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KCI Auto Auction, Inc. v. Ephrem

United States District Court, D. Kansas

October 22, 2019

KCI AUTO AUCTION, INC., Judgment Creditor,
v.
TOM EPHREM, et al. Judgment Debtors.

          MEMORANDUM AND ORDER

          Gwynne E. Birzer United States Magistrate Judge.

         This matter is before the Court on Judgment Creditor KCI Auto Auction, Inc.'s Motion to Compel and Request for Sanctions against Judgment Debtors Angelo Jefferson, Barry Ristick, David Ephrem, Danny Ephrem, Tom Ephrem and Quality Used Cars, LLC for Failure to Respond to Discovery Requests and Suggestions in Support of the Same (“Motion to Compel and Request for Sanctions”) (ECF No. 40). Due to the Judgment Debtors' failure to respond to the discovery requests at issue and failure to respond to the Motion to Compel and Request for Sanctions, this Court ordered all Judgment Debtors to appear in-person on October 4, 2019 to show cause why the Motion to Compel and Request for Sanctions should not be granted as unopposed.

         Judgment Creditor, KCI Auto Auction, Inc., appeared through counsel, Shawn E. Stewart for the October 4, 2019 hearing. Judgment Debtor Barry Ristick appeared in-person for the October 4, 2019 hearing.[1] All other Judgment Debtors failed to appear at the October 4, 2019 hearing. After consideration of the Motion to Compel and Request for Sanctions, all exhibits, and the arguments made at the October 4, 2019 hearing, the Court GRANTS the Motion to Compel and Request for Sanctions as to Judgment Debtors Angelo Jefferson, David Ephrem, Danny Ephrem, Tom Ephrem and Quality Used Cars, LLC, and GRANTS IN PART AND DENIES IN PART the Motion to Compel and Request for Sanctions as to Judgment Debtor Barry Ristick.

         I. Background

         On February 22, 2019, Judgment Creditor KCI Auto Auction, Inc. (“KCI”) registered a foreign judgment in this Court for enforcement against Judgment Debtors Angelo Jefferson, Barry Ristick, David Ephrem, Danny Ephrem, Tom Ephrem and Quality Used Cars, LLC (“Judgment Debtors”).[2] The foreign judgment registered stems from a case filed by KCI against the Judgment Debtors in the United States District Court for the Western District of Missouri, captioned KCI Auto Auction, Inc. v. Alonzo D. Anderson, et al., Case Number 17-06086-CV-SJ-NKL.

         In that case, KCI brought suit against the Judgment Debtors (and others) for breach of contract, action on account, promissory estoppel, account stated, fraudulent misrepresentation, fraudulent conveyance, unjust enrichment and quantum merit, conversion, replevin, civil conspiracy, constructive trust, injunctive relief, negligence per se and alter ego/piercing the corporate veil.[3] These allegations arise from certain business transactions and dealings involving motor vehicles that the Judgment Debtors and the other defendants purchased from KCI.[4] Highly summarized, KCI, a wholesale motor vehicle auctioneer located in Missouri, sold vehicles to the Judgment Debtors and the other defendants pursuant to a “floor plan” account for which the Judgment Debtors and the other defendants, after taking possession of the vehicles, did not pay in full.[5]

         On January 5, 2018, the Western District of Missouri Court entered a Consent Judgment in favor of KCI and against each of the Judgment Debtors “on the grounds that the Settling Defendants, jointly and severally, committed acts of fraud as alleged in Plaintiff's First Amended Complaint that have caused and resulted in damages to Plaintiff, for which the Settling Defendants agree and consent to in the amount of Three Hundred Thousand Dollars ($300, 000.00), until paid, as a valid and enforceable judgment against the Settling Defendants.”[6] This is the foreign judgment KCI registered in this Court for enforcement.[7]

         On April 5, 2019, KCI served each Judgment Debtor with a First Set of Post-Judgment Interrogatories and First Set of Post-Judgment Requests for Production Documents.[8] The discovery requests were served upon each Judgment Debtor via the United States Postal Service with tracking confirmation numbers, all of which are shown on the tracking database of USPS.com as having been delivered to the last known addresses of the Judgment Debtors.[9] Responses to the discovery requests were due May 6, 2019, but none of the Judgment Debtors responded.[10]

