Harmon v. Nelson

CourtDistrict Court, N.D. California
DecidedJanuary 27, 2022
Docket3:19-cv-01192
StatusUnknown

This text of Harmon v. Nelson (Harmon v. Nelson) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harmon v. Nelson, (N.D. Cal. 2022).

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 6 GARY HARMON, et al., Case No. 19-cv-01192-SI

7 Plaintiffs, ORDER GRANTING IN PART 8 v. DEFENDANTS’ MOTION TO DISMISS AND GRANTING PLAINTIFF 9 WILLIE NELSON, et al., COUNSEL’S MOTION TO WITHDRAW 10 Defendants. Re: Dkt. Nos. 64, 66 11

12 Before the Court is defendants’ Motion to Dismiss for Failure to Prosecute and Violation of 13 Court Order, Dkt. No. 64, and plaintiff counsel’s Motion to Withdraw as Counsel of Record, Dkt. 14 No. 66. On January 12, 2022, the Court held a consolidated hearing on the motions. For the reasons 15 discussed below, the Court GRANTS IN PART defendants’ motion to dismiss and GRANTS 16 plaintiff counsel’s motion to withdraw. The case is dismissed without prejudice. 17

18 BACKGROUND 19 I. The lawsuit’s origin in state court over six years ago 20 This lawsuit began in the Superior Court of California in the middle of 2015. Plaintiffs Gary 21 22 Harmon and ISE Entertainment Corporation1 sued Kerry Wallum, Willie Nelson, Luck Films, Luck 23 Films LLC, Boulder Music Group LLC, and other unknown defendants for $10,000,000 based on 24 alleged misrepresentations, false promises, and breach of fiduciary duty arising from supposed 25 business ventures between the parties. Dkt. No. 1 at 41-72 (Initial Complaint filed July 17, 2015, 26 27 Second Amended Complaint filed Dec. 7, 2018). For example, plaintiffs allege that between 2010 1 2 and 2013, defendants invited Harmon and ISE to run a video production company, Luck Films LLC, 3 which would be jointly owned by Harmon, Kerry Wallum, and Willie Nelson, with Nelson 4 providing millions of dollars in financial support. SAC ¶ 18-23. Plaintiffs allege they expended 5 tens of thousands of dollars on films projects believing that they would be reimbursed by defendants, 6 but reimbursement never came. Id. 7 The case progressed slowly. In the first nine months, defendants demurred, plaintiffs 8 amended their complaint, and the first of many plaintiff attorney substitutions took place (a pattern 9 10 which the Court addresses later). Cazzell Decl., Dkt. 69-1 at 24-29, Ex. B (State Court Docket 11 Sheet). The proceedings otherwise remained fairly quiet for the first 2.5 years of the case. Plaintiffs 12 would later attribute this period of “statis” to an inability to locate and serve Kerry Wallum. Dkt. 13 No. 14 (CMC filed June 10, 2019). It was not until May 2017 that plaintiffs filed an ex parte 14 application to effect service by publication on Wallum, which the state court granted. Dkt. 70-1 at 15 4, 11. Wallum filed his answer in October 2017. But nearly a full year would pass before plaintiffs 16 meaningfully resumed their prosecution of the case. 17 18 During the summer of 2018—three and a half years after filing—plaintiffs began serving 19 written discovery on defendants Wallum and Nelson. Dkt. No. 14 at 12 (CMC filed June 10, 2019). 20 Plaintiffs filed two substantive motions in fall 2018: (1) a motion to quash a third-party deposition 21 subpoena served on a non-party, and (2) a motion for leave to file a second amended complaint. 22 Dkt. 69-1 at 19-20. The SAC, filed in December 2018, added a civil RICO claim (for the first time) 23 and introduced a new defendant—Kathy Hardt—who, on March 4, 2019, removed the case to 24 25 federal court. Dkt. No. 1. 26 27 II. Harmon goes to prison and discovery stalls counts involving fraud and embezzlement in a separate criminal matter. As a result, Harmon was 1 2 in prison from January 2019 until November 2021—nearly the entire time the case was in federal 3 court. 4 Despite Harmon’s incarceration, the parties held a discovery conference on May 15, 2019. 