Eduardo V. Rodriguez, United States Bankruptcy Judge.
The first duty of man is the seeking
This Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rules of Bankruptcy Procedure 7052, which incorporates Fed. R. Civ. P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.
For the purposes of this Memorandum Opinion and, to the extent not inconsistent herewith, this Court adopts and incorporates by reference each of the Finding of Facts in this Court's Amended Memorandum Opinion. [ECF No. 105 at 3-6] (the "
On August 25, 2010, Jose and Teresa Trevino (collectively, the "
On February 3, 2014, U.S. Bank and Caliber, (collectively, the "
On April 25, 2014, HSBC served Plaintiffs with its Rule 26 Initial Disclosures. [ECF No. 33-1]; [ECF No. 138-2]. Caliber Defendants also served Plaintiffs with their Rule 26 Initial Disclosures on April 25, 2014. [ECF No. 138-2]. After Plaintiffs received the Initial Disclosures from HSBC and Caliber Defendants, Plaintiffs' Counsel initiated written communications with the Defendants and served requests for production and deposition notices. See generally [ECF No. 33-1]; [ECF No. 138-2]. Specifically, Plaintiffs served requests for production of documents
On July 28, 2014, Plaintiffs filed their Motion to Compel HSBC to Produce Documents as a result of HSBC's alleged failure to cooperate meaningfully with discovery. [ECF No. 33]. In response, HSBC filed its Expedited Motion for Stay of Debtor's Motion to Compel and Discovery Pending Ruling of HSBC's Dispositive Motion wherein it requested the Court grant a stay of consideration of Plaintiffs motion to compel and a stay of discovery until the Court resolved HSBC's Motion for Judgment on the Pleadings, or in the alternative, Summary Judgment. [ECF No. 39]. On August 25, 2014, Plaintiffs next filed their Emergency Motion to Compel [Caliber Defendants] to Produce Documents and Deposition Dates. [ECF No. 43]. In that motion to compel, Plaintiffs allege that Caliber Defendants failed to produce the documents in response to Plaintiffs' requests for production of documents though they had produced the documents identified in their initial disclosures, and additionally would not provide prospective dates for depositions. Id. at 2-4. In response, Caliber Defendants filed their Joinder in HSBC's Motion to Stay in which Caliber Defendants requested, among other things, a protective order as to "documents and information produced by them...." [ECF No. 45 at ¶ 2].
On August 26, 2014, the court held a hearing on Defendants' motions and allowed Plaintiffs until October 15, 2014 to file an amended complaint. [ECF No. 47]. After timely filing their First Amended Complaint, Plaintiffs filed their Motion for Leave to File a Second Amended Complaint on November 4, 2014. [ECF Nos. 58, 59]. On February 27, 2015, the court held a hearing on the Plaintiff's Motion for Leave to File a Second Amended Complaint and dismissed four of the claims asserted in the First Amended Complaint before granting Plaintiffs' motion and giving Plaintiffs until March 13, 2015 to file a second amended complaint. [ECF No. 74].
Plaintiffs filed their Second Amended Complaint on March 12, 2015, wherein Plaintiffs asserted claims against both HSBC, separately, and the Caliber Defendants. [ECF No. 78] (the "
Id. at 1.
The Plaintiffs assert the following remaining claims against the Defendants: (i) Abuse of Process; (ii) Objection to HSBC's 3002.1 notice;
Prior to the issuance of the Amended Memorandum Opinion, [ECF No. 105], the Defendants, respectively, filed their answers to Plaintiffs' Second Amended Complaint. See generally [ECF Nos. 100, 101].
On August 26, 2015, Plaintiffs filed an unopposed motion seeking to schedule a status conference to discuss the lack of a scheduling order, which was subsequently granted by the Court and the hearing was set for September 25, 2015. [ECF Nos. 109, 110]. At the September 25, 2015 hearing, the parties discussed the possibility of entering into mediation on the matter to attempt to resolve the case. According to Plaintiffs' Counsel, the outcome of the Amended Memorandum Opinion, [ECF No. 105], potentially changed some of the claims resulting in the potential need to narrow discovery. Ultimately, the parties agreed to set a trial date for May 27, 2016, in order to provide a deadline for the anticipated mediation and provide for reasonable time to conduct the remaining discovery. [ECF No. 112 at 3]. The parties were able to secure a date for mediation with the Honorable David R. Jones in Houston, Texas on March 28, 2016, and as a result needed to stay the proceedings in order to conduct the mediation. [ECF No. 115]; see also [ECF No. 117] (granting the requested stay of proceedings). On April 11, 2016, the parties filed a joint status report regarding the mediation outcome in
After almost two years of extensive litigation, and as a result of the mediation, Plaintiffs entered into a Confidential Settlement and Agreement Release with HSBC, which was granted on May 9, 2016. [ECF Nos. 126, 131]. HSBC was subsequently dismissed from this Adversary Proceeding. [ECF Nos. 142, 144].
Following the announcement regarding the mediation in the joint status report, the Court set a scheduling conference for May 16, 2016. [ECF Nos. 120, 121]. Prior to the May 16, 2016 hearing, the parties filed their joint report that stated that Plaintiffs' motion to compel was still outstanding and the parties were unable to resolve their discovery from earlier in the case. [ECF No. 130 at 2]; see generally [ECF No. 43] (alleging a lack of responsive production by Caliber Defendants and lack of cooperation for deposition dates). It was further represented that an amended motion to compel would be filed by Plaintiffs if the impasse continued; thus Plaintiffs' Amended Motion to Compel was subsequently filed. [ECF No. 130 at 2]; [ECF No. 135] (amending [ECF No. 43]); [ECF No. 138] (amending [ECF No. 135]).
Plaintiffs' Motion to Compel sought production from the Caliber Defendants for additional documents that had been the subject of allegedly insufficient objections. See generally [ECF No. 138]. Since the Plaintiffs' original motion to compel filed in August 2014, Plaintiffs allege that the Caliber Defendants only production since responding to Plaintiffs' Requests for Production was a spreadsheet produced on June 6, 2016. Id. at ¶¶ 16-17. In the Motion to Compel, Plaintiffs detail Caliber Defendants' responses to their requests for production and contend why each response is respectively insufficient. Id. at 6-11. To summarize, Plaintiffs' primary objection is that the responses received are incomplete or the Caliber Defendants have refused to produce the documents. Id. (covering Request Nos. 1, 2, 10, 13, 14, 15, 16, 17, 19, 20). For Requests Nos. 3-9, Plaintiffs articulated significantly different complaints, namely that the documents produced by Caliber were those created for litigation rather than records in their native format or screenshots thereof. Id. at 7-8. Plaintiffs also allege that U.S. Bank has not produced any documents. Id. at ¶ 23. In addition to their complaints, Plaintiffs state that they have withdrawn or limited the scope for certain requests within the requests for production. Id. at 9. On the basis of those complaints, Plaintiffs argue that (1) they are entitled to the requested discovery, (2) that the Caliber Defendants' objections are deficient, and (3) that the Caliber Defendants' claim of privilege in regard to certain documents is insufficient because a protective order has not been acquired nor was a privilege log produced. Id. at 11-15. Accordingly, Plaintiffs seek an order requiring the Caliber Defendants to produce the outstanding documents and for costs to prepare the Motion to Compel. Id. at 15-16.
