Pacific Resources Associates LLC, a Delaware limited liability company, et al. v. Suzy Cleaners, an organization, et al.

• Court: District Court, S.D. California
• Decided: December 2, 2025
• Docket: 3:20-cv-00234
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 PACIFIC RESOURCES ASSOCIATES Case No.: 20-cv-0234-RBM-DEB 11 LLC, a Delaware limited liability Consolidated: 22-cv-1892-RBM-DEB 12 company, et al., ORDER GRANTING THE 13 Plaintiffs, HORTMANS’ MOTION TO 14 v. ENFORCE PROTECTIVE ORDER AND FOR SANCTIONS 15 SUZY CLEANERS, an organization,

et al., 16 Defendants, [DKT. NO. 308] 17 AND RELATED CROSS-CLAIMS. 18 19 I. INTRODUCTION 20 Before the Court is the Hortman Parties’ Motion to Enforce Protective Order and for 21 Sanctions (“Motion for Sanctions”). Dkt. No. 308. For the reasons discussed below, the 22 Court GRANTS the Hortmans’ Motion for Sanctions and awards sanctions against the 23 Kims’ counsel. See Dkt. No. 308.1 24 25

26 1 The “Hortmans” are Kim Buhler, the court appointed administrator and executor of the 27 Estate of Barbara Hortman and co-trustee, and/or Norman Alton Hortman, III, co-trustee of the Norman Alton Hortman and Barbara Hortman Revocable Trust No. 1 Dated July 2, 28 1 II. PROCEDURAL AND FACTUAL BACKGROUND 2 This case arises out of alleged soil contamination at the Valley Plaza shopping center 3 in Escondido, California. The remaining claims are between current and former property 4 owners and owners/operators of dry-cleaning businesses allegedly responsible for the 5 contamination. 6 One disputed issue is whether the Hortmans fraudulently transferred Trust assets to 7 avoid financial responsibility for the Valley Plaza investigation and remediation. The 8 Hortmans produced financial information in response to discovery requests. The Hortmans 9 designated their financial information as “Confidential” and subject to the Court’s 10 Protective Order, which requires that “[a]ll confidential information designated as 11 ‘CONFIDENTIAL’ must not be disclosed by the receiving party . . . and, in any event, 12 must not be used for any purpose other than in connection with this litigation[.]” 13 Dkt. No. 276 ¶ 7. 14 In a separate administrative proceeding, the San Diego Regional Water Quality 15 Control Board (“Water Board”) issued a final Cleanup and Abatement Order (“CAO”) for 16 Valley Plaza. The Water Board named the Kims, but not the Hortmans, as responsible 17 parties. Dkt. No. 283 at 30–34. The Kims, through their counsel, filed a Petition for Review 18 with the State Water Resources Control Board challenging the Hortmans’ omission from 19 the CAO. See Dkt. No. 306-2 (“Water Board Petition”). The Kims’ Petition alleges the 20 Hortmans fraudulently transferred Trust assets to themselves and described certain of those 21 assets. Id. at 12–13, 17, 19. 22 The Kims also filed a complaint against the Hortmans in the San Diego County 23 Superior Court (“Superior Court Complaint”).2 The Kims’ Superior Court Complaint 24 similarly alleges the Hortmans fraudulently conveyed Trust assets to avoid liability for the 25

26 1985 (the “Trust”). The “Kims” are third-party Plaintiffs Guhn Y. Kim, Yun Soon Kim, 27 and the Kim Family Trust of 2017.

