Agile Sky Alliance Fund LP et al v. Citizens Financial Group et al

Filing 287

ORDER denying 247 APPEAL OF MAGISTRATE JUDGE DECISION to District Court; denying 275 Motion for Leave; denying as moot 276 Motion for Summary Judgment, by Judge R. Brooke Jackson on 2/3/12.(gmssl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Honorable R. Brooke Jackson
Civil Action No. 09-cv-2786-RBJ-BNB
AGILE SKY ALLIANCE FUND LP, and
SKY BELL SELECT, LP,
Plaintiffs,
v.
RBS CITIZENS, N.A., d/b/a Charter One Bank, and
SWISS FINANCIAL SERVICES, INC.,
Defendants.

ORDER

This matter is before the Court on (1) plaintiffs’ objection to Magistrate Judge Boland’s
September 2, 2011 and September 12, 2011 Orders [#247], and (2) defendant RBS’s motion for
leave to filed a renewed motion for summary judgment and tendered “renewed motion” [##275,
276]. The Court also will address the parties’ exhibit and witness lists.
Facts
The facts were set forth by Judge Martinez in his order denying motions to dismiss and
for summary judgment [#215] and need only be briefly summarized again. RBS Citizens, N.A.,
d/b/a Charter One Bank and Swiss Financial Services are alleged to have been lenders,
administrators or advisors of Lancelot Investors Fund L.P. and Lancelot Investors Fund II, L.P.
The Lancelot Funds were hedge funds that provided financing to entities owned or controlled by
Thomas J. Petters. Those entities purportedly purchased and resold consumer electronics to
large discount retailers. The gist of this case is that Petters was operating a Ponzi scheme, that

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Lancelot was complicit and eventually went bankrupt as a result of the scheme, and that
plaintiffs invested or reinvested in Lancelot based representations, assurances, and inducements
by the defendants that turned out to be false. In the Second Amended Complaint plaintiffs assert
claims of (1) negligent misrepresentation; (2) negligence; and (3) violation of Colorado securities
laws.
Procedural History
As relates to the pending motions, RBS filed a “Motion for Sanctions Against Plaintiffs
for Failure to Comply with Court Order” on August 12, 2011 [#227]. RBS sought sanctions for
plaintiffs’ failure to comply with a November 4, 2010 order requiring the production of
documents showing buy-sell information, due diligence files for all Asset Based Lending hedge
funds, and quarterly statements. Following a hearing, Magistrate Judge Boland granted the
motion to the extent that RBS was permitted to (1) serve no more than five additional
interrogatories; (2) serve no more than five additional requests for production; (3) serve no more
than five additional requests for admissions, and (4) reopen the deposition of Neal Greenberg for
not more than three additional hours. The motion was denied in all other respects. [#240].
Following a final pretrial conference on August 26, 2011 Magistrate Judge Boland
refused to enter the parties’ proposed final pretrial orders. Judge Boland ordered the parties to
submit a single, revised pretrial order on, or before, December 1, 2011 [#246]. They did so
[#270], and Judge Boland entered the order as tendered. [#274].
Nevertheless, plaintiffs object to both of Magistrate Judge Boland’s orders and requests
that the Court vacate them.

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On December 12, 2011 RBS filed a motion for leave to file a renewed motion for
summary judgment [#275] and simultaneously filed its renewed motion [#276]. Plaintiffs have
filed a response [#282], and RBS has filed a reply [#285].
Standard
This Court may modify or set aside any part of a magistrate judge’s nondispositive order
that is clearly erroneous or contrary to law. Fed. R. Civ. P. 72(a). Whether to permit a renewed
summary judgment motion, particularly after the deadline for dispositive motions has passed, is a
matter of discretion.
Conclusions
A. Objections to the Magistrate Judge’s Orders [#247].
The issues discussed in RBS’s motion and in the hearing held by Magistrate Judge
Boland were (1) whether the affidavit of Neal Greenberg, plaintiffs’ professional manager, was
inconsistent with prior discovery, and (2) whether plaintiffs had disclosed all documents that
they were required to disclose. RBS sought to discover any evidence that it had given advice to
plaintiffs prior to plaintiffs’ investments. RBS contends that no such evidence was produced.
However, statements made by Neal Greenberg in an affidavit pointed to documents of
investments after the relevant period that had not been previously disclosed. RBS first sought to
exclude the affidavit as inconsistent with prior discovery under Fed. R. Civ. P. 57. That motion
was denied by Judge Martinez [#215]. Because plaintiffs did not disclose the document
referenced by Mr. Greenberg during the discovery period, RBS then filed a Motion for Sanctions
against plaintiffs for failure to comply with the court order. At the conclusion of a hearing on the
motion, Judge Boland granted and denied it in part, as indicated above. He found that the
Greenberg affidavit appeared to be inconsistent with previous discovery responses, thereby

