Alutiiq International Solutions, LLC v. OIC Marianas Insurance
Alutiiq International Solutions, LLC v. OIC Marianas Insurance
Opinion of the Court
Order
Introduction
Four years of well-documented delays and discovery abuses by defendant OIC Marianas Insurance Corporation and its principal Dennis Lyon have culminated in plaintiff Alutiiq International Solutions, LLC’s instant motion to strike the surety’s answer and enter a default against it as the sanction for this litigation misconduct.
Months after OIC’s objections to the R & R were fully briefed, in a last-ditch effort to stave off case-dispositive sanctions, OIC obtained new lawyers—its fourth set—who filed a vaguely titled emergency motion for relief.
Having thoughtfully considered de novo Magistrate Judge Ferenbach’s findings and recommendation
Background
This litigation over a performance bond issued by OIC Marianas to guaranty NCC Electrical Service’s construction work on the OJO Encino Day School in New Mexico spans three lawsuits, two of which are consolidated here.
As Magistrate Judge Ferenbach accurately recounts, the litigation has been “straining,” Lyon and OIC have repeatedly refused to comply with the court’s discovery orders, and the docket in both cases is peppered with Alutiiq’s motions to compel and escalating requests for sanctions.
The first order compelling discovery in the instant case was entered by Magistrate Judge Nancy Koppe on May 13, 2013. It directed OIC to provide proper responses to various written-discovery requests including requests for production (RFPs) 11 and 12 and interrogatory request 5 and to “submit a detailed explanation of the search it conducted to find responsive documents in its possession, custody and control in responding to the Request for Production of Documents Numbers 11, 12, and 13.”
Magistrate Judge Ferenbach conducted an evidentiary hearing to consider the two issues raised in Alutiiq’s latest discovery-sanctions motion: (1) whether OIC complied with Magistrate Judge Koppe’s order by providing proper responses to Alutiiq’s written discovery requests, and (2) if not, whether case-dispositive sanctions should be imposed.
OIC objects to the report and recommendation,
Discussion
When a party files specific written objections to a United States magistrate judge’s findings and recommendations,
A. Judge Koppe Warned OIC that Case-Dispositive Sanctions May Issue.
At the beginning of Magistrate Judge Koppe’s May 13, 2013, hearing, OIC’s then-counsel acknowledged that the company’s interrogatory and request-for-production responses were inadequate:
----Your Honor, before we continue any further, we’ve just been retained recently. So we’ve been having to deal with the Motion for Default judgments and we— we’ve been very occupied with that motion. And so we’ve been trying to—well, we—we hit the road running pretty fast. So we haven’t had adequate time to go over every single detail of the interrogatories and whatnot. But what we can—what we can represent to the Court is that we agree with opposing counsel that some interrogatories were not adequately addressed and some were adequately addressed. And if the Court would allow us 15 days to address them individually, we would adequately respond to every interrogatory and—and request for production.26
And when issuing her ruling, Magistrate Judge Koppe emphasized to OIC—not just to counsel—that case-dispositive sanctions would issue for continued discovery violations. She explained, “to be clear, failure to provide any supplemental discovery that’s ordered at this hearing—I want your client to be very aware that failure to provide that supplemental discovery could subject your client to severe sanctions, including case dis-positive sanctions.”
B. OIC Did Not Fully Respond to RFP 11.
Alutiiq’s RFP 11 asked OIC to “Produce any and all documents that support, evidence, or corroborate your answer to [Interrogatory 4],”
But in response to RFP 11, OIC asserted a completely different basis for refusing to provide responsive documents: this request “calls for an improper disclosure of Defendant’s counsel’s mental sense impressions” of what documents support the decision to utilize Standard From 25,”
that documents in the possession, custody and control of OIC Marianas must be produced in response to this request for production. Further, OIC ... in responding to this request for production ... must provide a detailed explanation of the search it conducted to find responsive documents in its possession and it must provide that detailed explanation to plaintiffs counsel along with its supplemental response to this request for production.34
Both the responsive documents and the detailed explanation of the search for those documents were due to Alutiiq by May 28, 2013.
