Square 1 Bank v. Lo et al

Filing 58

ORDER RE: EVIDENTIARY OBJECTIONS. Signed by Magistrate Judge Jacqueline Scott Corley on 12/18/2013. (ahm, COURT STAFF) (Filed on 12/18/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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SQUARE 1 BANK,

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Plaintiff,

Case No.: C-12-05595 JSC
ORDER RE: EVIDENTIARY
OBJECTIONS

v.

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HENRY LO, and ABSOLUTELY NEW,
INC.,
Defendants.

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Now pending before this Court is Plaintiff Square 1 Bank’s application for writ of attachment

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in the amount of $1,750,617.42 against Defendant Henry Lo. (Dkt. No. 36.) During the hearing on

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Plaintiff’s application, the parties stated that additional evidence may be required to supplement the

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current record, but that it would be helpful if the Court were to rule on the parties’ evidentiary

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objections prior to any submission of supplemental materials. (See Dkt. Nos. 48 & 50.) The Court

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agrees. The Court accordingly rules on the parties’ evidentiary objections as set out below.

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The Court notes at the outset that, given both parties’ numerous boilerplate objections to

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virtually every sentence and exhibit offered by opposing declarants, this Order does not attempt to

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address every objection. Instead, the Order addresses only those objections that either appear

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particularly relevant to the underlying application or can be considered together, or both. This

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approach is particularly appropriate since the vast majority of the parties’ evidentiary objections are

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not included within the opposition and reply briefs as required by the Local Rules. See N.D. Cal. Civ.

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L.R. 7-3(a) (“Any evidentiary and procedural objections to the motion must be contained within the

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brief or memorandum.”), (c) (“Any evidentiary and procedural objections to the opposition must be

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contained within the reply brief or memorandum.”). Thus, rather than reject the parties’ evidentiary

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objections for non-compliance with the Local Rules, the Court will forgive the parties’ violations and

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address only particular objections, as described above.

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DISCUSSION
A.

Northern District of California

United States District Court

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Lo’s Objections to the Balakrishnan Declaration
Lo objects generally to many statements in the declaration of Bala Balakrishnan on the ground

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that Balakrishnan lacks personal knowledge of the facts to which he testifies. The Court agrees in

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part.

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Balakrishnan states that he is the Senior Manager of OutForce LLC (“OutForce”) as well as

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the Interim Chief Executive Officer (Consulting) of Absolutely New, Inc. (“ANI”). (Dkt. No. 37 ¶ 1.)

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He further states that since May 2011 he has been “personally involved in the review and analysis of

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ANI’s books and records.” (Id. at ¶ 3.) Given Balakrishnan’s testimony as to his personal knowledge

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of ANI’s books and records, his testimony as to what documents he discovered within ANI’s books

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and records is admissible. See Fed. R. Evid. 602 (“A witness may testify to a matter only if evidence

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is introduced sufficient to support a finding that the witness has personal knowledge of the matter.

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Evidence to prove personal knowledge may consist of the witness’s own testimony.”) Given his

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personal knowledge, Balakrishnan’s statements that ANI “did not receive any benefit” from Lo’s

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alleged transactions are also admissible. (See, e.g., Dkt. No. 37 ¶ 10.) Lo fails to persuade the Court

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that this testimony is inadmissible under Rule 701, as Lo has not explained why Balakrishnan’s

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review of ANI’s books and records requires “specialized knowledge within the scope of Rule 702.”

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Fed. R. Evid. 701(c). The bulk of Lo’s arguments go to the weight the Court should assign

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Balakrishnan’s testimony, not to the testimony’s admissibility.

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While Balakrishnan’s current position at ANI gives him personal knowledge as to ANI’s

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books and records, Balakrishnan’s declaration provides no basis for his personal knowledge as to

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whether third-parties ever received the payments Lo was supposedly making. (See, e.g., Dkt. No. 37

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¶¶ 20 (“I learned in or about May 2012 that the City never received any of the funds or proceeds from

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the City Cashier’s Checks.”), 33 (“I learned in or about May 2012 that the IRS never received any of

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the PayPal Payments or proceeds thereof.”).) Further, to the extent Balakrishnan’s knowledge

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regarding benefits to third-parties is based on the assertions of out-of-court declarants, Balakrishnan’s

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statements on the topic would be hearsay since the assertions are offered for their truth and they do

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not fall within any exception to the hearsay rule. See Fed. R. Evid. 802.

