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Evanston Insurance Co. v. Aminokit Laboratories, Inc.

United States District Court, D. Colorado

March 29, 2018

EVANSTON INSURANCE COMPANY, an Illinois corporation, Plaintiff,
v.
AMINOKIT LABORATORIES, INC., a Colorado corporation d/b/a TREATMENT CENTERS XL; TAMEA RAE SISCO, Individually and as a Principal of Aminokit Laboratories, Inc.; and JONATHAN LEE, M.D., Defendants.

          ORDER ON MOTION TO QUASH

          Nina Y. Wang United States Magistrate Judge

         This matter comes before the court on Non-party Jerad West's (“Mr. West”) Motion to Quash Subpoena and for Protective Order (“Motion” or “Motion to Quash”), filed February 2, 2018 [#240], [1] and referred to the undersigned pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and the Memorandum dated February 2, 2018 [#241]. Having carefully reviewed the Motion and related briefing, the comments offered at the February 5, 2018 Telephonic Discovery Conference, the applicable case, and the entire docket, this court DENIES the Motion to Quash for the reasons stated herein.

         BACKGROUND

         The court has discussed the background of this case in prior Orders, see e.g., [#142; #180], and does so here only as it pertains to the instant Motion. This case arises from a dispute over insurance coverage for claims asserted in the separate lawsuit of Brandon Lassley and Julia Walker v. Aminokit Laboratories, Inc. d/b/a Treatment Centers XL; Tamea Rae Sisco; Jonathan Lee, MD; and White Lodging Services Corporation, No. 15-cv-01531-REB-MJW (the “Lassley Suit”). [#61 at ¶ 5]. Plaintiff Evanston Insurance Company (“Plaintiff” or “Evanston”) provided Defendants Tamea Sisco and Aminokit Laboratories, Inc. (the “Aminokit Defendants”) and Defendant Jonathan Lee, M.D. (“Defendant Lee” or “Dr. Lee”) (collectively, “Defendants”) a defense in the Lassley Suit, but reserved its rights to seek reimbursement from Defendants. [Id. at ¶¶ 20, 23]. Evanston then initiated this action and asserts four claims against Defendants. [#46]. Attorney Jared West, who jointly represented Defendants for a time in the Lassley Suit, initially represented the Aminokit Defendants, while Dr. Lee proceeded pro se. Defendants moved to dismiss Plaintiff's Amended Complaint on April 4, 2016. See [#63].

         Pending the court's disposition of the Motion to Dismiss, the Parties were directed to proceed with discovery that was contemplated under a Scheduling Order entered before the filing of the Amended Complaint. [#57]. Due to an impasse with certain discovery from third-parties, the undersigned stayed discovery and set this matter for a further Status Conference to discuss scheduling needs, following Judge Moore's ruling on the pending Motion to Dismiss. See [#175]. Judge Moore denied the Motion to Dismiss on July 5, 2017. See [#180]. The following day, Mr. West and his co-counsel filed their Motion to Withdraw from representation of the Aminokit Defendants, prompting this court to set a Status Conference for July 12, 2017. See [#181; #184].

         At the July 12 Status Conference, this court granted the Motion to Withdraw and ordered any new counsel for the Aminokit Defendants to enter an appearance on or before August 11, 2017. [#193]. The Aminokit Defendants were also to file their Answer to Plaintiff's Amended Complaint as well as their Response to Evanston's Motion for Partial Summary Judgment on or before August 12, 2017, and this court set a further Status Conference for August 30, 2017. [Id.; #194]. The Aminokit Defendants failed to file an Answer to Plaintiff's Amended Complaint or a Response to its Motion for Partial Summary Judgment, and Plaintiff has since moved for entry of default and default judgment against both. See [#204; #207]. The Clerk of the Court entered default against the Aminokit Defendants on September 19, 2017. [#211]. The Motion for Default Judgment [#207] remains pending.

