Amorient Engineering v. Sterling Design

Opinion

2 3 4 IN THE SUPERIOR COURT OF GUA 5 J.M. ROBERTSON, INC. dbaAMORIENT ) CIVIL CASE NO. CV0955-16 6 ENGINEERING, INC., ) ) 7 PLAINTIFF, ) 8 ) v. ) 9 ) DECISION AND ORDER RE: 10 STERLING DESIGN, INC. dba STERLING ) DEFENDANT'S DESIGN CONSTRUCTION ) MOTION TO COMPEL 11 ) ----~D~E_F_E_N_D_AN __T_._________________) 12 ) 13 STERLING DESIGN, INC. dba STERLING ) DESIGN CONSTRUCTION ) 14 ) COUNTERCLAIM -PLAINTIFF, ) 15 ) v. ) 16 ) 17 J.M. ROBERTSON, INC. dbaAMORIENT ) ENGINEERING, INC. ) 18 COUNTERCLAIM-DEFENDANT. ) ___________________________________) 19 20 21 INTRODUCTION 22 This matter came before the Honorable Maria T. Cenzon on Defendant/Counterclaim- 23 Plaintiff Sterling Design, Inc.'s ("Sterling") Motion to Compel Discovery ("Motion to Compel") 24 filed on December 22, 2017. Sterling is represented by Attorney Daniel J. Berman. 25 Plaintiff/Counterclaim-Defendant J.M. Robertson, Inc. ("AmOrient") is represented by Attorney 26 Thomas Tarpley. The Court took the matter under advisement on February 13, 2018, without oral 27 argument, pursuant to CVR 7.1 of the Local Rules of the Superior Court of Guam. Having 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 1 of7 reviewed the parties' arguments, the record, and the relevant law, the Court now issues this 1 Decision and Order DENYING Sterling's Motion to Compel. 2 3 BACKGROUND

4 This matter arises out of claims and counterclaims for alleged monies owed on several

5 contracts between AmOrient and Sterling. See Complaint (Nov. 1, 2016); Answer and

6 Counterclaims (Nov. 29, 2016). AmOrient is an engineering firm owned by John M. Robertson

7 ("Robertson") and Coffman Engineers, Inc. 1 Michael Wirges ("Wirges") is the principal owner of

8 Sterling, a corporation in the business of building and construction.

9 The same parties are involved in litigation in CV0775-16 Wirges v. Robertson, et. al.

10 Among other claims in CV0775-16, Wirges sought to enforce an Option Agreement. The Option

11 Agreement allegedly granted Wirges an option to purchase a majority stock interest in AmOrient

12 Engineering, Inc. from Robertson. See Def. 's Answer and Counterclaims at p. 3. The bench trial 13 for CV0775-16 concluded on January 2, 2018. Judge Anita A. Sukola issued a Findings of Fact 14 and Conclusions of Law Re: Complaint for Breach of Contract and Related Tort Claims on May 15 1, 2018. Judge Sukola found the Option Agreement was not enforceable. 16 Prior to the filing of the Motion to Compel, the parties were also in dispute as to whether 17 the alleged Option Agreement should be excluded from this case. On February 9, 2018, the Court 18 issued a Decision and Order DENYING AmOrient's request to exclude the Option Agreement. 19 The court found the Option Agreement was relevant to Sterling's second counterclaim and 20 AmOrient's affirmative defense to that claim. 21 This motion arises out of a question posed by Sterling's counsel at a deposition wherein 22 Robertson was instructed not to answer by AmOrient's counsel? On October 19, 2017, a 23

25 1 Robertson, a majority owner, owns 60% of the company; while Coffman Engineers, Inc. owns the remaining 40% 26 of the company. 27 2 Attorney Tarpley also represents Robertson in CV0775-16. 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 2 of7 deposition was held pursuant to GRCP 30(b) (6) 3 ; Robertson was one of three representatives 1 that gave testimony on behalf of AmOrient. Attorney Berman asked, "So, Mr. Robertson my 2 3 question is whether you knew in May, 2016, that you weren't going to sell AmOrient to Michael

4 Wirges." Decl. of Def. Counsel Re: Mot. to Compel, Ex. A (Dec. 22, 2017). At the deposition,

5 AmOrient argued the question was "beyond the scope" of the 30(b)(6) deposition and that

6 Robertson was not subpoenaed in his personal capacity, but appeared as a representative of the

7 corporation. Attorney Berman was unable to ask Robertson further questions regarding his

8 knowledge, intent, or plan for the Option Agreement between May to July 2016.

