The Middle Game in Adversary Proceedings

The Middle Game in
Adversary Proceedings:
Federal Rule of Civil Procedure 26
and Crafting Pre-Trial Stipulations
and Orders
Hon. Vincent P. Zurzolo, United State Bankruptcy Judge, Central District California
J. Scott Bovitz, Bovitz & Spitzer
Beverly Hills Bar Association, Bankruptcy Law Section
March 26, 2015
v5
FLASH! Pursuant to 28 U.S.C. Section 2071(b), comments are invited on the proposed amendments to the 9th Circuit BAP Rules. Details are available on the BAP website at www.bap9.uscourts.gov.
1
Hon. Vincent P. Zurzolo
University of California, San Diego, 1978, B.A.; University of California, Davis, School of Law, 1982, J.D.
Appointed April 18, 1988 by the United States Court of Appeals for the Ninth Circuit
Reappointed April 18, 2002 by the United States Court of Appeals for the Ninth Circuit
Chief Judge, Bankruptcy Court, Central District of California, 2007-2010
2011 Calvin Ashland Award for Judge of the Year (awarded by the Central District Consumer Bankruptcy
Attorneys Association)
2011 Leadership Award - awarded by the Public Counsel Law Center, Los Angeles
Promoter of Debtor Assistance Project
Flies the United States and New York Yankee flags in his courtroom
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J. Scott Bovitz
J. Scott Bovitz is a bankruptcy litigator with Bovitz & Spitzer in Los Angeles (1991-2015). Board Certified,
Business Bankruptcy Law, American Board of Certification (abcworld.org) (1994-2015); Secretary, American
Board of Certification (2015). Certified Specialist, Bankruptcy Law, State Bar of California Board of Legal
Specialization (californiaspecialist.org) (1994-2015). AV Preeminent rating, Martindale Hubbell
(martindale.com) (AV rated, 1991-2015). Southern California Super Lawyer in bankruptcy and
creditor/debtor rights (superlawyers.com) (2004-2015). California Committee of Bar Examiners
(cc.calbar.ca.gov) (2011-2014). Editor, Personal and Small Business Bankruptcy Practice in California (CEB,
2003-2006). Contributing author, Norton Bankruptcy Law and Practice (store.westlaw.com, 2008-2015).
Coordinating editor, ABI Journal (abiworld.org, 2014-2015). Member, Information Technology Committee,
U.S. Bankruptcy Court, Central District of California (2012-2015). President, Los Angeles Bankruptcy Forum
(labankruptcyforum.org, 2000-2001). California Bankruptcy Forum: co-chair (2004); education co-chair
(2001); sponsor (poetry, photography, and comedy competition, 2011-2015). Adjunct Professor of Law,
Loyola Law School, Los Angeles (1982-1987). Composer and producer of 349 songs (bovitz.biz). Recording
engineer for Los Angeles Lawyers Philharmonic (lalawyersphil.org) and Gary S. Greene’s Big Band of
Barristers (2011-2015). Webmaster, bankruptcydog.com (bankruptcy calendar site) (2007-2015). Regularly
quoted on bankruptcy topics on television, on radio, and in print. Speaker at more than 200 legal and ham
radio programs (1984-2015). Photographer (bovitz.com).
3
Ambrose Bierce, Devil’s Dictionary
Litigant, n. A person about to give up his skin for the hope of retaining his bones.
Litigation, n. A machine which you go into as a pig and come out of as a sausage.
http://www.thedevilsdictionary.com
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Federal Rule of Bankruptcy Procedure 7001
“An adversary proceeding is governed by the rules of this Part VII.
The following are adversary proceedings:
(1) a proceeding to recover money or property, other than a proceeding to compel the debtor to
deliver property to the trustee, or a proceeding under § 554(b) or § 725 of the Code, Rule 2017, or
Rule 6002;
(2) a proceeding to determine the validity, priority, or extent of a lien or other interest in
property, other than a proceeding under Rule 4003(d);
(3) a proceeding to obtain approval under § 363(h) for the sale of both the interest of the estate
and of a co-owner in property;
(4) a proceeding to object to or revoke a discharge...;
(5) a proceeding to revoke an order of confirmation of a chapter 11, chapter 12, or chapter 13
plan;
(6) a proceeding to determine the dischargeability of a debt;
(7) a proceeding to obtain an injunction or other equitable relief...;
(8) a proceeding to subordinate any allowed claim or interest...;
(9) a proceeding to obtain a declaratory judgment relating to any of the foregoing; or
(10) a proceeding to determine a claim or cause of action removed under 28 U.S.C. § 1452.”
