Monterey Bay Military Housing, LLC et al v. Pinnacle Monterey LLC et al

Filing 145

ORDER Re: Discovery Dispute Joint Report #7 134 . Signed by Magistrate Judge Howard R. Lloyd on 3/20/2015. (hrllc1S, COURT STAFF) (Filed on 3/20/2015)

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*E-Filed: March 20, 2015*

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

NOT FOR CITATION

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United States District Court

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SAN JOSE DIVISION

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MONTEREY BAY MILITARY HOUSING,
LLC; et al.,

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Plaintiffs,
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No. C14-03953 BLF (HRL)
ORDER RE: DISCOVERY DISPUTE
JOINT REPORT #7

v.
[Re: Docket No. 134]

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PINNACLE MONTEREY LLC; et al.,

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Defendants.
____________________________________/

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Plaintiffs allege that Defendants, with assistance from their controlled insurance broker
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Lockton, consistently misled Plaintiffs in material respects related to the provision of insurance for
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the Irwin and Monterey Military Housing Projects. Specifically, Plaintiffs allege that Defendants
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charged an undisclosed risk management fee, charged the Projects above-market insurance rates,
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and used the low insurance risk of the Projects to subsidize the insurance premiums of higher risk
properties controlled by Defendants John Goodman and Stan Harrelson. Fourth Amend. Compl. ¶¶

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92-127. Defendants contend that Plaintiffs had knowledge of the risk management fees. The parties
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dispute whether Defendants took steps to hide the existence of the risk management fee in
documentation they sent to Plaintiffs. Specifically, Plaintiffs argue that in a certain Excel

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spreadsheet, Defendants hid references to the risk management fee in a “hidden” column.
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In February 2015, Rafeal Muniz was deposed. Muniz was the Development Executive for
Clark Realty Capital from 2001 to 2006. In 2008, Muniz joined Pinnacle. Before the deposition,

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Muniz met with counsel for Pinnacle, who showed him certain documents, including an Excel

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spreadsheet that contained a cell with a formula calculating the risk management fee being paid to

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Defendants. In the present Discovery Dispute Joint Report #7, Plaintiff seeks the production of all

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documents reviewed by Muniz prior to his deposition.
Under Federal Rule of Evidence 612, where a witness uses a document to refresh his

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hearing, to inspect it, to cross-examine the witness about it” when “justice requires.” Rule 612

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apples to depositions to require the disclosure of documents used to refresh a witness’s recollection

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prior to a deposition. 8A Wright & Miller, Fed. Prac. & Proc. § 6183. “By its very language, Rule

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612 requires that a party meet three conditions before it may obtain documents used by a witness

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For the Northern District of California

recollection prior to testifying, “an adverse party is entitled to have the writing produced at the

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United States District Court

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prior to testifying: 1) the witness must use the writing to refresh his memory; 2) the witness must

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use the writing for the purpose of testifying; and 3) the court must determine that production is

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necessary in the interests of justice.” Sporck v. Peil, 759 F.2d 312, 317 (3d Cir. 1985); see also

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Greer v. Elec. Arts, Inc., No. C10-3601 RS JSC, 2012 WL 6131031, at *2 (N.D. Cal. Dec. 10,

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2012).

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Here, the parties dispute whether Plaintiffs have laid a proper foundation for application of

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Rule 612. Plaintiffs argue that Muniz’s testimony was based on the Excel spreadsheet shown to him

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the day before his deposition, while Defendants argue that his testimony was based on his

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independent recollection.

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The Court finds that Plaintiffs have failed to lay a proper foundation for application of Rule

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612. First, Plaintiffs have not shown that Muniz used the writing to refresh his memory. Muniz

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never testified that the documents he reviewed refreshed his recollection on his belief that Clark had

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knowledge of the risk management fee associated with Pinnacle’s insurance program. When asked

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whether the purpose of reviewing the documents before his deposition was to refresh his memory,

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Muniz testified: “I would have been just as happy showing up here today without doing anything

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yesterday . . . . I was just reviewing what was in front of me.” 2/24/2015 Muniz Dep. Tr. at 108. In

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addition, Muniz testified that he “flipped through [the documents] fairly quickly.” Id. at 8.

