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Estate of Petersen v. Bitters

United States District Court, D. Nebraska

May 3, 2018



          Robert F. Rossiter, Jr. United States District Judge.

         This matter is before the Court on plaintiff Estate of Joyce Rosamond Petersen's (the “estate”) “Statement of Objections to Magistrate Judge's Order Dated March 14, 2018” (Filing No. 189) and “Statement of Objections to Magistrate Judge's Order Dated March 23, 2018” (Filing No. 190). For the reasons stated below, the objections are overruled.

         I. BACKGROUND

         While Joyce Rosamond Petersen (“Petersen”) was still living, William E. Bitters (“Bitters”) was her financial advisor. On Bitters's advice, Petersen loaned $150, 000 in 2008 to defendant John L. Henry (“Henry”) and received a promissory note. Henry never repaid the loan. Petersen died on October 20, 2013. On December 1, 2014, the estate filed suit in the United States District Court for the Eastern District of Texas against Henry, Bitters, United Financial Services (“UFS”), and Robert W. Boland, Jr. (“Boland” and collectively, the “defendants”) for damages arising from the unpaid loan.[1]

         After some disputes in the Eastern District of Texas involving service and personal jurisdiction, the case was transferred (Filing No. 57) to the District of Nebraska on March 17, 2016, and the case was received (Filing No. 58) on April 25, 2016. The defendants moved to dismiss (Filing Nos. 68 and 70), but their motions were deemed mooted when the Court allowed (Filing No. 98) the estate to file an amended complaint (Filing No. 99). The defendants again moved to dismiss (Filing Nos. 104, 106, and 112), and the Court dismissed (Filing No. 121) three of the ten claims in the amended complaint.

         After a planning conference, the magistrate judge[2] entered a Final Progression Order (“progression order”) (Filing No. 127) setting trial for March 19, 2018, scheduling a status conference for October 24, 2017, and setting a November 1, 2017, written-discovery deadline and a November 30, 2017, deposition deadline. It appears no activity took place in the case for the next seven months until the estate served discovery on the defendants for the first time on September 19, 2017. At the October status conference, the estate informed the magistrate judge for the first time that Henry was not responding to discovery requests. The magistrate judge extended the trial date to June 25, 2018, the written-discovery deadline to December 1, 2017, and the deposition deadline to February 9, 2018.

         On November 6, 2017, the magistrate judge held a hearing on the estate's discovery disputes with Henry, which included requests for admission, requests for production, and interrogatories. During the hearing, the parties went through the discovery requests individually and mostly resolved the requests for admission and the interrogatories. The magistrate judge informed the estate it could obtain many of the requested documents by directly subpoenaing the entities that possessed them, and, if the estate recovered any documents Henry claimed did not exist, the estate could then ask the magistrate judge to impose sanctions.

         After a telephone conference on November 15, 2017, the magistrate judge scheduled a discovery conference for December 21, 2017, required a jointly prepared summary of remaining discovery disputes to be submitted by December 18, 2017, and extended the deadline for written discovery to January 16, 2018 (Filing No. 137). On November 16, 2017, the magistrate judge ordered (Filing No. 138) Henry to produce several responses and documents by December 4, 2017, and keep the Court updated on his address.[3] On December 6, 2017, the magistrate judge extended (Filing No. 144) the expert-witness deadlines in response to the estate's unopposed motion (Filing No. 143).

         The estate moved to continue the discovery hearing on December 12, 2017, and the submission date for the summary of remaining discovery disputes on December 18, 2017. The magistrate judge extended the deadline for the summary to January 22, 2018, and set the conference for January 25, 2018.

         On January 10, 2018, the estate notified Henry it intended to subpoena his accountant and subpoenaed the accountant on January 19, 2018. The estate took the accountant's deposition on January 29, 2018, where Henry appeared and was allegedly very disruptive and hostile.

