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Parkcrest Builders, LLC v. Housing Authority of New Orleans

United States District Court, E.D. Louisiana

December 14, 2017


         SECTION: “J” (4)



         Before the Court is Liberty Mutual Insurance Company's Motion for Sanctions (R. Doc. 366) for the Housing Authority of New Orleans' alleged failure to comply with this Court's Order from June 1, 2017. Rec. Doc. 206.

         I. Background

         A. Factual Summary

         This claim involves the alleged breach of an 11 million dollar construction contract for the contruction of the Florida Avenue: New Affordable Housing Unit (“the Project”). The Project began in 2013, but due to multiple delays Parkcrest Builders (“Parkcrest”) was terminated as the contractor on April 10, 2015. Rec. Doc. 21.

         The dispute centers on whether the construction could not be completed due to the poor performance of Parkcrest or inadequate design documents which caused delays outside of Parkcrest's control. As a result, Parkcrest filed this lawsuit contending that its termination was one for convenience, not cause. Id.

         The Housing Authority of New Orleans (“HANO”), the owner of the housing units counterclaimed against Parkcrest and the surety, Liberty Mutual, also intervened in the claim. R. Docs. 23, 31. HANO contends that Parkrest was obligated to deliver a total of 52 units within the contracting time which was extended by a change order to 529 days or until September 14, 2014. HANO also claims that none of the units have been accepted as complete. As a result HANO seeks liquidated damages, claiming bad faith and compensatory damages. The matter has been hotly contested, and the discovery aggressive, involving the production of electronic documents which resulted in the subject motion being filed and the question of whether all of the documents were produced in compliance with earlier orders. The discovery scenario follows below.

         B. The Discovery Story

         While the lawsuit was filed in May of 2015, discovery did not begin in earnest until October 2016.[1] During that time, the lawyers for the parties met and agreed to a rather unrealistic discovery plan which consisted of completing written discovery by December 2016, and the first set of written discovery was not propounded until October 2016. Rec. Doc. 91-2. They also unrealistically agreed to the completion of fact depositions by Spring of 2017. Id.

         On February 10, 2017, the parties agreed to another extension of time for HANO to respond to the first set of discovery to March 6, 2017.[2] Despite this agreement, the first Motion to Compel complete responses was filed on February 16, 2017, and regarded the inadequacy of HANO's responses to the First Set of Requests for Production of Documents. Rec. Doc. 92. The initial Motion to Compel was denied largely due to the production of documents the night before the hearing on the motion and the question of whether the production was sufficient. Rec. Doc. 107. On or about March 13, 2017, Liberty propounded its Second Set of Requests for Production of documents on HANO. This discovery sought the production of any documents that HANO relied upon in responding to the Interrogatories, all correspondences related to the project, correspondence sent to or from Jennifer Adams, Kevin Oufnac, Guy Barcelona, Hollie DeHarde, and Patrick Kennedy, documents reflecting inspections performed at the request of Perez APC, HANO, New Orleans Public Works, and Liberty. Rec. Doc. 156-2.

         Essentially, the requests sought everything having to do with the project whether evidencing communications, decisions, or design issues. Id. Interesting to the Court is that although it sought information generally, the way the requests were written the responses to some degree would overlap with the request to produce everything. The Second Requests for Production of documents were not materially different than the First Set of Request for Production of Documents, as it too sought all documents concerning the project.[3]

         On April 25, 2017, Liberty filed a Motion to Compel HANO to respond to its Second Set of Interrogatories and Requests for Production of Documents. However before the hearing, the parties entered into an agreement wherein HANO would: (1) respond to the discovery on or before May 10, 2017; (2) produce all documents from 2013 to the present in response to Liberty's Second Request for Production of Documents[4] before May 17, 2017; and (3) provide a privilege log regarding those items it contends are subject to the attorney client privilege or work product doctrine. Rec. Doc 169.

         On April 26, 2017, by email, HANO's counsel agreed that it would fully respond to Liberty's second set of Interrogatories on or before May 10, 2017 (providing all facts and the documents that support its allegations that the Project was not substantially complete as of June 29, 2016). Rec. Doc. 199-4. HANO, in the general objections section of the pleading, noted its request for an additional 30 days to respond to the second set of discovery. Rec. Doc. 199-6, 5/18/17.