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Second, Plaintiffs have not shown that Muniz relied on the documents in giving his

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testimony. Muniz’s belief that Clark had knowledge of the risk management fee stemmed from his

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recollection of conversations with his colleagues. Muniz was asked, “apart from the spreadsheet,

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were you aware of any other documents that disclosed to you, while you worked at Fort Irwin, that

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Pinnacle was charging a—some sort of fee in connection with placing insurance for the projects?”

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Id. at 56. Muniz relied that “Clark had an asset management team that was very aware of the

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insurance program,” without referencing any documents. Id. Muniz was also asked, “did you

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discuss with anyone at Clark that Pinnacle was charging some sort of risk management fee for

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administering the master insurance program . . . ?” Id. at 58. Muniz replied, “I can tell you that we

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had conversations about insurance and I’m sure we talked about the fact that there was a fee

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associated with the program.” Id.

For the Northern District of California

United States District Court

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In addition, Muniz was asked, “other than the spreadsheet, can you point to any other emails

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or documents that reflect your knowledge of this fee that Pinnacle was charging for placing

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insurance?” Id. at 59. Muniz replied, “I would expect that there were emails with, probably, A.J.

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Caputo, again, because he was responsible for that kind of thing . . . . I’m pretty sure that there was

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correspondence associated with that.” Id. Muniz was asked, “have you seen any such emails, at all,

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in the last couple years?” Id. at 60. Muniz replied, “there were some insurance emails I saw

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yesterday. I can’t tell you specifically if it was a general discussion about insurance or if it was—if

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it specifically highlighted knowledge of having a fee or not….” Id.

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Third, because Plaintiff has not shown that the materials impacted the testimony at issue,

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Plaintiff has not shown that production of the documents is necessary in the interests of justice.

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Plaintiffs allude to the fact that Muniz received a large payment from Pinnacle in 2013,

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although he left the company in 2010. Id. at 160. Muniz, however, explained in his deposition that

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this payment was the result of a bonus that he was entitled to, but never received, while working at

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Pinnacle. Id. When asked why he did not receive the bonus until 2013, Muniz testified that it was

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“just a simple cash flow issue probably.” Id. at 163.

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Plaintiffs also assert that a Georgia trial judge previously instructed Pinnacle to not mislead

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witnesses about information that was hidden in Excel spreadsheets that Pinnacle or Lockton sent to

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the owners of the Projects. The Georgia court ordered Pinnacle and then co-defendant Lockton to

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“disclose any differences known to the questioner between a document as originally transmitted and

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as shown to the witness at the deposition or trial, including whether any columns or rows of

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spreadsheets have been hidden or unhidden.” 12/31/2014 Order Granting Plaintiffs’ Motion for

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Protective Order Against Defendants’ Counsel Misleading Witnesses. Plaintiffs’ motion for a

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protective order in that case, however, pertained to the alleged misconduct of former co-defendant

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Lockton during depositions, not the conduct of Pinnacle’s counsel.

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For the Northern District of California

United States District Court

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Accordingly, Plaintiffs’ request for the production of all documents reviewed by Muniz prior
to his deposition is denied.
IT IS SO ORDERED.
Dated: March 20, 2015
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE

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C14-03953 BLF (HRL) Notice will be electronically mailed to:

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Alice Y Chu

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Amanda D. Donson

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Andrew Lee Mathews

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Cindy Hamilton

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Daniel G. Hildebrand

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Donna Marie Welch [e-mail], [e-mail],
[e-mail], [e-mail]

[e-mail], [e-mail], [e-mail]
[e-mail], [e-mail], [e-mail]
[e-mail]

[e-mail], [e-mail], [e-mail]
[e-mail]

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Douglas R. Young

[e-mail], [e-mail]

Ian David Burkow

[e-mail]

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For the Northern District of California

United States District Court

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Jeffrey L. Willian [e-mail], [e-mail],
[e-mail], [e-mail]

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Jessica Jane Bluebond-Langner

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Kara L. Arguello

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Karen P. Kimmey

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Lindsay Erin Hutner

[e-mail], [e-mail], [e-mail]

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Marc Howard Cohen

[e-mail]

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Thomas Edward Dutton

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William J. Goines

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Yates McLaughlin French

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Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.

[e-mail]

[e-mail], [e-mail]
[e-mail], [e-mail], [e-mail]

[e-mail], [e-mail]

[e-mail], [e-mail], [e-mail]
[e-mail]

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