United States of America, for the use and benefit of Ash Equipment Co., Inc. et al v. Morris, Inc. et al
Filing
104
ORDER granting in part and denying in part 81 Motion to Compel. Signed by US Magistrate Judge Veronica L. Duffy on 7/28/2016. (CG)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
UNITED STATES OF AMERICA, FOR
THE USE AND BENEFIT OF ASH
EQUIPMENT CO., INC. D/B/A
AMERICAN HYDRO; AND ASH
EQUIPMENT CO., INC., A MARYLAND
CORPORATION;
4:14-CV-04131-LLP
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
MOTION TO COMPEL MORRIS, INC.
Plaintiffs,
DOCKET NO. 81
vs.
MORRIS, INC., A SOUTH DAKOTA
CORPORATION; UNITED FIRE AND
CASUALTY COMPANY, AN IOWA
CORPORATION; AND RED WILK
CONSTRUCTION, INC., A SOUTH
DAKOTA CORPORATION;
Defendants.
INTRODUCTION
This is a Miller Act action (40 U.S.C. § 3133(b)(3)(B)), brought by the
United States of America for the use and benefit of Ash Equipment Company,
Inc., doing business as American Hydro (“Hydro”). Defendants are Morris, Inc.
(“Morris), United Fire and Casualty Company (“UF&CC), and Red Wilk
Construction, Inc. (Red Wilk). Pending before the court is a motion filed by
Hydro to compel Morris to provide certain discovery. See Docket No. 81. The
presiding district judge, the Honorable Lawrence L. Piersol, referred this motion
to this magistrate judge for a decision. See Docket No. 87.
FACTS
Defendant Morris contracted with the United States Army Corps of
Engineers (“the Corps”) to do work on the Fort Randall Dam spillway at
Pickstown, South Dakota. Morris obtained a Miller Act payment bond on the
project from defendant UF&CC in the amount of $7,472,670.25. The payment
bond obligated Morris and UF&CC jointly and severally to guarantee payment
to any subcontractor of Morris’ who furnished labor and materials on the
project as well as to persons who had a direct contractual relationship with
Morris on the project.
Part of the project required concrete removal using hydrodemolition
methods as required by the Corps in its project plans and specifications.
Morris subcontracted this work to Red Wilk, who in turn subcontracted with
Hydro. Red Wilk promised to pay Hydro for Hydro’s work on the project within
10 working days after Morris paid Red Wilk on monthly progress payments.
Hydro brought suit after Red Wilk allegedly failed to pay for certain claims
made by Hydro for completed work on the project. Hydro gave notice to Morris
that it had not been paid. Hydro’s first notice to Morris claims amounts
unpaid of $520,135.00; its supplemental notice claimed unpaid amounts of
$1,168,018.49. In its complaint, Hydro asserts a breach of contract claim
against Red Wilk, an equitable claim in quantum meruit against Morris, and
claim against the UF&CC bond.
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Morris responded to this lawsuit by filing a crossclaim for indemnity
against Red Wilk, asserting that Red Wilk must indemnify Morris for any
monies Morris must pay to Hydro. Red Wilk asserted a compulsory
counterclaim against Hydro, asserting that the prime contract was part and
parcel of the contract between Red Wilk and Hydro. Red Wilk further asserted
that Hydro did defective and/or incomplete work pursuant to its contract with
Red Wilk.
Hydro served Morris with a number of discovery requests about which
disputes arose. See Docket No. 82. The instant motion was filed, which Morris
resists in part. See Docket No. 88.
DISCUSSION
A.
Meet and Confer Requirement
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
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. CIV. P. 37(a)(1). Hydro alleges that it
has complied with this requirement. After reviewing the communications
between counsel that are of record, the court concludes that Hydro met its
obligation. Therefore, the court considers the motion on its merits.
B.
Standards Applicable to Discovery
Federal Rule of Civil Procedure 26(b)(1) sets forth the scope of discovery
in civil cases pending in federal court:
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Unless otherwise limited by court order, the scope of discovery is
as follows: Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party=s claim or
defense and proportional to the needs of the case, considering the
importance of the issues at stake in the action, the amount in
controversy, the parties’ relative access to relevant information, the
parties’ resources, the importance of the discovery in resolving the
issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit. Information within the scope
of discovery need not be admissible in evidence to be discoverable.
See FED. R. CIV. P. 26(b)(1). Rule 26 contains specific limitations relative to
electronic discovery and other objections to providing discovery:
(B)
Specific Limitations on Electronically Stored Information. A
party need not provide discovery of electronically stored
information from sources that the party identifies as not
reasonably accessible because of undue burden or cost. On
motion to compel discovery or for a protective order, the
party from whom discovery is sought must show that the
information is not reasonably accessible because of undue
burden or cost. If that showing is made, the court may
nonetheless order discovery from such sources if the
requesting party shows good cause, considering the
limitations of Rule 26(b)(2)(C). The court may specify the
conditions for the discovery.