5
Federal Rule of Bankruptcy Procedure 7026
“Rule 26 F.R.Civ.P. applies in adversary proceedings.”
6
Contested matters
Lucas v. Dynegy, Inc. (In re Dynegy, Inc.), 770 F.3d 1064, 1069 (2d Cir. N.Y. 2014) (“A contested matter is
defined as ‘the litigation to resolve’ an ‘actual dispute, other than an adversary proceeding, before the
bankruptcy court.’ Fed. R. Bankr. P. 9014 advisory committee's notes (1983). Lucas argues there was not a
‘contested matter’ before the bankruptcy court because ‘by simply objecting to the Plan and seeking to optout of the [r]elease, [he] sought only to preserve the rights of the class members,’ ...not to seek relief from
the bankruptcy court ....’All disputes in bankruptcy,’ however, ‘are either adversary proceedings or contested
matters.’ In re Am. Reserve Corp., 840 F.2d 487, 488 (7th Cir. 1988) ...). An adversary proceeding must fall
within one of the ten categories defined in Bankruptcy Rule 7001. The proceeding here does not fit within
any of those categories; therefore it must be a contested matter.”).
7
Federal Rule of Bankruptcy Procedure 9014(a), (c)
“In a contested matter... the following rules shall apply...7026.... [but the] following subdivisions of
Fed.R.Civ.P. 26, as incorporated by Rule 7026, shall not apply in a contested matter unless the court directs
otherwise: 26(a)(1) (mandatory disclosure), 26(a)(2) (disclosures regarding expert testimony) and 26(a)(3)
(additional pre-trial disclosure), and 26(f) (mandatory meeting before scheduling conference/discovery plan).
... The court may at any stage in a particular matter direct that one or more of the other rules in Part VII shall
apply.”
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Timing of discovery in contested matter
Bovitz: It is very difficult to conduct discovery in a contested matter, if you are representing the
respondent.
Judge Zurzolo: I disagree. If there are factual issues, a respondent should promulgate immediate
discovery and file a separate motion to continue the hearing. The respondent should file her
opposition, too, so that there is no default if the motion to continue is denied.
Bovitz: May either party promulgate discovery before a response is filed to the motion? When does
the motion become a contested matter? RG Premier Bank v. Alvarado (In re Alvarado), 463 B.R. 200,
206 (D.P.R. 2011) (“As to what constitutes a contested matter, Norton explains that under his analysis
of Fed.R.Bankr.P. 9014 and its application to Fed.R.Bankr.P. 4001, ‘only when an objection is filed does
the dispute become a contested matter proceeding.’ 11 Norton Bankr.L. & Prac. 3d, Fed.R.Bankr.P.
9014.”); In re Circuit City Stores, Inc., 426 B.R. 560, 567 (Bankr. E.D. Va. 2010) (“When a response is
filed to an objection, the claim objection becomes a contested matter governed by Bankruptcy Rule
9014.”).
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Federal Rule of Civil Procedure 26(a)(1)(A)
initial disclosures in adversary proceeding
“...a party must, without awaiting a discovery request, provide to the other parties:
(i) the name and, if known, the address and telephone number of each individual likely to have discoverable
information—along with the subjects of that information—that the disclosing party may use to support its
claims or defenses, unless the use would be solely for impeachment;
(ii) a copy—or a description by category and location—of all documents, electronically stored information, and
tangible things that the disclosing party has in its possession, custody, or control and may use to support its
claims or defenses, unless the use would be solely for impeachment;
(iii) a computation of each category of damages claimed by the disclosing party—who must also make available
for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or
protected from disclosure, on which each computation is based, including materials bearing on the nature and
extent of injuries suffered; and
(iv) for inspection and copying as under Rule 34, any insurance agreement under which an insurance business
may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for
payments made to satisfy the judgment.”
10
Federal Rule of Civil Procedure 26(a)(2)(A), (B), (D)
expert witness disclosures
“In addition to the disclosures required by Rule 26(a)(1), a party must disclose to the other parties the
identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705.
... this disclosure must be accompanied by a written report—prepared and signed by the witness—if the
witness is one retained or specially employed to provide expert testimony in the case or one whose duties as
the party's employee regularly involve giving expert testimony. ...at least 90 days before the date set for trial
or for the case to be ready for trial...”.
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What is a judge looking for in an expert’s report?
