SPV-LS, LLC v. Transamerica Life Insurance Company

Filing 320

AMENDED ORDER granting in part and denying in part 196 MOTION to Compel. Page 5 was amended regarding attorneys Pamela Reiter and Ronald Parsons. They withdrew after one month was amended to 13 months. Signed by US Magistrate Judge Veronica L. Duffy on 7/14/16. (SLW)

FILED
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA

JUL 14 2016

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SOUTHERN DIVISION

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4: 14-CV-04092-LLP

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AMENDED
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF AND
THIRD-PARTY DEFENDANTS'
MOTION TO COMPEL

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SPV-LS, LLC,
Plaintiff,

vs.
TRANSAMERICA LIFE INSURANCE
COMPANY,

!
[

DOCKET NO. 196
Defendant and
Third-Party Plain tiff,
vs.
NACHMAN BERGMAN, as Trustee of The
N Bergman Insurance Trust dated
December 18, 2006; MALKA
SILBERMAN, as Successor Trustee of The
N Bergman Insurance Trust dated
December 18, 2006; LIFE TRADING
TRUST, dated August 8, 2007; T-LEG,
LLC, a/k/ a TLEG LLC; FINANCIAL LIFE
SERVICES, LLC; SPV II LLC; and THE
REPRESENTATIVE OF THE ESTATE OF
NANCY BERGMAN,
Third-Party
Defendants.

INTRODUCTION

This matter is before the court on the complaint of plaintiff SPV-LS, LLC
pursuant to the court's diversity jurisdiction, 28 U.S.C. § 1332. See Docket
No. 1. Plaintiff and third-party defendants Life Trading Trust, Financial Life

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Services LLC ("FLS"), and SPV II LLC, collectively the Krasnerman Entities,
have filed a joint motion seeking to compel certain discovery responses from
third-party defendant Malka Silberman, trustee of the N. Bergman Insurance
Trust Dated December 18, 2006. See Docket No. 196. The district court, the
Honorable Lawrence L. Piersol, referred the motion to this magistrate judge for
a decision pursuant to 28 U.S.C. § 636(b)(l)(A). See Docket No. 216.

FACTS
Plaintiff filed this complaint on June 13, 2014. See Docket No. 1.
Although third-party defendant Malka Silberman was properly served with the
summons and complaint, she did not timely answer and a default was entered
against her on September 22, 2014. See Docket No. 37. The Krasnerman
Entities then moved for entry of a default judgment. That prompted
Ms. Silberman to make her appearance herein and she successfully moved to
set aside the default and to defeat the motion for default judgment.
All parties having finally appeared, the district court then ordered all the
parties to hold a scheduling conference within 30 days from September 21,
2015. See Docket Nos. 95 & 96. Before the 30 days expired, Ms. Silberman's
counsel moved to withdraw and was allowed to do so. One month later, new
counsel filed a notice of appearance on behalf of Ms. Silberman. On or before
December 4, 2015, the parties held their planning meeting to discuss
scheduling and discovery issues. See Docket No. 152. At that meeting, the
parties agreed that all initial voluntary disclosures required by Federal Rule of
Civil Procedure 26(a)(l) would be exchanged by February 1, 2016. See id. at

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p. 2, if 2. The Krasnerman Entities, in their motion and the reply on their
motion, represent that Ms. Silberman has never made her initial disclosures as
required by Rule 26(a)(l).
On January 29, 2016, the Krasnerman Entities served Ms. Silberman
with their first sets of interrogatories and requests for the production of
documents. See Docket Nos. 198-1 and 198-2. On the same date, the
Krasnerman Entities issued a notice of deposition for Ms. Silberman,
designating March 2, 2016, at 9:30 a.m. as the date and time for taking
Ms. Silberman's deposition.
In their motion and reply brief, the Krasnerman Entitites represent that
Ms. Silberman has never provided them with signed, answered interrogatories.
They further represent that Ms. Silberman, while interposing only one objection
to one request for documents, nevertheless has failed to provide any
documents in response to their discovery request for documents. Unsigned
"drafts" of responses to these discovery requests were given to the Krasnerman
Entities on February 29, 2016.
Finally, after issuing Ms. Silberman's deposition notice, the Krasnerman
Entities sought to change the date and time for the deposition. They allege
that Ms. Silberman's attorneys have failed and refused to give the Krasnerman
Entities a new date and time on which she will agree to have her deposition
taken. Also, in anticipation of taking the depositions of certain New York
attorneys who allegedly represented the trust, the Krasnerman Entities sent
Ms. Silberman's attorney release forms for Mark Frankel, M. David Graubard,
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Michael Kanzer, and Mark Nussbaum. Each of these releases, if they had been
signed, would have authorized the named person (all attorneys) to release to
the Krasnerman Entities' New York law firm "copies of any and all records
relating to the N Bergman Insurance Trust dated December 18, 2006, or the
Former Trustee for the N Bergman Insurance Trust, Mr. Nachman Bergman."
See Docket No. 198-4.
A thumbnail sketch of the facts of this action, recited only to provide
context for discussion of the discovery disputes, is as follows. Nancy Bergman,

