Wakefield Kennedy v. Baldwin et al

Filing 271

MEMORANDUM DECISION AND ORDER granting 121 Second Motion to Compel. Signed by Magistrate Judge Evelyn J. Furse on 2/11/14 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
WAKEFIELD KENNEDY,

MEMORANDUM DECISION AND
ORDER GRANTING SECOND MOTION
TO COMPEL
(ECF No. 121)

Plaintiff,
v.

Case No. 2:11-cv-604-DN-EJF
D. SHANE BALDWIN, et al.,
District Judge David Nuffer
Defendants.
Magistrate Judge Evelyn J. Furse

Metro National Settlement Services, LLC (“Metro Settlement”) filed this Second Motion
to Compel and for Sanctions, and for Extension of Discovery Period. (ECF No. 121.) Metro
Settlement asks this Court to compel State Capital Holdings, LLC (“State Capital”) to “provide
proper responses” to certain discovery requests and for sanctions, among other things. The Court
has carefully considered the Motion and Memoranda submitted for and against Metro
Settlement’s Motion and GRANTS that Motion. 1
Interrogatory No. 13
Metro Settlement’s Interrogatory number thirteen asks State Capital to identify all
payments it made in relation to the Loan Sale Agreement and subsequent amendments at the
center of this case. (See ECF No. 122-3.) In response, State Capital identified certain payments
and produced documents it possessed. (Id.) State Capital also stated Altman Law Group LLC
(“Altman”)—formerly State Capital’s counsel—may possess responsive documents but that

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The Court determined it could decide the Motion based on the briefing and does not
need oral argument. See DUCivR 7-1(f).
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State Capital does not control any such documents. (Id.) Metro Settlement argues State
Capital’s response falls short on three grounds.
First, Metro Settlement argues State Capital produced no “financial documents that
reference State Capital in any manner in the Second Set of Responses.” (ECF No. 122-3 at 2.)
In response, State Capital explains that its founder formed it for the sole purpose of purchasing
the loan at issue. (Schwartz Decl. ¶ 3, ECF No. 159.) Because State Capital had not conducted
any business prior to the loan purchase and lacked bank accounts, State Capital’s managing
member made payments through multiple sources including attorney escrow accounts. (Id. at ¶
6.) State Capital argues it has produced the financial documents it possesses—wire
confirmations. (Mem. Opp’n 5, ECF No. 157.) Federal Rule of Civil Procedure 26(e) requires
State Capital to supplement their responses. Failure to do so prevents State Capital from
subsequently using any information not produced in a timely manner. Fed. R. Civ. P. 37(c)(1).
Thus, absent timely supplementation, State Capital’s statements that it has produced all relevant
documents binds it going forward.
Second, Metro Settlement argues State Capital improperly failed to produce or at least
inquire about responsive documents Altman may possess. (Mem. Supp. 10–11, ECF No. 122.)
State Capital argues Metro Settlement should have subpoenaed Altman. (Mem. Opp’n 5, ECF
No. 157.) The Court agrees with Metro Settlement. State Capital admits Altman acted as its
“transaction attorney.” (Schwartz Decl. ¶ 7, ECF No. 159.) Because Altman practices in New
York City, State Capital has presumptive control over documents Altman possesses pursuant to
the ethical rules applicable to Altman. See N.Y.C. Bar Assoc. Comm. on Prof’l and Judicial
Ethics, Formal Op. 2008-1, “A Lawyer’s Ethical Obligations to Retain and to Provide a Client
with Electronic Documents Relating to a Representation” 2008 WL 3911383, at *4–5, 7 (citing

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Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn L.L.P., 91 N.Y.2d 30, 37 (1997)) (“In
New York, a client has a presumptive right to the lawyer’s entire file in connection with a
representation, subject to narrow exceptions.”); (Reply 4, ECF No. 167). State Capital must
therefore investigate whether Altman possesses any responsive, non-privileged documents and
produce any such documents within fourteen days of this Order’s entry.
Finally, Metro Settlement argues State Capital’s response to Interrogatory thirteen lacks
sufficient verification under Federal Rule of Civil Procedure 33. (Mem. Supp. 11, ECF No.
122.) Federal Rule of Civil Procedure 33 states that “[e]ach interrogatory must, to the extent it is
not objected to, be answered separately and fully in writing under oath.” Fed. R. Civ. P. 33(b)(3).
State Capital’s managing member, Joseph Schwartz, signed the following verification: “I,
Joseph Schwartz, the undersigned hereby state that I have read the foregoing Answers and
Responses, am familiar with the contents of those responses that relate to me, and verify and
affirm the truthfulness of the same.” (Bluth Decl., Oct. 24, 2012, Ex. B, ECF No. 122-2.) This
language improperly limits the verification to responses that “relate to” Mr. Schwartz and
therefore does not comply with Rule 33’s command that a party answer each interrogatory fully
and under oath. See Fed. R. Civ. P. 33(b)(3). Within fourteen days of this Order’s entry State
Capital must provide full verification of all its responses, not only those which relate to Mr.
Schwartz. 2
Requests for Production Nos. 6–8
Metro Settlement next asks this Court to order State Capital to respond properly to certain
Requests for Production. Request for Production number six seeks documents that support State
2

