National Liability & Fire Insurance Company, et al v. Nathan Carman

Filing 126

MEMORANDUM AND ORDER granting in part and denying in part 92 Motion to Compel; granting 110 Motion to Amend/Correct. So Ordered by Magistrate Judge Patricia A. Sullivan on 2/1/2019. (Saucier, Martha)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
NATIONAL LIABILITY & FIRE
INSURANCE COMPANY and BOAT
OWNERS ASSOCIATION of the
UNITED STATES,
Plaintiffs,
v.
NATHAN CARMAN,
Defendant.

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C.A. No. 17-038WES

MEMORANDUM AND ORDER
PATRICIA A. SULLIVAN, United States Magistrate Judge.
At a hearing held on January 29, 2019, the Court considered and determined the
following motions: Plaintiffs’ Fifth Motion to Compel Discovery (ECF No. 92) and Plaintiffs’
Second Motion to Amend Fraud Affirmative Defense ¶ 88 (ECF No. 110). This Memorandum
and Order reflects the rulings of the Court that were memorialized on the record during the
hearing.
1.

Plaintiffs’ Fifth Motion to Compel Discovery – Granted in Part and Denied in
Part

Request Nos. 20 and 32. On June 15, 2017, Plaintiffs propounded Request No. 20,
seeking “all witness statements,1 recorded or written, related to this case.” ECF No. 19-1 at 11.
On September 10, 2018, Plaintiffs propounded Request No. 32, as part of a set permitted by the
Court’s Text Order of October 15, 2018, seeking “[t]he deposition transcript, audiovisual
recording, and all marked exhibits from [Defendant’s] August 27-28, 2018 deposition in” related
litigation in probate court in New Hampshire (“the New Hampshire case”). ECF No. 92 at 8.

1

To clarify, this term covers statements, including interrogatory answers and deposition testimony in the New
Hampshire case. It does not include Defendant’s pro se filings, documents or physical items he produced or any of
his in-court statements in connection with self-representation in defending the New Hampshire case.

Plaintiffs have moved to compel as to both, except that in the motion as to Request No. 20, they
seek only witness statements of Defendant.2 Plaintiffs do not seek health care information, or
information protected by the attorney-client privilege or the work product doctrine; to the extent
that the requested material contains any, they agree that it may be redacted.
The Court finds that, as limited to delete or remove health care information, the requested
documents are squarely relevant and the burden to produce them is not substantial. While it is
likely that, given the differing focus of this case and the New Hampshire case, some of the
information in these documents may be less relevant to the issues here, in this case, Defendant’s
credibility and intent are at issue. Therefore, his statements and sworn testimony are also
relevant for impeachment purposes. Rubenstein v. Kleven, 21 F.R.D. 183, 184 (D. Mass. 1957)
(pretrial discovery may be used to explore sources for impeachment). Further, the Court finds
that during the session of Defendant’s deposition held on October 29, 2018, Plaintiffs’ attempt to
depose Defendant was obstructed by inappropriate colloquy, increasing the need to obtain
discovery of the requested testimony and statements. Accordingly, the Court orders that
Defendant must produce the requested documents (including all statements, the transcripts and
all exhibits marked at the deposition) on or before February 8, 2019, provided that he may redact
health care information and remove any exhibits that are health care documents; he may redact
any material covered by the attorney-client privilege or the work product doctrine; and he must
produce a log explaining any attorney-client privilege and work product redactions.
Request Nos. 33 and 34. On September 10, 2018, Plaintiffs propounded Request Nos. 33
and 34, as part of a set permitted by the Court’s Text Order of October 15, 2018. They seek all
discovery produced by Defendant in the New Hampshire case and all documents “deemed

2

Because the statements sought largely came into existence after Request No. 20 was propounded, the motion as to
Request No. 20 is actually to compel supplementation. Fed. R. Civ. P. 26(e)(1)(A)-(B).

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confidential” by Defendant in the New Hampshire case. ECF No. 92 at 10, 13. With no link to
relevancy other than that they are materials connected with the New Hampshire case, and in light
of the significant burden that would be imposed on Defendant because of the volume of such
material, the motion as to Requests Nos. 33 and 34 is denied.
2.

