Iowa Based Milling LLC v. Fischer Excavating INC et al
Filing
97
ORDER granting in part and denying in part 79 Motion for Sanctions and to Compel; finding as moot 87 Motion to Deposit Funds and for Other Relief. For the reasons set forth in the written Order, this Court GRANTS the Motion for Sanctions and to Compel 79 to the extent that the Court finds sanctions are warranted, but DENIES the motion to the extent that it finds that dismissal and default judgment are not appropriate sanctions at this time and, instead, the sanctions set forth in B.2. of the written Order are appropriate under the circumstances. The Motion to Deposit Funds and for Other Relief (D. 87) is MOOT. As set forth fully in the written Order, on or before February 3, 2017, IBMs counsel is directed to submit an affidavit to th e Court establishing the amount of costs and attorney's fees associated with IBMs efforts to obtain the supplemental answers to the interrogatories. Those fees and costs are those incurred by IBM after January 14, 2016, when Fisher Excavating ag reed to provide those answers, through the filing of Fisher Excavatings response to the motion for sanctions and to compel. The Court also directs Fisher Excavating to provide full and complete answers to the interrogatories which are consistent with the agreement it reached with IBM in January of 2016. It shall do so on or before February 3, 2017. After Fisher Excavatings time for complying with the Court's Order has passed, this Court will set a status hearing for the purpose of setting a prompt bench trial and other related deadlines and hearings. Other than the discovery ordered in the written Order, all other discovery in this matter is closed. Entered by Magistrate Judge Jonathan E. Hawley on 1/25/2017. (Hawley, Jonathan)
E-FILED
Wednesday, 25 January, 2017 10:53:05 AM
Clerk, U.S. District Court, ILCD
IN THE
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
ROCK ISLAND DIVISION
UNITED STATES OF AMERICA and
STATE OF ILLINOIS FOR THE USE
AND BENEFIT OF IOWA BASED
MILLING, LLC, an Iowa Limited
Liability Company,
Plaintiffs,
Case No. 4:12-CV-04082-JEH
v.
FISHER EXCAVATING, INC.,
CONCRETE STRUCTURES OF THE
MIDWEST, INC., and WESTERN
SURETY COMPANY, and
CONTINENTAL CASUALTY
COMPANY,
Defendants.
Order
Before the Court are Plaintiff’s, Iowa Based Milling LLC (“IBM”), Second
Motion for Sanctions and to Compel (D. 79) 1 and Defendants’ Concrete
Structures of the Midwest, Inc. (“Concrete Structures”) and Continental Casualty
Company (“Continental”), Motion to Deposit Funds and For other Relief (D. 87).
For the reasons set forth below, the Second Motion for Sanctions and to Compel
is GRANTED IN PART AND DENIED IN PART, and the Motion to Deposit
Funds and for Other Relief is MOOT. 2
1
2
Citations to the Docket are cited as “(D. __).”
The parties consented to the jurisdiction of a U.S. Magistrate Judge. (D. 72).
1
I
A
The alleged facts in this case have been set forth in detail previously, and
the Court will not repeat them here. Suffice it to say that Defendant Concrete
Structures of the Midwest, Inc. (“Concrete Structures”) won a contract to
resurface a runway at Quad Cities International Airport (“QCIA”). Concrete
Structures hired a subcontractor, Defendant Fischer Excavating, Inc. (“Fischer
Excavating”), who then allegedly hired Plaintiff Iowa Based Milling, LLC, in an
oral agreement, to mill the runway on several occasions. Concrete Structures
obtained a bond on the project from Defendant Continental Casualty Company
(“Continental”) and Fischer Excavating obtained a bond on the project from
Western Surety Company (“Western Surety”). Afterward, Fischer Excavating
allegedly shorted Iowa Based Milling more than $85,000 in fees. Iowa Based
Milling filed a seven-count amended verified complaint seeking to recover from
Concrete Structures or Fischer Excavating or the bonds provided in their favor.
Fisher Excavating in turn filed a three-count counterclaim against IBM, although
only the breach of contract claim contained in count I of the counterclaim
survived a motion for judgment on the pleadings. Additionally, IBM has now
settled this case with all parities but Fisher Excavating and its surety, Western
Surety.
B3
The facts giving rise to the motions now before the Court center around an
ongoing discovery dispute between IBM and Fisher Excavating. On March 2,
2015, IBM propounded interrogatories, requests for production, and requests for
admission to Fisher Excavating. (D. 81 at p. 2). IBM followed up the requests to
The facts in this section are taken largely from the recordings of the hearings before this Court. These
recordings are available to the parties upon request to the Clerk of the Court.
