Branch Banking And Trust Company v. Rad et al

Filing 48

ORDER Denying Defendants' 39 Motion to Reopen Discovery. Signed by Magistrate Judge Peggy A. Leen on 11/18/2015. (Copies have been distributed pursuant to the NEF - NEV)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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BRANCH
BANKING
COMPANY,

TRUST

Case No. 2:14-cv-01947-APG-PAL
ORDER

Plaintiff,

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AND

v.

(Mot Reopen Disc – Dkt. #39).

SAIID FOROUZAN RAD, et al.,

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Defendants.

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Before the court is Defendants’ Motion to Reopen Discovery (Dkt. #39) filed October 29,

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2015.

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Defendants’ Reply (Dkt. #46), and the arguments of counsel at a hearing held November 17,

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2015. Joseph Went and Nicole Lovelock appeared on behalf of the Plaintiff. Ogonna Brown

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appeared on behalf of the Defendants.

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The court has considered the Motion (Dkt. #39), Plaintiff’s Opposition (Dkt. #43),

BACKGROUND
The Complaint (Dkt. #1) in this case was filed November 21, 2014.

Defendants R.

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Phillip Nourafshan and Saiid Forouzan Rad responded to the complaint by filing a Motion to

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Dismiss (Dkt. #9) February 2, 2015. The parties stipulated to stay discovery proceedings against

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Rad on March 17, 2015 (Dkt. #21) because of his ill health. The court granted the stipulation

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staying proceedings against Defendant Rad until after a ruling on the pending motion to dismiss,

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or no later than May 31, 2015. Mr. Rad died June 1, 2015, the day the stay was lifted. On June

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30, 2015, the parties submitted a stipulation and proposed order to extend discovery deadlines to

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“ensure the proper parties are able to participate in discovery as Mr. Rad’s family is in the

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process of addressing issues relating to Mr. Rad’s estate.” The court granted the stipulation and

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extended discovery until September 17, 2015. See Order (Dkt. #26). Defendants filed a Motion
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to Substitute Party (Dkt. #29) August 28, 2015, to substitute the special administrator estate of

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Mr. Rad as the Defendant.

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The district judge held oral argument on the motion to dismiss on September 23, 2015,

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and entered a written order (Dkt. #35) denying the motion to dismiss the following day.

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Defendants filed an Answer (Dkt. #36) to the complaint October 8, 2015.

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In the current motion, the Defendants seek to reopen discovery which closed September

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17, 2015, to address issues raised in the district judge’s order denying the motion to dismiss.

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Defendants seek to conduct limited written discovery and to take one or two depositions to

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obtain evidence regarding the Plaintiff’s damages claim.

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Plaintiff opposes the motion arguing that it is unclear how Mr. Rad’s death hindered the

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Defendants’ opportunities to conduct discovery upon Branch Banking and Trust Company

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(“BB&T). Plaintiff claims that the Defendants made the strategic and deliberate decision not to

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conduct any discovery while they awaited a ruling on the motion to dismiss. The stay of

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discovery as to Mr. Rad did not prevent the Defendants from engaging in discovery directed to

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BB&T.

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compliance with the court’s discovery plan and scheduling order. The motion for summary

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judgment was based in large part upon a stipulated set of facts supporting Plaintiff’s liability and

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damages claims.

BB&T timely filed its motion for summary judgment on October 16, 2015, in

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Additionally, BB&T argues the motion to reopen was not timely filed 21 days before the

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expiration of the discovery cutoff. As such, Defendants are required to show excusable neglect.

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Defendants’ lack of diligence in attempting to conduct any discovery within the discovery cutoff

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precludes a finding that Defendants were diligent. Under controlling Ninth Circuit authority,

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modification of a scheduling order is permitted only if the deadlines cannot be met despite the

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diligence of the parties seeking the extension and where the movant fails to show diligence, the

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inquiry should end. LR 26-4 provides that an extension made after the expiration of the

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discovery plan and scheduling order deadline shall not be granted unless the movant

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demonstrates that the failure to act was the result of excusable neglect.

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Citing Bateman v. United States Postal Serv., 231 F.3d 1220, 1223-24 (9th Cir. 2000),

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Plaintiff argues that the Ninth Circuit considers four factors in determining whether neglect is

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excusable: (1) the danger of prejudice to the opposing party; (2) the length of delay in its

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potential impact on the proceeding; (3) the reason for the delay; and (4) whether the movant

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acted in good faith. The Ninth Circuit has held excusable neglect approximates negligence.