During the evidentiary hearing before Magistrate Judge Ferenbach on Alutiiq’s renewed motion for sanctions,
OIC objects to Magistrate Judge Feren-bach’s finding that OIC should have pro-
C. OIC’s Responses to Interrogatory 5 and RFP 12 Are Also Deficient.
Interrogatory 5 directed OIC: “To the extent that you contend that Alutiiq is not the obligee under the Performance Bond, describe in full detail all facts upon which you base your contention.”
To the extent that [OIC] is not obligated to Alutiiq under the Performance Bond to the extent that the Bond issues, Standard Form 25 ... states ‘We, the Principle [sic] and the Surety(ies), are firmly bound to the United States of America, (hereinafter called the Government) in the above penal sum.[’] In further support that the Government is the obligee, please see “The Miller Act”, 40 U.S.C. 3131, subsections (a)(b) and (c), 48 C.F.R. 28.106-3(b) (2009 vol. 1 pp. 577-578) and 48 C.F.R. 28.102-2(b)(1) (2009 vol. 1 p. 575). To that extent, the obligee under the Bond is the Government.46
With RFP 12, Alutiiq sought all documents that supported OIC’s answer to this interrogatory request.
In the hearing before Magistrate Judge Koppe, counsel for OIC stated as to interrogatory 5, “we could supplement that one [ ].”
In its supplemental response to interrogatory 5, OIC stated:
The bond that was issued states on its face that the obligation is to the United States of America. Specifically, the Bond contains the following language, “We, the Principal and Surety, are firmly bound to the United States of America, hereinafter called the Government, in the above penal sum.” The bond contains no language to the contrary. Alutiiq is a major player in the construction injury and was well aware of the purpose and intent of this bond. If it wanted to be named as obligee, it could have demanded a bond be issued where it was the obligee. The bond was accepted*624 by Alutiiq to satisfy the bonding requirements imposed on it by the United States of America.54
OIC’s supplemental response to RFP 12 represents that OIC “previously produced the bond at issue in this litigation. That is the only document [OIC] is aware of which supports defendant’s position.”
Magistrate Judge Ferenbach found that OIC’s “answer ignores the facts that OIC Marianas issued a second bond [naming] Alu-tiiq as the oblige[e], and that Judge Koppe ordered OIC Marianas to identify facts in support of its position that the second bond does not identify Alutiiq as the obligee.”
D. OIC’s Objections to the R & R Lack Merit.
Having concluded that the record supports Magistrate Judge Ferenbaeh’s finding that OIC violated Magistrate Judge Koppe’s discovery order, I now turn to OIC’s objections, which can generally be distilled to the following themes: (1) OIC’s responses were complete and satisfied Magistrate Judge Koppe’s order because there was nothing left to produce; (2) OIC’s supplemental responses only demonstrated its willingness to keep giving plaintiff documents beyond the scope of its requests; (3) Magistrate Judge Koppe did not order OIC to produce more documents in response to the requests; she expanded the scope of the requests; and (4) the case-dispositive sanctions Magistrate Judge Fer-enbach recommends would violate due process.
1. Objections 1, 2, 3, 6 & 12: OIC’s responses were complete and satisfied Judge Koppe’s order because there was nothing left to produced.
The bulk of OIC’s objections center on its claim that it fully complied with Magistrate Judge Koppe’s order because it simply had nothing left to produce. Alutiiq made a persuasive case that additional documents must exist, however. During the evidentiary hearing before Magistrate Judge Ferenbach on Alutiiq’s renewed motion for sanctions,
OIC’s objection that “Defendant produced the underwriting file in business order”
Even if there had been no documents left to produce in May 2013, OIC still did not comply with Magistrate Judge Koppe’s Order. The order directed OIC to provide a detailed description of its search efforts for additional documents by May 28,2013.
Objections 1, 2, 3, 6, and 12 are overruled.
2. Objections 4, 5 & 7: OIC’s supplemental responses only demonstrated its willingness to keep giving plaintiff documents beyond the scope of its requests.
I am also unmoved by OIC’s assertion that its supplemental production in January 2014—nearly nine months after the May 2013 court-ordered deadline—is consistent with its argument that it had produced everything. OIC’s production of documents on January 17, 2014, with the explanation that the holiday season and Alutiiq’s refusal to participate in discovery were the reasons for the delay, belies its claim that it had nothing left to produce.
