Larson Manufacturing et al v. Western Showcase Homes et al
Filing
152
ORDER denying defendants' 139 Motion for issuance of letters rogatory. Signed by US Magistrate Judge Veronica L. Duffy on 01/04/19. (Duffy, Veronica)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
LARSON MANUFACTURING COMPANY
OF SOUTH DAKOTA, INC., SUPERIOR
HOMES, LLC,
Plaintiffs,
4:16-CV-04118-VLD
ORDER DENYING DEFENDANTS’
MOTION FOR LETTERS ROGATORY
[DOCKET NO. 139]
vs.
WESTERN SHOWCASE HOMES, INC.,
AMERICAN MODULAR HOUSING
GROUP, LLC, AMERICAN MODULAR
HOUSING GROUP, INC., PAUL
THOMAS,
Defendants.
INTRODUCTION
This matter is pending before the court pursuant to defendants’ removal
of the action from South Dakota state court. Jurisdiction is premised on
diversity of citizenship of the adverse parties and an amount in controversy in
excess of $75,000. See 28 U.S.C. § 1332. The parties have consented to this
court’s handling of their case pursuant to 28 U.S.C. § 636(c). Now pending is a
motion by defendants for letters rogatory to parties in Canada. See Docket
No. 139. Plaintiffs oppose the motion in part. See Docket No. 143.
FACTS
This case arises out of contracts between plaintiffs and defendants for
the production and sale of modular housing units by plaintiffs to defendants
and related financing agreements. A more complete recitation of the facts is
contained in this court’s order denying the parties’ cross-motions for partial
summary judgment. See Docket No. 142. The facts from that earlier opinion
are incorporated herein by reference.
Plaintiffs’ original complaint contained 21 counts involving nine
separately-named projects. See Docket No. 1-1. Midway through this
litigation, the parties settled the claims relating to five of those projects so that
the remaining claims concern only four projects, plus some free-standing
claims of debt, guarantee, fraud and deceit, conversion, and piercing the
corporate veil. The housing projects still being litigated herein are the [Doug]
Simon Unit, Units C5452HTC 1 & 2, Unit 5383, and the Aspen project. See
Docket No. 58. The claims related to the following projects have been settled:
the Carlyle Units (Waugh Who), the Heidt Unit, Unit 5334, the Colt Unit, and
the Stephenson Unit. Defendants have asserted various counterclaims against
plaintiffs. See Docket No. 57.
In addition to the present litigation pending before this court, there are at
least four lawsuits pending in Canada. Two of those cases, like this one, were
2
begun in 2016 and two were initiated in 2017.1 The parties and claims being
litigated in Canada are as follows.
In Larson Manufacturing Co. v. Aspen Village Properties Ltd., QBG 162044, plaintiff herein Larson Manufacturing Company of South Dakota, Inc. is
suing Aspen Village Properties Ltd., the Canada Revenue Agency, and various
contractors or subcontractors seeking to foreclose its mortgage interest in the
Aspen project.
In Jahnke v. Thomas, QBG 16-2125, Gregory Jahnke, the principal in
the Aspen properties, is suing defendant herein Paul Thomas, and Craig
Johnson, Dale Larson, and Jeffrey Ries, the latter three of which are principals
in plaintiffs herein. The subject of that lawsuit involves the credit agreement
and mortgages involved in the Aspen project.
In Western v. Aspen Village Properties, Ltd., QBG 17-2616, plaintiff
herein Western Showcase Homes, Inc. is suing Aspen Village Properties, Ltd.;
Aspen Village Developments, Ltd.; Aspen Creek Developments Ltd.; and
Gregory Jahnke, the principal behind the Aspen entities. The subject matter of
that suit is apparently enforcement of the sales agreement related to the Aspen
project.
In Mauri-Gwyn v. Larson Manufacturing Co., QBG 17-2404, plaintiff
Mauri Qwyn (of which Gregory Jahnke is the principal) is suing plaintiff herein
Larson Manufacturing Co. of South Dakota, Inc. and defendant herein
The court is not aware whether the 2016 cases in Canada were begun before
or after this one.
1
3
American Modular Housing Group, Inc. seeking an accounting upon the sale of
condominiums by Larson and AMHG.
DISCUSSION
A.
Motion for Letters Rogatory
The defendants now seek to obtain letters rogatory to allow certain
discovery in Canada as follows:
1.
to Al Stevers to produce documents concerning consulting
services or work he performed on the Aspen project. See Docket
No. 139-1.
