Auto-Owners Mut. Ins. Co. v. Bricks & Stones, LLC

AUTO-OWNERS MUTUAL INSURANCE CO., Plaintiff, v. BRICKS & STONES, LLC and DD&B CONSTRUCTION, INC., Defendants.

Case No. 20-2365-JWB

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

March 26, 2021

ORDER

Auto-Owners Mutual Insurance Co. ("Auto-Owners") seeks a declaratory judgment that a certain insurance policy provides no coverage for a default judgment entered in Kansas state court in a construction-defect case against its insured, Bricks & Stones, LLC ("B&S"), and in favor of DD&B Construction, Inc. ("DD&B"). DD&B has filed a motion to compel discovery from Auto-Owners (ECF No. 33). DD&B also has filed a separate motion for leave to file a motion to compel after Auto-Owners objected that the first motion was untimely (ECF No. 39). Although both of these two motions are pending before the undersigned U.S. Magistrate Judge, James P. O'Hara, they relate to discovery allowed by the presiding U.S. District Judge, John W. Broomes, before he rules on Auto-Owners' early summary-judgment motion (see ECF Nos. 17, 24, and 25). For the reasons discussed below, the court grants the motion for leave to file the motion to compel out of time. The motion to compel is granted in part and denied in part.

Background

On November 28, 2018, DD&B filed an action in the District Court of Wyandotte County, Kansas against B&S, alleging breach-of-contract, negligence, and breach-of-warranty claims related to a construction project (DD&B was the general contractor, and B&S was the stucco and brick-work subcontractor). Ultimately, that court entered default judgment against B&S, in part due to its failure to respond to discovery and failure to comply with discovery orders.¹

On July 28, 2020, Auto-Owners filed this case.² As earlier indicated, Auto-Owners had issued an insurance policy to B&S. Auto-Owners claims in the case at bar that it only learned about the underlying construction case in January 2020, through notice of the claim sent by an independent insurance broker, Cornerstone Kansas City, LLC ("Cornerstone").³

Auto-Owners and DD&B served their Rule 26(a)(1) initial disclosures on October 20, 2020.⁴ B&S is in default in this case, just as it defaulted in the Wyandotte County case.⁵ On October 27, Auto-Owners filed a motion for summary judgment in this case,⁶ arguing it's relieved of its duty to defend and indemnify B&S because of the untimelynotice of the underlying litigation and the resulting prejudice. Accordingly, Auto-Owners seeks a declaration as to its obligations to B&S, including whether it owes a duty to indemnify B&S and whether Auto-Owners breached the terms of the insurance policy.

DD&B filed a motion for extension of time on November 5, 2020, seeking limited discovery to respond to the summary-judgment motion pursuant to Rule 56(d).⁷ Specifically, DD&B stated it would ask Auto-Owners to "produce all communications with Cornerstone regarding the claims and underlying action" and "produce documents/disclose its attempts to defend B&S in the underlying action."⁸ DD&B also stated its intention to subpoena Cornerstone for its communications with Auto-Owners regarding the claims in this action.⁹ On November 16, 2020, Judge Broomes granted that extension in a text order, giving DD&B until February 10, 2021 to respond to the summary-judgment motion.¹⁰

DD&B served its first set of discovery on December 16, 2020.¹¹ Auto-Owners served responses and objections on January 15, 2021.¹² DD&B timely filed its response to the summary-judgment motion on February 10, 2021.¹³ On February 19, 2021, DD&Bfiled the instant motion to compel (ECF No. 33). Auto-Owners' counsel sent a letter on February 23, claiming the motion was filed out of time.¹⁴ On February 26, DD&B filed a motion for leave to file the motion to compel out of time (ECF No. 39).¹⁵ In the meantime, Auto-Owners filed its reply in support of the motion for summary judgment, meaning that motion is fully briefed and pending before Judge Broomes.¹⁶

Motion for Leave to File Out of Time (ECF No. 39)

Under D. Kan. Rule 37.1(b), a motion to compel discovery "must be filed and served within 30 days of the default or service of the response, answer, or objection that is the subject of the motion, unless the court extends the time for filing such motion for good cause. Otherwise the objection to the default, response, answer, or objection is waived." The discovery responses and objections at issue here were served on January 15, 2021. Therefore, any motion to compel should've been filed by Tuesday, February 16 (given the Presidents' Day on Monday, February 15).