To the extent that OIC now blames its own discovery failures on Alutiiq’s failure to respond to OIC’s discovery requests and calls on the equitable doctrine of unclean hands, this argument is too little, too late and based on little more than uninformed speculation by OIC’s fourth set of attorneys.
Objections 4, 5, and 7 are overruled.
3. Objections 8, 10 & 11: Judge Koppe did not order OIC to produce more documents in response to the requests; she expanded the scope of the requests.
OIC’s next set of objections takes an historical-revisionist approach to Magistrate Judge Koppe’s order. In its eighth objection, OIC argues that “Judge Koppe’s order did not find there were additional documents not already produced by other parties to the litigation or even find that there were additional documents to be produced, rather it held that the ‘you’ in a request to produce to OICM included Joe Lyon and that ‘in New Mexico’ included Indian reservations located within the geographic boundaries of New Mexico.”
OIC’s tenth objection is that “Magistrate Koppe’s order with respect to Request 10 directed only that the Defendant produce copies of Bonds (there was only 1, the one which is the subject of this lawsuit and attached to the complaint) issued within the borders of the State of New Mexico, without excluding the Indian reservation from the meaning of the Request to Produce. Defendant did that in its supplement.”
In its eleventh objection, OIC argues that “Magistrate Koppe’s order, with respect to Request 11 directed only that the ‘you’ in a request for Cease and Desist orders applied to Joe Lyon. It did not apply to Defendant OICM. There never were any cease and desist orders issued to OICM, and it was Joe Lyon who agreed to contact the various states where cease and desist orders might exist against him and ask for copies. He did that the information [sic] was supplied as orders.”
Objections 8,10, and 11 are overruled.
4. Case-dispositive sanctions are warranted.
OIC’s thirteenth objection is that “The Order and Report & Recommendations fails to comply with the due process requirements of the United States Constitution as enunciated in Hammond Packing [,] which holds that a sanction must be related to the claim to which the discovery sought applies.”
a. The relevance of Hammond Packing.
I begin with OIC’s contention that Magistrate Judge Ferenbach’s recommendation for case-dispositive sanctions runs afoul of the Supreme Court’s decision in Hammond Packing v. State of Arkansas and denies OIC due process. A 1909 decision last cited by the Ninth Circuit in 1948,
b. Ninth Circuit authority supports the recommended case-dispositive sanctions.
For the sake of completeness, I expand my consideration of the propriety of case-dispositive sanctions from OIC’s Hammond Packing argument to the Ninth Circuit’s current five-factor test, which Magistrate Judge Ferenbaeh analyzed and properly applied in his recommendation.
Magistrate Judge Ferenbaeh found that the first two factors favor sanctions because OIC faded to follow Magistrate Judge Koppe’s orders, causing significant delay and requiring the court to repeatedly revise and rewrite its case management orders.
I agree with Magistrate Judge Ferenbach that OIC has demonstrated an unwillingness to participate meaningfully in discovery, even after Magistrate Judge Koppe explicitly warned of case-dispositive sanctions. OIC has consistently offered more excuses than answers, a strategy facilitated by its revolving door of legal representation. OIC’s inability to distill and comply with the court’s instructions is also amply demonstrated by its objections to Magistrate Judge Ferenbaeh’s report and recommendation—which are extraordinary for their outright miseharacterization of the proceedings before Magistrate Judges Koppe and Ferenbaeh. Indeed, OIC claimed on two occasions to have produced all responsive documents, yet reversed course on January 17, 2014, and “produced supplemental discovery responses, as ordered by Judge Koppe.” Continuing to allow OIC to participate in discovery will cause significant prejudice to Alutiiq because the subject of the disputed discovery goes to the heart of this case, given that OIC has been provided ample opportunity to comply with its discovery obligations but chose instead an active pattern of evasion and mischaracteri-zation. By its conduct, OIC has amply demonstrated that no sanction short of the ease-dispositive sanctions Magistrate Judge Fer-enbaeh recommends will result in its compliance with its discovery and court-ordered obligations.
Even assuming arguendo that Magistrate Judge Ferenbaeh somehow lacked authority to enter case-dispositive sanctions under the federal rules, this is one of the rare cases in which these sanctions are warranted under the court’s inherent powers. In addition to its power to sanction litigants for violation of enumerated discovery rules, the court retains the power to sanction litigants under its inherent power to manage its docket “so as to achieve the orderly and expeditious disposition of cases.”
