Opinion
Civil Action 1:19-cv-02203-WJM-NYW 1:19-cv-02208-WJM-NYW 1:19- cv-02205-WJM-NYW
11-09-2020
WEIHONG MA, MEI CI MA, and RESTORATION ENTERPRISES, LLC, Plaintiffs, v. AUTO-OWNERS INSURANCE COMPANY, Defendant. WEIHONG MA, MEI CI MA, and RESTORATION ENTERPRISES, LLC, Plaintiffs, v. AUTO-OWNERS INSURANCE COMPANY, Defendant. And QUAN SHENG MA, and RESTORATION ENTERPRISES, LLC, Plaintiffs, v. AUTO-OWNERS INSURANCE COMPANY, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Nina Y. Wang, United States Magistrate Judge.
This matter comes before this court on Defendant Auto-Owners Insurance Company's (“Defendant” or “Auto-Owners”) Motion for Sanctions for Plaintiff Mei Ci Ma's Failure to Comply with Court Orders and Appear for Deposition (the “Motion for Sanctions” or “Motion”), filed September 23, 2020. [#61]. The undersigned considers the Motion pursuant to 28 U.S.C. § 636(b) and the Memorandum dated September 25, 2020, [#63], and this court concludes that neither oral argument nor additional briefing will materially assist in the resolution of this matter.Accordingly, having reviewed the Motion, applicable case law, and being fully advised in its premise, this court respectfully RECOMMENDS that the Motion for Sanctions be GRANTED IN PART and DENIED IN PART.
The time to respond to the pending Motion has long since expired, without any response from Plaintiffs, but nothing prohibits this court from considering the Motion presently. See D.C.COLO.LCivR 7.1(d) (providing that the court may dispose of a motion at any time).
Because the Motion seeks dispositive sanctions, this court proceeds by Recommendation rather than Order.
BACKGROUND
This consolidated civil action arises out of an insurance dispute between Plaintiffs Weihong Ma (“Mr. Ma”), Mei Ci Ma (“Ms. Ma”), Quan Sheng Ma (“Mr. Quan Ma”), and Restoration Enterprises, LLC (“Restoration”) (collectively, “Plaintiffs”). See [#1; #2; #19; #24].On or about May 8, 2017, a hailstorm caused property damage to real property owned by Mr. and Ms. Ma in Denver, Colorado, real property owned by Mr. Quan Ma in Wheat Ridge, Colorado, and real property owned by Mr. and Ms. Ma in Thornton, Colorado (collectively, the “Properties”). See [#2 at ¶¶ 1, 6; #19 at ¶¶ 1, 6; #24 at ¶¶ 1, 6]. At the time of the hailstorm, Auto-Owners insured each property under separate policies for each property. See [#2 at ¶ 5; #19 at ¶ 5; #24 at ¶ 5]. Plaintiffs (excluding Restoration) filed individual claims for each Property: claim number 300-0038360-2018 (the “Denver claim”), claim number 745232017 (the “Wheat Ridge claim”), and claim number 22000003342017 (the “Thornton claim”). See [#2 at ¶ 7; #19 at ¶ 7; #24 at ¶ 7]. Auto-Owners sent adjusters to inspect each property individually, and disputes soon arose between Auto-Owners and Plaintiffs as to the amount of damages and costs of repairs for the Properties. See [#2 at ¶¶ 8-17; #19 at ¶¶ 8-17; #24 at ¶¶ 8-17].
This court uses the designation [#] for citations to the Electronic Court Filing (“ECF”) system in the lead case Ma et al. v. Auto-Owners Insurance Company, Civil Action No. 19-cv-02203-WJM-NYW. For all other cases, this court uses the convention [ECF No. ].
Believing Defendant's conduct breached the respective terms of the Properties' insurance contracts, Plaintiffs filed actions in the Denver County District Court (the Denver claim), the Jefferson County District Court (the Wheat Ridge claim), and the Adams County District Court (the Thornton claim), asserting claims for breach of contract, bad faith breach of an insurance contract, and unreasonable delay and/or denial of an insurance claim under Colo. Rev. Stat. § 10-3-1115. See [#2; #19; #24]. Auto-Owners removed these actions to this District pursuant to 28 U.S.C. § 1332, see [#1]; Ma et al. v. Auto-Owners Insurance Company, Civil Action No. 19-cv-02205, [ECF No. 1]; Ma et al. v. Auto-Owners Insurance Company, Civil Action No. 19-cv-02208, [ECF No. 1], and the presiding judge, the Honorable William J. Martinez, consolidated these civil actions on October 4, 2019. [#17]. Following consolidation, this court conducted a Scheduling Conference and set July 31, 2020 as the deadline for discovery, among others. See [#27; #28]. This action has now been consolidated with Ma et al. v. Auto-Owners Insurance Company, Civil Action No. 19-cv-02208, for trial. [#74; #79].