(C)
When Required. On motion or on its own, the court must
limit the frequency or extent of discovery otherwise allowed
by these rules or by local rule if it determines that:
(i)
the discovery sought is unreasonably cumulative or
duplicative, or can be obtained from some other source
that is more convenient, less burdensome, or less
expensive;
(ii)
the party seeking discovery has had ample opportunity
to obtain the information by discovery in the action; or
(iii)
the proposed discovery is outside the scope permitted by
Rule 26(b)(1).
See FED. R. CIV. P. 26(b)(2)(B) and (C).
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A party claiming a privilege as to requested discovery has the burden of
proving the basis for the application of the privilege:
When a party withholds information otherwise discoverable by
claiming that the information is privileged or subject to protection
as trial-preparation material, the party must:
(i)
expressly make the claim; and
(ii)
describe the nature of the documents,
communications, or tangible things not produced or
disclosedBand do so in a manner that, without
revealing information itself privileged or protected, will
enable other parties to assess the claim.
See FED. R. CIV. P. 26(b)(5)(A).
If a party fails to respond to a proper request for discovery, or if an
evasive or incomplete response is made, the party requesting the discovery is
entitled to move for a motion compelling disclosure after having made a good
faith effort to resolve the dispute by conferring first with the other party. See
FED. R. CIV. P. 37(a).
The scope of discovery under Rule 26(b) is extremely broad. See 8 Charles
A. Wright & Arthur R. Miller, Federal Practice & Procedure ' 2007, 36-37
(1970) (hereinafter "Wright & Miller"). The reason for the broad scope of
discovery is that "[m]utual knowledge of all the relevant facts gathered by both
parties is essential to proper litigation. To that end, either party may compel
the other to disgorge whatever facts he has in his possession." 8 Wright &
Miller, ' 2007, 39 (quoting Hickman v. Taylor, 329 U.S. 495, 507-08, 67 S. Ct.
385, 392, 91 L. Ed. 2d 451 (1947)). The Federal Rules distinguish between
discoverability and admissibility of evidence. FED. R. CIV. P. 26(b)(1), 32, and
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33(a)(2) & (c). Therefore, the rules of evidence assume the task of keeping out
incompetent, unreliable, or prejudicial evidence at trial. These considerations
are not inherent barriers to discovery, however.
ARelevancy is to be broadly construed for discovery issues and is not
limited to the precise issues set out in the pleadings. Relevancy ...
encompass[es] >any matter that could bear on, or that reasonably could lead to
other matter that could bear on, any issue that is or may be in the case.= @
E.E.O.C. v. Woodmen of the World Life Ins. Society, 2007 WL 1217919 at *1
(D. Neb. March 15, 2007) (quoting Oppenheimer Fund, Inc. v. Sanders, 437
U.S. 340, 351 (1978)). The party seeking discovery must make a Athreshold
showing of relevance before production of information, which does not
reasonably bear on the issues in the case, is required.@ Id. (citing Hofer v.
Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1993)). AMere speculation that
information might be useful will not suffice; litigants seeking to compel
discovery must describe with a reasonable degree of specificity, the information
they hope to obtain and its importance to their case.@ Id. (citing Cervantes v.
Time, Inc., 464 F.2d 986, 994 (8th Cir. 1972)).
Discoverable information itself need not be admissible at trial; rather, the
defining question is whether it is within the scope of discovery. See FED. R. CIV.
P. 26(b)(1). Additionally, the court may limit the frequency and extent of
discovery. See FED. R. CIV. P. 26(b)(2); see also Roberts v. Shawnee Mission
Ford, Inc., 352 F.3d 358, 361 (8th Cir. 2003) (AThe rule vests the district court
with discretion to limit discovery if it determines, inter alia, the burden or
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expense of the proposed discovery outweighs its likely benefit.@); Continental
Illinois Nat=l Bank & Trust Co. of Chicago v. Caton, 136 F.R.D. 682, 684-85 (D.
Kan. 1991) (AAll discovery requests are a burden on the party who must
respond thereto. Unless the task of producing or answering is unusual, undue
or extraordinary, the general rule requires the entity answering or producing
the documents to bear that burden.@).
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 Ain the responding party=s possession, custody, or
control.@ See FED. R. CIV. P. 34(a)(1). The concept of documents in a party=s
Apossession@ or Acustody@ is clear enough, but the concept of documents in a
party=s Acontrol@ is not obvious upon a reading of the rule.