         On January 22, 2018, the estate provided a discovery-dispute summary to the magistrate judge that was over 250 pages. At the discovery conference on January 25, 2018, the magistrate judge first advised the parties to attempt to come to an agreement. After an hour in court and two and a half hours conferring, the parties were unable to resolve any issues. The subsequent in-court portion of the discovery hearing took over five hours.[4]

         Boland and Bitters moved to extend the deadline for expert disclosure on February 6, 2018. On February 8, 2018, Henry moved for a protective order pertaining to documents obtained from the subpoena of his accountant[5] and moved to quash a subpoena duces tecum served on him in relation to Henry's alleged involvement in a business known as JSJ Manufacturing Inc. On February 11, 2018, the estate filed a Motion to Extend Deadlines; Make Alternative Service; Add New Defendants; and Sanction John L. Henry and Require Him to Sign an Authorization to Release IRS Records (Filing No. 166).[6]

         The magistrate judge dealt with these issues in a March 14, 2018, Memorandum and Order (Filing No. 181). The magistrate judge denied Henry's motion for a protective order because of his own refusal to cooperate with the discovery process. Henry's motion to quash the subpoena duces tecum was denied as moot because the estate withdrew the subpoena. The magistrate judge determined the estate had shown good cause only for an extension of the deadline to depose party witnesses and denied the other requests for extension.[7] The magistrate judge denied sanctions as to Henry but stated “if Henry fails to produce documents as ordered in Filing No. 138 before March 26, 2018, Henry will be ordered to appear before the court and sign an authorization permitting [the estate] to obtain records from the IRS.”[8]

         After Boland and Bitters moved (Filing Nos. 182 and 184) for summary judgment, the estate moved (Filing No. 186) to extend the deadline to file its own summary-judgment motion and requested an extension of the deposition deadline. This motion for extension was filed at 11:41 p.m. on the day of the deadline. The estate claimed one of its attorneys was ill and the other attorney was too busy to work on the case. Finding the estate's excuses unpersuasive, especially against the backdrop of the three-and-a-half year pendency of this lawsuit, and the continual inability of counsel for the estate to follow the rules of this Court, the magistrate judge denied (Filing No. 188) the estate's motion for lack of good cause.


         A. Standard of Review

         The estate's objections to the magistrate judge's orders are governed by 28 U.S.C. § 636(b)(1)(A). Under that section, the Court may reconsider the magistrate judge's rulings if “it has been shown that the magistrate judge's order is clearly erroneous or contrary to law.” Id. “A finding is clearly erroneous when ‘although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'” Lisdahl v. Mayo Found., 633 F.3d 712, 717 (8th Cir. 2011) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)).

         B. First Order

         The estate objected (Filing No. 189) to the magistrate judge's partial denial (Filing No. 181) of its Motion to Extend Deadlines; Make Alternative Service; Add New Defendants; and Sanction John L. Henry and Require Him to Sign an Authorization to Release IRS Records (Filing No. 166) on March 28, 2018. The estate's statement of objections contained multiple objections to the magistrate judge's decision.

         1. Counter-motion for a Protective Order

         The estate complains the magistrate judge did not rule on its “counter-motion” for a protective order to prevent Henry from attending depositions. The magistrate judge did not err in declining to rule because the estate's “counter-motion” was contained in a response brief (Filing No. 168) and was not a proper motion. See NECivR 7.1 (describing motions and response briefs separately). In addition, if the magistrate judge did not rule on the motion then the estate cannot object to that non-existent ruling.

         2. Lack of Due Diligence

         A progression order “may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). “The primary measure of good cause is the movant's diligence in attempting to meet the order's requirements.” Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716-17 (8th Cir. 2008) (quoting Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir. 2006)). Prejudice to the nonmovant is also a relevant factor to consider before extending progression deadlines, but courts do not need to reach that factor if the movant was not diligent. Id. at 717.

         The magistrate judge determined the estate was not diligent because it “did not attempt to serve subpoenas on third parties until nearly a year after the case progression order was entered, three years after the case was filed, and less than a month before the deposition deadline.” The magistrate judge also noted the case had been pending for two years, with approximately six months of the delay attributable to the estate's “failure to promptly effectuate service on the defendants, with an additional year caused by filing the lawsuit in a forum that lacked personal jurisdiction over them.” The magistrate judge concluded that “despite the court's November 2017 assistance regarding Defendant Henry's discovery, ...

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