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

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

March 6, 2017

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, 2016; LIFE TRADING TRUST, dated August 8, 2007; T-LEG LLC, a/k/a TLEG LLC; FINANCIAL LIFE SERVICES, LLC; SPVII, LLC; and THE REPRESENTATIVE OF THE ESTATE OF NANCY BERGMAN, Third-Party Defendants.

          MEMORANDUM OPINION AND ORDER ON PLAINTIFF' S AND THIRD-PARTY DEFENDANTS' MOTION TO COMPEL

          Lawrence L. Piersol United States District Judge.

         Pending before the Court is plaintiff, SPV-LS, LLC ("SPV") and third-party defendants, Life Trading Trust dated August 8, 2007, Financial Life Services, and SPV II, LLC ("Krasnerman Entities"), joint motion seeking to compel The Representative of the Estate of Nancy Bergman ("the Estate") to conduct a reasonably diligent search of Nancy Bergman's records in responding to discovery requests, to produce a privilege log, to produce unredacted retainer agreements and billing records, to supplement discovery responses, and to provide a detailed explanation of its efforts to conduct a reasonably diligent search of Nancy Bergman's records. Doc. 336. This motion is based upon all pleadings and records filed herein. For the following reasons, the motion will be granted in part and denied in part in accordance with this Order.

         BACKGROUND

         The facts of this case have been thoroughly explained in this Court's prior memorandum opinion and orders. See Docs. 225; 320. As such, the Court will only recite the facts directly pertinent to this pending motion.

         On February 3, 2016, SPV and the Krasnerman Entities ("SPV/Krasnerman Entities") served joint discovery requests on the Estate. Doc. 338-1. On March 7, 2016, the Estate generally and individually objected to virtually every interrogatory and document demand served asserting, among other things, that the information sought was either not relevant or that attorney-client privilege and work product protections applied.[1] Doc. 338-2. On March 10, 2016, counsel for the Krasnerman Entities emailed a six-page letter to counsel for the Estate documenting the alleged deficiencies in the Estate's discovery responses, including the Estate's failure to produce a privilege log. Doc. 338-3. Counsel requested that the Estate "immediately supplement th[e] responses[, ]" and that Symcha Bergman, as the representative of the Estate, "perform a reasonable search of decedent's records and investigat[e] . . . her affairs for purposes of participating in this litigation." Id. On April 4, 2016, counsel for the Estate responded that he would reply to the March 10 letter the following day.[2] Doc. 338-4. The parties exchanged additional emails between April 21 and April 28, 2016 in an attempt to settle the outstanding discovery issues.[3] Doc. 338-5.

         On May 4, 2016, after meet and confer efforts proved unsuccessful, SPV/Krasnerman Entities filed a joint motion compelling the Estate,

to conduct a reasonably diligent search of the Nancy Bergman's records (whether in his personal possession, or within his control as Executor) in responding to the discovery requests, to produce a privilege log, to supplement his discovery responses in good faith, taking into account the laws governing the scope of attorney client privilege and work product, and to immediately produce the requested medical authorizations.

Doc. 237 at 2. On June 28, 2016, Magistrate Judge Veronica Duffy denied the motion based on SPV/Krasnerman Entities' failure to comply with local filing rules.[4] Doc. 305.

         Beginning on July 6, 2016, counsel for both parties continued to exchange emails in an effort to resolve the still pending discovery issues.[5] Doc. 338-6; Doc. 368 at ¶ 2. Relevant portions of the subsequent emails are as follows:

July 6, 2016:
SPV/Krasnerman Entities: To just follow up on our phone call from earlier today, we understand that you are interested in further meeting and conferring about the Estate's responses to the discovery demands. We are, of course, always willing to meet and confer.
July 11, 2016:
SPV/Krasnerman Entities: I have not heard back from you regarding my [July 6] email .... We believe the Estate has had more than enough time to compile and prepare its responses, given that the requests have been outstanding since February 3, 2016, the requests have been the subject of motion filings since May, and the court order providing guidance on the Estate's obligations was issued almost two weeks ago. As you know, the extended discovery deadline is set to expire in mid-September, and we are therefore eager to move forward with discovery from the Estate so that we can schedule [Symcha Bergman's] deposition.
July 15, 2016:
Estate: As promised during our telephone conversation last week, I folio wed-up with my client about the financial documents you requested. He has been unable to find a record of TD Bank account # 792349103 or an account at the bank in the name of Nancy Bergman. Santander Bank does have the account number you provided. That bank requires documents (e.g. original death certificates) in order for Symcha Bergman to access the account records. He is in the process of submitting the required documents in an effort to obtain those records.
July 19, 2016:
SPV/Krasnerman Entities:[6] In response to your email . . . wherein you explained that Brian Donahoe is preparing supplemental responses on behalf of the Estate to be provided to us tomorrow. As you know, we have always insisted on receiving responses from the Estate to the specific issues addressed in our March 10, 2016 letter. We still have not received responses to [the] vast majority of the issues, despite meet and confer emails and discussions over the last four months. Meet and confer discussions have been unsuccessful, with the notable exception of the Estate's delivery of Nancy's passport as well as signed medical . authorizations.
At this point, we are prepared to wait only one more day for the Estate's supplemental responses.

Doc. 338-6.

         Pursuant to those discussions, on July 20 and July 22, 2016, the Estate provided supplemental responses to document demands and interrogatories, respectively. Doc. 338-8; Doc. 338-7.[7] The Estate also produced a redacted retainer agreement. Doc. 338-9. Finding this supplemental documentation to be "wholly deficient, "[8] on August 4, 2016, SPV/Krasnerman Entities filed the current joint motion compelling the Estate to, .

(1) conduct a reasonably diligent search of [Nancy Bergman's] records (whether in his personal possession, or within his control) in responding to the discovery requests; (2) produce a privilege log . . .; (3) produce unredacted retainer agreements and billing records; (4) supplement [] discovery responses in good faith and taking into account the laws governing the scope of attorney-client privilege and work product; and (5) provide a detailed explanation of its efforts to conduct a reasonably diligent search of [Nancy Bergman's] records.

Doc. 336.

         After the filing of the motion, on August 25, 2016, the Estate provided SPV/Krasnerman Entities with its Attorney Client & Work Product and Non-Testifying Expert Consultant privilege logs.[9] Doc. 368 at ¶ 9; Doc. 368-3; Doc, 368-4. Additionally, SPV/Krasnerman Entities acquired, through third-party discovery, an unredacted copy of a draft retainer agreement between the Estate and Gerald Kroll, Kroll Law Corporation, see Doc. 391-1, and on January 12, 2017, SPV/Krasnerman Entities attached a copy of the unredacted retainer agreement in its Motion for Summary Judgment claiming it was produced by the Estate. See Doc. 465 at 11 ("Attached hereto as Exhibit 30 is a true and correct copy of Kroll's signed retainer, produced by Kroll for the very first time on January 12, 2017 ... . This signed retainer agreement reflects Kroll receiving a large contingency fee if either the Trust or the Estate prevails in obtaining the Policy proceeds in this proceeding."); Doc. 465-30 (retainer agreement). Subsequently, on February 8, 2017, in its Response to Motion for Summary Judgment and accompanying Declaration of Gerald L. Kroll, the Estate produced to the Court a "correct, final Retainer Agreement between Mr. Kroll and the Estate[, ]" claiming that the retainer agreement produced on January 12, 2017 was not the correct copy produced by the Estate.[10] See Doc. 468 at 1-2 ("[W]e were served with a copy of SPV's Motion for Summary Judgment... the Declaration of Douglas Foss ... and a document entitled 'Statement of Material Facts, ' [] both of which contain statements that are false, misleading, and defamatory."); Doc. 469-1 (retainer agreement).

