Karalis v. The Gun Vault, Inc. et al

Filing 89

ORDER that Defendants' 80 Renewed MOTION to Compel Compliance with Subpoena is granted as follows:(1) Nonparty Las Vegas Metropolitan Police Department shall produce to Defendants their original computer hard drives and flash drives seized from the 24/7 Private Storage Vaults, or alternatively, shall produce identical images thereof to Defendants' counsel on or before 7/25/2014; (2) The Clerk of Court shall serve a copy of this Order on counsel for the Las Vegas Metro politan Police Department, Nick D. Crosby; (3) Defendants' counsel shall also serve a copy of this Order upon the deputy or assistant Clark County District Attorneys and United States Attorneys. Signed by Magistrate Judge George Foley, Jr on 7/7/2014. (Copies have been distributed pursuant to the NEF - copy mailed to Attorney Crosby - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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GEORGE DEMETRIUS KARALIS, M.D.,

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Plaintiff,
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vs.
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THE GUN VAULT, INC. and KELLY D. CARN, )
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Defendants.
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__________________________________________)

Case No. 2:12-cv-00694-APG-GWF
ORDER

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This matter is before the Court on Defendants’ Renewed Motion to Compel Compliance

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with Subpoena (#80), filed on May 29, 2014. Third party Las Vegas Metropolitan Police

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Department (LVMPD) filed an Opposition to Defendants’ Renewed Motion (#81) on June 11,

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2014. The Court conducted a hearing in this matter on July 2, 2014. Plaintiff and counsel for the

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Defendants appeared telephonically. Counsel for LVMPD did not appear. Following the July 2nd

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hearing, the Court determined that LVMPD’s counsel was not notified of the hearing date. The

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Court therefore scheduled a further telephonic hearing on July 7, 2014 at which Plaintiff,

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Defendants’ counsel and LVMPD’s counsel appeared telephonically.

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BACKGROUND AND DISCUSSION
Plaintiff George Karalis, M.D. alleges that he entered into contracts with Defendants The

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Gun Vault, Inc. and Kelly D. Carn in 2005 and 2009 to purchase various firearms. Plaintiff alleges

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that he paid Defendants $99,180.00, but did not receive the firearms he purchased. Plaintiff also

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alleges that he placed four firearms with Defendant for safekeeping and has not received either the

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return of the firearms or an accounting as to what became of them. Plaintiff subsequently served

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requests for production of documents on Defendants for documents relating to the firearms

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transactions alleged in his complaint. Defendants responded that they were unable to produce

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responsive documents because their business records were seized by the Las Vegas Metropolitan

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Police Department (LVMPD) in regard to a criminal investigation.

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Defendant Kelly Carn has, in fact, been indicted in the United States District Court for the

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District of Nevada for the unlawful receipt or possession of firearms, including machine guns, a

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short-barrel rifle, a machine gun trigger pack, and a suppressor in violation of 26 U.S.C. §§ 5812,

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5861(b) and 5871. Defendant is also charged with making a false entry with respect to certain

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firearms in violation of 26 U.S.C. §§ 5848(b), 5861(c) and 5871. See United States v. Kelly Carn,

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Case No. 2:13-cr-00346-APG-GWF, Indictment (#1), filed September 4, 2013. An indictment was

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also filed against Defendant Kelly Carn in the District Court, Clark County, Nevada on October 5,

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2012 for the crime of theft arising out of his alleged sales of firearms and other devices which he

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did not have the legal authority to sell. See State of Nevada v. Kelly Carn, Case. No. C-12-284671-

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1, Indictment. Counts 9-16 of the state court indictment involve Defendant Carn’s purported sales

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of firearms to the plaintiff in this action, George Karalis. Both criminal cases are currently pending

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against Defendant Carn. Trial in the state court case is set for September 22, 2014. Trial in the

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federal case is scheduled for October 20, 2014.

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Defendants assert in their renewed motion to compel that at some unspecified date

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Defendant Kelly Carn entrusted possession of his business and personal records to his son Kelly

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Carn, Jr. (“Carn, Jr.”). Carn, Jr., in turn, stored Defendant Carn’s records at 24/7 Private Vaults

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located 3110 E. Sunset Road, Suite H, Las Vegas, Nevada. Defendants assert that on another

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unspecified date a burglary occurred at 24/7 Private Vaults. Las Vegas Metropolitan Police

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department officers went to 24/7 Private Vaults to investigate the burglary and while there observed

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items related to Defendants Carn and The Gun Vault which the police then seized. The seized

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items allegedly include numerous computer hard drives and flash drives that contain the business

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records of Defendants Carn and The Gun Vault. The LVMPD acknowledges that during the course

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of its investigation, it seized pertinent evidence relating to Defendant Carn’s alleged criminal

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activity.

