United States District Court, N.D. Florida, Pensacola Division
ORDER AND REPORT AND RECOMMENDATION
CHARLES J. KAHN, JR. UNITED STATES MAGISTRATE JUDGE.
February 22, 2018, the court conducted a telephonic status
conference/hearing on plaintiff's “Motion for
Enforcement of Court Order and/or for Status
Conference” (doc. 20). Based on defendant's failure
to meet its discovery obligations and failure to comply with
the court's November 22, 2017, order, the undersigned
recommends that defendant's pleadings be stricken,
including its counterclaim. In addition, plaintiff is
entitled to recover the reasonable expenses it incurred in
bringing both its “Motion to Require Turnover of
Documents for Audit” (doc. 14) and “Motion for
Enforcement of Court Order and/or for Status
Conference” (doc. 20).
action involves a dispute over an excess workers'
compensation and employer liability insurance policy.
Plaintiff issued the policy to defendant for the period
covering May 1, 2015, to May 1, 2016. Plaintiff alleges
defendant failed to allow an audit of its records to
determine whether and in what amount defendant owes
additional premium to plaintiff under the policy.
Defendant's counterclaim alleges plaintiff breached the
policy by not complying with its obligation to pay claims
expenses in excess of $600, 000.
November 2, 2017, plaintiff filed a “Motion to Require
Turnover of Documents for Audit.” (Doc. 14). Plaintiff
claimed defendant repeatedly failed to provide plaintiff with
documents necessary for an audit the parties had agreed
Plaintiff sought the production of the documents, as well as
its expenses for bringing the motion. Defendant did not
respond in opposition. On November 22, 2017, therefore, the
undersigned ordered defendant to produce the documents
necessary for the audit within 7 days. (Doc. 16). The court
further ordered the parties to confer concerning the
sanctions issue and, within 7 days, file a report indicating
whether a dispute still existed regarding the issue.
November 30, 2017, plaintiff submitted a report indicating
defendant failed to produce the required documents and
plaintiff's counsel had been unable to reach defense
counsel to discuss the sanctions issue. (Doc. 17). Plaintiff
filed a “Motion for Enforcement of Court Order and/or
for Status Conference” on January 25, 2018. (Doc. 20).
Plaintiff reported defendant still had not complied with the
court's November 22, 2017, order to produce the documents
needed for the audit. Based on the foregoing series of
events, plaintiff sought “a hearing or show cause order
to require compliance with this court's previous order
and to consider the issue of contempt or other
sanctions.” (Doc. 20, p. 3).
January 31, 2017, the court ordered defendant to show cause
within 7 days why sanctions should not be imposed due to its
failure to comply with the court's November 22, 2017,
order. (Doc. 21). Defendant did not respond to the show cause
order. The court then conducted the status conference/hearing
on plaintiff's “Motion for Enforcement of Court
Order and/or for Status Conference” (doc. 20) on
February 22, 2018.
district court . . . has broad authority under Rule 37 to
control discovery, including dismissal as the most severe
sanction.” Gratton v. Great Am. Commc'ns,
178 F.3d 1373, 1374 (11th Cir. 1999). “Rule 37
sanctions are intended to prevent unfair prejudice to the
litigants and insure the integrity of the discovery
process.” Id. “If a party . . . fails to
obey an order to provide or permit discovery, . . . the court
[may enter an order] striking pleadings in whole or in
part[.]” Fed.R.Civ.P. 37(b)(2)(A)(iii).
despite plaintiff's diligent efforts, and defendant's
recognition that the requested discovery is critical to this
case and the calculation of damages, defendant has failed to
produce the documents plaintiff needs to complete the audit.
Furthermore, defendant did not comply with the court's
November 22, 2017, order (doc. 16) to produce the documents.
February 22, 2018, hearing, defense counsel represented: (1)
his attempts to have defendant produce the documents
plaintiff needs for the audit were unsuccessful; (2)
defendant's principal is currently located somewhere in
Puerto Rico; (3) defendant is insolvent; and (4) defendant no
longer has employees capable of identifying the relevant
documents. Counsel also said defendant intended to file a
petition for bankruptcy in the near future.
on plaintiff's representations, and the forthright
concessions made by defense counsel, the undersigned finds
monetary sanctions against defendant are not practical in
this case, and would accomplish no end other than further
delay. Defendant has proved unwilling to produce documents
critical to the resolution of this case, and, due to its
insolvency, monetary sanctions are unlikely to cause
compliance. An appropriate sanction-the only practical
sanction-for defendant's failure to meet any of its
obligations will be to strike defendant's pleadings,
including its counterclaim. See Fed. R. Civ. P.
37(b)(2)(A)(iii) (providing the court may strike pleadings
when a party fails to obey an order to provide discovery);
see also State Exch. Bank v. Hartline, 693 F.2d
1350, 1352 (11th Cir. 1982) (“The Federal Rules
expressly authorize a district court to dismiss a claim,
including a counterclaim, . . . for failure to prosecute or
obey a court order or federal rule.”) (citing
Fed. R. Civ. P. 41(b)-(c)).
addition, the court previously granted plaintiff's
request for fees and costs for bringing the “Motion to
Require Turnover of Documents for Audit” (doc. 14). The
determination of the amount of those expenses remains
outstanding. Plaintiff also seeks its expenses for bringing
the “Motion for Enforcement of Court Order and/or for
Status Conference” (doc. 20). As the “Motion for
Enforcement” represents a continued effort by plaintiff
to acquire the audit documents, and defendant has not set
forth a reason to deny plaintiff the expenses, the court will
award plaintiff its expenses related to the “Motion for
Enforcement.” Plaintiff's counsel will submit an