Adams et al v. Cline Agency, Inc. et al
Filing
183
ORDER denying 157 Defendants Motion in Limine. To minimize any prejudice to Defendants due to Plaintiffs late disclosure of evidence of their damages, discovery is reopened from June 5, 2013 until June 23, 2013, for the sole purpose of permittin g Defendants to conduct up to two depositions of no more than two hours each regarding Plaintiffs evidence of damages; and Each party shall bear his, her, or its own costs associated with this reopened discovery period and the filing of the instant Motion, by Judge William J. Martinez on 6/5/2013.(ervsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-02758-WJM-KLM
DOUGLAS ADAMS, and
GAYLE ADAMS,
Plaintiffs,
v.
CLINE AGENCY, INC.,
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY,
AMCO INSURANCE COMPANY,
NATIONWIDE MUTUAL INSURANCE COMPANY, and
LYNN MICHEL,
Defendants.
ORDER DENYING DEFENDANT’S MOTION IN LIMINE
This action arises out of an insurance contract issued to Plaintiff Douglas Adams
by Defendants AMCO Insurance Company, Allied Property and Casualty Company,
and Nationwide Mutual Insurance Company through Cline Agency and its agent, Lynn
Michel (collectively “Defendants”), an attempted claim made on the policy after an
incident on November 25, 2008, and subsequent litigation arising out of the November
25, 2008 incident (“Underlying Litigation”) in which Plaintiffs Douglas Adams and Gayle
Adams (collectively “Plaintiffs”) were named as parties. This matter is before the Court
on Defendants’ Motion in Limine on Evidence of Damages Not Disclosed By Plaintiffs
(“Motion”). (ECF No. 157.) Defendants move to exclude all evidence of Plaintiffs’
alleged damages at trial that was not timely disclosed under Fed. R. Civ. P. 26(a)(1)(iii)
and 37(c)(1). (Id.) For the reasons set forth below, the Motion is denied.
I. LEGAL STANDARD
Federal Rule of Civil Procedure 26 provides, in relevant part:
(a) Required Disclosures.
(1) Initial Disclosure.
(A) In General. Except as exempted by Rule 26(a)(1)(B) or
as otherwise stipulated or ordered by the court, a party must,
without awaiting a discovery request, provide to the other
parties:
(i) the name and, if known, the address and telephone
number of each individual likely to have discoverable
information—along with the subjects of that information—
that the disclosing party may use to support its claims or
defenses, unless the use would be solely for impeachment;
...
(e) Supplementing Disclosures and Responses.
(1) In General. A party who has made a disclosure under
Rule 26(a)—or who has responded to an interrogatory,
request for production, or request for admission—must
supplement or correct its disclosure or response:
(A) in a timely manner if the party learns that in some
material respect the disclosure or response is incomplete or
incorrect, and if the additional or corrective information has
not otherwise been made known to the other parties during
the discovery process or in writing; or
(B) as ordered by the court.
Fed. R. Civ. P. 26.
Where a party fails to comply with Rule 26, the opposing party has recourse in
Rule 37, which provides, in relevant part: “If a party fails to provide information or
identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that
2
information or witness to supply evidence on a motion, at a hearing, or at a trial, unless
the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). Rule
37(c)(1) also provides for additional or alternative sanctions, including payment of
attorneys’ fees, jury instructions regarding the nondisclosure, and discovery-related
sanctions. Id. The non-moving party has the burden of showing that they were
substantially justified in failing to comply with Rule 26(a)(1). Nguyen v. IBP, Inc., 162
F.R.D. 675, 680 (D. Kan. 1995).
The sanctions available under Rule 37(c) are often described as “self executing”
and “automatic.” Steven S. Gensler, Federal Rules of Civil Procedure, Rules and
Commentary Rule 37 (2012). However, in addressing Rule 37 generally, the Tenth
Circuit has made clear that “[t]he protections and sanctions found in the discovery rules
are not absolute and contemplate the use of judicial discretion.” Marshall v. Ford Motor
Co., 446 F.2d 712, 713 (10th Cir. 1971); see also Woodworker’s Supply, Inc. v.
Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999) (recognizing that Rule
37(c) vests broad discretion with the trial court); Yeti by Molly, Ltd. v. Deckers Outdoor
Corp., 259 F.3d 1101, 1106 (9th Cir. 2001) (noting that the district court’s discretion
should be given particularly wide latitude in imposing sanctions under Rule 37(c)(1));
Ortiz-Lopez v. Sociedad Espanola de Auxilio Mutuo Y Beneficiencia de Puerto Rico,
248 F.3d 29, 34 (1st Cir. 2001) (holding that district courts have broad discretion in
meting out Rule 37(c) sanctions for Rule 26 violations).
II. ANALYSIS
Defendants’ Motion in Limine makes two principal arguments: (1) pursuant to
3
Federal Rule of Civil Procedure 37(c), all evidence of Plaintiffs’ damages that was not
timely disclosed under Rule 26 should be excluded from evidence; and (2) Plaintiffs’
litigation-induced emotional distress damages are not recoverable as a separate
component of damages. (ECF No. 157 at 1-7.) The Court will review each argument in
turn.
A.
Late-Disclosed Evidence of Damages
Defendants argue that Plaintiffs’ failure to disclose evidence regarding their
claimed damages violated Rule 26, and request that the Court exclude all such
evidence pursuant to Rule 37(c). (Id.) Defendants attest that although they were aware
that Plaintiffs’ damages would fall into two general categories—emotional distress
damages resulting from Defendants’ failure to provide a defense in the Underlying
Litigation, and the costs of Plaintiffs’ legal defense in the Underlying Litigation and
indemnity paid by Plaintiffs’ other insurer—, Plaintiffs disclosed no evidence of these
damages or the dollar amounts Plaintiffs intended to demand. (Id. at 2-3.) Defendants
indicate that their attempts to obtain information about such damages in Plaintiffs’
depositions were unfruitful, as Plaintiffs refused to discuss specifics regarding the
damages due to a confidentiality agreement in the Underlying Litigation. (Id. at 6.)
Plaintiffs admit that they delayed disclosing the damages amounts they would be
seeking for the legal costs in the Underlying Litigation until serving Defendants with
Plaintiffs’ Seventh Supplemental Disclosures on May 31, 2013, two weeks after
Defendants filed the instant Motion. (ECF No. 174 at 5, Ex. C.) Plaintiffs did not
subpoena such information until earlier the same day, May 31, 2013. (ECF No. 174-5.)
4
However, Plaintiffs argue that Defendants are not prejudiced by this late disclosure, as
Defendants already had information regarding the nature of the damages demand and
the sources of evidence that would be used to prove such damages. (Id. at 7-8.)
Although the relevant witness, Laura Tighe, Esq., was not disclosed under Rule 26 as
an individual with discoverable information until May 31, 2013, Plaintiffs point out that
they disclosed her in the Final Pretrial Order, entered on April 16, 2012, as a person
who may be called at trial with regard to the Underlying Litigation and damages
asserted. (Id. at 4; see ECF No. 144 at 12.) Further, citing a letter between counsel in
the instant case, Plaintiffs point out that Defendants’ counsel was aware that Ms. Tighe
was counsel for Plaintiffs’ insurer in the Underlying Litigation as early as March 9, 2011,
and could have sought information from her. (ECF No. 174-6.)
Plaintiffs further contend that Defendants will not be prejudiced because they
were given the opportunity to conduct discovery and prepare their case with regard to
this late-disclosed information. (ECF No. 174 at 7-8.) Because the Underlying
Litigation was not settled until December 2011, after the close of discovery in November
2011, Plaintiffs indicated in the Final Pretrial Order that additional disclosures would be
required once the specific damages amounts arising out of the Underlying Litigation
were known, and stated that additional discovery may be requested by Defendants as a
result of the delay. (ECF No. 144 at 17.) While Defendants opposed the addition of
any undisclosed new claims, Magistrate Judge Kristen L. Mix, presiding over the Final
Pretrial Conference, invited any such discovery motion to be made pursuant to her
standard discovery procedures. (Id.) Plaintiffs agreed to allow additional discovery in
this regard, but Defendants did not seek any such discovery. (ECF No. 174 at 5.)
