Poreter Bridge Loan Company v. Hentges et al

Filing 132

OPINION AND ORDER by Judge John E Dowdell ; denying 123 Objection to Magistrate Judge's Order; finding as moot 129 Motion for Hearing (Re: 2 Complaint, 122 Order,,,,, ) (SAS, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
PORTER BRIDGE LOAN COMPANY, INC.,
Plaintiff,
v.
NANCY G. HENTGES, Trustee of the Nancy
G. Hentges Trust; MARK MARTENS, AND
FREDERICK H. NORTHROP,
Defendants.

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Case No. 09-CV-593-JED-FHM

OPINION AND ORDER
The Court has for its consideration the “Motion to Vacate Order” (Doc. 123) filed on
behalf of defendant, Frederick H. Northrop and his attorney, Stephen J. Capron. Although styled
a “Motion to Vacate Order,” the filing is submitted under 28 U.S.C. § 636(b)(1) and Fed. R. Civ.
P. 72(a), which authorizes the party to “serve and file objections to the order” entered by a
magistrate judge on a pretrial non-dispositive issue. See Fed. R. Civ. P. 72(a). Accordingly, the
Court will treat the motion as an objection under Fed. R. Civ. P. 72(a).
I.

Background

Plaintiff, Porter Bridge Loan Company, Inc. (“Porter Bridge”) has a default judgment
against defendant Frederick H. Northrop (“Northrop”) and other defendants, for a total amount
of $572,219.69, plus post-judgment interest, plus costs. (Doc. 23). A significant amount of the
judgment has been collected, but a substantial balance remains. (See Doc. 121, ¶ 10). Pursuant
to Fed. R. Civ. P. 69(a)(2), a judgment creditor “may obtain discovery from any person -including the judgment debtor -- as provided in these rules. . . .” Porter Bridge sought postjudgment discovery of Northrop, much of which was directed to discovery of the existence of

assets and any transfers of assets that could or should be available for satisfaction of Porter
Bridge’s judgment. On February 12, 2012, the Magistrate Judge to whom the matter was
referred (the Honorable T. Lane Wilson) granted Porter Bridge’s motion to compel Northrop to
provide complete responses to several interrogatories and document requests, including requests
regarding assets of and disbursements from the Frederick H. Northrop Trust (the “Trust”), a trust
for which Frederick H. Northrop is both the Trustor and the Trustee. At that time, Judge Wilson
denied Porter Bridge’s request for fees and costs, without prejudice. (Doc. 104).
Northrop provided supplemental responses to the discovery requests.

Subsequently,

Porter Bridge asserted that there remained significant deficiencies in Northrop’s responses and,
following a hearing on August 6, 2012, Judge Wilson ordered the parties’ counsel to meet and
confer to attempt a resolution of the remaining deficiencies. (See Doc. 114). Following the
ordered meet and confer, Northrop provided a second supplemental discovery response, but
Porter Bridge continued to argue that the discovery responses were inadequate. Judge Wilson
then ordered supplemental briefing on the motion to compel and the alleged remaining discovery
deficiencies. (Doc. 116). In its supplemental briefing, Porter Bridge asserted a number of
remaining deficiencies and requested “that Northrop be sanctioned pursuant to Fed. R. Civ. P.
37(b)(2), and that Porter be reimbursed its attorney fees and expenses for the many efforts it has
undertaken over the past year to obtain discovery to which it is rightfully entitled under the Federal
Rules of Civil Procedure and Oklahoma law regarding collection of judgments.” (Doc. 117 at 23).
Northrop responded that he had provided more information than he was required to provide and that,
“[h]aving run out of money to collect against Dr. Northrop on the judgment, Plaintiff is trying to
create a basis for sanctions.” (Doc. 118).
On October 25, 2012, Judge Wilson entered an Order granting in part and denying in part
Porter Bridge’s supplemental brief regarding the motion to compel and ordered Northrop to provide

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additional information responsive to the original discovery requests. (Doc. 122).