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Lamoge v. United States, 587 F.3d 1188, 1195 (9th Cir. 2009). The court’s decision about

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whether neglect is excusable is ultimately an equitable one, taking into account all of the relevant

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circumstances surrounding the parties’ omission. Pioneer Inv. Servs. Co. v. Brunswick Assoc.

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Ltd. P’ship. 507 U.S. 380, 395 (1993).

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The Defendants had approximately 200 days to conduct discovery and conducted none.

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Additionally, Defendants have not complied with LR 26-4 by providing a specific description of

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the discovery that remains to be completed, or the reasons why the discovery was not completed

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within the time allowed. Defendants’ motion seeks to reopen discovery to obtain evidence

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regarding Plaintiff’s damages claim, payments received from the FDIC, and to address issues

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raised by the court during a hearing on the motion to dismiss which does not comply with the

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specificity required by LR 26-4. Defendant could have conducted discovery on payments made

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by the FDIC within the discovery cutoff, the order on the motion to dismiss did not raise new

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issues. Additionally, BB&T argues discovery concerning FDIC payments to it has been held

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irrelevant by a number of judges in many decisions and written opinions in this district.

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Rad’s reply was filed at 9:43 p.m. the night before the hearing. The court took the matter

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under advisement after hearing oral argument to review the reply and supporting declaration of

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R. Phillip Nourafchan and supplemental Brown declaration. The reply argues that Defendants

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lacked the resources to conduct discovery as a result of multiple litigations dating back to 2008

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in state court, federal court, bankruptcy court, the Nevada Supreme Court, the Ninth Circuit

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Court of Appeals, and the Bankruptcy Appellate Panel. Mr. Rad’s resources were also depleted

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as a result of his own illness, his wife’s illness, and family support obligations.

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The motion to reopen for a very short period of time is made for the limited purpose of

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addressing the inquiries raised by Judge Gordon during a hearing on the motion to dismiss.
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Defendants dispute that they are requesting to reopen discovery to delay proceedings. Rather,

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Defendants were hopeful the motion to dismiss would be granted and that the expense of

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discovery could be avoided. This case has been pending for less than a year, and has been

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clouded by Mr. Rad’s illness and passing. BB&T cannot legitimately claim any prejudice if

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discovery is reopened for a short period of 60 days. The court should therefore exercise its broad

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discretion to reopen discovery finding excusable neglect under the compelling circumstances

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arising from the debilitating illness and death of Mr. Rad, a key witness and person most

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knowledgeable for Defendants’ defense who was unable to conduct or participate in any

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discovery. Finally, Defendants argue that BB&T failed to comply with its Rule 26(a)(1) initial

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disclosure obligation with respect to its computation of damages. Specifically, BB&T provided

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no information concerning sums it received under its Loss Share Agreement with the FDIC.
During oral argument, counsel for Defendants made an impassioned plea on behalf of her

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clients.

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discovery cutoff, or until after BB&T filed its motion for summary judgment. However, she

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urged the court to consider the equities involved in her client’s illness and passing, and lack of

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financial wherewithal to engage in discovery given the multiple lawsuits and appeals her clients

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had been engaged in since 2008.

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She accepted responsibility for not filing the motion before the expiration of the

DISCUSSION

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Rule 16(b) of the Federal Rules of Civil Procedure requires the court to enter a

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scheduling order after the parties have conducted their Rule 26(f) conference. The Ninth Circuit

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has held that the purpose of Rule 16 is “to encourage forceful judicial management.” Sherman v.

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United States, 801 F.2d 1133, 1135 (9th Cir. 1986); see also advisory committee’s note to Fed.

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R. Civ. P. 16 (stating “explicit reference to sanctions reinforces the rule’s intention to encourage

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forceful judicial management.”) Violations of Rule 16 are neither technical nor trivial. Martin

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Family Trust v. Heco-Nostalgia Enterprises, Co., 186 F.R.D. 601, 603 (E.D. Ca. 1999). Rule 16

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is critical to the court’s management of its docket and prevents unnecessary delays in

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adjudicating cases. Id. The Ninth Circuit has emphasized that a case management order “is not

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a frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without
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peril.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992) (internal

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quotations and citations omitted). Disregard of a court order undermines the court’s ability to

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control its docket and rewards the indolent and cavalier. Id.

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A scheduling order may be modified “only for good cause and with the judge’s consent.”

