# GL Master Inc

> United States Bankruptcy Court, C.D. California · July 24, 2020

URL: https://www.frixlaw.com/law-library/cases/10454984

## Case

- **Court:** United States Bankruptcy Court, C.D. California
- **Decided:** July 24, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10454984

## How later opinions describe it (automated extraction)

- noting lack of prejudice to non-movant 19 resulting from live video testimony

## Opinion text

1 MARK FANG ATTORNEY AT LAW, APC
Mark Fang, Esq., SBN 199073
2 mfang@markfangapc.com FILED & ENTERED
William G. Short, Esq., SBN 132479
3
bshort@markfangapc.com JUL 24 2020
4 400 Camarillo Ranch Road, Suite 203
Camarillo, CA 93012
5 Telephone: (805) 383-2788 CLERK U.S. BANKRUPTCY COURT
F acsimile: (805) 388-9488 C Be Yn g t r h a a l l tD c i hs it r i c Dt E o Pf UC Ta Yli f Cor Ln Eia RK
6
Attorneys for Unsecured Creditors Wei Dong,
7 Wenrui Wang, and Zongzhi Hu CHANGES MADE BY COURT

8 IN THE U.S. BANKRUPTCY COURT FOR THE
9 CENTRAL DISTRICT OF CALIFORNIA
10

11 In re Case No. 2:18-bk-24302-NB

12
Chapter 7
13 GL MASTER, INC.,
[Proposed] ORDER GRANTING MOTION BY
14 UNSECURED CREDITORS WEI DONG,
WENRUI WANG, AND ZONGZHI HU FOR
15 Debtor. ORDER TO SHOW CAUSE RE: CIVIL
CONTEMPT AND DIRECTING (i) DEBTOR,
16
(ii) FREDA WANG, (iii) THOMAS POLIS, (iv)
17 LYNN CHAO AND (v) THE LAW OFFICES
OF LYNN CHAO, A.P.C. TO APPEAR AND
18 SHOW CAUSE WHY THIS COURT SHOULD
NOT FIND THEM IN CONTEMPT AND
19 IMPOSE SANCTIONS
[Ref.: Dkts. 95, 106, 107, 108, 111, 128, 131, 132,
20
133, 136, 137, 138, 139, & 140]
21
Original Hearing Held
22 Date: July 7, 2020
Time: 2:00 p.m.
23 Place: Courtroom 1545
255 E. Temple St.
24
Los Angeles, CA
25 OSC Hearing:
Date: August 19, 2020
26 Time: 9:00 a.m.
Place: Courtroom 1545
27 255 E. Temple St.,
1 The Motion by Creditors Wei Dong, Wenrui Wang, and Zongzhi Hu for an OSC re Contempt
2 (dkt. 95, “Motion for OSC”) was heard at the above-described time and date. Per the Court’s attached
3 Tentative Ruling, no appearances were required. Nevertheless, Thomas J. Polis, Esq., appeared for
4 himself, the Law Offices of Lynn Chao APC, and the debtor GL Master, Inc. William G. Short
5 appeared for the moving party. Trustee Ed Wolkowitz appeared pro se.
6 The Court notes that the word “form” found in the second line of the second full paragraph of
7 page 31 of the Tentative Ruling should be correct to read: “forum.” With that correction and the
8 following additional amendments, the Court adopts its Tentative Ruling, attached hereto, as the ruling
9 of the Court.
10 [The following text has been added by this Court to the proposed form of this order.]
11 (1) Debtor and its designated Person Most Knowledgeable (“PMK”), Ms. Freda Wang
12 The Alleged Employees request that this Court issue an Order to Show Cause (“OSC”) against
13 several persons. Principal among those persons are Debtor and its PMK designee, Ms. Freda Wang.
