Unreported / Non-Citable
Background
Timothy and Patricia Peden hired contractor Mark Whitney, doing business as Whitney Homes, in 2023 to build a retaining wall and terminated him mid-project in December 2025. Their First Amended Complaint alleges, among fifteen claims, theft by diversion of construction funds under California Penal Code section 484b, civil RICO, and fraud claims with a punitive-damages prayer. They allege Whitney collected money billed for vendor costs and used it for personal expenses, other projects, and older obligations, including $65,000 in advance draws and $34,059.20 in vendor-designated payments on their project, in a pattern running from at least 2022 through 2026. These are allegations, and no pending motion challenges the theft or RICO claims.
The Pedens served requests for production on March 24, 2026, so responses were due April 23. Requests 7 through 10, 15, and 16 seek vendor-payment proof, account statements, ledgers, bank statements, financial-condition records, and records of customer-fund use on active projects. Whitney, then unrepresented, did not respond on time; his current counsel appeared May 7 and served responses May 19, twenty-six days late, objecting on overbreadth, burden, relevance, and privacy grounds and offering only records tied to the Pedens' project. Counsel says 6,724 records have been produced across three sets of requests. The Pedens dispute completeness, asserting that roughly seventy-eight percent of credit-card entries are redacted and that no savings-account statements, statements for cards paid from the business account, or post-November 2025 records were produced. The court did not resolve those competing accounts but ordered a verified one.
The Court’s Holding
Magistrate Judge Laurel Beeler, with the parties' consent, granted the motion to compel on the Pedens' proposed terms. The court first held that Whitney waived his objections: being unrepresented at service, believing an earlier lawyer had secured an extension, and counsel's prompt response after appearing did not show good cause, and nothing showed anyone asked for more time. Alternatively, the court said it would order the same production because the objections fail on the merits.
On relevance, only Whitney's unredacted records can show what he did with vendor-designated funds, which is central to the theft claim; they also bear on RICO continuity and enterprise, and financial condition is discoverable on the punitive-damages prayer without a prima facie showing. That vendors were eventually paid is a merits argument that does not answer a diversion theory. The protective order answers privacy concerns, and Whitney's unilateral relevance redactions were rejected because the non-project entries are the alleged destination of the money. The discovery is proportional: defined records from January 2023 forward are not a general audit, and his burden showing was not particularized.
Within fourteen days, Whitney must produce unredacted credit-card and savings-account statements from January 2023 to the present, including cards paid from the business account, redacting only account and Social Security numbers; produce receipts, payment dates, and vendor details for active projects or state that none exist; serve counsel-signed amended responses to Nos. 7 through 10, 15, and 16 identifying documents by Bates range and stating whether anything is withheld; and serve a declaration attesting to completeness. He may designate the records under the protective order. The court also kept Exhibit C, one credit-card statement page, under seal.
Key Takeaways
- Responses to document requests served well after the Rule 34 deadline can waive objections, and a mistaken belief that an extension was secured, or later diligence by new counsel, does not supply good cause.
- Where claims turn on what a defendant did with earmarked funds, his own unredacted financial records are directly relevant, and a protective order, not self-selected relevance redaction, is the tool for privacy.
- Financial-condition discovery tied to a punitive-damages prayer does not require a prima facie showing under the rule this court applied, and California Civil Code section 3295 does not govern discovery in federal court.
- A party resisting on proportionality grounds needs particularized evidence of burden; counsel's total hours for all requests, without apportionment to the disputed ones, did not suffice.
Why It Matters
This is a discovery order resolving a letter brief, so it decides only what must be produced; it makes no finding that Whitney diverted any funds. Fact discovery closes January 8, 2027, and the fourteen-day deadline leaves little room for further delay.
As a magistrate judge's discovery ruling, it is persuasive rather than binding precedent, but it offers a practical template for resisting selective redactions and late-response objections in fund-diversion cases.