CG Elkhorn Hotel, LLC et al
Filing
174
AMENDED MEMORANDUM DECISION AND ORDER granting 136 Motion to Compel; granting 139 Motion to Compel; granting 142 Motion to Compel. Defendants request for sanctions is DENIED at this juncture, however. The Court will RESERVE ruling on Defendants Joint Motion for Relief from Civil Rule 30 (Dkt. 141 ) and Travelers Cross-Motion for Protective Order (Dkt. 153 ). The parties shall contact the Court staff if they still cannot resolve this issue upon reviewing this decision. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
THE TRAVELERS INDEMNITY
COMPANY OF AMERICA, a Connecticut
insurance company,
Case No. 1:10-cv-00604-BLW
AMENDED MEMORANDUM
DECISION AND ORDER
Plaintiff,
v.
KENDRICK BROS. ROOFING, INC., a
Utah corporation; WESTERN ROOFING,
INC., a Utah corporation; ZITTING
BROTHERS CONSTRUCTION, INC., a
Utah corporation; BUILT-TO-LAST, an
Idaho corporation; ALLIANCE LEVELBUILD, LLC f/k/a FEDERAL
CONSTRUCTORS CORPORATION, a
Utah limited liability company; UNITED
SUBCONTRACTORS, INC. dba TABOR
INSULATION, a Utah corporation;
STANDARD DRYWALL, INC., a
California corporation; HENNESSY
COMPANY, an Idaho limited liability
company; and DOES 1-10,
Defendants.
MEMORANDUM DECISION AND ORDER - 1
INTRODUCTION
Before the Court is the issue of Travelers Indemnity Company of America’s and
Okland Construction Company, Inc.’s legal relationship, as it pertains to this lawsuit and
Travelers’ discovery obligations. Related to this issue are three separate motions to
compel (Dkts. 136, 139, 1421), filed by Defendants Zitting Brothers Construction, Inc.,
Kendrick Bros. Roofing, Inc., and United Subcontractors, Inc., respectively. These
defendants maintain that Travelers stands in Okland’s shoes as the assignee of Okland’s
claims against defendants, and Travelers discovery responses have been deficient. For the
reasons set forth below, the Court finds that Travelers does stand in Okland’s shoes, and
therefore Travelers must meet any discovery obligations that would have fallen on
Okland as the plaintiff in this lawsuit, including providing adequate responses to the
defendants’ discovery requests and making an Okland representative available for
deposition.
ANALYSIS
This dispute arises over a delayed construction project. CG Elkhorn Hotel, LLC
hired Okland Construction Company to act as the general contractor overseeing the
construction of the Elkhorn Springs Residential Condominium project, located in Sun
1
The original Memorandum Decision and Order entered on December 9, 2013 (Dkt. 169)
referenced an incorrect docket number for Zitting Brothers and Kendrick’s motion to compel (Dkt. 142).
This amended order now refers to the correct docket number.
MEMORANDUM DECISION AND ORDER - 2
Valley, Idaho. In March 2008, CG Elkhorn sent notice and an opportunity to cure alleged
defects in the construction of the project to Okland. Okland sent a timely notice of CG
Elkhorn’s claim to its insurer, Travelers.
According to CG Elkhorn, Okland failed to provide a proposal to cure the alleged
defects in Okland’s work. Compl. ¶ 13, Dkt. 2-1. In response, CG Elkhorn filed this
lawsuit in November 2010, naming Okland as the sole defendant. Okland then brought
third-party claims against some of its subcontractors, including Zitting Brothers
Construction, Kendrick Bros. Roofing, and United Subcontractors, alleging that its
liability to CG Elkhorn, if any, arose from the subcontractors’ acts or omissions in
performing their work on the project. CG Elkhorn and Okland agreed by stipulation to
resolve their dispute in an arbitration proceeding. The subcontractor defendants agreed to
stay this suit pending resolution of the arbitration.
Okland and its insurer, Travelers, negotiated and reached a settlement with CG
Elkhorn for Okland to pay CG Elkhorn $1,000,000. Okland then reached a settlement
with Travelers by which Travelers would pay $1,000,000 in settlement to CG Elkhorn
and Okland would assign its third-party claims against the subcontractors to Travelers.
As part of the settlement agreement between Travelers and Okland, Okland agreed to
“provide reasonable cooperation in all matters and to all tasks and endeavors necessary to
allow Travelers to carry out or realize the terms of [the settlement agreement], and
specifically with respect to the prosecution of the assigned Subcontractor Claims.”
MEMORANDUM DECISION AND ORDER - 3
Okland-Travelers Settlement Agreement at 4, section 4(e), Ex. 1 to Fuhrman Aff., Dkt.
129-1.