Auto-Owners initially noticed Ms. Ma's deposition for July 29, 2020, to occur via remote means. [#61 at ¶ 3]. Due to technical issues, the Parties cancelled the July 29 deposition and reset the deposition for August 4, 2020. See [id.]. For this reason, on August 4, 2020, Auto-Owners moved unopposed for an order allowing it to depose Mr. and Ms. Ma out of time, which this court granted, permitting Auto-Owners to complete the remaining depositions by August 31, 2020. See [#42; #44]. On the morning of August 4, Ms. Ma's counsel advised Auto-Owners that Ms. Ma was unavailable for her deposition because of conflicts with her work schedule, prompting Auto-Owners to reset Ms. Ma's deposition to August 31, 2020. See [#61 at ¶¶ 5, 7]. However, on the morning of August 31, Ms. Ma's counsel again informed Auto-Owners that Ms. Ma would be unavailable for her deposition. [Id. at ¶ 7].
Given the scheduling issues with Ms. Ma, the Parties appeared before this court for an informal discovery dispute conference on September 3, 2020. [#49]. At the September 3 conference, the undersigned ordered the Parties to provide notice by September 4, 2020 of the newly scheduled date for Ms. Ma's deposition, and this court made clear that Ms. Ma's nonappearance would be a violation of this court's order and could result in sanctions. See [#49]. Upon receiving notice that the Parties had agreed to Ms. Ma's deposition occurring on September 10, 2020, this court issued a Minute Order that ordered Ms. Ma to appear for her deposition on September 10 and specifically advised Ms. Ma “that failure to appear . . . on the date ordered or secure relief prior to that date may lead to sanctions, including but not limited to preclusion of evidence and/or dismissal of an action.” [#50 at 1 (emphasis in original)]. Ms. Ma failed to appear for her September 10 deposition and did not secure relief prior to that date.
Given Ms. Ma's failure to appear for her September 10 deposition, Auto-Owners filed the instant Motion for Sanctions. [#61]. Though indicating that Plaintiffs opposed the Motion, Plaintiffs have yet to respond to the Motion and the time to do so has long since expired. Accordingly, I find it appropriate to consider the Motion currently. See D.C.COLO.LCivR 7.1(d).
LEGAL STANDARD
The Federal Rules of Civil Procedure provide for discovery procedures that seek to further the interests of justice by minimizing surprise at trial and ensuring wide-ranging discovery of information. Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614, 619 (D. Colo. 2007). Rules 37 provides for various sanctions when a party fails to comply with her discovery obligations under the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 37; Mize v. Kai, Inc., No. 17-CV-00915-NYW, 2018 WL 1035084, at *3 (D. Colo. Feb. 23, 2018) (“Rule 37 serves as the mechanism for enforcing compliance with discovery obligations”). Relevant here, “Rule 37(b)(2) provides that a court may sanction a party for failing to obey a court order to provide or permit discovery, which may include both monetary and non-monetary penalties.” Echon v. Sackett, No. 14-CV-03420-PAB-NYW, 2016 WL 1732708, at *2 (D. Colo. May 2, 2016) (discussing sanctions under Rule 37(b)(2)(A)-(C)). Applicable monetary sanctions may include reasonable fees and expenses caused by the failure, unless otherwise substantially justified or other circumstances make an award of fees and costs unjust. See Id. Nonmonetary sanctions available under Rules 37(b) and 37(d) include “prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence”; “dismissing an action or proceeding in whole or in part; and holding the disobedient part in contempt of court, among others. See Fed. R. Civ. P. 37(b)(2)(A)(i)-(iv). The same sanctions are available under Rule 37(d)(3) should a party fail to appear for her own deposition. See Mize, 2018 WL 1035084, at *3. Ultimately, the court retains broad discretion to impose an appropriate sanction for the disobedient conduct. See Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d 840, 862 (10th Cir. 2005).
ANALYSIS
Auto-Owners seeks sanctions against Ms. Ma given her repeated failures to appear for her deposition, including violating this court's order regarding her attendance at the September 10 deposition. Among those sanctions, Auto-Owners seeks dismissal of the Denver claim and Thornton claim in their entirety or, at the least, the dismissal of Ms. Ma's claims. [#61 at ¶¶ 15-16]. Alternatively, Auto-Owners requests that the court preclude Ms. Ma from testifying at trial and allow for an adverse inference instruction. See [id. at ¶ 16]. I consider the appropriate sanction below.