E. OIC’s Emergency Motion for Leave to File a Reply Brief
OIC, through its former counsel, file4 an “emergency” motion to file a reply to its objection.
F. OIC’s New Lawyers’ Emergency Motion for Relief
On October 20, 2014, OIC was granted leave to substitute its counsel once more, and new counsel immediately filed an “emergency motion” for relief from Magistrate Judge Ferenbach’s Order.
I find the motion unpersuasive. OIC claims that it was “surprised and distraught” that its former counsel did not make certain arguments on its behalf. But the time for OIC to express these emotions was—at the latest—during the May 16, 2014, hearing before Magistrate Judge Ferenbaeh when OIC representatives appeared at the hearing with counsel, not four months after Judge Feren-bach recommended case-dispositive sanctions. Lyon appeared and testified.
The persuasiveness of this motion is further lessened by the reality that the blame-our-last-lawyers plea has become a tired refrain for OIC throughout this case. See, e.g., Doc. 38 at 10 (second lawyers, when seeking to set aside default against OIC,
OIC had numerous opportunities during the course of this protracted litigation to ensure that its discovery obligations were satisfied, and it failed to do so. The request for emergency relief (Doc. 176) is denied.
Conclusion
Accordingly, IT IS HEREBY ORDERED that Magistrate Judge Ferenbach’s Report and Recommendation [Doc. 160] is ACCEPTED and ADOPTED consistent with this order;
IT IS FURTHER ORDERED that Plaintiff Alutiiq International Solutions’ Supplemental Motion for Discovery Sanctions [Doc. 129] is GRANTED. The Clerk of Court is directed to STRIKE Defendant OIC Marianas Insurance Corporation’s Amended Answer [Doc. 45] and enter default against Defendant OIC Marianas;
IT IS FURTHER ORDERED that Defendant OIC Marianas Insurance Corporation’s Emergency Motion for Leave to File Reply to Plaintiffs Response to Defendants Objection to Magistrate’s Order and Report and Recommendation [Doc. 171] and OIC’s Emergency Motion for Relief [Doc. 176] are DENIED.
. Doc. 129. All "Doc.” references denote filings in 2:10-cv-1189-JAD-VCF unless otherwise noted.
. Doc. 160.
. Id. at 22.
. Doc. 176.
. Doc. 160.
. Doc. 129.
. Doc. 176.
. Case Nos.: 2:10-cv-1189-JAD-VCF; 2:11-cv-1104-JAD-VCF. A third case was filed in the District of New Mexico.
. Doc. 7 at 23; Doc. 1 at 3-9 in 2:11-cv-1104.
. See Doc. 160 at 3-5; Docs. 53, 60, 97. I adopt and incorporate herein Magistrate Judge Ferenbach’s characterization of the proceedings in Doc. 160 at 2-9.
. Docs. 90, 98, and 102 in 2: 11-cv-01104.
. Doc. 94 (minutes).
. Id.
. Docs. 127 (minutes), 130 (minutes).
. Doc. 129
. Id. at 9-10.
. Doc. 160 at 9; 170-1 at 10 (hearing transcript).
. Doc. 160 at 23. I base my acceptance and adoption of the R & R on a merits determination, not on LR 7-2(d). Because I find the merits of the motion a stand-alone basis for granting the motion for sanctions, I do not address whether OIC's failure to oppose the motion provides an additional basis for granting it.
. Doc. 167.
. Doc. 171.
. Doc. 169.
. Doc. 176.
. 28 U.S.C. § 636(b); D. Nev R. IB 3-2.
. Id.
. Id.
. Doc. 147 at 6-7 (emphasis added).
. Id. at 7-8.
. Doc. 53-2 at 34.
. Id. at 33.
. Doc. 53-2 at 33-34. Alutiiq has not moved to compel on the basis of OIC’s response to Interrogatory 4.
. Id. at 34.
. Id.
. Doc. 53.
. Doc. 147 at 11.
. Doc. 94 (minutes).
. Doc. 129-2 at 5.
. Doc. 129.
. Doc. 166 at 13-14.
. See id. at 18-19, 30-31.
. Id. at 19.
. Id. at 14-19.
. Id. at 25-26.
. Doc. 160 at 14.
. Doc. 167 at 18-20.
