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SPV-LS, LLC. v. Transamerica Life Insurance Co.

United States District Court, D. South Dakota, Southern Division

July 14, 2016

SPV-LS, LLC, Plaintiff,
v.
TRANSAMERICA LIFE INSURANCE COMPANY, Defendant and Third-Party Plaintiff,
v.
NACHMAN BERGMAN, as Trustee of The N Bergman Insurance Trust dated December 18, 2006; MALKA SILBERMAN, as Successor Trustee of The N Bergman Insurance Trust dated December 18, 2006; LIFE TRADING TRUST, dated August 8, 2007; T-LEG, LLC, a/k/a TLEG LLC; FINANCIAL LIFE SERVICES, LLC; SPV II LLC; and THE REPRESENTATIVE OF THE ESTATE OF NANCY BERGMAN, Third-Party Defendants.

          AMENDED ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF AND THIRD-PARTY DEFENDANTS' MOTION TO COMPEL DOCKET NO. 196

          VERONICA L. DUFFY UNITED STATES MAGISTRATE JUDGE.

         INTRODUCTION

         This matter is before the court on the complaint of plaintiff SPV-LS, LLC pursuant to the court's diversity jurisdiction, 28 U.S.C. § 1332. See Docket No. 1. Plaintiff and third-party defendants Life Trading Trust, Financial Life Services LLC ("FLS"), and SPV II LLC, collectively the Krasnerman Entities, have filed a joint motion seeking to compel certain discovery responses from third-party defendant Malka Silberman, trustee of the N. Bergman Insurance Trust Dated December 18, 2006. See Docket No. 196. The district court, the Honorable Lawrence L. Piersol, referred the motion to this magistrate judge for a decision pursuant to 28 U.S.C. § 636(b)(1)(A). See Docket No. 216.

         FACTS

         Plaintiff filed this complaint on June 13, 2014. See Docket No. 1. Although third-party defendant Malka Silberman was properly served with the summons and complaint, she did not timely answer and a default was entered against her on September 22, 2014. See Docket No. 37. The Krasnerman Entities then moved for entry of a default judgment. That prompted Ms. Silberman to make her appearance herein and she successfully moved to set aside the default and to defeat the motion for default judgment.

         All parties having finally appeared, the district court then ordered all the parties to hold a scheduling conference within 30 days from September 21, 2015. See Docket Nos. 95 & 96. Before the 30 days expired, Ms. Silberman's counsel moved to withdraw and was allowed to do so. One month later, new counsel filed a notice of appearance on behalf of Ms. Silberman. On or before December 4, 2015, the parties held their planning meeting to discuss scheduling and discovery issues. See Docket No. 152. At that meeting, the parties agreed that all initial voluntary disclosures required by Federal Rule of Civil Procedure 26(a)(1) would be exchanged by February 1, 2016. See id. at p. 2, ¶ 2. The Krasnerman Entities, in their motion and the reply on their motion, represent that Ms. Silberman has never made her initial disclosures as required by Rule 26(a)(1).

         On January 29, 2016, the Krasnerman Entities served Ms. Silberman with their first sets of interrogatories and requests for the production of documents. See Docket Nos. 198-1 and 198-2. On the same date, the Krasnerman Entities issued a notice of deposition for Ms. Silberman, designating March 2, 2016, at 9:30 a.m. as the date and time for taking Ms. Silberman's deposition.

         In their motion and reply brief, the Krasnerman Entitites represent that Ms. Silberman has never provided them with signed, answered interrogatories. They further represent that Ms. Silberman, while interposing only one objection to one request for documents, nevertheless has failed to provide any documents in response to their discovery request for documents. Unsigned "drafts" of responses to these discovery requests were given to the Krasnerman Entities on February 29, 2016.