5
With respect to Plaintiffs’ Seventh Supplemental Disclosures, there is no dispute
that the evidence therein was not timely disclosed; the filing of the instant Motion
appears to have triggered the disclosure, and Plaintiffs argue not that the disclosure
was timely, but that Defendants will not be prejudiced by its tardiness. Thus, the
question before the Court is whether Rule 37(c) mandates exclusion of this evidence.
“The determination of whether a Rule 26(a) violation is justified or harmless is entrusted
to the broad discretion of the district court.” Woodworker’s Supply, 170 F.3d at 993.
The Tenth Circuit has identified four factors for consideration in determining whether
the failure to disclose is substantially justified or harmless: (1) the prejudice or surprise
to the impacted party; (2) the ability to cure the prejudice; (3) the potential for trial
disruption; and (4) the erring party’s bad faith or willfulness. Id.
Considering this record as a whole, the Court finds that in these circumstances
Defendants were not surprised by the disclosure of Ms. Tighe as a potential witness or
person with discoverable information. Although Plaintiffs violated Rule 26 in failing to
timely include Ms. Tighe as an individual likely to have discoverable information until
after the instant Motion was filed, Defendants had notice of the nature of Plaintiffs’
damages and Ms. Tighe’s role in the Underlying Litigation prior to the close of
discovery, and Ms. Tighe was disclosed as a potential witness in the Final Pretrial
Order. Similarly, although Plaintiffs violated Rule 26 in failing to subpoena the relevant
dollar amounts until May 31, 2013, when such amounts could likely have been
discovered at any time after the settlement of the Underlying Litigation in December
2011, Defendants were likewise not surprised that this category of damages would be
sought.
6
Similarly, the prejudice to Defendants that would normally attend such a tardy
disclosure is mitigated here, where Defendants were specifically invited by the
Magistrate Judge to reopen discovery after the Final Pretrial Conference to seek
information regarding such damages. Because Defendants appear to have taken an
all-or-nothing approach to Plaintiffs’ evidence of damages, and declined to seek
discovery of such evidence despite sufficient knowledge that it existed, Defendants
bear some responsibility for their asserted lack of “adequate opportunity to prepare a
defense for any such undisclosed evidence.” (ECF No. 157 at 6.) In submitting their
Seventh Supplemental Disclosures, and in agreeing to additional discovery on the
matter, Plaintiffs have already taken steps to cure the prejudice to Defendants.
Although Plaintiffs’ tardiness was in error, there is no evidence that it was willful or
undertaken in bad faith, nor is there any indication here that presentation of evidence of
Plaintiffs’ damages will disrupt the trial, as the parties undoubtedly contemplated that
Plaintiffs would attempt to prove their damages.
Therefore, having weighed the factors which the Court is to consider under Rule
37(c), on balance the Court finds that wholesale exclusion of the evidence of Plaintiffs’
damages is not the appropriate remedy here. However, there is no doubt that the late
disclosure of this evidence violated Rule 26, and although Defendants failed to move
for discovery of such evidence, Defendants cannot be held solely responsible for curing
Plaintiffs’ errors. While Defendants were prejudiced to some degree by Plaintiffs’ late
disclosure, such prejudice is easily cured by reopening discovery for the limited purpose
of allowing Defendants to prepare their case with respect to Plaintiffs’ damages
evidence. Therefore, to alleviate any prejudice to Defendants caused by Plaintiffs’ late
7
Seventh Supplemental Disclosures, the Court will permit Defendants to reopen
discovery for the sole and limited purpose of taking two depositions on the issue of
Plaintiffs’ damages, of no more than two hours each, and prior to trial.
