UNITED STATES OF AMERICA V. SWAMP FOX UTILITIES, LLC, ET AL.

Filing 38

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 09/26/2016; that the Extension Motion (Docket Entry 32 ) is DENIED. (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

UNITED STATES OF AMERICA for
the use and benefit of RODGERS
EXCAVATING,

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Plaintiff,
v.
SWAMP FOX UTILITIES, LLC,
IKHANA, LLC, and CONTINENTAL
CASUALTY COMPANY,
Defendants.

1:15cv482

MEMORANDUM OPINION AND ORDER
This case comes before the Court on the “Motion for Extension
of

Time

to

Supplement

Disclosures

Under

Rules

26(a)(1)

and

26(a)(2)” (Docket Entry 32) (the “Extension Motion”) filed by
Defendant Continental Casualty Company (“Continental”).

For the

reasons that follow, the Court will deny the Extension Motion.
FACTUAL BACKGROUND
Defendant

Ikhana,

LLC

(“Ikhana”)

worked

as

the

prime

contractor on a construction project (the “Project”) for the United
States Army (the “Army”).
2.)

(Id. at 1; see also Docket Entry 34 at

Continental served as the surety on the Project, for which

Ikhana and Continental executed payment and performance bonds.
(Docket Entry 32 at 1; see also Docket Entry 1, ¶¶ 4, 41.)

Ikhana

subcontracted with Defendant Swamp Fox Utilities, LLC (“Swamp Fox”)
to

provide

labor,

equipment,

and

materials

for

the

Project.

(Docket Entry 32 at 2; see also Docket Entry 1, ¶ 8.)

Swamp Fox

and/or Ikhana then contracted with Plaintiff Rodgers Excavating
(“Rodgers”) to perform work on the Project.

(Docket Entry 1, ¶¶ 8-

10; see also Docket Entry 32 at 2.)
Rodgers ceased work on the Project on June 17, 2014, followed
shortly by Swamp Fox.
34 at 2.)

(Docket Entry 32 at 2; see also Docket Entry

During the fall of 2014, the Army terminated its

contract with Ikhana and called upon Continental to satisfy the
performance bond.
at 2.)

(Docket Entry 32 at 2; see also Docket Entry 34

Continental then arranged for Samet Corporation (“Samet”)

to complete the work remaining under Ikhana’s contract.

(Docket

Entry 32 at 2; see also Docket Entry 34 at 2.)
PROCEDURAL HISTORY
Rodgers commenced this action for, inter alia, breach of
contract, alleging that it did not receive full payment for the
work it performed on the Project.
24.)

(Docket Entry 1, ¶¶ 11-15, 21-

Continental answered (Docket Entry 11) and asserted numerous

affirmative defenses, including that the “Complaint is barred or
mitigated by setoffs or backcharges” (id. at 10).1
1

The Federal Rules of Civil Procedure required Continental to
state in its Answer “in short and plain terms its defenses to each
claim asserted against it.” Fed. R. Civ. P. 8(b)(1)(A). Although
“[a]n affirmative defense may be pleaded in general terms,” it must
“give[] [the] plaintiff fair notice of the nature of the defense.”
Clem v. Corbeau, 98 F. App’x 197, 203 (4th Cir. 2004) (internal
quotation marks omitted).
During the Extension Hearing,
Continental asserted that it did not know the facts supporting the
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On September 17, 2015, the Court issued a Scheduling Order
adopting the parties’ proposed discovery plan, establishing a Rule
26(a)(1) initial disclosure deadline of November 2, 2015; a Rule
26(a)(2) expert witness disclosure deadline for Continental of
March 1, 2016; a Rule 26(e) supplementation deadline of March 20,
2016; and a discovery and mediation deadline of April 1, 2016.
(Text Order dated Sept. 17, 2015 (adopting Docket Entry 20);
Mediation Scheduling Order dated Sept. 18, 2015.)

Consistent with

the foregoing deadlines, on December 3, 2015, the Clerk set a trial
date of January 9, 2017.

(Docket Entry 23 at 1.)

On April 4,

2016, the Court granted the parties’ “Joint Motion to Extend
Deadlines for Mediation and Discovery” (Docket Entry 27), extending
the mediation deadline to May 31, 2016, and the discovery deadline
to June 30, 2016.

(Text Order dated Apr. 4, 2016.)

