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Murphy v. Wells Fargo Bank, Na

United States District Court, Ninth Circuit

July 29, 2013

Anne S. Murphy, Plaintiff,
Wells Fargo Bank, NA, et al., Defendants.


ROSLYN O. SILVER, Chief District Judge.

Counterclaimant Sandburg Financial Corporation ("Sandburg") has moved to strike the answer filed by Gerald and Anne Murphy. For the following reasons, the motion will be granted.


The procedural history of this case is incredibly complicated as it involves multiple lawsuits filed in multiple jurisdictions. In short, in the summer of 2010 Anne Murphy sued Wells Fargo Bank, N.A. ("Wells Fargo") in Arizona for allegedly misappropriating certain funds from her Wells Fargo account. (Doc. 1). Anne Murphy later added Sandburg as a defendant. (Doc. 13). Around that same time, Sandburg was suing Gerald Murphy and Anne Murphy in Texas to enforce a judgment obtained in California. There were two cases in Texas, both of which were eventually transferred to this Court. (CV-11-208-PHX-ROS, CV-11-1497-PHX-ROS).

Sandburg and Gerald Murphy (acting on behalf of his marital estate) entered into a settlement agreement resolving the two cases from Texas. Those cases were dismissed. Unfortunately, Gerald and Anne Murphy breached the settlement agreement which led Sandburg to file counterclaims against Gerald and Anne Murphy in the case originally brought by Anne Murphy. Those counterclaims were for breach of contract and fraud. Anne Murphy's claims against Wells Fargo and Sandburg were dismissed based on her failure to comply with Court orders. (Doc. 263). That dismissal left pending only the counterclaims brought by Sandburg against Gerald and Anne Murphy.

On May 1, 2013, the Court held a status conference. During that conference, counsel for Sandburg explained that he was having difficulty obtaining documents from Gerald Murphy. Sandburg was seeking documents regarding Mr. Murphy's ability to pay the settlement amount. During his deposition, Mr. Murphy claimed he was attempting to obtain the funds to pay what he owed but that a number of individuals were thwarting his efforts. Those individuals included Kofi Annan (the former Secretary General of the United Nations), the current CEO of Bank of America, and Jim Yong Kim (President of the World Bank). Sandburg's counsel had propounded discovery to Gerald Murphy regarding his interactions with these individuals. In particular, Sandburg sought:

all records of communication between Mr. Murphy and Bank of America, any statements of accounts at Bank of America, any correspondence that would have to do with the failure to release funds, any confirmations of wire deposits from Ghana, any e-mails between Bank of America representatives and Mr. Murphy, any emails between [Kofi Annan] and Mr. Murphy, any e-mails or any kinds of other communications between [the President] of the World Bank and Mr. Murphy, his cell phone billing statements from the periods of 2010 to the present, any and all communications whatsoever with the failure to release funds.

(Doc. 271 at 22). The Court advised Mr. Murphy that, based on Mr. Murphy's previous statements, this information was relevant and he was required to produce the responsive documents. (Doc. 271 at 23). The Court warned Mr. Murphy that the failure to provide responsive documents might result in sanctions. ( Id. )

Mr. Murphy responded that he talked "every day" to Kofi Annan, the CEO of Bank of America, and Mr. Kim. (Doc. 271 at 23). Mr. Murphy indicated he could provide his communications with these individuals "any way [Sandburg wants]." (Doc. 271 at 23). Mr. Murphy agreed to produce the communications by May 17.

On May 21, 2013, Sandburg filed a motion to strike the answer to its counterclaims. (Doc. 270). According to that motion, Mr. Murphy did not produce any documents by May 17. The motion also pointed out that Mr. Murphy had attempted to engage in fraudulent behavior. As shown in an email attached to the motion, Mr. Murphy advised Sandburg that Mr. Murphy would send Sandburg the $250, 000 (identified as $300, 000 in the email) he owed under the parties' settlement agreement if Sandburg sent him $3, 000 dollars. (Doc. 270-1 at 13). The email explains that the "$3, 000 would be given to Kofi Annan as an escrow holder to be released upon [payment of] the $300, 000 to you." (Doc. 270-1 at 13). In other words, Kofi Annan was going to act as an escrow agent to help the CEO of Bank of America transfer money to Mr. Murphy. There is no evidence Mr. Murphy has ever had any contact with any of these famous individuals. Moreover, the claim that Kofi Annan runs a side business as an escrow agent is hard to believe. Mr. Murphy's claims about Kofi Annan and the like appear to be utterly fantastical and the request for an additional $3, 000 appears to be a transparent confidence scheme.

Mr. Murphy's response to the motion to strike attempts to explain his behavior but offers no coherent explanation. Mr. Murphy appears to concede that he owes funds to Sandburg but he argues unexpected delays have prevented him from paying those funds. He explains that his request for an additional $3, 000 was "to obtain the necessary regulatory approvals" and that it is "slanderous" to accuse him of attempting to defraud Sandburg. (Doc. 273 at 4-5). Mr. Murphy claims the "unsettled financial conditions internationally" are preventing him from making payment. (Doc. 273 at 5). Mr. Murphy provides no explanation for his failure to comply with his discovery obligations.


It is now clear that Mr. Murphy is not acting in good faith. Mr. Murphy has made misleading and inaccurate statements in filings and in-person before this Court. He has also attempted to obtain additional funds from Sandburg in a transparent attempt to defraud Sandburg. Most importantly, however, Mr. Murphy refused to comply with his discovery obligations and the order requiring him to produce responsive documents. Pursuant to Federal Rule of Civil Procedure 37(b), such refusal to participate in discovery allows the Court to impose sanctions. The only issue is the appropriate extent of those sanctions.

In determining whether it would be appropriate to strike the answer as a result of Mr. Murphy's misconduct, the Court must consider the following five factors: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions." Hester v. Vision Airlines, Inc., 687 ...

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