The Order

included a “monetary sanction in the total amount of $1,500.00 on Northrop and its counsel, jointly
and severally, as a sanction for [the] failure” to fully respond to discovery as previously ordered in
February 2012. Judge Wilson further found that Northrop’s deficiencies in responding to Porter
Bridge’s discovery requests were “not substantially justified and there are no circumstances that
make an award of expenses unjust.” (Id. at 11-12). Northrop objects to the Order (Doc. 122) on
several grounds, which are discussed in Section III, below.
II.

Standard of Review

Federal magistrate judges may hear and determine pretrial discovery matters that are not
dispositive of the case, and when appropriate, they will issue a written order of the decision. Fed. R.
Civ. P. 72(a); 28 U.S.C. § 636(b)(1). 1 The district court is to review any objections to the order and
may set aside or modify the order only where it is clearly erroneous or contrary to law. Fed. R. Civ.
P. 72(a); 28 U.S.C. § 636(b)(1). The district court “[must] affirm unless it ‘on the entire evidence is
left with the definite and firm conviction that a mistake has been committed.’” Allen v. Sybase, Inc.,
468 F.3d 642, 658 (10th Cir. 2006), quoting Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458,
1464 (10th Cir. 1988).

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Notwithstanding the references in Rule 72(a) and 28 U.S.C. § 636(b) to magistrate judges
conducting “pretrial” matters, magistrate judges may conduct other non-dispositive matters after
trial and judgment. See, e.g., J.P. Morgan Chase Bank, N.A. v. PT Indah Kiat Pulp and Paper
Corp., 854 F. Supp.2d 528, 535 (N.D. Ill. 2012) (post-judgment discovery in collection
proceedings may be referred to a magistrate judge) (citations omitted); F.D.I.C. v. LeGrand, 43
F.3d 163, 167 (5th Cir. 1995) (district court properly referred motions relating to post judgment
discovery); Bergeson v. Dilworth, 749 F. Supp. 1555, 1562, n.3 (D. Kan. 1990) (“Courts
considering the meaning of the term ‘pretrial’ as used in [§ 636] have not defined this with
respect to the time of trial, but rather have interpreted this to refer to ‘a matter unconnected to the
issues litigated at trial. . . .’”) (citations omitted). Moreover, pursuant to Fed. R. Civ. P. 69(a)(2),
post-judgment discovery proceeds like pre-trial discovery under the discovery rules. The Court
finds that such discovery was properly referred to the magistrate judge. In any event, Northrop
specifically filed his objections “pursuant to Fed. R. Civ. P. 72(a) and 28 U.S.C. § 636(b)(1)(A),”
and he acknowledges that certain post-trial referrals, like the referral in this case, are appropriate.
(See Doc. 126 at 2).
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III.

Discussion
A.

The Order Compelling Discovery

After conducting a thorough analysis of each discovery request as to which Porter Bridge
alleged a continuing deficiency, the Magistrate Judge granted in part and denied in part Porter
Bridge’s request that the Magistrate Judge again order Northrop to fully respond to discovery
requests. The Court has reviewed the Order, the underlying discovery requests at issue, and the
other information submitted with the parties’ supplemental briefing (Doc. 117, 118, 119), and
has reviewed and considered the objections asserted by Northrop. The Court finds that Judge
Wilson’s Order contains a thorough, measured, and accurate analysis of the discovery issues
relating to Northrop and his Trust, the information sought by Porter Bridge, and the discovery
responses by Northrop. After examining the record of the proceedings, the Court agrees with
Judge Wilson’s findings that Northrop’s discovery responses remained deficient notwithstanding
the prior order compelling responses and the repeated opportunities for Northrop to supplement
the responses in order to comply with its discovery obligations and the earlier order to do so.
The Order is not clearly erroneous or contrary to law. A discussion of Northrop’s specific
objections to the Order is set forth by issue below.
1.