Caliber Defendants filed their response to the Motion to Compel, wherein it was argued that Plaintiffs' requests for production were generally overbroad and not relevant to the claims at bar. See generally [ECF No. 146]. Moreover, Caliber Defendants state that their Joinder and the underlying motion filed by HSBC are still outstanding. Id.; see also [ECF Nos. 39, 45].
On July 21, 2016, this Court entered a discharge for Plaintiffs in their underlying chapter 13 case. [Case No. 10-70594, ECF Nos. 136, 139].
On August 23, 2016, Plaintiffs filed their Motion for Leave that seeks approval to file a supplemental complaint. [Case No.
On September 9, 2016, the Caliber Defendants filed a witness and exhibit list for the September 13, 2016 scheduled hearing in which their exhibits, infra, were listed, including two witnesses: Caliber Defendants' Counsel and Mr. Clint Burton. See generally [ECF No. 155]. Shortly thereafter, Plaintiffs filed their Motion to Strike that alleges Caliber Defendants' Exhibit List provisioning Mr. Clint Burton as one of the "Fact and Expert Witnesses" is improper because Caliber Defendants failed to disclose Mr. Burton as a potential witness in their initial disclosures. [ECF No. 157] (the "
On September 13, 2016, this Court conducted an evidentiary hearing on Plaintiffs' Motion to Compel, Motion for Leave, Motion to Strike, and Caliber Defendant's Joinder (the "
The September Hearing was reset by agreement due, in part, to the volume of testimony from Mr. Harris that Plaintiffs presented and, in part, in order to permit Caliber Defendants the ability to present their arguments on the Motion to Compel, the Motion for Leave, and Motion to Strike.
On September 23, 2016, Caliber Defendants served Plaintiffs with supplemental initial disclosures and additional discovery via email. Caliber Def. Exs. 28, 28A, 28B. On October 13, 2016, Plaintiffs filed their Motion for Sanctions, on an expedited basis, which sought to bar Mr. Burton's testimony on the same grounds as the Motion to Strike and further seek to bar Caliber Defendants from putting forth any witnesses other than Mr. Harris to cure the alleged shortcomings of his testimony in his deposition. [ECF No. 167 at 12-13]; see also [ECF. No. 157]. The Motion for Sanctions alleges that Mr. Harris was not a competent witness and had deficient knowledge of the noticed topics for the deposition. [ECF No. 167 at 7-12]; see also Pls. Ex. 26. As a result of the deficiency of Mr. Harris' testimony, Plaintiffs seek sanctions, pursuant to Fed. R. Civ. P. 30 and 37, both in terms of denying Caliber Defendants the ability to call witnesses, such as Mr. Burton, and in terms of fee shifting. [ECF No. 167 at 12-13].
On October 18, 2016, the Court conducted the evidentiary hearing (the "
At the conclusion of the October Hearing, the Court took the Motion for Leave, the Motion for Sanctions, the Motion to Compel, and the Caliber Defendants' Joinder under advisement.
Subsequent to the October Hearing, Caliber Defendants filed their Motion to Reopen Evidence Under Rule 59(a)(2). [ECF No. 178] (the "
Therefore, the pending motions before the Court are Plaintiffs' Motion to Compel, Motion for Sanctions, and Motion for Leave, and Caliber Defendants' Motion to Reopen and Joinder, each of which is ripe for consideration.
The Federal Rules of Civil Procedure provide guides for the free exchange of information between parties through the process of discovery and disclosures covered under Rule 26. See generally Fed. R. Civ. P. 26; see also Harris v. Amoco Prod. Co., 768 F.2d 669, 684 (5th Cir. 1985) (discussing the provision for exchange of information and how such information may be utilized by parties). In addition to providing the guidelines for discovery and disclosures, Rule 26 provisions parties with the ability to seek refuge from certain discovery upon demonstrating the necessity for such a safeguard. See generally Fed. R. Civ. P. 26(c); 8A Fed. Prac. & Proc. Civ.
Upon a moving party meeting the burden of both prerequisites, a court has "broad discretion in fashioning protective orders `to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.'" Bankr. Proc. Manual § 7026:16 (2016 ed.) (citing to Seattle Times Co. v. Rhinehart, 467 U.S. 20, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984)). Rule 26 enumerates certain remedies, which may be used singularly or in tandem with one another:
Fed. R. Civ. P. 26(c)(1)(A)-(H). The protective measures are not required to necessarily terminate with the end of the litigation. Bankr. Proc. Manual § 7026:16 (2016 ed.) (citing to In re Roman Catholic Archbishop of Portland in Oregon, 661 F.3d 417 (9th Cir. 2011)).
Accordingly, the Court must determine whether the Caliber Defendants have met the burden of demonstrating that a protective order is warranted, that they have conferred with Plaintiffs, and, if so, what remedies, if any, are warranted.
Rule 26 casts a very wide net as to what is included in the scope of discovery. Fed. R. Civ. P. 26(b)(1). The scope of discovery, while still broad, was condensed in the 2015 amendment's inclusion of a proportionality requirement. Fed. R. Civ. P. 26(b) advisory committee's note to 2015 amendment.
When a dispute arises over permissible discovery, Rule 37, which is incorporated into adversary proceedings by Rule 7037, governs the resolution of that dispute. See generally Fed. R. Bankr. P. 7037. In general, Rule 37 governs the provision of relief in the form of compelling a party's response and provides that "[o]n notice to other parties and all affected persons, a party may move for an order compelling disclosure or discovery." Fed. R. Civ. P. 37(a)(1); 8B Fed. Prac. & Proc. Civ. § 2285 (3d ed.). Importantly, Rule 37(a) also requires that the parties must confer in good faith or at least attempt to confer with the party that has failed to make the alleged disclosure or discovery. Fed. R. Civ. P. 37(a)(1); 8B Fed. Prac. & Proc. Civ. § 2285 (3d ed.) (noting that parties must make "[sufficient] efforts to avoid the need for a motion altogether"). A motion to compel must include a certification of the party's good faith conference or attempt to confer. Id.; Good Faith, BLACK'S LAW DICTIONARY (10th ed. 2014).
There are generally three types of motions that serve as a basis upon which a party may seek an order from a court to compelled action from the opposing party. See generally Fed. R. Civ. P. 37(a)(3)(A)-(C). To wit, a party may bring a motion to compel on the basis of compelling disclosure, pursuant to Rule 26(a), compelling a discovery response, pursuant to Rules 30, 31, 33, or 34, and finally in regards to a deposition. Id. Rule 37 provides an additional form of relief from mis- or malfeasance by an opposing party during discovery in the form of technical admissions. Fed. R. Civ. P. 37(a)(4), (c)(2). In addition to providing a basis for seeking to compel an opposing party to act, Rule 37 also provides for fee shifting, in certain circumstances, for the moving party. Fed. R. Civ. P. 37(a)(5).
In determining whether to grant relief to the moving party, a court has "broad discretion in all discovery matters, and such discretion will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse." Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir. 2000) (citing to Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982)) (internal quotation marks omitted); see also Smith v. DeTar Hosp. LLC, 2011 WL 6217497, at *1, *2 (S.D. Tex. Dec. 4, 2011). The party seeking to compel discovery has the burden of demonstrating that the discovery sought falls within the scope of discovery as provided by Rule 26. Smith, 2011 WL 6217497, at *2; see also Fed. R. Civ. P. 26(b)(1) (defining the scope as discovery
Accordingly, the Court must determine whether the disclosures sought by Plaintiffs are demonstrated to fall within the scope of discovery, given the proportionality considerations and limitations on discovery.
