Prosight-- Syndicate 1110 At Lloyd's v. American Builders and Developers LLC

Filing 217

ORDER denying 181 Motion for Sanctions. See order for details. Signed by Judge Steven P Logan on 10/23/2019. (LMR)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Prosight-- Syndicate 1110 At Lloyd’s, )
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Plaintiff,
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vs.
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American Builders and Developers
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LLC,
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Defendant.
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No. CV-17-04662-PHX-SPL
ORDER

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Plaintiff Prosight-- Syndicate 1110 At Lloyd’s (the “Plaintiff”) filed suit against

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American Builders and Developers LLC (“ABD”) seeking a declaratory judgment that it

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is not liable to indemnify ABD for any damages awarded pursuant to Maria Virginia

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Huizache and Florenciano Axinicuilteco’s (the “Claimants”) lawsuit.1 The Court issued

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an Order (Doc. 143) granting the Claimants’ motion for summary judgment (the “SJ

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Motion”) (Doc. 74). The Plaintiff filed a motion for reconsideration (Doc. 146), and the

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Court granted the motion for reconsideration and vacated its Order granting the SJ Motion.

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(Doc. 184) After the Court’s ruling on the SJ Motion, the Claimants supplemented their

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discovery

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correspondence between Claimants’ counsel and ABD’s counsel.

disclosures

with

several

documents

(the

“Documents”),

including

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In January 2016, the employee of a subcontractor was killed while working at the
location of ABD’s construction project. The Claimants, as the decedent’s parents, brought
a wrongful death action against ABD, among others, in Arizona state court. The Claimants
stepped into the shoes of ABD to defend this case.

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The Plaintiff filed this motion for sanctions (the “Motion”) seeking sanctions against

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the Claimants for their delayed disclosure of the Documents. (Doc. 181) The Plaintiff

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argues that the Claimants waited to disclose the Documents in order to influence the

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Court’s ruling on the SJ Motion. (Doc. 181-1 at 6) The Motion was fully briefed on July

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8, 2019, and oral argument was requested. (Docs. 186, 187) Because it would not assist in

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resolution of the instant issues, the Court finds the pending motion is suitable for decision

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without oral argument. See LRCiv. 7.2(f); Fed. R. Civ. P. 78(b); Partridge v. Reich, 141

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F.3d 920, 926 (9th Cir. 1998). The Court’s ruling is as follows.

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A party that fails to provide information required by Rule 26(a) or (e) “is not allowed

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to use that information or witness to supply evidence on a motion, at a hearing, or at a trial,

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unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). A

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district court has “particularly wide latitude” in its discretion to issue sanctions under Rule

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37(c)(1). Ollier v. Sweetwater Union High Sch. Dist., 768 F.3d 843, 859 (9th Cir. 2014).

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The Plaintiff moves for sanctions against the Claimants, arguing that they failed to

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produce the Documents in discovery until after the Court had ruled on the Claimants’ SJ

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Motion. (Doc. 181 at 2) The Plaintiff argues that the Claimants intentionally withheld the

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Documents in order to obtain a favorable ruling on the SJ Motion based on “an incomplete

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and inaccurate record of the facts.” (Doc. 181 at 3) The Plaintiff does not address whether

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the Claimants’ delayed disclosure was substantially justifiable. Instead, the Plaintiff argues

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that the Claimants’ delayed disclosure was not harmless because the delayed disclosure (i)

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prevented the Court from considering the withheld evidence in deciding the SJ Motion; (ii)

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provided evidence that is dispositive of the Claimants’ counterclaims; and (iii) prevented

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the Plaintiff from asserting arguments related to the Claimants’ stipulated judgment with

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ABD. (Doc. 181-1 at 14)

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In response, the Claimants argue that the Motion should be denied because they did

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not violate FRCP 37. (Doc. 186 at 9) The Claimants state that the Documents were not

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requested by the Plaintiff, and the Claimants only disclosed the Documents in order for the

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record in this case to remain consistent with the records in two related cases pending before
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the Maricopa County Superior Court. (Doc. 186 at 3) The Claimants do not substantively

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address whether their delayed disclosure was substantially justified. Instead, the Claimants

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provide the Court with a detailed explanation of the timing of their supplemental

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disclosures of the Documents. (Doc. 186 at 3–6) Separately, the Claimants argue that their

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delayed disclosure was harmless because (i) the Plaintiff was able to depose witnesses

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about the Documents; (ii) the Documents were disclosed prior to the discovery deadline on

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July 26, 2019; and (iii) the Court has already vacated its ruling on the SJ Motion.

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At this time, the Court declines to exercise its discretion to impose sanctions against

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the Claimants. The Court is persuaded by the Claimants’ statement that the Documents,

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which are primarily communications between Claimants’ counsel and ABD’s counsel, are

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not the type of material that is generally or immediately discoverable. The Court is not

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persuaded by the Plaintiff’s arguments related to the SJ Motion, as the Court has already

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granted the Plaintiff’s motion for reconsideration and vacated its Order granting the SJ

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Motion. (Doc. 184) Furthermore, the Court’s review of the Documents demonstrates that

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the correspondence between Claimants’ counsel and ABD’s counsel did not harbor any

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“smoking gun” statements or admissions about the viability of this case.

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correspondence reflected expected conversations amongst counsel seeking to develop a

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litigation strategy. The Court also finds that the Documents were disclosed prior to the

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discovery deadline, and the Plaintiff has not been prejudiced because it has been able to

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depose multiple people on the issues described in the Documents. (Doc. 179 at 2; Doc. 187

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at 5) For all of these reasons, the Court finds that the delayed disclosure of the Documents

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was harmless and does not require sanctions under FRCP 37.

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Accordingly,

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IT IS ORDERED that Plaintiff’s Motion for Sanctions (Doc. 181) is denied.

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Dated this 23rd day of October, 2019.

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Honorable Steven P. Logan
United States District Judge

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The