United States District Court, M.D. Louisiana
J.A.H. ENTERPRISES, INC.
BLH EQUIPMENT, L.L.C.,
RICHARD L. BOURGEOIS, JR. UNITED STATES MAGISTRATE JUDGE.
the Court is Defendants' Motion to Compel (R. Doc. 86)
filed on May 31, 2017 under seal without leave of
court. Defendants request oral argument. (R. Doc.
86-5). The motion is opposed. (R. Doc. 93).
before the Court is Plaintiff's Motion to Compel
Discovery Responses (R. Doc. 87) filed on May 31, 2017.
Plaintiff requests oral argument. (R. Doc. 87-1). The Motion
is opposed. (R. Doc. 92).
is no need for oral argument as requested by the parties.
27, 2014, J.A.H. Enterprises, Inc., which does business as
“Henderson Auctions, ” (“Plaintiff”
or “Henderson Auctions”) initiated this action in
the 21st Judicial District Court, Livingston Parish,
Louisiana, naming as defendants BLH Equipment, L.L.C.
(“BLH”), James Blake Everett (“Blake
Everett”), Sam Everett, and ELA Mission, L.L.C.
(“ELA”) (collectively, “Defendants”).
(R. Doc. 1-2, “Petition”).
31, 2016, Henderson Auctions filed an Amended Complaint. (R.
Doc. 31, “Am. Compl.”). Henderson Auctions
alleges that it acquired the former M/V Crown Casino vessel
for approximately $600, 000, expended approximately $300, 000
to maintain, moor, and prepare the vessel for resale, and
that it partnered with Blake Everett to sell the vessel and
split the profits equally. (Am. Compl. ¶¶ 10-12).
Henderson Auctions alleges that “Blake and Sam Everett
came to Louisiana repeatedly in efforts to sell the casino
vessel” and that “[t]hese two defendants
eventually reached an agreement in Louisiana in mid-2013 with
a buyer named Dr. Rhodes.” (Am. Compl. ¶ 13).
Henderson Auctions alleges that both Blake and Sam Everett
represented to Jeffrey Henderson and Janet Henderson Cagley,
the owners of Henderson Auctions, that the sale price would
include a cash payment of $350, 000 and title to a property
in Kosiusko, Mississippi known as the “Ivey
House.” (Am. Compl. ¶ 13).
Auctions alleges that Blake Everett then set up ELA, a
Mississippi limited liability company to which only Blake
Everett is a member, to take ownership of the Ivey House
despite the parties' agreement to place ownership into
the hands of a co-owned limited liability company. (Am.
Compl. ¶¶ 14-15). Henderson Auctions further
alleges that Sam and Blake Everett actually contracted to
obtain $460, 000 from Dr. Rhodes without informing Henderson
Auctions, with the intention of splitting the additional
$110, 000 amongst themselves and Marvin Henderson. (Am.
Compl. ¶¶ 16-17).
Auctions alleges that in March of 2014, Blake and Sam Everett
agreed to list the Ivey House for $750, 000 without
disclosing the listing to Ms. Cagley. (Am. Compl.
¶¶ 20-21). Henderson Auctions alleges that Blake
and Sam Everett scheduled the auction of the Ivey House and
its items and that Sam Everett “personally participated
in the sale of the antiques and contents from the Ivey House
without disclosing to Henderson Auctions the fact of the sale
or that the proceeds were going to be diverted to his, Blake
Everett's, or BLH Equipment's coffers.” (Am.
Compl. ¶ 22). Henderson Auctions further alleges that
after it learned of the sale of the Ivey House's
furniture, fixtures, and equipment, it obtained “a
temporary restraining order from a Mississippi state court
requiring the escrow of any proceeds of the sale of the
assets and an injunction against the sale of the Ivey
House” and “obtained an agreement with Nick Clark
. . . to retain the proceeds from the sale until further
notice.” (Am. Compl. ¶ 23).
on the foregoing, Henderson Auctions asserts that Sam
Everett, Blake Everett, and/or BLH “obtained an
undisclosed commission and/or benefits from the seller of the
casino vessel, misrepresented the sales price of the casino
vessel to Henderson Auctions, retained approximately $110,
000.00 in funds over and above $340, 000.00 wired to
Henderson Auctions as the sales price to Dr. Rhodes, retained
all funds from the sale of the furniture, fixtures and
equipment at the Ivey House, as well as funds from the Ivey
House itself, in derogation of obligations owed to Henderson
Auctions to pay off the approximate $700, 000.00 in expenses
related to the M/V Crown Casino.” (Am. Compl. ¶
Auctions further alleges that Blake Everett has sought from
Henderson Auctions, on behalf of himself or BLH, the amount
of at least $551, 877 from various transactions involving the
sales and/or usage of certain equipment. (Am. Compl. ¶
26). Henderson Auctions asserts that it does not owe any
money to the Defendants, and that it has lost approximately
$570, 000 on transactions involving Blake Everett. (Am.
