MERIDIAN FINANCIAL ADVISORS, LTD. D/B/A THE MERIDIAN GROUP v. PENCE et al

Filing 530

DISCOVERY ORDER: Meridian's motion to compel documents from BME 500 and to strike Pence's fee claim or compel production of documents from Pence 502 are denied. Also pending is Meridian's motion for extension of the deadlines for discovery and briefing regarding fees, which are April 30, 2011, and June 28, 2011, respectively. Docket 524 Meridian seeks an additional 60 days for each deadline. Such additional time is unnecessary given the Court's denial of Meridian 9;s motions to compel. April 30 has passed, so Meridian may have until May 19, 2011, to complete discovery on fees. The June 28, 2011, briefing deadline remains in place (see Order for additional information). Signed by Magistrate Judge Tim A. Baker on 5/5/2011. (SWM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

MERIDIAN FINANCIAL ADVISORS LTD,
d/b/a THE MERIDIAN GROUP, as Receiver
for OCMC, INC.,
Plaintiff,
vs.
JOSEPH A. PENCE, et al.,
Defendants.

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1:07-cv-995-LJM-TAB

DISCOVERY ORDER
I.

Introduction
Plaintiff Meridian Financial Advisor’s misconduct has sent this case on a two-year

detour. Last July, the Court sanctioned Meridian—in part by awarding attorney’s fees to
Defendant Joseph Pence—resulting in this detour-within-a-detour regarding the scope of fee
application discovery. Because Pence has produced sufficient evidence for Meridian to oppose
his fee application, the Court denies Meridian’s motions to compel. [Docket Nos. 500, 502.]
II.

Background
As described in the Court’s sanctions order [Docket No. 470], this case arises from the

collapse of telecommunications company OCMC. Defendant Joseph Pence served as OCMC’s
president, CEO, and director. Former Defendant Ann Bernard served as secretary and general
counsel. On July 26, 2006, Pence and Bernard retained the law firm of Bose McKinney & Evans
(“BME”) to jointly represent them in this matter. On approximately February 20, 2008, Bernard
and Meridian entered into a secret cooperation agreement. BME eventually learned of the
agreement and resulting conflict between Pence and Bernard and moved to withdraw on

September 23, 2008. [Docket No. 179.] Pence later retained the firm of Price Waicukauski &
Riley (“PWR”) and joined in a motion for sanctions alleging that Meridian had engaged in
various misconduct. [Docket Nos. 269–70.]
On July 12, 2010, the Court found that Meridian abused the judicial process through its
secret relationship with Bernard and violated Federal Rule of Civil Procedure 26(a)(1)(A)(ii) by
intentionally failing to identify electronically stored information. [Docket No. 470 at 24.] As
part of its sanction, the Court awarded Pence attorney’s fees “associated with his representation
by BME during the time Bernard was secretly cooperating with Meridian and his attorney’s fees
and costs associated with investigating and filing [his] Motion for Sanctions.” [Id.]
Pence requested $485,572.91 in attorney’s fees and expenses for his representation by
BME and PWR’s work associated with his sanctions motion.1 [Docket No. 481 at 2.] Pence
supported his fee application with affidavits of BME’s Jeff Gaither and PWR’s Jana Strain.
Attached to the affidavits were charts summarizing BME’s monthly statements and PWR’s fees
and expenses. [Docket No. 473, Exs. B-1, B-2; Docket No. 481, Ex. A-1.] The BME chart
contained dates and amounts for fees and costs but did not describe any of the work performed or
costs incurred. The PWR charts contained descriptions, but the fee chart did not include dates.
Meridian requested, and the Court allowed, discovery into Pence’s attorney’s fees.
Meridian served discovery on Pence on November 2, 2010. [Docket No. 504-1.] On the same
date, Meridian subpoenaed BME and PWR, seeking all documents responsive to the Pence
discovery “which are not produced by Mr. Pence on the basis that same are in the possession,

