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GFL Advantage Fund, Ltd. v. Colkitt

July 15, 2003

GFL ADVANTAGE FUND, LTD., A BRITISH VIRGIN ISLANDS CORP., PLAINTIFF,
v.
DOUGLAS R. COLKITT, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola, United States Magistrate Judge.

MEMORANDUM OPINION

This case has been referred to me by Judge Huvelle for discovery disputes pursuant to LCvR 72.2(a). Currently ripe for resolution is defendant's Motion To Stay Consideration Of Plaintiff's Motion To Compel Discovery From Womble, Carlyle, Sandridge, & Rice, P.L.L.C., plaintiff's Motion To Compel Compliance With Subpoena Duces Tecum Served Upon Womble, Carlyle, Sandridge, & Rice, P.L.L.C. and plaintiff's Motion To Strike Sur-Reply In Opposition To Plaintiff's Motion To Compel. For the reasons set forth herein, defendant's motion to stay will be denied. Furthermore, I will grant plaintiffs' motion to compel to compliance with its subpoena duces tecum served upon Womble, Carlyle, Sandridge, & Rice, P.L.L.C. Finally, plaintiff's motion to strike will be denied as moot.

BACKGROUND

This action initially arises out of two loan transactions made between the defendant, Dr. Colkitt ("Colkitt"), and GFL Advantage Fund Limited ("GFL"). The first loan was for $3 million, which was to be repaid at a seven percent interest rate. GFL Advantage Fund, Ltd. v. Colkitt, 2000 U.S. Dist. LEXIS 21747, at * 7-8 (M.D. Fla. July 17, 2000). The second loan was for $10 million, which was to be repaid at a four percent interest rate. Id. For both loans, Colkitt was the sole borrower and both were unsecured. Id.. The only collateral provided for both loans were shares of stock in companies in which Colkitt was the majority shareholder and chairman of the board. Id. at * 9. In the months following the loan, however, the share price of these companies dropped precipitously. Id. at * 14. In 1997, GFL brought a lawsuit against Colkitt in the Middle District of Pennsylvania to recoup the amount of both loans in addition to the interest that had accrued on the two loans. Thereafter, on April 25, 2000, Judge McClure of the Middle District granted summary judgment in favor of GFL in excess of $21 million. GFL Advantage Fund, Ltd. v. Colkitt, 2000 U.S. Dist. LEXIS 21747, at * 1 (M.D. Pa. July 17, 2000). That decision was subsequently affirmed by the Third Circuit Court of Appeals. See GFL Advantage Fund, Ltd. v. Colkitt, 272 F.3d 189 (3rd Cir. 2001), cert denied, 536 U.S. 923 (2002).

Three months after entry of judgment, GFL began tracking down Colkitt's assets in order to collect on the judgment. After a series of failed attempts at negotiating a resolution of the disputed discovery issues, GFL filed a motion to compel in the Middle District of Pennsylvania. On June 6, 2001, Judge McClure issued an order allowing GFL to seek information from Colkitt and his wife, limiting the scope of discovery to the period after January 1, 1999, and ordering GFL to seek less specific information about the categories of documents it sought. Motion To Stay Consideration Of Plaintiff's Motion To Compel Discovery From Womble, Carlyle, Sandridge, & Rice, P.L.L.C. ("D. Mot. Stay & Opp.") at 8, Exhibit 3.

Thereafter, GFL proceeded with discovery by issuing subpoenas in Florida, Pennsylvania, and the District of Columbia. In March 2002, this court issued a subpoena to Womble, Carlyle, Sandridge, & Rice, P.L.L.C. ("Womble Carlyle"). The subpoena seeks "[c]hecks(s), drafts(s), wire transfer advice(s), notice(s) and/or confirmation(s), debit notice(s), credit notice(s), and letters relating to any payment of retainer, fees and/or costs for or on behalf of Douglas R. Colkitt." Memorandum Of Law In Support Of Motion To Compel Compliance With Subpoena Duces Tecum Served Upon Womble, Carlyle, Sandridge, & Rice, P.L.L.C. ("P. Mot.") at Exhibit B.

