TRS INSTITUTE, LLC v. TRANSCEND SERVICES, INC.
Filing
72
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 4/16/2013, that Trustee Miller's Motion to Extend Time to Complete Certain Discovery (Docket Entry 45 ) is DENIED. (Lloyd, Donna)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
WILLIAM P. MILLER, Chapter 7
)
Trustee for TRS Institute, LLC, )
)
Plaintiff,
)
)
v.
)
)
TRANSCEND SERVICES, INC.,
)
)
Defendant.
)
1:10CV362
MEMORANDUM OPINION AND ORDER
This case comes before the Court on Plaintiff William P.
Miller’s Motion to Extend Time to Complete Certain Discovery
(Docket Entry 45).
(See Docket Entry dated Mar. 13, 2013.)
For
the reasons that follow, the Court will deny the instant Motion.
BACKGROUND
TRS Institute, LLC commenced this action by filing a Complaint
against Defendant.
(Docket Entry 1.)
By Order dated November 30,
2011, the Court (per United States Magistrate Judge P. Trevor
Sharp) adopted the parties’ Joint Rule 26(f) Report (Docket Entry
24) and ordered (as to the one matter on which the parties
disagreed)
that
discovery
should
begin
immediately
awaiting completion of a related arbitration).
(without
(Docket Entry 25.)
That ruling resulted in the establishment of a discovery deadline
of July 28, 2012.
(See Docket Entry dated Nov. 30, 2011; see also
Docket Entry 25 at 1 (“direct[ing] that discovery shall begin on
the date of the scheduled initial pretrial conference, November 28,
2011, and extend for the agreed-upon eight-month period”).)
Court
(per
the
undersigned
United
States
Magistrate
The
Judge)
subsequently extended the discovery deadline to November 28, 2012,
to allow completion of certain deposition discovery.
(See Text
Orders dated July 12 and Nov. 19, 2012.)
On November 2, 2012, TRS Institute, LLC filed a Suggestion of
Bankruptcy.
(Docket Entry 40.)
Two weeks later, TRS Institute,
LLC and Defendant “move[d] the Court to extend the discovery
deadline . . . [to] January 31, 2013, for the purpose of permitting
[Defendant] to take [four] depositions . . . [three of which
involved witnesses] under subpoena to give depositions prior to
. . . November 28, 2012 . . . [which] depositions were cancelled
following TRS [Institute, LLC’s] [C]hapter 7 bankruptcy filing on
October 19, 2012 at the request of the [C]hapter 7 trustee, William
P. Miller, Esq. [‘Trustee Miller’].”
(Docket Entry 41 at 1; see
also id. at 3 (explaining that Trustee Miller requested deferral of
depositions “so that [he] could meet with . . . the attorney for
TRS [Institute, LLC] in this case, to learn more about the issues
in this case and evaluate the status of the litigation”).)
Said
Motion noted that “[t]he jury trial of this case [was] scheduled
for April 1, 2013 . . . [and did] not request that date for the
jury trial be moved [but instead] submit[ted] that [TRS Institute,
LLC and Defendant would] be prepared to try the case as scheduled
-2-
. . . .”
(Id. at 4.)
Trustee Miller received a copy of said
Motion before its filing and consented to it.
51-1 at 2.)
(See Docket Entry
The Court (per the undersigned Magistrate Judge)
granted said Motion.
(Text Order dated Nov. 19, 2012.)
On November 29, 2012, Trustee Miller (with the consent of
Defendant) moved to substitute Trustee Miller in place of TRS
Institute, LLC (Docket Entry 42), which substitution the Court (per
the undersigned Magistrate Judge) allowed (Text Order dated Dec.
17, 2012). Trustee Miller subsequently filed the instant Motion on
January 31, 2013.
Defendant
moved
(Docket Entry 45.)
for
summary
judgment
On February 25, 2013,
(Docket
Entry
49)
and
responded in opposition to the instant Motion (Docket Entry 51).
Consistent with the then-pending trial date, in early March 2013,
Trustee Miller and Defendant filed pretrial disclosures.
Entries 53, 54, 55.)
On March 11, 2013, Trustee Miller replied as
to the instant Motion.
(Docket Entry 56.)
Over the next 10 days,
Defendant made additional trial-related filings.
58, 59, 63, 64, 66.)
(Docket
(Docket Entries
On March 27, 2013, Trustee Miller (with the
consent of Defendant) moved for a continuance of the trial on the
grounds that briefing on Defendant’s summary judgment motion would
extend beyond the scheduled trial date.
(Docket Entry 68 at 2.)
The Court (per United States District Judge James A. Beaty, Jr.)
granted that Motion on April 3, 2013.