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Pence initially requested $526,672.92 in fees and expenses [Docket No. 473 at 11] but
later identified an error and reduced his claim to $485,572.91. [Docket No. 481 at 2.]
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custody and control of Bose McKinney & Evans or Price Waicukauski, rather than Mr. Pence.”
[Docket No. 504, Exs. B, C.]
BME did not formally respond to Meridian’s subpoena. On December 6, PWR provided
Pence’s discovery responses and objections. PWR further explained that neither it nor BME
would produce any documents in response to Meridian’s subpoenas because Pence did not
withhold any documents on the basis that they were in the firms’ possession, custody, and
control. [Docket No. 504, Ex. D.] On December 16, Meridian contacted BME about its lack of
response. BME responded that “Mr. Pence did not fail to produce documents on the grounds
that same were within our custody or control. Consequently, by the terms of your subpoena, no
documents are due from Bose McKinney.” [Docket No. 501 at 2.] Dissatisfied with these
responses, Meridian moved to strike Pence’s fee claim or, alternatively, to compel production of
unredacted documents from Pence.2 [Docket Nos. 500, 502.]
III.

Discussion
A.

Meridian’s motion to compel production of documents from BME

Meridian seeks an order compelling BME to comply with the subpoena by producing
unredacted records. [Docket No. 500.] Meridian argues that BME waived any objections by
failing to respond to the subpoena. [Id. at 2.] BME responds that it has no documents to
produce because the condition triggering the subpoena—Pence’s failure to produce documents
because they were in the custody or control of BME—never occurred. [Docket No. 512.]
Meridian correctly states that a more direct response from BME would have been

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Pence has since served discovery on Meridian, which Meridian moved to strike.
Meridian’s motion to strike only recently became ripe, and the Court is hopeful that the guidance
in this entry will help the parties resolve Meridian’s motion to strike.
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appropriate. But BME is also correct that it had no responsive documents because Pence did not
fail to produce documents on the grounds that BME controlled them. Meridian knew of BME’s
position from PWR’s December 6 letter and heard directly from BME on December 16. Given
the parties’ history and the context of the subpoena, BME’s lack of formal response is somewhat
understandable. In any event, because BME has no responsive documents, the Court denies
Meridian’s motion to compel documents from BME.
B.

Meridian’s motion to strike fee claim or to compel production of documents

Meridian also seeks an order either striking Pence’s fee claim or compelling Pence to
produce unredacted documents. Meridian argues that Pence is improperly seeking “nearly half
of a million dollars as fees without revealing the documents and information on which the fee
claim is based.” [Docket No. 502 at 1.]
Meridian’s requests of Pence were broad. Meridian sought time sheets for the entire day
for each day services were rendered (redacted to omit non-OCMC litigation); original bills; draft
bills; mark-ups of bills; draft invoices; final invoices; “actual invoices issued”; and documents
reviewed by counsel underlying their conclusion that Pence’s fees were reasonable and
necessary. Pence produced over 900 pages and 3 charts in response. However, Pence did not
provide all types of documents requested, and he redacted on privilege grounds all BME work
descriptions and any PWR work descriptions unrelated to the sanctions motion.
Meridian argues that the omitted documents and redactions prevent it from defending
itself against Pence’s fee claim, and that Pence waived any privilege by filing his fee

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application.3 [Docket No. 502 at 2.] Meridian specifically requests more information to
determine whether charges for the related PNC litigation were shifted to this matter, whether
services were reasonable and necessary, whether bills were altered or inflated, and whether BME
and PWR improperly
attempt to bill for 30 hour workdays, improperly purport to perform work
simultaneously for different clients in distant cities, improperly attempt to double
or triple bill distinct clients for identical services, such as travel, presentation of
motions, legal research, etc.
[Docket No. 502 at 5.] Meridian submits a 16-item list underlying its concerns about “the
reliability and integrity of the substance of the Fee Application and the veracity of Defendant
Pence’s submission.” [Docket No. 502 at 9–10, 13.]
Pence responds that he did not waive any privilege and points out that “it is Meridian’s
conduct in intruding into the attorney-client relationship that has resulted in the sanctions order.”
[Docket No. 510 at 9.] Pence asserts that the level of proof for a sanctions award is lower than
that for an award under a contract or fee-shifting statute, and he argues that no BME work
descriptions are necessary because the Court broadly awarded all BME fees associated with a
certain period. Pence acknowledges that more detail is necessary (and was provided) when the
specific nature of the services is at issue, such as that portion of the order awarding fees
associated with Pence’s sanctions motion.