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constituting good cause to allow additional discovery notwithstanding the expiration of the close
of discovery. Transcript, September 2, 2011 [#255], at 49-50.
Plaintiffs object on the bases that (1) Judge Boland granted sanctions without violation of
an order in violation of Fed. R. Civ. P. 37(b)(2)(A); (2) the sanctions purport to overrule rulings
made by the District Court; and (3) the order fails to acknowledge the unjustifiable delay of trial.
1. Violation of Fed. R. Civ. P. 37(b)(2)(A)
Agile maintains that because it did not violate any discovery rules, sanctions are
inappropriate and impermissible. Judge Boland did not make a finding of a discovery violation
in either of his Orders. Rather, he re-opened discovery for a limited purpose. That is well within
the discretion of a magistrate judge. See Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d 1458
(10th Cir. 1988).
2. Overruling rulings made by the District Court
RBS previously sought to have Neal Greenberg’s affidavit stricken as inconsistent under
Fed. R. Civ. P. 56. This issue, as well as RBS’s Motion for Summary Judgment, were argued
before Judge Martinez on April 25, 2011. Judge Martinez denied RBS’s motion to strike the
affidavit [#214] and also denied the Motion for Summary Judgment [#215]. In ruling on the
Motion for Summary Judgment Judge Martinez appears to have relied, at least in part, on the
Greenberg affidavit in determining that plaintiffs had “come forward with some evidence that
after considerable deliberation it decided to retain its investments in Lancelot…as a direct result
of the alleged misrepresentations made by Defendants.” Order at 20.
According to plaintiffs, if the affidavit was inconsistent with previous discovery
responses then it must be stricken under Rule 56. During the hearing on April 25, 2011, Judge
Martinez declined to strike Neal Greenberg’s affidavit. Plaintiffs’ argument now is that because

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Judge Martinez did not strike the affidavit, it must be consistent with previous discovery
responses. Therefore, Judge Boland’s finding that the affidavit is inconsistent or “at least
appears to be inconsistent” equates to an overruling of a finding of the District Court.
In denying the Motion to Strike, Judge Martinez explained:
[t]he Court finds that defendant RBS Citizens has failed to establish certain
portions of these declarations submitted in support of plaintiffs’ opposition to
defendants’ amended motion for summary judgment violate Rule 56. The Court
will take these declarations into account when it considers the amended motion
for summary judgment. The Court believes the arguments of defendants’ counsel
with respect to some alleged deficiencies in the declaration go more to the weight
the Court should attribute to the declaration and not the fact that they should be
stricken and not considered under Rule 56.
April 25, 2011 Hearing Transcript, #280 at p. 73-74.
While Judge Martinez did not find that the Greenberg declaration is inconsistent, and thus
should be stricken, this Court does not read his Order as finding that the affidavit is consistent.
Rather, Judge Martinez found that RBS failed to establish that the declaration violated Rule 56,
and any deficiencies should be considered when giving the document weight. Judge Boland has
not “overruled” Judge Martinez’s ruling by allowing additional discovery on this issue. Rather,
Judge Boland’s order allows clarification of the record and is not clearly erroneous or contrary to
the law of the case as established by Judge Martinez.
3. Unjustifiable Delay
Plaintiffs argue that the magistrate judge’s “sanctions” order of September 2, 2011
“rewards Charter One for bringing a discovery motion long after the close of discovery and on
the eve of trial, contrary to the law of this Court.” Tr. [#255] at 21-22. RBS contends that Judge
Boland contradicted his previous ruling when he denied a motion to extend discovery because
defendants had “sat on their hands.” Id. at 23.