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Fed. R. Civ. P. 16(b)(4). A party seeking to reopen discovery after the deadline has run must

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show excusable neglect. Fed. R. Civ. P. 6(b)(1)(B); LR 6-1(b). For purposes of Rule 6(b),

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“inadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute

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‘excusable neglect.’” Committee v. Cost, 92 F.3d 814, 824 (9th Cir. 1996) (citing Pioneer

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Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993)).

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The determination of whether an act or an omission constitutes excusable neglect “is at bottom

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an equitable one, taking account of all relevant circumstances surrounding the party’s omission.”

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92 F.3d at 825. Relevant circumstances to consider include: (1) the danger of prejudice to other

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parties; (2) the length of delay and its potential impact on judicial proceedings; (3) the reason for

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the delay, including whether it was within the reasonable control of the moving party; and (4)

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whether the moving party acted in good faith. Id. Denial of a motion to reopen discovery is

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reviewed for a clear abuse of discretion. United States ex rel Army Athletic Ass’n v. Reliance

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Insurance, Co., 799 F.2d 1382, 1387 (9th Cir. 1986).

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Here, the motion to reopen was filed more than six weeks after the discovery cutoff ran

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on September 17, 2015, and two weeks after Plaintiff timely filed its motion for summary

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judgment in compliance with the court’s discovery plan and scheduling order. Defendants did

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not raise any issue concerning Defendants’ financial inability to participate in discovery with the

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court until the reply brief filed late in the evening the night before the hearing on this motion.

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The court finds BB&T would be prejudiced if discovery was reopened at this late date where, as

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here, it filed its motion for summary judgment two weeks before this motion was filed.

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Reopening discovery would cause BB&T to incur additional attorneys’ fees and costs and delay

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resolution of this case on its merits. It would also disrupt the court’s case management of this

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case. LR 26-1(e) is designed to allow the parties to complete discovery, file dispositive motions

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and receive a trial date after decision of dispositive motions when the joint pretrial order is filed.
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Allowing additional discovery at this point would undoubtedly result in a new round of

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dispositive motion practice and waste the resources of both the parties’ and the court already

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spent on BB&T’s motion for summary judgment.

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The court accepts counsel’s representations that this motion is brought in good faith and

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not to delay these proceedings. The court is sympathetic to the profound personal and financial

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stressors confronting Mr. Rad. However, as BB&T correctly points out, Mr. Rad’s illness and

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subsequent passing did not prevent Defendants from conducting the discovery now sought. The

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court was not asked to delay discovery and extend the deadlines for a period to allow the

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Defendants an opportunity to muster the resources to conduct discovery. Defendants stipulated

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to a 45 day extension of the discovery cutoff after Mr. Rad’s death but conducted no discovery.

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Although Defendants now seek to conduct discovery on issues suggested by Judge Gordon at the

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hearing and in the written order denying the motion to dismiss, the motion to reopen was not

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filed until more than a month after the district judge denied

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Defendants filed a response to BB&T’s motion for summary judgment the day before the

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hearing. The response argues there are genuine issues of material fact that preclude summary

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judgment in favor of BB&T. Counsel for Defendants acknowledged during oral argument at the

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hearing on this motion that Defendants did not claim they were unable to respond to the motion

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for summary judgment because additional discovery was needed. The response to the motion for

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summary judgment did not ask for discovery under Rule 56(d). Counsel for Defendants

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explained that she believed she had effectively done this by filing the motion to reopen.

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Defendants did not raise any equitable considerations concerning their financial inability

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to afford discovery with the court in the stipulation to extend discovery for 45 days, before the

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45-day extension expired, or until the reply brief on this motion was filed. The court accepts the

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representations of counsel for Defendants that this motion is made in good faith and not as a

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delay tactic. However, the remaining factors the Ninth Circuit has directed the lower courts to

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address do not weigh in favor of the Defendants. On this record, the court cannot find that the

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Defendants were diligent in attempting to comply with the court’s discovery plan and scheduling

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order deadlines when no discovery was conducted, no request for an extension was made before
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the expiration of the deadline, and the motion to reopen was not filed until after BB&T timely

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filed its motion for summary judgment. For these reasons,

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IT IS ORDERED that Defendants’ Motion to Reopen Discovery (Dkt. #39) is DENIED.

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DATED this 18th day of November, 2015.

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PEGGY A. LEEN
PEGGY A. LEEN
E Y LEE
UNITED STATES MAGISTRATE JUDGE

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