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a school teacher of modest means, obtained a $10 million life insurance policy
on herself from defendant Transamerica Life Insurance Company and placed
that policy into the N. Bergman Insurance Trust dated December 18, 2006.1
Nancy's grandson, third party defendant Nachman Bergman, was the
beneficiary and trustee of the trust. Allegedly, Malka Silberman took over as
trustee of the trust in 2008, though that is a disputed fact. Transamerica
claims it was never notified of the change in the identity of the trustee until
after Nancy's death in 2014.
In 2009, Nachman sold the insurance policy from the trust to FLS. After
the sale, FLS discovered that the premiums on Nancy's life insurance policy
had not been paid. It also discovered that Nachman's representations that
Nancy was on death's doorstep were inaccurate. Nachman, for his part, denies
that he ever entered into these transactions with FLS, suggesting an imposter
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Nancy also apparently obtained a $5 million insurance policy on her life from
another insurer, Sun Life, and also placed that policy into a trust. That policy
is not part of this District of South Dakota litigation.
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posing as Nachman dealt with FLS. He claims someone forged his signature to
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the pertinent documents.

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FLS brought suit against the trust in federal district court for the
Eastern District of New York. Default was entered against the trust because it
never answered. Thereafter, an auction of Nancy's life insurance policy was

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held in 2012. FLS bought the policy at the auction for $1.19 million. FLS then
transferred the policy to the plaintiff herein, SPV-LS, LLC.
On April 6, 2014, Nancy died. Thereafter, both SPV-LS, LLC and Malka
Silberman on behalf of the trust, submitted claims to Transamerica for the
policy proceeds. SPV-LS, LLC brought this suit against Transamerica in this
court, alleging a claim of breach of contract. Transamerica interpleaded the
policy proceeds and sued Nachman, Ms. Silberman, Nancy's estate, and other
third-party defendants, alleging that Transamerica was unable to determine
which of the claimants was legitimately entitled to the proceeds of the policy.
A series of lawyers in New York have allegedly represented the trust,
though Ms. Silberman now claims she never hired these New York lawyers. In
this litigation, a succession of lawyers have made appearances on behalf of
Ms. Silberman. First attorneys Pamela Reiter and Ronald Parsons appeared.
They withdrew after 13 months. Then after a month's lapse, Matthew Dorothy
appeared. Mr. Dorothy withdrew less than five months later. Andrew Citron of
New York purported to represent Ms. Silberman and communicated with
counsel for other parties in that capacity (see Docket No. 198), but Mr. Citron
never formally entered a notice of appearance in this case. On April 8, 2016,
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Aaron Twersky of New York City and James Moore, as local counsel, noticed
their appearance on behalf of Ms. Silberman. This was two months after the
parties had agreed to exchange initial Rule 26 disclosures and one month after
the Krasnerman Entities filed the motion to compel currently under
consideration.
DISCUSSION

A.

Meet and Confer
Before a party may make a motion to compel another party to make

discovery or disclosure, the movant must certify that they have in good faith

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conferred or attempted to confer with the opposing party from whom the
discovery or disclosure is sought in an attempt to resolve the disagreement
without court intervention. See

FED.

R. Crv. P. 37(a)(l); DSD LR 37.1. Lawyers

for the Krasnerman Entities assert that they have attempted to meet and
confer with Ms. Silberman's lawyers in an effort to resolve the outstanding
discovery requests, however, they have been thwarted in their attempt to do so
by the frequently changing cast of persons purporting to represent
Ms. Silberman.
When Mr. Dorothy was contacted, he stated the attorney handling
discovery matters was Mr. Citron. When Mr. Citron was contacted, he
indicated Mr. Dorothy was handling the discovery responses. Then
Mr. Twersky entered the picture and purported to be representing
Ms. Silberman in early March, 2016, but he did not file a notice of appearance