B.
Litigation-Induced Emotional Distress
Defendants’ Motion includes a two-paragraph argument that Plaintiffs’ emotional
distress damages in the form of “litigation-induced stress” are not recoverable as a
separate component of damages, and that Defendants should not be liable for such
damages. (ECF No. 157 at 5.) Although Defendants do not explicitly state that
evidence of these damages should be excluded at trial, the Court construes
Defendants’ argument as such a request.
Defendants’ position appears to be that, because courts have not permitted
plaintiffs to recover litigation-induced emotional distress damages, evidence of such
damages is irrelevant and inadmissible. Defendants cite five state court cases from
outside of Colorado as support for this contention. (ECF No. 157 at 5.) The Court
agrees that in state courts and federal courts alike, plaintiffs generally may not recover
for stress and emotional distress caused by the very litigation process in which they are
attempting to obtain such recovery. See Stoleson v. United States, 708 F.2d 1217, 1223
(7th Cir. 1983); Timms v. Rosenblum, 713 F. Supp. 948, 955 (E.D. Va. 1989), aff’d, 900
F.2d 256 (4th Cir. 1990); Clark v. United States, 660 F. Supp. 1164, 1200 (W.D. Wash.
1987), aff’d, 856 F.2d 1433 (9th Cir. 1988). Were the emotional distress damages
claimed by Plaintiffs equivalent to those in the cases discussing litigation-induced stress,
the Court would agree that such damages are unrecoverable and irrelevant.
8
However, Plaintiffs’ emotional distress damages in the instant case are
distinguishable. As Plaintiffs’ Response explains, “the Adamses are not seeking to
recover for their emotional distress, anger, frustration, loss of use of their time, et cetera
in connection with this case”; rather, they seek damages for the emotional distress they
experienced because of Defendants’ refusal to defend them the Underlying Litigation.
(ECF No. 174 at 8 (emphasis in original).) Because Plaintiffs’ claim for emotional
distress amounts to an argument that it was caused by Defendants’ failure to defend
them against the claims in the Underlying Litigation—not, as in the cited cases, by
Plaintiffs own choice in bringing the instant litigation—the courts’ reasoning for rejecting
litigation-induced emotional distress damages is inapplicable to the instant case. See
Stoleson, 708 F.2d at 1223 (no recovery for litigation-induced stress because alleged
tortfeasor should be able to defend himself in court without multiplying his damages);
Timms, 713 F. Supp. at 955 (no recovery because mental anguish attends all litigation);
Clark, 660 F. Supp. at 1200 (no recovery because pursuit of affirmative litigation is a
matter of choice).
Accordingly, the Court finds no reason to exclude evidence of Plaintiffs’ emotional
distress damages merely because they happen to have resulted from a separate
litigation.1
1
Defendants also state (without explanation or citation to authority) that they should not
be liable for emotional distress damages because Plaintiffs asserted cross-claims in the
Underlying Action. (ECF No. 157 at 5.) As it is not apparent what Defendants intend by such a
statement, it does not affect the Court’s decision not to exclude evidence of Plaintiffs’ emotional
distress damages. Nothing in this ruling prevents Defendants from asserting any defense to
liability for such damages as Defendants may wish to present.
9
III. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.
Defendants’ Motion in Limine (ECF No. 157) is DENIED;
2.
To minimize any prejudice to Defendants due to Plaintiffs’ late disclosure of
evidence of their damages, discovery is reopened from June 5, 2013 until June
23, 2013, for the sole purpose of permitting Defendants to conduct up to two
depositions of no more than two hours each regarding Plaintiffs’ evidence of
damages; and
3.
Each party shall bear his, her, or its own costs associated with this reopened
discovery period and the filing of the instant Motion.
Dated this 5th day of June, 2013.
BY THE COURT:
William J. Martínez
United States District Judge
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?