Let’s ask Judge Zurzolo!
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Federal Rule of Civil Procedure 26(a)(3)
pretrial disclosures
“... at least 30 days before trial... a party must provide to the other parties and promptly file the
following information about the evidence that it may present at trial other than solely for
impeachment:
(i) the name and, if not previously provided, the address and telephone number of each witness—
separately identifying those the party expects to present and those it may call if the need arises;
(ii) the designation of those witnesses whose testimony the party expects to present by deposition and,
if not taken stenographically, a transcript of the pertinent parts of the deposition; and
(iii) an identification of each document or other exhibit, including summaries of other evidence—
separately identifying those items the party expects to offer and those it may offer if the need arises.”
[rearranged for clarity]
13
Federal Rule of Civil Procedure 26(g)(1)
signing the initial disclosures and discovery
“Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be
signed by at least one attorney of record in the attorney's own name—or by the party personally, if
unrepresented—and must state the signer's address, e-mail address, and telephone number. By signing, an
attorney or party certifies that to the best of the person's knowledge, information, and belief formed after a
reasonable inquiry:
(A) with respect to a disclosure, it is complete and correct as of the time it is made; and
(B) with respect to a discovery request, response, or objection, it is:
(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending,
modifying, or reversing existing law, or for establishing new law;
(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly
increase the cost of litigation; and
(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior
discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.”
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Federal Rule of Civil Procedure 26(b)
discovery scope and limits
Rule 26(b)(1). “Relevant information” is discoverable. “Relevant information need not be admissible at the
trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”
Rule 26(b)(2)(B). Limitation on “discovery of electronically stored information from sources that the party
identifies as not reasonably accessible because of undue burden or cost.”
Rule 26(b)(2)(C). Limitation on “frequency or extent of discovery” where “(i)the discovery sought is
unreasonably cumulative or duplicative, or can be obtained from some other source that is more
convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity
to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery
outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’
resources, the importance of the issues at stake in the action, and the importance of the discovery in
resolving the issues.”
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Federal Rule of Civil Procedure 26(d), (f)
early meeting
Rule 26(d)(1). “A party may not seek discovery from any source before the parties have conferred as
required by Rule 26(f)...”
Rule 26(f)(1), (2). “...the parties must confer as soon as practicable—and in any event at least 21 days before
a scheduling conference is to be held.... In conferring, the parties must consider the nature and basis of
their claims and defenses and the possibilities for promptly settling or resolving the case; make or arrange
for the disclosures required by Rule 26(a)(1); discuss any issues about preserving discoverable information;
and develop a proposed discovery plan.”
16
Local Bankruptcy Rules
Local Bankruptcy Rule 7026-1(a)(1). “Compliance with FRBP 7026 and this rule is required in all adversary
Proceedings. ... The plaintiff must serve with the summons and complaint a notice that
compliance with FRBP 7026 and this rule is required.”
Local Bankruptcy Rule 7026-1(b)(2). “Within 7 days after such meeting, the parties must prepare a joint
status report containing the information set forth in LBR 7016-1(a)(2). The joint status report will serve
as the written report of the meeting required by FRBP 7026.”
Local Bankruptcy Rule 7026-1(c)(2). “Prior to the filing of any motion relating to discovery, counsel for
the parties must meet in person or by telephone in a good faith effort to resolve a discovery dispute. It is
the responsibility of counsel for the moving party to arrange the conference.”
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Common problems (and solutions) in the early
meeting process
The other attorney does not perform her duties in a timely fashion.
The other attorney does not accurately recall prior discussions and agreements. (Keep records! Send
confirming notes!)
The other side is not represented by counsel and does not understand litigation procedures. (Here, the
lawyer might ask to be excused from normal procedures.)
The judge does not yet understand that my client is a really fine fellow. (This is a given!)
What other problems have come to the judge’s attention? (Ignorance of the rules. Or, if a lawyer is aware
of the rules, ignoring the rules.)
18
Bovitz, Memorable Legal Insults, ABI Journal, October 2014
“Another approach to discovery -- the meet, eat meat, and confer -- is outlined by Judge Pendleton Gaines in
her July 19, 2006 Ruling on Pending Motions (Superior Court of Arizona, Maricopa County, Case No. CV 2003020242):
The Court has rarely seen a motion with more merit. The motion will be granted. … Plaintiff’s counsel
extended a lunch invitation to Defendant’s counsel “to have a discussion regarding discovery and other
matters.” Plaintiff’s counsel offered to “pay for lunch.” Defendant’s counsel failed to respond until the
motion was filed. … The lunch must be conducted and concluded not later than August 18, 2006. Each side
may be represented by no more than two (2) lawyers of its own choosing, but the principal counsel on the
pending motions must personally appear. …
Judge Gaines put these two morsels in her footnotes.
