American Zurich Insurance Company v. ESG Republic, Inc. ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 AMERICAN ZURICH INSURANCE Case No. 1:23-cv-00643-KES-CDB COMPANY, 12 ORDER ON SECOND STIPULATED Plaintiff, REQUEST TO EXTEND CASE 13 MANAGEMENT DATES v. 14 (Doc. 53) ESG REPUBLIC, INC, et al., 15 Defendants/Counterclaimants. 16 17 18 Pending before the Court is the parties’ stipulated request for a further, four-month 19 extension of all case management dates. (Doc. 53). For the reasons that follow, the Court will 20 permit the parties to engage in nonexpert discovery through and including the current deadline 21 for completing expert discovery, but otherwise finds that good cause does not exist for any further 22 adjustments to the operative scheduling order. 23 Background 24 Plaintiff American Zurich Insurance Company initiated this action with the filing of a 25 complaint against Defendants on April 27, 2023. (Doc. 1). On September 20, 2023, following 26 the Court’s receipt from the parties of their joint scheduling report and having convened for a 27 scheduling conference, the Court entered a scheduling order that adopted all case management 1 parties: “The dates set in this Order are considered to be firm and will not be modified absent a 2 showing of good cause even if the request to modify is made by stipulation.” (Doc. 21 at 7). 3 Thereafter, on January 18, 2024, Plaintiff filed the operative second amended complaint 4 (SAC) that added a Defendant (WL Acquisitions, LLC) and included additional allegations. 5 (Doc. 34). All appearing Defendants answered and certain Defendants asserted crossclaims. 6 (Docs. 35-37, 40).1 7 On May 17, 2024, the parties filed a stipulated request for 90-day extension of all 8 discovery, motion and trial dates that the Court denied given the parties’ noncompliance with the 9 scheduling order’s provisions for seeking such extensions and for other deficiencies. (Docs. 47- 10 49). On May 22, 2024, the parties filed a renewed stipulated request for 90-day extension of all 11 case management dates. (Doc. 50). The parties made numerous assertions in support of their 12 collective representation that good cause warranted granting the 90-day extension, including. 13 1) The parties had delayed undertaking discovery in favor of focusing on settlement discussions; 14 2) In light of Plaintiff’s filing in January 2024 of the SAC and the Defendants’ 15 filings of their answers and crossclaims, the parties represented “additional time is needed to conduct the expensive and time-consuming further discovery”; and 16 3) “Counsel for Plaintiff has several matters that are very active currently with 17 depositions, and a family vacation for a week in early June. Counsel for Thorn also has a currently impacted schedule in other matters, has a trial in August, and will 18 be on a two week vacation in July. Based on the schedules of party counsel it would be prejudicial to require all percipient discovery to be completed by the current 19 deadline of June 21, 2024.” 20 Id. at ¶¶ 3-4, 6, 8, 9. 21 The Court granted the parties’ request for a 90-day extension of all case management dates 22 and set the mid-discovery status conference on the date requested by the parties (August 27, 23 2024). (Doc. 52). The Court’s order including the following admonition: “The Court expects 24 the parties to properly manage and balance completion of all discovery within the modified case 25 management dates below without regard to ongoing and/or parallel efforts to settle the case.” Id. 26 On the deadline for filing a joint mid-discovery status report one week in advance of the 27 1 At Plaintiff’s request, the Clerk of the Court entered defaults against Defendants ESG Republic II, LLC, and ESG Republic, Inc, which have not appeared in the action. (Docs. 29- 1 mid-discovery status conference, the parties filed instead the instant stipulated request for a 2 further four-month extension of case management dates (to include a continuance of the mid- 3 discovery status conference). (Doc. 53). In their stipulation, the parties represent that good cause 4 exists for the further extension of all case management dates, as follows: 5 1) Over the preceding 90 days, the parties “engaged in extensive written discovery, 6 revealing the need to undertake additional written discovery in advance of anticipated depositions”; 7 2) Counsel for Plaintiff and Defendant Thorn are “sole practitioner with very busy 8 schedules, which have made it very difficult to engage in heavy discovery needed in this case”; and 9 3) Plaintiff’s counsel has two motions for summary judgment due within 30 days 10 a nd “many depositions in other matters.” 11 Id. ¶¶ 5, 6, 8. 12 The parties’ stipulation also includes a representation at variance with a representation 13 counsel made in their May 22 stipulation seeking a three-month extension: that counsel for 14 Defendant Thorn had “a long planned out-of-the-country vacation for several weeks in August, 15 and a several-week trial that starts the first week of October 2024” (not, as previously 16 represented, a two-week vacation in July and trial in August). Cf. (Doc. 50 ⁋ 9 with Doc. 53 ⁋ 17 7).2 18 In light of their failure to timely file a joint mid-discovery status report, the Court directed 19 the parties to file a report no later than August 23, 2024. (Doc. 54). The parties thereafter filed 20 their report which revealed that Plaintiff had propounded its initial written discovery demands 21 on March 24, 2024 – a full six months after the case was scheduled and discovery opened. (Doc. 22 55). Moreover, with the exception of Defendant Thorn, it appears that all other Defendants were 23 afforded more than three months to respond to Plaintiff’s written discovery demands. Id. The 24 report further revealed that the Vensure Defendants had propounded no written discovery until 25 very recently. Id. Although depositions were noticed within the existing deadline to complete 26 nonexpert discovery, all of the noticed depositions were taken off calendar in light of the parties’ 27 2 The Court directed Defendant Thorn to make a filing addressing these apparent 1 hope that the requested extensions would be granted. Id. 2 Governing Law 3 District courts enter scheduling orders in actions to “limit the time to join other parties, 4 amend the pleadings, complete discovery, and file motions.” Fed. R. Civ. P. 16(b)(3). Once 5 entered, a scheduling order “controls the course of the action unless the court modifies it.” Fed. 6 R Civ. P. 16(d). Scheduling orders are intended to alleviate case management problems. Johnson 7 v. Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992). 8 “A scheduling order is not a frivolous piece of paper, idly entered, which can be cavalierly 9 disregarded by counsel without peril.” Id. (quotation and citation omitted). Under Federal Rule 10 of Civil Procedure 16(b), a scheduling order “may be modified only for good cause and with the 11 judge’s consent.” Fed. R. Civ. P. 16(b)(4). As the Court of Appeals has observed: 12 In these days of heavy caseloads, trial courts in both the federal and state systems 13 routinely set schedules and establish deadlines to foster efficient treatment and resolution of cases. Those efforts will be successful only if the deadlines are taken 14 seriously by the parties, and the best way to encourage that is to enforce the deadlines. Parties must understand that they will pay a price for failure to comply 15 s trictly with scheduling and other orders. . . 16 Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1060 (9th Cir. 2005). “Rule 16(b)’s ‘good 17 cause’ standard primarily considers the diligence of the party seeking the amendment.” Johnson, 18 975 F.2d at 609. If the moving party is unable to reasonably meet a deadline despite acting 19 diligently, the scheduling order may be modified. Id. If, however, the moving party “‘was not 20 diligent, the inquiry should end’ and the motion to modify should not be granted.” Zivkovic v. 21 So. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (quoting Johnson, 975 F.2d at 609). 22 Discussion 23 The parties do not advance sufficient good cause – in other words, a showing that they have 24 exercised diligence – sufficient to warrant a four-month extension of all case management dates. 25 At the outset of this litigation, the Court admonished the parties that it considered the case 26 management dates “firm.” No party represented in their joint scheduling report filed in advance 27 of the scheduling of this case that they intended to informally halt discovery for an extended 1 set an expanded period for taking discovery to facilitate any such settlement discussions. When 2 the parties sought (and the Court granted) a three-month extension of case management dates 3 near the end of the original deadline for completing nonexpert discovery, the Court further 4 admonished that it “expects the parties to properly manage and balance completion of all 5 discovery within the modified case management dates” adopted by the order. 6 In general, the newly advanced reasons for further extending case management dates are 7 that (1) responses to written discovery have revealed the need to undertake additional discovery, 8 and (2) the parties’ counsel have competing duties and vacations making it difficult to complete 9 discovery within the time allotted. 10 But as summarized above, the parties’ engagement in written discovery (as reflected in 11 their joint mid-discovery status report) demonstrates that discovery has proceeded at an 12 inexplicably delayed pace. Separately, with respect to counsels’ competing priorities, the Court 13 has attempted to elicit information from counsel for Defendant Thorn regarding his involvement 14 in a trial set to commence in state court on October 7, 2024, in the matter of “Mario Delis and 15 Nature & Life Farms, LLC vs. Jeffrey Thorn, et. al.” (Doc. 58 ⁋ 6). A review of the public 16 records for that matter reflects that the parties jointly moved to continue the trial date and the 17 state court granted the parties’ motion on February 23, 2024.3 In their earlier stipulated request 18 of this Court to continue case management dates by three months, filed on May 22, 2024, counsel 19 for Defendant Thorn identified only a trial reportedly set to commence in August. The Court has 20 been unable to obtain from Defendant Thorn an explanation for the apparent divergence between 21 his originally reported trial and vacation dates, and those identified in the instant stipulated 22 request for further extension. 23 In short, because the parties have not demonstrated due diligence in the prosecution of this 24 action, good cause does not exist to grant a four-month extension of all case management dates. 25 The Court nevertheless will permit the parties to continuing engaging in nonexpert discovery 26 through and including the deadline to complete expert discovery. 27 3 The Court takes judicial notice of documents on file in unrelated state court matters. 1 Conclusion and Order 2 For the foregoing reasons, it is HEREBY ORDERED, the parties’ stipulated request for a 3 | four-month extension of all case management dates (Doc. 53) is DENIED; and 4 It is FURTHER ORDERED, the parties shall be permitted to engage in nonexpert 5 | discovery through and including the deadline for completing expert discovery — November 27, 6 | 2024. 7 IT IS SO ORDERED. Dated: September 5, 2024 | Ww R~ 9 UNITED STATES MAGISTRATE JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28