7ASR3d164

Series: 7ASR3d | Year: () | 7ASR3d164
Print This

FAISILI HALECK, RAYMOND M. McMOORE and

SESE McMOORE, on behalf of themselves and

as shareholders of TRT, INC., Plaintiffs,

 

v.

 

TRT, INC.,

AMERICAN SAMOA 2000, INC.,

AGAOLEATU C.

TAUTOLO, AGAESE ACE TAGO, MURRAY R. DRAKE, RAYMIE P. SNOW, and DOES I-XX, Defendants.

 

High Court of American

Samoa

Trial Division

 

CA No. 20-02

 

September 23, 2003

 

 

[1]

The examining party may set the deposition of a party at any place which he

desires, subject to the power of the court to grant a protective order if

deemed necessary.

 

[2]

The court may issue a protective order designating the location for an oral

deposition in order to protect the party being deposed from “undue burden or

expense” upon a showing of good cause.

 

[3]

A presumption exists that a non-resident defendant will be deposed at his place

of residence.

 

[4] In the absence of exceptional or

unusual circumstances, when a deponent resides at a substantial distance from

the deposing party’s residence, the deposing party should be required to take

the deposition at a location in the vicinity in which the deponent resides,

even if the deponent is a party.

 

[5] Where plaintiffs sought tax returns and financial

information of defendant and asserted that information might demonstrate how defendants

managed to acquire funds in order to make various payments at issue in action,

court determined discovery requests sought information relevant to breach of

fiduciary duty claim.

 

[6] Where discovery requests did not specify a time

limitation, court found such requests overbroad.

 

[7] Requests for production under T.C.R.C.P. 34 may

only be directed to the parties to the action.

 

[8] A requesting party may seek the production of

documents or things which are in the possession, custody, or control of the

responding party.

 

[9] “Control”, as used in T.C.R.C.P. 34, includes both

the actual possession of the requested materials or the legal right to obtain

the materials. 

 

[10]

The term “control”, as used in T.C.R.C.P. 34, is broadly construed.

 

[11]

The party seeking production of documents or things under T.C.R.C.P. 34 bears

the burden of establishing that the responding party controls the requested

materials.

 

[12]

An individual party to a lawsuit can be compelled to produce relevant

information and documents relating to a non-party corporation of which it is an

officer, director, or shareholder.

 

[13]

Where requesting party established that responding party served on board of

corporation, was one of the incorporators of corporation, was 33% shareholder

of corporation, and was president of corporation, such was sufficient to show

that responding party had control over corporation and could be expected to

produce records of corporation.

 

[14]

When financial information is relevant to the subject matter at issue it is

discoverable.

 

[15]

Courts perform a two prong test prior to ordering the disclosure of tax

returns: first, the court must find that the returns are relevant to the

subject matter of the action; and second, the court must find that there is a

compelling need for the returns because the information contained therein is

not otherwise readily obtainable.

 

[16]

Once relevance has been established, the party resisting discovery bears the

burden of proving that alternative sources would provide the required

information.

 

[17]

Under T.C.R.C.P. 37(a)(4), the court has authority to award costs and

attorney’s fees to the prevailing party on a motion to compel.

 

Before RICHMOND, Associate Justice,

and LOGOAI, Chief Associate Judge.

 

Counsel:          For Plaintiffs,

Charles V.  Ala`ilima and David Wagner

                         For Defendants Agaoleatu C. Tautolo, Agaese

Ace Tago, Murray P. Drake, and Raymie P. Snow, Devin McRae and William H.

Reardon

                         For Defendants TRT, Inc. and American Samoa

2000, Inc., Marshall Ashley and Frederick J. O’Brien

 

ORDER GRANTING MOTION FOR

PROTECTIVE ORDER

 AND GRANTING IN PART AND DENYING IN PART

MOTION TO COMPEL

PRODUCTION

 

Defendant Murray P. Drake (“Drake”) moves, pursuant to

T.C.R.C.P. 26(c), for a protective order requiring his deposition be held in

Apia, Samoa.  By separate motion,

Plaintiffs move for an order compelling the production of documents and records

and for an award of sanctions.  In

response, Defendants request an award of expenses for responding to Plaintiffs’

motion to compel.  For the reasons stated

below, we grant Drake’s motion for a protective order, grant in part and deny

in part Plaintiffs’ motion to compel production, and deny both parties’

requests for an award of expenses.