On May 20,

2016, the Court granted the parties’ “Second Joint Motion to Extend
Deadlines for Mediation and Discovery” (Docket Entry 28), further

Corrective Work Claim at the time it filed the Answer, and that the
Answer’s “setoffs and backcharges” defense referred to certain
outstanding payments that Rodgers might owe to vendors and/or for
materials. If Continental’s defense of “setoffs and backcharges”
did not encompass the Corrective Work Claim at the time Continental
filed the Answer, and given Continental’s failure to amend its
Answer to provide “fair notice of the nature of the defense”
involving the Corrective Work Claim, evidence related to that
defense would remain irrelevant to the claims and defenses
currently alleged in this action. Continental, however, has argued
that its “setoffs or backcharges” defense encompasses the
Corrective Work Claim (see Docket Entry 37 at 4), and this Order
will proceed on that assumption.
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extending

the

mediation

deadline

to

discovery deadline to August 1, 2016.

June

30,

2016,

and

the

(Text Order dated May 20,

2016.)
On August 31, 2016, Continental filed the Extension Motion,
requesting extension of its disclosure deadlines to September 30,
2016.

(See Docket Entry 32 at 1.)2

Continental

contends

that,

as

Through the Extension Motion,

Samet’s

work

on

the

Project

progressed, “[Samet] discovered that various items of the work
performed by Swamp Fox, through its subcontractor Rodgers, were not
in

conformance

with

the

Project

plans

and

specifications,”

requiring “additional payment from Continental for the correction
[of that nonconforming work (the “Corrective Work Claim”)].”

(Id.

at 2.) In support of that contention, Continental submitted to the
Court numerous change order requests (Docket Entries 37-2 through
37-7, 37-9) (the “Change Order Requests”) that Samet provided to
Continental beginning August 12, 2015 (see Docket Entry 37-2 at 1),
detailing

the

alleged

nonconforming

work

on

the

Project.

Continental effectively seeks post hoc relief from its failure to
disclose that information to Rodgers and Swamp Fox before the
disclosure deadlines expired, as well as “to identify lay and/or
2

Specifically, Continental seeks leave to supplement its
disclosures and to designate new witnesses, including expert
witnesses. (See Docket Entry 32 at 5 (requesting “an extension of
the time to supplement disclosures under Fed. R. Civ. P. 26(a)(1)
and 26(a)(2),” and “agreeing to make any new witnesses available
for deposition”).)
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expert witnesses who can present testimony and other evidence in
connection with Continental’s Corrective Work Claim.”

(Docket

Entry 37 at 3.)
In response to the Extension Motion, Rodgers and Swamp Fox
argue that “(1) Continental has not shown, and cannot show, good
cause why it neither made the requested disclosures in a timely
manner, nor even requested an extension to make such disclosures
during the discovery period, and (2) such an ‘extension’ would
inevitably, and needlessly, delay trial.”

(Docket Entry 34 at 6.)3

The

Extension

Court

conducted

a

hearing

on

the

Motion

(the

“Extension Hearing”) that Continental, Swamp Fox, and Rodgers
attended.

(See Minute Entry dated Sept. 16, 2016.)4
DISCUSSION

Under the Federal Rules of Civil Procedure (the “Rules”), near
the inception of a case, a party must provide the other parties:
(i)

the name and, if known, the address and telephone
number
of
each
individual
likely
to
have
discoverable information – along with the subjects
of that information – that the disclosing party may
use to support its claims or defenses, unless the
use would be solely for impeachment; [and]

3

Swamp Fox “concurs with and reasserts the arguments set
forth in Rodgers’[s] Response to the [Extension Motion],” and
“requests that the Court grant the relief requested by Rodgers.”
(Docket Entry 35 at 1.)
4

Ikhana did not file a brief regarding the Extension Motion
(see Docket Entries dated Aug. 31, 2016, to present), and did not
appear at the Extension Hearing (see Minute Entry dated Sept. 16,
2016).
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(ii) a copy - or a description by category and location
of
all
documents,
electronically
stored
information,
and
tangible
things
that
the
disclosing party has in its possession, custody, or
control and may use to support its claims or
defenses, unless the use would be solely for
impeachment.
Fed. R. Civ. P. 26(a)(1)(A).

“A party must make its initial

disclosures based on the information then reasonably available to
it,” even if the disclosing party “has not fully investigated the
case.”

Fed. R. Civ. P. 26(a)(1)(E); see also Fed. R. Civ. P.

26(a)(1)(C) (providing that courts may set deadline for initial
disclosures).
“In addition to the disclosures required by Rule 26(a)(1), a
party must disclose to the other parties the identity of any
witness it may use at trial to present evidence under Federal Rule
of Evidence 702, 703, or 705.”

