Coventry Capital US LLC v. EEA Life Settlements, Inc.

Background

Coventry brought a breach-of-contract action against EEA Life Settlements, Inc. (EEA Inc.) and related defendants. The complaint also asserted fraud and intentional misrepresentation claims against all defendants, and aiding-and-abetting claims against two individual defendants. The opinion concerns discovery, not the merits of those claims.

Coventry sought documents concerning EEA Inc.’s dealings with Coventry that were held by EEA Life Settlements UK (EEA UK) and EEA Life Settlements Fund PCC Limited (the Fund). An earlier order denied Coventry’s motion to compel based on EEA Inc.’s representation that it did not have access in the ordinary course of business to the requested documents. The court allowed Coventry to depose Christopher Daly, an EEA Inc. director, about EEA Inc.’s access to documents held by affiliated entities.

Parties’ Positions

Coventry argued that Daly’s testimony showed EEA Inc. had control of documents held by EEA UK and the Fund. Daly testified that he had received information and documents from those entities, including internal communications and materials concerning the transaction at issue. He also testified that receiving internal documents relating to transactions or negotiations was standard. Coventry additionally pointed to EEA Inc.’s initial disclosures and discovery responses.

EEA Inc. maintained that it lacked the practical ability to obtain documents from EEA UK and the Fund. It argued that Coventry’s proper method for obtaining the documents was a request under the Hague Evidence Convention.

Legal Standard

Federal Rule of Civil Procedure 34 requires a party to produce documents within its possession, custody, or control when the documents are within the scope of discovery. Under Rule 37, a party may ask the court to compel production when another party fails to provide required disclosures or provides an incomplete disclosure.

The party seeking production bears the burden of showing control. For Rule 34 purposes, control is not limited to formal managerial authority. It may exist when a party can access documents when needed in the ordinary course of business, or when there is close coordination between the party and a related foreign entity.

Court’s Analysis

The court found that EEA Inc. had the ability to access documents from EEA UK and the Fund when the need arose in the ordinary course of business. Daly’s testimony showed several instances in which he received documents and information from those entities, either on request or through ordinary business practices.

The court rejected EEA Inc.’s argument that it lacked the practical ability to obtain the documents. It characterized EEA Inc.’s restrictions on access as the same type of unilateral restriction that had already been rejected as a defense to production. The court therefore concluded that EEA Inc. had control of the responsive documents for purposes of Rule 34.

Disposition

The court granted Coventry’s request to renew its motion to compel. EEA Inc. was ordered to search for and produce responsive documents held by EEA UK and the Fund. The opinion states that the renewed request concerned those two entities, not EEA Holdings or the Guernsey Manager.