was "significantly higher" than the amount paid by CBA for the property.
At trial, Chaudhry testified he thinks the subject property is worth what he paid for it.
State of the Trees in 2015
At trial, Chaudhry testified he believed he did not owe the December 2014 payment because the Ortizes breached the nursery contract. Eufracio, however, believed he honored the nursery contract because he had 60,000 trees that were at least three and a half feet tall at the nursery as of March 31, 2015.
Nakata conceded in his trial testimony that the 18,000 trees that had been purchased later were not in two-gallon plastic sleeves as required by the nursery contract. However, Nakata believed the trees were "in good shape" as of March 2015. Nakata testified he "believe[s]" the trees were three and a half feet tall at the time.
Chaudhry claimed he never received notice that Circle of Confidence had 60,000 trees ready. Chaudhry saw the trees again in April or May 2015 and testified that they looked "not much" different than they had in October 2014.
Eventually, Circle of Confidence sold the trees to third parties.
Eufracio sold several thousand of the 18,000 trees previously purchased from S&J Nursery for $31,800 to a third party. Eufracio sold another approximately 55,686 trees to another third party for $269,430.
DISCUSSION
I. The Decision in Favor of Nakata on CBA's Breach of Fiduciary Duty Cause of Action is Supported by Substantial Evidence
CBA argues the court's implied findings as to its 11th cause of action for breach of fiduciary duty are not supported by substantial evidence. Specifically, there was insufficient evidence to support the trial court's implied findings that (1) CBA and Nakata did not have a fiduciary relationship; (2) that Nakata did not breach any fiduciary duty; and (3) that CBA suffered no damage from any alleged breach of fiduciary duty by Nakata. CBA argues the evidence compels findings of fact in its favor on these issues. We conclude the evidence is sufficient to support an implied finding that Nakata did not have a duty to avoid the conduct/omissions CBA alleges was improper.
While the trial court's statement of decision does not include express findings on some of these issues, CBA acknowledges that "when the court's statement of decision ... omits material factual findings, a reviewing court is required to infer any factual findings necessary to support the judgment. [Citations.]" (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 494.)
A. Law
Substantial evidence is evidence that is " ' reasonable in nature, credible, and of solid value such that a reasonable mind might accept it as adequate to support a conclusion. [Citation.]' " (South Coast Framing, Inc. v. Workers' Comp. Appeals Bd. (2015) 61 Cal.4th 291, 303.)
" 'The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.' [Citation.]" (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932.) By definition, if even one element is missing, a cause of action fails. (See Girard v. Ball (1981) 125 Cal.App.3d 772, 783.)
1. Fiduciary Duties of an Agent are Limited in Scope
An agent "is a fiduciary with respect to matters within the scope of the agency [citation]." (Van de Kamp v. Bank of America (1988) 204 Cal.App.3d 819, 857 (Van de Kamp).) The existence and extent of an agent's duties are determined by the agreement of the parties, interpreted in light of the circumstances under which the agreement was made. (Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 755.) In other words, an agent's duties are limited to the scope of the agency set forth in the agreement. (Meyers v. Guarantee Sav. & Loan Assn. (1978) 79 Cal.App.3d 307, 312; see also Van de Kamp, supra, 204 Cal.App.3d at p. 860.)
" 'The existence of an agency relationship is a factual question for the trier of fact, whose determination must be affirmed on appeal if supported by substantial evidence.' [Citations.]" (Valentine v. Plum Healthcare Group, LLC (2019) 37 Cal.App.5th 1076, 1086.) " ' "Only when the essential facts are not in conflict will an agency determination be made as a matter of law." [Citations.]' [Citation.]" (Ibid.)
B. Analysis
CBA insists that the evidence compels a factual finding that Nakata was acting as its agent in the purchase of the property. Certainly, there is some evidence Nakata was indeed acting as CBA's agent in the purchase of the property. The evidence is clear that Chaudhry communicated his offers to Nakata with the reasonable expectation they would be transmitted to the sellers. And Nakata himself considered CBA to be his client in the transaction. For the sake of argument, we will assume without deciding that Nakata was Chaudhry's agent in at least some respect to the property sale. If so, Nakata would owe some duties to his principal, CBA. For one, Nakata was required to disclose that he was acting in his own interest with respect to the transaction. (See Van de Kamp, supra, 204 Cal.App.3d at p. 861.)
According to Nakata's testimony, he satisfied this duty.
But that is not the end of the inquiry. Even assuming an agency relationship existed, and certain duties arose therefrom, Nakata's fiduciary duties to Chaudhry would still be limited by the scope of any such agency as determined by "the specific facts of the case. [Citation.]" (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 961.) And Nakata's testimony, if credited, established important limitations on the scope of his agency.