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Meridian also represents that Pence “decline[d] to produce these discovery materials
over this Court’s clear determination that such discovery be allowed.” [Docket No. 502 at 1.]
Meridian misstates the Magistrate Judge’s prior discovery order. As Pence correctly points out,
the Magistrate Judge granted only Meridian’s motion for extension of time to conduct discovery
regarding fees. The Magistrate Judge did not determine the scope of discovery. Instead, the
Magistrate Judge advised Pence to respond to Meridian’s discovery and assert any objections at
that time.
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As to BME, Pence has produced sufficient evidence to support his fee application. As
Pence points out, the sanctions order broadly awarded him fees associated with his
representation during a defined period, not for discrete tasks. Pence’s chart of BME billing
statements [Docket No. 473, Ex. A-1] shows this amount. The chart also addresses Meridian’s
concern about improper billing for the PNC matter by separating amounts billed for the two
matters. In any event, Meridian has no need to contest the reasonableness of BME’s fees
because Pence also produced BME’s monthly invoices and copies of checks paying the invoices.
RK Co. v. See, 622 F.3d 846, 854 (7th Cir. 2010) (“[T]he best evidence of whether attorney’s
fees are reasonable is whether a party has paid them.”).
As to PWR, the Strain affidavit and accompanying charts are substantial. Although the
work performed chart has no dates or matter numbers, the billing statements and work in
progress reports show dates, descriptions, and matter numbers. This information is sufficient to
allow Meridian to defend itself against Pence’s fee application. Requiring additional production
would only unnecessarily extend this lengthy detour.
Moreover, the Court declines to require production of additional materials to satisfy
Meridian’s far-fetched concerns about 30-hour workdays, triple billing, and the like. These
concerns appear to be largely an attempt to throw up some smoke. Pence sufficiently responded
to Meridian’s three detailed allegations of impropriety, and Meridian’s remaining 13 allegations
lack sufficient citation to the record for the Court to determine whether Meridian has uncovered
a nefarious billing scheme. Concerns such as those identified in Meridian’s list may be properly
addressed in resolution of Pence’s fee application and are not grounds for additional discovery.
Meridian’s motion to strike Pence’s fee claim or to compel production of unredacted documents

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is therefore denied.
IV.

Conclusion

Meridian’s motion to compel documents from BME [Docket No. 500] and to strike
Pence’s fee claim or compel production of documents from Pence [Docket No. 502] are denied.
Also pending is Meridian’s motion for extension of the deadlines for discovery and
briefing regarding fees, which are April 30, 2011, and June 28, 2011, respectively. [Docket No.
524.] Meridian seeks an additional 60 days for each deadline. Such additional time is
unnecessary given the Court’s denial of Meridian’s motions to compel. April 30 has passed, so
Meridian may have until May 19, 2011, to complete discovery on fees. The June 28, 2011,
briefing deadline remains in place.
Dated: 05/05/2011

_______________________________
Tim A. Baker
United States Magistrate Judge
Southern District of Indiana

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Copies to:
George William Bills Jr.
LAW OFFICE OF G. WILLIAM BILLS,
JR.
[e-mail]

Craig Morris McKee
WILKINSON GOELLER MODESITT
WILKINSON & DRUMMY
[e-mail]

Jeffrey R. Gaither
BOSE MCKINNEY & EVANS, LLP
[e-mail]

Stephen S. Stallings
STALLINGS LLC
[e-mail]

Kathleen A. Gallagher
ECKERT SEAMANS CHERIN &
MELLOTT LLC
[e-mail]

Jana K. Strain
GEIGER CONRAD & HEAD, LLP
[e-mail]
Ronald J. Waicukauski
PRICE WAICUKAUSKI & RILEY
[e-mail]

Sandy B. Garfinkel
ECKERT SEAMANS CHERIN &
MELLOTT, LLC
[e-mail]

Ann Marie Waldron
[e-mail]

Gregg Heinemann Jr.
ECKERT SEAMANS CHERIN &
MELLOTT, LLC
[e-mail]

John H. Williams Jr.
ECKERT SEAMANS CHERIN &
MELLOTT, LLC
[e-mail]

Max W. Hittle Jr.
KRIEG DEVAULT, LLP
[e-mail]

SCOTT HALL
308 Blue Quail Ct.
Bedford, TX 76021

Carol Nemeth Joven
PRICE WAICUKAUSKI & RILEY
[e-mail]
Thomas Livingston
OFFICE OF THE FEDERAL PUBLIC
DEFENDER
[e-mail]
C. Kent May
ECKERT SEAMANS CHERIN &
MELLOTT, LLC
[e-mail]

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