Compl. ¶ 27). With regard to the other transactions
forming the basis of the counterclaim asserted by Sam
Everett's co-defendants, Henderson Auctions asserts that
“Sam Everett has been an active participant in the
transactions . . ., including repeated travels to Louisiana
to participate in negotiations with third parties and
Henderson Auctions (including meetings with Marvin
Henderson).” (Am. Compl. ¶ 36).
Auctions seeks to recover damages and/or declaratory relief
for the following causes of action: (1) Breach of Fiduciary
Duty; (2) Breach of Contract/Bad Faith Breach of Contract;
(3) Detrimental Reliance; (4)
Conversion/Fraud/Misrepresentation; (5) Declaratory Judgment;
and (6) Demand for Accounting. (Am. Compl. ¶¶
Blake Everett, and ELA filed an Answer and Counterclaim in
response to Henderson Auction's original Petition. (R.
Doc. 6). BLH, Blake Everett, and ELA assert, among other
things, an affirmative defense of “offset by amount
amounts owed by Plaintiff to defendants.” (R. Doc. 6 at
alone raises a counterclaim against Henderson Auctions for
“Breach of Contract/Bad Faith Breach of Contract”
and “Demand for Accounting.” (R. Doc. 6 at
13-21). BLH alleges that beginning in 2012, it had an
arrangement with Henderson Auctions whereby it would identify
property for auction, Henderson Auctions would finance the
purchase of the items if interested and auction off the
items, and BLH and Henderson Auctions would split 50% of the
profit. (R. Doc. 6 at 15). BLH references a spreadsheet of
the transactions in its pleading, which appears to be
attached as an exhibit to a separate motion to dismiss. (R.
Doc. 5-3). This spreadsheet provides an accounting of various
purchases of items from October 4, 2012 through March 4, 2014
and indicates a balance due to BLH from Henderson Auctions in
the amount of $601, 877. (R. Doc. 5-3).
Law and Analysis
otherwise limited by court order, the scope of discovery is
as follows: Parties may obtain discovery regarding any
non-privileged matter that is relevant to any party's
claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the
action, the amount in controversy, the parties' relative
access to relevant information, the parties' resources,
the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit. Information within this scope
of discovery need not be admissible in evidence to be
discoverable.” Fed.R.Civ.P. 26(b)(1). The court must
limit the frequency or extent of discovery if it determines
that: “(i) the discovery sought is unreasonably
cumulative or duplicative, or can be obtained from some other
source that is more convenient, less burdensome, or less
expensive; (ii) the party seeking discovery has had ample
opportunity to obtain the information by discovery in the
action; or (iii) the proposed discovery is outside the scope
permitted by Rule 26(b)(1).” Fed.R.Civ.P. 26(b)(2)(C).
court may, for good cause, issue an order to protect a party
or person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed.R.Civ.P. 26(c)(1). Rule
26(c)'s “good cause” requirement indicates
that the party seeking a protective order has the burden
“to show the necessity of its issuance, which
contemplates a particular and specific demonstration of fact
as distinguished from stereotyped and conclusory
statements.” In re Terra Int'l, Inc., 134
F.3d 302, 306 (5th Cir. 1998) (quoting United States v.
Garrett, 571 F.2d 1323, 1326 n.3 (5th Cir. 1978)).
33 and 34 provide a party with 30 days after service of the
discovery to respond or object. See Fed. R. Civ. P.
33(b)(2) and 34(b)(2)(A). If a party fails to respond fully
to discovery requests made pursuant as to Rules 33 and 34 in
the time allowed by the Federal Rules of Civil Procedure, the
party seeking discovery may move to compel disclosure and for
appropriate sanctions under Rule 37. An “evasive or
incomplete disclosure, answer, or response must be treated as
a failure to disclose, answer or respond.” Fed.R.Civ.P.
Defendants' Motion to Compel (R. Doc. 86)
represent that on May 26, 2017, Plaintiff provided them
“with a spreadsheet dated May 24, 2017 [that Plaintiff]
prepared in accordance with Federal Rule of Evidence
1006.” (R. Doc. 86-1 at 2). Defendants seek an order
requiring Plaintiff “to produce the source documents it
used to prepare its 1006 summary or, in the alternative, make
those documents available for inspection and copying.”
(R. Doc. 86-1 at 2). Defendants represent that Plaintiff
contends that the source documents have already been provided
to Defendants. (R. Doc. 86-1 at 2). Defendants attached
“sample” documents produced by Plaintiff. (R.
Doc. 86-2). Defendants did not submit a copy of the
spreadsheet dated with their Motion to Compel.
opposition, Plaintiff asserts that “[a]t the time that
[the] Rule 1006 exhibits were produced, [Plaintiff] had
already produced recordings of each auction where equipment
was sold and documents showing the item numbers for
equipment, purchase price(s), date(s) of acquisition,
expenses, dates of sale, the identity of the buyers, each
buyer's invoice, the amount of the sale's price, and
whether the transaction was profitable.” (R. Doc. 93 at
1). Plaintiff further assets that it only became evident a
few days before the discovery deadline that Defendants
“wanted the actual checks, wire receipts, or credit
card receipts, etc., by which third parties had paid for each
piece of equipment after each auction, ” ...