The Order for a Complete Response to Interrogatory No. 12
Regarding Trust Payments of Northrop Expenses

Interrogatory No. 12 requested that Northrop “[i]dentify and describe all instances in
which the Trust has paid any account payable or other expense or liability of Northrop during the
Relevant Time Period.”

In the February 2012 responses, Northrop stated that the bank

statements include any transactions where the Trust “paid any account payable or other expense
or liability of Northrop.” (See Doc. 117-4, Interrogatory No. 12 and Response to same). Judge
Wilson noted that the bank statements reflected several debit card purchase for expenses that
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appear personal in nature, as well as electronic transfers of lump sums of money and transfers
(including of “Cash”) via handwritten checks marked only with “transfer” in the memo line, and
also noted that there was a lack of detail (i.e. the names of the recipient accounts receiving
electronic transfers, identification of where those accounts are located). Judge Wilson also found
that the descriptions were vague and that they do not “describe” the transactions fully, such that
Northrop had still not fully responded to Interrogatory No. 12.
Northrop argues that the Magistrate Judge made an improper assumption that those Trust
bank transactions involved expenses or liability “of Northrop.” The Court finds that objection to
be without merit. That objection ignores the plain language of Interrogatory No. 12, which
clearly seeks an identification and description of all transactions involving payments from the
Trust on behalf of Northrop. Porter Bridge is entitled to the detailed information that reflects the
transactions in order to determine whether there were fraudulent transfers. Northrop’s objection
also disregards the purpose of the discovery sought, which was at least in part directed to
determining the existence of any assets upon which Porter Bridge could execute to collect on its
judgment and to determine whether any fraudulent transfers had been made of assets. The
additional transaction information which Northrop has been ordered to provide is clearly within
the scope of that Interrogatory request, and Judge Wilson committed no error in ordering that
additional information.
2.

The Order to Provide Additional “Information” in Response to
Document Request Nos. 1, 4, 8, 12 and 15

Northrop also objects to the Order because, in a few places, it contains directives that
Northrop shall provide additional “information,” rather than “documents,” in response to
document requests. The Court has reviewed the complained of references to “information” and
does not agree with Northrop’s analysis or find any error in the Order. Judge Wilson noted that
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Porter Bridge’s document request Nos. 1, 4, 8, 12, 15, and 16 seek “information” regarding large
transfers of money to unidentified accounts via electronic transfers and to individuals via handwritten checks to “Pat Northrop” or “Cash.” (Doc. 122 at 7). In footnotes, the Order quotes the
actual document requests, and the Court does not find any error in summarizing all six (6) of
those document requests as seeking “information” rather than “documents.” Judge Wilson also
found that those requests and the information sought by the document requests “draws into
question the sufficiency of the information provided in the bank statements and the sufficiency of
the supplementing documents such as the checks, credit card statements, and other billing
statements,” and found that the documents produced are not sufficient to respond to the requests.
(Id.).

The Order then directs Northrop to “provide detailed information regarding any

transaction in which funds were transferred by check to ‘Pat Northrop’ or ‘Cash,’ including the
specific purpose and reason for the transfer,” and ordered that Northrop “provide detailed
information regarding the electronically transferred money to the unnamed accounts.” (Id.).
There should be documents that reflect the missing information, including documents
identifying the purpose for the large transfers of money to unidentified accounts (by way of
example, invoices, requests for payment, additional statements, check endorsement information,
detailed records of accounts, checkbook or accounting records). Moreover, as noted in the
Order, the missing information that cannot be gleaned from the documents produced by Northrop
in response to those document requests is also related to the insufficient bank statements and
other records, which lacked sufficiently detailed information in response to Interrogatory No. 12.
Thus, the Court concludes that the Order properly directs the production of that additional detail,
by production of documents and inclusion of the missing detailed information necessary to fully
respond to Interrogatory No. 12.

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3.