14 The Alleged Employees assert that Ms. Wang and Debtor failed to comply with this Court’s
15 Order Granting Motion Authorizing 2004 Examination (dkt. 12, the “Debtor 2004 Order”) because
16 Ms. Wang was unprepared and/or unwilling to provide answers to several topics of questioning. This
17 Court is persuaded that the Alleged Employees papers establish more than sufficient grounds to issue
18 the OSC.
19 One example is cited in this Court’s (now adopted) Tentative Ruling, which was posted prior to
20 the hearing: Ms. Wang’s testimony concerning the alleged misuse of her signature stamp. At the
21 hearing on the Motion for OSC, Debtor’s counsel argued that Ms. Wang has provided all information
22 known to her and otherwise answered this line of questioning in good faith.
23 Having once again reviewed the record following the hearing, this Court remains unconvinced
24 by Debtor’s counsel and is mystified by his and Debtor’s apparent attempts to deny the obvious. By
25 way of background, in response to the Motion for OSC, Ms. Wang provided a declaration in which she
26 states that she “testified on January 30, 2020 that after [she] left employment of the Debtor in 2016,
27 that various bookkeepers the Debtor used would use a ‘signature stamp’ to sign hundreds of checks
1 states that she “also testified on January 30, 2020 that [she] had no idea where any of the Debtor’s
2 bookkeepers or other financial management staff could be located” and that she has “tried [her] best
3 to piece together the information requested.” Id., para. 6 & 11 (emphasis added).
4 First, Ms. Wang does not point to any specific excerpts from the Rule 2004 examination
5 transcript. Such a half-hearted response inappropriately places the burden on the Alleged Employees
6 and this Court to hunt through the transcript for her alleged testimony. That leaves the Alleged
7 Employees and this Court either to conclude that her declaration falsely alleges what she actually
8 testified, or that she must be referring to some other portion of the deposition transcript that she has
9 failed to provide. Ms. Wang’s half-hearted response may constitute a waiver or forfeiture of Debtor’s
10 and her argument that she adequately responded. See generally Hamer v. Neighborhood Housing
11 Svcs., 138 S.Ct. 13, 17 n.1 (2017) (“Forfeiture is the failure to make the timely assertion of a right;
12 waiver is the intentional relinquishment or abandonment of a known right.”) (citations and internal
13 quotation marks omitted); Independent Towers, WA v. Washington, 350 F.3d 925, 929-930 (9th Cir.
14 2003) (issues forfeited when supported by “little if any analysis to assist the court” and when
15 “[n]otably absent is any explanation of why” alleged legal doctrine applied or why “well-defined
16 exceptions” did not apply; citing authority that court is not required to search out those things like
17 buried “truffles”).1