[Footnote 1] Everyone knows that Ruth’s Chris, while open for dinner, is not open for lunch. This is a
matter of which the Court may take judicial notice. … [Footnote 4] The Court suggests that serious
discussion occur after counsel have eaten. The temperaments of the Court’s children always improved
after a meal.”
19
Federal Rule of Bankruptcy Procedure 7016
“Rule 16 F.R.Civ.P. applies in adversary proceedings.”
20
“Pretrial” or “pre-trial”?
Federal Rule of Civil Procedure 16 says “pretrial.”
21
Federal Rule of Civil Procedure 16
Rule 16(f). “The court may hold a final pretrial conference to formulate a trial plan, including a plan to facilitate
the admission of evidence. The conference must be held as close to the start of trial as is reasonable, and must
be attended by at least one attorney who will conduct the trial for each party and by any unrepresented party.
The court may modify the order issued after a final pretrial conference only to prevent manifest injustice.”
Rule 16(d). “Pretrial Orders. After any conference under this rule, the court should issue an order reciting the
action taken. This order controls the course of the action unless the court modifies it.”
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Rule 16(c)(2). “At any pretrial conference, the court may consider and take appropriate action... :
(A) formulating and simplifying the issues, and eliminating frivolous claims or defenses;
(B) amending the pleadings if necessary or desirable;
(C) obtaining admissions and stipulations about facts and documents to avoid unnecessary proof, and ruling in
advance on the admissibility of evidence;
(D) avoiding unnecessary proof and cumulative evidence, and limiting the use of testimony under Federal Rule
of Evidence 702; ...
(G) identifying witnesses and documents, scheduling the filing and exchange of any pretrial briefs...; ...
(I) settling the case...;
(J) determining the form and content of the pretrial order;
(K) disposing of pending motions;
(L) adopting special procedures for managing potentially difficult or protracted actions that may involve
complex issues, multiple parties, difficult legal questions, or unusual proof problems;
(M) ordering a separate trial under Rule 42(b) of a claim, counterclaim, crossclaim, third-party claim, or
particular issue;
(N) ordering the presentation of evidence early in the trial on a manageable issue that might, on the evidence,
be the basis for a judgment as a matter of law under Rule 50(a) or a judgment on partial findings under Rule
52(c);
(O) establishing a reasonable limit on the time allowed to present evidence; and
(P) facilitating in other ways the just, speedy, and inexpensive disposition of the action.
23
Local Bankruptcy Rule 7016-1(b), timing
LBR 7016-1(b)(1)(C) (“all parties and/or attorneys for the parties must meet and confer at least 28 days before
the date set for pretrial conference...for the purpose of preparing the pretrial stipulation”).
LBR 7016-1(c)(1), (2) (“It is plaintiff’s duty to prepare and sign a proposed pretrial stipulation that is
complete in all respects except for other parties’ lists of exhibits and witnesses. Unless otherwise ordered by
the court, plaintiff must serve the proposed pretrial stipulation in such manner so that it will actually be
received by the office of counsel for all other parties (or parties, if not represented by counsel) not later than
4:00 p.m. on the 7th day prior to the last day for filing or lodging (depending upon the presiding judge’s
procedures) the proposed pretrial stipulation.”).
LBR 7016-1(b)(1)(B) (“the pretrial stipulation must be filed or lodged (depending upon the procedures of the
presiding judge) and served not less than 14 days before the date set for the pretrial conference”).
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Local Bankruptcy Rule 7016-1(b)(2), contents
...a pretrial stipulation must include the following statements in the following sequence:
(A) “The following facts are admitted and require no proof:” ...
(B) “The following issues of fact, and no others, remain to be litigated:” ...
(C) “The following issues of law, and no others, remain to be litigated:” ...
(D) “Attached is a list of exhibits intended to be offered at the trial by each party, other than exhibits to be
used for impeachment only. The parties have exchanged copies of all exhibits.” ... If deposition testimony is
to be offered as part of the evidence, the offering party must comply with LBR 7030-1.
