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Wells Fargo Bank NA v. Wyo Tech Investment Group LLC

United States District Court, D. Arizona

October 31, 2019

Wells Fargo Bank NA, Plaintiff,
v.
Wyo Tech Investment Group LLC, et al., Defendants.

          ORDER

          Dominic W. Lanza United States District Judge.

         Pending before the Court is the Judgment Creditors' motion for sanctions. (Doc. 190.) For the following reasons, the motion will be granted in part and denied in part.

         BACKGROUND

         On February 3, 2019, the Judgment Creditors served Wyo Tech with a first request for production of documents (“RFP”) and a first set of interrogatories. (Docs. 126-1, 126-2.)

         On April 30, 2019, the parties filed a joint letter summarizing a discovery dispute over Wyo Tech's response to those requests. (Doc. 126.)

         On May 1, 2019, following a hearing, the Court issued an order requiring Wyo Tech “to comply with the two outstanding discovery requests.” (Doc. 128.) In reaching this conclusion, the Court rejected “Wyo Tech's objection to the requests as being overbroad, ” finding that “Wyo Tech has forfeited or waived its objections for reasons as stated on the record. However, the Court will not compel Wyo Tech to comply with the [Judgment Creditors'] request for production #15.” (Id.) The Court further ordered Wyo Tech to “produce all material no later than May 15, 2019.” (Id.)

         On August 13, 2019, the Judgment Creditors filed the motion for sanctions. (Doc. 190.) Afterward, Wyo Tech filed an opposition (Doc. 210) and the Judgment Creditors filed a reply (Doc. 220).

         On October 15, 2019, the Court issued a tentative ruling on the Judgment Creditors' motion. (Doc. 256.)

         On October 30, 2019, the Court heard oral argument. (Doc. 277.)

         DISCUSSION

         A. The Parties' Arguments

         In their motion for sanctions, the Judgment Creditors contend that Wyo Tech still has not fully complied with their RFPs and interrogatories, even though the Court set a May 15, 2019 deadline for compliance. (Doc. 190.) The motion begins by summarizing an array of discovery-related emails and communications that the parties exchanged between May 15, 2019 and July 24, 2019. (Id. at 1-9.) The Judgment Creditors contend that, during this period, Wyo Tech “play[ed] a game of cat and mouse with its discovery responses, ” repeatedly “ma[de] a belated production of documents, ” and “serv[ed] pithy, useless interrogatory responses.” (Id.at 1.) The Judgment Creditors then identify the following 11 categories of information that, in their view, Wyo Tech still has not fully and/or properly disclosed:

         1. Persons with an ownership interest in Wyo Tech and Inductance:[1]

         The Judgment Creditors contend that Wyo Tech merely provided a general reference to the “documents previously produced” and argue this response was insufficient because Wyo Tech was required to identify the Bates numbers of the documents that fully address this topic. (Id. at 9-10.)

         2. Persons who performed services for Wyo Tech:[2]

         The Judgment Creditors contend that Wyo Tech responded to this interrogatory by merely cross-referencing its general ledger and telling the Judgment Creditors that Wyo Tech shouldn't be required to incur the expense necessary to prepare a more detailed answer. (Id. at 11.) The Judgment Creditors argue this response was insufficient because (1) the Court already found that Wyo Tech waived any overbreadth objections and (2) in any event, Wyo Tech improperly failed to certify that the general ledger contains all of the information that's responsive to this interrogatory. (Id. at 11-12.)

         3. Purchases on Wyo Tech's behalf:[3]

         The Judgment Creditors contend that “Wyo Tech merely referred to its bank statements and said that it is ‘still compiling this information.'” (Id. at 12.) The Judgment Creditors contend this response was insufficient because almost all of the underlying invoices actually refer to a different company (Inductance), not to Wyo Tech. (Id.)

         4. Wyo Tech's assets and liabilities:[4]

         The Judgment Creditors contend that Wyo Tech first referred to a single document (an “Agreement to Release Intellectual Property Rights”) and said “this information is still being compiled, ” then later referred to a second document (balance sheet as of December 31, 2018). (Id. at 12-13.) The Judgment Creditors contend these responses are insufficient because the balance sheet only shows the assets and liabilities on a particular date, not during the full time period covered by the interrogatories, and doesn't break out each individual asset/liability or show the relevant dates on which they were acquired or incurred. (Id.)

         5. Invoices showing services performed and/or goods bought for Wyo Tech by DAS or members of the Danzik family:[5]

         The Judgment Creditors contend that “Wyo Tech did not produce any receipts or invoices showing purported services performed or goods bought by DAS or any of Mr. Danzik's family members . . . that would support the hundreds of thousands of dollars that Wyo Tech paid them” and instead mistakenly claimed that a different set of invoices (were directed to a different company, Inductance) were responsive. (Id. at 13.) The Judgment Creditors further contend that, when they pointed out this error, “Wyo Tech's counsel then promised to get us an explanation . . . but still has not done so.” (Id.)

         6. Tax returns:[6]

         The Judgment Creditors contend that Wyo Tech did not produce any tax returns and “insisted that Wyo Tech did not file any tax return for 2017 or 2018.” (Id. at 13-14.) According to the Judgment Creditors, this assertion is suspect because Wyo Tech has sent letters to its investors referring to its prior tax filings. (Id.)

         7. Correspondence between Wyo Tech's counsel and Wyo Tech's investors:[7]

         The Judgment Creditors contend that Wyo Tech refused to produce any such correspondence based on the theory that it is protected to the attorney-client privilege, yet Wyo Tech's counsel has made clear during this case that it doesn't represent any of the investors. (Id. at 14.)

         8. Wyo Tech's bank records:[8]

         The Judgment Creditors contend that Wyo Tech failed to produce any bank records for the account ending in x2809 after November 2017, even though the account remained open through February 2018, and never followed up ...


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