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until April 8, 2016. Mr. Citron disavowed any knowledge of Mr. Twersky and
purported to continue to be Ms. Silberman's attorney.
The documentation provided by the Krasnerman Entities establishes that
they did endeavor, for several weeks, to attempt to talk to the right lawyer to
resolve these discovery matters. That they did not succeed is not their fault.
Current counsel for Ms. Silberman, Mr. Twersky, admits that the Krasnerman
Entities' lawyers satisfied their requirement to meet and confer as to
Ms. Silberman's former counsel, Mr. Dorothy and Mr. Citron. Having met the
requirement as to former counsel, however, Mr. Twersky apparently would
have the court hold that the Krasnerman Entities must meet the requirement
again with Mr. Twersky. However, at the time Mr. Twersky insists the
Krasnerman Entities should have worked with him on discovery matters-early
March, 2016-Mr. Twersky had yet to file a notice of appearance in this case.
He only did so on April 8, 2016. In the interim, Mr. Citron denied that
Mr. Twersky was representing Ms. Silberman. The court concludes that the
facts herein, unusual in the court's experience, satisfy the meet-and-confer
requirement. A party may not evade compliance with discovery rules by the
simple expedient of hiring a new lawyer. It is, after all, the party's requirement
to produce discovery, not the lawyer's.
B.

Initial Disclosures

Rule 26 provides in pertinent part as follows regarding initial disclosures:
(A) In General. Except as exempted by Rule 26(a)(l)(B) or as
otherwise stipulated or ordered by the court, a party must, without
awaiting a discovery request, provide to the other parties:
(i)
the name and, if known, the address and telephone
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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 defense, unless the use would be
solely for impeachment;
(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.

(iii)

a computation of each category of damages claimed by
the disclosing party-who must also make available for
inspection and copying as under Rule 34 the
documents or other evidentiary material, unless
privileged or protected from disclosure, on which each
computation is based, including materials bearing on
the nature and extent of injuries suffered; and

(iv)

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for inspection and copying as under Rule 34, any
insurance agreement under which an insurance
business may be liable to satisfy all or part of a
possible judgment in the action or to indemnify or
reimburse for payments made to satisfy the judgment.

See FED. R. Crv. P. 26(a)(l)(A). Part (a)(l)(B) of Rule 26 contains a list of nine
types of actions which are exempt from the requirement of making voluntary
initial disclosures. See FED. R. Crv. P. 26(a)(l)(B). This case does not fit within
any of those exceptions. See id. See also Docket No. 95 (Judge Piersol's
September 21, 2015, letter to all parties advising them that this case is not
exempt from Rule 26(a) requirements).
In responding to the Krasnerman Entities' motion to compel,
Ms. Silberman does not claim privilege or other protection from these required
disclosures. She does not claim any exception to the requirement.
Furthermore, before this motion to compel was filed, she assured counsel for
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the Krasnerman Entities that she could have discovery to him no later than
March 31, 2016. Ms. Silberman's response in opposition to the motion to
compel was filed March 29, 2016. At this time, she still had not provided the
disputed discovery. The Krasnerman Entities' reply on the motion filed March
30, 2016, is silent as to whether they received Ms. Silberman's initial
disclosures. See Docket No. 210.

A later pleading filed April 20, 2016,

indicates Ms. Silberman still had not provided any of the disputed discovery.
See Docket No. 230 at p. 2, if 3.
The initial disclosures are not optional. They must be made.
Furthermore, a motion to compel is the appropriate remedy in the event a party
fails or refuses to make these disclosures. See FED. R. Crv. P. 37(a)(3)(A). The
court grants the Krasnerman Entities' motion in this regard. Ms. Silberman is
directed to serve all parties with her initial disclosures no later than
July 22, 2016, if she has not already done so.

C.

Requests for the Production of Documents
Once served, it is incumbent on the party receiving a written request for

the production of documents to serve the requesting party with (1) a written
response to the request and (2) any responsive documents, both within 30
days. See FED. R. Crv. P. 34(b)(2)(A). As of March 8, 2016, when the
Krasnerman Entities filed the instant motion, Ms. Silberman's responses to the
requests for production were overdue by approximately 10 days.
Ms. Silberman's response to the motion alleges that she is going to produce the
discovery responses and asks the court to deny the motion to compel as moot.
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The Krasnerman Entities' reply to their own motion is silent as to whether they
received the promised discovery.

A later pleading filed April 20, 2016,

indicates Ms. Silberman still had not provided any of the disputed discovery.
See Docket No. 230 at p. 2,

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Responses to discovery requests, even if a party objects, are not optional.
A written response must still be made, detailing objections, if any. See FED. R.
C1v. P. 34. Furthermore, a motion to compel is the appropriate remedy in the

event a party fails or refuses to respond, or makes evasive responses. See FED.
R.