Specifically, Nakata testified to the following. Nakata told Chaudhry "at the very beginning" of their relationship that MMN was an entity under which Nakata operated his farm management business, and that MMN was the seller of the subject property. In their "original conversation" about the property Nakata told Chaudhry that he was not a real estate agent and that "the only way I can participate in a real estate transaction is through a double escrow."
Chaudhry's testimony on these points diverges significantly from Nakata's version of events. But we must look to the evidence and inferences that support the judgment.
The testimony described above, if credited, establishes that any agency created by the words and conduct of the parties did not prohibit - and indeed expressly contemplated - that Nakata (through MMN) would profit from the transaction through a double escrow. Thus, whatever duties Nakata owed Chaudhry, they did not include a duty not to personally profit from the transaction. Nakata disclosed that (1) MMN was the seller; (2) MMN was an entity under which Nakata operated his business and (3) that Nakata's involvement with the transaction would include personal profit (through MMN).
Of course, an agent does have a duty to "disclose whether it is acting on its own account or as an adverse party to the principal. [Citations.]" (Van de Kamp, supra, 204 Cal.App.3d at p. 857.) Any such duty was satisfied here by Nakata's disclosures to Chaudhry.
In sum, while Nakata may have owed some duties to CBA, the circumstances of the agency relationship were such that Nakata owed no duty to avoid personally profiting from the transaction. Therefore, we conclude that the evidence supports an implied finding in Nakata's favor on the element of duty. And since even one missing element is fatal to a cause of action, we need not address whether CBA satisfied the other elements of the claim. II. The Decision in Favor of Nakata on CBA's Fraudulent Concealment Cause of Action is Supported by Substantial Evidence
CBA argues that the amount of the price differential was a material fact, which Nakata had a duty to disclose. CBA argues Nakata's duty to disclose arises from three separate bases: (1) the fiduciary duty he owed as CBA's agent; (2) the general duty to disclose facts known only to him, and not known or reasonably discoverable by CBA; and (3) the duty to not actively conceal discovery from the plaintiff. (See Warner Const. Corp v. City of Los Angeles (1970) 2 Cal.3d 285, 294 (Warner).)
An agency relationship is created by the words or conduct of the principal and agent. (van't Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571.) The agent's fiduciary duties are limited to the scope of the agency set forth in the agreement. (Meyers v. Guarantee Sav. & Loan Assn., supra, 79 Cal.App.3d at p. 312; see also Van de Kamp, supra, 204 Cal.App.3d at p. 860.)
Nakata testified that he told Chaudhry his participation in the property transaction would involve a double escrow and that the company Nakata used to conduct his farm management business was the seller. Even with these disclosures, Chaudhry elected to proceed with the transaction without knowing the price at which MMN had the property under contract. In other words, there was evidence Chaudhry knew there was a price differential of some unknown amount and yet, he proceeded with the transaction. Thus, a reasonable finder of fact could conclude that the scope of any agency relationship that may have existed here did not encompass a duty to disclose the price differential.
If the finder of fact had concluded that Nakata concealed his personal profit.
It is true that a cause of action for material non-disclosure can arise outside the context of a fiduciary relationship. For example, if the defendant fails to disclose facts known only to the defendant and not known or reasonably discoverable by the plaintiff, or actively conceals information from the plaintiff. (Warner, supra, 2 Cal.3d at p. 294.) However, it remains a requirement of all fraudulent concealment claims that the defendant have been under some legal duty to disclose the fact to the plaintiff. (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613; Lingsch v. Savage (1963) 213 Cal.App.2d 729, 735; see also Goodman v. Kennedy (1976) 18 Cal.3d 335, 346-347; Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312.) The basis for the duty need not necessarily be a fiduciary relationship, but plaintiff must establish that such a duty indeed existed. (See Lingsch v. Savage, supra, at pp. 735-736.) Whatever legal duties may have arisen from Nakata's relationship with Chaudhry, they did not include a duty to disclose the price differential. Under Nakata's version of the facts, Chaudhry knew there was a price differential (of an unknown amount) and proceeded with the transaction anyway. Thus, the duties established by the conduct and expectations of the parties show Nakata did not have a duty to disclose the amount of the differential.
Chaudhry's testimony was that Nakata did not disclose any price differential at all, nor did he disclose that he stood to personally profit from the transaction through his ownership of MMN. Chaudhry testified that if he had known the differential, he would not have proceeded with the transaction.
But we must accept the evidence and inferences in favor of the judgment. Here, that means crediting Nakata's version of events over Chaudhry's. And under Nakata's testimony about the disclosures he made to Chaudhry, the amount of the differential is not material.