         LEGAL STANDARD

         Federal Rule of Civil Procedure 26 governs the scope of discovery in civil cases. Under section (b)(1), parties to a lawsuit may discover "any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case[.]" Fed.R.Civ.P. 26(b)(1); see also Black Hills Molding, Inc. v. Brandom Holdings, LLC, 295 F.R.D. 403, 411 (D.S.D. 2013) ("Relevancy is to be broadly construed for discovery issues and is not limited to the precise issues set out in the pleadings."); EEOC v. Woodmen of the World Life Ins. Soc'y, 2007 WL 1217919, at *1 (D. Neb. Mar. 15, 2007) (internal quotations and citation omitted) ("Relevancy . . . encompass[es] any matter that could bear on, or that reasonably could lead to other matters that could bear on, any issue that is or may be in the case."). However, "[t]he district court has broad discretion to compel or deny discovery, and [an appellate court] will therefore leave undisturbed a district court's ruling unless [it is found] that [the district court] made a clear error of judgment or applied the wrong legal standard." Jackson v. Corrections Corp. of America, 606 Fed.Appx 945, 950 (11th Cir. 2015) (citing Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1306-07 (11th Cir. 2011)).

         The party requesting discovery must make "[s]ome threshold showing of relevance . . . before [opposing] parties are required to open wide the doors of discovery . . . ." Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992). "Once the requesting party has satisfied its threshold showing, the burden then shifts to the party resisting discovery to show specific facts demonstrating that the discovery is irrelevant or disproportional." Sprint Commc'n. Co. L.P. v. Crow Creek Sioux Tribal Court, 316 F.R.D. 254, 264 (D.S.D. 2016).

         Discovery limitations are governed by Rule 26(b)(2)(C). See Barnes v. District of Columbia, 289 F.R.D. 1, 5-6 (D.D.C. 2012) ("Courts consider the prior efforts of the parties to resolves the dispute, the relevance of the information sought, and the limits imposed by Rule 26(b)(2)(C) when deciding whether to grant a motion to compel"). Under section (b)(2)(C), discovery may be limited if:

(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
(iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).

Fed. R. Civ. P. 26(b)(2)(C). Pursuant to this rule, however, courts have found that "the articulation of mere conclusory objections that something is 'overly broad, burdensome, or oppressive, ' is insufficient to carry the resisting party's burden-that party must make a specific showing of reasons why the particular discovery should not be had." Sprint Commc'n. Co. L.P., 316 F.R.D. at 264 (citing Cincinnati Ins. Co. v. Fine Home Managers, Inc., 2010 WL 2990118, at *'1 (E.D. Mo. July 27, 2010)).

         DISCUSSION

         A. Meet and Confer

         Motions to compel discovery disclosures are governed by Federal Rule of Civil Procedure 37. Rule 37(a)(1) and Local Rule 37.1 requires the parties to make a good faith effort to resolve any discovery disputes prior to filing a motion to compel. FED. R. CIV. P. 37(a)(1); LR 37.1; see also Brandom Holdings, LLC, 295 F.R.D. at 409 ("A party requesting the discovery is entitled to move for [an order] compelling disclosure after having made a good faith effort to resolve the dispute by first conferring With the other party."); Pierce v. Fremar, LLC, 2010 WL 3420169, *1 (D.S.D. Aug. 27, 2010) ("Email, letters, or, even better, direct conversation between the attorneys will satisfy the [meet and confer] requirement."). Additionally, Rule 37 and LR 37.1 require that the filing party include a certification detailing the good faith efforts of the parties to resolve the discovery disputes. FED. R. CIV. P. 37(a)(1) ("The motion must include a certification that the movant has in good faith conferred or attempted to confer with the . . . party failing to make disclosure or discovery in an effort to obtain it without court action."); LR 37.1 ("A party . . . must file a separate certification describing the good faith efforts of the parties to resolve the dispute.").