(E) “The parties have exchanged a list of witnesses to be called at trial.” ... The lists of witnesses must be
attached to the pretrial stipulation together with a concise summary of the subject of their proposed
testimony. If an expert witness is to be called at trial, the parties must exchange short narrative statements
of the qualifications of the expert and the testimony expected to be elicited at trial. If the expert to be
called at trial has prepared a report, the report must be exchanged as well.
(F) “Other matters that might affect the trial such as anticipated motions in limine, motions to withdraw
reference due to timely jury trial demand pursuant to LBR 9015-2, or other pretrial motions.”
(G) “All discovery is complete.”
(H) “The parties are ready for trial.” ...
25
Judge Zurzolo’s pretrial procedures
Judicial Variance Statement (May 1, 2013). “Judge Zurzolo requires that a pre-trial stipulation be filed, but not
separately lodged in LOU. ... Use Judge Zurzolo’s mandatory format for preparing a pretrial stipulation. It is
found on the ‘Forms’ page of his section of the court website. There are also instructions found on the
‘Instructions/Procedures’ page of his section of the court’s website. If a pretrial stipulation is approved, follow
the same instructions for preparing and lodging a pretrial order that approves the pretrial stipulation.”
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Judge Zurzolo’s pretrial stipulation (instructions)
http://www.cacb.uscourts.gov/sites/cacb/files/documents/judges/instructions/VZ_PTS.Instructions.pdf:
Each Pre-Trial Stipulation must contain the following:
a) Section I – Underlying Issues of Fact Common to Multiple Claims for Relief:
i) Only facts fundamental to the adversary proceeding should be included.
ii) Each fact should be stated in a separate paragraph.
iii) State whether each fact is contested or not contested. Please carefully consider whether facts
identified as contested are truly contested. The Court carefully reviews whether the Parties’
argument(s) and supporting evidence directly controvert the asserted fact.
iv) For each fact that is not contested, stating ‘not contested’ is adequate. For each contested fact, in
separate paragraphs provide a brief statement of each party’s argument and supporting evidence
including any admissions and proposed witnesses and exhibits.
v) No legal issues/assertions should be listed in this section.
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b) Section II – Claims for Relief:
i) Elucidate each claim for relief and specify the elements which establish the claim.
ii) State whether each element of the claim for relief is contested or not contested. Please carefully consider
whether an element identified as contested is truly contested. The Court carefully reviews whether the
Parties’ argument(s) and supporting evidence are relevant to the element being contested.
iii) For each element that is not contested, stating ‘not contested’ is adequate.
iv) For each contested element, in separate paragraphs, provide a brief statement of each party’s argument
(including a brief citation of authority supporting the position) and supporting evidence including any
admissions and proposed witnesses and exhibits.
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But we can’t agree on the contents, your honor!
Use “Plaintiff Smith contends” and “Defendant Jones contends.”
Please avoid dueling unilateral pretrial “stipulations.”
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Elements of claim for relief – cite to case?
How about this?
On Plaintiff Smith’s claim for relief under 11 U.S.C. §523(a)(2)(A) regarding material misrepresentations,
has Plaintiff Smith established: "(1) misrepresentation, fraudulent omission or deceptive conduct by
[Defendant Jones]; (2) knowledge of the falsity or deceptiveness of [Defendant Jones’] statement or
conduct; (3) [Defendant Jones’] intent to deceive; (4) justifiable reliance by the [Plaintiff Smith] on
[Defendant Jones’] statement or conduct; and (5) damage to [Plaintiff Smith] proximately caused by its
reliance on [Defendant Jones’] statement or conduct"? In re Harmon, 250 F.3d 1240, 1246 (9th Cir.
2001); In re Jacks, 266 B.R. 728, 733 (9th Cir. BAP (Cal.) 2001).
Did Defendant Jones make any misrepresentations to Plaintiff Smith regarding the purchase of XYZ, Inc.?
If so, what were such misrepresentations?
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c) Section III – Damages:
i) Plaintiff should specifically state damages claimed and how the damages are calculated.
ii) State whether the claim of damages is contested or not contested. Please consider that contesting liability
does not require contesting damages, and vice versa.
iii) If damages are not contested, stating “not contested” is adequate.
iv) If contested, in separate paragraphs provide a brief statement of each party’s argument and supporting
evidence including any admissions and proposed witnesses and exhibits.
Judge Zurzolo: Cross reference to Federal Rule of Civil Procedure 26(a)(1)(A).