3
2
Fisher Excavating by letter on April 20, 2015, requesting a response on or before
May 1, 2015. Id. Fisher Excavating failed to provide any responses to the
discovery requests, a fact which was noted at status conferences with the Court
on April 14, 2015, May 28, 2015, and October 22, 2015. On November 1, 2015, IBM
filed a motion for sanctions premised on Fisher Excavating’s ongoing failure to
respond to the discovery requests. (D. 73). Fisher Excavating, in its response,
conceded that the requests to admit must be “deemed” admitted due to its
failure to respond thereto and did not dispute that it had failed to respond to the
interrogatories or requests to produce. (D. 75).
The Court held a hearing on the motion for sanctions on December 1, 2015.
Although the Court denied the motion for sanctions, the Court did find that the
unanswered requests to admit were deemed admitted, that Fisher Excavating
had waived any objections to the interrogatories or requests to produce, and that
it had 21 days to respond to the outstanding discovery requests. Fisher
Excavating sent responses to IBM within the time set by the Court but, as
outlined in a letter of January 5, 2016 from IBM to Fisher Excavating, IBM found
some of the responses deficient.
On January 8, 2016, the Court held a hearing regarding the discovery
Fisher Excavating produced to IBM on December 22, 2015 pursuant to the
Court’s order. Although at that hearing Fisher Excavating attempted to argue
about the scope and relevance of some of the interrogatories, the Court noted
that it had previously held that Fisher Excavating’s previous failures to respond
at all to those interrogatories waived its right to object. However, because the
parties had not yet conferred regarding the discovery dispute, the Court directed
the parties to discuss the problems IBM had with the answers to interrogatories
and set the matter for another hearing after that conferral for January 14, 2016.
The parties reported at that hearing that they had reached agreement on the
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outstanding issues, and Fisher Excavating was ordered, pursuant to the
agreement, to correct the deficiencies in its responses by February 26, 2016.
However, February 26 came and went without Fisher Excavating fulfilling
its obligations under the agreement. A month later on March 23, 2016, the Court
held another hearing where the parties noted that Fisher Excavating had still not
submitted anything to supplement, clarify, or correct the original responses it
sent to IBM back on December 22, 2016. The Court gave Fisher Excavating
another six weeks to correct the deficiencies pursuant to an agreement reached
between the parties and relayed to the Court at the January 14, 2016 hearing.
The additional six weeks came and went as well, and the parties were
again before the Court on August 10, 2016 on the same, ongoing discovery
dispute. Again at that hearing, it was undisputed that the deficiencies noted by
IBM in its January 5, 2016 letter to Fisher Excavating were still not corrected. The
Court, after noting that the trial setting in this case had been moved several times
due to the same discovery dispute, directed IBM to file a written motion to
compel for its consideration. IBM filed its Second Motion for Sanctions and to
Compel pursuant to that direction from the Court.
In that motion now before the Court, IBM argues that Fisher Excavating
has never fully answered the interrogatories served on them despite the
numerous extensions of time granted by the Court to them for doing so. 4 Given
the many months of delay, IBM sought dismissal of Fischer Excavating’s
counterclaim and default judgment on its claims as a sanction pursuant to
Federal Rule of Civil Procedure 37. IBM also sought its costs and attorney fees
related to the issue. (D. 80). Defendant Fisher Excavating responded that its
IBM noted that the two surety companies “have answered their discovery after a fashion and Iowa
Based Milling, LLC did not complain about the adequacy of the responses.”
4
4
December 22, 2015 production “substantially complied” with the request to
answer interrogatories. (D. 93-1).
C
After IBM filed the Second Motion for Sanctions and to Compel,
Defendants Concrete Structures and Continental Casualty then filed a Motion to
Deposit Funds or for other Relief on August 31, 2016. However, those parties
subsequently settled this matter with IBM, and, pursuant to the settlement,
stipulations of dismissal were filed as to those parties on January 24, 2017. (D.
96). Although Western Surety stated at a January 13, 2017 hearing that it had
adopted the motion of its co-defendants, nothing on the Docket indicates that it
did so. Moreover, even assuming that it had, the motion seeks permission from
the Court for Concrete Structures and Continental Casualty to deposit funds
pursuant to Federal Rule of Civil Procedure 67(a). Given that those parties have
now settled the case, the Court cannot grant the relief requested in the motion. In
light of the settlements, therefore, the Motion to Deposit Funds and for other
Relief (D. 87) is MOOT.
II
A
Given the settlement between IBM and Concrete Structures and
Continental Casualty, as well as IBM’s statement in its motion that Western
Casualty has complied with its discovery obligations, the only facet of the
discovery dispute remaining before the Court, as framed by IBM in its motion, is
Fisher Excavating’s continued failure to address the deficiencies in its answers to
interrogatories provided to IBM on December 22, 2015. The Court will therefore
limit its discussion to that issue.