-3-
(Docket Entry 70.)
A
hearing has been set on Defendant’s summary judgment motion for
(Docket Entry 71.)1
April 30, 2013.
DISCUSSION
The instant Motion (filed the day discovery closed) asks the
Court to extend discovery “for at least four (4) months to allow
[Trustee Miller] the opportunity to conduct the depositions of some
or all of [22 listed] individuals . . . [and] limited additional
written discovery . . . .”
(Docket Entry 45 at 3-4.)2
As
justification for that request, said Motion states as follows:
At the time of the November 17, 2012 text order,
[Trustee Miller] simply did not have enough information
to not only evaluate the case, but to even fully
appreciate the issues, facts and witnesses of this case.
Since [that] time . . ., [Trustee Miller] and his counsel
have diligently attempted to familiarize themselves with
this case and the facts underlying it. . . .
. . . .
[Trustee Miller’s] requests are reasonable given his
recent appointment, the factual and legal complexity of
this case, and the discovery which had been completed on
[TRS Institute, LLC’s] behalf prior to the filing of the
[Chapter 7] petition. As the Court well knows, it is the
statutory duty of [Trustee Miller] to attempt to maximize
the value of the estate of [TRS Institute, LLC] for the
1
Trustee Miller electronically filed his response in
opposition to Defendant’s summary judgment motion on April 1, 2013
(Docket Entry 69), such that Defendant must file any reply by April
18, 2013, see M.D.N.C. LR7.3(h); Fed. R. Civ. P. 6(d).
2
In his Reply, Trustee Miller clarified that he “meant that
if the Court allows [him] to conduct depositions, the individuals
deposed will be selected from among those listed in [the instant
Motion], subject always to the limitations of the Initial Pretrial
Order [which permitted 10 depositions of non-experts].” (Docket
Entry 56 at 1-2; see also Docket Entry 24 at 3.)
-4-
benefit of its creditors. [TRS Institute, LLC’s] only
asset is the present litigation which, upon investigation
of the complex factual basis of the instant matter,
appears to [Trustee Miller] to be a meritorious claim.
Should [Trustee Miller] not be permitted the extension
requested herein, [he] will not be able to effectively
carry out his statutory duties to [TRS Institute, LLC’s]
creditors. Moreover, as the instant matter has already
been pending for several years, the brief additional
extension of time requested herein will not unduly
prejudice [] Defendant.
(Id. at 2, 4.)
“A schedule may be modified only for good cause and with the
judge’s consent.”
Fed. R. Civ. P. 16(b)(4) (emphasis added).3
3
Prior to the 1983 amendment of Federal Rule of Civil
Procedure 16 that mandated entry of scheduling orders, federal
courts had experimented with them. See Fed. R. Civ. P. 16 advisory
committee’s note, 1983 Amend., Discussion, Subdiv. (b). In Barwick
v. Celotex Corp., 736 F.2d 946 (4th Cir. 1984), the United States
Court of Appeals for the Fourth Circuit confronted an appeal
related to a scheduling order entered by a district court prior to
the adoption of the 1983 Amendment.
In affirming the district
court’s enforcement of the scheduling order in that case, the
Fourth Circuit stated: “The requirements of the pretrial order are
not set in stone, but may be relaxed for good cause, extraordinary
circumstances, or in the interest of justice.”
Id. at 954
(emphasis added).
In this case, the governing Federal Rule of
Civil Procedure permits modification of scheduling orders “only for
good cause,” Fed. R. Civ. P. 16(b)(4) (emphasis added), and thus
does not authorize alteration of scheduling order deadlines upon a
showing of “extraordinary circumstances” or “in the interest of
justice,” as Barwick did for scheduling orders entered prior to the
1983 Amendment. It does not appear that the Fourth Circuit has
repeated the relevant Barwick language in a published opinion
construing a scheduling order adopted pursuant to the post–1983
Amendment version of Federal Rule of Civil Procedure 16.
The
Fourth Circuit, however, has quoted that excerpt from Barwick in a
few unpublished decisions, including, most recently, Wall v.
Fruehauf Trailer Servs., Inc., 123 F. App’x 572, 576 (4th Cir.
2005), but without addressing the intervening amendment of Federal
Rule of Civil Procedure 16.
Trustee Miller has not relied on
Barwick (or its unpublished progeny) (see Docket Entries 45, 56)
(continued...)
-5-
“[T]he touchstone of ‘good cause’ under [Federal] Rule [of Civil
Procedure] 16(b) is diligence.”
