Darmer v. Jenkins-Jones

Background

Steven Darmer filed an insurance claim with State Farm after his residence was badly damaged by fire in November 2016. Darmer alleged that State Farm breached its obligations and failed to pay all benefits due under the policy.

During discovery, the magistrate judge ordered Darmer to review, organize, and reproduce an initial production that was considered an unusable data dump. Darmer’s revised production included an original repair contract estimating approximately $920,000 in repairs, but did not include an amended repair contract estimating approximately $520,000. State Farm learned about the amended contract during the deposition of Darmer’s contractor and had to conduct additional depositions.

The revised production also omitted twelve emails between Darmer and his public adjuster, some of which were described as damaging to Darmer’s case. The opinion states that Darmer gave several different explanations for why the emails were missing, including that they had been accidentally discarded, that he did not have access to them, that some had appeared in the earlier production, and that the public adjuster’s production should count as Darmer’s production.

Magistrate Judge’s Rulings and Objections

State Farm moved for sanctions, alleging abuse of the discovery process, improper withholding of documents, and violation of the discovery order. Magistrate Judge Katherine M. Menendez granted the motion in part and awarded attorney’s fees as a sanction. She also recommended permitting State Farm to cross-examine Darmer about his failure to produce the amended repair contract and the emails, as well as other discovery inconsistencies.

Darmer objected to the sanctions, arguing that he had not violated the discovery rules, that any violation was accidental, and that delays or omissions by his agents were also accidental. He also objected to paying costs and fees for additional depositions and the sanctions motion. Finally, he argued that cross-examination about discovery would require complex and unnecessary testimony and would unfairly prejudice him.

District Court’s Analysis

The district court explained that it reviews a magistrate judge’s ruling on nondispositive matters only for clear error or legal error. It reviews properly objected-to portions of a report and recommendation de novo, meaning it considers those portions independently.

The court concluded that the magistrate judge’s finding of discovery misconduct was not clearly erroneous or contrary to law. The magistrate judge had found that Darmer violated the discovery order by omitting the amended repair contract and the twelve emails. She also found bad faith based on the importance of the documents, Darmer’s control over his agent, his multiple opportunities to disclose or produce the contract, and the lack of an adequate explanation for the missing emails.

The court also upheld the monetary sanctions. It noted that Darmer did not dispute that the missing documents caused the need for additional depositions. The court therefore found that shifting the costs of those depositions and the sanctions motion was not clearly erroneous or contrary to law.

The court adopted the recommendation allowing State Farm to cross-examine Darmer about the discovery misconduct. It explained that the jury would not decide whether Darmer violated the discovery rules because the court had already made that determination. Instead, State Farm could present the facts about the missing documents, and the jury could draw whatever inferences it chose. The court also rejected Darmer’s argument that the cross-examination was irrelevant or unfairly prejudicial, finding that the withheld documents were relevant to State Farm’s position that Darmer had not been forthright with the insurer.

Disposition

The court overruled Darmer’s objections to the magistrate judge’s order granting in part State Farm’s motion for sanctions and affirmed the sanctions order. The court also overruled Darmer’s objections to the report and recommendation and adopted it. The opinion does not state that the underlying insurance claims were resolved by this order.