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For the same reasons, Balakrishnan’s statements as to whether ANI authorized Lo’s

Northern District of California

United States District Court

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transactions are inadmissible to the extent those transactions occurred prior to Balakrishnan’s

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association with ANI. Balakrishnan provides no basis for his personal knowledge of ANI’s actions

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before he became involved with ANI. Nor does he explain why ANI’s books and records would

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reflect whether a particular transaction was authorized by ANI.

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Lo also objects to the numerous checks attached to Balakrishnan’s declaration on the ground

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that the checks are not properly authenticated. Those objections are overruled. As provided in

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Federal Rule of Evidence 902(9), “[c]ommercial paper, a signature on it, and related documents, to

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the extent allowed by general commercial law,” are self-authenticating and require no extrinsic

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evidence of authenticity. See also United States v. Pang, 362 F.3d 1187, 1192 (9th Cir. 2004) (“As a

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negotiable instrument, a check is a species of commercial paper, and therefore self-authenticating.”);

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In re Maui Indus. Loan & Fin. Co., Inc., 2013 WL 2897792, at *3 (D. Haw. June 13, 2013) (“The

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checks . . . fall squarely within Rule 902(9).”); see also Fed. R. Evid. 1003 (“A duplicate is admissible

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to the same extent as the original unless a genuine question is raised about the original’s authenticity

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or the circumstances make it unfair to admit the duplicate.”). Further, Balakrishnan testifies that he is

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“familiar” with Lo’s signature through his involvement with ANI, and testifies that the signatures on

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the checks are Lo’s. (Dkt. No. 37 ¶ 8); see also Fed. R. Evid. 901(b)(2) (stating that a document can

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be authenticated by “[n]onexpert opinion as to the genuineness of handwriting, based upon familiarity

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not acquired for purposes of the litigation”). However, Balakrishnan provides no similar testimony as

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to the handwriting on at least some of the checks that note that the check was “not used for original

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purpose.” (See Dkt. No. 36 ¶ 9.) Thus, the checks are inadmissible to the extent they are offered to

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show that the handwritten notes on the checks were written by Lo; they are, however, admissible to

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show that the notations exist.

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Finally, Paragraph 15 of the Balakrishnan declaration is inadmissible as the statements therein

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are based on hearsay. Specifically, Balakrishnan testifies as to what Wells Fargo told ANI CEO

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Richard Donat and OutForce Accountant Subhash Tibrewal regarding ANI’s Wells Fargo account and

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IRS notices. Because those statements—both Wells Fargo’s assertions to Donat and Tibrewal as well

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as Donat’s and Tibrewal’s subsequent re-telling of those assertions to Balakrishnan—are made by

Northern District of California

out-of-court declarants and are offered by Balakrishnan for their truth, the statements constitute

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United States District Court

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inadmissible hearsay not covered by any exception.

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B.

Square 1’s Objections to Lo’s Declaration

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While Square 1’s objections to Lo’s declaration rely almost entirely on boilerplate recitations

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of the Federal Rules of Evidence, Square 1 appears to assert in its reply brief that Lo’s declaration is

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inadmissible because, among other things, “Lo makes conclusory and generic statements that ANI

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approved or was aware of his transactions, but he does not present a single document, or even a single

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statement by ANI personnel, demonstrating that ANI actually approved any of the transactions

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involving Misdirected ANI Funds.” (Dkt. No. 49 at 10-11.) This objection is overruled. To the

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extent Lo’s testimony is “conclusory” or “generic,” those qualities would go to the weight given to his

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testimony, not its admissibility. The same is true for the asserted lack of evidence corroborating his

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testimony.

