UNITED STATES OF AMERICA v. All Funds on Deposit at Old Mutual of Bermuda, Ltd. Contract Number CX4011696 in Bermuda

Filing 82

ORDER ADOPTING MEMORANDUM AND RECOMMENDATIONS re: denying as moot 76 MOTION to Compel The Government to Respond to Claimant's Written Discovery Requests, granting 75 MOTION for Sanctions, adopting 80 Memorandum and Recommendations. (Signed by Judge Nelva Gonzales Ramos) Parties notified.(lcayce, 2)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
UNITED STATES OF AMERICA
VS.
ALL FUNDS ON DEPOSIT AT OLD
MUTUAL OF BERMUDA LTD.
CONTRACT NUMBER CX4011696 IN
BERMUDA

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§ CIVIL ACTION NO. 2:13-CV-294
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ORDER ADOPTING MEMORANDUM AND RECOMMENDATION
Pending before the Court are Plaintiff United States of America’s (the
Government) motion for sanctions pursuant to Federal Rule of Civil Procedure 37 (D.E.
75) and Claimant Maria Llaguno de Torres’s (Claimant) motion to compel the
Government to respond to her written discovery requests (D.E. 76). On January 29,
2015, United States Magistrate Judge B. Janice Ellington submitted her Memorandum
and Recommendation (M&R) (D.E. 80), recommending that the Government’s motion be
granted and Claimant’s motion be denied as moot. This Court received Claimant’s
timely-filed objections (D.E. 81) on February 12, 2015. Claimant’s objections are set out
and discussed below.
First, Claimant objects to the Magistrate Judge’s recommendation because “the
government has not pled a fact nor produced a single document showing that the money
in the seized account is the proceeds of any specific illegal activity.” D.E. 81, p. 3.
Claimant argues that the facts alleged by the Government do not give rise to probable
cause. Id. at 7. Claimant has raised this argument throughout this case without success.
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Claimant’s attempt to reurge her Motion to Dismiss pursuant to Rule 12(b)(6) and the
Motion to Stay is not proper at this juncture. The Court will address the matters that were
before the Magistrate Judge and which were addressed in the M&R—the Government’s
motion for sanctions and the Claimant’s motion to compel. Claimant’s first objection is
overruled.
Second, Claimant objects to the recommendation, asserting that the Magistrate
Judge’s dismissal sanction was improper under the circumstances. Federal Rule of Civil
Procedure 37(b)(2)(A) authorizes the striking of pleadings and dismissing of actions
when a party fails to obey a discovery order. United States v. $49,000 Currency, 339
F.3d 371, 376 (5th Cir. 2003). A district court’s discretion under Rule 37 is broad. Bluitt
v. Arco Chem., 777 F.2d 188, 191 (5th Cir. 1985). However, “dismissal is a severe
sanction that implicates due process.” FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir.
1994).
Several factors must be present before a court may dismiss a case with prejudice
as a sanction for violating a discovery order: “(1) the refusal to comply results from
willfulness or bad faith and is accompanied by a clear record of delay or contumacious
conduct; (2) the violation of the discovery order must be attributable to the client instead
of the attorney; (3) the violating party’s misconduct must substantially prejudice the
opposing party; and (4) a less drastic sanction would not substantially achieve the desired
deterrent effect.” Moore v. CITCO Ref. & Chem. Co., L.P., 735 F.3d 309, 316 (5th Cir.
2013) (citations omitted).

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Claimant who resides in Saltillo, Mexico, has continuously refused to appear for
her deposition scheduled at the United States Attorney’s Office in Corpus Christi, Texas,
because she believes that the Government will detain her in an effort to persuade her to
provide information against her husband. D.E. 81, p. 6. Claimant argues that her “very
reasonable fears” are based on her previous experience with Border Patrol agents, who
detained her and her two daughters at the McAllen airport on November 21, 2013,
questioned her without benefit of counsel, forced her to sign a statement, and confiscated
their Visas. Id. at 13; D.E. 34, p. 2.
Claimant argues that her continued failure to appear for her deposition is “fearful
noncompliance” rather than willful defiance.

Id. at 13.

These allegations were

considered by the Magistrate Judge and rejected. See D.E. 34; D.E. 43. In the order
denying Claimant’s motion to stay discovery, the Magistrate Judge stated that Claimant is
not charged in a criminal proceeding and the Government offered her assistance in
traveling to the United States to give her deposition. D.E. 73. This Court finds no error
in the Magistrate Judge’s conclusion that Claimant’s actions were willful.
Claimant also argues that the dismissal sanction is improper because it was
imposed without giving her notice of the particular sanction. D.E. 81, p. 10 (citing Reilly
v. Natwest Markets Grp. Inc., 181 F.3d 253 (2d Cir. 1999)). Claimant’s argument was
foreclosed by the Fifth Circuit in Moore. 735 F.3d at 316 (rejecting plaintiffs’ argument
that their dismissal sanction was improper for lack of notice because “[t]hey cite no

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authority for that proposition, and notice is not among the Conner factors governing
dismissal”).1
Nevertheless, the Court finds that Claimant was given fair notice that her failure to
comply with discovery would result in sanctions. D.E. 61, p. 7 (“[I]f [Claimant] doesn’t
appear, then the Government can seek whatever sanctions are necessary.”); D.E. 73
(“Claimant must attend the scheduled deposition or face possible sanctions for her failure
to comply.”). The Court also finds that Claimant’s violation of the discovery order was
attributable to her and not her counsel, Claimant’s misconduct has substantially
prejudiced the Government, and a less drastic sanction would not substantially achieve
the desired deterrent effect. See D.E. 61 (sanctioning Claimant by having her pay the
costs of one of the depositions she failed to attend). For these reasons, Claimant’s second
objection is OVERRULED.
Having reviewed the findings of fact, conclusions of law, and recommendations
set forth in the Magistrate Judge’s M&R (D.E. 80), as well as Claimant’s objections, and
all other relevant documents in the record, and having made a de novo disposition of the
portions of the Magistrate Judge’s M&R to which objections were specifically directed,
this Court OVERRULES Claimant’s objections and ADOPTS as its own the findings
and conclusions of the Magistrate Judge. Accordingly, the Government’s motion for
sanctions (D.E. 75) is GRANTED, Claimant’s pleadings are struck and her claim (D.E.

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See also Reilly, 181 F.3d at 270 (“[I]n the Rule 37 context, we have declined to impose rigid requirements on
either the timing or the form of the notice afforded to a sanctioned party.”); cf. $49,000 Currency, 330 F.3d at 379
(rejecting the view that a court is “required to attempt to coax [parties] into compliance with its order by imposing
incrementally increasing sanctions”).

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4) is DISMISSED with prejudice, and Claimant’s motion to compel (D.E. 76) is
DENIED as moot.

ORDERED this 24th day of June, 2015.

___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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