         On May 24, 2019, KCI's counsel sent each of the Judgment Debtors letters requesting their discovery responses by June 3, 2019, and requesting the Judgment Debtors to contact counsel by phone upon receipt of the letters.[11] The letters also cautioned the Judgment Debtors if responses to the discovery were not received by June 3rd, then KCI would file a motion to compel the answers and to request sanctions.[12] KCI's counsel also left a telephone message with Judgment Debtor Tom Ephrem.[13] However, no responses from any of the Judgment Debtors were forthcoming.[14]

         Thus, on June 4, 2019, KCI filed the instant Motion to Compel and Request for Sanctions. KCI asks the Court to order each of the Judgment Debtors to fully respond to the discovery requests and to deem any potential objections to the discovery requests waived. KCI also requests the Court to award it reasonable expenses, including attorney's fees, caused by the Defendants' failure to respond to the discovery requests.[15]

         Because none of the Judgment Debtors responded to the Motion to Compel and Request for Sanctions, the Court filed a Notice of Hearing and Order to Show Cause for the Judgment Debtors to appear in person on October 4, 2019, to show cause why the Motion to Compel and Request for Sanctions should not be granted as unopposed.[16] The Notice of Hearing and Order to Show Cause was served upon each Judgment Debtor by mail to their last known address.[17] Even though mailing is sufficient to accomplish service, [18] the Court also ordered the U.S. Marshals to personally serve the Notice of Hearing and Order to Show Cause on each Judgment Debtor.[19] KCI appeared at the October 4th hearing through its counsel. Barry Ristick was the only Judgment Debtor to appear for the October 4th hearing.

         II. Legal Standard

         Pursuant to Fed.R.Civ.P. 69(a)(2), in “aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person__including the judgment debtor__as provided in these rules or by the procedure of the state where the court is located.” Here, KCI, the Judgment Creditor, has issued interrogatories pursuant to Fed.R.Civ.P. 33 and requests for production of documents pursuant to Fed.R.Civ.P. 34, to the Judgment Debtors in order to learn about the Judgment Debtors' assets, property and income from which the Consent Judgment may be satisfied.

         Rules 33 and 34 each allow thirty days for responses to interrogatories and requests for production of documents.[20] Per Rule 37(a)(3)(B)(iii) and (iv), if a party fails to timely answer an interrogatory or respond to a document request, the party seeking discovery may move for an order compelling an answer or response.

         III. Duty to Confer

         Before the Court can rule on the Motion to Compel and Request for Sanctions, it must determine whether the parties conferred as required by Rule 37(a)(1), Rule 37(d)(1)(B), and D. Kan. Rule 37.2. Here, KCI's Motion to Compel and Request for Sanctions contains a certification that it in good faith attempted to confer with the Judgment Debtors by letter and telephone, but the Judgment Debtors were unresponsive. Because the Judgment Debtors have been unresponsive to KCI's conferral attempts, the Court will not order additional attempts at conferral before deciding the instant Motion.[21]

         IV. Discussion

         A. KCI's Request for the Judgment Debtors to Fully Respond to the Outstanding Discovery without Objection

         As stated above, KCI served post-judgment discovery requests to the Judgment Debtors on April 5, 2019, making the responses due May 6, 2019.[22] The Judgment Debtors failed to respond. Thus, KCI sent each Judgment Debtor a letter on May 24, 2019, requesting their discovery responses by June 3, 2019. Again, the Judgment Debtors failed to respond. Because the Judgment Debtors failed to timely respond, the Court will grant KCI's request to compel responses to the outstanding discovery requests.[23]

         The Court will also grant KCI's request that the Judgment Debtors answer the discovery requests without objection. Rule 33 provides the “grounds for objecting to an interrogatory must be stated with specificity” and “[a]ny ground not stated in a timely objection is waived unless the court, for good cause, excuses the failure.”[24] The same is true for requests for production of documents under Rule 34.[25] Mr. Ristick did not provide good cause during the hearing for why he failed to timely answer or ...


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