2.
to Aspen Creek Developments, Ltd. to produce documents
concerning Aspen Creek Developments’ dealings with Superior
Homes, LLC; Larson Manufacturing of South Dakota, Inc.; Western
Showcase Homes, Inc.; AmeriCan Modular Housing Group, Inc.;
AmeriCan Modular Housing Group, LLC; and Paul Thomas relating
to the Aspen project. See Docket No. 139-2.
3.
to Aspen Village Developments, Ltd. to produce documents
concerning its dealings concerning Aspen Village Developments,
Ltd.; Superior Homes, LLC; Larson Manufacturing of South
Dakota, Inc.; Western Showcase Homes, Inc.; AmeriCan Modular
Housing Group, Inc.; AmeriCan Modular Housing Group, LLC; and
Paul Thomas relating to the Aspen project. See Docket No. 139-3.
4.
to Aspen Village Properties, Ltd. to produce documents
concerning its dealings concerning Aspen Village Properties, Ltd.;
Superior Homes, LLC; Larson Manufacturing of South Dakota,
Inc.; Western Showcase Homes, Inc.; AmeriCan Modular Housing
Group, Inc.; AmeriCan Modular Housing Group, LLC; and Paul
Thomas relating to the Aspen project. See Docket No. 139-4.
5.
to Darren Matity to produce documents concerning work he
performed in connection with the Aspen project. See Docket No.
139-5.
6.
to Gregory Jahnke, principal of the Aspen entities, to
produce documents and to appear for a video-taped oral deposition
concerning Aspen Village Properties, Ltd.; Aspen Village
Developments, Ltd.; Aspen Creek Developments, Ltd.; Superior
Homes, LLC; Larson Manufacturing of South Dakota, Inc.; Western
4
Showcase Homes, Inc.; AmeriCan Modular Housing Group, Inc.;
AmeriCan Modular Housing Group, LLC; and Paul Thomas relating
to the Aspen project. See Docket No. 139-6.
7.
to Mauri Gwyn Development, Ltd. to produce documents
concerning its dealings concerning Mauri Gwyn Development, Ltd.;
Superior Homes, LLC; Larson Manufacturing of South Dakota,
Inc.; Western Showcase Homes, Inc.; AmeriCan Modular Housing
Group, Inc.; AmeriCan Modular Housing Group, LLC; and Paul
Thomas relating to the Aspen project. See Docket No. 139-7.
8.
to McKercher, LLP to produce documents concerning the
receipt and distribution of funds relating to the Aspen project. See
Docket No. 139-8.
9.
to Rylan Waugh to produce documents concerning dealings
among Superior Homes, LLC; Larson Manufacturing of South
Dakota, Inc.; Waugh Who Developments, Inc.; Western Showcase
Homes, Inc.; AmeriCan Modular Housing Group, Inc.; AmeriCan
Modular Housing Group, LLC; and Paul Thomas relating to the
Aspen project. See Docket No. 139-9.
10. to Waugh Who Developments, Inc. to produce documents
concerning dealings among Superior Homes, LLC; Larson
Manufacturing of South Dakota, Inc.; Waugh Who Developments,
Inc.; Western Showcase Homes, Inc.; AmeriCan Modular Housing
Group, Inc.; AmeriCan Modular Housing Group, LLC; and Paul
Thomas relating to the Aspen project. See Docket No. 139-10.
11. to the Town of White City, Saskatchewan to produce
documents concerning plaintiffs, the Aspen Entities, or the
Western Entities placing liens on properties or communications
with those entities. See Docket No. 139-11.
Plaintiffs oppose defendants request for these letters rogatory. See
Docket No. 143. As to the Gregory Jahnke deposition (number 6 above),
plaintiffs point out that the parties agreed to a limit on depositions and
allowing the Jahnke deposition would exceed that agreed-upon limit. As to the
Jahnke deposition, plaintiffs also argue the cost and burden of attending
Jahnke’s deposition in Canada would be disproportionate to the issues at
5
stake, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery, and the
likely benefit from the discovery. In addition, plaintiffs point out that whether
Aspen performed under its agreement with defendants is not relevant to these
proceedings and the issue of whether the collateral is sufficient to cover the
amount of defendants’ debt is likewise a distinct issue from whether
defendants owe the debt.
As to the Waugh Who letters rogatory (numbers 9 & 10 above), plaintiffs
object on the grounds that their original claims involving Waugh Who are
among those claims that the parties have settled and are no longer a part of
this lawsuit. Finally, plaintiffs object to the “facts” section contained in each of
the proposed letters as not constituting a neutral and objective statement of
the facts.