CIV.

P. 37. The court grants the Krasnerman Entitites' motion in this regard.

Ms. Silberman is directed to serve the Krasnerman Entities with her responses
to their first set of requests for the production of documents, along with any
responsive documents, no later than July 22, 2016, if she has not already
done so.

D.

Interrogatories
Once served, it is incumbent on the party receiving interrogatories to

serve the requesting party with a written response to the interrogatories signed
by the party under oath within 30 days. See FED. R.

CIV.

P. 33(b). As of March

8, 2016, when the Krasnerman Entities filed the instant motion,
Ms. Silberman's responses to their interrogatories were overdue by
approximately 10 days. Ms. Silberman's response to the motion alleges that
she is going to produce the discovery responses and asks the court to deny the
motion to compel as moot. The Krasnerman Entities' reply to their own motion
is silent as to whether they received the promised discovery.
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filed April 20, 2016, indicates Ms. Silberman still had not provided any of the
disputed discovery. See Docket No. 230 at p. 2, if 3.
Responses to discovery requests, even if a party objects, are not optional.
A written response must still be made, detailing any objections. See FED. R.
C1v. P. 33. Furthermore, a motion to compel is the appropriate remedy in the

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event a party fails or refuses to respond, or makes evasive responses. See FED.
R. C1v. P. 37. The court grants the Krasnerman Entitites' motion in this regard.

Ms. Silberman is directed to serve the Krasnerman Entities with her responses
to their first set of interrogatories, under oath, no later than July 22, 2016, if
she has not already done so.
E.

Ms. Silberman's Deposition

Although the Krasnerman Entities noticed Ms. Silberman's deposition for
March 2, 2016, she did not disregard that notice. Rather, the Krasnerman
Entities effectively withdrew the March 2 notice and requested counsel for
Ms. Silberman to confer with them to come up with a mutually-agreeable date.
In essence, then, the Krasnerman Entities assert that the Rules of Civil
Procedure entitle them to a motion to compel Ms. Silberman to suggest a date
of her own for her deposition. While conferring with counsel as to deposition
dates is the civilized route-and the court strongly encourages the parties to
avail themselves of this method-there is nothing in the rules to compel such
conduct.
Rule 30 of the Federal Rules of Civil Procedure governs the taking of
depositions of parties. Rule 30 does not require the party who is being deposed
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to suggest the date, time, location or any other details of her own deposition.
Instead, the onus is on the party who wishes to take the deposition. The party
seeking the discovery must simply issue a notice of deposition to the party they
wish to depose with reasonable advance notice. See

FED.

R. Crv. P. 30(b)(l).

The notice must set forth the day, time, and location of the deposition as well
as the method by which the deposition will be recorded. See

FED.

R. Crv. P.

30(b). Even if the person to be deposed is a party, their attendance can be
compelled by serving them with a subpoena under Rule 45.

See

FED.

R. Crv.

P. 30(a)(l).
There is nothing to compel before this court. A deposition notice for
Ms. Silberman was served and then withdrawn. It remains for the Krasnerman
Entities to issue another notice of deposition, giving Ms. Silberman reasonable
advance notice of the same. They may confer with Ms. Silberman's counsel in
setting the details of the deposition or not, as they wish. The Krasnerman
Entities have not yet issued a second notice to take the place of the one they
withdrew. This portion of the Krasnerman Entities' motion to compel is denied.

F.

Privilege Waivers
The final issue raised in the Krasnerman Entities' motion to compel

concerns four waivers they sent to Ms. Silberman and asked her to execute.
The waivers would, as discussed above, allow the addressee attorneys to
release documents in their possession to the Krasnerman Entities' lawyers.
The Krasnerman Entities allege that the four named persons in the waivers

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were lawyers who previously represented the N. Bergman Insurance Trust

