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

Background

Coventry sued EEA Life Settlements, Inc., Hiren Patel, and Vincent Piscaer on claims for breach of contract, fraud or intentional misrepresentation, and aiding and abetting fraud or intentional misrepresentation. The opinion says the case was referred to Magistrate Judge Cave for general pretrial matters, including discovery.

Coventry objected to two rulings in Judge Cave’s December 16, 2020 discovery order. The district court reviewed those nondispositive discovery rulings under Federal Rule of Civil Procedure 72(a). Under that rule, a ruling may be overturned only if it is clearly erroneous or contrary to law. The district court also explained that magistrate judges have broad discretion over discovery and that the party seeking to overturn such a decision bears a heavy burden.

Discovery from six individuals

During a second phase of discovery, Coventry sought documents from seven additional custodians identified in EEA’s initial disclosures. Judge Cave allowed discovery from Barry John because Coventry showed that his documents could provide unique, relevant, and noncumulative evidence. Judge Cave denied discovery from the remaining six individuals, finding that they had played less active roles or, in the case of General Counsel Harrop, had been copied on emails largely captured in earlier productions. The order found that additional discovery from those six people would be disproportionate given the discovery already produced.

The district court upheld this ruling. It rejected Coventry’s argument that a person identified in initial disclosures must always provide documents. The court explained that discovery must be balanced against its cost and must remain reasonably proportional to the value of the requested information, the needs of the case, and the parties’ resources. It also held that Coventry had not shown that the six custodians would provide unique, relevant, and nonduplicative evidence. The court found Judge Cave’s explanation sufficient concerning the different treatment of Barry John and William Simpson.

Interrogatories about EEA’s assets

Coventry also sought supplemental answers to interrogatories about EEA’s assets and cash transfers. Coventry had previously been told that it had not answered threshold factual questions showing a threat that EEA would dispose of assets and become unable to satisfy a judgment. After EEA gave answers that Coventry considered inadequate, Coventry moved to compel additional responses.

Judge Cave denied that motion, finding that the requested information was extraneous to and cumulative of information EEA had already provided and that Coventry had not shown how the answers would reveal that EEA was attempting to become unable to satisfy a judgment. The district court agreed. It clarified that an earlier order did not give Coventry an unconditional right to obtain all discovery concerning EEA’s assets. Information about transfers and a policy-by-policy calculation of the current net value of each policy was properly treated as extraneous. The court also rejected Coventry’s arguments that EEA had waived its relevance objection or that allegedly boilerplate objections automatically entitled Coventry to irrelevant discovery.

Disposition

The court held that both challenged portions of the discovery order were neither clearly erroneous nor contrary to law. It therefore overruled Coventry’s objection in its entirety.

Name discrepancy

The supplied case name and the opinion’s body refer to EEA Life Settlements, Inc., while the caption reproduced in the opinion identifies the defendant as BBA Life Settlements, Inc. The opinion does not explain this discrepancy.