A motion seeking permission to file a supplemental pleading is governed by Fed. R. Civ. P. 15(d). Rule 15(d), in pertinent portion, states that "the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented." Fed. R. Civ. P. 15(d). Rule 15 grants courts wide latitude to grant relief to a plaintiff, even permitting a supplemental pleading when "the original pleading is defective in stating a claim or defense." Id. Further, a court may deviate from the time to respond set forth in Fed. R. Civ. P. 12(a) when setting the opposing party's deadline to respond.
In Haralson v. Campuzano, the Fifth Circuit reviewed a district court's decision to deny a motion for supplemental complaint. 356 Fed.Appx. 692 (5th Cir. 2009). In Haralson, the supplemental complaint "included actions which occurred after [the plaintiff] filed his original complaint..." Id. at 699. Ultimately, the Fifth Circuit affirmed the lower court's decision as being within its discretion because granting the motion would have caused prejudice to the defendants by delaying the resolution of the dispute between the parties. Id. (citing to Fed. R. Civ. P. 15(d) and emphasizing the use of "may" within the language of the rule). Similarly, the Fifth Circuit reviewed a lower court's denial of the plaintiffs' request to file a supplemental pleading in Burns v. Exxon Corp. 158 F.3d 336 (5th Cir. 1998). In Burns, the facts provided that the plaintiffs had "failed to show ... that any transaction or occurrence or event has transpired in the ten years since they filed their original complaint." Id. at 343. The plaintiffs argued that their motion should have been granted, arguing that the "freely give[n]" language of Rule 15(a) should be applicable to Rule 15(d). Id. However, the Fifth Circuit reasoned that while Rule 15(a) states that leave should be freely given, Rule 15(d) grants courts the discretion to permit a supplemental pleading when circumstances have changed since the original complaint was filed. Id.; see also In re Treyson Dev., Inc., 2016 WL 1604347, at *1, *14 (Bankr. S.D. Tex. Apr. 19, 2016); In re JCP Properties, Ltd., 540 B.R. 596, 607 (Bankr. S.D. Tex. 2015) (declining to adopt a tortuous reading of 11 U.S.C. § 1101(2)(C)). C.f. Yates v. United States, ___ U.S. ___, 135 S.Ct. 1074, 1099, 191 L.Ed.2d 64 (2015) (Kagan, J., dissenting) (referring to the practice of inserting implied words into a statute as a game of Mad Libs); Lamb's Chapel v. Center Moriches Union Free School Dist., 508 U.S. 384, 398, 113 S.Ct. 2141, 124 L.Ed.2d 352 (1993) (Scalia, J., dissenting); In re Tavares, 547 B.R. 204, 205-06, 215-16 (Bankr. S.D. Tex. 2016) (declining to play judicial Mad Libs).
This Court has previously ruled on a motion for sanctions. In re Lopez, 2015 WL 7572097, at *1 (Bankr. S.D. Tex. Nov. 24, 2015), appeal denied, 2016 WL 4546884, at *1 (S.D. Tex. Sept. 1, 2016) (Alvarez, J.) (denying defendant's request for leave to appeal for want of merit). However, the relief sought in Lopez was more significant than what Plaintiffs presently seek here. Compare [ECF No. 167] with In re Lopez, 2015 WL 7572097, at *5; see also [Case No. 13-7024, ECF No. 137].
Rule 37, in addition to providing the basis for a motion to compel, also provides for sanctions when a party fails on various bases in the discovery process. See generally Fed. R. Civ. P. 37(b)-(f). As with a motion to compel, the movant must certify that they have at least attempted to resolve the dispute with the allegedly offending party. Compare Fed. R. Civ. P. 37(a)(1) with Fed. R. Civ. P. 37(d)(1)(B); see also 8B Fed. Prac. & Proc. Civ. § 2285 (3d ed.). The Court's substantive power to sanction rests in its inherent equitable powers to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [title 11] ... [and] tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." 11 U.S.C. § 105(a). In more specificity, this Court's power to issue sanctions for discovery abuse is found in, but not limited by, Rule 37 of the Federal Rule of Civil Procedure, from which the bankruptcy rules derive. Fed. R. Bankr. P. 7037.
Rule 37(b) applies "[i]f a party fails to obey an order to provide or permit discovery,... the court where the action is pending may issue further just orders." Fed. R. Civ. P. 37(b)(2). In addition to a court's duty to require the disobedient party to pay the reasonable expenses caused by the failure to comply with a discovery order, Rule 37(b) empowers a court to implement a non-exhaustive list of available sanctions. Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii). In relevant part, these sanctions include (A)(i) in "directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims" and (A)(ii) in "prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence."
Rule 37(c) regards a party's continuing duty to supplement or correct their disclosures and responses in a timely manner pursuant to Fed R. Civ. P. 26(e). Under Rule 37(c), a party's failure to comply with Rule 26(e)'s duty to supplement permits a court to order the failing party to pay reasonable expenses. Fed. R. Civ. P. 37(c). Rule 37(c) also empowers the court to deny the use of the abused evidence, impose all available sanctions from Rule 37(b)(2)(A)'s enumerated list, or craft its own appropriate sanction. Id.
Under Rule 37(d), where a party fails to attend its properly noticed deposition, a court is empowered to issue all sanctions available under Rule 37(b)(2)'s enumerated list and is required to, instead of or in addition to any other sanctions, order the
The Supreme Court established two standards, a general and specific standard, in the context of imposing Rule 37(b)(2) sanctions for discovery abuse: (1) the sanction must be "just," and (2) the imposed sanction must be specifically related to the particular claim that was at issue in the order providing discovery. Insurance Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982); In re Lopez, 2015 WL 7572097, at *9-*10. In addition to the rules set forth by the Supreme Court, the Fifth Circuit has fashioned a proportionality consideration by requiring "that the sanction meet the Rule 37 goals of punishing the party which has obstructed discovery and deterring others who would otherwise be inclined to pursue similar behavior[.]" In re Lopez, 2015 WL 7572097, at *10 (citing Chilcutt v. United States, 4 F.3d 1313, 1319-20 (5th Cir. 1993)). Rule 37 provides a court with broad discretion to fashion remedies for the misconduct of a party. Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012).
In addition to Rule 37, the Court also has the ability to sanction a party when that party "impedes, delays, or frustrates the fair examination of the deponent" or when an incompetent witness is put forth by a party. Fed. R. Civ. P. 30(d)(2); see also Fed. R. Civ. P. 30(b)(6); Hoffman v. L & M Arts, 2015 WL 1000864, at *1, *6 (N.D. Tex. Mar. 6, 2015). When seeking sanctions, the Court, as with Rule 37, has broad discretion under the plain language of Rule 30(d)(2) to fashion an appropriate remedy to the improper conduct, such as a party putting up a witness that is not knowledgeable. Fed. R. Civ. P. 30(d)(2); see also In re Lopez, 2015 WL 7572097, at *11 (citing to Brazos River Authority v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006)). The Court may levy monetary damages. Fed. R. Civ. P. 30(d)(2). Further, the Court could limit a party's ability to present testimony, such as "forbidding it from calling witnesses who would offer testimony inconsistent with that given by the one it designated, or by forbidding it from presenting evidence on topics listed in the Rule 30(b)(6) notice on which it did not provide proper discovery." 8A Fed. Prac. & Proc. Civ. § 2103 (3d ed.) (opining that these types of sanctions would be consistent with Rule 37(c)(1)). However, as this Court stated in Lopez, these types of limiting sanctions cannot be the death knell for a party's case. Click v. Abilene Nat. Bank, 822 F.2d 544, 545 (5th Cir. 1987); In re Lopez, 2015 WL 7572097, at *9 (citing to Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012)).
