CGC Holding Company, LLC et al v. Hutchens et al

Filing 692

ORDER; 653 Plaintiffs Motion for an Order CompellingDiscovery and Awarding Sanctions and Supporting Memorandum of Law is GRANTED. 670 Plaintiffs Motion to Strike HutchensResponse to Motion to Compel/Sanctions for Refusal to Answer GEIF-RelatedQuestions is DENIED, by Magistrate Judge Kristen L. Mix on 4/28/16.(morti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-01012-RBJ-KLM
CGC HOLDING COMPANY, LLC, a Colorado limited liability company;
CRESCENT SOUND YACHT CLUB, LLC, a Florida limited liability company;
HARLEM ALGONQUIN LLC, an Illinois limited liability company; and
JAMES T. MEDICK; on behalf of themselves and all others similarly situated,
Plaintiffs,
v.
SANDY HUTCHENS, a/k/a Fred Hayes, a/k/a Moishe Alexander, a/k/a Moshe Ben
Avraham; et al.,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY UNITED STATES MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiffs’ Motion for an Order Compelling
Discovery and Awarding Sanctions and Supporting Memorandum of Law [#653]1 (the
“Motion to Compel”). Plaintiffs also filed a Reply Brief in Further Support of Their Motion
for an Order Compelling Discovery and Awarding Sanctions [#667], and Defendants
untimely filed Hutchens’ Response to Motion to Compel/Sanctions for Refusal to Answer
GEIF-Related Questions [#669]. Also at issue is Plaintiffs’ Motion to Strike Hutchens’
Response to Motion to Compel/Sanctions for Refusal to Answer GEIF-Related
Questions [#670] ( the “Motion to Strike”). The Court has reviewed the pleadings and the

1

[#653] is an example of the convention the Court uses to identify the docket number
assigned to a specific paper by the Court’s case management and electronic case filing system
(CM/ECF). The Court uses this convention throughout this Order.

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case file and is fully advised in the premises.
IT IS HEREBY ORDERED that the Motion to Strike [#670] is DENIED for failure to
comply with D.C.COLO.LCivR 7.1(a). For the reasons set forth below, the Motion to
Compel [#653] is GRANTED.
In brief, Plaintiffs assert that they should be permitted to reopen the deposition of
Defendant Sandy Hutchens because he impermissibly refused to answer questions related
to Great Eastern Investment Fund (“GEIF”), an entity which they assert was controlled by
Mr. Hutchens and involved in the advance fee loan fraud alleged in this lawsuit. Motion to
Compel [#653] at 5-9. They further assert that Defendants attempted to prevent them from
getting information about GEIF because “Hutchens, through GEIF and under his ‘Matthew
Kovce’ alias, continued to run his advance fee loan fraud scheme for years after this case
was originally filed, even after Judge Jackson’s March 4, 2013 ruling certifying the Class.”
Reply [#667] at 2-3. For his part, Mr. Hutchens asserts that the Court previously excluded
GEIF as a defendant in this lawsuit, and that Plaintiffs should not be permitted “to treat
GEIF as a class defendant.” Defendants assert that Fed. R. Civ. P. 30(c)(2) permits an
instruction not to answer a deposition question “to enforce a limitation ordered by the
Court.” Response [#669], at 2-3.2
The Court rejects Defendants’ interpretation of the District Judge’s Orders regarding
GEIF.3 First, it is undisputed that the class as certified in this case includes “all US

2

Although Defendant’s Response [#669] was not timely filed, the Court considers it for the
purpose of thoroughness.
3

GEIF was apparently originally thought by Plaintiffs to be named “Great Eastern
Investments, LLC.” The misnomer is immaterial to this dispute.