Federal Rule of Civil Procedure 37(b)(2) provides:
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If a party . . . fails to obey an order to provide or permit discovery,
including an order under Rule 26(f), 35, or 37(a), the court where the
action is pending may issue further just orders. They may include
the following:
(i) directing that the matters embraced in the order or
other designated facts be taken as established for
purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting
or opposing designated claims or defenses, or from
introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is
obeyed;
(v) dismissing the action or proceeding in whole or in
part;
(vi) rendering a default judgment against the
disobedient party; or
(vii) treating as contempt of court the failure to obey
any order except an order to submit to a physical or
mental examination.
Subsection (b)(2)(C) also provides that “[i]nstead of or in addition to the orders
above, the court must order the disobedient party, the attorney advising the
party, or both to pay the reasonable expenses, including attorney fees, caused by
the failure, unless the failure was substantially justified or other circumstances
make an award of expenses unjust.” FRCP 37(b)(2)(C).
Applying this rule in Roland v. Salem Contract Carriers, Inc., 109 F.R.D. 424
(N.D. Ind. 1986), the court dismissed a personal injury action as a sanction for the
plaintiff’s refusal to answer interrogatories over a period of a year despite two
court orders directing the plaintiff to do so. While noting that “dismissal of a
plaintiff’s case is the most drastic remedy available to a court, and a case should
not be dismissed unless the court is satisfied that less drastic sanctions will not be
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effective,” the court found that the plaintiff’s failure was “deliberate, willful, and
in bad faith such that dismissal was warranted.” Roland, 109 F.R.D. at 425. In
reaching this conclusion, the court considered the length of the delay, any
reasons advanced for the refusal to comply with the discovery orders, and the
willfulness or bad faith of the recalcitrant party. Id. citing Insurance Corporation of
Ireland Ltd. v. Compagnie des Bauxites de Guinea, 456 U.S. 694, 102 S.Ct. 2099, 72
L.Ed.2d 492 (1982); National Hockey League v. Metropolitan Hockey Club, Inc., 427
U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976); Hindmon v. National-Ben Franklin
Life Insurance Corporation, 677 F.2d 617, 620–21 (7th Cir.1982); and Margoles v.
Johns, 587 F.2d 885, 888 (7th Cir.1978).
Choosing a less drastic sanction in Lucas v. GC Services L.P., 226 F.R.D. 328
(N.D. Ind. 2004), the court found that the defendant’s unjustified refusal to
answer interrogatories warranted the sanction of paying the plaintiffs’ attorney’s
fees related to the two separate motions to compel that the plaintiff filed in an
effort to receive answers to interrogatories. The court gave the defendant ten
days to finally answer the interrogatories. Id. at 328. When imposing this
sanction, the court noted that the sanction chosen by a court for a discovery
violation “must be such that ‘a reasonable jurist, apprised of all the
circumstances, would have chosen [it] as proportionate to the infraction.’” Id.,
citing Salgado v. General Motors Corp., 150 F. 3d 735, 740 (7th Cir. 1998); In re
Golant, 239 F.3d 931, 937 (7th Cir. 2001).
B
1
Here, the Court first finds that a sanction for Fisher Excavating’s failure to
fully and completely answer the interrogatories is appropriate. As an initial
matter, there is no dispute that Fisher Excavating provided incomplete answers
to the interrogatories at issue. After IBM filed its first motion for sanctions due to
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Fisher Excavating’s total failure to answer the interrogatories, this Court directed
Fisher Excavating to answer them. Although Fisher Excavating did finally
provide answers to the interrogatories on December 22, 2016, counsel for IBM
sent a letter to Fisher Excavating’s counsel detailing the deficiencies therein. (D.
81 at pp. 78-81). When Fisher Excavating refused to correct those deficiencies, the
Court held a hearing wherein it directed the parties to confer regarding those
deficiencies and, at the January 14, 2016 hearing after that conferral, the parties
noted an agreement regarding the outstanding discovery issues. Pursuant to that
agreement, Fisher Excavating agreed to correct its deficiencies, and the Court
gave it until February 26, 2016 to do so. Notwithstanding Fisher Excavating’s
acknowledgement of the deficiencies in its answers to interrogatories and its
agreement to correct them at that hearing, to this day Fisher Excavating still has
not fulfilled its agreement with IBM nor complied with this Court’s order to do
so. At the time of IBM’s filing of the Second Motion for Sanctions and to Compel,
more than 7 months had passed since Fisher Excavating agreed to correct its
deficiencies.
