United States District Court, W.D. North Carolina, Charlotte Division
MB REALTY GROUP, INC. and MATT BECKHAM, Plaintiffs,
THE GASTON COUNTY BOARD OF EDUCATION, GASTON COUNTY, CARSTAPHEN FAMILY FOUNDATION, THE STOWE FOUNDATION, INC., CATHERINE ROBERTS, and TRACY PHILBECK, Defendants.
D. Whitney, Chief United States District Judge.
MATTER is before the Court on Plaintiffs' Motion for
Default Judgment and Sanctions Against Defendants Tracy
Philbeck (“Philbeck”) and Catherine Roberts
(“Roberts”). (Doc. No. 93). Defendants Philbeck
and Roberts responded to the motion, (Docs. Nos. 95, 97),
Plaintiffs replied, (Docs. Nos. 111, 112), and this matter is
now ripe for review. For the reasons stated below,
Plaintiffs' Motion for Default Judgment and Sanctions
against Defendants is DENIED. Plaintiffs' earlier Motion
for Default Judgment and Sanctions, (Doc. No. 92), is hereby
DENIED AS MOOT.
interests of judicial economy, the Court provides a general
overview of the case here but summarizes the specific
background relevant to the issues raised by the parties'
motions and answers in the analysis. This litigation stems
from Plaintiffs' contention MB Realty Group, Inc.
(“MBRG”) was “cut . . . out” of a
deal wherein Plaintiffs planned to purchase a 78-acre parcel
from Defendants Carstarphen Family Foundation and The Stowe
Foundation (“the Foundations”) and then
subsequently sell the same parcel of land to Defendant Gaston
County Board of Education (“GCBOE”) whereby
Plaintiffs would realize a roughly $400, 000 profit. (Doc.
No. 32, pp. 4-8). After Plaintiffs failed to close on the
property by the extended closing date of May 16, 2017,
provided by the Foundations, the GCBOE eventually purchased
the parcel directly from the Foundations. Id.
sued Defendants Philbeck and Roberts for libel per
se, unfair and deceptive trade practices
(“UDTPA”), and punitive damages. Id. at
13-14. Plaintiffs alleged Defendant Roberts, a member of the
GCBOE, published and Defendant Philbeck, a Gaston County
Commissioner, “re-published an email to various members
of GCBOE and others, ” which:
“[M]ade false statements about a prior transaction
involving Mr. Beckham, specifically stating that
‘Pearson, Gray and Hoyle refuse to take the commission
owed to them, due to the fact of the land purchase going on
before the foreclosure process and because of the
relationship between Kevin and Matt Beckham. Matt Beckham is
paid a commission fee.'”
Id. at 5.
Motion for Default Judgment and Sanctions Against Defendants
Philbeck and Roberts (“Motion”) seeks an order
pursuant to Federal Rule of Civil Procedure 37(e) containing
the following: (1) a presumption that the lost information
from the emails was unfavorable to Defendant Philbeck, (2) a
default judgment against Defendant Philbeck, (3) in the
alternative, a jury instruction to presume the information in
the emails was unfavorable to Philbeck, (4) a presumption the
information in the text messages not handed over by Roberts
was unfavorable as to Roberts, (5) a default judgment against
Roberts, (6) a jury instruction presuming the information in
the text messages was unfavorable to Roberts, (7)
“measures no greater than necessary to cure the
prejudice, ” and (8) Defendants Philbeck and Roberts to
be liable jointly and severally for reasonable expenses and
attorney's fees connected to the Motion. (Doc. No. 93-1,
sanction for spoliation of evidence should “(1) deter
the parties from engaging in spoliation; (2) place the risk
of an erroneous judgment on the party who wrongfully created
the risk; and (3) restore the prejudiced party to the same
position he would have been in absent the wrongful
destruction of evidence. . . .” Eshelman v. Puma
Biotechnology, Inc., No. 7:16-cv-18-D, 2017 WL 2483800,
at *11-12 (E.D. N.C. June 7, 2017) (quoting West v.
Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2nd
Cir. 1999)). There are two avenues by which a court may
impose sanctions for spoliation, “(1) Fed.R.Civ.P.
37(e); and (2) [the Court's] ‘inherent
power'” Silvestri v. Gen. Motors Corp.,
271 F.3d 583, 590 (4th Cir. 2001) (quoting Chambers v.
NASCO, Inc., 501 U.S. 32, 45 (1991)).
to Rule 37(e) of the Federal Rules of Civil Procedure:
If electronically stored information that should have been
preserved in the anticipation of litigation is lost because a
party failed to take reasonable steps to preserve it, and it
cannot be restored or replaced through additional discovery,
(1) Upon finding prejudice to another party from loss of the
information, may order measures no greater than necessary to
cure the prejudice; or
(2) Only upon finding that the party acted with the intent to
deprive another party of the information's use ...