At approximately the same time, GFL issued similar subpoenas in the Middle District of Florida as well as the Eastern District of Pennsylvania. D. Mot. Stay & Opp. at 15. Before filing its motion to compel in this court, GFL filed motions to compel compliance with those subpoenas in Florida and Pennsylvania. Id. The Eastern District of Pennsylvania, on December 2, 2002, dismissed the action without prejudice and ordered GFL to re-file its motion in the Middle District of Pennsylvania because"there are still outstanding motions before the Judge in the case giving rise to the judgment in the United States District Court for the Middle District of Pennsylvania." Id. at Exhibit 1, n. 1. GFL re-filed its motion to compel in the Middle District of Pennsylvania as ordered, where it is currently pending. The Middle District of Florida, however, entered an Order enforcing the subpoena, but limited it to the period Judge McClure had previously set for discovery.*fn1 Id. at Exhibit 6, n.2.

DISCUSSION

Womble Carlyle's Motion to Stay

A court has broad discretion to stay all proceedings in an action pending resolution in a proceeding currently pending in another court. Landis v. North American Co., 299 U.S. 248, 254 (1936)."The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, counsel, and for litigants." Id. at 254-55; Nat'l Shopmen Pension Fund, et al. v. Folger Adam Sec., Inc., 274 B.R. 1, 3 (D.D.C. 2002)(citing Air Line Pilots Ass'n v. Miller, 523 U.S. 866, 879 n. 6 (1998)). This is best done by the"exercise of judgment, which must weigh competing interests and maintain an even balance." Landis v. North American Co., 299 U.S. at 255. The party requesting such a stay must make out a clear case of hardship or inequity in order to prevail. Id. See also Commodity Futures Trading Comm'n v. Chilcott Portfolio Mgmt., Inc., 713 F.2d 1477, 1484 (10th Cir. 1983). But,"[t]he right to proceed in court should not be denied except under the most extreme circumstances." Id.

Womble Carlyle urges this Court to stay plaintiff's motion to compel compliance with its subpoena pending resolution of a similar subpoena at issue in one of the federal courts of Pennsylvania because"it would be most appropriate for the Middle District of Pennsylvania to judge the propriety of Plaintiff's subpoena... and, it would serve the interests of efficiency and judicial economy [as well as] avoid the possibility of inconsistent results on the same issue." D. Mot. Stay & Opp. at 17-18. As noted above, the party requesting a stay of a pending action must establish a"clear case of hardship." Landis v. North American Co., 299 U.S. at 255. Womble Carlyle, however, fails to even argue how it will suffer any harm by this court resolving the issues unquestionably before it. The ad hominem attack it makes on plaintiff and its counsel based on findings in other cases does not relieve this court of the obligation it has to consider whether to enforce the subpoena notwithstanding Womble Carlyle's objections. Those objections will be considered in this opinion. Womble Carlyle surely cannot ask that its objections be heard by a certain court when another party had legitimately invoked the jurisdiction of this Court.

Alternatively, Womble Carlyle argues that"Rule 45 affords the nonparty recipient of a subpoena'territorial protection' by vesting power to compel discovery from a nonparty... in the subpoena-issuing court. However, the nonparty need not take advantage of this'territorial protection'... [because] the recipient of the subpoena may seek a protective order from the trial court." D. Mot. Stay & Opp. at 16-17 (citing In re Sealed Case, 141 F.3d 337, 341-42 (D.C. Cir. 1998)). Regardless of whether Womble Carlyle intends to file a motion for a protective order in the Middle District of Pennsylvania does not terminate this court's ability and obligation to rule on plaintiff's motion to compel compliance with its subpoena. Womble Carlyle's motion to stay is, therefore, denied.

Plaintiff's Motion To Compel Compliance With Its Subpoena

A party is entitled to discover information"if the information sought appears reasonably calculated to lead to the discovery of admissible evidence." FED. R. CIV. P. 26(b)(1). Moreover, a party may only obtain discovery as to a matter that is"relevant to the claim or defense of any party." Pleasants v. Allbaugh, 208 F.R.D. 7, 9 (D.D.C. 2002); Krieger v. Fadely, 199 F.R.D. 10, 13 (D.D.C.2001)(holding that the nature of the claims asserted defines relevancy). Because the substantive nature of the claim defines relevancy and, as to the execution of a judgment, information ...


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