18
1 In contrast to Debtor’s failure to cite or provide deposition excerpts, the Alleged Employees cited and provided
clearly marked excerpts of the deposition transcript that fully support their allegations about what occurred at the
19
deposition. They also lodged a complete copy of the transcript under seal, after Debtor asserted that this was required by
20 LBR 7030-1 (this Court assumes solely for purposes of this discussion, without deciding, that LBR 7030-1 is applicable,
even though this is not an adversary proceeding, pursuant to Rule 9014(c) and (d) and 9017(c) or other applicable rules).
Debtor’s failure to provide its own deposition excerpts is particularly notable because it simultaneously complains
21
that the Alleged Employees’ submission of excerpts was somehow defective. Having quoted LBR 7030-1(a)(3) (dkt. 106,
pp. 11:5-12:7), Debtor clearly knew that it could have requested a complete copy of the deposition transcript from the
22
Alleged Employees as stated in that local rule, so it has no apparent excuse for having failed to file relevant excerpts. See,
23 e.g., Rule LBR 7026-2(c).
But Debtor ignores its own non-compliance with the rules, and instead focuses on the Alleged Employees’ alleged
non-compliance with rules that, so far as this Court can tell, are completely irrelevant. For example, Debtor has objected
24
both in writing and orally that the Alleged Employees did not make notations in the margin of the deposition transcript that
allegedly are required by LBR 7030-1(b)(2). See dkt. 106, pp. 11:5-12:7. Debtor has never explained how this discovery
25
dispute is governed by that LBR’s requirement to note anticipated questions and answers “at trial” (which is part of the
26 language that Debtor emphasizes in quoting LBR 7030-1(b)(2)). Nor has Debtor ever explained how it was prejudiced in
the slightest way by whatever the Alleged Employees allegedly failed to do in compliance with the Local Rules. In these
circumstances, this Court must conclude that Debtor is advancing frivolous arguments, and lacks standing to do so. See,
27
e.g., Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009) (“[D]eprivation of a procedural right without some concrete
1 Second, from this Court’s own re-review of the examination transcript (e.g., dkt. 95, Ex. 8,
2 pp. 46:4-48:23 and pp. 60:5-61:12) she did not actually testify as she now declares that she did. On
3 the present record, it appears that she has fabricated such alleged testimony.
4 Third, in both the examination transcript and her subsequent declaration, her excuses are
5 notable for her conclusory statements without supporting information. For example, she declares that
6 in her examination she “tried [her] best to piece together the information requested” (dkt. 106, p. 18,
7 ¶ 11) but nowhere in that declaration or in the excerpts from her examination testimony does she
8 allege how or when she “tried her best,” what efforts she undertook to “piece together” any
9 information, what documents she looked at (if any), whom she consulted (if anyone), what responses
10 she received, why she concluded that Debtor had no relevant discovery to produce on a host of topics,
11 or anything else to support her bald assertions. Again, her and Debtor’s half-hearted effort to comply
12 with their discovery obligations, or even respond to the issues raised in the Alleged Employees’
13 motion for an OSC, may constitute a waiver or forfeiture of these issues. See generally, e.g.,
14 Independent Towers, WA, 350 F.3d 925, 929-930 (9th Cir. 2003).
15 Fourth, this Court’s reference to the signature stamp testimony was only intended to serve as an
16 example of the Alleged Employees’ allegations that Ms. Wang disregarded this Court’s 2004 Order.
17 Paragraph 5 of the 2004 Order provides that “GL Master, Inc.’s designee(s) shall be prepared to
18 testify . . . on the topics listed in Exhibit A of the [Rule 2004 Examination] Motion.” Dkt. 12, p.3,
19 para. 5 (emphasis added). That Exhibit A lists, among other things, numerous other topics on which
20 Ms. Wang was questioned, but on which she appears to have been unprepared and/or unwilling to
21 respond:

