National Credit Union Administration Board v. Cumis Insurance Society Inc.

Filing 135

Memorandum Opinion & Order denying defendant's 127 Motion to Reopen Discovery. Signed by Magistrate Judge Greg White on 10/19/2015. (S,S)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
NATIONAL CREDIT UNION,
ADMINISTRATION BOARD,
as Liquidating Agent of
St. Paul Croatian Federal Credit Union,
Plaintiff,
v.

CUMIS INSURANCE SOCIETY, INC.,
Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)
)

CASE NO. 1:11 CV 1739

MAGISTRATE JUDGE GREG WHITE

MEMORANDUM OPINION & ORDER

This matter is before the Court upon Defendant Cumis Insurance Society’s Motion to Reopen Discovery (Doc. No. 127.)1 Plaintiff National Credit Union Administration Board in its
capacity as Liquidating Agent of St. Paul Croatian Federal Credit Union (“Plaintiff”) filed a
Brief in Opposition on October 1, 2015. (Doc. No. 131.) For the following reasons, Defendant’s
Motion is DENIED.
In its Motion, Defendant asks the Court to reopen discovery for forty-five (45) days in
order to allow Defendant to determine if any member of St. Paul Croatian Federal Credit
Union’s Board of Directors or Supervisory Committee, or any supervisory staff employee,
“provided information to the FBI or IRS during their investigation of St. Paul which shows that a
member of the Board, Supervisory Committee, or supervisory staff knew prior to February 11,

1

This case is before the Court upon consent of the parties entered November 28, 2011.
(Doc. No. 13.)

2010, that Anthony Raguz (‘Raguz’) was dishonest.” (Doc. No. 127-1 at 2.) Defendant asserts
that, “[i]f so, coverage terminated for Raguz prior to the inception of the February 11, 2010
policy on which the plaintiff has sued.” Id. Moreover, Defendant argues that “any such
knowledge may also trigger discovery and the concomitant notice and limitations periods in the
bond which, if not met, could also negate coverage.” Id.
Plaintiff argues discovery should not be re-opened because Defendant had ample notice
of FBI/IRS involvement with the National Credit Union Administration, in its capacity as
Regulatory Agency (hereinafter “Agency”) prior to the liquidation of St. Paul in April 2010.
Specifically, Plaintiff notes that (1) as early as October 8, 2010, Defendant was provided with
documents “which indicated both FBI/IRS involvement and specified the names of the
respective agents.” (Doc. No. 131 at 3.) In addition, Plaintiff asserts Defendant deposed
numerous individuals within the discovery period, during which defense counsel expressly
inquired about meetings between the FBI and/or IRS and the Agency. Id. Thus, Plaintiff argues
Defendant’s motion should be denied because Defendant “had all the time it needed to complete
discovery, yet [it] made a conscious decision to terminate same without requesting a timely
extension.” Id. at 4.
The Court finds Defendant has failed to demonstrate the need to re-open discovery. As
has been detailed in prior Orders of this Court, over two years ago (in July 2013), Plaintiff (as
Liquidating Agent) produced for in camera review two discs containing documents in its
possession that reflected or related to communications between Plaintiff and the FBI and/or IRS
regarding St. Paul. (Doc. Nos. 36, 41.) The Court thereafter conducted an in-person conference
with counsel for the parties, as well as counsel for the United States. During this conference,

2

counsel for the U.S. represented that none of the in camera documents on the discs were
responsive to Defendant’s discovery requests. (Doc. No. 42.) Moreover, more recently, the nonparty Agency conducted a thorough search of its records for documents reflecting or relating to
communications between the Agency and the FBI and/or IRS; and, produced those documents to
the Court for in camera review.2 The Court subsequently ordered certain non-privileged,
responsive documents from this in camera production to be provided to the parties in redacted
form. (Doc. No. 124.) In light of the above, the Court finds Defendant has obtained the
discovery it now seeks; i.e., documents reflecting or relating to communications between the FBI
and/or IRS and the Plaintiff and the Agency regarding St. Paul.
Defendant, however, asserts the Court should nevertheless re-open discovery in order to
allow it to attempt to obtain such documents directly from the FBI and/or IRS. (Doc. No. 128.)
During a status conference on October 15, 2015, counsel for Defendant stated Defendant had
recently served Touhy requests on the FBI and the IRS for deposition testimony regarding (1)
information received from any member of the St. Paul Board or Supervisory Committee, or
employee of St. Paul, regarding possible dishonest and/or fraudulent activity at St. Paul; (2)

2

Specifically, counsel for the Agency was asked to determine “whether the [Agency] has
documents reflecting or relating to communications between the NCUA and the FBI and/or IRS
between January and April 2010 regarding St. Paul Croatian Federal Credit Union.” (Doc. No.
114.) On July 27, 2015, the Agency produced documents pursuant to this Order for in camera
review. (Doc. No. 122.) On August 13, 2015, the Court ordered certain documents to be
produced to the parties in redacted form. (Doc. No. 124.) Thereafter, the Court asked the
Agency to “determine whether it has any records from the 2009 calendar year that indicate a St.
Paul Croatian Federal Credit Union (“St. Paul”) Board Member, Supervisory Committee
member, or supervisory staff member had knowledge that Anthony Raguz had committed a
dishonest or fraudulent act.” (Doc. No. 128.) On October 9, 2015, counsel for the Agency
advised the parties that it had conducted a thorough search of its records and determined it has
no records meeting this description. (Doc. No. 133.)
3

information received from members of St. Paul about loans they did not receive or possible
dishonest and/or fraudulent activity at St. Paul; and, (3) information received from or provided to
the Agency regarding possible dishonest and/or fraudulent activity at St. Paul. As noted in the
Minutes from that conference, Defendant’s Touhy requests were denied via letter dated October
9, 2015. (Doc. No. 133 at 2.)
As noted above, however, Defendant has already obtained discovery from both Plaintiff
and the Agency regarding FBI and/or IRS communications relating to St. Paul. While Defendant
may wish to appeal the denial of his Touhy requests to the FBI and IRS, the Court finds any such
appeal to be distinct from the instant case and not a basis to re-open discovery herein. The
discovery deadline in this matter was extended seven times over the course of this litigation.
(Doc. Nos. 20, 51, 55; and, Non-document Orders dated December 21, 2012, May 7, 2013, July
18, 2013, and April 15, 2014.) With trial now less than two months away, the Court will not reopen discovery to allow Defendant to continue to pursue this line of inquiry, particularly where it
has already received responsive documents on the very same topic from both Plaintiff and the
Agency.
Accordingly, and for all the reasons set forth above, Defendant’s Motion to Reopen
Discovery is DENIED.
IT IS SO ORDERED.

/s/ Greg White
U.S. Magistrate Judge
Date: October 19, 2015

4