To be clear, our conclusions above (Discussion, §§ I-II, ante) are quite fact-dependent. If the court, as trier of fact, had found in favor of CBA, and we had been obligated to accept Chaudhry's version of events, we could have reached a different conclusion concerning whether Nakata breached his fiduciary duties and fraudulently concealed information. However, we construe the facts in favor of the judgment, which is supported by sufficient evidence.
We also note that it is not our role to address the relative virtue of the business practices employed by either party. Our role is simply to determine whether the trial court's decision should be overturned under the applicable standard of review. III. We Uphold the Trial Court's Conclusion the Ortizes did not Breach Contract by Germinating Less than 90 Percent of the 60,000 Seeds
Next, CBA argues the Ortizes breached the nursery contract by failing to germinate 90 percent of the seeds.
At the outset, we note that the court's statement of decision did say that "the Ortizes did not breach the contract." However, the statement of decision later noted that the Ortizes' minor breach of an insurance provision was "not material as no insurance claim was ever made." Later still, the statement of decision says that the Ortizes "substantially performed under the contract. (italics added)" While we acknowledge there is ambiguity, if not conflict, in these statements, we think the best overall reading of the statement of decision is that the trial court concluded that the Ortizes did not materially breach the nursery contract so as to excuse performance by CBA.
A. Background
The nursery contract required the Ortizes to germinate 50,000 seeds and "subsequently grow[] the rootstock to a suitable June bud stage for grafting." The next sentence provided that the Ortizes "guarantee[]" a 90 percent or better germination rate.
Later increased by 10,000 seeds.
It is undisputed that less than 90 percent of the seeds ultimately germinated. Therefore, the Ortizes purchased 18,000 pistachio trees from S&J Nursery (S&J) in order to honor the 90 percent guarantee.
B. Analysis
It is certainly arguable whether the Ortizes "breached" the contract at all. A guarantee " 'is not a promise of perfection.' " (Punian v. Gillette Company (N.D. Cal., Mar. 15, 2016, No. 14-CV-05028-LHK) 2016 U.S. Dist. LEXIS 34164, *22.) " 'Instead, a 'guarantee' is a promise ... that if the product does not perform as anticipated, the company will repair or replace the product or refund the purchase price ....' " (Ibid.) By purchasing the 18,000 trees, the Ortizes arguably honored the guarantee provision by ensuring that they could deliver the required number of trees (90 percent of the 60,000 seeds).
Moreover, even if the Ortizes' conduct constituted a technical breach, the trial court was certainly entitled to its determination that they "substantially performed under the contract." (Italics added.) " '[S]ubstantial performance [of a contract] is sufficient, and justifies an action on the contract, although the other party is entitled to a reduction in the amount called for by the contract, to compensate for the defects.' [Citation.] 'What constitutes substantial performance is a question of fact, but it is essential that there be no wil[l]ful departure from the terms of the contract, and that the defects be such as may be easily remedied or compensated, so that the promisee may get practically what the contract calls for. [Citations.]" (Magic Carpet Ride LLC v. Rugger Investment Group, L.L.C. (2019) 41 Cal.App.5th 357, 364.) Providing trees in the equivalent amount as if 90 percent of the seeds had germinated is, at the very least, substantial performance of the contract. IV. The Trial Court Erred in Granting the Ortizes' Motion to Quash the Subpoena of Circle of Confidence Growers, LLC's Bank Records and Sanctioning CBA
CBA challenges the trial court's grant of a motion to quash bank records and ordering of sanctions against CBA.
A. Background
At Maria Ortiz's deposition on December 21, 2015, she was asked whether she had any objection to CBA's counsel "requesting copies of the statements" for Circle of Growers, LLC's account at United Security Bank. She replied that she had no objection.
On December 22, 2015, CBA issued a subpoena to United Security Bank seeking the following:
"Copies of all documents relating to CIRCLE OF CONFIDENCE GROWERS, LLC's banking transactions, from the periods of 1-1-2013 through 2-31-2015 including but not limited to:
"1. Copies of the signature card on file for the account.
"2. All bank statements for the checking account which copy is provided herewith during the above referenced period.
"3. Copies of all cancelled/processed checks for the above referenced period."
On January 20, 2016, the Ortizes filed a motion to quash the subpoena. The motion was "based on the fact that the subpoena duces tecum unreasonably invades Defendants' right of privacy" and that the requested records "have no relevance whatsoever to the issues in this action." The court granted the motion to quash and sanctioned CBA in the amount of $1,665. (See Code Civ. Proc., § 1987.2.) On appeal, CBA argues the court erred in granting the motion and imposing sanctions.
The court's ruling is apparently based on the conclusion that the Ortizes have a right to privacy "as individuals" and they are "the only two members of the LLC." The court acknowledged that Maria Ortiz "may have consented at her deposition," but she "did not sign a release. See [Code of Civil Procedure,] § 1985.3[, subd.] (c)(2)." Finally, the court held she did not have standing to consent to the release of her husband's banking records nor to waive the right of privacy possessed by third parties who were paid from this account.