. Doc. 53-2 at 34.
. Id. at 34-35.
. Id. at 35.
. Id. at 35.
. See Doc. 53.
. Doc. 147 at 12.
. Id. at 14.
. Id. at 12-14.
. Id.; see also Doc. 94 (minutes).
. Doc. 129-2 at 3-4.
. Id. at 5.
. Doc. 160 at 13.
. Doc. 147 at 12-13 (emphasis added).
. Doc. 167 at 1-3.
. Docs. 129, 166.
. Doc. 166 at 13-14. OIC’s ninth objection is that "Defendant cannot make up facts to support its contention, addressed in its motion to dismiss (# 8, order # 23) that a Bond made payable to the U.S. makes the U.S. the obligee. Plaintiff does not contend that the obligee on the additions to the Bond was the US.” Doc. 167 at 2. This is not as much an objection to Magistrate Judge Ferenbach’s ruling as it is a statement of the law. I overrule it because it is not an objection.
. Doc. 166 at 13-14; Doc. 147 at 10-11.
. Doc. 160 at 11. Magistrate Judge Ferenbaeh also noted that no leave had been given to OIC to supplement the record. Doc. 160 at 15.
. Doc. 167 at 2.
. Doc. 166 at 22-23.
. Id. at 25-26, 29-30.
. Id. at 30-31.
. Doc. 94 (minutes).
. Doc. 167 at 2.
. Id. at 1-3.
. Id.
. Doc. 167 at 2.
. Doc. 176 at 25-26.
. Doc. 152.
. Doc. 160 at 23.
. Doc. 167 at 1-3.
. Doc. 167 at 2.
. See Docs. 101-1 at 2-4; 147 at 14.
. Doc. 167 at 2.
. Doc. 101-1 at 1-4.
. Id. at 4.
. Doc. 167 at 2.
. Doc. 147 at 14 (emphasis added).
. Doc. 167 at 2-3.
. Hammond Packing v. State of Arkansas, 212 U.S. 322, 29 S.Ct. 370, 53 L.Ed. 530 (1909).
. Id. at 350-51, 29 S.Ct. 370.
. Doc. 160 at 16.
. Hester v. Vision Airlines, 687 F.3d 1162, 1169 (9th Cir. 2012) (quotation omitted).
. Id.
. Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990).
. Anheuser-Busch, Inc. v. Natural Beverage Dis-tribs., 69 F.3d 337, 348 (9th Cir. 1995) (internal quotations and citations omitted); Jorgensen v. Cassiday, 320 F.3d 906, 912 (9th Cir. 2003).
. Henry v. Gill Inds., 983 F.2d 943, 948 (9th Cir. 1993) (internal quotations omitted).
. Doc. 160 at 18-19 &n. 6.
. Id. at 19.
. Id. at 19-20.
. Link v. Wabash R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962); In re Kee-gan Management Co. Securities Litig., 78 F.3d 431, 435 (9th Cir. 1996).
. Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); In re Keegan, 78 F.3d at 435.
. There is some merit to OIC’s contention that the protracted history of this discovery dispute owes itself to this case being passed among several magistrate judges. Magistrate Judge Johnston, originally assigned to this case, retired. The case then passed to his successor, Magistrate Judge Koppe, who honored OIC’s request to re-cuse after she conducted a settlement conference. But OIC must own the bulk of the delay. See, e.g., Doc. 43 (recounting the delay in OIC’s retention of counsel after its first set of lawyers withdrew for non-communication and lack of payment, see also Doc. 19); Doc 104 (Alutiiq’s summary of procedural history).
. Doc.45.
. Doc. 171.
. Doc. 176.
. Id. at 1.
. Doc. 176 at 4.
. Doc. 177.
. Doc. 166 at 52.
. Id. at 22.
. Doc. 160 at 12; Doc. 166 at 29-34.
. Doc. 176 at 26.
. See Pioneer Inv. Servs. Co. v. Brunswick As-socs. Ltd., 507 U.S. 380, 396-97, 113 S.Ct. 1489, 123 L.Ed.2d 74(1993).
Reference
- Full Case Name
- ALUTIIQ INTERNATIONAL SOLUTIONS, LLC v. OIC MARIANAS INSURANCE CORPORATION
- Cited By
- 6 cases
- Status
- Published