Plaintiffs’ Second Motion to Amend Fraud Affirmative Defense ¶ 88 – Granted

Throughout the travel of this case, Plaintiffs have articulated their theory that the sinking
of the insured vessel was caused by Defendant’s fraudulent conduct as part of a unified scheme
that began with Defendant’s alleged acquisition of a certain firearm in 2013. Since 2017, over
Defendant’s vigorous objection, the Court has permitted discovery focused on this theory of the
case. See In re Merck Mumps Vaccine Antitrust Litig., No. 12-03555 (CDJ), 2015 WL
12806504, at *1 n.2 (E.D. Pa. Nov. 30, 2015) (fraud-based claims entitle parties to broad scope
of relevance). Based on this theory of the case, in their initial answer to Defendant’s
counterclaim seeking payment on the insurance policy in issue, Plaintiffs asserted the affirmative
defense of fraud, pleading that the “counterclaim is barred by fraud because his boat’s sinking
was not an accident.” ECF No. 13 at 8 ¶ 88.
During the early months of the case’s travel, the parties sparred about the sufficiency of
this pleading of the affirmative defense of fraud. Despite being invited by the Court to do so,
Defendant did not move to strike it based on insufficiency. See ECF No. 31 at 6. Nevertheless,
in the face of these arguments, with Defendant’s assent, Plaintiffs amended ¶ 88 in December
2017, enhancing significantly the particularity of the pleading’s articulation of the circumstances
on which the affirmative defense was based, but also making clear that Plaintiffs allege
Defendant made other “omissions, concealments from, and misrepresentations to plaintiffs, as
will be shown following additional discovery.” ECF No. 36 at 9-10 ¶ 88 (emphasis added).

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Following the filing of this version of the fraud affirmative defense, Plaintiffs pursued the timeconsuming and frustrating process of trying to complete Defendant’s deposition. When it finally
closed on October 29, 2018, Plaintiffs waited for Defendant’s signed errata sheet and promptly
moved to amend ¶ 88 as soon as it was received. As proposed, the amended affirmative defense
now has detailed particularity based on information learned during discovery, including
allegations based on what Plaintiffs learned in Defendant’s deposition, especially during the final
session.3 At the hearing, Plaintiffs confirmed that they do not need any discovery based on the
proposed amendment.
In opposition to the motion to amend, Defendant argues that he is surprised and therefore
prejudiced by ¶ 88’s factually-based articulation of Plaintiffs’ familiar theory that Defendant
perpetuated a fraud scheme that included the purchase of the vessel, the procurement of the
insurance and the increase in the insurance, all alleged to be part of a scheme that began in 2013,
resulting in the sequence of intentional conduct that caused the vessel to sink. Defendant’s claim
of surprise or prejudice is not well founded. Throughout the travel of the case, Defendant has
striven mightily to block discovery regarding the 2013 events that Plaintiffs now plead were part
of the scheme to defraud them, while the Court has consistently ruled that such matters are
within the scope of relevant discovery.4 Further, when Defendant argued that he needed
discovery on what he alleged was an expanded scope of the case, despite his failure to file a
motion to reopen or extend fact discovery, the Court sua sponte reopened discovery, making
clear in the Order that it was based on Defendant’s argument that he needed more discovery to

3

The transcript of this session of the deposition was submitted by Plaintiffs under seal to support the motion to
amend. The transcript was reviewed by the Court, which finds that it provides a foundation for some of the new
material in the proposed version of ¶ 88.
4

Whether such facts will be admissible at trial is an entirely different question. Martinez v. Cornell Corrs. of Tex.,
229 F.R.D. 215, 218 (D.N.M. 2005) (“relevancy in the discovery context is broader than in the context of
admissibility . . .”).

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rebut Plaintiffs’ expansive theory of the scheme. Text Order of Oct. 23, 2018. Moreover, at the
hearing on the motion to amend, the Court offered Defendant the opportunity to propound one or
more contention interrogatories to inquire about the amended version of ¶ 88 but he declined.
When, as here, no amendment deadline was set by the scheduling order (ECF No. 18),
the district court must evaluate a contested motion to amend under Rule 15(a)’s “freely give[n]”
standard. Sheet Metal Workers Local No. 20 Welfare & Benefit Fund v. CVS Pharmacy, Inc.,
305 F. Supp. 3d 337, 342-43 (D.R.I. 2018). That is, pursuant to Rule 15(a), the Court must ask
whether a plaintiff unduly delayed in bringing the motion to amend, whether the amendment is
brought in bad faith or with a dilatory motive, or whether the amendment would be futile. Grant
v. News Grp. Bos., Inc., 55 F.3d 1, 5 (1st Cir. 1995). Here, Plaintiffs brought the motion
immediately upon concluding Defendant’s deposition so there is no delay at all. And with no
need for new discovery, there is not a whisper of a dilatory motive or prejudice arising from the
amendment. Additionally, Plaintiffs have been open with Defendant and with the Court
regarding their intent to amend this affirmative defense to make it more particularized once
additional discovery provided a foundation for doing so – this is not bad faith. Finally,
Defendant does not attack ¶ 88 as futile.
In accordance with the Fed. R. Civ. P. 15(a)(3) directive that “[t]he court should freely
give leave when justice so requires,” the motion to amend is granted.
3.

Conclusion

Plaintiffs’ Fifth Motion to Compel Discovery (ECF No. 92) is granted in part and denied
in part; Defendant must produce the documents subject to this Order (including all statements,
the transcripts and all exhibits marked at the deposition) on or before February 8, 2019.
Plaintiffs’ Second Motion to Amend Fraud Affirmative Defense ¶ 88 (ECF No. 110) is granted.

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/s/ Patricia A. Sullivan
PATRICIA A. SULLIVAN
United States Magistrate Judge
February 1, 2019

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