         After the agreement was entered into, Liberty filed a subsequent motion again seeking to compel complete responses to the Second Set of Requests for Production of Documents. Rec. Doc. 199. Liberty sought an order from the Court: (1) Limiting the responses to the pending Interrogatories; (2) Deeming HANO's objections to the Requests for Production of Documents waived; (3) Compelling HANO to fully respond to the Discovery Requests; and (4) Compelling HANO to produce the documents on its privilege log. Id.

         Liberty continued to complain that HANO has not produced all the documents from 2013 to the present. During oral argument on the motion, HANO's counsel, Jonathan Brehm, advised the court that: (1) the documents it had not produced were primarily documents relating to emails from HANO employee Jennifer Adams; and (2) that it would produce the documents by May 31, 2017, the actual date they were in court for oral argument. Despite his representations to the court, HANO's counsel did not complete the production on May 31, 2017. Instead, at 5:50 p.m. on the day of the hearing, HANO's lawyer, by email, indicated that its third-party vendor was still working on Bates-stamping and “ocr”-ing the documents. Rec. Doc. 206. The Court extended the production deadline until 5:00 p.m. on June 2, 2017. On June 1, 2017 at 12:22 p.m., Mr. Jonathan Brehm sent a link to download the documents using Dropbox.

         On July 31, 2017 at 6:58 p.m., Mr. Brehm sent another link to documents he identified as HANO Production No. 7, which consist of updates to the HANO Project File for the subject dispute. Rec. Doc. 366-4, Exhibit C. The next day on August 1, 2017 at 7:03 p.m., Brehm again sent a link for the download of additional documents, which consisted of updates to documents regarding the completion and corrective work, including the Project Manager's emails. Brehm indicated that the documents supplemented HANO's responses for request for production of documents evidencing Parkcrests defective work, HANO's damages, and completion of Comex's scope of work including change orders.

         On August 29, 2017, Liberty filed the subject motion contending that despite the Court's order for the parties to complete its production of documents by 5:00 p.m. on Friday June 2, 2017, it failed to do so. Rec. Doc. 366-1. Liberty contends that while HANO had represented to it and this Court on June 1st that its production was complete, HANO's representation was false. R. Doc. 366-3. Liberty contends that based upon HANO's completion certification of June 1, 2017, the parties proceeded with taking various fact witness depositions in advance of the August 1, 2017 discovery deadline.

         Liberty contends that the documents that were the subject of the last minute data dump largely were in HANO's possession for months, for which there is no justification for withholding until after nearly all fact depositions had been taken. Rec. Doc. 366-1, p. 1. As a result, Liberty now requests that the Court sanction HANO for its untimely production in violation of this court's order and bar HANO from using any of the documents produced either on July 31, 2017 or August 1, 2017.

         HANO opposes the motion contending that it was not under an order of the Court to complete is production of documents in this matter by June 2, 2017. Rec. Doc. 372. Instead, it contends that it was under an order to complete its responses to the Second Set of Interrogatories and Request for Production of Documents only, and that it complied with the court's order. HANO further points out that from April 10, 2017 to June 1, 2017, it had produced 44, 000 pages[5] of electronic documents, that it also had done so in compliance with the courts rolling production instruction and pursuant to its obligation to supplement its responses to the First Request for Production of Documents. HANO contends that any delay in production is the result of the review process, preparing the documents for production by converting them to .tiff and having the optical character recognition analysis performed.

         HANO contends it was simply complying with its duty to supplement its discovery response pursuant to Rule 26(e) and it did so regarding its productions No. 7 and 8 as soon as it learned that its earlier responses were deficient, but that they were done in compliance with the scheduling order. HANO strongly denies that its production of documents supplementing its responses to the first set of discovery is in violation of any discover order issued in this case.

         II. Standard of Review

         Federal Rule ("Rule") of Civil Procedure 26 requires a party to produce non-privileged documents which are relevant to the subject matter involved in the pending action. That requirement embraces documents and information that are reasonably calculated to lead to the discovery of admissible evidence. Fed.R.Civ.P. 26(b)(1). This broad duty of disclosure extends to all documents that fit the definition of relevance for the purposes of discovery-whether the documents are good, bad, or indifferent. Danis v. USN Communications, Inc., No. 98-7482, 2000 WL 1694325, at *1 (N.D. Ill., October 20, 2000). Self-reporting is, in fact, a central concept of the discovery process. The duty of disclosure finds expression in the rules of ...

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