Fed. R. Civ. P. 26(a)(2)(A); see

also Fed. R. Civ. P. 26(a)(2)(B) & (C) (describing material that
parties must produce along with name of each expert witness); Fed.
R. Civ. P. 26(a)(2)(D) (“A party must make these disclosures at the
times and in the sequence that the court orders.”).

Finally, “as

ordered by the court,” Fed. R. Civ. P. 26(e)(1)(B), “[a] party who
has made a disclosure under Rule 26(a) . . . must supplement or
correct its disclosure,” Fed. R. Civ. P. 26(e)(1).5
5

“If a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is not allowed
to use that information or witness to supply evidence on a motion,
-6-

The Rules further require the issuance of a scheduling order
early in each case.

See Fed. R. Civ. P. 16(b).

“The drafters of

the Rules intended [the scheduling] order to control the subsequent
course of the action so as to improve the quality of justice
rendered in the federal courts by sharpening the preparation and
presentation of cases, tending to eliminate trial surprise, and
improving,

as

well

as

facilitating,

the

settlement

process.”

Forstmann v. Culp, 114 F.R.D. 83, 84-85 (M.D.N.C. 1987) (internal
quotation marks omitted).

“[Such a] schedule may be modified only

for good cause and with the [Court’s] consent.”
16(b)(4).

Fed. R. Civ. P.

“[T]he touchstone of ‘good cause’ under Rule 16(b) is

diligence.”

Marcum v. Zimmer, 163 F.R.D. 250, 255 (S.D. W. Va.

1995); see also Fed. R. Civ. P. 16 advisory committee’s note, 1983
Amendment Subdivision (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)).
Continental has identified nothing that would support a finding
that it acted with diligence regarding the disclosures at issue.
The Scheduling Order required Continental to make its Rule
26(a)(1)

initial

disclosures

by

November

2,

2015

(with

supplementations due by March 20, 2016), and its Rule 26(a)(2)
expert witness disclosures by March 1, 2016. (See Text Order dated
at a hearing, or at a trial, unless the failure was substantially
justified or is harmless.” Fed. R. Civ. P. 37(c)(1).
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Sept. 17, 2015; see also Docket Entry 20 at 1-2.)
those deadlines

(and

30

days

after

the

close

of

Months after
discovery),

Continental sought leave to supplement its initial disclosures in
connection with the Corrective Work Claim and to make related
expert disclosures.

(See Docket Entry 32 at 5.)

According to Continental, the delay associated with these
disclosures resulted from its lack of knowledge of the “[f]ull
scope” of Rodgers’s nonconforming work until approximately April
2016.

(Docket Entry 32 at 2.)

However, the Rules obliged

Continental to investigate its defenses (including the Corrective
Work Claim), see Fed. R. Civ. P. 26 advisory committee’s note, 1993
Amendment,

Subdivision

(a),

Paragraph

1

(“Before

making

its

disclosures, a party has the obligation under subdivision (g)(1) to
make a reasonable inquiry into the facts of the case.”), and, as to
such defenses, to provide both witness information and documentary
evidence in its possession, custody, or control (e.g., the Change
Order Requests that Samet provided to Continental beginning August
12,

2015)

to

Rodgers

26(a)(1)(A)(i) & (ii).

and

Swamp

Fox,

see

Fed.

R.

Civ.

P.

Despite receiving at least three of the

Change Order Requests (see Docket Entries 37-2 through 37-4) before
the parties’ Rule 26(a)(1) disclosure deadline of November 2, 2015,
and three additional Change Order Requests (see Docket Entries 37-5
through 37-7) before the supplementation deadline of March 20,
2016, Continental did not disclose that (or any related witness)
-8-

information to Rodgers and Swamp Fox until May 9, 2016 (see Docket
Entry 32 at 3 (asserting that Continental provided the Corrective
Work Claim, detailing the items of alleged non-conforming work, to
Rodgers and Swamp Fox on May 9, 2016); see also Docket Entry 37-1
(noting that Continental emailed Rodgers’s attorney regarding the
Corrective Work Claim on April 13, 2016)).6
Additionally, Samet provided each of those six Change Order
Requests to Continental by January 28, 2016.

(See Docket Entries

37-2

Extension

through

37-7.)

