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United States v. Talmage

United States District Court, D. Utah, Northern Division

June 8, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
RONALD B. TALMAGE, et al., Defendant.

          David Nuffer Chief District Judge

          MEMORANDUM DECISION AND ORDER DENYING SHORT FORM DISCOVERY MOTION

          Paul M. Warner Chief United States Magistrate Judge

         Chief Judge David Nuffer referred this matter to Chief Magistrate Judge Paul M. Warner pursuant to 28 U.S.C. § 636(b)(1)(A).[1] Before the court is Defendants Western Land & Livestock, LLC's and Western Reserve Mortgage's (collectively, the “Western Entities”) Short Form Motion to Compel the Government to Respond to Document Requests.[2] Having reviewed the parties' briefs and the relevant law, the court renders the following Memorandum Decision and Order.[3]

         BACKGROUND

         In August 2016, the United States obtained a $20 million default judgment against accused tax cheats Ronald B. Talmage and Annette C. Talmage (the “Talmages”).[4] The current dispute involves the government's attempt to foreclose on real property located in Liberty, Utah (“Liberty Property”).[5] The government contends that the Liberty Property was purchased by John Wadsworth (“Mr. Wadsworth”) and the Western Entities at the direction of Ronald Talmage.[6] The government claims that the Talmages resided at the Liberty Property in the months leading up to this lawsuit.[7] Furthermore, in response to the Western Entities' motion for summary judgment, the government has outlined a complex web of ownership of both the Western Entities and the Liberty Property that the government claims demonstrates that the Western Entities are the nominees, alter egos, or fraudulent transferees of the Talmages.[8]

         The Western Entities dispute any relationship with the Talmages that would subject them to the Talmages' tax liabilities. The Western Entities claim that Mr. Wadsworth holds 100% of the beneficial ownership interest in the Western Entities.[9] The Western Entities contend that the Talmages have never been involved in the Western Entities' business or the purchase of the Liberty Property. The Western Entities further assert that Mr. Wadsworth has “made all decisions to purchase the Liberty Property, negotiate the [Real Estate Purchase Contract], close on the property, pay the mortgage, pay the property taxes, pay and shut off the utilities, lease out the property, and evict the Talmages.”[10]

         During the beginning stages of discovery, the parties disputed the breadth of discovery required to resolve this dispute. The government argued that the purchase of the Liberty Property involved a complicated real estate transaction encompassing several entities. Therefore, the government requested an extended discovery plan to accommodate the needs of the case.[11] Specifically, the government requested that each party be granted 40 depositions and 100 interrogatories, requests for admission, and requests for production.[12] Conversely, the Western Entities were adamant that the government's case was a straightforward case of ownership and, therefore, a routine discovery plan was more than necessary to resolve this dispute.[13]

         The court agreed with the Western Entities and found that the government had failed to demonstrate that a protracted discovery plan was warranted in “light of the amount in controversy and the burden and expense an extended discovery plan [would] likely entail.”[14]Accordingly, the court granted each side 10 depositions and 25 interrogatories, requests for admission, and requests for production.

         On April 14, 2017, the Western Entities served the government with their First Set of Discovery Requests.[15] The Western Entities asked the government to respond to 7 interrogatories, 10 requests for production, and 18 requests for admission.[16] The government refused to respond to any of the Western Entities' requests for production on the grounds that the Western Entities' document requests exceeded the court's imposed limit of 25.[17]

         DISCUSSION

         The present motion is the fifth discovery motion the court has refereed over the course of six months.[18] The present discovery dispute is even more unattractive than its predecessors. The Western Entities' motion to compel argues that the government erred by refusing to respond to any of their requests for production based on the government's opinion that responding to some requests would waive objections to other requests.[19] The Western Entities ask the court to compel the government to produce documents responsive to the Western Entities' first 25 requests for production (as calculated by the government) and to organize the documents in the manner requested by the Western Entities.[20] In response, the government argues that the Western Entities' requests for production and related interrogatories are compound, overly broad, and encompass over 44 discrete requests in violation of the court's discovery plan.[21]Moreover, the government objects to the Western Entities' request that the government organize “by category” its document production.[22]

         In the court's view, the Western Entities' motion involves two discrete discovery issues. First, whether the Western Entities exceeded the number of allotted discovery requests and, in turn, whether the government properly refused to respond to any of the Western Entities' requests for production. Second, whether Rule 34 requires the government to organize its documentary evidence by the categories identified by the Western Entities.

         A. Compound Discovery Requests

         Rule 33(a)(1) of the Federal Rules of Civil Procedure provides: “Unless otherwise stipulated or ordered by the court, a party may serve on any other party no more than 25 written interrogatories, including all discrete subparts . . .” (emphasis added). Similarly, Rule 34 allows a party to request relevant documents, electronically stored information, and tangible things from any party. See Fed. R. Civ. P. 34(a) & 26(b)(1).

         Whether the government's method to objecting to the Western Entities' requests for production was proper is debatable. There is case law to suggest that answering some but not all of the Western Entities' requests for production may result in the government waiving its objection that the Western Entities exceeded the discovery order's numerical limitation. See Allahverdi v. Regents of Univ. of New Mexico, 228 F.R.D. 696, 698 (D.N.M. 2005). Similarly, there is case law suggesting that the proper method for challenging a party's excessive discovery requests is to answer the requests chronologically until the allotted number is exhausted. See Avila v. Mohave Cty., No. 3:14-CV-8124-HRH, 2015 WL 6660187, at *9 (D. Ariz. Nov. 2, 2015) (citing cases). Without a clear answer, the court finds no fault in the government's wholesale objection. Furthermore, regardless of the propriety of the government's objection method, the real inquiry in this dispute is whether the Western Entities' First Set of Discovery Requests exceeded the court's discovery order.

         The court has carefully reviewed the Western Entities' First Set of Discovery Requests and finds them remarkable. The Western Entities stressed at the beginning of discovery that a run-of-the-mill discovery plan was sufficient to resolve the ownership of the Liberty Property. After successfully obtaining a standard discovery plan, the Western Entities have served the government with discovery requests that, in the court's view, unapologetically disguise multiple discovery requests into seemingly singular interrogatories and requests for production. For example, the Western Entities' Interrogatory No. 6 states:

State the factual basis for each of the following allegations that are stated in Section B of the Government's Response to Motion to Strike Regarding Rule 56(d) Argument (Docket No. 87) at 3-4:
• “That Ronald Talmage owns Asia Pacific Partners, LLC, and therefore controls at least one of the Western Entities directly”;
• “That Ronal Talmage, via Heng Cheong Pacific Limited (‘HCPL'), actually paid for the ...

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