The rule that has developed is that if a party Ahas the legal right to obtain
the document,@ then the document is within that party=s Acontrol@ and, thus,
subject to production under Rule 34. See 8A Charles A. Wright, Arthur R.
Miller, & Richard L. Marcus, Fed. Practice & Procedure, '2210, at 397 (2d ed.
1994). ABecause 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)).
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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.
C.
Hydro’s Discovery Requests
1.
Jake Russell Photos and Corps Submittals
After filing the instant motion to compel, Morris provided documents
responsive to Hydro’s requests for the Jake Russell photos and for the
submittals made by Morris to the Corps. Therefore, these two issues are moot.
In its reply, Hydro asks the court to allow further discovery to follow up
on the discovery received. This issue is moot as well because the district court
recently extended the discovery deadline to September 15, 2016, thus allowing
Hydro and the other parties to conduct what remaining discovery is left. The
issue of sanctions, if any, is left for another date. The court notes, however,
that Hydro itself was the object of a recent successful motion to compel by
Morris. See Docket No. 77. This appears to be a case where both parties may
be required to bear their own attorney’s fees and costs for the discovery
disputes that have arisen.
2.
Concrete Testing
Hydro served Morris with request for production numbers 8 and 44, both
of which seek documents relative to concrete testing. See Docket No. 84-1 at
8
p. 7; Docket No. 84-2 at p. 2. Morris objects to producing these documents on
the grounds that they are not relevant.
Here, it is necessary to discuss a few more facts of the underlying
construction project. The Corps’ project required first the hydrodemolition of
the existing spillway at the Fort Randall Dam, and then the construction of a
new spillway. Hydro was hired in connection with the demolition of the old
spillway. Hydro had nothing to do with that part of the contract regarding the
construction of the new spillway. However, Morris as the general contractor
was involved in both parts of the project.
Morris has not asserted a counterclaim directly against Hydro, only
against Red Wilk for indemnity. Red Wilk has asserted a counterclaim against
Hydro, but in that counterclaim, it never alleges that Hydro caused the
concrete in the new spillway to fail or be defective. Seemingly, then,
documents regarding testing of the concrete on the new spillway are irrelevant
to the claims, cross-claims and counterclaims asserted by Morris, Red Wilk
and Hydro. That is certainly Morris’ position.
Hydro asserts, however, that concrete testing is relevant. Hydro states
that at the Rule 30(b)(6) deposition of Red Wilk, Red Wilk’s designee testified
that a dispute has arisen between Red Wilk and Morris over the concrete
testing done on the new spillway (presumably constructed by Red Wilk). Hydro
points out that Red Wilk has asserted a broad counterclaim against Hydro for
damages Red Wilk has suffered due to delays on the project. Hydro posits that
if concrete testing is responsible in whole or in part for the delays experienced
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on the contract, this would be relevant to Red Wilk’s counterclaim against
Hydro. In essence, Hydro disputes the causation for delays on the project,
seeking evidence that something other than Hydro (i.e. concrete testing) has
caused or contributed to the delay, which would defeat or reduce Red Wilk’s
counterclaim damages against Hydro.
This is a somewhat attenuated argument. However, the court is
cognizant that it is not familiar with all the details and facts of this
construction project like the parties themselves are. Furthermore, the court
notes that a parallel discovery dispute was recently filed by Hydro against Red
Wilk with one of the contested items being requests by Hydro for concrete
testing documents. Red Wilk never asserted that the documents in question
were not relevant.
Morris has not asserted that the number of documents or the expense of
marshalling them or providing them poses an undue burden. This is
significant because discovery is proportional and the less relevant discovery is
to the heart of the case, the more the expense or work needed to produce the
discovery weighs in the balance. Given the broad scope of discovery under the
federal rules, the showing of relevancy Hydro has made, and the absence of a
claim of undue burden, the court will grant the discovery.
CONCLUSION AND ORDER
Good cause appearing, it is hereby
ORDERED that plaintiff’s motion to compel against defendant Morris
Construction, Inc. [Docket No. 81] is denied in part and granted in part as
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indicated above. Morris must deliver the concrete testing documents to
plaintiff no later than 15 days from the date of this opinion.
NOTICE OF RIGHT TO APPEAL
Pursuant to 28 U.S.C. ' 636(b)(1)(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)(1)(A),
unless an extension of time for good cause is obtained. See FED. R. CIV. P.
72(a); 28 U.S.C. ' 636(b)(1)(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 July 28, 2016.
BY THE COURT:
VERONICA L. DUFFY
United States Magistrate Judge
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