Accordingly,

at

the

Hearing,

Continental did not dispute that its communications with Samet
provided Continental with a good-faith basis for requesting an
extension of the expert and supplemental disclosure deadlines no
later than February 2016. However, even after Continental provided
the Corrective Work Claim to Rodgers and Swamp Fox some three
months later (i.e. on May 9, 2016) (see Docket Entry 37-1 at 9),
Continental waited nearly four additional months (i.e. until August
31, 2016) to file the Extension Motion (see Docket Entry 32).

That

unreasonable delay in presenting the Extension Motion further
counsels against finding that Continental acted with diligence
regarding

the

proposed

belated

6

disclosures.

Put

simply,

At the Extension Hearing, Continental also reported that it
may still have additional documentation related to the Corrective
Work Claim that it has never provided to Rodgers, but that it would
disclose if given an extension of its supplementation deadline.
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Continental has not established “good cause” for amending the
Scheduling Order.
Moreover,

because

Continental

waited

until

after

the

disclosure deadlines passed to seek their extension, it also must
satisfy the demanding “excusable neglect” standard.

See Fed. R.

Civ. P. 6(b) (“When an act may or must be done within a specified
time, the court may, for good cause, extend the time . . . on
motion made after the time has expired if the party failed to act
because of excusable neglect.”).

“‘Excusable neglect’ is not

easily demonstrated, nor was it intended to be.”

Thompson v. E.I.

DuPont de Nemours & Co., Inc., 76 F.3d 530, 534 (4th Cir. 1996).
The Court’s review of controlling authority and the record confirms
that Continental has not made the requisite showing.
The

United

States

Supreme

Court

has

explained

that

the

excusable neglect inquiry “is at bottom an equitable one, taking
account of all relevant circumstances surrounding the party’s
omission.”

Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.

P’ship, 507 U.S. 380, 395 (1993).

“These include . . . [1] the

danger of prejudice to the [opposing party], [2] the length of the
delay and [3] its potential impact on judicial proceedings, [4] the
reason

for

the

delay,

including

whether

it

was

within

the

reasonable control of the movant, and [5] whether the movant acted
in good faith.”

Id.

Considering those factors in the context of

this case, the Court first observes that granting Continental’s
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requested relief would require a significant extension of the
discovery period and thus would jeopardize the long-scheduled trial
date (or, at a minimum, would deprive the Court of a reasonable
amount of time to assess any dispositive motions before such
date).7

These consequences portend possible serious prejudice to

Rodgers’s (and other parties’) interest in maintaining an agreedupon and judicially sanctioned end-point for this case, as well as
an adverse impact on the Court’s proceedings.
Coordinately, Continental’s request for an extension of the
expert and supplemental disclosure deadlines by more than six
months (i.e. from March 1 and 20, 2016, to September 30, 2016)
would

represent

a

delay

of

unreasonable

length

under

the

circumstances, particularly given the absence of an acceptable
reason for such delay (even if the Court assumes no bad faith on
Continental’s part).8

In regard to the reason for delay, as

detailed above, Continental possessed both knowledge of the alleged
nonconforming work and a good-faith basis to request extensions of

7

At the Extension Hearing, Continental suggested that, if the
Court allows the Extension Motion, it may present as many as five
additional witnesses that the other parties could then depose
before trial. Beyond the time necessary for Rodgers to review any
supplemental initial disclosure materials and any expert disclosure
materials, Rodgers likely would have the right to depose any newly
disclosed witnesses and to conduct other discovery regarding the
Corrective Work Claim. That process reasonably could take months.
8

Rodgers and Swamp Fox have not contended that Continental
acted in bad faith. (See Docket Entry 34 at 7 n.2; see also Docket
Entry 35 at 1.)
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the disclosure deadlines before those deadlines passed, but failed
to take actions within their “reasonable control,” Pioneer, 507
U.S. at 395, to avoid delay.

In sum, the Pioneer factors counsel

against a finding of excusable neglect.
CONCLUSION
Because Continental has failed to show “good cause” under Rule
16(b)(4) and/or “excusable neglect” under Rule 6(b)(1)(B), the
Court will not modify the deadlines for Continental to make and/or
to

supplement its initial and/or expert disclosures.9
IT IS THEREFORE ORDERED that the Extension Motion (Docket

Entry 32) is DENIED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
September 26, 2016

9

Nothing in this Order precludes Continental from arguing
against exclusion under Rule 37(c)(1) of the documents related to
the Corrective Work Claim that it disclosed to Rodgers in May 2016,
and/or from providing late expert (or fact) witness disclosures and
litigating matters concerning those untimely disclosures pursuant
to Rule 37(c)(1).
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