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d) Section IV – Affirmative Defenses:
i) Elucidate each affirmative defense and specify the elements which establish the defense.
ii) State whether each element of the affirmative defense is contested or not contested.
iii) For each contested element, in separate paragraphs provide a brief statement of each party’s argument
(including a brief citation of authority supporting the position) and supporting evidence including any
admissions and proposed witnesses and exhibits.
32
e) Section V – Exhibits:
i) The Parties must attach and state that their exhibits are listed and attached to the Pre-Trial Stipulation in the
appropriate Appendix. Plaintiff’s exhibits are to be indexed and attached in Appendix 1. Defendant’s exhibits
are to be indexed and attached in Appendix 2.
ii) Each Party must identify which exhibits are stipulated to be admitted at trial and which are subject to
objection. The failure to object to the admission of exhibits listed on Appendices 1 and 2 shall be deemed a
waiver of any objection.
iii) If there is a dispute as to the admissibility of either party’s exhibits for any purpose which cannot be
remedied, NOT an evidentiary objection which may be remedied at trial (such as lack of foundation) or which
may only be determined at trial (such as relevance or hearsay where there may be a non-hearsay purpose for
offering the evidence), the objecting party must file and serve a Motion to Exclude concurrently
with the Pre-Trial Stipulation. See Section 3 below.
iv) Legible copies of each exhibit a party intends to use at trial must be attached to the Pre-Trial Stipulation
unless the exhibit is to be used for impeachment purposes only.
v) If any party is attaching deposition transcripts as an exhibit, please be aware that the Court requires strict
compliance with Local Bankruptcy Rule 7030-1(b).
33
Judge Bluebond likes one joint exhibit book,
with consistent identification of exhibits
Judge Zurzolo does not need a single joint exhibit book, but ask your judge.
The Central District of California’s IT committee is considering options for exhibits in the file and at trial.
34
f) Section VI – Witnesses to Be Offered by Each Party:
i)
The Parties must use the language in Section VI of the Model Pretrial Stipulation.
ii) In the appropriate appendix, each party must list the witnesses which the party intends to call to
testify at trial.
iii) For each witness listed, summarize the witness’ anticipated testimony and estimate the time needed
for the direct and cross examination of the witness. It is important to be as accurate as possible in
estimating the time needed as that is what the Court uses to allocate the appropriate amount of trial
time.
35
g) Section VII – Rebuttal Testimony and Stipulation:
i) The Parties must use the language in Section VII of the Model Pretrial Stipulation.
36
Motions to Exclude
a) As a general rule, motions to exclude evidence are only appropriate to object to patently inadmissible or
prejudicial evidence.
b) If there is any dispute as to the admissibility of either party’s evidence, the objecting party must file and
serve concurrently with the Pre-Trial Stipulation a motion to exclude the subject evidence with a supporting
memorandum of points and authorities.
c) Any response to the motion must be filed and served two court days prior to the pre-trial conference. All
objections to admission of exhibits must be resolved at the pre-trial conference.
37
Judge Zurzolo’s pretrial stipulation (model form)
http://www.cacb.uscourts.gov/sites/cacb/files/documents/judges/forms/VZ_Model%20PTS.pdf [minor edits below]
Second Claim: The debt should not be discharged because the debt was obtained by fraud or defalcation
while the Defendant was acting in a fiduciary capacity. (523(a)(4))
ELEMENTS OF THE CLAIM -- Defendant owed a fiduciary duty to Plaintiff. Contested.
Plaintiff: The Defendant and Plaintiff have been friends and lovers for many years. Their relationship is
based upon trust. It was reasonable for Plaintiff to believe that the loan would be repaid.
Evidence: Testimony of Joan Jones, Testimony of Annie Applegate.
Defendant: Recently, the relationship between Defendant and Plaintiff has been very strained. At the time
Plaintiff filed his bankruptcy petition, he was in the process of moving out of Plaintiff's house, and ending
their relationship. On numerous occasions prior to the petition date, Plaintiff accused Defendant of seeing
other women. Plaintiff would call work to see if Defendant had left for the day and be outraged if
Defendant didn't come straight home. Defendant frequently stated that she "didn't trust Defendant as far
as she could throw him.“ Evidence: Testimony of Dave Dill, Testimony of Sally Smith.
38
V. EXHIBITS TO BE OFFERED BY EACH PARTY AND OBJECTIONS TO EXHIBITS
PLAINTIFF'S EXHIBITS: Plaintiff's exhibits are attached to this order as Appendix 1. Defendant stipulates to the
admission and authenticity of the exhibits listed in Appendix 1.
