USA v. Sterling Centrecorp Inc. et al

Filing 382

ORDER signed by Senior Judge Morrison C. England, Jr on 2/25/2022 DENYING 374 Motion for Reconsideration; DIRECTING SCI to provide the discovery materials, whose production has already been compelled by the Magistrate Judge, to the United States within 14 days. (Coll, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA, and
CALIFORNIA DEPARTMENT OF
TOXIC SUBSTANCES CONTROL,

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Plaintiffs,

No. 2:08-cv-02556-MCE-DB

ORDER

v.
STERLING CENTRECORP INC.,
STEPHEN P. ELDER, and ELDER
DEVELOPMENT, INC.,
Defendants.

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The Motion for Reconsideration presently before the Court (ECF No. 374) asks

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this Court to revisit its July 22, 2021, Order (ECF No. 369) which denied a previous

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request by Defendant Sterling Centrecorp, Inc. (“Defendant” or “SCI”) for reversal of

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the Magistrate Judge’s February 20, 2020, Order granting a motion to compel further

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discovery filed on behalf of Plaintiff United States of America (“Plaintiff”). ECF No. 359.

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Once Plaintiff obtained a USD $30 million monetary judgment against Defendant, it

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served discovery pursuant to Federal Rule of Civil Procedure 69 concerning alleged

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assets valued in excess of CAD $80 million that were transferred to related parties just

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before Plaintiff filed the instant CERCLA cost recovery action, and well after Defendant
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was placed on notice that Plaintiff sought reimbursement for costs incurred to clean up

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hazardous substances at a California Superfund site previously owned by Defendant.

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Even though this case was instituted in 2008, Defendant argued that because thirteen

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years have now passed since the transfers at issue the information has become

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essentially irrelevant. The Magistrate Judge granted a Motion to Compel discovery as to

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those assets, and on March 6, 2020, Defendant moved to reconsider that decision.
This Court denied SCI’s initial reconsideration request, by Order filed July 22,

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2021, on grounds that it found no clear error on the part of the Magistrate Judge leaving

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it with a “definite and firm conviction that a mistake ha[d] been committed.” Concrete

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Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for So. Cal., 508 U.S. 602,

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622 (1993). Instead, the Court noted that a judgment creditor like Plaintiff herein is

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accorded “a wide scope or inquiry concerning property and business affairs of the

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judgment debtor” and is entitled “to leave no stone unturned in the search for assets

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which might be used to satisfy the judgment.” A&F Bahamas, LLC v. World Venture

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Grp., Inc., No. CV 17-8523-VAP (SS), 2018 WL 5961297 at *2 (C.D. Cal. Oct. 19, 2018).

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Given that sweeping scope, the Court concluded that the Magistrate Judge had acted

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well within her discretion in compelling discovery. July 22, 2021, Order, ECF No. 369.

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SCI now asks that the Court reconsider its decision pursuant to Federal Rule of

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Civil Procedure 60(b) and Eastern District Local Rule 230(j).1 Under Rule 60(b), “a court

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may relieve a party from a final judgment, order or proceeding” due to, among other

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things, “newly discovered evidence” that, with reasonable diligence, could not have been

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discovered beforehand. Local Rule 230(j) further specifies that any motion for

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reconsideration identify “what new or different facts or circumstances are claimed to exist

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which did not exist or were not shown upon [the initial motion], or upon what other

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grounds exist for the motion.”

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All further references to “Rule” or “Rules” are to the federal Rules of Civil Procedures unless
otherwise indicated.
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As indicated above, this particular dispute involves discovery concerning the

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assets with which Plaintiffs’ judgment could potentially be satisfied. Rule 69 permits a

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judgment creditor to obtain discovery assisting it in executing upon a judgment “from any

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person – including the judgment debtor.” Fed. Rule Civ. P. 69(a)(1). Because this Court

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adopted the Magistrate Judge’s Order compelling discovery and ordering that certain

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documents be turned over within 30 days, and since the Court also denied SCI’s request

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to reconsider that decision, SCI contends that for all intents and purposes this is a “final

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order” for which relief can be sought under Rule 60(b). Although Plaintiffs disagree, as

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SCI points out, this District has already found, in Lasheen v. Loomis Co., No. 2:01-cv-

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0227-KJM-EFB, 2018 WL 4679305 (E.D. Cal. 2018), that Rule 60(b) may properly be

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invoked in ruling upon a motion for reconsideration of an order compelling post-judgment

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discovery. Id. at *2. The Court consequently finds for purposes of this Order that