The Order to Provide AT&T and ONG Documents in Response to
Document Request Nos. 14, 15, and 16

In responding to discovery, Northrop produced certain documents relating to AT&T and
ONG accounts. Northrop admits that he is an obligor on those accounts, but denies that he pays
those accounts, and he therefore argues that any additional documents relating to the AT&T and
ONG accounts are not responsive to Document Request Nos. 14, 15 and 16. (Doc. 123 at 7).
Whether or not Northrop actually pays those accounts in no way diminishes his obligation to
provide documents related to them. The Court finds that the documents sought are responsive to
the requests. His admitted “obligor” status on those accounts renders those accounts to be within
the scope of at least document request No. 16, which calls for production of all “documents
identifying the recurring monthly accounts payable of Northrop.” Moreover, the Court notes, as
did Judge Wilson, that Northrop produced those AT&T and ONG account records (albeit in an
incomplete fashion) in response to Porter Bridge’s discovery requests, which reflects an
acknowledgement by Northrop that such documents are responsive.
4.

The Order to Produce Additional Documents Relating to the Chase
Credit Card Account

With respect to a Chase credit card account allegedly used in connection with Northrop’s
medical practice,2 the Order directs that Northrop “produce all account information for the
Relevant Time Period, including how the account is paid each month and copies of account
statements.” (Doc. 122 at 8). Northrop objects, claiming that the records are not responsive to
Porter Bridge’s discovery requests and that he has already produced the account statements.
Once again, Northrop produced some documents relating to the Chase credit card account in
response to Porter Bridge’s discovery requests, an acknowledgement that those documents are
2

The statements that were produced indicate that the account is listed in the name of “Fred
Northrop.” (Doc. 118-2 at 13 [sealed]).
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responsive. Moreover, Porter Bridge’s discovery requests were directed to locating payments
made by, on behalf of, or for Northrop. Records relating to the account would appear to be
responsive, as is indicated by Northrop’s production of certain records relating to that account.
The Court finds that the Order is clear: Northrop is to provide all documents relating to the
account for the relevant time frame, including “all documents reflecting the manner of paying
that account each month.” There is no error with respect to that part of the Order.
B.

The Sanctions Order

The Order also imposed a monetary sanction of $1,500.00 on Northrop and his counsel,
jointly and severally. (Doc. 122 at 12). Northrop and his counsel object and argue that Judge
Wilson erred in awarding sanctions because (1) Northrop complied with discovery obligations
and thus is not culpable, (2) to the extent that the Court finds a failure to completely comply with
discovery obligations and the prior order to produce, such failure did not cause prejudice to
Porter Bridge and has not “substantially interfered with the judicial process,” (3) “there was no
warning . . . that a failure to produce these records would result in harsh sanctions or any
penalty,” and (4) even if a sanction is warranted, sanctions are not warranted against Northrop’s
counsel, because there is no evidence that counsel “advised” Northrop to engage in any improper
conduct and he was not separately given an opportunity to be heard on the issue of sanctions.
(Doc. 123 at 15-17). The Court disagrees on each of these points.
As noted above, the Court finds no error in Judge Wilson’s determination that Northrop
failed to comply with his discovery obligations and the Judge’s prior order in February 2012.
Contrary to Northrop’s assertion, the Court finds that the failure to fully comply with discovery
and the February 2012 order compelling complete discovery responses did prejudice Porter
Bridge, in that it caused extraordinary delay and expense in order for Porter Bridge to obtain