Marcum v. Zimmer, 163 F.R.D. 250,
255 (S.D.W. Va. 1995) (emphasis added); see also Fed. R. Civ. P. 16
advisory comm.’s note, 1983 Amend., Discussion, Subdiv. (b) (“[T]he
court may modify the schedule on a showing of good cause if it
cannot reasonably be met despite the diligence of the party seeking
the extension.” (emphasis added)); M.D.N.C. LR26.1(d) (providing
that motions seeking to extend discovery period “must set forth
good cause justifying the additional time and will be granted or
approved only upon a showing that the parties have diligently
pursued discovery” (emphasis added)).
The instant Motion fails to
show good cause under the foregoing standard.
The record (detailed in the Background section above) reflects
that Defendant Miller had notice of and consented to the Motion
that resulted in the Text Order dated November 17, 2012, that
extended the discovery period (for a second time) to January 31,
2013.
As its first ground for relief from that deadline, the
instant Motion states that, “[a]t the time of the November 17, 2012
[T]ext
[O]rder,
[Trustee
Miller]
simply
did
not
have
enough
information to not only evaluate the case, but to even fully
appreciate the issues, facts and witnesses of this case.”
3
(Docket
(...continued)
and, if he had, the Court would hold that the Barwick standard did
not survive the 1983 Amendment, see Halpern v. Wake Forest Univ.
Health Scis., 268 F.R.D. 264, 273–74 (M.D.N.C. 2010), aff’d, No.
1:09CV474 (M.D.N.C. Sept. 20, 2010) (Tilley, S.J.) (unpublished).
-6-
Entry 45 at 2.)
However, as Defendant’s Response notes, “as of
November 17, 2012, [Trustee Miller] had been appointed [to oversee
TRS Institute, LLC’s bankruptcy estate] for approximately one
month” (Docket Entry 51 at 4) and the instant Motion fails to
explain why, within that period and through reasonable diligence,
he could not have completed a proper “review of the litigation,
which as [Trustee Miller] point[ed] out in his [instant] Motion, is
[said] bankruptcy estate’s only significant asset” (id.).
these
circumstances,
the
Court
deems
Trustee
Miller
Under
to
have
knowingly accepted January 31, 2013, as a reasonable date for the
conclusion of discovery in this case.
Additionally, even if one assumed that, as of November 17,
2012, Trustee Miller had not had sufficient time to make an
informed assessment about what discovery to take, the instant
Motion fails to explain why he waited another two-and-a-half months
until the last day of the twice-extended, 14-month discovery period
to seek a further extension.
(See Docket Entry 45.)
Nor does the
instant Motion set out any justification for the apparent failure
of Trustee Miller to take any depositions during the period from
November 17, 2012, through January 31, 2013.
words,
the
instant
Motion
“offers
an
(See id.)
insufficiently
In other
robust
explanation of why [or how] he was diligent,” Alioto v. Town of
Lisbon, 651 F.3d 715, 720 (7th Cir. 2011).
-7-
The instant Motion does assert in conclusory terms that the
request for at least four more months of discovery is “reasonable
given [Trustee Miller’s] recent appointment, the factual and legal
complexity of this case, and the discovery which had been completed
on [TRS Institute, LLC’s] behalf prior to the filing of the
[Chapter 7] petition” (Docket Entry 45 at 4) and that, without
further time for discovery, Trustee Miller “will not be able to
effectively carry out his statutory duties to [TRS Institute,
LLC’s] creditors” (id.).
These assertions do not warrant the
requested extension of the discovery period for several reasons.
First, simply declaring a case complex does not establish good
cause under Federal Rule of Civil Procedure 16(b)(4).
See, e.g.,
Hernandez v. Mario’s Auto Sales, Inc., 617 F. Supp. 2d 488, 495
(S.D. Tex. 2009) (declining to extend discovery where “Plaintiffs’
counsel fail[ed] to explain how the complexities of th[e] case
warrant an extension”).
Notably, the instant Motion does not
attempt to show why Trustee Miller requires deposition testimony
from any listed witness.
(See Docket Entry 45.)
In addition,
Trustee Miller’s Response to Defendant’s summary judgment motion
does not contend, pursuant to Federal Rule of Civil Procedure
56(d), that inadequate discovery prevented the presentation of
evidence necessary to sustain his claim(s). (See Docket Entry 69.)
Further, Trustee Miller has not cited any authority for his
view that his assumption of control over this litigation from TRS
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Institute, LLC (and the related change in counsel) entitles him to
alteration of the previously agreed-upon end-point of discovery.
(Docket
Entry
45.)
Moreover,
independent
research
revealed
authority from analogous contexts suggesting the opposite.
See,
e.g., Carson v. Bethlehem Steel Corp., 82 F.3d 157, 159 (7th Cir.