Fisher Excavating now argues that its original answers, provided to IBM
on December 22, 2015, are “substantially complete.” (D. 93-1 at p. 2). However,
Fisher Excavating itself acknowledged the deficiencies in its answers and agreed
at the January 14, 2016 hearing to correct them. Accordingly, it cannot now, 7
months later, change its tune and argue that its original answers were
substantially complete. Rather, the time for it to make that argument was in
January 2016 when, had Fisher Excavating made that argument, the Court could
have reviewed the answers to the interrogatories and determined for itself
whether the answers were in fact “substantially complete.” Fisher Excavating
chose a different course, agreed to correct its deficiencies, and still to this day has
not done so. Having made that choice and injected several months of delay into
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these proceedings, it cannot now change course; it long ago conceded it needed
to supplement the answers to interrogatories. Other than this waived
“substantial compliance” argument, Fisher Excavating offers in its response no
other excuse for its failure to fully and completely answer the interrogatories.
Accordingly, this conduct is clearly sanctionable under Rule 37.
2
On the question of the appropriate sanction, the Court first finds that the
drastic remedy of dismissal of the counterclaim and default judgment on IBM’s
claims is too drastic at this time, although just barely. As already noted, these
sanctions are a last resort and only appropriate where some lesser sanction is not
appropriate.
While the Court has already found that Fisher Excavating’s failure to
provide what it promised in January of 2016 is without excuse, the Court also
notes that the parties were engaged in settlement discussions during the ensuing
7 months. Those discussions did ultimately result in the settlement of claims
with two of the defendants. At the August 10, 2016 hearing on this discovery
dispute, counsel for Fisher Excavating gave those discussions as one of the
reasons he failed to provide the answers previously promised. Although IBM’s
counsel agreed that such negotiations had taken place, he also noted that at no
time had he agreed to stop seeking the answers to which he was entitled nor
agreed to any type of stay in the provisioning of the same. In other words, Fisher
Excavating’s counsel at the time apparently bet on the case settling completely,
which would eliminate the need to comply with the Court’s order. Unfortunately
for Fisher Excavating, its settlement with IBM did not materialize, so its counsel
made a bad bet. While the above is not an excuse for Fisher Excavating’s
conduct, it does indicate that its failure was at least not made in bad faith,
although it certainly was the result of bad judgment. This bad judgment still
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warrants a sanction, but it falls short of warranting the drastic remedies of
dismissal and default judgment.
Regarding what the appropriate remedy should be in this case, the Court
finds, first, that pursuant to Federal Rule of Civil Procedure 37(b)(2)(B), Fisher
Excavating shall pay the attorney’s fees and costs associated with IBM’s efforts to
obtain the supplemental answers to the interrogatories. Those fees and costs are
those incurred by IBM after January 14, 2016, when Fisher Excavating agreed to
provide those answers, through the filing of Fisher Excavating’s response to the
motion for sanctions and to compel. IBM’s counsel is directed to submit an
affidavit to the Court establishing the amount of these costs and fees on or
before February 3, 2017.
The Court directs Fisher Excavating, rather than its counsel, to pay these
fees and costs for two reasons. First, Fisher Excavating’s counsel at the time of
the events giving rise to the events warranting sanctions has since withdrawn as
counsel; Fisher Excavating’s current counsel played no role in any of the
sanctionable conduct. Second, Fisher Excavating’s former counsel intimated at
the March 23, 2016 hearing that at least some of the delay in providing full and
complete answers to the interrogatories was due to Fisher Excavating. At the end
of the day, among IBM, Fisher Excavating’s current counsel, or Fisher Excavating
itself, the sanction most fairly falls upon the latter.
Second, the Court directs Fisher Excavating to provide full and complete
answers to the interrogatories which are consistent with the agreement it
reached with IBM in January of 2016. It shall do so on or before February 3,
2017.
Third, failure to provide the answers to the interrogatories as set forth in
the preceding paragraph in the time period set by this Court will result in
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dismissal of Fisher Excavating’s counterclaims and entry of default judgment on
IBM’s claims against it as a sanction for failure to comply with this Order.
Fourth, if Fisher Excavating submits the answers to interrogatories ordered
herein but, upon motion of IBM and after giving Fisher Excavating an
opportunity to respond, the Court finds that such answers are not full and
complete, then, such a finding will result in dismissal of Fisher Excavating’s
counterclaims and entry of default judgment on IBM’s claims against it as a
sanction for failure to comply with this Order.
III
For the reasons set forth above, this Court GRANTS the Motion for
Sanctions and to Compel (D. 79) to the extent that the Court finds sanctions are
warranted, but DENIES the motion to the extent that it finds that dismissal and
default judgment are not appropriate sanctions at this time and, instead, the
sanctions set forth in B.2. are appropriate under the circumstances. The Motion to
Deposit Funds and for Other Relief (D. 87) is MOOT.
After Fisher Excavating’s time for complying with this Order has passed,
this Court will set a status hearing for the purpose of setting a prompt bench trial
and other related deadlines and hearings. Other than the discovery ordered
herein, all other discovery in this matter is closed.
It is so ordered.
Entered on January 25, 2017
s/Jonathan E. Hawley
U.S. MAGISTRATE JUDGE
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