28 1 alleged soil contamination at Valley Plaza. Dkt. No. 306-3. The Superior Court Complaint 2 also describes the Hortmans’ assets. Id. ¶¶ 12, 14, 22. 3 The Hortmans seek sanctions against the Kims and their attorney, alleging they 4 violated the Court’s Protective Order by disclosing the Hortmans’ confidential financial 5 information in the Water Board Petition and Superior Court Complaint. Dkt. No. 306-1 6 at 5–6. The Hortmans’ Supplemental Brief seeks additional sanctions for a third violation 7 of the Protective Order that allegedly occurred when the Kims’ counsel filed a new lawsuit 8 against the Hortmans (and others), George Landt, et al. v. M&E Brothers, LLC, et al., 9 United States District Court, Southern District of California, Case No. 3:25-cv-01364- 10 RBM-DEB (“Landt Action”). Dkt. No. 328. 11 The Court held a hearing on the Motion for Sanctions. Dkt. No. 326; see also Dkt. 12 No. 330 (Sealed Hr’g Tr.). The Court now finds counsel for the Kims violated the Court’s 13 Protective Order and imposes sanctions. 14 III. LEGAL STANDARD 15 Federal Rule of Civil Procedure 37 grants courts authority to impose sanctions for 16 protective order violations. Westinghouse Elec. Corp. v. Newman & Holtzinger, P.C., 992 17 F.2d 932, 934–35 (9th Cir. 1993); see also Apple, Inc. v. Samsung Elecs. Co., No. 5:11-cv- 18 01846-LHK-PSG, 2014 WL 12596470, *5 (N.D. Cal. 2014) (“[T]he Ninth Circuit has 19 repeatedly held that Rule 37 ‘provide[s] comprehensively for enforcement of all 20 [discovery] orders, including Rule 26(c) protective orders.’” (citing Westinghouse, 21 992 F.2d at 934–35)). “Sanctions are permissible under Rule 37 when a party fails to 22 comply with a court order, regardless of the reasons.” Life Techs. Corp. v. Biosearch 23 Techs., Inc., No. 12-cv-0852-WHA-JCS, 2012 WL 1600393, at *8 (N.D. Cal. 24 May 7, 2012). 25 The Court has “discretion whether to issue sanctions under Rule 37(b), and if so, 26 what types of sanctions to issue.” Cabrales v. BAE Sys. San Diego Ship Repair, Inc., No. 27 21-cv-2122-AJB-DDL, 2023 WL 5985517, at *1 (S.D. Cal. Sept. 13, 2023) (citing Von 28 Brimer v. Whirlpool Corp., 536 F.2d 838, 844 (9th Cir. 1976)). The sanctions, however, 1 “must be just” and “specifically relate to the particular claim at issue in the discovery 2 order.” Navalier v. Sletten, 262 F.3d 923, 947 (9th Cir. 2001) (citing Ins. Corp. of Ireland, 3 Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982)). Unless the violation 4 was “substantially justified or other circumstances make an award of expenses unjust[,]” 5 the Court “must” order the disobedient party, its attorney, or both, to pay for reasonable 6 expenses caused by the noncompliance. Fed. R. Civ. P. 37(b)(2)(C). 7 IV. DISCUSSION 8 For the reasons discussed below, the Court finds: (A) the Hortmans designated their 9 financial information as “Confidential” and subject to the Protective Order; (B) the 10 Hortmans’ designations were proper; (C) the Kims disclosed the Hortmans’ confidential 11 financial information in their Water Board Petition and Superior Court Complaint; and 12 (D) sanctions are warranted. 13 A. The Hortmans Designated Their Financial Information as Confidential and 14 Subject to the Protective Order 15 In January 2025, the Hortmans produced financial documents in response to 16 discovery requests. Dkt. No. 308-6. The documents included Trust records, tax returns, and 17 personal bank statements. Id.; see also Dkt. No. 306-5. The Hortmans also answered 18 interrogatories about Trust assets and distributions. See, e.g., Dkt. No. 306-7 at 6. The 19 Hortmans designated these discovery responses as “Confidential” and subject to the 20 Protective Order. See Dkt. No. 308-6. 21 The Hortmans also gave deposition testimony about their finances and designated 22 this testimony as “Confidential” and subject to the Protective Order. Dkt. No. 306-8 23 at 4–5 (Hortman Dep.); Dkt. No. 306-9 at 5–6 (Buhler Dep.); Dkt. No. 308-3 ¶¶ 9–10, 12 24 (McMillan Decl.); Dkt. No. 308-7 (attorney e-mails). 