In its Reply Brief, Metro Settlement questions whether State Capital is a proper party in
this case. (See Reply 6–7, ECF No. 167.) Although Metro Settlement raises an important
question, the Court will not consider the argument because Metro Settlement did not raise it in its
opening memorandum.
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Capital’s damages computation. (ECF No. 122-3 at 3.) Request for Production number eight
seeks all documents State Capital identified in its interrogatory responses. (Id. at 4.) Metro
Settlement argues State Capital has not produced all documents responsive to these two requests
and supports this argument by noting State Capital produced no documents “that even reference
State Capital.” (Mem. Supp. 12, ECF No. 122.) But as noted above, State Capital has explained
the absence of such documents: State Capital existed for the limited purpose of the Loan Sale
Agreement and lacked its own bank accounts. Metro Settlement does not identify any
documents it contends State Capital must produce. The Court thus denies Metro Settlement’s
request. The Court notes, however, that Federal Rule of Civil Procedure 26(e) requires State
Capital to supplement its responses in a timely manner. If State Capital fails to supplement its
responses, it may not later introduce documents it now says do not exist. See Fed. R. Civ. P.
37(c)(1).
Request for Production number seven asks for all of State Capital’s financial records
from State Capital’s December 2009 formation to the present that refer or relate to the Loan Sale
Agreement and subsequent amendments. (ECF No. 122-3 at 4.) State Capital objected to this
Request as “unduly burdensome, harassing and oppressive” and explained that payments claimed
by State Capital are not disputed and that other parties have produced documents evidencing the
payments. (See ECF No. 122-3.) In its Opposition Memorandum State Capital expands on these
objections, arguing that the request duplicates other requests—specifically, Interrogatory number
thirteen—and that no additional responsive documents exist. (Mem. Opp’n 6, ECF No. 157.) If
no other responsive documents exist, State Capital should have stated as much in its response.
Cf. Dealer Computer Servs., Inc. v. Griffith, No. 11-2305-JWL, 2012 WL 3156814, at *1 (D.
Kan. Aug. 3, 2012) (noting “[i]t is improper to assert boilerplate objections to discovery requests

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when there are no documents responsive to the requests” and emphasizing signing attorney’s
obligations under Rule 26(g)). Accordingly, the Court strikes State Capital’s objections to
Request for Production number seven and ORDERS State Capital to respond in conformity with
its assertions in its opposition within fourteen days of this Order’s entry.
Supplementation
Metro Settlement also argues State Capital must supplement its responses to Metro
Settlement’s first set of discovery requests. (Mem. Supp. 15, ECF No. 122.) As noted above,
Federal Rule of Civil Procedure 26(e) requires State Capital to supplement its responses in a
timely manner. Failure to do so will result in exclusion. Fed. R. Civ. P. 37(c)(1). This Court
ORDERS State Capital to supplement its responses within fourteen days of this Order’s entry or
identify the lack of any additional information/documents.
Sanctions
Federal Rule of Civil Procedure 37 requires the Court to award the moving party its
“reasonable expenses incurred in making the motion, including attorney’s fees” unless, among
other options, “the opposing party’s nondisclosure, response, or objection was substantially
justified.” Fed. R. Civ. P. 37(a)(5)(A). Because the Court finds State Capital’s objections and
responses lack substantial justification, the Court awards Metro Settlement its expenses incurred
in bringing this Motion. Metro Settlement should submit documentation to support its expenses
to the Court.
CONCLUSION
For the reasons set forth above, the Court GRANTS Metro Settlement’s Second Motion
to Compel and for Sanctions, and for Extension of Discovery Period. (ECF No. 121.) The Court

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expects the parties will file a stipulated Scheduling Order as discussed at the February 10, 2014
Telephone Conference with Judge Nuffer. (See ECF No. 270.)
Dated this 11th day of February, 2014.
BY THE COURT:

Evelyn J. Furse
United States Magistrate Judge

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