Alutiiq International Solutions, LLC v. OIC Marianas Insurance

305 F.R.D. 618, 2015 U.S. Dist. LEXIS 32587
CourtDistrict Court, D. Nevada
DecidedMarch 13, 2015
DocketCase Nos. 2:10-cv-01189-JAD-VCF, 2:11-cv-01104-JAD-VCF
StatusPublished
Cited by6 cases

This text of 305 F.R.D. 618 (Alutiiq International Solutions, LLC v. OIC Marianas Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Nevada primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alutiiq International Solutions, LLC v. OIC Marianas Insurance, 305 F.R.D. 618, 2015 U.S. Dist. LEXIS 32587 (D. Nev. 2015).

Opinion

Order

JENNIFER A DORSEY, District Judge.

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.1 In a 23-page report and recommendation,2 Magistrate Judge Cam Ferenbach concluded that “OIC Marianas repeatedly disregarded [Magistrate] Judge Koppe’s” discovery order and “on multiple occasions” responded to discovery “only after the court held a hearing or Alutiiq filed additional motions to compel and motions for sanctions”—“the precise type of conduct that Rule 37 was designed to curb”3—and he recommends I grant the motion.

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.4 The motion blames the discovery violations entirely on now-terminated counsel and asks the court not to impute these failures to the client, OIC.

Having thoughtfully considered de novo Magistrate Judge Ferenbach’s findings and recommendation5 and the parties’ extensive briefing on these issues, I adopt the magistrate judge’s findings and accept his recommendation, overrule OIC’s objections, grant the motion to strike OIC’s answer and enter default against it,6 and deny OIC’s Emergency Motion for Relief7 for the reasons below.

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.8 In these consolidated matters, the project’s prime contractor Alutiiq alleges [620]*620that OIC (headquartered in Saipan) and its majority shareholder Dennis Lyon engaged in a scheme to defraud surety bond holders and owes Alutiiq more than $1.5 million for the work Alutiiq had to replace after NCC failed to perform.9

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.10 In case 2:ll-ev-01104, Lyon’s answer was stricken and default was entered against him shortly before the ease was consolidated into this one after Magistrate Judge Leen found—and District Judge Navarro agreed—that Lyon had not satisfied his discovery obligations “[djespite repeated warnings and Orders from the court” and having been “urged to comply, warned and threatened with case-dispositive sanctions.”11

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.”12 Judge Koppe deferred consideration of Alutiiq’s request for sanctions for further briefing.13 When the case was reassigned to Magistrate Judge Ferenbach, he heard and denied Alutiiq’s sanctions request and ordered the parties to meet and confer regarding the discovery that Magistrate Judge Koppe ordered.14 On December 16, 2013, Alutiiq renewed its motion to compel and for sanctions15 arguing that, despite having served its first discovery requests nearly three years earlier, it still does not have full and adequate discovery responses that go to the heart of the parties’ dispute and that striking OIC’s answer and entering default against it so that the matter can proceed to the damages phase is the only way to level the playing field.16

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.17 In his 23-page report and recommendation, Magistrate Judge Ferenbach concluded that OIC did not satisfy its obligations under Magistrate Judge Koppe’s order because its responses remain deficient; he recommends that I impose case-dispositive sanctions both under Local Rule 7-2(d) because OIC Marianas did not oppose the motion for sanctions and because, on balance, the relevant factors “strongly support” them; and he further ordered that OIC “is SANCTIONED pursuant to Federal Rule of Civil Procedure 37” and directed each of the parties to file a supplemental brief regarding “the appropriate amount of the sanction.”18

OIC objects to the report and recommendation,19 filed an emergency motion for leave [621]*621to file a reply in support of its objection,20 and responded to Alutiiq’s supplemental brief regarding the amount of attorneys fees it seeks under Rule 37.21 Months later, OIC changed counsel a third time, and its new lawyers filed an “emergency motion” that seeks to replace all of OIC’s previous briefing about the pending sanctions motion with a new theory: the discovery violations were the fault of legal malpractice by OIC’s third counsel’s law firm and should not be imputed to this innocent client.22 I first consider Alutiiq’s sanctions motion and OIC’s objections to the R & R, followed by the emergency motions.

Discussion

When a party files specific written objections to a United States magistrate judge’s findings and recommendations,23 the district court must make a de novo determination of those portions of the report to which objections are made.24 The court may accept, reject, or modify, in whole or in part, the magistrate judge’s findings and recommendations.25 Having now completed a de novo review of this matter, I agree with Magistrate Judge Ferenbaeh that OIC violated Magistrate Judge Koppe’s order and this is one of those rare cases of protracted discovery abuses and delays in which case-disposi-tive sanctions are warranted. I base these conclusions on the following findings:

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.

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Bluebook (online)
305 F.R.D. 618, 2015 U.S. Dist. LEXIS 32587, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alutiiq-international-solutions-llc-v-oic-marianas-insurance-nvd-2015.