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residents or domiciled entities (1) who were issued loan commitments between January 1,
2004 and April 7, 2013, (2) by . . . Great Eastern Investments, LLC, or by any other entity
controlled by Sandy Hutchens . . . .” Order [#406] at 22; see also CGC Holding Co., LLC
v. Broad & Cassel, 773 F.3d 1076, 1087 (10th Cir. 2014). In an Order entered on
Defendants’ Motion to Reconsider the class certification ruling, the Court made clear that
although GEIF was not “being added as an additional defendant” in the case, Plaintiffs had
alleged that GEIF “was simply another alias used in the course of the scheme” at issue,
and “[w]hether that is so remains to be seen.” Order [#428] at 3.
In light of the explicit language of the District Judge’s Orders, it is difficult to
understand how Defendants could have interpreted them to preclude discovery into GEIF.
Not only is GEIF one of the entities named as a lender in the class definition, but
Defendants had to consciously ignore Judge Jackson’s statement that “it remains to be
seen” whether GEIF is another Hutchens alias to assert their argument. Facts are
determined in civil litigation through discovery, hence the way to learn whether GEIF is a
Hutchens alias is through that process. For this reason, Defendants’ argument strikes the
Court as disingenuous, at best.
Moreover, even though Judge Jackson expressly disallowed GEIF to be named as
an additional defendant, such a “limitation” is not the type of discovery preclusion
contemplated by Fed. R. Civ. P. 30(c)(2). First, that rule specifically refers to instructing
a witness not to answer a question “to enforce a limitation ordered by the court.” By
deciding that GEIF would not be named as an additional defendant in the case, the District
Judge said nothing about whether information relating to GEIF was discoverable. In other
words, the “limitation” at issue was on the identity of parties to the case, not on discovery.
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In fact, as pointed out above, the District Judge indicated that he did not intend to limit
discovery by saying that information about the connection between GEIF and Mr. Hutchens
would eventually come to light. The only way that could happen is through discovery.
Second, the “limitation” referred to in Rule 30(c)(2) is generally construed to mean a
limitation on evidence directed by the court. 8A Charles Alan Wright and Arthur R. Miller,
Federal Practice & Procedure § 2116. Nothing in the District Judge’s ruling limits evidence
related to GEIF. Indeed, inclusion of GEIF as a lender in the class definition compels the
opposite conclusion; i.e., that evidence relating to GEIF is relevant and discoverable.
Finally, it has long been established that instructing a witness not to answer a
deposition question on the grounds of relevance is simply not permitted. Resolution Trust
Corp. v. Dabney, 73 F.3d 262, 266 (10th Cir. 1995) (“It is inappropriate to instruct a witness
not to answer a [deposition] question on the basis of relevance”). Fed. R. Civ. P. 30(d)
permits imposition of a sanction “– including the reasonable expenses and attorney’s fees
incurred by any party – on a person who impedes . . . the fair examination of a deponent.”
In addition, when a Motion to Compel is granted, the court “must” require the wrongdoer
to “pay the movant’s reasonable expenses in making the motion, including attorneys’ fees.”
Fed. R. Civ. P. 37(5)(A). Accordingly,
IT IS HEREBY ORDERED as follows:
1.

Plaintiffs’ Motion to Compel [#653] is GRANTED. Plaintiffs are permitted to
reopen the deposition of Defendant Sandy Hutchens a/k/a Moishe Alexander
for no longer than ninety (90) minutes to seek information relating to GEIF
and Matthew Kovce. Plaintiffs are not limited to asking only those
questions which Mr. Hutchens refused to answer at his deposition on
March 1-2, 2016. The deposition shall be conducted on a date and at a time
and place mutually agreeable to counsel and the parties, but no later than
May 20, 2016. If any dispute arises during the deposition which counsel
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cannot resolve, they shall immediately telephone the undersigned at 303335-2770 for a ruling.
2.

As a sanction for impeding the fair examination of the deponent under Fed.
R. Civ. P. 30(d), Defendant Sandy Hutchens, a/k/a Moishe Alexander, and
Steven A. Klenda, attorney for Defendants, shall pay Plaintiffs’ counsel’s
costs and attorney’s fees incurred in reopening the deposition, including: (1)
travel expenses for one attorney; (2) court reporter fees; and (3) one
attorney’s fees including travel time. Plaintiffs’ counsel shall submit an
invoice attaching original expense receipts and including an itemization of
attorney time and hourly rate to Defendants within seven (7) business days
following completion of Mr. Hutchens’ deposition. The invoice shall be paid
within ten (10) business days.

3.

On or before May 13, 2016, Plaintiffs’ counsel shall file an Affidavit of
attorneys’ fees and costs incurred in filing the Motion to Compel [#653],
pursuant to D.C.COLO.LCivR 54.3. Defendants may file a Response on or
before May 20, 2016. No reply will be permitted. Failure to comply with
D.C.COLO.LCivR 54.3 shall result in denial of the request for costs and
attorneys’ fees.

Dated: April 28, 2016

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