 

Discussion

 

A. 

Drake’s Motion for a Protective Order

 

Plaintiffs noticed Drake’s deposition to take place in Nu`uuli, American

Samoa.  However, Drake lives and works in

Apia, Samoa.  Accordingly, Drake seeks a

protective order pursuant to T.C.R.C.P. 26(c) requiring his deposition take

place in Apia, Samoa.

 

[1-4] “[T]he examining party may set the

deposition of a party at any place which he desires, subject to the power of

the court to grant a protective order if deemed necessary.”  Beaver v. Cravens, 24 A.S.R.2d 115,

116 (Trial Div. 1993).  The court may

issue a protective order designating the location for the deposition to protect

the party seeking the order from “undue burden or expense” upon a showing of

good cause.  T.C.R.C.P. 26(c).  A presumption exists that the non-resident

defendant will be examined at his place of residence.  See 6 James

W. Moore et al., Moore’s Federal Practice § 26.105[3][b] (3d ed. 1999); see

also Farguhar v. Sheldon, 116 F.R.D. 70, 72 (E.D. Mich. 1987) (noting

that “a party seeking discovery must go where the desired witnesses are

normally located”).

 

In the absence of exceptional or

unusual circumstances, when a deponent resides at a substantial distance from

the deposing party’s residence, the deposing party should be required to take

the deposition at a location in the vicinity in which the deponent resides,

even if the deponent is a party.

 

Metrex Research Corp.

v. United States,

151 F.R.D. 122, 125 (D. Colo. 1993). Plaintiffs have offered no “exceptional”

or “unusual” circumstances which would cause us to depart from the normal rule

requiring the defendant be deposed in the place in which he resides. As such,

if Plaintiffs want to depose Drake, the deposition shall take place in Apia,

Samoa.

 

B. 

Plaintiffs’ Motion to Compel

Production of Documents

 

On July 22, 2003, Plaintiffs served various discovery requests for the

production of documents on defendants, and on July 24, 2003, Plaintiffs served

a supplemental request on defendants. 

Defendants responded to these requests on August 12, 2003.  Plaintiffs, arguing that Defendants’ response

to their requests was insufficient, move to compel discovery and for an award

of sanctions.[1]

 

1. Relevancy

 

“Relevancy is a liberal process.”  Johnson

v. Coulter, 25 A.S.R.2d 84, 87 (Trial Div. 1993).  According to Rule 26(b):

 

Parties may obtain discovery

regarding any matter, not privileged, which is relevant to the subject matter

involved in the pending action .  .  . .  It

is not ground for objection that the information sought will be in adimissble

[sic] at the trial if the information sought appears reasonably calculated to

lead to the discovery of admissible evidence.

 

T.C.R.C.P. 26(b)(1).  Defendants argue that Plaintiffs’ requests

are not reasonably calculated to lead to the discovery of admissible

evidence.  We disagree.

 

[5] Plaintiffs request the tax returns

and financial information of Defendant Agaoleatu Charlie Tautolo

(“Agaoleatu”).  Plaintiffs argue this

information may demonstrate how Agaoleatu managed to acquire funds in order to

make various payments at issue in this action. 

This sort of information is relevant to Plaintiffs’ breach of fiduciary

duty claim.

 

Plaintiffs also request documents from Agaoleatu relating

to three other enterprises allegedly controlled by Agaoleatu. Specifically,

Plaintiffs request documents from Agaoleatu relating to Kent Samoa, Inc.

(“Kent”), A.C.T., Inc. (“ACT”) and ARC Construction Inc. (“ARC”). Several of

the requests seek information about alleged transactions between these entities

and Agaoleatu, TRT, Inc. (“TRT”) or American Samoa 2000, Inc. (“AS2000”).  Plaintiffs argue this information is also

relevant to determine the nature of Agaoleatu’s investments.  As such, this information is also relevant to

Plaintiffs’ breach of fiduciary duty claim.