Dispositive Sanctions .
Courts, in their discretion, may sanction a disobedient party for discovery misconduct, including the heavy punishment of dismissal of an action or the entry of default judgment. See Atlas Res., Inc. v. Liberty Mut. Ins. Co., 291 F.R.D. 638, 643 (D.N.M. 2013). Given the harshness of dispositive sanctions, “due process requires that the discovery violation be predicated upon willfulness, bad faith, or some fault of petitioner rather than inability to comply.” Archibeque v. Atchison, Topeka & Santa Fe Ry. Co., 70 F.3d 1172, 1174 (10th Cir. 1995) (brackets and internal quotation marks omitted). Several non-exhaustive factors guide the court's inquiry as to whether it should award dispositive sanctions:
1. The degree of actual prejudice to the moving party;
2. The amount of interference with the judicial process;
3. The culpability of the litigant;
4. Whether the disobedient party had notice of the likelihood of dispositive sanctions; and
5. The efficacy of lesser sanctions.Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992). “Only when the aggravating factors outweigh the judicial system's strong predisposition to resolve cases on their merits is dismissal an appropriate sanction.” Id. (internal quotation marks omitted).
Auto-Owners argues that the court should dismiss the Denver claim and Thornton claim in their entirety, or at least dismiss Ms. Ma's claims. It argues that Ms. Ma willfully failed to appear for her deposition, which Auto-Owners reset several times and which this court ordered Ms. Ma to attend. See [#61 at ¶¶ 14-15]. According to Auto-Owners, no evidence demonstrates that Ms. Ma's absence was substantially justified, and this court specifically advised Ms. Ma of the possibility of sanctions for her failure to appear at the September 10 deposition, thereby warranting dispositive sanctions. See [id. at ¶¶ 14-16]. On the record before this court, I respectfully conclude that dispositive sanctions are not appropriate.
While this court agrees that Ms. Ma's repeated failures to appear for her deposition, including her most recent absence despite this court's order, are troubling (and perhaps willful), it does not appear that the Ehrenhaus factors as a whole weigh in favor of dispositive sanctions. Though not formally bound by Rule 37(e), this court considers its principles in analyzing whether Auto-Owners provides any factual basis for the prejudice it alleges it suffered as a result of Ms. Ma's failure to appear for her deposition. On this ground, it is not clear what evidence Auto-Owners anticipated Ms. Ma had that could not be secured through other discovery means. Cf. Fed. R. Civ. P. 37(e) (requiring a showing that missing electronically stored information cannot be restored or replaced through additional discovery to trigger sanction). Indeed, Auto-Owners deposed Mr. Ma, who appears to own with Ms. Ma the properties subject to the Denver claim and Thornton claim. Further, the Mas' contractor Restoration is a party to this action; was properly subject to a Rule 30(b)(6) deposition; and was involved in the adjustment of the claim. See, e.g., [#55 at ¶¶ 26-28]. Moreover, the Parties were otherwise able to proceed through discovery and Auto-Owners has moved for summary judgment on all claims asserted in each of the three consolidated actions. See [#55]. Thus, I conclude that a lesser sanction is more appropriate.
Adverse Inference .
Though less severe than dispositive sanctions, “[a]n adverse inference is a powerful sanction as it brands one party as a bad actor and necessarily opens the door to a certain degree of speculation by the jury.” Henning v. Union Pac. R.R. Co., 530 F.3d 1206, 1220 (10th Cir. 2008) (internal quotation marks omitted). An adverse inference instruction is appropriate only if the movant can demonstrate the disobedient party's bad faith. Turner v. Pub. Serv. Co. of Colorado, 563 F.3d 1136, 1149 (10th Cir. 2009). This requires Auto-Owners to produce actual evidence of bad faith, not mere speculation. See E.E.O.C. v. JetStream Ground Servs. Inc., 878 F.3d 965-66 (10th Cir. 2017). Courts typically employ an adverse inference instruction in the context of spoliation of evidence, though they may also employ such a sanction for the non-production of evidence. Hawley v. Mphasis Corp., 302 F.R.D. 37, 54 (S.D.N.Y. 2014).
