Keybank National Association v. Perkins Rowe Associates, L.L.C., et al

Filing 366

RULING: The Court hereby GRANTS Defendants Motion (doc. 353) for Contempt and for Sanctions, Including Dismissal of Defendants Defenses and Counterclaims. As such, Defendants will not be able to defend their conduct or assert counterclaims against Plaintiffs based on Plaintiffs alleged breaches of contract. Signed by Judge James J. Brady on 06/07/2011. (NLT)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
KEYBANK NATIONAL ASSOCIATION
CIVIL ACTION
VERSUS
NO. 09-497-JJB-SCR
PERKINS ROWE ASSOCIATES, INC.,
ET AL

RULING ON PLAINTIFF’S MOTION FOR CONTEMPT AND FOR SANCTIONS
This matter is before the Court on Plaintiff KeyBank National Association’s
Motion (doc. 353) for Contempt and for Sanctions, Including Dismissal of
Defendants’ Defenses and Counterclaims. Defendants 1 have filed an opposition.
There is no need for oral argument. This Court’s jurisdiction exists pursuant to
28 U.S.C. § 1332. For the reasons stated herein, the Court GRANTS Plaintiff’s
motion.
Background
On September 8, 2010, Plaintiff filed a motion (doc. 186) to compel
discovery from Defendants. Plaintiff asserted that Defendants, despite alleging
numerous counterclaims and defenses, 2 refused to provide any meaningful
responses to Plaintiff’s discovery requests. In addition, Plaintiff asserted that
Defendants had purposefully withheld responsive and critical documents. In its

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Defendants are Perkins Rowe Associates, LLC, Perkins Rowe Associates II, LLC, Perkins Rowe Block
A Condominiums, LLC, and Joseph T. Spinosa (collectively “Defendants” or “Perkins Rowe”).
2
Defendants asserted counterclaims against Plaintiff for breach of contract and wrongful sequestration.
In addition, Defendants asserted the following defenses: release of obligations, nonperformance of
contract, various equitable defenses including laches and unclean hands, prescription, standing, subject
matter jurisdiction, and detrimental reliance.

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motion, Plaintiff requested that the Court sanction Defendants by dismissing their
counterclaims and defenses.

In support of its request, Plaintiff noted that

Defendants had already been sanctioned numerous times and had generally
failed to cooperate in the discovery process.
On February 25, 2011, Magistrate Judge Stephen C. Riedlinger (“MJR”)
granted (doc. 304) Plaintiff’s motion to compel on the grounds that Defendants’
discovery responses were fraught with general and unsubstantiated objections
(“MJR’s Ruling”). Though he opted against dismissing Defendants counterclaims
and defenses, MJR determined that sanctions were appropriate and ordered that
“[n]o objections will be allowed, except for objections based on attorney client
privilege or work product protection, and then only to the extent the Perkins
Rowe defendants have previously properly urged and supported such objections
by a privilege log which satisfies Rule 26(b)(5)(A)(ii), Fed.R.Civ.P.” (Id., pp. 1213) (emphasis added).
On April 7, 2011, this Court denied (doc. 343) Defendants’ appeal of MJR’s
Ruling.

The Court recognized that the disclosure of otherwise privileged or

protected documents may be imposed as a sanction if the party objecting to the
disclosure willfully and improperly authored its privilege log or did so in bad faith.
(Id., p. 7). In concluding that the sanction imposed by MJR was appropriate, the
Court found that:
In the sixteen months since KeyBank served its
discovery requests, Defendants have identified only
twenty-six documents as privileged. By August 9, 2010,
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Defendants produced a total of three-hundred pages
and identified twenty-six as privileged. Since that date,
Defendants have produced over 86,000 documents and
failed to identify a single additional document as
privileged. On October 25, 2010, Plaintiffs complained
about the insufficiency of Defendants’ privilege log, but
Defendants have failed to respond.
(Id., p. 8) (internal citations omitted). Based on this blatant failure to author a
reasonable privilege log and Defendants’ numerous prior discovery abuses, the
Court found that MJR correctly prohibited Defendants from objecting to document
“requests on the basis of attorney-client privilege or work product protection
unless [D]efendants had previously urged and supported such objections by a
privilege log.” (Id., pp. 2, 7).
Despite these rulings, Defendants have failed to produce the requested
documents. Instead, Defendants have sent Plaintiff over one hundred pages of
privilege logs and indicated that they intend to provide more.

Defendants’

counsel has stated that their client has refused to give them permission to
produce the requested documents and that they interpreted MJR’s Ruling not to
apply to recently produced documents (doc. 353, ex. A). In addition, Defendants
have also indicated that they will again ask this Court to reconsider the privilege
issue and that they intend to file for an interlocutory appellate review—though
they have not yet taken any steps to do so.
On May 9, 2011, Plaintiff filed its Motion (doc. 353) for Contempt and for
Sanctions, Including Dismissal of Defendants’ Defenses and Counterclaims.
Plaintiff asserts that Defendants violated an explicit discovery order and have
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willfully and continuously thwarted the discovery process.

On June 3, 2011,

Defendants filed their opposition (doc. 362).
DISCUSSION
Plaintiff asserts that Defendants’ counterclaims and defenses should be
dismissed (doc. 353). Plaintiff asserts that Federal Rule of Civil Procedure 37(b)
authorizes a court to dismiss the claims or defenses of a party who violates a
court order or fails to provide appropriate discovery.

Plaintiff alleges that

Defendants have violated MJR’s Ruling by providing voluminous privilege logs
rather than the requested documents.

