Securities and Exchange Commission v Behrens, et al

Filing 359

ORDER - The receiver's objection (filing 344 ) is sustained. Behrens' motion to compel the release of funds (filing 323 ) is denied. Behrens' motion to compel discovery and extend the reply deadline (filing 358 ) is denied. Ordered by Judge John M. Gerrard. (Copy mailed to pro se party)(GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
SECURITIES AND EXCHANGE
COMMISSION,
8:08-CV-13
Plaintiff,
vs.

ORDER

BRYAN S. BEHRENS, et al.,
Defendants.
This matter is before the Court on defendant Bryan S. Behrens'
"Motion to Compel" (filing 323) (better understood as a motion for release of
funds) and the receiver's response (filing 344) to that motion.1 The SEC has
filed a response in support of the receiver's position, as have various other
parties. See filings 346, 347, and 349. Behrens has also filed a motion (filing
358) to compel discovery and extend the deadline to reply in support of his
motion for release of funds. Both of Behrens' motions will be denied.
MOTION FOR RELEASE OF FUNDS
Behrens' motion for release of funds claims that he is owed $102,991.40
that was, according to him, mistakenly paid to the receivership by Kansas
City Life Insurance Company, for whom Behrens previously worked. Filing
323 at 1. Behrens asserts that the receivership was not entitled to seize his
income, and no garnishment has been ordered. Filing 323 at 1-2. So, Behrens
asks the Court to order the funds turned over to him. Filing 323 at 2.
But the evidence submitted by the receiver demonstrates that the
funds at issue were properly paid to the receivership. The funds were not
wages or income generated by Behrens after the receivership was
established—rather, they were assets belonging to Behrens at the time that
the receivership was created. Specifically, the evidence shows that Behrens'

Although captioned and filed as an "objection," filing 344 is actually a response in
opposition to a motion. NECivR 7.1(b)(1)(A) provides that a "party opposing a motion must
not file an 'answer,' 'opposition,' 'objection,' or 'response,' or any similarly titled responsive
pleading. Rather, the party must file a brief that concisely states the reasons for opposing
the motion and cites to supporting authority." The Court will "sustain" the "objection," but
solely for the purpose of disposing of the "objection" on the docket.
1

contract with Kansas City Life was terminated in December 2007. Filing 3442 at 1. The funds at issue represent:
(a)
(b)
(c)
(d)

$656 in reimbursement for medical expenses incurred
before December 2007, see filings 344-1 and 344-2;
$491.40 in dividend payments for stock Behrens acquired
before December 2007, see filings 344-1 and 344-2;
$29,538.94 in renewal commissions for policies Behrens
sold before December 2007, see filings 344-2 and 344-3; and
$75,272.47 in deferred compensation for Behrens' work
before December 2007, see filings 344-2 and 344-4.2

Consequently, Behrens' interest in the funds was established before
Behrens was terminated from Kansas City Life, and as such, the funds were
assets subject to the receivership. Specifically, the assets belonged to
Behrens, a "Receivership Entity" pursuant to the Court's order of March 24,
2009 (filing 107 at 2); and the Court's order of July 28, 2008 authorized the
receiver to take possession and control of assets "owned by, controlled by, or
belonging to the Receivership Entities, of every kind whatsoever, and
wherever located, whether tangible, intangible, real, equitable, personal,
realized, unrealized, or otherwise . . . ." Filing 85 at 4. The receiver's evidence
demonstrates that the disputed funds fall within the scope of that order.
Therefore, the Court will deny Behrens' motion for release of funds.
MOTION TO COMPEL DISCOVERY
Behrens' other motion asks the Court to compel production of
documents that Behrens claims would support his motion for release of funds.
Specifically, Behrens is seeking copies of contracts and agreements
purportedly entered into between Behrens, 21st Century Financial Group,
Kansas City Life, and Sunset Financial Services. Filing 358 at 7. Behrens has
attached documentation to his motion evidencing requests made of Kansas
City Life and Wells Fargo Institutional Retirement and Trust seeking copies
of the documents. Filing 358 at 11-12. Behrens represents that his requests
were unsuccessful. Filing 358 at 6-7. And according to Behrens, those
documents might shed light on the source of the funds paid to the
receivership by Kansas City Life. Filing 358 at 4.
There is a slight discrepancy in the amounts at issue: Behrens is claiming $102,991.40,
but the receiver's evidence actually accounts for about $3,000 more than that. The
discrepancy is presumably because Behrens is relying on tax documents for the 2012 tax
year to substantiate his claim, but not all of the money paid out by Kansas City Life was
paid that year. The Court does not believe the discrepancy is material.
2

