Hopkins AG Supply LLC v. First Mountain Bancorp
ORDER granting in part and denying in part 215 Plaintiff Hopkins AG Supply LLC's Motion for Discovery Sanctions Against Defendant Brunswick Companies. Signed by Honorable Robin J. Cauthron on 7/10/17. (lg)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
HOPKINS AG SUPPLY LLC,
FIRST MOUNTAIN BANCORP, a
Nevada Corporation, et al.,
Case No. CIV-12-1141-C
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff’s Motion for Discovery Sanctions Against Defendant
Brunswick Companies (Dkt. No. 215). Defendant Brunswick has responded and the
Motion is now at issue.
Plaintiff requests sanctions pursuant to Fed. R. Civ. P. 37(c)(1) for Defendant
Brunswick’s failure to disclose an errors and omissions (“E&O”) insurance policy as
required by Fed. R. Civ. P. 26(a). Rule 37(c)(1) vests the Court with discretion to impose
“other appropriate sanctions” in addition to or in lieu of excluding the evidence not
properly disclosed pursuant to Rule 26(a) unless the Court determines the non-disclosing
party’s “failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). The
court should consider the following factors when making the determination: “(1) the
prejudice or surprise to the party against whom the testimony is offered; (2) the ability of
the party to cure the prejudice; (3) the extent to which introducing such testimony would
disrupt the trial; and (4) the moving party’s bad faith or willfulness.” Woodworker’s
Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999) (citations
First the Court will determine whether the non-disclosure was substantially justified.
The statement in question reads as follows: “defendants are unaware of any insurance
agreement under which such insurers would be liable to satisfy all or part of any judgment
which might be obtained against defendants.” (Def.’s Resp. to Mot. for Disc. Sanctions,
Dkt. No. 229, p. 1.) Counsel for Brunswick admits the disclosure was inaccurate because
Brunswick had an applicable E&O policy but had not elected to involve the insurance
carrier in this case. Brunswick was not aware of the need to disclose the E&O policy
because counsel never asked if there was a policy in place.
Counsel is reminded that pursuant to Rule 26(g)(1), the type of disclosure in dispute
must be signed by an attorney of record. “By signing, an attorney . . . certifies that to the
best of the person’s knowledge, information, and belief formed after a reasonable inquiry
. . . with respect to a disclosure, it is complete and correct as of the time it is made.” Fed.
R. Civ. P. 26(g)(1)-(g)(1)(A) (emphasis added); see also Sun River Energy, Inc. v. Nelson,
800 F.3d 1219, 1229 (10th Cir. 2015) (finding that “[c]ounsel has an obligation to assure
that the client complies with discovery obligations and court orders” (citation and internal
quotation marks omitted)). Brunswick was required to disclose the policy and counsel
should have inquired about the existence of a policy before signing the disclosure
document. Therefore, the Court finds the non-disclosure was not substantially justified.
The Court will consider whether the non-disclosure was harmless. Applying the
factors, Plaintiff claims the non-disclosure is prejudicial because the absence of insurance
has influenced nearly all of its litigation decisions regarding Brunswick. The Court
determines evidence of a policy Brunswick had purchased but declined to use would not
be admissible to a jury, so speculations as to what actions Plaintiff could have taken had it
known of the inactive insurance role are not persuasive.
Brunswick argues that although the non-disclosure did occur, Brunswick’s
representative, Mr. Levinson, was unaware of the need to disclose the existence of the
policy and when asked at deposition, he freely discussed the policy. At the time of Mr.
Levinson’s deposition, on March 31, 2017, one month of discovery remained from a more
than four-year discovery period. However, Plaintiff did not request additional time for
discovery or attempt to schedule more depositions within the time remaining.
Plaintiff argues its lack of knowledge harmed judicial settlement negotiations. The
argument may have been persuasive if a settlement had been reached for a low figure, but
since no settlement resulted from the judicial settlement conference, no harm occurred.
The third and fourth factors have no great weight in this decision.
Rule 37 precludes the use of any non-disclosed evidence at trial and grants the Court
discretion to impose other sanctions.
Because evidence of the E&O policy is not
admissible, Plaintiff requests the alternative sanction of various attorney fees and the
reopening of discovery for an additional deposition.
The Court will not permit the
reopening of discovery because, as discussed, Plaintiff could have requested an extension
before discovery concluded.
This is not the proper time to reopen discovery when
Plaintiff’s predictions of what could be discovered are mere speculation and the request
comes on the eve of trial, two and one-half months after the non-disclosure was discovered.
Additionally, the Court will not grant Plaintiff’s requests for attorney fees associated with
Mark Levinson’s deposition. There is no harm suffered related to the deposition.
The Court grants Plaintiff’s request for attorney fees for preparing for and attending
the judicial settlement conference and discovering and obtaining the subject insurance
policy. Because the non-disclosure was not substantially justified, Plaintiff may recover
the cost of obtaining the information that should have been disclosed. The Court grants
the request for attorney fees for the judicial settlement conference because while no
settlement was reached, the lack of full discovery rendered the conference a sham.
For the reasons stated, Plaintiff Hopkins AG Supply LLC’s Motion for Discovery
Sanctions Against Defendant Brunswick Companies (Dkt. No. 215) is GRANTED in part
and DENIED in part.
IT IS SO ORDERED this 10th day of July, 2017.
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