         On August 21, 2017, Ms. Sisco filed a Suggestion of Bankruptcy indicating that she filed a voluntary petition for Chapter 7 bankruptcy on July 21, 2017. See [#206]. The Suggestion of Bankruptcy stated, “Any action against Aminokit is stayed, as it is a 100% asset of the bankruptcy estate.” [Id.]. The Parties discussed whether the automatic stay associated with Ms. Sisco's petition for bankruptcy also applied to Aminokit at the August 30 Status Conference. [#209]. This court issued an Order directing the parties to proceed with discovery as to Aminokit, including from Ms. Sisco as Aminokit's agent, unless or until the bankruptcy court extended the automatic stay to Aminokit. [#212]. By that same Order this court reiterated that the discovery cut-off remained set for November 17, 2017. See [id.].

         Based on Plaintiff and Dr. Lee's motion, the undersigned extended the discovery cut-off to November 30, 2017, for the sole purposes of conducting the depositions of Plaintiff and Dr. Lee. See [#221]. This court then conducted a Telephonic Discovery Conference on December 7, 2017, to discuss the untimely disclosure of Mr. West as a potential witness for Dr. Lee and Plaintiff's Motion to Strike that disclosure. See [#223; #224; #226]. The undersigned denied Plaintiff's Motion to Strike, but granted Plaintiff permission to depose Mr. West out of time. See [#226]. Mr. West's deposition was to occur on or before January 10, 2018, see [id.], but was later extended to February 12, 2018, upon Plaintiff's request, see [#230].

         Mr. West filed the instant Motion on February 2, 2018. [#240]. Mr. West moves to quash Plaintiff's subpoena setting him for deposition or for a protective order limiting the scope of his potential deposition testimony on grounds that his deposition will require the disclosure of information protected by the attorney-client privilege and Colorado's Dispute Resolution Act (“CDRA”), Colo. Rev. Stat. § 13-22-307, relating to his representation of Defendants in the Lassley Suit and in this matter. See generally [id.].[2] On February 5, 2018, the undersigned conducted a Telephonic Discovery Conference on the issues outlined in the Motion to Quash, and ordered that any responses be filed on or before February 14, 2018, and that any replies be filed by February 16, 2018. [#243]. Plaintiff and Dr. Lee both filed Responses, see [#244; #245]; Mr. West has not filed a Reply, but this court may nonetheless proceed. See D.C.COLO.LCivR 7.1(d). I now consider the arguments raised in the Motion to Quash.

         LEGAL STANDARDS

         I. Rule 26(c)

         Rule 26(c) of the Federal Rules of Civil Procedure provides that a court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. Fed.R.Civ.P. 26(c). The party seeking a protective order bears the burden of establishing its necessity, Centurion Indus., Inc. v. Warren Steurer & Assoc., 665 F.2d 323, 325 (10th Cir. 1981), but the entry of a protective order is left to the sound discretion of the court, see Rohrbough v. Harris, 549 F.3d 1313, 1321 (10th Cir. 2008). As part of the exercise of its discretion, the court may also specify the terms for disclosure. Fed.R.Civ.P. 26(c)(1)(B).

         The good cause standard is highly flexible, having been designed to accommodate all relevant interests as they arise. See Rohrbough, 549 F.3d at 1321.

         II. Rule 45

         A subpoena served on a third party pursuant to Rule 45 of the Federal Rules of Civil Procedure is considered discovery within the meaning of the Federal Rules of Civil Procedure. Rice v. U.S., 164 F.R.D. 556, 556-57 (N.D. Okla. 1995). Accordingly, a subpoena is bounded by the same standards that govern discovery between the parties-to be enforceable, a subpoena must seek information that is relevant to a party's claims or defenses, and are proportional to the needs of the case. Fed.R.Civ.P. 26(b)(1). On a timely motion, the court must quash a subpoena that, inter alia, requires the disclosure of privileged or other protected matter, if no exception or waiver applies. See Fed. R. Civ. P. 45(d)(3)(A), (d)(3)(B). ÔÇťAbsent a finding by a court that a valid basis exists to quash a subpoena, the party receiving the ...


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