As Rule 30(b)(6) contemplates and the Fifth Circuit has noted, corporate parties are different from normal parties because "it is not possible to literally depose a corporation itself, but such a deposition must instead be obtained from a natural person who can speak for the corporation." In re Lopez, 2015 WL 7572097, at *11 (citing to Brazos River Auth. v. GE Ionics, Inc., 469 F.3d at 433); see also Fed. R. Civ. P. 30(b)(6). For this reason, inter alia, courts have created other sanctions to redress deposition disputes when corporate representatives are involved, such as ordering that another representative be put forth. 8A Fed. Prac. & Proc. Civ. § 2103 n.16 (3d ed.) (citing to U.S. ex rel Fago v. M & T Mortg. Corp., 235 F.R.D. 11 (D.D.C. 2006), for the proposition that "[b]ecause the initial witness was not able to answer properly, the court would order the corporation to designate another witness," and also to Sony Elecs., Inc. v. Soundview Techs., Inc., 217 F.R.D. 104 (D. Conn. 2002), for the proposition that "[i]f it becomes obvious that the deposition representative
Therefore, the Court must look first to the conduct complained of to see whether it is violative of Rule 30(b)(6) and Rule 37 and, if so, fashion a remedy that is both just and proportional.
The Court has previously reviewed provisions of Rule 59 in the context of a motion to reconsider, which under Rule 9023 is brought under Rule 59(e) or Rule 60(b). See, e.g., [Case No. 15-1003, ECF No. 23] (citing to Shepherd v. Int'l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir. 2004), and In re Ramirez, 2010 WL 2639880, at *1 (Bankr. S.D. Tex. June 24, 2010)). Rule 59(a) provides that after a nonjury trial a court may "grant a new trial on all or some of the issues ... to any party ... for any reason for which new trials have heretofore been granted in a suit in equity in federal court." Fed. R. Civ. P. 59(a)(1)(B); see also Fed. R. Bankr. P. 9023 (incorporating Rule 59 into bankruptcy proceedings). When considering a motion for a new trial, Rule 59(a)(2) provides that "[a]fter a nonjury trial, the court may ... open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones, and direct the entry of a new judgment." Fed. R. Civ. P. 59(a)(2). Rule 9023 requires that the motion be filed within 14 days of the entry of judgment. Fed. R. Bankr. P. 9023; see also Fed. R. Bankr. P. 9001(7) (defining "Judgment" to mean "any appealable order").
The plain language of Rule 59(a)(2) indicates that a motion under that rule may be brought for many purposes, including seeking a new trial based on newly discovered evidence. 11 Fed. Prac. & Proc. Civ. § 2808 (3d ed.); see also Simon v. United States, 891 F.2d 1154 (5th Cir. 1990) (holding that a Rule 59(a) motion must clearly establish either a manifest error of law or fact or must present newly discovered evidence and cannot be used to raise arguments which could and should have been made before the judgment was issued). When considering a Rule 59(a)(2) motion brought under the guise of newly discovered evidence, the newly discovered evidence must have been existing at the time of the trial and the movant must be excusably ignorant of such facts despite their efforts to discover or learn such facts. 11 Fed. Prac. & Proc. Civ. § 2808 (3d ed.).
Relief under Rule 59(a) should be used sparingly as a party must demonstrate that "it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done, and the burden of showing harmful error rests on the party seeking the new trial." Sibley v. Lemaire, 184 F.3d 481, 487 (5th Cir.1999) (citing to Del Rio Distrib., Inc. v. Adolph Coors Co., 589 F.2d 176, 179 n.3 (5th Cir. 1979)) (internal quotations omitted); see also Asarco LLC v. Americas Min. Corp., 2009 WL 2168778, at *1, *2 (S.D. Tex. July 20, 2009) (Hanen, J.); Reeves v. MCI Telecomms. Corp., 1991 WL 574975, at *1, *12 (S.D. Tex. June 5, 1991) (stating that a party must show
As such, the Court will review the Motion to Reopen to see if Caliber Defendants have timely filed their motion that properly demonstrates an actionable basis, pursuant to Rule 59(a)(2), to reopen evidence in order to admit their newly discovered evidence.
This Court holds jurisdiction pursuant to 28 U.S.C. § 1334, which provisions that "the district courts shall have original and exclusive jurisdiction of all cases under title 11" and "all civil proceedings arising under title 11, or arising in or related to cases under title 11." See also 28 U.S.C. § 157(a); see, e.g., In re: Order of Reference to Bankruptcy Judges, General Order 2012-6 (S.D. Tex. May 24, 2012). Section 157 provides that bankruptcy judges may issue final orders or judgments where the matter is determined to be core, which includes "matters concerning the administration of the estate." 28 U.S.C. § 157(b)(2); see also Bass v. Denney (In re Bass), 171 F.3d 1016, 1022 (5th Cir. 1999). A bankruptcy court has jurisdiction over a "related to" matter when the "outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy." Wood v. Wood (In re Wood), 825 F.2d 90, 93 (5th Cir. 1987); see also Arnold v. Garlock, 278 F.3d 426 (5th Cir. 2001) (holding that "[c]ertainty or even likelihood of such an effect is not a requirement..."). This Court has jurisdiction over these matters pursuant to 28 U.S.C. §§ 157(b)-(c). See Wood, 825 F.2d at 93; see also Celotex Corp. v. Edwards, 514 U.S. 300, 307 n. 6, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995).
This Court may only hear a case in which venue is proper. Venue with respect to cases under title 11 or arising in or related to cases under title 11 is governed by 28 U.S.C. § 1409, which designates that venue may hold wherever "a proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending." Plaintiffs' bankruptcy case was pending before this Court, pursuant to 28 U.S.C. § 1408, at the time this Adversary Proceeding commenced. Therefore, venue is proper.