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Further, Lo’s statements throughout his declaration as to what ANI or ANI

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employees/management/representatives told him are not hearsay; rather, they are statements of an

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opposing party. See Fed. R. Evid. 801(d)(2). Although ANI is actually Lo’s co-defendant in this suit,

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Square 1’s quasi-contract claim underlying its application for writ of attachment is brought in place of

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ANI. In other words, for purposes of Square 1’s quasi-contract claim underlying its application, Lo’s

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“opposing party” is ANI.

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At the hearing, Square 1 emphasized that Lo’s testimony as to providing loans to ANI was

recording, or photograph is required in order to prove its content unless these rules or a federal statute

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provides otherwise.” Fed. R. Evid. 1002. The best evidence rule applies when secondary evidence,

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either oral or written, is offered to prove the content of writing without producing the physical item

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itself. United States v. Bennett, 363 F.3d 947, 953 (9th Cir. 2004). Defendants’ best evidence rule

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objections are overruled as Lo’s testimony is either not submitted to prove the contents of a writing or

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the writings that Lo does reference are attached to his declaration. (See Dkt. No. 42-19.) For

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instance, Square 1 objects to Lo’s testimony that ANI promised him repayment on his loans and that

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ANI implicitly agreed that Lo could personally retrieve the money owing to him. The best evidence

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Northern District of California

inadmissible under the best evidence rule. Under the best evidence rule, “[a]n original writing,

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United States District Court

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rule, however, is inapplicable because Lo does not testify that these agreements were necessarily

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written down; in other words, his testimony is not offered to prove the contents of a writing. In

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addition, where Lo testifies to writing a check to ANI, copies of those checks are attached as exhibits.

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(Id.) To the extent Square 1 objects to the submission of a copy of a check rather than the original,

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Square 1 has not raised a “genuine question” as to the original’s authenticity or explained the

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circumstances under which it is unfair to admit the duplicate, as required by Rule 1003. See Fed. R.

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Evid. 1003 (“A duplicate is admissible to the same extent as the original unless a genuine question is

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raised about the original’s authenticity or the circumstances make it unfair to admit the duplicate.”)
Finally, the Court notes that Lo attaches to his declaration some documents to corroborate his

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testimony that ANI agreed to repay him for his cash advancements; however, at least some of these

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documents contain signatures of ANI employees that are unauthenticated. (See Dkt. No. 42-19 at 1-2,

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7.) Thus, to the extent Lo submits these documents to show that particular ANI employees signed

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them, those documents are inadmissible. See Fed. R. Evid. 901(b)(2) (stating that a document can be

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authenticated by “[n]onexpert opinion as to the genuineness of handwriting, based upon familiarity

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not acquired for purposes of the litigation”).

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C.

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Square 1’s Objections to the Remaining Declarations
The Court overrules Square 1’s objections to the declaration of John Fagundes, who “observed

treasury and daily accounting operations practices of both [ANI and IPR].” (Dkt. No. 43 ¶ 1 (stating

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his position at ANI as “Financial Planning and Analysis Manager,” and his position at IPR as “Senior

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Financial Analyst”).) His testimony as to his observations and understanding of ANI’s financial

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practices during his employment are based on his personal knowledge gained from his position as

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Senior Financial Analyst. As with many of its objections to Lo’s declaration, Square 1’s objections to

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the Fagundes declaration largely go to the weight given to the testimony, not its admissibility.

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The same is true in regards to the declaration of Susan Wei, who was “in the accounting

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department and responsible for payroll and management of the ledger” for ANI and IPR. (Dkt. No.

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44 ¶ 1.) However, Ms. Wei’s bald statement that former ANI CEO Richard Donat “was aware” of

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Lo’s actions is inadmissible as Ms. Wei provides no explanation as to why she has personal

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Northern District of California

United States District Court

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knowledge of Mr. Donat’s awareness. (Id. ¶ 5.)
Finally, and for the same reasons stated above, the declaration of Walter Thill, ANI’s former
controller, is admissible in its entirety.

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CONCLUSION
In light of the evidentiary rulings above, Square 1 shall notify the Court on or before noon on

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Friday, December 20, 2013 as to whether it wishes the Court to take its application for writ of

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attachment under submission based on the current record.

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IT IS SO ORDERED.

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Dated: December 18, 2013
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

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