25 B. The Hortmans’ Designations Were Proper 26 The Kims’ Opposition argues the Hortmans improperly designated their financial 27 information as confidential and subject to the Protective Order. These arguments include: 28 (1) the Hortmans are not “parties” entitled to designate discovery as subject to the 1 Protective Order; (2) their financial information is not protectable because the Hortman 2 matriarch is deceased; (3) they did not timely designate their deposition testimony as 3 subject to the Protective Order; and (4) their financial information is publicly available. 4 The Protective Order, however, contains a procedure for a party to challenge the 5 propriety of designating discovery as “Confidential” and subject to the Protective Order: 6 the objecting party must notify the designating party of the objection, “promptly meet and 7 confer,” and bring any unresolved disputes to the Court. Dkt. No. 276 ¶ 24. The objecting 8 party “must” treat the materials at issue as confidential “until the Court has ruled on the 9 objection” or the issue is otherwise resolved. Id. 10 The Kims did not invoke this procedure for the discovery at issue. Instead, the Kims 11 publicly disclosed the discovery at issue and now make after-the-fact arguments 12 challenging the designations. This is impermissible. See, e.g., DS Advanced Enterps., Ltd. 13 v. Lowe’s Home Ctrs., LLC, No. 23-cv-1335-CAB-JLB, 2025 WL 586030, at *1 (S.D. Cal. 14 Feb. 24, 2025) (“[C]ounsel could not unilaterally decide to ignore the designation because 15 he thought it improperly designated.”); Brady v. Grendene USA, Inc., No. 12-cv-0604- 16 GPC-KSC, 2015 WL 3554968, at *3 (S.D. Cal. June 5, 2015) (“whether something should 17 be designated confidential is irrelevant to [a party’s] obligation to comply with the 18 Protective Order”); Brocade Communs. Sys. v. A10 Networks, Inc., No. 10-cv-3428-LHK, 19 2011 U.S. Dist. LEXIS 99932, at *14 (N.D. Cal. Sep. 6, 2011) (“It is not up to the party 20 filing a document containing information designated as confidential […] to make a 21 subjective decision about whether the designation is accurate. That decision is for the court 22 to make.”). 23 The Kims’ arguments also fail on the merits. As counsel for the Kims acknowledged 24 at the hearing on this Motion, Kim Buhler and Norman Hortman are parties in their capacity 25 as trustees, they are living beneficiaries of the Hortman Trust, and they designated the 26 financial information provided in their discovery responses as confidential and subject to 27 the Protective Order. Dkt. No. 330 at 31. Confirming this, the discovery at issue was 28 1 requested and produced pursuant to Federal Rules of Civil Procedure 30, 33, and 34, which 2 are not available to obtain discovery from non-parties. 3 The Court also finds the Hortmans timely designated their deposition testimony as 4 subject to the Protective Order. At the outset of the depositions, and anticipating the 5 questioning would seek financial information, the Hortmans’ counsel designated the 6 depositions as subject to the Protective Order. Dkt. No. 306-8 at 4; Dkt. No. 306-9 at 5–6. 7 Counsel for the Kims did not object. Id. Once the transcripts were prepared, the Hortmans’ 8 counsel narrowed the designations by identifying the specific pages and lines of testimony 9 subject to the Protective Order. Dkt. No. 308-7 at 1, 3. The Court finds this two-step 10 procedure is reasonable and proper, especially in the absence of a contemporaneous 11 objection. 12 The Kims’ argument that the Hortmans’ financial information is publicly available 13 is based on internet searches the Kims’ counsel conducted in preparation for the Motion 14 hearing. Dkt. No. 330 at 19. Thus, the internet searches were not the source of the 15 information disclosed. Moreover, the searches were informed by the confidential 16 information the Hortmans produced in discovery. Id. at 18–19. The Court, therefore, finds 17 after-the-fact internet searches irrelevant to the analysis. 18 C. The Kims Disclosed the Hortmans’ Confidential Financial Information in the 19 Water Board Petition and Superior Court Complaint 20 The Kims disclosed the Hortmans’ confidential financial information in their Water 21 Board Petition. The Petition describes the type, quantity, and value of the Hortman Trust 22 assets and specifically references this litigation. Dkt. No. 306-2 at 17, 19. The Petition also 23 identifies the Hortman parties by name. Id. at 15. 