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dated December 18, 2006.
Ms. Silberman denies that any of the lawyers ever represented the trust,
but she leaves open the possibility that she may have consulted them briefly,
with the expectation that any disclosures she made would be held in
confidence pursuant to the attorney-client privilege. Ms. Silberman therefore
objects to signing the waivers as she believes she should not be compelled to
waive any attorney-client privilege there may be. Ms. Silberman also objects to
signing the waivers on the grounds that they do not represent proper discovery
requests. The documents the Krasnerman Entities seek, she notes, are in the
possession of the attorneys whose names are listed on the waivers.
Ms. Silberman suggests that the proper method of obtaining the documents is
for the Krasnerman Entitites to serve the attorneys in question with subpoenas

duces tecum pursuant to Rule 45.
The court partially agrees. A Rule 45 subpoena served on each attorney
is one acceptable method for the Krasnerman Entities to attempt to obtain the
desired documents. They have pursued this method with regard to other
attorneys in New York. They can pursue this method with regard to these four
attorneys too.
Alternatively, they could serve Ms. Silberman herself with requests for
the documents. Rule 34 of the Federal Rules of Civil Procedure governs
requests for the production of documents and provides that a party may ask
another party to permit copying of documents "in the responding party's
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possession, custody, or control." See FED. R. Crv. P. 34(a)(l). The concept of
documents in a party's "possession" or "custody" is clear enough, but the
concept of documents in a party's "control" is not obvious upon a reading of the
rule.
The rule that has developed is that if a party "has the legal right to obtain
the document," then the document is within that party's "control" and, thus,
subject to production under Rule 34. See BA Charles A. Wright, Arthur R.
Miller, & Richard L. Marcus, Fed. Practice & Procedure, §2210, at 397 (2d ed.
1994). "Because a client has the right, and the ready ability, to obtain copies of
documents gathered or created by its attorneys pursuant to their
representation of that client, such documents are clearly within the client's
control." American Soc. for the Prevention of Cruelty to Animals v. Ringling
Bros. & Barnum & Bailey Circus, 233 F.R.D. 209, 212 (D.D.C. 2006) (citing
Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494, 501 (D. Md. 2000); and
Poppino v. Jones Store Co., 1 F.R.D. 215, 219 (W.D. Mo. 1940)).
Merely because documents gathered by an attorney are subject to the
client's control does not, however, automatically mean they are discoverable.
The work product doctrine and the attorney-client privilege still apply and may
be asserted in opposition to discovery, along with the appropriate privilege log.
Ringling Bros., 233 F.R.D. at 211-213.
Currently, the Krasnerman Entities point to no specific request for the
production of documents which has been served on Ms. Silberman seeking the
documents in possession of the four attorneys. Nor do they assert they have
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served the attorneys with subpoenas. Until such steps are taken, any
discussion over whether the documents must be produced is not yet ripe. The
court denies this portion of the Krasnerman Entities' motion to compel.
CONCLUSION

Based on the foregoing facts, law and analysis, it is hereby
ORDERED that the motion to compel [Docket No. 196] filed by plaintiff
SPV-LS, LLC and third-party defendants Life Trading Trust, Financial Life
Services LLC ("FLS"), and SPV II LLC, is GRANTED IN PART and DENIED IN
PART as follows:
1.

the motion to compel third-party defendant Malka Silberman to

disclose initial discovery required by Rule 26(a) is granted in its entirety.
Ms. Silberman is ordered to serve movants with such discovery no later than
July 22, 2016.
2.

the motion to compel third-party defendant Malka Silberman to

serve movants with written responses to movants' first set of requests for the
production of documents as well as any responsive documents pursuant to
Rule 34 is granted in its entirety. Ms. Silberman is ordered to serve movants
with such discovery no later than July 22, 2016.
3.

the motion to compel third-party defendant Malka Silberman to

serve movants with written responses to movants' first set of interrogatories
signed by her under oath as required by Rule 33 is granted in its entirety.
Ms. Silberman is ordered to serve movants with such discovery no later than
July 22, 2016.

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4.

the motion to compel third-party defendant Malka Silberman to

suggest a date, time and location for her own deposition is denied.
5.

the motion to compel third-party defendant Malka Silberman to

sign waivers relative to documents held by attorneys who previously
represented the trust is denied.
NOTICE OF RIGHT TO APPEAL

Pursuant to 28 U.S.C. § 636(b)(l)(A), any party may seek reconsideration
of this order before the district court upon a showing that the order is clearly
erroneous or contrary to law. The parties have fourteen (14) days after service
of this order to file written objections pursuant to 28 U.S.C. § 636(b)(l)(A),
unless an extension of time for good cause is obtained. See FED. R. C1v. P.
72(a); 28 U.S.C. § 636(b)(l)(A).

Failure to file timely objections will result in

the waiver of the right to appeal questions of fact. Id. Objections must be
timely and specific in order to require review by the district court. Thompson
v. Nix, 897 F.2d 356 (8th Cir. 1990); Nash v. Black, 781 F.2d 665 (8th Cir.
1986).
DATED this 14th day of July, 2016.

BY THE COURT:

v~:?. %-VERONICA L. DUFFY
United States Magistrate Judge

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