Continental Western Insurance Company v. Opechee Construction Corporation et al

Filing 71

ORDER denying 62 Motion to Compel. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Continental Western Insurance
Company
v.

Civil No. 15-cv-006-JD
Opinion NO. 2016 DNH 088

Opechee Construction
Corporation, et al.

O R D E R
Continental Western Insurance Company (“Continental”)
brings a subrogation action against Opechee Construction
Corporation, the general contractor that built the Hampton Inn
in Dover, New Hampshire, and two plumbing subcontractors, North
American Plumbing & Heating, LLC and Linx Ltd.

The claims arise

from extensive water damage at the hotel caused by a pipe
failure.

Opechee moves to compel Linx, the hotel’s pipe flange

supplier, to respond to its discovery requests.

Linx objects.

Standard of Review
“Parties may obtain discovery regarding any nonprivileged
matter that is relevant to any party's claim or defense and
proportional to the needs of the case.”
26(b)(1).

Fed. R. Civ. P.

Whether discovery is “proportional to the needs of

the case,” depends on, among other things, “the parties'
relative access to relevant information, the parties' resources,

the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit.”

Id.

If a party fails to respond

to requests for production or interrogatories, the party seeking
discovery may move to compel production of the requested
documents or answers to the interrogatories.

Fed. R. Civ. P.

37(a)(3)(B)(iii) & (iv).
The party seeking an order compelling discovery responses
over the opponent’s objection bears the initial burden of
showing that the discovery requested is relevant.

Caouette v.

OfficeMax, Inc., 352 F. Supp. 2d 134, 136 (D.N.H. 2005).

Once a

showing of relevance has been made, the objecting party bears
the burden of showing that a discovery request is improper.
See, e.g., Gowan v. Mid Century Ins. Co., 309 F.R.D. 503, at 509
(D.S.D. Sept. 11, 2015); Collins v. Bledsoe, 2015 WL 5174021, at
*2 (M.D. Pa. Sept. 2, 2015).

Background
Continental brought this lawsuit against Opechee, Linx, and
North American Plumbing in January of 2015.

About nine months

later, the parties learned that Linx had become the subject of a
receivership action in the Rhode Island Superior Court for
Newport County (“the state court”).

2

On October 5, 2015, the

state court issued an order appointing Richard J. Land as
permanent receiver over Linx.
Receiver, Doc. No. 56-1.

See Order Appointing Permanent

That order provided that the

“continuance of the prosecution . . . of any action” against
Linx is “hereby restrained and enjoined.”

Id. at ¶ 14.

The

order also allowed the receiver to “take possession and charge
of all of the said estate, assets, effects, property and
business” of Linx.

Id. at ¶ 3.

Linx has represented that

pursuant to the order, the receiver has obtained possession of
Linx’s documents.
A.

Previous Order
Opechee’s motion to compel raises issues similar to those

that the court resolved in a previous motion to compel in this
action.

See Doc. No. 57.

In that motion, the plaintiff,

Continental, moved to compel Linx to respond to its requests for
production and interrogatories.

In response, Linx asserted that

it could not produce the requested discovery because the
receiver, who possessed the relevant documents, would not assist
it in responding to discovery.

See Doc. No. 58 at 2.

In

addition, Linx represented that it was no longer operating and
had no remaining employees to provide the requested information.
Id.

Continental did not dispute either representation.

3

In an order dated March 2, 2016, this court denied
Continental’s motion to compel based on Linx’s objections.
Order Denying Motion to Continental’s Motion to Compel
(“Continental Order”), Doc. No. 64.

The court first clarified

that the state court’s order did not stay this action.
4-5.

Id. at

The court then held that Linx could not be compelled to

produce the documents under Federal Rule of Civil Procedure 34,
which only requires parties to produced documents under their
“possession, custody, or control.”
Civ. P. 34(a)(1)(A)).

Id. at 6 (quoting Fed. R.

As the court explained, based on the

information presented for purposes of Continental’s motion to
compel, Linx did not have possession, custody, or control of the
requested documents because it was undisputed that those
documents were in the possession of the receiver and that Linx
had no right to access them.

Id. at 6-7 (“[D]ocuments are

within a party’s control ‘when that party has the right,
authority or ability to obtain those documents upon demand.’”)
(quoting Szulik v. State St. Bank & Tr. Co., 2014 WL 3942934, at
*1 (D. Mass. Aug. 11, 2014)).
The court also held that Linx could not be compelled to
answer Continental’s interrogatories, which required the
participation of its former employees, because Federal Rule of
Civil Procedure 33 does not require a party responding to

4

interrogatories to obtain information from persons not under its
control.

Id. at 7-8.

In addition, the court concluded that,

given the parties’ respective positions, the information
requested in the interrogatories was not “proportional to the
needs of the case,” and therefore outside the scope of
discovery.
B.

Id.

Opechee Discovery Requests
Opechee served first sets of requests for production of

documents and interrogatories (together, the “discovery
requests”) on Linx on January 20, 2016.

Linx did not respond to

Opechee’s discovery requests within the time required under the
Federal Rules of Civil Procedure.

In a conference after that

deadline lapsed, Linx’s counsel informed Opechee’s counsel that
Linx could not respond to the discovery requests because the
receiver, who possesses the relevant documents, would not
participate in discovery unless the state court lifted the stay
provision in its order.

Shortly thereafter, Opechee moved to

compel Linx to respond to its discovery requests.

See Doc. No.

62.

Discussion
Opechee contends that the discovery requests seek documents
that are relevant to central issues in this action.