Although the scope of discovery is broad, it is defendants’ burden as the
parties seeking these letters rogatory to demonstrate the relevance of the
requested discovery. See FED. R. CIV. P. 26(b)(1) advisory committee’s note;
E.E.O.C. v. Woodmen of the World Life Ins. Society, 2007 WL 1217919 at *1 (D.
Neb. March 15, 2007) (citing Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380
(8th Cir. 1993)). “Mere 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)).
6
In their initial three-page motion, defendants only state “certain
individuals and certain entities located in Canada . . . may have information
that will aide these proceedings.” See Docket No. 139 at p. 1. That hardly
satisfies defendants’ burden to demonstrate initial relevancy.
In their 11-page reply, defendants argue the Jahnke deposition is
relevant, pointing out the centrality of the Aspen project to the parties’ dispute
in this case. Defendants also argue the deposition is not unduly burdensome.
Defendants analogize a deposition trip to Canada as no more burdensome than
a similar trip to Las Vegas. This, of course, overlooks several salient
differences such as (1) a trip to Canada requires everyone attending from the
United States to have a passport whereas a trip to Nevada does not and (2) the
law of Canada, unlike the federal law applicable in the District of Nevada, may
differ significantly from the law applicable to discovery in this case.
Defendants offer to reschedule one of their existing depositions to meet
the six-deposition limit agreed upon by the parties, but it is not clear they are
offering to forego any presently-anticipated depositions. Defendants also
represent they will work with plaintiffs to arrive at a statement of facts in the
letters which is agreeable to both parties. Finally, defendants argue the Waugh
Who letters rogatory are necessary to determine if there was a pattern of poor
warranty, installation or servicing by plaintiffs in regard to their products.
Neither party addresses the four pending Canadian lawsuits. Those
lawsuits appear to involve, in one way or another, all the parties herein as well
as all of the Aspen entities. Presumably, the plaintiffs and defendants in this
7
case have access to discovery under Canadian rules through their participation
in the four Canadian lawsuits. None of the parties explain to this court why
letters rogatory are necessary and why discovery in the ordinary course in
those Canadian lawsuits is not sufficient to allow the parties access to the
persons, documents and information described in the letters rogatory.
Furthermore, none of the parties outline the scope of discovery allowable in
Canada and whether the requested letters rogatory exceed that scope. Such
information would clearly raise comity concerns.
The court notes that one of the letters rogatory requested by defendants
(number 11 above) is to a Canadian town, an entity that presumably is
protected in some way and to some degree by the concept of sovereign
immunity. No mention is made of the rules of Canadian discovery or other
Canadian law which might apply to discovery from a political subdivision in a
foreign country.
The advisory committee’s notes to Rule 28, the rule pertaining to letters
rogatory, suggests examination of the law and policy of the foreign country is a
prerequisite in advance of attempting to conduct discovery there. See FED. R.
CIV. P. 28, advisory committee’s note to 1963 amendment (citing 4 Moore’s Fed.
Prac., §§ 28.05-28.08 (2d ed. 1950). The advisory committee also states that a
party wishing to take a deposition in a foreign country ordinarily is “obliged to
conform to an applicable treaty or convention.” Id. advisory committee’s note
to 1993 amendment (citing Société Nationale Industrielle Aérospatiale v. United
8
States District Court, 482 U.S. 522 (1987)). Defendants discuss neither the
applicable foreign law nor any applicable treaty in their motion.
Rule 26(b)(1) allows the court to limit discovery if it determines that the
discovery sought is unreasonably cumulative or duplicative or that “the burden
or expense of the proposed discovery outweighs its likely benefit...” See FED. R.
CIV. P. 26(b)(1); see also Roberts v. Shawnee Mission Ford, Inc., 352 F.3d 358,
361 (8th Cir. 2003) (“The rule vests the district court with discretion to limit
discovery if it determines, inter alia, the burden or 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).
Here, the court notes defendants’ motion comes at the eleventh hour.
This case has been pending for nearly 3 years. The Canadian lawsuits have
been pending approximately that long too. A trial date here has been set. The
discovery deadline is approaching fast. Defendants have not carried their
burden to show that the letters rogatory are necessary given the existence of
the Canadian lawsuits nor have they shown the letters conform to Canadian
law and are allowed under applicable treaty. These facts, as well as the
unanswered questions regarding whether the letters rogatory would contravene
Canadian discovery rules, leads this court to conclude the motion is not wellplaced.
9
CONCLUSION
Based on the foregoing law, facts and analysis, it is hereby
ORDERED that defendants’ motion for letters rogatory to parties in
Canada [Docket No. 139] is denied.
DATED January 4, 2019.
BY THE COURT:
VERONICA L. DUFFY
United States Magistrate Judge
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?