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...
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On April 3, 2013, Defendants served a subpoena duces tecum issued in this action on the

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LVMPD for the production of the hard drives and flash drives belonging to Defendants The Gun

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Vault, Inc. and Kelly Carn. See Defendants’ Renewed Motion to Compel Compliance with

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Subpoena (#80), Exhibit A. The subpoena also requested production of all documents and

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electronically stored information relating to or referring to search warrants served by LVMPD and

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the Bureau of Alcohol Tobacco, Firearms and Explosives (BATFE). LVMPD objected to the

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subpoena on the grounds that the requested records are evidence in the pending criminal

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investigations against Defendants and that the subpoena also seek confidential and privileged

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criminal investigative materials. On June 6, 2013, Defendants filed their first motion to compel

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LVMPD’s compliance with the subpoena. At that time, only the state criminal case was pending.

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The Court inferred that the Nevada state court has a procedure in place similar to that under Rule

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41(g) of the Federal Rules of Criminal Procedure whereby a person whose property is seized by law

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enforcement officers during a criminal investigation may seek the return of the property. The Court

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therefore denied Defendants’ motion to compel compliance with the subpoena, without prejudice,

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and recommended that they pursue return of their property in the Nevada district court where the

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criminal prosecution was pending. Defendants represent that they did as directed, but that the

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Nevada District Court declined to entertain their motion and directed them to seek relief in federal

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court.

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For purposes of this action, the Court is reasonably satisfied that Defendants cannot produce

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electronically stored documents responsive to Plaintiff Karalis’ requests for production of

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documents because LVMPD seized the Defendants’ computer hard drivers and flash drives on

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which the responsive documents are stored. At this point, LVMPD, and/or the state and federal

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prosecutors with whom it is working, have been in possession of Defendants’ computer hard drives

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and flash drives for over a year and a half. While this Court is not familiar with the searches that

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law enforcement agents have conducted of Defendants’ computer records, both criminal cases are

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scheduled for trial within the next few months. That suggests that the State of Nevada and the

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United States have obtained the evidence needed to prosecute Defendant Carn in the criminal cases.

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To the extent that LVMPD or the prosecutors need to retain Defendants’ computer hard drives or
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flash drives for evidentiary purposes, they can image the hard drives and flash drives, and either

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return the original hard drives and flash drives to Defendants, or they can retain the originals and

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provide the images thereof to Defendants.

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The subpoena also requested all documents and electronically stored information relating to

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or referring to search warrants obtained by the LVMPD and BATFE. The LVMPD objected to this

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portion of the subpoena on privilege grounds. It is not necessary for the Court to reach the issue of

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privilege, however, because Defendants have not made any showing that law enforcement

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investigative materials are relevant in this civil action. There is also no basis for the Court in this

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case to order the LVMPD to return other items to Defendants that are unrelated to the claims or

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defenses in this action. Accordingly,
IT IS HEREBY ORDERED that Defendants’ Renewed Motion to Compel Compliance
with Subpoena (#80) is granted as follows:
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Nonparty Las Vegas Metropolitan Police Department (LVMPD) shall produce to

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Defendants their original computer hard drives and flash drives seized from the 24/7 Private

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Storage Vaults, or alternatively, shall produce identical images thereof to Defendants’ counsel on or

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before July 25, 2014.

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2.

The Clerk of Court shall serve a copy of this Order on counsel for the Las Vegas

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Metropolitan Police Department, Nick D. Crosby, Esq., Marquis Aurbach Coffing, 10001 Park Run

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Drive, Las Vegas, Nevada 89145.

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3.

Defendants’ counsel shall also serve a copy of this Order upon the deputy or

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assistant Clark County District Attorneys and United States Attorneys, handling the respective

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criminal and federal prosecutions pending against Defendant Kelly Carn. Defendants’ counsel

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shall also file proof of service on the Clark County District Attorney and the United States

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Attorney.

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DATED this 7th day of July, 2014.

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______________________________________
GEORGE FOLEY, JR.
United States Magistrate Judge
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