Awadh et al v. Farm Bureau Mutual Insurance

Filing 22

MEMORANDUM DECISION AND ORDERgranting in part and denying in part 16 Motion to Compel. Defendants request for sanctions is DENIED. Signed by Magistrate Judge Paul M. Warner on 8/11/2015. (jds)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

NASER AWADH and STACY AWADH,

MEMORANDUM DECISION
AND ORDER

Plaintiffs,
Case No. 1:13cv00145
v.
FARM BUREAU MUTUAL INSURANCE
COMPANY,

District Judge Dale A. Kimball
Magistrate Judge Paul M. Warner

Defendant.

District Judge Dale A. Kimball referred this case to Magistrate Judge Paul M. Warner
pursuant to 28 U.S.C. § 636(b)(1)(A).1 Before the court is Defendant Farm Bureau Property and
Casualty Insurance Company’s (“Defendant”) motion to compel production of certain tax
records.2 The court has carefully reviewed the written memoranda submitted by the parties.
Pursuant to civil rule 7-1(f) of the Rules of Practice for the United States District Court for the
District of Utah, the court has concluded that oral argument is not necessary and will determine
the motion on the basis of the written memoranda. See DUCivR 7-1(f).
BACKGROUND
The underlying action arises from an insurance claim for a stolen skid loader. Plaintiffs
Naser Awadh and Stacy Awadh (“Plaintiffs”) submitted a claim to Defendant for the value of the

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See docket no. 3

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Docket no. 16.

skid loader. Defendant determined that the skid loader was property of the Plaintiffs’ business,
and thus subject to a $2,500 business property coverage limitation. Plaintiffs allege that the skid
loader was personal property purchased in 2004, and that they are entitled to insurance coverage
for the full value of the skid loader. In addition to the coverage dispute, the parties dispute the
actual value of the skid loader.
Defendant served requests for production of documents on Plaintiffs, including requests
for business tax returns and schedules for the years 2004 through 2011, the period from
acquisition of the skid loader until Plantiffs submitted their insurance claim. Defendant believes
that these records are relevant because they show whether Plaintiffs treated the skid loader as a
personal or business asset in the tax records; whether Plaintiffs claimed the stolen skid loader as
a business loss; and Plaintiffs’ stated value of the asset.
Plaintiffs objected to the request, but eventually produced just eight pages of tax
documents relating to a few of the years in question. Plaintiffs did not produce any schedules for
2007, 2009, and 2010 and did not produce any records at all for years 2004, 2005, 2006, 2008, or
2011. Plaintiffs claim that they do not have any additional tax records for the years in question.
Defendant contends that if Plaintiffs do not have the records, the records can be obtained from
the Internal Revenue Service (the “IRS”), provided Plaintiffs give the appropriate authorization.
Defendant made a good faith attempt to obtain production of the tax records from
Plaintiffs without the court’s involvement, but was forced to file the current motion to compel
production after the parties were unable to reach agreement. Defendant also requests that the
court impose sanctions on Plaintiffs for cost incurred by Defendant for bringing the motion to
compel and for a potential second deposition of Mr. Awadh.

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ANALYSIS
Under rule 26(b) of the Federal Rules of Civil Procedure, “[p]arties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense . . . .” Fed. R.
Civ. P. 26(b)(1). “Relevant information need not be admissible at trial if the discovery appears
reasonably calculated to lead to the discovery of admissible evidence.” Id. A party may request
the production of documents “in the responding party’s possession, custody, or control.” Fed. R.
Civ. P. 34(a)(1).
Here, the court finds Defendant’s request for production of the tax documents relevant
and proper. Plaintiffs’ tax records appear highly relevant to claims and defenses in the case, and
the requested documents appear likely to be admissible at trial or “reasonably calculated to lead
to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1). The crux of the underlying
action appears to be (1) whether the skid loader was personal or business property, and thus
subject to their respective coverage limits. Further, Defendant controls the documents in that
Defendant either has possession of the documents or has the ability to authorize release of the
documents by the IRS.
Accordingly, Defendant’s motion is GRANTED IN PART AND DENIED IN PART as
follows:
Within ten (10) days of the date of this order, Plaintiffs are ordered to produce all
personal and/or business tax returns and schedules for the years 2004 through 2011 in their
possession, custody, or control, including copies of tax returns and schedules held by Plaintiffs’
accountants, attorneys, or other professionals. Plaintiffs’ production shall include an affidavit
verifying whether the documents produced include full copies of all returns and schedules for the

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requested years. If Plaintiffs affidavit states that they cannot produce full copies of all returns
and schedules for the years in question, Defendant may prepare for Plaintiffs’ signatures any
paperwork required by the IRS for release of the tax records. Plaintiffs shall sign and return the
authorization paperwork within five days of receipt of the authorization paperwork from
Defendant. If necessary, Plaintiffs shall cooperate with Defendant and perform any other actions
reasonably necessary for Defendant to be able to obtain the tax records from the IRS.
All tax documents produced by Plaintiffs and/or the IRS shall be subject to the provisions
of the Standard Protective Order provided for under civil rule 26-2(a) of the Rules of Practice for
the United States District Court for the District of Utah. DUCivR 26-2(a)(1), App’x. XV. The
tax records shall be designated “CONFIDENTIAL INFORMATION – ATTORNEYS’ EYES
ONLY” pursuant to the Standard Protective Order. The produced tax records shall not be
disclosed to anyone other than attorneys or attorneys’ professional consultants, and may only be
used for purposes of this litigation. Parties shall comply with all requirements regarding the
treatment of confidential information under the Standard Protective Order.
Defendant’s request for sanctions is DENIED.
IT IS SO ORDERED.
DATED this 11th day of August, 2015.

BY THE COURT:

PAUL M. WARNER
United States Magistrate Judge

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