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Defendant’s reliance on Rule 60(b) is permissible.
In terms of the substantive basis for SCI’s Motion, however, Defendant seizes

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upon a statement made in the Court’s earlier July 22, 2021, Order that the United States

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was “entitled to understand the details of [privatization transfers between SCI and

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related entities and individuals] so that it can decide whether to pursue the matter further

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in enforcement proceedings.” ECF No. 369, 3:1-4. SCI points out that Plaintiff in fact

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filed a claim in the Ontario (Canada) Superior Court of Justice against 11 named

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individuals and entities, including SCI, on March 16, 2020 (the “Ontario Action”), after

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briefing on its prior Motion for Reconsideration was complete but before this Court’s

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decision denying that Motion was filed on July 22, 2021. Because that proceeding was

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filed to enforce the same March 20, 2018, judgment as to which this Court compelled

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further discovery under Rule 69, SCI contends it amounts to evidence of a change of

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circumstances that should have been disclosed to the Court and may “alter [its]

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reasoning” and justify reconsideration. See Reply, ECF No. 380, 2:17-18. As SCI

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states: “to the extent the Court reasoned that post-judgment discovery in this action was

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necessary to provide Plaintiff with the information about the privatization transactions it

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seeks, that is no longer the case.” Id. at 4:25-27.

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To begin with, despite SCI’s claim that the additional compelled discovery was

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“ordered specifically to allow Plaintiff to evaluate whether to pursue enforcement

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proceedings,” (Def.s’ Mot., ECF No. 374, 6:20-22) in fact the statement was made in the

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context of the Court’s observation that discovery as to the transferred assets did “not

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mean those assets would necessarily be available to satisfy Plaintiff’s judgment.”

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July 22, 2021 Order, ECF No. 369, 2:25-3:1. Consequently, to say that the Court’s

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Order was predicated solely upon discovery prior to any enforcement proceeding is

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incorrect.
Even more significantly, the fact that Plaintiff filed an enforcement proceeding in

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Canada, where SCI is incorporated and where certain key shareholders to whom assets

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were purportedly transferred also reside, does not detract from the fact that other

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implicated shareholders and companies are based in the United States, or the fact that

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certain transferred assets at issue are also allegedly located in this country.

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Nonetheless, SCI maintains that because the Ontario Defendants include SCI along with

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other parties involved in the asset transactions, requiring that any discovery occur under

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the auspices of the Ontario Action, only, would be “more convenient, less burdensome,

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or less expensive” than discovery in this post-judgment proceeding. Def.’s Reply, 2:21-

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While SCI correctly points out that a district court has discretion to limit the scope

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of discovery where the information sought can be more easily obtained elsewhere, in a

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case like this one involving a substantial monetary judgment, the satisfaction of which

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implicates complicated business transactions between Canadian and American

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companies and individuals, the judgment creditor (here the United States) may explore

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options available to pay that judgment as it sees fit. As the Court already indicated in its

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July 22, 2021, Order, Plaintiff is entitled “to leave no stone unturned in the search for

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assets which might be used to satisfy the judgment.” A&F Bahamas, LLC v. World
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Venture Grp., Inc., 2018 WL 5961297 at *2 Besides claiming that the Ontario Action is

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“live” and resort to the auspices of this Court is “post-judgment,” SCI offers no specific

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evidence or justification why discovery through the Ontario Action would be any more

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convenient or less costly than that already underway here by way of these proceedings.

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In addition, as the United States points out by way of its opposition, SCI points to

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no case authority in any event to support its proposition that an order compelling

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discovery under Rule 69 may be vacated “merely because a judgment creditor filed an

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action to enforce the judgment before the judgment debtor complied with the Rule 69

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Order.” Pl.’s Opp., ECF No. 376, 7: 5-8. SCI did not respond with any such authority in

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its reply; nor has this Court identified any law to support Defendant’s proposition. As

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indicated above, SCI simply argues that where to conduct discovery boil down to

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considerations of cost, ease and convenience. But, the United States, with a judgment

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of some USD $30 million against SCI and its related parties, is in the driver’s seat in

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deciding how to pursue collection of that judgment, particularly in a case like this one

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where no clear-cut evidence as to the relative difficulty in pursuing discovery in either

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venue has been offered.

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For all the foregoing reasons, Defendant’s Motion for Reconsideration (ECF

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No. 374) is DENIED. SCI is directed to provide the discovery materials, whose

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production has already been compelled by the Magistrate Judge, to the United States

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not later than fourteen (14) days after this Order is electronically filed.

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IT IS SO ORDERED.
Dated: February 25, 2022

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