DEFENDANT'S EXHIBITS: Defendant's exhibits are listed in and attached to Appendix 2 of this order. Plaintiff
stipulates to the admission and authenticity of the exhibits listed in Appendix 2 [and contests the admissibility
of the exhibits listed in the concurrently filed "Motion to Exclude Evidence."] ...
If there is a dispute as to the authenticity or admissibility of either party's exhibits, the objecting party shall file
and serve concurrently with this pre-trial stipulation any motion to exclude evidence with a supporting
memorandum of points and authorities. Any response to the motion shall be filed and served two court days
prior to the pre-trial conference. All objections to the admission of exhibits shall be resolved at the pre-trial
conference. The failure to so object to the admission of exhibits listed on Appendices 1 and 2 may be deemed a
waiver of any objection.
39
Pretrial stipulation and order are binding
Neilson v. United States (In re Olshan), 356 F.3d 1078, 1085 (9th Cir. Cal. 2004):
The trustee was bound by the pretrial order. See Fed. R. Civ. P. 16(e) (stating that the pretrial order "shall
control the subsequent course of the action unless modified by a subsequent order" and "shall be modified
only to prevent manifest injustice"); United States v. First Nat'l Bank of Circle, 652 F.2d 882, 886 (9th Cir.
1981). The bankruptcy court made no finding that enforcing the pretrial order would result in manifest
injustice. It was therefore error for the court to reject the unreported nonbusiness income and overstated
business deductions items.
N.Y. Skyline, Inc. v. Empire State Bldg. Co. L.L.C. (In re N.Y. Skyline, Inc.), 497 B.R. 700, 704, f.n. 5 (Bankr. S.D.N.Y.
2013) (“The pre-trial order supersedes the pleadings and becomes the governing pattern of the lawsuit.” [quotes
and citation omitted]).
Adelphia Recovery Trust v. FPL Group, Inc. (In re Adelphia Communs. Corp), 452 B.R. 484, 486 (Bankr. S.D.N.Y.
2011) (“...Fed. R. Civ. P. 16(b) provides that scheduling orders may be modified only for ‘good cause,’ and Rule
16(b) case law requires a showing of diligence....the request for leave to amend here is grossly untimely under
the Court's earlier scheduling orders—four years after the deadline. And it appears here that the late request
arises not by reason of ignorance of the potential defense, but because FPL Group's predecessor counsel thought
it could lie back and raise the Safe Harbor Defense whenever it chose to—a tactic that the Court finds to be
debatable in its legal reasoning, and offensive in its gamesmanship.”).
40
Federal Rule of Civil Procedure 16(f)
sanctions for non-cooperation
Kartzman v. Affordable Luxury Limousine Serv. (In re Claire Transp., Inc.), 2010 Bankr. LEXIS 3512, pp. 11, 19, 29
(Bankr. D.N.J. Oct. 1, 2010):
Lacking the timely submission of the Defendants' trial exhibits, the Trustee made a Motion in Limine to
Exclude Evidence and Testimony. ...The Trustee advanced three grounds for exclusion of exhibits and
testimony. First, he asked that exclusion be granted as a sanction under Federal Rule of Civil Procedure
("Rule") 16(f) for failure to obey the court's directive in the Fourth Amended Joint Scheduling Order that
all trial exhibits shall be filed seven (7) days prior to trial. ... Agreeing with the Trustee that the
Defendants' failure to timely provide discovery and to timely produce trial exhibits placed the Trustee at
an unfair disadvantage, the Court excluded the exhibits and the testimony thereon. ... The court based its
decision to exclude trial exhibits and testimony primarily on Rule 16(f) and Rule 37(b)(2)(A). It granted this
extraordinary relief only after repeatedly granting the Defendants extensions of time to comply with
deadlines contained in prior orders directing compliance with the Trustee's discovery requests. ... It is
recommended that the Defendants trial exhibits and testimony thereon be excluded as a sanction for
failure to comply with discovery orders and pretrial orders. This court also recommends that judgment be
entered against ATN and Zappone in the amount of $237,000, less amounts paid, for breach of contract
and that legal fees be allowed to the trustee in the amount of $83,495.
41
New claims for relief in pretrial stipulation/order?
Eagle v. American Tel. & Tel. Co., 769 F.2d 541, 548 (9th Cir. Cal. 1985):
We agree with the district court that the pretrial Status [Conference] Order precluded Eagle from
raising a new theory of relief at the summary judgment stage. The order provided that "no further
motions for leave to amend the complaint will be entertained except on showing of good cause based
on new facts that have come into existence subsequent to the date of this order." A Rule 16(e) order
controls the subsequent course of action in the litigation unless it is modified by a subsequent order.