22 Q: All right. Are you familiar with GL Master’s investments and assets since 2014?
A: No.
23
Q: Did you try to get yourself prepared to discuss that topic?
24 A: No.
Q: Are you familiar with GL Master, Inc.’s interactions with other restaurants?
25 A: No.
Q: Did you do anything to try to get yourself prepared about that?
26 A: No.
Q: Do you know anything about in particular GL Master’s transactions with XFY
27 Houston, LLC?
A: No.
1 Q: Little Sheet Flushing, LLC?
A: No.
2
Q: And Hot Pot City, LLC in San Francisco?
3 A: No. [Dkt. 95, Ex. 8, pp.30:24-31:19. See also, e.g., id., pp. 35:9-36:4; pp. 37:8-
41:16.]
4
Debtor and Ms. Wang offer no meaningful explanation in opposition to the Motion for OSC to
5
address this, even though the Alleged Employees had been pressing for months for Debtor to designate
6
a PMK who actually qualified as such. See dkt. 95, Ex. 14, p. 3 of 4 (objecting to prior designee’s
7
complete lack of knowledge, and citing Sony Elecs., Inc. v. Soundview Techs., Inc., 217 F.R.D. 104
8
(D. Conn. 2002) (“Pursuant to Rule 30(b)(6), the deponent must make a conscientious good-faith
9
endeavor to designate persons having knowledge of the matters sought by [the party noticing the
10
deposition] and to prepare those persons in order that they can answer fully, completely, unevasively,
11
the questions posed … as to the relevant subject matters.”) (internal quotations and citations omitted)).
12
The Alleged Employees point to other instances in which Ms. Wang/Debtor failed and refused
13
to answer questions pertinent to their theory of Debtor’s business and the shutting down of that
14
business and transfer of its tangible and intangible assets. For example, although Ms. Wang testified
15
that she worked for Debtor without pay, and worked for apparently affiliated entities, she/Debtor failed
16
and refused to answer questions about the nature of that work. See dkt. 95, pp. 14:12-16:17.
17
She/Debtor also failed and refused to answer questions on grounds of the attorney-client privilege,
18
without providing grounds for doing so, as discussed below.
19
None of the foregoing is intended to limit in any way the scope of acts and omissions about
20
which the Alleged Employees object. Rather, the foregoing is intended to provide Debtor, its counsel,
21
and Ms. Wang – who purport not to understand what else they possibly could have done to comply
22
with their discovery obligations – with a further explanation of how this Court understands the Alleged
23
Employees’ objections, and this Court’s concerns.
24
For all of the foregoing reasons, Debtor and Ms. Wang are directed to appear and show cause
25
why this Court should not find them in contempt of the Debtor 2004 Order and impose compensatory
26
and coercive sanctions for (a) Debtor’s failure to designate an appropriate PMK, (b) Ms. Wang’s
27
1 failure to prepare herself appropriately to address the Alleged Employees’ topics for discussion, and/or
2 (c) Ms. Wang’s unwillingness to provide adequate responses to the Alleged Employees’ questions.
3 (2) Debtor’s Counsel, Mr. Thomas J. Polis, Esq.
4 The Alleged Employees argue that Mr. Polis should be held in contempt for (a) instructing Ms.
5 Wang not to answer questions to various topics (see dkt. 95, p.12:10-16) and (b) invocation of the
6 attorney-client privilege as a basis for Ms. Wang to not answer the Alleged Employees’ questions
7 despite the chapter 7 trustee’s waiver of the debtor’s pre-petition attorney client privilege (see dkt. 95,