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The Court is skeptical of Behrens' claim. Presumably, had Behrens
actually worked for Kansas City Life and earned income since July 28, 2008,
Behrens would not need discovery to know about it. Behrens is obviously on a
fishing expedition.
But the Court need not resolve the merits of Behrens' underlying
discovery request to conclude that his motion to compel discovery is
premature. Behrens' motion refers to discovery from both a party (the
receiver) and a third party (Kansas City Life). Both types of discovery require
a movant to satisfy certain preconditions before filing a motion to compel, and
those preconditions are not met here.
To begin with, there is no indication that before filing his motion to
compel, Behrens sought the material at issue from the receiver, by serving a
request pursuant to Fed. R. Civ. P. 34 or even making an informal request. A
motion to compel discovery "must include a certification that the movant has
in good faith conferred or attempted to confer with the person or party failing
to make disclosure or discovery in an effort to obtain it without court action."
Fed. R. Civ. P. 37(a)(1) (emphasis supplied). And NECivR 7.1(i) provides that
"[t]o curtail undue delay in the administration of justice, this court only
considers a discovery motion in which the moving party, in the written
motion, shows that after personal consultation with opposing parties and
sincere attempts to resolve differences, the parties cannot reach an accord."3
In other words, a party is meant to ask for documents before invoking the
power of the Court. There is no showing here that Behrens asked the receiver
for anything. As a result, Behrens' motion to compel is premature with
respect to the receiver. See Geir v. Educ. Serv. Unit No. 16, 144 F.R.D. 680,
689 (D. Neb. 1992).
Behrens has presented evidence that he requested the material from
Kansas City Life. But his motion to compel is still premature, because in
order to obtain discovery material from a third party to an action, a movant
should serve a subpoena on the holders of the material, issued by the district
court in the district where the material is located. 4 See Fed. R. Civ. P.
45(a)(2)(C); see also Geir, 144 F.R.D. at 689. The Court, in fact, lacks the
authority to compel production by a nonparty outside this district. See Fed. R.
The Court notes that NECivR 7.1(i) defines "personal consultation" as "person-to-person
conversation, either in person or on the telephone." But an exchange of correspondence may
also be acceptable as "personal consultation" if person-to-person conversation was thwarted
by the nonmoving party. In this instance, given Behrens' incarceration in Indiana, the
Court would theoretically be willing to accept an exchange of correspondence as "personal
consultation" on the assumption that person-to-person conversation might be impractical.
3

With respect to Kansas City Life, that would appear to be the Western District of
Missouri. See 28 U.S.C. § 105(b).
4

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Civ. P. 37(a)(2). So, with respect to Kansas City Life, Behrens' motion to
compel is both premature and outside the Court's authority in any event.
If Behrens wants discovery from the receiver, he should begin by
serving a request for production pursuant to Fed. R. Civ. P. 34. (That would
not mean that Behrens has a right to discover the materials at issue—but it
would initiate the process.) If Behrens wants discovery from Kansas City
Life, he should begin by serving a subpoena issued by the U.S. District Court
for the Western District of Missouri pursuant to Fed. R. Civ. P. 45. But in the
meantime, his present motion to compel discovery will be denied.
MOTION TO EXTEND REPLY DEADLINE
Finally, Behrens asks the Court to extend the deadline for him to reply
in support of his motion for release of funds until he can obtain discovery.
Filing 358 at 8. But the motion for release of funds was filed by Behrens. He
had the opportunity to present evidence in support of it, and he should not
have filed the motion if it did not have evidentiary support. See Fed. R. Civ.
P. 11(b)(3). It is apparent from Behrens' motion to compel discovery that he
has no clear knowledge of what evidence might exist to support his motion for
release of funds. He is, in effect, asking for time to find some, and cannot
clearly articulate what such evidence might provide. A party's failure to have
evidence that the party should have had before filing a motion in the first
place is not "good cause" for extending a deadline. See, NECivR 7.1(h) and
6.1(a)(2); Fed. R. Civ. P. 6(b)(1)(A). The Court has already extended Behrens'
reply deadline once, see filing 354, and declines to do so again. Behrens'
motion to extend his reply deadline will be denied, and for the reasons set
forth above, his motion for release of funds (which is now ripe for disposition)
will be denied as well.
The Court notes, for Behrens' information, that an order denying a
motion for release of funds is not final or appealable when other parts of the
litigation remain unresolved. See SEC v. Tringham, 475 Fed. Appx. 203, 204
(9th Cir. 2012) (order denying motion to release funds from receivership not
appealable); see also, Commodity Futures Trading Com'n v. Walsh, 618 F.3d
218, 225 n.3 (2d Cir. 2010); FTC v. Overseas Unlimited Agency, Inc., 873 F.2d
1233, 1235 (9th Cir. 1989); United States v. Beasley, 558 F.2d 1200, 1201 (5th
Cir. 1977); United States v. Chelsea Towers, Inc., 404 F.2d 329, 330 (3d Cir.
1968). Nor is a discovery order in a pending case subject to immediate appeal.
Phox v. George E. Fern Co., 506 Fed. Appx. 530, 531 (8th Cir. 2013); compare
Misc. Docket Matter No. 1. v. Misc. Docket Matter No. 2, 197 F.3d 922, 925
(8th Cir. 1999) (denial of discovery from nonparty immediately appealable
when main action is pending in district court outside circuit).

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IT IS ORDERED:
1.

The receiver's objection (filing 344) is sustained.

2.

Behrens' motion to compel the release of funds (filing 323)
is denied.

3.

Behrens' motion to compel discovery and extend the reply
deadline (filing 358) is denied.

Dated this 13th day of August, 2013.
BY THE COURT:

John M. Gerrard
United States District Judge

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