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another order requiring Northrop to comply with obligations it should have complied with
months before. Northrop failed to comply with the first order granting the motion to compel,
which required additional proceedings (including an additional hearing, supplemental briefing,
and the entry of the Order which is the subject hereof). The Court also rejects the notion, much
less the contention, that there was no warning that “harsh sanctions or any penalty” would be
imposed, because Porter Bridge specifically sought sanctions in its supplemental briefing. Under
the circumstances and in light of the months-long delay in Northrop’s providing responsive
information and the resulting multiplication of proceedings, the Court finds that the $1,500
sanction was not “harsh” or improper, but was instead measured, reasonable, and restrained.
The Court also finds no error in the imposition of sanctions, jointly and severally, upon
Northrop and his counsel. The record reflects that Northrop’s counsel was involved in the delay
in compliance with discovery, filed papers asserting that categories of documents were not
responsive despite the fact that some within those categories had clearly been produced in
response to Porter Bridge’s discovery requests, and argued that documents identifying Northrop
as “obligor” were not responsive to discovery calling for payments made on accounts payable of
Northrop (see, e.g., Document Request No. 16) even though certain documents relating to those
accounts were produced as being responsive to Porter Bridge’s discovery.
The Court also rejects the arguments of Northrop’s counsel that he should not be held
accountable for sanctions for due process reasons or because he did not “advise” any misconduct
under Fed. R. Civ. P. 37(a)(5)(A). Porter Bridge sought, and the Order imposes, sanctions on the
basis of Fed. R. Civ. P. 37(b)(2), not Rule 37(a)(5). Rule 37(b)(2) provides that, “[i]f a party . . .
fails to obey an order to provide or permit discovery . . . the court where the action is pending
may issue further just orders.” Courts have “’very broad discretion to use sanctions where

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necessary to insure . . . that lawyers and parties . . . fulfill their high duty to insure the
expeditious and sound management of the preparation of cases for trial.’” Lee v. Max Int’l, 638
F.3d 1318, 1320 (10th Cir. 2011), quoting In re Baker, 744 F.2d 1438, 1440 (10th Cir. 1984).
The sanctions that may be imposed under Rule 37(b)(2) for a failure to comply with a
discovery order include severe sanctions, such as contempt, directing that certain matters are
established for purposes of the action, and other sanctions impacting the merits of the dispute.
See Fed. R. Civ. P. 37(b)(2)(A)(i) through (vii). Judge Wilson did not impose any such harsh
sanctions, but instead imposed a monetary sanction under Rule 37(b)(2)(C), which provides:
Payment of Expenses. Instead of or in addition to the orders above [in Rule
37(b)(2)(A)(i) – (vii)], the court must order that the disobedient party, the
attorney advising that party, or both to pay the reasonable expenses, including
attorney’s fees, caused by the failure, unless the failure was substantially justified
or other circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37(b)(2)(C) (bold added). Nothing in this rule requires -- as a predicate to
imposing an expense sanction against a party’s attorney -- a finding that the attorney advised
“misconduct,” as is asserted in the objections by Northrop and his counsel. (Doc. 123 at 17).3
In any event, the Magistrate Judge found the “root cause of the discovery disputes to be Northrop
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Unlike Fed. R. Civ. P. 37(a)(5)(A), which refers to sanctions against an “attorney advising [the
party’s discovery] conduct,” Rule 37(b)(2) (which was the basis for the sanctions award in this
case) merely refers to the “attorney advising that party.” Even under Rule 37(a)(5)(A), courts
have held that the language “attorney advising such conduct” does not require proof of bad faith
by the attorney or proof that the attorney did so advise before a court imposes sanctions against
the attorney. See, e.g., Devaney v. Continental Amer. Ins. Co., 989 F.2d 1154, 1161-62 (11th
Cir. 1993); Adelman v. Boy Scouts of Amer., 276 F.R.D. 681, 700 (S.D. Fla. 2011). Otherwise, a
presumption would be read into the Rule that the Court “must impose those sanctions on the
client unless the client proves that his or her attorney instigated the relevant misconduct.”
Devaney, 989 F.2d at 1161. “[T]he phrase [attorney advising such conduct] instructs that when
an attorney advises a client in discovery matters, he assumes a responsibility for the professional
disposition of that portion of a lawsuit and may be held accountable for positions taken or