8 p.7:25) and the Alleged Employees’ contention that post-petition attorney-client privilege had been
9 waived with respect to certain emails that had already been produced by Debtor during earlier
10 discovery (see dkt. 95, p.20:3-23). See also, e.g., dkt. 95, Ex. 8, pp. 73:19-75:11 and Ex. 9.
11 In the tentative ruling (attached), this Court limited its discussion concerning Mr. Polis’ alleged
12 contemptuous conduct to whether Mr. Polis had satisfactorily explained his instructions to Ms. Wang
13 to not answer questions on attorney-client privilege grounds despite the Chapter 7 Trustee’s waiver.
14 At the hearing, Mr. Polis argued that his instructions were appropriate because the Chapter 7 Trustee
15 can only waive a debtor’s pre-petition attorney-client privilege and cited Commodity Futures Trading
16 Comm’n v. Weintraub, 471 U.S. 343 (1985).
17 First, while Mr. Polis’ summary of the Supreme Court’s decision is accurate, he fails to explain
18 why he did not raise the argument in response to the Motion for OSC or clearly differentiate between
19 pre- and post-petition privileges in his papers. The Alleged Employees and this Court should not have
20 to piece together what he might or might not be asserting. Nor do his responsive papers address the
21 Alleged Employees’ contention that the debtor waived its post-petition attorney-client privilege by
22 voluntarily turning over certain documents. See, e.g., Independent Towers, WA v. Washington, 350
23 F.3d 925, 929-930 (issues forfeited when supported by “little if any analysis to assist the court” and
24 when “[n]otably absent is any explanation of why” alleged legal doctrine applied or why “well-defined
25 exceptions” did not apply).
26 Accordingly, Mr. Polis is directed to appear and show cause why this Court should not find
27 that he and Debtor have waived and forfeited any objection on that basis and find him and Debtor in
1 contempt of the Debtor 2004 Order for instructing Ms. Wang not to answer the Alleged Employees’
2 questions.
3 (3) The Law Offices of Lynn Chao, A.P.C. (“Chao”)
4 With respect to whether to issue an OSC against Chao for its failure to comply with the Order
5 Granting Motion Authorizing 2004 Examination (dkt. 25, 40, the “Chao 2004 Order”), the Alleged
6 Employees argue that Chao’s PMK designee, Ms. Lynn Chao, Esq., should be held in contempt
7 because Ms. Chao was unable to confirm whether her firm (Chao) had produced all responsive
8 documents to items 32, 33, 35, or 36 of the Alleged Employees’ requests for production (dkt. 20, Ex.
9 B), concerning communications between Debtor and Mr. Xiao “Shawn” Wang. Dkt. 95, p.16:18-18:7.
10 In response to the Motion for OSC, the Responding Parties’ submitted declarations from Ms.
11 Chao and Mr. Wang. Ms. Chao represents that she appeared for the examination, answered all
12 questions to the best of her knowledge and belief and that her office has produced all documents
13 reasonably within their possession. Dkt. 106, Chao Decl., pdf p. 14, para. 5 & 6. Similarly, Mr. Wang
14 represents that Chao has turned over all documents requested by the Alleged Employees. Dkt. 106,
15 Mr. Wang Decl., pdf p. 16, para 4. But neither party satisfactorily addresses the Alleged Employees’
16 contention that during the deposition Ms. Chao was unable to confirm that all emails between Mr.
17 Wang and Debtor had been produced, despite the Alleged Employees’ inclusion of relevant excerpts
18 from the Chao deposition:

19 Q: So you have asked Shawn Wang to print out every communication that your
office had with GL Master, and then he provided a stack of documents to you?
20
A: Correct.
21 Q: Is it your understanding that Mr. Wang printed those e-mails out of his office
server?
22 A: I don’t know.
Q: Do you know whether that stack of documents included his personal g-mail
23 account?
A: I don’t know.
24 Q: You didn’t ask him?
A: No. [Dkt. 95, Ex. 10, p. 112:10-17.]
25
***
26

Q: Do you have a policy whereby Mr. Wang can use both your particular
27
lynnchao.com e-mail address as well as using his own personal gmail account when
A: It’s pretty liberal in my office.
1 Q: Say it again?
A: It’s pretty liberal in the office. [Dkt. 95, Ex. 10, p. 113:10-16.]
2
In addition, Chao appears to have listed certain emails on her privilege log despite the fact that
3
previously they were produced, and although the Alleged Employees have challenged how the
4
attorney-client privilege was not waived for forfeited by that production, Chao, Debtor, and Mr. Polis
5
have not cited any authority or provided any analysis on that issue.
6
Accordingly, Chao and Ms. Chao are directed to appear and show cause why this Court should
7
not find them in contempt of the Chao 2004 Order and impose compensatory and coercive sanctions
8
for Ms. Chao’s failure to properly prepare for the examination and/or her unwillingness to provide
9
adequate responses to the Alleged Employees’ questions.
10
(4) Remote trial procedures for the OSC hearing
11
As set forth in the attached (and now adopted) Tentative Ruling, in view of ongoing health
12
concerns arising from COVID-19, this Court finds that good cause and compelling circumstances exist
13
to conduct an evidentiary hearing on the OSC via Zoomgov at the time and place stated in the caption
14
of this order. See Rule 43(a) (Fed. R. Civ. P.) (incorporated by Rule 9017, Fed. R., Bankr. P.). Such
15
procedures are appropriate (a) because the Responding Parties have not identified any basis to find that
16
they would be prejudiced by having to conduct direct and cross examination through video
17
transmission either in their paper filings (dkt. 136, p.6:24-7:3) or orally at the hearing (see F.T.C. v.
18
Swedish Match N. Am., Inc., 197 F.R.D. 1, 1 (D.D.C. 2000) (noting lack of prejudice to non-movant
19
resulting from live video testimony)), and (b) because this Court believes appropriate procedural
20
safeguards can be implemented to ensure that the communication will have sufficient reliability
21
comparable to live testimony (see e.g., Ransom v. Herrera, 2018 U.S. Dist. LEXIS 13261, at *3 (E.D.
22
Cal. Jan. 25, 2018) (“because a witness testifying by video is observed directly with little, if any, delay
23
in transmission, video testimony can sufficiently enable cross-examination and credibility
24
determinations, as well as preserve the overall integrity of the proceedings”)).
25
At the above-captioned hearing this Court directed the parties to meet and confer and the lodge
26
a proposed order (or, if they could not agree, separate proposed orders) establishing procedures for that
27
1 || trial procedures available on the undersigned Bankruptcy Judge’s portion of this Court’s website
2 || (www.cacb.uscourts.gov) and meet and confer to establish agreeable procedures; but meanwhile in the
3 || absence of any lodged orders from the parties this Court hereby adopts the hearing date set forth in the
4 || caption.
5 The deadline for the Responding Parties’ briefs to be filed and served is August 4, 2020. The
6 || deadline for the Alleged Employees’ responsive brief is August 11, 2020, which is also the deadline
7 || for the parties to lodge proposed order(s) for the evidentiary hearing procedures. The failure of any
8 || party to meet and confer and/or agree to terms of a proposed form of order will be deemed as that
9 || party’s consent to the procedures adopted by this Court and any arguments of prejudice will be
10 || deemed waived and forfeited.
11
12 HHH
13
14
15
16
17
18
19
20
21
Nol
23 Date: July 24, 2020 LE a SA
United States Bankruptcy Judge
25
26
27
28