Moreover, Plaintiff asserts that

Defendants have engaged in a pattern of discovery abuses which further justify
dismissal.
Defendants reassert that MJR’s Ruling—in which he barred Defendants
from objecting to document requests on the grounds of attorney-client privilege or
work product protection unless previously done so—and this Court’s decision to
uphold that ruling, were wrongly decided (doc. 362). As such, Defendants claim
that they were justified in violating the order to protect their client’s privileged
information.
Under Federal Rule of Civil Procedure 37(b)(2)(v), if a party fails to obey a
court order or provide discovery, the court may sanction the party.

In such

cases, the court has substantial discretion to determine the appropriate sanction

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and may even dismiss the sanctioned party’s claims or defenses. 3 To do so, the
court must find that (1) the penalized party’s violation was willful; and (2) a less
drastic sanction would not be a sufficient deterrent.

Plasticsource Workers

Comm. v. Coburn, 283 Fed. App’x 181, 184 (5th Cir. 2008). In addition, the court
may consider whether the penalized party’s client participated in or encouraged
the violation, and whether the violation prejudiced the opposing party. Id.
In addition, a court may hold a party in civil contempt for failing to obey a
discovery order. See, e.g., Smith v. Smith, 145 F.3d 335, 344 (5th Cir. 1998);
McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1486 (5th
Cir. 1990); J.D. v. Nagin, 2009 WL 363456, at *5 (E.D. La. 2009); NASCO, Inc. v.
Calcasieu Television & Radio, Inc., 583 F.Supp. 115, 122 (D.C.La. 1984). In
such a proceeding, the movant must establish that (1) a court order was in effect;
(2) the order required the respondent to take specific action; and (3) the
respondent failed to comply with the court's order.

United States v. City of

Jackson, 359 F.3d 727, 731 (5th Cir. 2004). In addition, courts within the Fifth
Circuit generally require that the party violated the court’s order willfully or in bad
faith. See Nagin, 2009 WL 363456, at *5.
The Court finds that a finding of contempt and dismissal of Defendants’
affirmative defenses and counterclaims is an appropriate sanction for their
3

See, e.g., Doe v. Am. Airlines, 283, Fed. App’x 289, 292 (5th Cir. 2008) (affirming dismissal of party’s
claims where party disobeyed discovery order and demonstrated a pattern of intentional delay and refusal
to cooperate in discovery); Bluitt v. Arco Chem. Co., 777 F.2d 188, 190 (5th Cir. 1985) (same); Watson v.
Commissioner, 690 F.2d 429, 431 (5th Cir. 1982) (affirming dismissal of party’s claims where party
disobeyed discovery order after court had already rejected party’s objections and privilege claims);
Morton v. Harris, 628 F.2d 438, 440 (5th Cir. 1980) (affirming dismissal of party’s claims where party
“willfully and deliberately failed and refused, in bad faith, to fully comply” with discovery order).

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discovery abuses. Simply put, Defendants willfully violated a court order and the
Court is now convinced that Defendants, who have already been sanctioned four
times for discovery abuses in this case alone, will not respond to a lighter
sanction than the one imposed herein.
MJR’s Ruling explicitly stated that “[n]o objections will be allowed, except
for objections based on attorney client privilege or work product protection, and
then only to the extent the Perkins Rowe defendants have previously properly
urged and supported such objections by a privilege log which satisfies Rule
26(b)(5)(A)(ii), Fed.R.Civ.P.” Since the ruling, Defendants have produced over a
hundred pages of privilege logs and indicated that they intend to produce more.
Defendants’ claim that they do not interpret the ruling to apply to newly produced
documents. However, the ruling could not be more clear: “no objections will be
allowed” unless “previously properly urged and supported.” (doc. 304, pp. 1213). Indeed, Defendants devoted nearly their entire opposition urging—again—
that MJR’s Ruling, and the Court’s upholding thereof, were in error rather than
clarifying how its conduct was appropriate in light of those decisions.

As such,

the Court finds that Defendants violated MJR’s Ruling willfully and in bad faith.
Furthermore,

that

Defendants

themselves—and

not

simply

their

attorneys—have refused to allow the documents to be produced only strengthens
the argument for dismissal. Though an unwilling client should not suffer for his
attorney’s foot-dragging or bad faith, a client who directly participates in the
subversion of discovery should be barred from asserting claims or defenses for
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which he provides his opposition no means to disprove.

See Plasticsource

Workers Comm., 283 Fed. App’x at 184.
Finally, the Court finds that the sanctions imposed are necessary to
compel Defendants to satisfy their discovery obligations. Defendants’ failure to
obey MJR’s February 25th ruling is not the first time they have exhibited a lack of
respect for this Court or Plaintiff.

Throughout this case, Defendants have

disobeyed court orders, filed frivolous motions, and impeded Plaintiff’s attempts
to obtain third-party discovery. For their efforts, Defendants have already been
sanctioned four times for discovery abuses. (docs. 105, 145, 304, 348). Clearly,
the previous sanctions have not had the necessary deterrent effect, and thus
more drastic measures are now required. See Plasticsource Workers Comm.,
283 Fed. App’x at 184.

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Conclusion
Accordingly, the Court hereby GRANTS Defendants’ Motion (doc. 353) for
Contempt and for Sanctions, Including Dismissal of Defendants’ Defenses and
Counterclaims. As such, Defendants will not be able to defend their conduct or
assert counterclaims against Plaintiffs based on Plaintiff’s alleged breaches of
contract.
Signed in Baton Rouge, Louisiana this 7th day of June, 2011.

S

JUDGE JAMES J. BRADY
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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