9 On December 22, 2017, Sterling filed the instant motion seeking an order to compel

10 AmOrient to answer the questions in the deposition and/or to preclude any of its testimony on the

11 second counterclaims after the discovery cut-off date. AmOrient opposed for reasons set forth in 12 its Opposition to Motion Compel (Jan. 18, 2018). In response to the Opposition, Sterling filed a 13 Reply to Memorandum in Support of Motion to Compel Discovery (Feb. 2, 2018). 14 DISCUSSION 15 A. Motion to Compel Discovery 16 Sterling argues there is no dispute that Robertson is the majority shareholder, President, 17 and Chief Executive Officer of AmOrient and, thus, his admissions on behalf of the corporation 18 are imputed to the corporation. In opposition thereto, AmOrient contends that it was improper to 19 ask Robertson these questions because Robertson appeared at the deposition as a representative 20 of AmOrient Engineering, Inc. and not in his personal capacity. See Pl.'s Opp. to Mot. to 21 22 3 Rule 30(b )( 6) provides: 23 A party may in the party's notice and in a subpoena name as the deponent a public or private corporation or a partnership or association or governmental agency and describe with reasonable 24 particularity the matters on which examination is requested. In that event, the organization so named shall designate one or more officers, directors, or managing agents, or other persons who 25 consent to testify on its behalf, and may set forth, for each person designated, the matters on which the person will testify. A subpoena shall advise a non-party organization of its duty to make such a 26 designation. The persons so designated shall testify as to matters known or reasonably available to the organization. This subdivision (b)(6) does not preclude taking a deposition by any other 27 procedure authorized in these rules. 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 3 of7 Compel, at p. 3 (Jan. 18, 2018). In order to have compelled his attendance in his personal 1 capacity, Defendant would have to serve Robertson in such capacity, since the sale of stock was a 2 personal decision attributed to Robertson as an individual, and not a decision of the corporation. 3

4 /d. Plaintiff adds it cannot be held liable for Robertson's decision not to sell to Wirges, since

5 there are no allegations that AmOrient "secretly" conspired with Robertson or that Robertson and

6 AmOrient are "alter egos" of each other. Pl.'s Opp. to Mot. to Compel, at p. 4. Notably, that

7 Robertson's decision to sell his shares to Wirges is a private matter, not a corporate decision. /d.

8 at p. 3.

9 Pursuant to Guam Rules of Civil Procedure ("GRCP"), a party may apply for an order

10 compelling discovery "[i]f a deponent fails to answer a question propounded or submitted under

11 Rules 30 or 31." Guam R. Civ. P. 37(a)(2)(B). 4 A motion to compel a witness to answer questions

12 put to him at a deposition should be granted if the questions are relevant and proper and denied if 13 the questions call for privileged information 5 or if an answer is otherwise unnecessary. In re 14 Folding Carton Antitrust Litigation, 83 F.R.D. 132, 134 (1979) (quoting 8 Wright & Miller, 15 Federal Practice and Procedure: Civil § 2286, at 779-80; See also 4A Moore's Federal Practice § 16 30.59, at 30-111-12) (emphasis added). 17 Rule 30 provides two methods by which a party may take a corporation's deposition: (1) 18 Rule 30(b )( 1) allows a party to notice a particular corporate officer, director or managing agent's 19 deposition; and, (2) Rule 30(b)(6) permits a party to notice a corporation's deposition without 20 specifically naming the individual to be deposed and instead setting forth "with reasonable 21 particularity" the matters on which the examination is requested, so the corporation can designate 22 one or more individuals to testify. Bd. of Trustees of Leland Stanford Junior Univ. v. Tyco Int'l 23

24 4 Guam's Civil Rules 30 and 37 are virtually identical to Rule 30 and 37 of the Federal Rules of Civil Procedure, 25 thus this Court looks to cases which interpret and apply the principles of the federal rule for guidance. Benavente v. Taitano, 2006 Guam 15 '][ 48. 26 5 Generally, "absent a claim of privilege it is improper for counsel at a deposition to instruct a client not to answer. If 27 counsel objects to a question, he should state his objection for the record and then allow the question to be answered." Wright & Miller, Federal Practice and Procedure: Civil s 2113, at 419 n.22. 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 4 of7 Ltd., 253 F.R.D. 524, 525 (C.D. Cal. 2008) (citing Fed. R. Civ. P. 30). Through both methods, the 1 deponent's testimony is the corporation's testimony, and if the corporation is a party, "the 2 3 testimony may be used at trial by an adverse party for any purpose." !d. (citations omitted).