This Court also has an independent duty to evaluate whether it has the constitutional authority to sign a final order. Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). In Stern, the Supreme Court reasoned that bankruptcy judges are not protected by the lifetime tenure attribute of Article III judges, but they were performing Article III judgments by judging on "all matters of fact and law" with finality. Id. at 2618-19. Hence, the Court held Article III imposes some restrictions against a bankruptcy judge's power to rule with finality, but a bankruptcy court is permitted to issue final judgments and orders where the issue "arises in" or "arises under" bankruptcy, but not where the issue is merely "related to" bankruptcy. See § 157. However, Article III will be satisfied where parties knowingly and voluntarily consent to the bankruptcy court's power to issue final judgments. Wellness Int'l Network v. Sharif, ___ U.S. ___, 135 S.Ct. 1932,
The matter at bar arises from Plaintiffs' Chapter 13 case, which is a core proceeding under § 157(b)(2). Although Caliber Defendants admit that the Court has jurisdiction over the claims arising under the Bankruptcy Code, they deny that Plaintiffs' claims arising under state law are core claims and therefore do not consent to the entry of final orders or judgments by this Court on non-core claims. [ECF No. 101 at 2]. Plaintiffs' claims, as alleged in their Second Amended Complaint, present a mixture of core and non-core claims. See generally [ECF No. 105]; see also [ECF Nos. 138 at ¶ 12, 146 at ¶ 40]. This Court's authority to issue an order to compel the production of documents with respect to the remaining claims is different from this Court's authority to issue final judgments on the merits of those remaining claims. C.f. In re Texas Extrusion Corp., 844 F.2d 1142, 1154-55 (5th Cir. 1988). A similar distinction is also applicable to a motion for leave to file a supplemental complaint, a motion to reopen evidence, and a motion for sanctions. Id. This is because the integrity of the discovery process helps to fully apprise a bankruptcy court as to the threshold issue of whether a merited and jurisdictionally proper claim stands before it, and it therefore must have some power to enforce this process irrespective of whether the underlying claim is core or non-core. See In re Allison, 2006 WL 2620480, at *7 (Bankr. S.D. Tex. Sep. 12, 2006) ("At a minimum, a bankruptcy court has jurisdiction to determine its own jurisdiction"); see also Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978) (noting that "discovery itself is designed to help define and clarify the issues"). Rule 26, which applies in adversary proceedings in bankruptcy, bestows on parties a duty to disclose information which the parties intend to use to support their claims or defenses, including initial disclosures and pretrial disclosures. Fed. R. Civ. P. 26; see also Fed. R. Bankr. P. 7026. In conjunction, Rule 37(a)(2) provides that a motion for an order compelling disclosure or discovery must be made in the court where the action is pending. Fed. R. Civ. P. 37(a)(2); see also Fed. R. Bankr. P. 7037. Rule 37 simultaneously authorizes the court which has issued an order to provide or permit discovery to issue sanctions on parties for failure to comply with such orders for discovery. Without concluding whether the Court has the constitutional authority to grant or deny final judgment on the merits of the matters pertaining to the underlying claims absent consent of the parties, this Court determines it may grant or deny the pending Joinder, Motion to Compel, Motion for Leave, Motion for Sanctions, and Motion to Reopen as doing so is not a final order that is potentially violative of Stern because there is not a "final determination of the rights of the parties to secure the relief they seek." Williams v. Midwest Emp'rs Cas. Co., 243 F.3d 208, 209 (5th Cir. 2001) (citing to Cunningham v. Hamilton County, 527 U.S. 198, 204, 119 S.Ct. 1915, 144 L.Ed.2d 184 (1999)); see also In re Lopez, 2016 WL 4546884, at *2-4 (holding that the bankruptcy court's discovery-related order was interlocutory and not subject to review pursuant to the requirements of 28 U.S.C. § 158(a)(3)).
In the Joinder, Caliber Defendants join with HSBC on its motion seeking, inter alia, a protective order covering the discovery produced in this litigation. See generally [ECF No. 45]; see also [ECF No. 39]. While HSBC's motion is moot as it has been dismissed from this litigation, the request by the Caliber Defendants nevertheless
Rule 26 requires the moving party to certify that they have conferred with the opposing party prior to seeking relief from the court. Fed. R. Civ. P. 26(c)(1). Here, the moving party is not Caliber Defendants, but rather HSBC, as Caliber Defendants are merely joining with HSBC. Compare [ECF No. 39] with [ECF No. 45]. In HSBC's motion, it did certify that it conferred with Plaintiffs' Counsel on August 18, 2014. [ECF No. 39 at 15]. Moreover, HSBC avers that Plaintiffs' Counsel refused to agree to a protective order. Id. at 7-8. As such, the requirement to confer was met by the underlying motion that Caliber Defendants later joined. Compare [ECF No. 39 at 15] with Fed. R. Civ. P. 26(c)(1).
Turning to the basis for relief, Caliber Defendants seek a protective order as Plaintiffs seek "internal procedures that are confidential and are trade secrets." [ECF No. 45 at 2]. Caliber Defendants also assert that a protective order is necessary because certain discovery requests by Plaintiffs are overly broad, unduly burdensome, and harassing. See generally id. at 2-5; c.f. [ECF No. 146]. Aside from the trade secrets and confidential basis, Caliber Defendants bases for relief are blank assertions without adequate underpinnings to warrant the issuance of a protective order. See Fed. R. Civ. P. 26(c). As discussed later in this opinion, the discovery that is subject to an assertion of trade secrets or confidential is both relevant and necessary for the prosecution of Plaintiffs' case. See Merrill, 443 U.S. at 363, 99 S.Ct. 2800; 8A Fed. Prac. & Proc. Civ. § 2043; see also Fed. R. Civ. P. 26 advisory committee notes. As such, the Court finds that Caliber Defendants have shown good cause as to protecting trade secrets and confidential information within the discovery sought by Plaintiffs, but not as to the remaining bases for relief.
As Caliber Defendants' Joinder has imputedly met the conferment requirement and has demonstrated good cause as to some bases for relief, the Court finds that the Joinder should be granted as to a protective order being issued to restrict Plaintiffs' use of such information produced that constitutes a trade secret or is confidential in nature to the prosecution of this litigation solely. Accordingly, Plaintiffs and Caliber Defendants should confer and shall submit a proposed form of protective order within 30 days of the entry of the Court's accompanying order.
The Plaintiffs' Motion to Compel seeks relief for various reasons on a variety of requests. See generally [ECF No. 138 at 6-11]. Due to the non-uniformity of the requests and the basis for which respective relief is sought, the Court will look at each point that Plaintiffs allege Caliber Defendants are deficient in regards thereto. Nevertheless, Plaintiffs have put forth a good faith effort to resolve the dispute prior to filing the Motion to Compel, as indicated by the conference call that occurred on May 26, 2016, and as evinced by the emails between the parties to attempt to resolve the dispute in 2016. Pls. Ex. 17; Caliber Defs. Exs. 15-18, 28. Therefore, the Court finds that the prerequisite requirement of attempting in good faith to resolve the dispute prior to seeking court action has been met by Plaintiffs. [ECF No. 138 at 17]; see also Fed. R. Civ. P. 37(a)(1).
As previously discussed, Rule 26 and Rule 37 provide the scope for discovery and the consequences for a party's failure in the discovery process. Specifically, Rule 26 provides that discovery sought must be relevant to a claim and proportional given
Plaintiffs' Request for Production No. 1
Plaintiffs allege that the Caliber Defendants "have not complied with this request." [ECF No. 138 at 6]. Plaintiffs further allege that what Caliber has produced is incomplete, e.g. the spreadsheet does not contain all of the notes present within Caliber's system of record, and that U.S. Bank has not produced any discovery. Id.; see also Pls. Exs. 9-11. Caliber Defendants argue that the Plaintiffs' request is overly broad and vague insofar as the wording of the request is ambiguous as to the scope. [ECF No. 146 at 17-20]. Furthermore, Caliber Defendants state that both Caliber and U.S. Bank have "produced all documents in their possession, custody, and control that they identified as responsive and relevant ..." and substantiate that in their explanation of how Caliber's version of the Fiserv system works. Id. at 18-20; see also Pls. Exs. 16-17, 20-25, 51-54, 56-58, 61-62, 63
Turning now to the scope of discovery under the amended Rule 26 and applying it to the instant case. It is quickly apparent that the Plaintiffs Request No. 1 is indeed somewhat vague in its use of "any statement... made by any person concerning the subject matter of this lawsuit." [ECF No. 138 at 6]. The subject matter of this litigation can be interpreted very broadly and to absurd lengths that clearly fall outside of the scope contemplated by Rule 26. Compare [ECF No. 138 at 6] with Fed. R. Civ. P. 26(b). Plaintiffs' Request No. 1 could be better read, in the spirit of Rule 26's proportionality requirements, by limiting the scope to persons within the control of the Caliber Defendants and their statements made regarding the Plaintiffs' account. However, the vagueness of Plaintiffs' Request No. 1 does not excuse the Caliber Defendants from failing to respond or reasonably responding. See generally Fed. R. Civ. P. 37(a)(4). While Caliber has not failed to respond, the issue is whether its response, thus far, can be categorized as an incomplete response. The responses from Caliber have included the Plaintiffs' accounts' servicing notes, transaction history, activity history, and some history from HSBC. See generally Pls. Exs. 20-25, 50-54, 56-59, 61-62, 63, 64; Caliber Def. Ex. 17. Caliber Defendants proffer that U.S. Bank has produced all documents that are responsive to Request No. 1, however Plaintiffs have, inconceivably, not included in their exhibits what U.S. Bank has produced to date so it is not possible for this Court to make a determination as to the adequacy of U.S. Bank's production in response to Request No. 1. Compare
Accordingly, this Court finds that, although the Caliber Defendants have the burden of responsiveness to the Plaintiffs discovery requests, to the extent that they fall within the scope of discovery, Plaintiffs have not met their burden of demonstrating that the additional production sought falls within the scope of discovery. See generally Fed. R. Civ. P. 26(b); Smith, 2011 WL 6217497, at *2. Therefore, Plaintiffs' Motion to Compel, as to Request For Production No. 1, is denied.