24 The Kims also disclosed the Hortmans’ confidential financial information in their 25 Superior Court Complaint. The complaint describes Trust distributions and specific asset 26 types and values. Dkt. No. 306-3 at 4–8. 27 At the May 2025 hearing, counsel for the Kims acknowledged the discovery subject 28 to the Protective Order was the source of at least some of the information in the Water 1 Board Petition and Superior Court Complaint. Dkt. No. 330 at 18–19, 23–25. The Court, 2 therefore, finds the Kims violated the Protective Order by disclosing the Hortmans’ 3 confidential financial information outside of this litigation. 4 D. Sanctions are Warranted 5 The Court finds compensatory sanctions under Rule 37(b)(2)(C) are warranted to 6 redress the Kims’ violations of the Protective Order. For the reasons discussed above, the 7 Kims’ violations of the Protective Order were not substantially justified, and no other 8 circumstances make sanctions unjust. 9 Counsel for the Hortmans notified counsel for the Kims of the violations, but counsel 10 for the Kims initially refused to take any action to mitigate the improper disclosures. 11 Dkt. No. 308-10; Dkt. No. 308-11. The Hortmans, therefore, filed this Motion to vindicate 12 their rights under the Protective Order. The Court finds sanctions compensating the 13 Hortmans for the attorney’s fees incurred in enforcing the Protective Order are appropriate, 14 just, and specifically relate to the Kims’ violations. Cf. Juul Labs, Inc. v. Chou, No. 21-cv- 15 3056-DSF-PDx, 2022 WL 2161063, at *9 (C.D. Cal. May 6, 2022) (finding attorney’s fees 16 sanction unjust in part because counsel “generally cooperat[ed] . . . in attempting to work 17 through logistical issues and resolve problems” prior to raising issue with the court). 18 The Hortmans seek $15,645 in fees associated with bringing this (and related) 19 Motions (21.7 hours at $350/hour, and 32.2 hours at $250/hour). See Dkt. No. 308-16. The 20 Kims’ Opposition does not dispute the reasonableness of the fees claimed. 21 The Court has reviewed counsels’ time entries and finds the work and rates 22 reasonable, with two adjustments. The Court excludes 0.10 hour (at the $350 rate) on 23 April 3, 2025 concerning a minute order not included on the docket in this case, and 24 excludes 0.20 hour (at the $250 rate) on the same date, regarding unspecified expert 25 discovery. See Dkt. No. 308-16 at 4; see also Fed. R. Civ. P. 37(b)(2)(C) (permitting award 26 of “reasonable expenses . . . caused by the failure [to comply]”). The Court, therefore, 27 awards $15,560 in compensatory sanctions (21.6 hours at $350 ($7560.00), plus 32 hours 28 at $250 ($8000.00)). The Court finds this amount adequate to both compensate the | || Hortmans for the fees incurred enforcing the Protective Order and deter further violations. 2 || The Court finds this compensatory sanction sufficiently addresses any additional disclosure 3 |}in the related Landt litigation discussed in the Hortmans’ Supplemental Brief 4 || (Dkt. No. 328). 5 The record establishes counsel for the Kims is responsible for violating the 6 || Protective Order, rather than the Kims themselves. See Dkt. No. 308-4 (Water Board 7 || Petition filed by counsel); Dkt. No. 306-3 at 2 (Superior Court Complaint filed by counsel); 8 || Dkt. No. 330 at 40, 42 (counsel for the Kims’ acknowledgement of fault). The Court, 9 || therefore, imposes this sanction on counsel only. Cahill v. Nike, Inc., No. 18-cv-1477-JR, 10 || 2024 WL 3963809, at *6 (D. Or. Aug. 26, 2024) (amposing attorney’s fees sanctions on 11 counsel instead of client, “as the party itself played no role in the disclosure.”). 12 Vv. CONCLUSION 13 The Court GRANTS the Hortmans’ Motion for Sanctions and ORDERS counsel 14 || for the Kims to reimburse the Hortmans for costs and fees incurred litigating this motion 15 the amount of $15,560.00. Counsel must make this payment to Hortmans’ counsel within 16 || thirty days of this Order. 17 IT IS SO ORDERED. 18 Dated: December 2, 2025 — 9 Dando oa 0 Honorable Daniel E. Butcher United States Magistrate Judge 21 22 23 24 25 26 27 28