Wood v. Hurst et al

Filing 99

MEMORANDUM AND ORDER granting in part 76 Motion to Compel. Signed by Magistrate Judge Kenneth G. Gale on 8/3/15. (df)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
DAVID WOOD,

)
)
Plaintiff,
)
)
vs.
)
)
LP CONVERSIONS, et al.,
)
)
Defendants.
)
______________________________ )

Case No. 14-2228-CM-KGG

MEMORANDUM & ORDER
Now before the Court is Plaintiff’s Motion to Compel. (Doc. 76.) Having
reviewed the submissions of the parties, the Court GRANTS in part and DENIES
in part Plaintiff’s motion as more fully set forth herein.
BACKGROUND
Plaintiff’s Complaint brings the following claims against Defendants: 1)
violation of the Kansas Securities Act; 2) fraudulent misrepresentation and
inducement; 3) fraud by silence; 4) negligent misrepresentation; 5) breach of
fiduciary duty; 6) breach of contract; 7) conversion; and 8) accounting. (See Doc.
1.) The factual background of this case was summarized by the District Court in
its Memorandum & Order granting in part and denying in part Defendants’ Motion
to Dismiss. (See generally Doc. 47.) That summary is incorporated herein by
reference.

The present motion involves the continuation of issues that were the subject
of Plaintiff’s previous motion to compel (Doc. 41) and this Court’s Order granting
that motion in part (Doc. 57). Included in these issues are the sufficiency of
Defendants’ production of certain financial records and whether Defendants have
redacted more information than allowed by the Court’s prior Order. Plaintiff also
raises issue with Defendants’ itemization of counterclaim damages and
communications with John Deere.
DISCUSSION
A.

Financial records.
Following this Court’s prior Order (Doc. 57), Plaintiff received additional

responsive documents from Defendants on January 30, 2015. Plaintiff contends,
however, that
several categories of critical documents still have been
withheld from production, including cancelled checks for
Defendants Tech Services/LP Conversions accounts,
QuickBooks printouts for Tech Services/LP Conversions
accounting records (including but not limited to Profit
and Loss Statements and Balance Sheets), and account
statements for Tech Services/LP Conversions money
market account.
(Doc. 76, at 2.) Plaintiff states that Defendants subsequently promised that these
documents would be provided, but that, as of the filing of this motion, the
documents had not been produced. (Id.)
2

In regard to the financial records, Defendants respond that they received
cancelled checks from their bank “after a significant delay,” but were providing
them to Plaintiff pursuant to the Court’s prior redacting guidelines. (Doc. 88, at 2;
Doc. 57, at 6-7.) Defendants indicated they were providing “a redacted check
register for LP Conversions that is materially identical to the quickbooks printouts”
that they believed would be acceptable to Plaintiff based on prior conversations.
(Doc. 88, at 2.) Defendants agreed to supplement the production of statements for
LP Conversions’ money market account. (Id.) Defendants also indicated they
would provide “redacted copies of carbon checks and the remaining bank
statements for Tech-Services, Inc.” (Id.) Defendants contend that they had
previously produced all P&L statements in their possession. (Id.)
Plaintiff replies that “in response to Plaintiff’s pending Motion to Compel,
Defendants produced a Balance Sheet and Profit and Loss Statement.” (Doc. 94, at
2.) According to Plaintiff, however, Defendants’ production was insufficient as
they “did not produce copies of the subcategory entry information from
QuickBooks, nor have they produced the underlying financial documents from
which the information purportedly was gathered.” (Id., at 2-3.) Defendants are
thus directed to provide the underlying information for the categories of
information contained in the P&L Statement, including, but not limited to, “Payroll
3

Expenses,” “Travel Expenses,” “Automobile Expense,” and inventory. (See id., at
3.)
B.

Redaction of documents.
Plaintiff also replied Defendants’ documents were improperly redacted

beyond what was allowed in the Court’s prior Order. In that Order, the Court
adopted Defendants’ suggestion to allow redaction of “all information from these
documents that would permit identification of the identity and/or location of their
specific customers.” (Doc. 46, at 7; Doc. 57, at 6-7.) Plaintiff replies that
Defendants redactions include “large business expenditures” that do not relate to
the identity or location of customers. (Doc. 94, at 2.) Rather, according to
Plaintiff, Defendants “are concealing the identity of various vendors, and/or
possibly redacting their own names or those of other related persons who are
receiving funds.” (Id.)
Plaintiff contends that he “is entitled to know where Defendants are
disbursing funds, especially in such substantial amounts, and the Court already has
ordered production of that information.” (Id.) The Court agrees. Defendants are
directed to provide unredacted copies of the documents involved, including, but
not limited to, the documents bullet-pointed on pages 1-2 of Plaintiff’s reply brief.
(Id.) The Court will not, however, lift the redaction restriction entirely as
4

requested by Plaintiff.
C.

Miscellaneous issues.
Plaintiff also argues that Defendant Tech Services “has not produced the

documents supporting its itemization of purported counterclaim damages . . . nor
has Defendant produced documents reflecting contacts and communications with
John Deere . . . .” (Doc. 76, at 2.) Defendants respond that they previously
produced to Plaintiff all documents relating to Defendants’ itemization of damages,
particularly those relating to the $700,000 in sales and 35% profit margin
mentioned in a February 2015 email to Plaintiff. (Id.) As to the John Deere
information, Defendants stated that they were producing “a copy of the November,
2014 letter from John Deere regarding contract termination to Plaintiff.” (Id.)
These issues are not addressed in Plaintiff’s reply brief. (See generally Doc. 94.)
As such, the Court surmises that Defendants’ explanation adequately satisfied
Plaintiff’s needs.

IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel (Doc.
76) is GRANTED in part as more fully set forth herein. The information to be
produced by Defendants in compliance with this Order shall be provided to
Plaintiff’s counsel within 30 (thirty) days of the date of this Order.
5

Dated at Wichita, Kansas, on this 18th day of August, 2015.
S/ KENNETH G. GALE

KENNETH G. GALE
United States Magistrate Judge

6