responses filed during that process. Sanctions exist, in part, to remind attorneys that service to
their clients must coexist with their responsibilities toward the court, toward the law and toward
their brethren at the bar.” Id. at 1161-62 (emphasis added). While Mr. Capron contends he did
not “advise” any misconduct, he does not deny that he “advised” his client.
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and his counsel,” which warranted the sanctions award. (Doc. 122 at fn. 6). That finding is not
clearly erroneous or contrary to law.
The Court also rejects the argument by Northrop and his counsel that they were not
afforded adequate notice that a sanction may be imposed. In its briefing, Porter Bridge expressly
requested that Northrop be sanctioned “pursuant to Fed. R. Civ. P. 37(b)(2), and that Porter be
reimbursed its attorney fees and expenses for the many efforts it has undertaken over the past
year to obtain discovery to which it is rightfully entitled. . . .” (Doc. 117 at 23). As is set forth in
the quoted language of Rule 37(b)(2) above, once a court has determined that “a party . . . [has
failed] to obey an order to provide or permit discovery,” the court “must order the disobedient
party, the attorney advising that party, or both to pay the reasonable expenses, including
attorney’s fees, caused by the failure, unless the failure was substantially justified or other
circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(A) and (C). Thus,
an award of expenses under Rule 37(b)(2) is the rule, not the exception, and Northrop and his
counsel were on notice that such an award may be ordered.
Finally, the fact that Porter Bridge did not expressly seek sanctions against Northrop’s
counsel does not render Judge Wilson’s award clearly erroneous or contrary to law. In Devaney,
an attorney argued that the district court erred in awarding sanctions against him under Rule
37(a)(5)(A) because the party awarded sanctions had only named the client as the target of
sanctions. The Devaney court rejected that argument, reasoning as follows:
[T]he [sanctions] motions were sufficient to place [attorney] on notice of potential
personal liability for the activities referred to therein. Rule 37 subsections (a) and
(b) permit the court to impose sanctions upon a party or its attorney or both and
establish no preference between these options. Because the apportionment of
fault between an attorney and client is the court’s responsibility, a party listing
only its opponent in a motion for sanctions does not absolve the opponent’s
attorney of potential liability. Instead, the movant merely provides the court with
the double option of holding responsible either the opponent or the attorney either
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under the motion or sua sponte. Accordingly, a motion for sanctions under Rule
37, even one which names only a party, places both that party and its attorney on
notice that the court may assess sanctions against either or both unless they
provide the court with a substantial justification for their conduct.
Devaney, 989 F.2d at 1160 (emphasis added).4
Northrop’s counsel submitted the discovery responses at issue, signed the relevant briefs
relating to that discovery, and participated in the hearings and meet and confer discussions
relating to that discovery over the course of many months. The Court finds that Mr. Capron had
notice of the possibility that sanctions would be awarded for a failure to comply with discovery
obligations as previously ordered by Judge Wilson.
IV.

Conclusion

Judge Wilson’s Order is not clearly erroneous or contrary to law. Rather, the Order was
based on a thorough and reasoned analysis of the discovery at issue, the responses submitted, the
multiple hearings and submissions by the parties, and proper application of the applicable law.
IT IS THEREFORE ORDERED that the Magistrate Judge’s Order (Doc. 122) is
affirmed, and the “Motion to Vacate Order” (Doc. 123) asserted by Northrop and its counsel
(which has been construed as an objection to the Magistrate Judge’s Order) is denied.
IT IS FURTHER ORDERED that, in light of this Opinion and Order, the Plaintiff’s
Application to Set Hearing on Defendant’s Objection to Magistrate Judge’s Order (Doc. 129) is
moot. It was not necessary for the Court to hear arguments on the objections of Northrop and its
counsel before deciding the issues presented.

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The Tenth Circuit has cited with approval the holding in Devaney that due process is
satisfied where counsel had reason to know of the possibility of sanctions, despite the fact that
the motions for sanctions named only the party and not counsel. Sally Beauty Co., Inc. v.
Beautyco, Inc., 372 F.3d 1186, 1191 (10th Cir. 2004).
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DATED this 8th day of April, 2013.

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