Plaintiffs' Request for Production No. 2
The Plaintiffs' second request for production ("
Therefore, the Court finds that Caliber Defendants' response to Plaintiffs' Request No. 2 is deficient, as evinced by the individuals disclosed in Pls. Ex. 21, and, as such, Caliber Defendants must supplement their response to Plaintiffs' Request No. 2 by providing the requested information on each individual that has "handled or were responsible for the accounts of Plaintiffs." Plaintiffs' Motion to Compel, as to Request No. 2, therefore, is granted.
Plaintiffs' Requests for Production Nos. 3-9
For these requests for production ("
After the Motion to Compel was filed, Caliber Defendants supplemented their responsive production with the 2016 Production. See generally Pls. Exs. 20-25, 50-54, 56-59, 61-62, 63, 64; Caliber Def. Ex. 17. At the September Hearing and October Hearing, both of which occurred after the 2016 Production was provided, Plaintiffs offered arguments regarding the necessity of having documents produced in the native format utilized by the Caliber Defendants as compared to what had been produced by the Caliber Defendants to date. Plaintiffs' primary focus of this argument was a series of exhibits wherein a single spreadsheet had been converted into PDF file format that resulted in column headings becoming separated from their columns. See Pls. Exs. 29-33. However, during the October Hearing, Caliber Defendants asserted that the exhibits did in fact belong to HSBC, originally as a spreadsheet, and represented that they were, in actuality, the same as two other exhibits. Compare Pls. Exs. 29-33 with Pls. Exs. 46-47.
Turning to the Plaintiffs' complaint of native format, Rule 34 provides, in relevant part, that "[a] party must produce documents as they are kept in the usual course of business...." Fed. R. Civ. P. 34(b)(2)(E)(i). Thus, Plaintiffs are correct when they state that Caliber Defendants' production of documents is not in its native format. [ECF No. 138 at 7-9]. The analysis does not stop there because Rule 34 goes on to provide that a respondent may alternatively produce documents "organize[d] and label[ed] ... to correspond to the categories in the request." Fed. R. Civ. P. 34(b)(2)(E)(i). Rule 34 further provides that "[i]f a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms." Fed. R. Civ. P. 34(b)(2)(E)(ii) (emphasis added). Thus, the inquiry turns on whether the Plaintiffs specified a form in Request Nos. 3-9 and, if so, whether Caliber Defendants' responsive production of documents complies with that form. In Plaintiffs' Request Nos. 3-9, the instructions make no reference to any particular form in which Caliber or U.S. Bank were to format their responses and, in fact, the language describing what constitutes electronically stored information specifically denotes a "reasonably usable form." See generally [ECF No. 138-2 at 28, 31-32, 41, 43-44]. Due to Plaintiffs' failure to make Request Nos. 3-9 in a particular format, the Court finds that Caliber Defendants were free, pursuant to the provisions of Rule 34, to either respond in the native format or in a reasonably usable form. See Fed. R. Civ. P. 34(b)(2)(E)(ii); c.f. Jaso v. Bulldog Connection Specialists LLC, 2015 WL 11144603 at *1, *6 (S.D. Tex. Oct. 15, 2015) (Tagle, J.). Since the form of Caliber Defendants' responses is plainly permitted under Rule 34, the Court finds that Plaintiffs argument, insofar as Requests Nos.
Plaintiffs' Requests for Production Nos. 10 and 13
In the Motion to Compel, Plaintiffs only state that they have limited the scope of two of their Requests for Production, Nos. 10 and 13, ("
Rule 26 provides that a court may issue "an order to protect a party or person from annoyance, embarrassment, oppression,
Here, Plaintiffs' Requests Nos. 10 & 13, as amended, appear to fall within the scope of discovery proportional to the needs of the instant case. See generally Fed. R. Civ. P. 26(b)(1). However, that is not to say that Caliber Defendants' assertion of the confidential nature of the information sought by Plaintiffs' Requests Nos. 10 & 13 is not also within the scope of what is required for a protective order, even given the relatively general nature of Plaintiffs' pleading. Compare Fed. R. Civ. P. 26(c)(1) with Scott, 868 F.2d at 792. In consideration of the equities of the parties, the Court finds it appropriate to grant the Plaintiffs' Motion to Compel, as to Requests Nos. 10 & 13, to the extent that Caliber Defendants only produce non-privileged material, but also to grant Caliber Defendants' Joinder insofar ordering that Plaintiffs shall not disclose the contents of any production by Caliber Defendants in response to, at a minimum, Requests Nos. 10 & 13, outside of this litigation. The Court further finds that Plaintiffs' Requests Nos. 10 & 13 are deemed amended to the limited scope of Caliber Defendants' policies and procedures for filing Rule 3002.1 notices and accepting funds from a filed Rule 3002.1 notice, pursuant to Plaintiffs' representations in the Motion to Compel and Plaintiffs' Counsel's representations in her email to Caliber Defendants' Counsel on May 26, 2016. See Pls. Ex. 15; Caliber Defs. Ex. 16.
Plaintiffs' Requests for Production Nos. 14 and 15
In regard to Plaintiffs' Requests for Production Nos. 14 & 15, ("
The scope of discovery in litigation is not without boundaries, specifically the emphasis on proportionality to the needs of the case under the recent revisions to Rule 26. See generally Fed. R. Civ. P. 26 advisory committee's note to 2015 amendment (noting that standards must be applied evenhandedly). Rule 26's proportionality requirement restricts discovery on non-privileged material in consideration of "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." Fed. R. Civ. P. 26(b)(1) (emphasis added).