Upon Travelers’ request, the subcontractor defendants in this lawsuit stipulated to
allow Travelers to substitute as the plaintiff. Travelers was permitted to file a Second
Amended Complaint on April 12, 2013.
Since that time, the subcontractor defendants have served discovery on Travelers,
each of which has apparently elicited the same response from Travelers –
(1) it is not Okland, (2) it does not stand in the shoes of Okland for the purposes of
discovery, (3) it is not responsible for securing Okland’s attendance at a deposition, and
(4) it has no dominion and control over Okland such that Travelers cannot be held
responsible for the deficient discovery responses or deposition testimony.
As succinctly stated by the District Court in the Southern District of New York, in
responding to the same argument made by an assignee, “[v]iewed from any angle,
plaintiff's position cannot be correct.” JPMorgan Chase Bank v. Winnick, 228 F.R.D.
505, 506 (S.D.N.Y. 2005). Idaho law allows the assignment of claims. Purco Fleet
Services, Inc., v. Idaho State Dept. of Finance, 90 P.3d 346, 351 (2004). “The general
rule is that an assignee steps into the shoes of the assignor upon assignment of the interest
and takes the assignment subject to the defenses assertable against the assignor.” 6A
C.J.S. Assignments § 132. As the assignee of Okland’s claims, Travelers therefore steps
into Okland’s shoes – where it takes on both the potential benefits and obligations of an
MEMORANDUM DECISION AND ORDER - 4
allegedly wronged party bringing a lawsuit. To conclude otherwise would be grossly
unfair.
As explained by one court facing a similar issue: “It is both logically inconsistent
and unfair to allow the right to sue to be transferred to assignees of a debt free of the
obligations that go with litigating a claim. If the plaintiff's theory carried the day, the
assignor would be able to assign a claim more valuable than it could ever have, because
its claim, if pursued by the assignor, would entail certain obligations that, when assigned,
would magically disappear.” Winnick, 228 F.R.D. at 506. In other words, it would be
unfair to the subcontractor defendants to permit Travelers “to divorce the benefits of the
claims from the obligations that come with the right to assert them, to the detriment of
defendants.” Id. at 507. Travelers, as the assignee of Okland’s claims and the plaintiff in
this lawsuit, therefore bears the same discovery obligations that Okland would carry had
it remained the plaintiff.
ORDER
In accordance with the decision, IT IS ORDERED that:
1. Defendants Zitting Brothers Construction, Inc., Kendrick Bros. Roofing, Inc.,
and United Subcontractors, Inc. dba Tabor Insulation’s motions to compel
(Dkts. 136, 139, 142) are GRANTED to the extent that Travelers have refused
to produce information on the basis that it does not have dominion or control
over Okland and it does not speak for Okland. Defendants request for
sanctions is DENIED at this juncture, however.
MEMORANDUM DECISION AND ORDER - 5
2. Travelers, as the assignee of Okland’s claims, has a duty to produce the
documents, information, and witness testimony to which the subcontractor
defendants would be entitled in discovery from parties under the Federal Rules
of Civil Procedure, just as if Okland had continued the action itself on its own
claims.
3. Any objections made by Travelers to discovery the subcontractor defendants
have propounded based on the assertion that Travelers does not have dominion
or control over Okland and it does not speak for Okland are overruled. In
addition, any objection by Travelers that the subcontractor’s discovery requests
are duplicative of those propounded by Okland are also overruled.
4. If Travelers cannot obtain and produce documents, provide information in
response to interrogatories, and/or produce witnesses for deposition from
Okland in response to defendants' discovery requests within a reasonable time
consistent with the Federal Rules of Civil Procedure, the Court will entertain
motions from defendants for appropriate sanctions.
5. If any issues relating to the adequacy of Travelers’ discovery responses remain,
the parties must meet and confer and try to work out the remaining objections.
Defendants shall propound tailored and specific discovery requests, and
Travelers must respond accordingly. If the parties cannot work out their
remaining objections, they may contact the Court staff to set up an informal
conference in accordance with the Court’s Case Management Order.
MEMORANDUM DECISION AND ORDER - 6
6. The Cour will RES
rt
SERVE rulin on Defen
ng
ndants’ Join Motion f Relief fr
nt
for
rom
Civil Rul 30 (Dkt. 141) and Travelers’ C
le
T
Cross-Motio for Protective Order
on
r
(Dkt. 153 The par
3).
rties shall co
ontact the C
Court staff i they still cannot reso
if
olve
this issue upon revie
e
ewing this decision.
d
TED: Dece
ember 18, 2013
DAT
__________
__________
_____
___
B. L
Lynn Winm
mill
Chief Judge
ited
District Cou
urt
Uni States D
MEMORA
ANDUM DECI
ISION AND ORDER - 7
R
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?