5 However, the momentum was cut short when plaintiff counsel withdrew in August 2019, citing a 6 “break down of the attorney-client relationship” and nonpayment of attorneys’ fees. Dkt. No. 30 7 (Motion); Dkt. No. 30-2 ¶ 5, 6. As a result, further case management was continued to January 8 2020. Dkt. No. 31. Plaintiffs’ current counsel, Maryann Cazzell, noticed her appearance for 9 10 Harmon and ISE on January 13, 2020. 11 The parties exchanged their initial disclosures in the spring of 2020. Dkt. No. 45 at 9. One 12 year later, however, defendants alleged that plaintiffs had still not produced several documents 13 identified in their initial disclosure, including a computation of each category of damages or 14 documentation supporting damages claims. Id. Plaintiffs maintained that production was difficult 15 because Harmon had “many of his files with him” in prison, “but is prohibited from sending those 16 to his counsel, or even sharing them with counsel by an in-person [meeting] (which is currently not 17 18 allowed).” Id. Plaintiffs also cited the “perfect storm” brought on by the COVID-19 pandemic 19 that prevented “ongoing meaningful conversations with Mr. Harmon that were needed” for effective 20 advancement of the case. Id. at 10. 21 As a result of plaintiffs’ failure to produce the documents identified in the initial discloses, 22 Harmon had still not been deposed by April 2021—nearly six years since the complaint was filed. 23 While a virtual deposition may have been logistically possible (despite Harmon’s incarceration and 24 25 COVID-19), defendants reasonably maintained that “it would not be appropriate to move forward 26 with depositions until Plaintiffs have completed their document production.” Dkt. No. 45 at 16. 27 III. Plaintiffs fail to comply with a court order 1 2 Plaintiffs continued to delay production through 2021, eventually leading to court to enter 3 an order on August 20, 2021 requiring plaintiffs to produce, within 30 days, “1) the documents 4 identified in their initial disclosures, 2) a computation of plaintiffs’ damages supported by evidence, 5 and 3) the documents plaintiffs represented they would produce in their responses to defendants’ 6 requests for production.” Dkt. No. 58. The Court warned plaintiffs “that if the documents are not 7 produced by the deadline stated it will entertain issuing of sanctions including Dismissal of the case 8 due to failure to prosecute.” Dkt. No. 59. The Court further remarked that the due date “will not be 9 10 reset even if [Harmon] is not released from custody.” Id. 11 Plaintiffs produced various documents on October 8, 2021, but one day later, counsel 12 submitted declarations explaining that plaintiffs would not be able to fully comply with the Court’s 13 order. Dkt. No. 60. For example, a board member of ISE attested that as long as Harmon was 14 incarcerated, plaintiffs would be unable to produce 15 the actual computation of PLAINTIFFS’ damages, because these records I believe to be 16 solely within GARY HARMON’s domain. I understand that GARY HARMON has computer components in storage and potentially may have records on an old cell phone that 17 may contain documents from which those computations can be generated, and/or which are 18 identified in general terms in the PLAINTIFFS’ DISCLOSURES. However, in order to be accessed, those computer components and phone require passwords that I do not have and 19 never had. *** 20 there were other members of the ISE board that probably had those passwords and may have been able to access any balance of the records to be produced as directed in the ORDER. 21 However, I am personally aware that those former ISE Board Members were threatened by 22 the RICO participants, and as a result of those threats resigned or quit the ISE board, and I no longer have contact information for them. 23 24 Dkt. No. 60-2 ¶¶ 4, 5 (filed October 9, 2021). 25 On October 29, 2021, defendants submitted a detailed account of perceived deficiencies in 26 plaintiff’s October 8, 2021 production.

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Harmon v. Nelson, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harmon-v-nelson-cand-2022.