         Here, the Court finds that counsel for SPV/Krasnerman Entities have made a good faith effort to meet and confer with counsel for the Estate in order to resolve the outstanding discovery requests. While not filed as a "separate certification, " SPV/Krasnerman Entities motion and attached declarations certify and confirm to the Court that it has attempted to resolve the current discovery disputes without Court involvement. As the documentation above demonstrates, from February 3, 2016-the date SPV/Krasnerman Entities served the initial discovery requests-until May 4, 2016-the date SPV/Krasnerman Entities filed the first motion to compel-counsel for SPV/Krasnerman Entities communicated with counsel for the Estate for several months in an effort to resolve the alleged discovery deficiencies without court involvement. Based on the information provided to the Court, however, those communications proved unsuccessful, and in some instances, went completely unanswered by the Estate. See Doc. 338-4 ("My apologies for not being able to respond sooner to your [March 10] letter .... We will reply either today, April 4, 2016, or, latest tomorrow, April 5, 2016."); see also Doc. 338-5 (April 27, 2016 email: "We have yet to receive your response [to our March 10, 2016 letter].").

         Following Magistrate Judge Duffy's denial of the May 4th motion to compel, SPV/Krasnerman Entities continued to communicate with the Estate about discovery issues throughout the month of July in order to meet the Court's September 2016 discovery deadline. Again, some communications went unanswered. See Doc. 336-8 (July 6, 11, 15, 19, 2016 emails). Based on these facts, the Court concludes that SPV/Krasnerman Entities have satisfied the meet and confer requirement of Rule 3 7 and Local Rule 37.1.

         B. Interrogatories

         Rule 37(a)(3)(B)(iii) allows a party seeking discovery to move a court for an order "compelling an answer, designation, production, or inspection ... if... a party fails to answer an interrogatory submitted under Rule 33[.]" FED. R. CIV. P. 37(a)(3)(B)(iii). To the extent that it is not objected to, the responding party must answer each interrogatory fully and under oath. Fed.R.Civ.P. 37(b)(3); see also Lindholm v. BMW of K Am., LLC, 2016 WL 452315, at *5 (D.S.D. Feb. 5, 2016) (quoting Miller v. Pruneda, 236 F.R.D. 277, 282 (N.D. W.Va. 2004) (Under Rule 33, '"A party answering interrogatories is required to provide information that is available to it and can be produced without undue labor and expense.'").

         Interrogatories may be objected to on the basis that they are not within the scope of discovery, that the information they seek is not relevant to the subject matter, is privileged, or is protected by the attorney work product rule. See 8B Charles Alan Wright, Arthur R. Miller, et al., Federal Practice and Procedure § 2174 (3d ed.). The objecting party bears the burden of showing that the information sought is not reasonably available to it and stating the grounds of its objection with specificity. Id.; FED. R Ciy. P. 33(b)(4); see also Lindholm, 2016 WL 452315, at *5 (quoting Essex Builders Grp., Inc. v. Amerisure lns., 230 F.R.D. 682, 685 (M.D. Fla. 2005) ('"If the [objecting] party lacks necessary information to make a full, fair and specific answer to an interrogatory, it should so state under oath and should set forth in detail the efforts made to obtain the information.'").

         a. General Objections

         The Court will first address the Estate's "General Objections" to Interrogatories. In the Estate's "Answers to Plaintiffs First Set of Interrogatories, " and its "Supplemental Answers to Plaintiffs First Set of Interrogatories, " the Estate states:

         The following General Objections apply to every paragraph of Plaintiffs First Interrogatories:

1. The Estate objects to every interrogatory that calls for privileged information, including without limitation, information protected by the attorney-client privilege.
2. The Estate objects to every interrogatory that calls for information prepared in anticipation of litigation or for trial absent a ...

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