The parties disagree on the procedural standard that applies to DD&B's motion for leave to file a motion to compel out of time. Auto-Owners argues it's "excusable neglect," while DD&B argues it's "good cause." Auto-Owners is correct. That is, the "good cause"language in D. Kan. R. 37.1 refers to extensions granted for good cause before the time for filing runs out.¹⁷ When the time for filing has run, the court may grant an extension out of time upon a showing of excusable neglect.¹⁸ Courts consider four factors to determine excusable neglect: (1) the reason for the delay, including whether it was within the reasonable control of the movant; (2) whether the movant acted in good faith; (3) danger of prejudice to the nonmoving party; and (4) the length of the delay and its potential impact on judicial proceedings."¹⁹

DD&B's counsel candidly represents the filing the motion three days late wasn't an intentional choice; rather, counsel "was simply not aware of the deadline requirements"²⁰ in the local rules. Auto-Owners concedes the lack of bad faith for the delay but argues that's not dispositive.²¹ Indeed, courts have found that inadvertence, ignorance of the rules, and mistakes construing the rules do not constitute excusable neglect.²² But excusableneglect is "a somewhat elastic concept and is not limited strictly to omissions caused by circumstances beyond the control of the movant."²³

As to the length of the delay of a mere three days and its impact on the proceedings, the court finds this factor weighs heavily in favor of an extension. This finding shouldn't come as any great surprise to anyone with even minimal experience practicing law. The parties have been conferring about the discovery responses consistently since January. DD&B cites a "golden rule" letter sent on January 25 and Auto-Owners' response on February 1.²⁴ The parties held a phone conference on February 9, where counsel for DD&B discussed his intention to file a motion to compel.²⁵ Once alerted by Auto-Owners' counsel as to the local rule, DD&B very quickly filed the instant motion.

For essentially the same reasons, the court finds minimal prejudice to Auto-Owners. DD&B alerted Auto-Owners it intended to file a motion to compel during their February 9 conference call.²⁶ Auto-Owners points to DD&B's decision not to serve the limited discovery until a month after the court's order granting an extension to do so.²⁷ But the discovery was served and responded to within the relevant time period, and DD&B timelyfiled its response to the summary-judgment motion. The undersigned doesn't find that decision relevant to the issue of whether to grant leave to file the motion to compel.

Having considered the four relevant factors, the court finds excusable neglect under Fed. R. Civ. P. 6(b)(1)(B) and therefore grants DD&B leave to file its motion to compel out of time. To be clear, though, this shouldn't be construed as excusing continuing ignorance of the local rules. Counsel located in Kansas City, Missouri, should be familiar with the local rules of the federal courthouse located on the other side of the state line. Between admitting they didn't know the deadline to file a motion to compel and their incorrect interpretation of the good-cause standard in Rule 37, counsel for DD&B should be sure to take this opportunity to re-familiarize themselves with the local rules. The court is unlikely to accommodate future demonstrations of ignorance.

To sum up, the undersigned magistrate judge hasn't been too favorably impressed by counsel for DD&B missing the deadline for filing the motion to compel. The undersigned is even less impressed by counsel for Auto-Owners making the parties incur attorney fees, and making the court spend its limited resources, fighting about a three-day delay which caused zero prejudice. This isn't how good lawyers typically practice in the Kansas City legal community.

Motion to Compel (ECF No. 33)

As a threshold matter, the court first considers whether the parties have sufficiently conferred regarding the motion. Fed. R. Civ. P. 37(a)(1) requires motions to compel discovery "include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort toobtain it without court action." As discussed above, the parties have exchanged multiple meet-and-confer letters and had a conference call, which resolved some but not all of the disputes.²⁸ The court is satisfied the parties have conferred pursuant to Fed. R. Civ. P. 37(a)(1).

The discovery here is sought under Fed. R. Civ. P. 56(d). Under Rule 56(d), the court may allow additional discovery in response to a summary-judgment motion. "The court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order."²⁹ A party's 56(d) motion should be liberally treated, unless dilatory or lacking in merit.³⁰

Auto-Owners argues there's no need for any limited discovery because DD&B has already filed its response to the motion for summary judgment without seeking any extension.³¹ The court takes Auto-Owners' point. But the discovery has already been served, and the court isn't inclined to deny the motion outright on that ground alone.

Auto-Owners also cites practice guides directing courts to limit discovery under ...