5

Linx does

not dispute the requested discovery’s relevance, but rather
relies on and incorporates the arguments presented in its
objection to Continental’s motion to compel.1

As discussed in

the prior order, those arguments are premised on Linx’s
representations that it does not possess and cannot obtain the
requested discovery.

Continental Order, Doc. No. 64 at 5-6.

Opechee does not dispute Linx’s representations.

In its

reply, however, Opechee requests that the court reconsider the
reasoning of its March 2 order denying Continental’s motion to
compel.

Opechee argues that Linx’s lack of possession and

control is not fatal to its motion to compel because the court
can order Linx to provide the requested documents “through the
receiver.”

Opechee Reply, Doc. No. 69 at 3.

In support,

Opechee asserts that “[t]he receiver for Linx should bear the
same obligations to this Court and to the discovery process that
Linx would have borne absent the state court receivership
proceedings.”

Id. at 3.

A receiver “does not, by virtue of his or her appointment,
became a party to a pending action against the corporation or
person for whose property the receiver is appointed, but is a
stranger to the action until added or substituted by an order of

Linx states that its objection is made “on a limited
basis.” Doc. No. 63 at 1. Linx, however, provides no further
explanation concerning how its objection is limited.
1

6

the court wherein the action is pending.”

Wolff v. Cash 4

Titles, 351 F.3d 1348, 1355-56 (11th Cir. 2003) (quoting 65 Am.
Jur. 2d Receivers 394)).2

Therefore, absent formal joinder,

receivers are not a “proxy for the [receivership] defendant” and
maintain “legal identities distinct from the entities whose
assets they are charged with marshalling.”

See id. at 1355-56 &

n.19 (dismissing receiver’s appeal for lack of standing where it
failed to intervene as a party in the trial court proceedings).
The receiver has not moved to intervene in this action, and
none of the parties has moved to formally join him.

Absent a

court order approving such a motion, the receiver is a nonparty
and must be treated accordingly.

Therefore, there is no basis

for holding the receiver to the same discovery obligations that
would be required of a party to this action.
Opechee cites several cases that invoke the principle that
a receiver “stands in the shoes” of the entity in receivership
and is bound by that entity’s obligations.

See Reply, Doc. No.

69 at 3 (citing Javitch v. First Union Sec., Inc., 315 F.3d 619,

See also, Order Appointing Permanent Receiver, Doc. No.
56-1, at ¶3 (granting receiver the power to “intervene or become
a party in all suits, actions, or proceedings relating to said
estate, assets, effects and property as may in the judgment of
the Receiver be necessary or desirable for the protection,
maintenance and preservation of the property and assets of said
Defendants.”)
2

7

625 (6th Cir. 2003); Stooksbury v. Ross, 2014 WL 1745665, at *2
(E.D. Tenn. Apr. 30, 2014); Carney v. Montes, 2014 WL 671263, at
*5 (D. Conn. Feb. 21, 2014)).

The cited cases, and the

principle on which they rely, concern the receiver’s rights and
obligations relative to the receivership defendant’s assets.
See Javitch, 315 F.3d at 622-23 (holding that receiver is bound
by receivership defendant’s agreement to arbitrate claims to
recover assets); Stooksbury, 2014 WL 1745665, at *3 (declining
to require receiver to pay legal fees of receivership
defendant); Montes, 2014 WL 671263, at *5 (assessing whether
receiver had standing to recover alleged fraudulent transfers
and payments on behalf of entity in receivership).3

None of the

cases concern a receiver’s obligation (or lack of obligation) to
participate in litigation brought against the entity in
receivership.4

See also Receiver in the shoes of the entity in
receivership-Effect, 65 AMJUR RECEIVERS 116 (“While a receiver
takes the res of the receivership estate subject to all existing
liens, the rights of creditors remain as they were when the
receiver was appointed.”).
3

Opechee also relies on Montblanc-Simplo GMBH v. Colibri
Corporation, 692 F.Supp.2d 245 (E.D.N.Y. 2010). In MontblancSimplo, the court entered a default judgment against the
defendant, who was in receivership, as a discovery sanction for
its receiver’s failure to produce discovery in response to the
magistrate judge’s order compelling him to do so. Id. at 24849. Montblanc-Simplo is inapposite, however, because the
receiver (1) participated in the relevant discovery dispute and
(2) did not lodge an objection to the discovery requests based
4

8

Accordingly, the court declines to abandon the reasoning
contained in its March 2 order.

As the court explained in that

order, the Federal Rules of Civil Procedure do not require a
party to obtain and produce information that it neither
possesses nor controls.

Because Linx represents, and Opechee

does not dispute, that it does not possess and cannot obtain the
requested discovery, it does not have possession or control for
the purposes of this motion to compel.

Therefore, Linx cannot

be compelled to produce what it does not have.

Conclusion
For the foregoing reasons, Opechee’s motion to compel (doc.
no. 62) is denied.
__________________________
Joseph A. DiClerico, Jr.
United States District Judge
April 25, 2016
Cc: John E. Brady, Esq.
Christie Burnett, Esq.
Doreen F. Connor, Esq.
Adam R. Mordecai, Esq.
Thomas Paolini, Esq.
Matthew F. Renna, Esq.
Matthew D. Sweet, Esq.
Thomas J Underwood, Jr., Esq.
James G. Walker, Esq.

on the defendant’s possession, custody, and control of the
requested discovery. See Letter from Receiver’s Counsel at 1,
Montblanc-Simplo 1:07-cv-05422-KAM-RLM, Doc. No. 26.

9