 

[6] Accordingly, we find that

Plaintiffs’ requests are reasonably calculated to lead to the discovery of

admissible evidence.  However, we also note

that several of Plaintiffs’ requests are overbroad in that they do not specify

a time limitation.  To the extent

Plaintiffs’ requests are lacking a time limitation, information from 1998-2003

is responsive to Plaintiffs’ requests. 

We now turn to Defendants’ other objections.

 

2. Nonparty

Corporations

 

In Requests 1, 2, 3, 4, and 8, Plaintiffs request

documents from Agaoleatu which relate to nonparties Kent, ACT, and ARC.  Defendants argue that Plaintiffs may not use

T.C.R.C.P. 34 to discover information from nonparties.

 

[7-11] Requests for production under Rule

34 may only be directed to the parties to the action. T.C.R.C.P. 34(a).  However, the requesting party may seek the

production of documents or things “which are in the possession, custody or control

of the party.”  Id.; see also

Johnson, 25 A.S.R.2d at 85. Control includes both the actual possession of

the requested material or the legal right to obtain the materials.  See 7 James

W. Moore et al., Moore’s Federal Practice § 34.14[2][b] (3d ed. 1999).  “The term ‘control’ is broadly

construed.”  Id.  The party seeking production bears the burden

of establishing control of the requested materials.  Id. 

Accordingly, any documents that are in the actual physical possession of

Agaoleatu or under his control are subject to discovery.

 

[12] “An individual party to a lawsuit

can be compelled to produce relevant information and documents relating to a

non-party corporation of which it is an officer, director, or

shareholder.”  Gen. Envtl. Sci. Corp.

v. Horsfall, 136 F.R.D. 130, 133 (N.D. Ohio 1991); see also A.F.L. v.

Falck, S.P.A. v. E.A. Karay Co., 131 F.R.D. 46, 48-49 (S.D.N.Y. 1990)

(compelling individual respondent to produce the corporate documents of two

nonparty corporations because he had control over the corporate entities).

 

[13] In this case, Plaintiffs assert that

Agaoleatu has control over the documents requested from ARC, Kent, and

ACT.  Plaintiffs direct us to the

deposition testimony of Reynaldo Millari and Malaetino Leo, claiming this testimony

demonstrates that Agaoleatu has control over these entities.  A review of the deposition testimony

indicates that Agaoleatu serves on the Board of ARC, was one of the

incorporators of ARC, is a 33% shareholder of ARC, and President of ARC.  As such, Plaintiffs have sufficiently

demonstrated that Agaoleatu has control over the ARC documents.[2]  However, Plaintiffs fail to show that

Agaoleatu controls Kent or ACT.  In fact,

deposition testimony indicates that Agaoleatu has “some interest” in ACT and

“manages” Kent.  This is insufficient to

establish that Agaoleatu has control over the Kent or ACT documents.

 

3. Tax Returns and

Financial Information

 

In Requests 5-7, Plaintiffs request tax and financial

information from Agaoleatu.  Agaoleatu argues

that his financial information is not discoverable absent special circumstances

and that his tax returns are not discoverable because they are confidential.

 

[14] First, when financial information is

relevant to the subject matter at issue it is discoverable.  See generally 6 James W. Moore et al., Moore’ s Federal

Practice § 26.41[3][a] (3d ed. 1999). 

Since we find that the financial information requested by plaintiffs is

relevant (see discussion supra), it is discoverable.

 

[15-16]

Second, “[w]hile tax returns are not privileged, courts have been reluctant to

order their routine disclosure as part of discovery.”  S.E.C. v. Cymaticolor Corp., 106

F.R.D. 545, 547 (S.D.N.Y. 1985).  Courts

often perform a two-prong test prior to ordering the disclosure of tax returns.

“[F]irst, the court must find that the returns are relevant to the subject

matter of the action; and second, that there is a compelling need for the

returns because the information contained therein is not otherwise readily

obtainable.”  Id.  As indicated in our discussion above, we find

that Agaoleatu’s tax returns are relevant. 