While this court does not approve of Ms. Ma's conduct, Auto-Owners fails to adduce any evidence that Ms. Ma acted willfully and in bad faith. Auto-Owners fails to provide what, if any, reason Ms. Ma or her counsel provided as to her absence from the September 10 deposition. Her earlier depositions were rescheduled due to technical difficulties and conflicts with Ms. Ma's work schedule. Although there is no indication that similar reasons were at play on September 10, this court is not persuaded that Ms. Ma's absence, without more, justifies an adverse inference instruction. Indeed, Auto-Owners fails to demonstrate that Ms. Ma's deposition testimony would have been favorable to Auto-Owners. Cf. Alvariza v. Home Depot, 240 F.R.D. 586, 590 (D. Colo. 2007) (“The burden is on the aggrieved party to establish a reasonable possibility, based on concrete evidence rather than a fertile imagination, that access to the lost material would have produced evidence favorable to his cause.” (bracket and internal quotation marks omitted)). Thus, a lesser sanction seems appropriate.
Appropriate Sanctions .
As mentioned, the court has discretion to craft a sanction that appropriately reflects the disobedient conduct. See Zbylski v. Douglas Cty. Sch. Dist., 154 F.Supp.3d 1146, 1158-59 (D. Colo. 2015) (“As a general rule, the trial court acts with discretion in imposing sanctions for abuse of discovery under Rule 37”). This may include precluding the disobedient party from testifying at trial, as well as issuing appropriate fees and costs. See Carroll v. Allstate Fire & Cas. Ins. Co., No. 12-CV-00007-WJM-KLM, 2014 WL 859238, at *11 (D. Colo. Mar. 4, 2014) (precluding expert testimony at trial under Rule 37 and awarding the movant its costs and fees associated with the disrupted deposition). Based on the record before this court, I conclude that a more appropriate sanction for Ms. Ma's conduct is precluding her from testifying at trial, especially given that Auto-Owners was able to depose Mr. Ma who also owned the at-issue properties under the Denver claim and Thornton claim and presumably, Restoration, another Plaintiff and contractor. See Roadway Exp., Inc. v. Piper, 447 U.S. 752, 763-64 (1980) (explaining that Rule 37 sanctions “must be applied diligently both to penalize those whose conduct may be deemed to warrant such a sanction, and to deter those who might be tempted to such conduct in the absence of such a deterrent.”). Further, given Ms. Ma's repeated failures to appear for her deposition, including a direct order from this court, I also conclude that Auto-Owners should be entitled to its reasonable costs and fees associated with the September 10 deposition where Ms. Ma failed to appear even after court order, as well as its reasonable costs and fees in brining the instant Motion.
CONCLUSION
For the reasons stated herein, this court respectfully RECOMMENDS that:
(1) Defendant's Motion for Sanctions [#61] be GRANTED IN PART and DENIED IN PART;
(2) Ms. Ma be precluded from testifying at trial; and
(3) Defendant be awarded its reasonable costs and fees associated with the September 10 deposition, as well as its reasonable costs and fees in bringing the instant Motion.
Within fourteen days after service of a copy of the Recommendation, any party may serve and file written objections to the Magistrate Judge's proposed findings and recommendations with the Clerk of the United States District Court for the District of Colorado. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); In re Griego, 64 F.3d 580, 583 (10th Cir. 1995). A general objection that does not put the District Court on notice of the basis for the objection will not preserve the objection for de novo review. “[A] party's objections to the magistrate judge's report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.” United States v. One Parcel of Real Prop. Known As 2121 East 30th Street, Tulsa, Oklahoma, 73 F.3d 1057, 1060 (10th Cir. 1996). Failure to make timely objections may bar de novo review by the District Judge of the Magistrate Judge's proposed findings of fact, conclusions of law, and recommendations and will result in a waiver of the right to appeal from a judgment of the district court based on the proposed findings and recommendations of the magistrate judge. See Vega v. Suthers, 195 F.3d 573, 579-80 (10th Cir. 1999) (District Court's decision to review a Magistrate Judge's recommendation de novo despite the lack of an objection does not preclude application of the “firm waiver rule”); Int'l Surplus Lines Ins. Co. v. Wyoming Coal Refining Sys., Inc., 52 F.3d 901, 904 (10th Cir. 1995) (by failing to object to certain portions of the Magistrate Judge's order, cross-claimant had waived its right to appeal those portions of the ruling); Ayala v. United States, 980 F.2d 1342, 1352 (10th Cir. 1992) (by their failure to file objections, plaintiffs waived their right to appeal the Magistrate Judge's ruling). But see Morales-Fernandez v. INS, 418 F.3d 1116, 1122 (10th Cir. 2005) (firm waiver rule does not apply when the interests of justice require review).