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Weare v. Bennett Brothers Yachts, Inc.

United States District Court, E.D. North Carolina, Southern Division

June 12, 2019



          Robert B. Jones, Jr. United States Magistrate Judge

         Defendant Bennett Brothers Yachts, Inc. ("Defendant") moves the court to compel Plaintiffs Nicholas and Susan Weare ("Plaintiffs") to supplement their responses to Defendant's First Set of Interrogatories and First Request for Production of Documents pursuant to Fed.R.Civ.P. 26(e). [DE-35]. Plaintiffs oppose the motion. [DE-37]. The issues have been fully briefed, and the motion is ripe for decision. For the reasons stated below, Defendant's motion is allowed.

         I. BACKGROUND

         This action arises out of a brokered agreement concerning the sale of a boat. Compl. [DE-1] ¶ 4. Defendant is engaged in yacht brokerage, and it represented Tracy and Gregory Leonard ("the Leonards") in the planned purchase of a yacht from Plaintiffs. Answer [DE-13] at 1. In January 2017, Defendant contacted Plaintiffs' broker, Oyster Brokerage U.S.A. ("Oyster") and informed it that the Leonards were interested in purchasing Plaintiffs' yacht. Compl. [DE-1] ¶ 5. In March 2017, Plaintiffs and the Leonards agreed that the Leonards would purchase the yacht for $485, 000. Id. ¶ 12. On April 6, 2017, the Leonards deposited the sale price into Defendant's escrow account for a closing scheduled for April 7, 2017. Id. ¶¶ 19, 23. However, before the money was wired to Plaintiffs, cyber thieves gained access to Defendant's computer system and wired the money elsewhere. Id. ¶ 32. The thieves have not been identified, and the money remains lost. Id. ¶ 33. Plaintiffs allege that Defendant breached a fiduciary duty, acted negligently, breached a contract, and that Defendant was unjustly enriched. Id. ¶¶ 38-63. In its answer, Defendant has denied that it owed a fiduciary duty to Plaintiffs, and it has asserted that Oyster, not Defendant, acted negligently. Answer [DE-13] at 1.

         On March 19, 2018, Defendant served Plaintiffs with its first set of discovery requests. Def.'s Mem. [DE-36] at 3. Plaintiffs responded on April 16, 2018. Id. Plaintiffs supplemented their responses pursuant to Rule 26(e) on June 21, 2018 and September 21, 2018. Pis.' Resp. [DE-37] at 3. On October 31, 2018, Plaintiffs disclosed the report of their yacht brokerage expert, Jeffrey Cox ("Mr. Cox"), pursuant to Rule 26(a)(2). Id. at 4. In the report, Mr. Cox opined as to Defendant's negligence and did not render any opinion as to the negligence of Oyster. Def.'s Mem. [DE-36] at 2. Defendant objected to the expert report on November 18, 2018 on the grounds that it did not include an opinion regarding the negligence of Oyster. Id. At that time, Plaintiffs' counsel assured Defendant's counsel that Mr. Cox would be offering an opinion only as to Defendant's negligence. Id. Defendant did not depose Mr. Cox. Id. at 4.

         Plaintiffs are currently engaged in an arbitration proceeding with Oyster pending before the American Arbitration Association concerning the same circumstances giving rise to the instant action. Def.'s Mem. [DE-36] at 2. Although Defendant is not a party to the arbitration proceeding, the parties in the arbitration proceeding and the instant case have agreed to conduct discovery jointly, including joint depositions, and participating in a joint mediation of both matters. Id. It does not appear to the court that discovery is exclusive to the proceeding in which it has been produced. In fact, Plaintiffs have previously supplemented their discovery responses in the instant case with information that Oyster provided to Plaintiffs in the arbitration proceeding. Pis.' Resp. [DE-37] at 3. On March 1, 2019, Oyster's counsel informed Defendant's counsel that Mr. Cox had rendered an opinion on Oyster's negligence in the arbitration proceeding. [DE-36-3] at 3. Subsequently, Defendant's counsel requested Mr. Cox's report from Plaintiffs' counsel. Id. Plaintiffs' counsel responded that Plaintiffs have sufficiently produced and supplemented all discoverable material. Id. According to Defendant's motion, Plaintiffs have refused to provide Mr. Cox's report from the arbitration proceeding. Def.'s Mot. [DE-35] at 1.

         Defendant's Interrogatories Six and Eight to Plaintiffs are the subject of the parties' dispute:

6. Identify all written communication sent on your behalf to any third-party, not including your legal counsel, regarding the facts or circumstances giving rise to your claims in this lawsuit.
8. Identify any individual you believe violated any duties to you during the course of the subject transaction. Include in your response why you believe such individual violated duties to you.

Def.'s Mem. Ex. 2 [DE-36-2] at 10; [DE-37-2] at 8. Additionally, Defendant's Requests for Production of Documents ("RFP") to Plaintiffs One and Six are disputed:

1. All documents identified in the foregoing Interrogatories.
6. All writing communication [sic] between you and Oyster Yachts, USA, or its affiliates, from January 1, 2017 to the present.

[DE-37-2] at 1-2.[1]

         Defendant contends that Plaintiffs are obligated to supplement their responses to those discovery requests pursuant to Rule 26(e) and produce Cox's expert report produced in the arbitration proceeding. Def.'s Mem. [DE-36] at 5. Plaintiffs contend that Defendant is attempting to gain an unfair tactical advantage from Plaintiffs' arbitration case, Plaintiffs have adequately responded to all discovery requests, and Plaintiffs have satisfied the expert disclosure requirements of Rule ...

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