“[O]nce relevance has been established, the party resisting discovery

bears the burden of proving that alternative sources would provide the required

information.”  Carnegie Hill Fin. Inc.

v. Krieger, Nos. 99-CV-2592 and 99-CV-55l1, 2001 WL 869594, at *1 (E.D. Pa.

July 30, 2001).  Although Agaoleatu

argues that this information is readily available elsewhere, he fails to point

to any specific document in which Plaintiffs could discover this

information.  As such, Agaoleatu’s tax

returns are discoverable.[3]

 

4. 

Sanctions

 

[17]

Plaintiffs request sanctions with respect to their motion to compel. Defendants

seek attorney’s fees and costs for responding to Plaintiffs’ motion.  According to Rule 37(a)(4), if the moving

party’s motion is granted, the court may “require the party . . . whose conduct

necessitated the motion or the party or attorney advising such conduct or both

of them to pay to the moving party the reasonable expenses.”  T.C.R.C.P. 37(a) (4); see also Johnson,

25 A.S.R.2d at 88.  Likewise, if the

moving party’s motion is denied, expenses and attorney’s fees in opposing the

motion may be awarded to the non-moving party. 

Id.

 

In this case, we find an award of expenses to either

side to be inappropriate.  See, e.g., Johnson, 25

A.S.R.2d at 88.  Plaintiffs are not

entitled to expenses because Defendants acted in good faith in responding to

Plaintiffs’ requests.  Defendants are not

entitled to expenses because Plaintiffs’ motion to compel has merit.

 

Order

 

1. Defendant Drake’s motion for a protective order is

granted.

 

2. Plaintiffs’ motion to compel discovery is granted

in part and denied in part.  Defendant

Agaoleatu is ordered to produce documents from 1998-2003 that are responsive to

Requests 1-8 and are in his actual possession. Agaoleatu is further ordered to

produce documents from 1998-2003 that are responsive to Requests 1-4 and are

related to ARC Construction, Inc. Plaintiffs’ motion to compel discovery from

Agaoleatu relating to Kent Samoa, Inc. and A.C.T. Inc. is denied.

 

3. Plaintiffs’ request for sanctions

is denied.  Defendants’ request for

expenses is denied.

 

It is so ordered.

 

**********



[1] Defendants argue that Plaintiffs failed to meet and

confer before bringing their motion to compel discovery.  Unlike the Federal Rules of Civil Procedure,

the Trial Court Rules of Civil Procedure do not explicitly require the parties

meet and confer prior to bringing discovery motions.  Compare Fed. R. Civ. P. 37(a)(2)(A) with

T.C.R.C.P. 37. However, as both parties note, the High Court seeks to

conform to the Federal Rules of Civil Procedure.  See

A.S.C.A. § 43.0201(a). Obviously, the meet and confer requirement forces the

parties to discuss and possibly resolve the disputed issue before running into

court to seek relief.  While we will not

deny Plaintiffs relief for their failure to meet and confer prior to bringing the

instant motion, we suggest they make use of this procedure before bringing

future discovery motions.

[2] Defendants cite American Maplan Corporation v.

Heilmayr, 203 F.R.D. 499 (D. Kan. 2001), for the proposition that a party

may not be compelled to produce documents of a corporate nonparty.  In that case~ the defendant did not have a

legal right to the documents because there was insufficient evidence to show he

was “one and the same” with the nonparty corporate entity.  Id. at 502.  We find that there is sufficient evidence in

this case to demonstrate that Agoleatu has a legal right to the ARC materials.

[3] Plaintiffs also request cancelled checks and tax

filings from Kent, ACT and ARC that show funds transferred to Agaoleatu in

1998-2003.  Defendants argue that Kent,

ACT, and ARC’s tax returns and financial records are confidential and,

therefore, not discoverable by Plaintiffs. We disagree.  To the extent Agaoleatu has actual possession

of this information, he shall produce it. 

Moreover, because we find that Agaoleatu has control over ARC’s documents,

these documents should also be produced.