Here, Plaintiffs broadly request a wide range of information related to Rule 3002.1. [ECF No. 146 at 25] (quoting Plaintiffs' requests for production). As Caliber Defendants contend, Requests Nos. 14 & 15 are somewhat vaguely worded. The Court is perplexed at Plaintiffs' Requests Nos. 14 & 15 that, based on the plain language, appear to be an attempt, in large part, to shift researching public information from Plaintiffs to Caliber Defendants under the guise of the discovery process. Id. (requesting court pleadings without limiting the scope to a certain area). The proportionality requirement for the scope
Therefore, the Court finds that Plaintiffs' Requests Nos. 14 & 15 are overly broad but at the same time relevant, in part, to this litigation. As such, the Court finds that Plaintiffs' Motion to Compel as to Requests Nos. 14 & 15 should be granted to the extent that Caliber Defendants shall disclose any documents presently within their files that are responsive to Requests Nos. 14 & 15. The Court also finds that Plaintiff's Motion to Compel as to Requests Nos. 14 & 15 should be denied to the extent that Caliber Defendants shall not be required to produce any documents responsive to Requests Nos. 14 & 15 not presently within their files. The Court further finds that Plaintiffs' Requests Nos. 14 & 15 are deemed amended, as denoted above by the strikethrough, pursuant to Plaintiffs' representations in the Motion to Compel and their Counsel's representations in her email to Caliber Defendants' Counsel on May 26, 2016. See Pls. Ex. 15; Caliber Defs. Ex. 16.
Plaintiffs' Request for Production No. 16
Plaintiffs seek information regarding the Caliber Defendants compliance with bankruptcy laws and rules, specifically what the Caliber Defendants did in evaluating or ensuring compliance. ("
In order for a court to grant relief requested in a motion to compel, the movant must demonstrate that the request falls within the scope of discovery. Smith, 2011 WL 6217497 at *2; see also Fed. R. Civ. P. 26(b)(1). Here, Plaintiffs' only contention in their Motion to Compel is that the information "is highly relevant to the issues in this case." [ECF No. 138 at 11]. Such a barebones statement does not meet the burden of demonstrating why such an expansive request falls within the scope of discovery. Compare [ECF No. 138 at 11] with Fed. R. Civ. P. 26(b)(1). At the October Hearing, the Court questioned Plaintiff's Counsel directly on Request No. 16,
In consideration of the foregoing, Plaintiffs have minimally demonstrated the relevance of Request No. 16 to this litigation sufficient to meet their burden. Caliber Defendants' contention that such audits, should any exist, may be subject to privilege or constitute work product is a matter that is provided for under Rule 26 such that their objection is not well taken. Accordingly, the Court finds that Plaintiffs' Motion to Compel as to Request No. 16 should be granted. The Court further finds that a protective order is appropriate to cover all production for Request No. 16.
Plaintiffs' Requests Nos. 17 and 19
In Plaintiffs' Requests 17 and 19, ("
In order to succeed on their Motion to Compel, Plaintiffs had the burden of demonstrating that the requested discovery falls within the scope of discovery. Smith, 2011 WL 6217497, at *2; see also Fed. R. Civ. P. 26(b)(1). The language of Requests Nos. 17 & 19, as compared to the argument presented in the Motion to Compel and also to the exhibits admitted and oral arguments from the September Hearing and October Hearing unconvincingly demonstrates
The Court is left with only one possible finding — Plaintiffs have utterly failed to carry their burden of demonstrating that the requested discovery falls within Rule 26's scope of discovery given the proportionality requirements that this Court impressed upon the parties that it would require adherence to. Therefore, the Court finds that Plaintiffs' Motion to Compel as to Requests No. 17 & 19 should be denied.
Plaintiffs' Request for Production No. 20
Here, Plaintiffs are requesting information that explains the various codes that are included in Caliber Defendants' production. ("
The impetus for Request No. 20 is that the documents that Caliber Defendants have produced are responsive to Request No. 20, but thus far is of little value to Plaintiffs if they cannot interpret what it means due to a lack of definitions for the codes used. The Court, especially in light of Caliber Defendants' averment in their response to the Motion to Compel, finds that any remaining information that defines or explains the codes utilized by Caliber Defendants in any document produced thus far should be produced. Thus, the Plaintiffs' Motion to Compel, in respect to Request No. 20, is granted.
Other Requests that have been Withdrawn
In the Motion to Compel, Plaintiffs state that they have withdrawn certain of their Requests for Production. See [ECF No. 138 at 9]. An email between the parties from May 26, 2016, corroborates that assertion while adding that an additional request has been withdrawn. Caliber Defs. Ex. 16 at 1. Based on the representations of the Plaintiffs, the Court finds it appropriate to deem that Requests No. 11, 12, and 18 have been withdrawn.
In Plaintiffs' Motion for Leave, they seek to file a supplemental complaint based on a series of events that came to light during Plaintiffs' deposition of Mr. Harris, Caliber's corporate representative, on July 27, 2016. See generally [ECF No. 150]. The Motion for Leave states that Mr. Harris' deposition revealed a series of alleged transactions during 2014 where the
Rule 15 provides, in relevant part, that "the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented." Fed. R. Civ. P. 15(d); see also Cyberonics, 523 F.Supp.2d at 555 (citing the rule and to Burns v. Exxon Corp., 158 F.3d 336 (5th Cir. 1998)). The text of Rule 15 focuses on some change in circumstances that has transpired since the original pleading that necessitates a supplemental pleading be filed. See Fed. R. Civ. P. 15(d) (describing the order of events under which the need for a supplemental complaint may arise). To wit, the Fifth Circuit in Burns found that the lower court "was within its discretion to deny leave to supplement" by distinguishing the differing standards between an amended complaint, pursuant to Rule 15(a), and a supplemental complaint, pursuant to Rule 15(d), when plaintiffs failed to demonstrate a change in circumstances since they filed their original complaint. Burns, 158 F.3d at 343; see also Fed. R. Civ. P. 15(a), (d); Haralson, 356 Fed.Appx. at 699.
Here, Plaintiffs filed their Second Amended Complaint on March 12, 2015. [ECF No. 78]. The Motion to Leave states that the changes to Plaintiffs' account occurred during 2014. [ECF No. 150 at 3]; Pls. Ex. 17 at 2; see also [ECF No. 156 at ¶ 13] (describing the series of transactions between January and November 2014). Unlike the plaintiffs in Burns, Plaintiffs here have demonstrated that transactions transpired after the original pleading. Compare Burns, 158 F.3d at 343 with [ECF No. 150] and [ECF No. 156] and [ECF No. 1]. However, as Caliber Defendants argue, those transactions occurred prior to the Second Amended Complaint being filed. [ECF No. 156 at ¶ 20]; Compare [ECF No. 150] and [ECF No. 156] with [ECF No. 78]. Thus, the issue turns on whether the pleading being supplemented is the original pleading or if it is the Second Amended Pleading. Here, the language of Rule 15(d) is ambiguous as to whether the pleading being supplemented is the original pleading or a subsequent amended pleading, and if it is a subsequently amended pleading, whether that pleading swallows up a factual basis that could give rise to a supplemental pleading like Jonah and the leviathan.
Plaintiffs' Motion for Sanctions was filed five days prior to the October Hearing and is, in large part, a continuation of the Motion to Strike wherein Plaintiffs sought to preclude Mr. Burton, an in-house attorney for Caliber, from testifying at the September Hearing or October Hearing on the basis that Caliber Defendants failed to disclose him as a potential witness in their initial Rule 26 disclosures. Compare [ECF No. 157] with [ECF No. 167 at 12-13]. In their Motion for Sanctions, Plaintiffs also argue that Caliber Defendants should not be permitted to present Mr. Burton as a witness because Mr. Harris was allegedly an incompetent witness in violation of Rule 37. [ECF No. 167 at 9-12]. In sum, the relief sought by Plaintiffs under both lines of argument is to prohibit Mr. Burton or "Caliber's in-house lawyer" from testifying. [ECF No. 167 at 12-13]; see also [ECF No. 157]. In addition to preventing Mr. Burton's testimony, Plaintiffs seek attorney's fees, although Plaintiffs explicitly stated they are not presently seeking fees for filing their Motion for Sanctions, they did nevertheless reserve the right to seek those fees in the future. [ECF No. 167 at 13]. Caliber Defendants did not file a response to the Motion for Sanctions, which they explained at the October Hearing was due to the short timeframe between filing and the October Hearing. Caliber Defendants further stated that they felt the Motion for Sanctions mirrored the Motion to Strike.