United States Bankruptcy Court
Central District of California
Los Angeles
Judge Neil Bason, Presiding
Courtroom 1545 Calendar
Tuesday, July 7, 2020 Hearing Room 1545
2:00 PM
2:18-24302 GL Master Inc Chapter 7
#1.00 Order to Show cause re: Civil Contempt Against GL Master Inc.,
and Sanctions Against Polis & Associates, PLC
Docket 0
Tentative Ruling:
Grant as set forth below. Appearances are not required.
Pursuant to Judge Bason's COVID19 Procedures, ONLY TELEPHONIC
APPEARANCES WILL BE PERMITTED until further notice. Please contact
CourtCall at (888) 882-6878 to make arrangements for any telephonic
appearance. There is no need to contact the Court for permission. Parties
who are not represented by an attorney will be able to use CourtCall for free
through 8/31/20. Attorneys will receive a 25% discount (for more information,
see www.cacb.uscourts.gov, "Judges," "Bason, N.," "Telephonic
Instructions").
Proposed order: The Alleged Employees are directed to lodge a
proposed order via LOU within 7 days after the hearing date, and
attach a copy of this tentative ruling, thereby incorporating it as this
Court's final ruling, subject to any changes ordered at the hearing.
See LBR 9021-1(b)(1)(B).
Current issues
(1) Alleged employees’ motion for issuance of OSC re contempt (dkt. 95,
"Motion for OSC"), Law offices of Lynn Chao, APC ("Chao") and Debtor’s
opposition papers (dkt. 106, 107, 108), Alleged employees’ reply (dkt. 111),
Order setting hearing on Motion for OSC (dkt. 128), Alleged employees’
supplemental papers (dkt. 131, 132, 133), Ms. Chao/Debtor’s supplemental
opposition papers (dkt. 136, 137), Alleged employees’ supplemental reply
papers (dkt. 138, 139, 140)
The tentative ruling is to overrule Ms. Chao/Debtor’s evidentiary
objections on all of the grounds asserted by the Alleged Employees, grant the
Motion for OSC and, for the reasons stated in the Alleged Employees’
United States Bankruptcy Court
Central District of California
Los Angeles
Judge Neil Bason, Presiding
Courtroom 1545 Calendar
Tuesday, July 7, 2020 Hearing Room 1545
2:00 PM
CONT... GL Master Inc Chapter 7
Ms. Wang and debtor (collectively, the "Responding Parties") to appear and
show cause why this Court should not find them in contempt and impose
compensatory and coercive sanctions, including coercive sanctions in a daily
amount for each day from the date of this hearing that they fail to produce
the requested discovery.
(a) The Alleged Employees have made a sufficient showing to warrant
issuance of an OSC
The Alleged Employees request the issuance of an OSC re contempt
and sanctions against the Responding Parties for their alleged failure to
comply with this Court’s 2004 Orders (dkt. 25, 30). For example, the Alleged
Employees’ contend that Ms. Fang (aka Freda) Wang appeared for
examination on 1/30/20 as debtor’s designated "person most knowledgeable"
but Ms. Wang was not prepared to address several of the Alleged
Employees’ topics of questioning (dkt. 95, p.9:9-12:8), including a line of
questioning about the alleged misuse of her signature stamp. Id.,
p.12-17-13:6.
In response to the Motion for OSC, the Responding Parties admit that
Ms. Wang was not prepared to speak to that issue and argue that the stamp
was used after she resigned and without her knowledge. Dkt. 106, p.9:4-10.
But the Responding Parties have not cited any authority to persuade this
Court that, even if Ms. Wang’s testimony is true, she would be excused from
taking steps prior to the examination to inform herself about the
circumstances surrounding the use of her signature stamp or obtain
information about how to contact the employees who allegedly used her
stamp without her knowledge.
Similarly, Mr. Polis has failed to explain satisfactorily his instructions to
Ms. Wang not to answer questions on attorney client privilege grounds,
despite his knowledge that the Chapter 7 Trustee had already waived that
privilege. And Ms. Chao has failed to satisfactorily explain all efforts
undertaken to produce responsive documents (dkt. 95, p.16:19-18:7) or
confirm that she had complied in good faith with the Alleged Employees’
document requests.
Therefore, the tentative ruling is that there is more than sufficient
cause to issue the OSC to address what coercive and compensatory
sanctions this Court should impose for the Respondents' failure to comply
United States Bankruptcy Court
Central District of California
Los Angeles
Judge Neil Bason, Presiding
Courtroom 1545 Calendar
Tuesday, July 7, 2020 Hearing Room 1545
2:00 PM
CONT... GL Master Inc Chapter 7
legitimate inability to do so.
(b) The requested discovery is pertinent to the administration of
debtor’s estate
The Responding Parties object yet again that this Court is permitting
discovery to go forward even though there is similar discovery taking place in
connection with the pending State Court litigation. If this is intended as a
request to reconsider this Court's discovery orders, it is neither procedurally
proper nor persuasive. If, instead, it is intended as an excuse for not
complying with this Court's discovery orders, it fails to meet the standards for
showing that compliance was impossible and, again, it is not persuasive.
This Court has previously explained why it is appropriate for discovery
to continue in this form - including that Respondents' argument has been
waived and forfeited because it was not raised until after the Alleged
Employees had expended significant time and resources pursuing this
information. In addition, this Court points out that requested discovery is very
much relevant to bankruptcy-specific issues that could not be asserted in
