Casa W. v. Super. Ct. CA2/7

INTRODUCTION

Parties to a civil case in California have a privilege against forced disclosure of their tax returns, subject to certain exceptions. The trial court in this case compelled production of a limited liability company’s tax returns without considering whether any of the exceptions applied. We cannot find any exception that applies, and conclude that the tax returns the trial court ordered produced are privileged. Therefore, we grant the petition for a writ of mandate and order the trial court to vacate its order requiring production of the tax returns.

FACTUAL AND PROCEDURAL BACKGROUND

Real parties in interest Kyle Madison, his former wife Marjan Madison, and their friend petitioner Michael Theodore were the members of Casa W, LLC, a limited liability company that owned and operated a property known as Casa W in Cabo San Lucas, Mexico. Theodore was the managing member. Theodore owned another limited liability company, Casa Theodore, LLC, that owned the adjacent property known as Casa Theodore. Theodore was the only member of Casa Theodore, LLC. Pursuant to the Casa W, LLC operating agreement, the Madisons made a capital contribution of $500,000 and Theodore made a…