4 However, a deposition pursuant to Rule 30(b)(6) is substantially different from a

5 witness's deposition as an individual. Sabre v. First Dominion Capital, 2001 WL 1590544 at *1

6 (S.D.N.Y. 2001) (citing 8 A Charles A. Wright, Arthur R. Miller, Richard L. Marchs, Federal

7 Practice & Procedure § 2103(2d ed. 1994)). "A 30(b)(6) witness testifies as a representative of

8 the entity, his answers bind the entity and he is responsible for providing all the relevant

9 information known or reasonably available to the entity." !d. (emphasis added). Although not

10 binding, the Court found helpful a litigation journal published by the American Bar Association: 11 It is important to clarify, on the record, the capacity in which the witness testifies. Remember that Rule 30(b)(6) states. that proceeding with 12 a corporate representative deposition "does not preclude taking a deposition by 13 any other procedure authorized in these rules." Frequently, the witness offered up by the corporation as its representative to testify about a Rule 30(b )(6) topic is a 14 person whom the requesting party also wants to depose in an individual capacity. And, in the case of small, closely held corporations, there may be no 15 difference between the knowledge of the entity and the knowledge of the 16 principals. As a matter of convenience and efficiency, the parties frequently will agree that the witness can be deposed in one sitting, as both 17 a corporate representative and an individual witness. 18 Sidney I. Schenkier, Deposing Corporations and Other Fictive Persons: Some Thoughts on Rule 19 30(b )(6), Litigation, Winter 2003, at 20, 25 (2003) (internal citations omitted). 20 Although the Court earlier found the Option Agreement to be relevant in this case, the 21 issue in the instant motion is whether Sterling was permitted to ask Robertson questions about 22 his knowledge, intent, or plan to execute the Option Agreement where the deposition was noticed 23 upon AmOrient and not to Robertson in his personal capacity. The Court finds it was improper 24 for Sterling to do so. 25 First, the parties did not agree that Robertson can be deposed in one sitting, as both 26 a corporate representative and an individual witness. Secondly, the deposition notice was 27 addressed to AmOrient and its counsel and not personally to Robertson. Def. Mot. to Compel 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 5 of7 Discovery, Ex. D. Therefore, in this deposition, AmOrient representative's testimony was limited 1 to information "known or reasonably available to the entity." Guam R. Civ. P. 30(b)(6). 2 Sterling's question, however, alluded to Robertson's state of mind in May, 2016, specifically 3

4 regarding his "knowledge, intent, or plan" to execute the Option Agreement. The Court agrees

5 with AmOrient that the decision to execute the Option Agreement was a personal decision - to be

6 made by Robertson - and not of the Corporation. See Wirges v. Robertson, et.al, Sup. Ct of

7 Guam CV0775-16 FFCL re Compl. for Breach of Contract and Related Tort Claims (Judge

8 Sukola, May 1, 2018) (quoting PI's Trial Ex. 8). 6 In fact, the Option Agreement provides that it is

9 between Robertson and Wirges and not between AmOrient and Sterling. Therefore, questions

10 about Robertson's plans for the Option Agreement cannot be information available to AmOrient.

11 Accordingly, the Court finds Sterling's questions were improper.

12 B. Motion for Attorney's Fees 13 Defendant requests for reasonable attorneys' fees pursuant to Rule 37(a)(4). Def. Mot. to 14 Compel Discovery, at p. 6. Rule 37(A), however, does not permit an award of attorney's fees to 15 the moving party where its motion is denied. In such cases, an award of attorney's fees is only 16 appropriate for the party "who opposed the motion." Guam R. Civ. P. 37(a)(4)(B). Having 17 denied the Motion to Compel, the Court in effect DENIES Sterling's Motion for Attorneys' fees. 18 CONCLUSION 19 For the reasons provided above, the Court hereby DENIES Sterling's Motion to Compel 20 Discovery. 21 SO ORDERED this _ _ _ _ _ _ _ _ _ _ _. MAY 14 2018 22 SERVICE VIA COURl BOX. I acknowledge that. a c6p~ qf·the original hereto was placeCIInlhe 23 C()Urt X' of:

25 JUDGE, SUPERIOR COURT OF GUAM 26 6 "Robertson agrees to sell and Wirges agrees to purchase an irrevocable option to purchase Robertson's capital 27 stock in both John M. Robertson, Inc., dba AmOrient Engineering and AmOrient Contracting, Inc., in accordance with the terms and conditions of the Stock to Purchase Agreements attached hereto as Exhibits 'A' and 'B."' 28 J.M. Robertson, Inc. v. Sterling Design, Inc.; CV0955-16 D&O Re: Defendant's Motion to Compel Discovery Page 6 of7