Kendall State Bank v. West Point Underwriters, LLC

Filing 93

MEMORANDUM AND ORDER granting in part and denying in part 85 Motion for Reconsideration. Signed by Magistrate Judge Kenneth G. Gale on 12/20/2011. (df)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
KENDALL STATE BANK,

)
)
Plaintiff,
)
)
vs.
)
)
WEST POINT UNDERWRITERS, LLC, )
)
Defendant.
)
___________________________________ )

Case No. 10-2319-JTM/KGG

MEMORANDUM AND ORDER
Before the Court is Plaintiff’s “Motion for Clarification or Reconsideration
of Order Granting Defendant’s Motion to Compel.” (Doc. 85.) The factual
background of this case was adequately summarized in the Court’s prior Order and
is incorporated herein by reference. (Doc. 83, at 2-3.)
The underlying motion to compel, filed by Defendant, sought an Order
requiring Plaintiff to produce documents and information, maintained by non-party
participating lenders, that Defendant contends are within Plaintiff’s “possession,
custody, or control.” (Doc. 47; Doc. 48, at 3.) The Court held that because
Plaintiff claims to represent the non-party lenders’ interests in this case, some of
the requests are for information within Plaintiff’s control. (Doc. 83.) Thus, the

Court granted in part and denied in part Defendant’s underlying motion to compel.
(Id.)
In the present motion, Plaintiff asks the Court to clarify or reconsider it’s
prior Order. Plaintiff argues that the Court misapplied the holding in Starlight
Int’l v. Herlihy, 186 F.R.D. 626 (D.Kan. 1999). The Court’s prior ruling discussed
that decision as follows:
In Starlight, the Court held that the ‘sole owner, officer,
and director’ of an entity that was a ‘member of the joint
venture’ with a defendant in the case ‘has a sufficient nexus
with [the defendants] to attribute documents in his possession to
be under their joint control.’ Id., at 634. The court further held
that ‘members of a joint venture also have a legal right to obtain
information of the venture on demand.’ Id.
The party from whom the documents were requested in
Starlight – which was in a joint venture with the entity whose
sole owner maintained the documents at issue – argued that ‘the
information sought by plaintiff is not the property of the joint
venture and thus not within their custody or control.’ Id., at
635. The Starlight court did not agree.
Such argument has no merit with respect to
answering interrogatories, producing documents,
and providing deposition testimony. Knowledge
of officers and agents of a joint venture is imputed
to the entity for purposes of answering
interrogatories. Cf. Casson Constr. Co. v. Armco
Steel Corp., 91 F.R.D. 376, 381 (D.Kan.1980)
(applying proposition to a corporation); see also,
Fed.R.Civ.P. 33(a). The same is true with respect
to testifying at deposition. In re Indep. Serv. Org.
Antitrust Litig., 168 F.R.D. 651, 653 (D. Kan.
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1996). Under both K.S.A. 56–320 and newly
enacted K.S.A. 56a–403, partners have a duty to
provide full information of all things affecting the
partnership to any partner. It is well-settled that
these principles apply to joint ventures.
Id. Likewise, this Court holds that the same is true for the
Participants in this case whose interests are being represented
by Plaintiff.
(Doc. 83, at 6-7.)
In requesting clarification, Plaintiff contends that “if any of the other lenders
participating in WPU’s loan refuse to provide information or documents covered
by the Court’s order, Kendall State Bank will not be able to comply with it.” (Doc.
86, at 2.) In order to “facilitate” compliance with the Court’s prior Order, Plaintiff
“asks the Court to clarify the basis for its conclusion that those lenders are
obligated to provide information and documents relating to the loan to Kendall
State Bank.” (Id.)
In the alternative, Plaintiff asks the Court to reconsider the prior ruling,
arguing that the Starlight holding “addresses the obligations of joint venturers –
parties with a special relationship under Kansas law.” (Doc. 86, at 3.) Plaintiff
continues that “[t]he documents governing the assignment and administration of
WPU’s loan do not provide any basis for concluding that Kendall State Bank and
the other participating lenders have such a relationship.” (Id., citing Doc. 76-3, ¶
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23(A).) According to Plaintiff, “[i]f the Court determines that Kansas law does not
justify recognizing that such a relationship exists generally between lenders
participating in a loan and its administrator, no basis exists to compel Kendall State
Bank to produce documents that – in the absence of such a finding – are not within
its control.” (Id.) Thus, Plaintiff urges the Court to reconsider it’s prior decision.
In reaching the prior decision, the Court expressly applied Starlight by
analogy, and is fully aware that the statutory basis for authority among joint
ventures does not apply directly to the present case. However, the rationale applies
where, as here, a plaintiff and non-parties are jointly engaged in seeking relief in
court, with the plaintiff purporting to prosecute the interests of the non-parties.
The court is not finding, necessarily, that Plaintiff has the authority, vis a vis the
non-parties, to obtain their documents and information. Rather, the Court is
holding that if Plaintiff is representing the non-parties’ interests in this litigation,
and seeks judgment from Defendant on behalf of the non-parties, it has the
obligation to provide the information specified in the Order. It is unfair for the
non-parties to prosecute this action through Plaintiff while being shielded from
providing discovery. If Plaintiff lacks the authority to obtain the limited
discoverable information from the non-parties, the Court may be forced to examine

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whether Plaintiff should be allowed to continue to prosecute the claims of those
parties in this litigation.
The Court is satisfied that its prior Order has now been adequately clarified.
Plaintiff’s motion is, therefore, GRANTED in part to the extent it requested
clarification of the prior Order and DENIED in part to the extent Plaintiff asks for
reconsideration.

IT IS SO ORDERED.
Dated at Wichita, Kansas, on this 20th day of December, 2011.
S/ KENNETH G. GALE

Kenneth G. Gale
United States Magistrate Judge

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