Fed. R. Civ. P. 16(e). Although we liberally construe pretrial orders, a theory will be barred if not at least
implicitly included in the order. United States v. First National Bank of Circle, 652 F.2d 882, 886 (9th Cir.
1981). We find that the tax liability theory was not implicit in the pretrial order.
42
Kona Tech. Corp. v. Southern Pac. Transp. Co., 225 F.3d 595, 604 (5th Cir. Tex. 2000):
“It is a well-settled rule that a joint pretrial order signed by both parties supersedes all pleadings and
governs the issues and evidence to be presented at trial." McGehee v. Certainteed Corp., 101 F.3d
1078, 1080 (5th Cir. 1996); Branch-Hines v. Hebert, 939 F.2d 1311, 1319 (5th Cir. 1991). The claims,
issues, and evidence are narrowed by the pretrial order to expedite the proceeding. Elvis Presley
Enterprises, Inc. v. Capece, 141 F.3d 188, 206 (5th Cir. 1998). Once the pretrial order is entered, it
controls the scope and course of the trial. See Fed.R.Civ.Proc. 16. If a claim or issue is omitted from the
order, it is waived, even if it appeared in the complaint. Elvis, 141 F.3d at 206; Valley Ranch Dev. Co. v.
FDIC, 960 F.2d 550, 554 (5th Cir.1992); Flannery v. Carroll, 676 F.2d 126, 129 (5th Cir.1982). Because
Chevron omitted its claims of breach of fiduciary duty and forfeiture from the joint pre-trial order, they
are waived.
43
Malloy v. Mulkey Tire, Inc. (In re Universal Factoring Co.), 279 B.R. 297, 300-301 (Bankr. N.D. Okla. 2002):
One of the purposes for Rule 9(b) is "to afford defendant fair notice of plaintiff's claims and the factual
background upon which [they] are based . . ." Koch v. Koch Indus., Inc., 203 F.3d 1202, 1236 (10th Cir.
2000), cert. denied, 531 U.S. 926 (2000). Other reasons for the rule are to enable the defendant to
prepare a response and to deter frivolous claims. ...Where discovery is complete and the court has
entered a pretrial order, "none of the rationale for requiring fraud be pled with particularity apply,"
because the defendant has been made aware of "all of the details of the allegations from depositions,
interrogatories, and other discovery." ... In this case Mulkey filed the Motion more than four months
after the Court entered its Pretrial Order. As was the case in Safety Technologies, the Pretrial Order
spells out the Trustee's allegations in greater detail than do either of the complaints and controls the
course of this litigation. Mulkey does not argue that the allegations contained in the Pretrial Order are
deficient. ...to permit Mulkey to challenge the adequacy of the complaints at this late date, after the
issues have been framed in the Pretrial Order and the Trustee has come to rely on the same, would be
both prejudicial and unjust.”
44
Ehlen Floor Covering, Inc. v. Lamb, 909 F. Supp. 2d 1335, 1348 (M.D. Fla. 2012):
Plaintiffs' request to file an amended complaint to assert additional breaches of fiduciary duties by
defendants' alleged failure to adopt the Plan on behalf of the Affiliated Employers is denied. Although
Fed. R. Civ. P. 15(a)(2) governs leave to amend a Complaint, after the deadline for amendment has passed
the Court must consider the requirements of Fed. R. Civ. P. 16(b)(4), which provides that a Case
Management and Scheduling Order "may be modified only for good cause and with the judge's consent."
The Scheduling Order in this case controls the course of action unless modified. Sosa v. Airprint Sys., Inc.,
133 F.3d 1417, 1418 (11th Cir. 1998). To modify a Scheduling Order, a party must show good cause, and
the party must show that despite the party's diligence the deadline could not be met. Id., citing Fed. R.
Civ. P. 16. The deadline for amendments to the complaint has long passed and plaintiffs have not
provided the Court with any basis to conclude that despite its diligence, it could not have discovered that
the Plan was not adopted on behalf of the Affiliated Employers prior to the deadline set forth in the
Scheduling Order.
45
Judge Zurzolo, what could we do better?
Final words from Judge Zurzolo.
Cooperating with the opponent is effective advocacy. Explain this to your clients!
Designation and handling of expert witnesses.
46