1996) (“There is no principle that each new attorney for a litigant
must have an independent opportunity to conduct discovery.”);
Carlson v. Geneva City Sch. Dist., 277 F.R.D. 90, 96 (W.D.N.Y.
2011) (“[A] delay [in the conduct of discovery] attributed to a
change in counsel does not constitute good cause [for an extension
of the discovery period] because new counsel is bound by the
actions of their predecessor.” (internal quotation marks omitted)).
Finally, as Defendant has observed, although Trustee Miller may
have an obligation to maximize the value of this lawsuit as an
asset of TRS Institute, LLC’s bankruptcy estate, “[t]he asset that
the [b]ankruptcy [e]state owns is this litigation in the state it
was in [when the Chapter 7 filing occurred].
near the conclusion of discovery . . . .”
4
That litigation was
(Docket Entry 51 at 5.)4
As a final matter, any alleged lack of prejudice to
Defendant from an extension of discovery does not establish good
cause. See Reese v. Virginia Int’l Terminals, Inc., 286 F.R.D.
282, 285 (E.D. Va. 2012) (“‘The good cause provision of Rule
16(b)(4) does not focus on the prejudice to the non-movant
. . . but rather on the moving party’s diligence.’” (quoting
Lineras v. Inspiration Plumbing LLC, No. 1:10cv324, 2010 WL
4623940, at *2 (E.D. Va. Nov. 3, 2010)); accord Cole v. Principi,
No. 1:02CV790, 2004 WL 878259, at *7 (M.D.N.C. Apr. 22, 2004)
(Beaty, J.) (unpublished); DeWitt v. Hutchins, 309 F. Supp. 2d 743,
(continued...)
-9-
In sum, a scheduling order represents “the critical path
chosen by the [Court] and the parties to fulfill the mandate of
[Federal] Rule [of Civil Procedure] 1 in securing the just, speedy,
and inexpensive determination of every action.” Marcum, 163 F.R.D.
at 253 (internal brackets and quotation marks omitted); see also
Blue v. Hartford Life & Accident Ins. Co., 698 F.3d 587, 594 (7th
Cir. 2012) (reaffirming “that district courts have an interest in
keeping litigation moving forward and that maintaining respect for
set deadlines is essential to achieving that goal”); Walter Kidde
Portable Equip., Inc. v. Universal Sec. Instruments, Inc., No.
1:03CV537,
2005
WL
6043267,
at
*3
(M.D.N.C.
July
7,
2005)
(unpublished) (citing this Court’s “history of strict adherence to
4
(...continued)
748 (M.D.N.C. 2004) (Dixon, M.J.); 3 James Wm. Moore et al.,
Moore’s Fed. Prac.—Civil § 16.14[b] (3d ed. 2009). Nor can the
Court accept Trustee Miller’s assertion that, because “the instant
matter has already been pending for several years, the
[continuation of discovery for at least four more months] will not
unduly prejudice [] Defendant” (Docket Entry 45 at 4). Given the
late filing of the instant Motion (such that briefing thereon
necessarily ran past the dispositive motions deadline), “[g]ranting
the [instant Motion] would have occasioned not only more discovery
but also a duplication of the expense of making and supporting
dispositive motions,” Carson, 82 F.3d at 159. The Court need not
consider whether such prejudice would warrant denial of the instant
Motion if Trustee Miller otherwise had shown good cause, see Smith
v. United Steel Workers of Am., Civil Action No. 2:04–0499, 2007 WL
2477345, at *1 (S.D.W. Va. Aug. 29, 2007) (unpublished) (quoting
with approval statement in Johnson v. Mammoth Recreations, Inc.,
975 F.2d 604, 609 (9th Cir. 1992), that “existence or degree of
prejudice to the party opposing the modification might supply
additional reasons to deny a motion [to relax a scheduling order
deadline]”), because (for reasons discussed above) the instant
Motion fails to set forth good cause for further discovery.
-10-
discovery schedules”).
Under Federal Rule of Civil Procedure
16(b)(4), before altering a discovery deadline in a scheduling
order, the Court “must assess . . . the parties’ efforts throughout
the pendency of litigation
. . . and nothing has been presented to
explain the . . . lack of diligence in procuring [the] discovery
[now sought] over the prolonged discovery period.”
Yessenow v.
Hudson, No. 2:08CV353, 2011 WL 3667488, at *4 (N.D. Ind. Aug. 22,
2011) (unpublished).
The Court thus declines to extend discovery.
CONCLUSION
Trustee Miller has not shown good cause under Federal Rule of
Civil Procedure 16(b)(4) for extension of the discovery deadline.
IT IS THEREFORE ORDERED that Trustee Miller’s Motion to Extend
Time to Complete Certain Discovery (Docket Entry 45) is DENIED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
April 16, 2013
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