State Court.
For example, the discovery is relevant to assessing whether there are
grounds to bring a motion for substantive consolidation of Debtor and the
entities to which Debtor allegedly transferred funds or other assets. The
discovery is also relevant to assessing whether there are grounds to pursue
avoidance actions that might only be available in this bankruptcy case (the
filing of which may have preserved actions that were available as of the
commencement of this case, and as to which applicable statutes of limitation
could apply but for statutory or equitable bankruptcy tolling principles). The
discovery is also relevant precisely because the scope of discovery under
Rule 2004 (Fed. R. Bankr. P.) is intentionally very broad (it has been
described as a legitimate "fishing expedition"), because when a debtor in
bankruptcy asserts that it lacks the ability to pay its creditors, it is appropriate
to conduct a broad reaching examination of its "acts, conduct, or property"
and its "liabilities and financial condition" and any other "matter which may
affect the administration of the debtor's estate ...." Rule 2004(b).
(c) No hearing at this stage
The tentative ruling is to excuse appearances at today's hearing
United States Bankruptcy Court
Central District of California
Los Angeles
Judge Neil Bason, Presiding
Courtroom 1545 Calendar
Tuesday, July 7, 2020 Hearing Room 1545
2:00 PM
CONT... GL Master Inc Chapter 7
OSC. The tentative ruling is that the Alleged Employees have provided more
than enough grounds to issue the OSC, and the OSC itself will provide all
parties with an opportunity to file briefs regarding (i) whether compensatory
and coercive sanctions are appropriate for the Respondents' non-compliance
with this Court's discovery orders, (ii) from what date, (iii) in what dollar
amounts, and (iv) with what schedule and procedures for briefs and an
evidentiary hearing on those issues.
The parties are directed to meet and confer regarding the proposed
form of such OSC. As set forth at the start of this tentative ruling, the Alleged
Employees must lodge their proposed form of order within seven days of this
hearing date. In addition, as stated in the posted Procedures of Judge Bason
(available at www.cacb.uscourts.gov), Judge Bason typically does not hold
orders for any set period of time before issuing them so, if there is any
disagreement regarding the form or substance of a proposed order, parties
are directed to contact chambers and lodge an alternative proposed order as
soon as possible.
The parties are advised that a "Sanctions Table" is posted on this
Court's website, under Judge Bason' portion of that website, as a research
tool for all parties in matters before this Court. As noted on that Sanctions
Table, it is only a starting point for research, and all parties must Shepardize
any cited authorities and otherwise satisfy their research obligations.
(2) Future proceedings
(a) Discovery
The tentative ruling is that, in view of ongoing health concerns arising
from COVID-19, the parties are directed to meet and confer to discuss their
availability for continued oral examinations via video within the next two
weeks and then contact Chambers with their available dates. The tentative
ruling is that Judge Bason will attend any such examinations via audio or
video technology, and will rule on any objections as they arise. The tentative
ruling is to use Zoomgov, because it is more secure than regular Zoom, and
can be initiated by this Court and recorded on this Court's audio recording
system which may be useful for future factfinding and rulings.
The tentative ruling is that once the parties have tentatively arranged
for the dates of the examinations, they are directed to contact chambers to
verify the availability of Judge Bason on each date. Once the dates are
United States Bankruptcy Court
Central District of California
Los Angeles
Judge Neil Bason, Presiding
Courtroom 1545 Calendar
Tuesday, July 7, 2020 Hearing Room 1545
2:00 PM
CONT... GL Master Inc Chapter 7
dates to the Alleged Employees’ counsel, who will then be instructed to
circulate the link with participating parties.
The parties are also directed to meet and confer regarding agreeable
dates, in advance of the oral examinations, for a supplemental document
production. Those dates must be sufficiently far in advance of the oral
examinations to provide the Alleged Employees' counsel with adequate time
to review the documents and prepare questions based on those documents.
(b) Scheduling the OSC evidentiary hearing
The parties are directed to meet and confer to discuss an agreeable
day, that does not conflict with Judge Bason's posted hearing dates, for this
Court to conduct an evidentiary hearing on the OSC via Zoomgov during or
approximately on the dates of 8/17/20 through 8/21/20. The tentative ruling is
to conduct that hearing starting at 9:00 a.m. on Wednesday 8/19/20.
If appearances are not required at the start of this tentative ruling but you
wish to dispute the tentative ruling, or for further explanation of "appearances
required/are not required," please see Judge Bason's Procedures (posted at
www.cacb.uscourts.gov) then search for "tentative rulings." If appearances
are required, and you fail to appear without adequately resolving this matter
by consent, then you may waive your right to be heard on matters that are
appropriate for disposition at this hearing.
Party Information
Debtor(s):
GL Master Inc Represented By
Thomas J Polis
Trustee(s):
Edward M Wolkowitz (TR) Pro Se

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10454984. Public record. Not legal advice.