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Excel Fortress Ltd. v. Wilhelm

United States District Court, D. Arizona

June 17, 2019

Excel Fortress Limited, et al., Plaintiffs,
v.
Vaughn La Verl Wilhelm, et al., Defendants.

          ORDER

          DOMINIC W. LANZA UNITED SLATES DISTRICT JUDGE

         Pending before the Court is Defendant Wilhelm's motion for sanctions (Doc 134), which Plaintiffs oppose (Doc. 136). The Court heard oral argument on the motion on June 17, 2019. As explained below, the motion will be granted in part and denied in part and the parties will be ordered to file a joint supplemental brief after meeting and conferring.

         RELEVANT BACKGROUND FACTS

         In January 2018, Plaintiffs provided their initial MIDP disclosure. Although this document identified various categories of damages Plaintiffs seek to recover in this case, it failed to provide a computation of those damages:

Plaintiffs . . . seek monetary damages to be determined at trial with regard to their allegations against Defendants relating to severed and interrupted business relationships, business disruption, lost benefit of their investments, lost potential financing and investment, lost profits, lost competitive advantage, loss of valuable product, costs of delay and harm to reputation in the market, litigation costs, attorneys' fees, and interest. As discovery continues, Plaintiffs will supplement this disclosure with regard to amount of such damages and losses. Plaintiffs refer to documents produced at EFG000001-EFG000272 for evidence of the damages and losses described herein.

(Doc. 136-2 at 12.)

         In February 2018, the scheduling order was issued. (Doc. 55.) It imposed a deadline of December 28, 2018 for the completion of “Fact discovery” and a deadline of March 1, 2019 for the completion of “All discovery.” (Id. at 2-3.)

         In November 2018, as part of the meet-and-confer process arising from a discovery dispute, Plaintiffs' counsel sent an email to Wilhelm's counsel that provided additional information concerning Plaintiffs' damage theories. That email stated in relevant part as follows:

[A]s to damages and your request for profit documentation. There are no documents as to Plaintiffs' lost profits because they are not yet profitable entities. We do not have lost customer sales yet because, as far as we now know, your clients are not yet in production and have not yet taken customers from us. Our damages claims are and will at trial be primarily based on lost future profits, revenues and customers based on the alleged misappropriation of trade secrets, business disparagement and tortious interference with Dr. Li's contract. We will seek compensation for the lost benefit of the $1 million we paid to Dr. Li to obtain the devulcanization technology that we allege has been misappropriated. We will also seek compensation for the lost time and delay caused to us by Defendant Wilhelm's negligent mixing and creation of unusable [chemicals].

(Doc. 136-4 at 2.)

         On February 14, 2019, at the parties' request, the Court issued an order extending the deadline for completing “All discovery” to May 24, 2019. (Doc. 132.)

         On February 21, 2019, Wilhelm's counsel sent an email to Plaintiffs' counsel explaining that, although “Plaintiffs' claims against Mr. Wilhelm have been outstanding for almost two years now . . . Plaintiffs have never provided the required calculation of damages.” (Doc. 136-8 at 2.) Thus, Wilhelm's counsel asked Plaintiffs' counsel to provide supplemental disclosures on this topic. (Id. at 2-3.)

         On March 1, 2019, Plaintiffs' counsel provided an “amended and supplemental” version of Plaintiffs' MIDP disclosure. (Doc. 136-10.) This document stated that Plaintiffs were seeking the following seven categories of damages:

(1) $214, 000 in consulting payments to Wilhelm;
(2) “Loss of the full benefit of the rubber devulcanization technology sold to Excel by Dr. Li and licensed to EFG: some portion of $1 million to be determined by a jury”;
(3) $261, 163 for chemicals that Wilhlem had improperly ordered or misused;
(4) “Loss of profit from approximately one-year delay created by inability to use modifier compound negligently or intentionally created: $20, 800, 000 in net profit from 2015 pro formas”;
(5) “Lost potential funding from Green Injectors: $15 million or to be ...

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