B. Standard of Review
Whether to impose sanctions in connection with a motion to quash a subpoena is committed to the discretion of the trial court (Code Civ. Proc., § 1987.2, subd. (a)), so we review that ruling for abuse of discretion. The ruling on a motion to quash a subpoena, as a discovery order, is also reviewed for abuse of discretion. (Manela v. Superior Court (2009) 177 Cal.App.4th 1139, 1145.) Errors of law constitute an abuse of discretion. (Bennett v. Superior Court (2019) 39 Cal.App.5th 862, 876.)
CBA's opening brief does not set forth the standard of review on an order quashing a subpoena and imposing sanctions. As a result, the Ortizes request that we deem the argument "waived." While CBA should have articulated the standard of review, the basis for its challenge was otherwise cogently explained. We decline to deem the argument forfeited.
C. Analysis
In ruling on a motion to quash, the court may consider the right to privacy. (See Code Civ. Proc., § 1987.1, subd. (a).) Here, the trial court's ruling on the motion to quash observed that Maria and Eufracio have a right to privacy. However, the subpoena only sought bank records of Circle of Growers, LLC, not any personal bank accounts of its members. Even assuming a limited liability company has some privacy rights, any such rights would need to be balanced against CBA's right to discovery. (See Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 657.) The court could have ordered limited or modified compliance with the subpoena "upon those terms or condition as the court shall declare, including protective orders." (Code Civ. Proc., § 1987.1, subd. (a).) The court should have fashioned an order protecting the interests of third parties while upholding CBA's right to discovery. (Valley Bank of Nevada v. Superior Court, supra, 15 Cal.3d at p. 658 ["Where it is possible to do so, '... the courts should impose partial limitations rather than outright denial of discovery' [Citation.]"].)
The trial court also concluded Maria lacked standing to consent to release of her husband's (Eufracio) records. However, the subpoena did not seek Eufracio's bank records, but rather those of Circle of Confidence Growers, LLC. And as to those records, Maria did have standing to consent as a member and agent of the LLC. (See Corp. Code, § 17703.01, subd. (a).)
Nor was Maria's consent required to be in writing under section 1985.3, as the trial court suggested. That statute concerns subpoenas seeking personal records of a consumer. A "consumer" is statutorily defined as "any individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary." (§ 1985.3, subd. (a)(2).) This definition does not include limited liability companies like Circle of Confidence Growers, LLC. (See Moser v. Health Insurance Innovations, Inc. (S.D. Cal., Jul. 8, 2019, No. 17cv1127-WQH) 2019 U.S. Dist. LEXIS 113880.)
Finally, the court noted that any third parties who were paid from, or made payments to, Circle of Confidence Growers, LLC's bank accounts may also have a privacy interest at stake. However, the only way a third party's privacy interests would have been impacted, was the potential to reveal that the third party had made/received one or more payments to/from a pistachio tree nursery. While there is perhaps some minor privacy interest in transactions with a tree nursery, it would likely be outweighed by CBA's right to discovery. In any event, as noted above, the court may direct compliance with a subpoena "upon those terms or condition as the court shall declare, including protective orders." (Code Civ. Proc., § 1987.1, subd. (a).) The court could have fashioned an order protecting the interests of third parties while upholding CBA's right to discovery.
Sanctions
Sanctions are proper in this context only where "the court finds the motion [to quash] was ... opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive." (Code Civ. Proc., § 1987.2, subd. (a).) While the court explained why it was granting the motion to quash itself, it did not make express findings regarding its sanctions (e.g., that CBA acted in bad faith or without substantial justification). To the extent the court's ruling on the motion to quash could be construed as a finding that the "one or more requirements of the subpoena was oppressive," we believe that finding lacks substantial evidence for the reasons described above. Therefore, we will reverse the order quashing the subpoena and imposing sanctions.
While CBA argues the motion was improperly granted and sanctions improperly imposed, the remedy it seeks is reversal of that order. CBA does not argue or explain how the alleged error regarding the motion to quash would warrant reversal of the final judgment. And, as explained herein, we have rejected CBA's arguments for reversing the judgment itself. Thus, while the reversal of the sanctions aspect of the order will have tangible benefit to CBA, the reversal of the aspect of the order granting the motion to quash may have little real-world impact. --------
DISPOSITION
The judgment is affirmed. The court's April 26, 2016, order quashing CBA's subpoena and imposing sanctions is reversed. Each party shall bear its own costs on appeal.
POOCHIGIAN, Acting P.J. WE CONCUR: PEÑA, J. DE SANTOS, J.