         Finally, after issuing Ms. Silberman's deposition notice, the Krasnerman Entities sought to change the date and time for the deposition. They allege that Ms. Silberman's attorneys have failed and refused to give the Krasnerman Entities a new date and time on which she will agree to have her deposition taken. Also, in anticipation of taking the depositions of certain New York attorneys who allegedly represented the trust, the Krasnerman Entities sent Ms. Silberman's attorney release forms for Mark Frankel, M. David Graubard, Michael Kanzer, and Mark Nussbaum. Each of these releases, if they had been signed, would have authorized the named person (all attorneys) to release to the Krasnerman Entities' New York law firm "copies of any and all records relating to the N Bergman Insurance Trust dated December 18, 2006, or the Former Trustee for the N Bergman Insurance Trust, Mr. Nachman Bergman." See Docket No. 198-4.

         A thumbnail sketch of the facts of this action, recited only to provide context for discussion of the discovery disputes, is as follows. Nancy Bergman, a school teacher of modest means, obtained a $10 million life insurance policy on herself from defendant Transamerica Life Insurance Company and placed that policy into the N. Bergman Insurance Trust dated December 18, 2006.[1] Nancy's grandson, third party defendant Nachman Bergman, was the beneficiary and trustee of the trust. Allegedly, Malka Silberman took over as trustee of the trust in 2008, though that is a disputed fact. Transamerica claims it was never notified of the change in the identity of the trustee until after Nancy's death in 2014.

         In 2009, Nachman sold the insurance policy from the trust to FLS. After the sale, FLS discovered that the premiums on Nancy's life insurance policy had not been paid. It also discovered that Nachman's representations that Nancy was on death's doorstep were inaccurate. Nachman, for his part, denies that he ever entered into these transactions with FLS, suggesting an imposter posing as Nachman dealt with FLS. He claims someone forged his signature to the pertinent documents.

         FLS brought suit against the trust in federal district court for the Eastern District of New York. Default was entered against the trust because it never answered. Thereafter, an auction of Nancy's life insurance policy was held in 2012. FLS bought the policy at the auction for $1.19 million. FLS then transferred the policy to the plaintiff herein, SPV-LS, LLC.

         On April 6, 2014, Nancy died. Thereafter, both SPV-LS, LLC and Malka Silberman on behalf of the trust, submitted claims to Transamerica for the policy proceeds. SPV-LS, LLC brought this suit against Transamerica in this court, alleging a claim of breach of contract. Transamerica interpleaded the policy proceeds and sued Nachman, Ms. Silberman, Nancy's estate, and other third-party defendants, alleging that Transamerica was unable to determine which of the claimants was legitimately entitled to the proceeds of the policy.

         A series of lawyers in New York have allegedly represented the trust, though Ms. Silberman now claims she never hired these New York lawyers. In this litigation, a succession of lawyers have made appearances on behalf of Ms. Silberman. First attorneys Pamela Reiter and Ronald Parsons appeared. They withdrew after 13 months. Then after a month's lapse, Matthew Dorothy appeared. Mr. Dorothy withdrew less than five months later. Andrew Citron of New York purported to represent Ms. Silberman and communicated with counsel for other parties in that capacity (see Docket No. 198), but Mr. Citron never formally entered a notice of appearance in this case. On April 8, 2016, Aaron Twersky of New York City and James Moore, as local counsel, noticed their appearance on behalf of Ms. Silberman. This was two months after the parties had agreed to exchange initial Rule 26 disclosures and one month after the Krasnerman Entities filed the motion to compel currently under consideration.

         DISCUSSION

         A. Meet and Confer

         Before a party may make a motion to compel another party to make discovery or disclosure, the movant must certify that they have in good faith conferred or attempted to confer with the opposing party from whom the discovery or disclosure is sought in an attempt to resolve the disagreement without court intervention. See Fed.R.Civ.P. 37(a)(1); DSD LR 37.1. Lawyers for the Krasnerman Entities assert that they have attempted to meet and confer with Ms. Silberman's lawyers in an effort to resolve the outstanding discovery ...


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