At the October Hearing, the Court heard arguments regarding Plaintiffs' Motion to Strike contemporaneously with the Motion for Sanctions as they both involved whether Mr. Burton would be permitted to testify. Subsequent to the October Hearing, the Court entered an order granting Plaintiffs' Motion to Strike on the basis that Caliber Defendants failed to disclose
The Court must look to the relief sought in the Motion for Sanctions to determine whether there is any relief sought beyond that which was granted on Plaintiffs' Motion to Strike. The first basis in the Motion for Sanctions which is based on an alleged violation of Rule 37 by Caliber's corporate representative, Mr. Harris, and the testimony he provided. [ECF No. 167 at 9-12]. The Court today does not need to reach the merits of whether Mr. Harris was an incompetent witness because the very relief sought under this argument is simply the preclusion of testimony from "Caliber's in-house lawyer" at the hearings on the instant motion. Id. at 12. Plaintiffs, in that line of argument, sought no further relief despite conclusory wording in other parts of the Motion for Sanctions. Compare [ECF No. 167 at 12] (requesting the Court not permit "Caliber's in-house lawyer to testify at the continued hearing ...") with [ECF No. 167 at 1] (titling the motion to include "Anyone Else Not Presented ...") and [ECF No. 167 at 2] (stating that Plaintiffs sought to "exclude the testimony of Clint Burton or anyone else not presented...") and [ECF No. 167 at 2-3 (alleging that "[i]t would be highly prejudicial to Plaintiff[s] for [Burton] ... or anyone else who was not presented ...") and [ECF No. 167 at 3] (summarizing their requested relief to include Mr. Burton and anyone else]. Plaintiffs' second line of argument suffers the same exact flaw, the relief sought, despite what may be summarized elsewhere in the Motion for Sanctions, is simply that the Court "prohibit Mr. Burton's testimony ..." [ECF No. 167 at 12-13]. Plaintiffs' summarization of the Motion for Sanctions belies the actual content of the relief sought when Plaintiffs make their arguments therein. Compare [ECF No. 167 at 2-3] with [ECF No. 167 at 9-13]. The Court is left with only one conceivable result — the Motion for Sanctions is largely moot since the bulk of the relief sought is barring testimony by Mr. Burton and such relief has already been granted by the Court. Compare [ECF No. 175] with [ECF No. 157] and [ECF No. 167].
The only remaining relief sought by Plaintiffs is attorney's fees, which was sought in the Motion for Sanctions. [ECF No. 167 at 13]. However, as Plaintiffs raised the issue only to state that they were reserving the right to seek fees at a later date, there is no remaining relief upon which the Court need rule within the Motion for Sanctions.
While the Court is sympathetic to the Plaintiffs' plight in regard to the testimony of Mr. Harris, the Court does not need to reach the merits of whether he was or was not an incompetent witness because the relief sought by the Motion for Sanctions has already been granted by the Court when it granted Plaintiffs' Motion to Strike and such an analysis is unwarranted at present. [ECF No. 175]; see also [ECF No. 167 at 4-12]. Moreover, Plaintiffs conversed with Caliber Defendants over the potential of a subsequent deposition of a different corporate representative to supplement Mr. Harris' deposition, but were at loggerheads over allocation of the costs of such an endeavor. See generally Caliber Defs. Ex. 18. While Plaintiffs stated at the September Hearing there was an agreement to introduce a response email, none was offered or admitted into evidence during the course of either hearing. The Court, as discussed above, retains the ability to fashion a remedy appropriate to the circumstances, including fee shifting or ordering a supplemental deposition, when a moving party seeks sanctions, but no such
Based on the foregoing, the Court finds that the Plaintiffs' Motion for Sanctions should be granted as to Plaintiffs reservation of the right to seek attorney's fees and denied as moot as to all other relief.
In their Motion to Reopen, Caliber Defendants seek to admit into evidence, post-hearing, a recent filing in Plaintiffs' bankruptcy case. See generally [ECF No. 178]. The filing is SPS' 3002.1 Notice that was filed on October 31, 2016. [Case No. 10-70594, ECF No. 142]; see also [Case No. 13-7031, ECF No. 178 at 2-3]. Caliber Defendants seek to admit SPS' 3002.1 Notice because it reinforces their argument that there has never been an "attempt to collect the 2010 taxes or the alleged post-petition escrow disbursements from the [Plaintiffs]." [ECF No. 178 at 2]. The Motion to Reopen is brought under Rule 59(a)(2)'s provision for reopening evidence to admit newly discovered evidence. Id. at 3 (citing to In re Rule, 38 B.R. 37, 42 (Bankr. D. Vt. 1983), for the proposition that Rule 59 permits reopening evidence prior to a judgment being entered). Plaintiffs filed their response in which they argue that the Motion to Reopen is improper because "there has been no judgment, and there will be no judgment ..." and that the 3002.1 notice was not filed until after the October Hearing concluded. See generally [ECF No. 183 at 1-2].
Rule 9001's definition of judgment provides that the order must be appealable. An appealable order is a final order and an order "is not final unless it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." In re Lopez, 2016 WL 4546884, at *2. The only order that has been entered in relation to the September Hearing and October Hearing is not one for which Caliber Defendants seek to admit further evidence. See [ECF No. 175] (granting Plaintiffs' motion, [ECF No. 157]). Taking Caliber Defendants' assertion that a Rule 59 motion can be reviewed prior to a judgment being issued as accurate, the issue becomes whether a valid basis has been demonstrated. Here, Caliber Defendants' only basis is newly discovered evidence in the form of the SPS' 3002.1 Notice. However, the October Hearing, the last for the motions at bar, was held on October 18, 2016. Thus, the SPS' 3002.1 Notice cannot qualify as newly discovered evidence because it did not exist prior to the October Hearing, as Plaintiffs' deftly point that In re Rule precludes. Compare In re Rule, 38 B.R. at 43 and [Case No. 10-70594, ECF No. 142] with [Case No. 13-7031, ECF No. 178]. Accordingly, the Court finds that SPS' 3002.1 Notice does not qualify as "newly discovered evidence" for the purposes of supplementing the evidence admitted in the hearings on the motions at bar. See N.L.R.B. v. Jacob E. Decker and Sons, 569 F.2d 357, 364 (5th Cir. 1978).
As Caliber Defendants brought their Motion to Reopen only on the basis of newly discovered evidence, which is not qualified to be considered as newly discovered evidence for the purposes of the motions at bar, the Court finds that the Motion to Reopen should be denied as it does not comply with the provisions of Rule 59.
Pending before the Court were three separate matters pertaining to the Plaintiffs in addition to Caliber Defendants' Joinder and Motion to Reopen. The parties presented evidence and argument over the course of nearly two full days of hearings spread over a month of time. In summary of the foregoing, the Court finds that the Plaintiffs' Motion to Compel has been granted as to Requests Nos. 2, 20 in their entirety, granted to the extent that Caliber
An Order consistent with this Memorandum Opinion will be entered on the docket simultaneously herewith.