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Judge Boland explained why he found judicial intervention in this discovery matter to be
appropriate:
But I am a little bit troubled by the fact that there is a discovery – an interrogatory
answer which says look at document 5800, or whatever it is, and there is an
admission which says we admit it, and then there is an affidavit from Mr.
Greenberg which changes some of those facts, or appears to change some of those
facts. What do I do about that? And that affidavit comes very late in the game,
after the close of discovery, after my order saying you’ve sat on your hands. I
mean, perhaps the Greenberg affidavit creates good cause to reopen discovery as
to some limited issue.
Tr. [#255] at 36-37.
If the order delayed this already remarkably old case, then that is unfortunate. However,
the order was well within the magistrate judge’s discretion. It was neither clearly erroneous nor
contrary to law.
B. Motion for Leave/Renewed Motion for Summary Judgment [##275, 276].
RBS seeks leave to file a renewed motion for summary judgment, arguing that
information produced in discovery after the Court’s ruling on RBS’s original motion for
summary judgment shows that summary judgment should be granted. Plaintiffs object.
The magistrate judge set a dispositive motion deadline of January 31, 2011. RBS did not
meet that deadline. However, on February 11, 2011 RBS filed a motion for leave to file a
motion for summary judgment notwithstanding the passage of the deadline and simultaneously
tendered a motion for summary judgment. On February 28, 2011 RBS tendered an amended
motion for summary judgment. Judge Martinez granted leave to file and accepted the amended
motion.
The motion was extensively briefed, and literally several hundred pages of documents
were presented by the parties for and against the motion. On April 25, 2011 Judge Martinez held
oral argument on the motion. The transcript is 75 pages long. [#280]. On May 31, 2011 Judge
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Martinez issued a 22-page written order denying the motion for summary judgment as well as
RBS’ earlier filed motion to dismiss and Swiss Financial Service’s motion to dismiss. [#215].
After obtaining additional discovery, RBS requests an opportunity to “renew” the motion
for summary judgment that was previously denied. The Court now exercises its discretion to
decline to grant that leave. A deadline was set for dispositive motions. It was not met.
Nevertheless, RBS was permitted to file a motion for summary judgment out of time. As
indicated, after voluminous briefing, the Court granted oral argument. Thereafter, the Court
issued a thoughtful order on the pending motions. I am aware that RBS now believes that
information subsequently produced, that perhaps could and even should have been produced
earlier, supports its motion. However, there comes a time when enough is enough. The Court
has given RBS a fair and ample opportunity to be heard on summary disposition.
C. Exhibit and Witness Lists.
Despite Magistrate Judge Boland’s efforts, the parties have insisted on unrealistic exhibit
lists. Plaintiffs’ list is 61 pages long and lists 600 exhibits. [#274-1]. Defendants’ list is 23
pages long and lists 52 exhibits. [#274-2]. I note as well that plaintiffs have listed 26 non-expert
witnesses (11 by deposition) plus two expert witnesses. Defendants have listed 30 non-expert
witnesses (20 by deposition) plus three experts. There is some overlap between the plaintiffs’
and defendants’ non-expert witnesses.
Counsel surely knows that it would be impossible to present that many exhibits and
witnesses in an eight-day trial. Moreover, it would bore the jurors to death. These lists to me
indicate either that counsel have not yet exercised their good judgment as to what is critical to
their case, or they are essentially playing “hide the ball” at this stage.

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We are set for a final trial preparation conference on March 30, 2012. By that time the
Court requests and will expect that both parties will have very substantially pared down their
respective lists of exhibits to those relatively few critical exhibits that they truly expect to offer at
trial. Failing that, the Court will impose a limit of, for example, 10 exhibits per side. The Court
requests and will expect that the parties will have pared their witness lists to a reasonable number
and reduce, to the greatest extent possible, the testimony that will be presented by deposition.
Failing that, the Court will impose limits such as granting both sides an equal and pre-determined
amount of time to present their respective cases (including voir dire, opening statements, direct
examinations, cross examinations, closing arguments, and any in-trial motions or arguments).
Under that scenario, when a party exhausts the allotted time, it will be finished.
I do not wish to impose such restrictions. I much prefer letting lawyers try their case
without undue interference from the Court. It will be up to you. I suggest that you come to the
trial preparation conference in that spirit. Reasonable final lists of exhibits should be pre-marked
and stipulated as to authenticity or admissibility, except in instances where there is a serious and
unresolved (after conferring) dispute. Witness lists should be pared and final. Deposition
testimony should be minimized and, except when stipulations cannot be agreed despite good
faith efforts, agreed. If there are unresolvable disputes regarding deposition testimony, please
bring transcripts clearly marked to illustrate the disputes and reasons. Before the conference
counsel should have had an in-person conference concerning jury instructions, made their good
faith best efforts to reach agreement, and have written copies of the instructions agreed and those
to which they cannot agree.
Finally, I request that you not file additional motions unless, after conferring with
opposing counsel, you deem it to be vital to your representation of your clients to do so. In that

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case, please restrict the length of the motions and briefs to 10 pages unless a longer motion or
brief is permitted by the Court for good cause shown. The Court does not request trial briefs.
Order
1. Motion #247 is DENIED.
2. Motion #275 is DENIED.
3. Motion #276 is DENIED AS MOOT.
4. The Court’s comments regarding exhibits and witnesses are set forth above.
DATED this 3rd day of February, 2012.

BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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