Opinion
Case No. 2:05-cv-462.
January 19, 2006
OPINION AND ORDER AND REPORT AND RECOMMENDATION
This is an action brought by the Law Office of James P. Connors ("plaintiff") for breach of contract, fraud, fraudulent conveyance, securities fraud, quantum meruit, and promissory estoppel in connection with the alleged failure of defendants Douglas Alan Cohn, Kathryn J. Cohn, H-Quotient, Inc. and Standard Holdings Group Ltd. (collectively "defendants") to pay for legal services provided by plaintiff. This matter is before the Court on the Motion of Defendants for Protective Order, Doc. No. 20, the Memorandum Contra Motion of Defendants to Dismiss Plaintiff's Complaint or, in the Alternative, Transfer to the United States District Court for the Eastern District of Virginia and Plaintiff's Motion for Leave to File Supplemental Memorandum Pending Completion of Discovery Necessary to Fully Respond to Defendants' Motion to Dismiss, (" Plaintiff's Motion to File Supplemental Memorandum"), Doc. No. 21, and on the Motion of Defendants to Dismiss Plaintiff's Complaint, or in the Alternative, Transfer to the United States District Court for the Eastern District of Virginia (" Defendants' Motion to Dismiss or Transfer"), Doc. No. 15.
For the reasons set forth below, Plaintiff's Motion for Leave to File Supplemental Memorandum is DENIED as moot and the Motion of Defendants for Protective Order is DENIED. Defendants are given thirty (30) days from the date of this Opinion and Order and Report and Recommendation to respond to plaintiff's jurisdiction-related discovery requests. In addition, it is RECOMMENDED that Defendants Motion to Dismiss or Transfer be DENIED without prejudice to refiling within thirty (30) days after serving their responses to plaintiff's jurisdiction-related discovery requests. Defendants are given until that date to either answer or otherwise respond to plaintiff's complaint.
I. FACTS
Plaintiff filed this action on May 11, 2005. In the Complaint, plaintiff claims that in 2003 it was retained to perform legal services for Douglas Alan Cohn and H-Quotient Inc. in a case filed in this Court captioned Ohio Hospital Ass'n v. H-Quotient, Inc. et al., Case No. 01-cv-1245. Complaint, at ¶ 5. In addition, plaintiff later provided additional consulting and legal services for other legal matters pending in Ohio. Id., at ¶ 6.
In 2004, Mr. Cohn retained plaintiff to assist in other legal matters in cases pending in Ohio, New York, Utah, Oregon, Virginia, and Washington D.C. Id., at ¶ 8. Plaintiff contends that it spent extraordinary time and expense on a case titled Rao v. H-Quotient, which was tried in Virginia. Id. Ultimately, the defense prevailed in the Rao case and it was also granted a judgment of $385,000 on its counterclaims. Id., at ¶ 21.
Plaintiff alleges that it advanced funds for expenses incurred in his representation of defendants for which it has not been reimbursed and that it has not been paid for much of its legal services. Id., at ¶¶ 11, 12. Additionally, Plaintiff alleges that it was promised free trading stock in H-Quotient and Standard Holdings Ltd, both publicly traded companies, but that it had not received said stock or that what it received cannot be traded. Id., at ¶¶ 14-20.
On May 23, 2005, plaintiff served upon defendants its first request for production of documents. Doc. No. 8. On June 6, 2005, defendants filed their first request for a protective order asking to be relieved from responding to plaintiff's first discovery requests because the parties had not yet conferred as required under Fed.R.Civ.P. 26(d) and (f). Doc. No. 13.
On June 21, 2001, defendants filed Defendants' Motion to Dismiss or Transfer. Doc. No. 15. In that motion, defendants argue that this Court cannot exercise personal jurisdiction over Kathryn J. Cohn or Standard Holdings Ltd. and that venue is also improper in this Court. Plaintiff has opposed this motion; however, it has also filed Plaintiff's Motion to File Supplemental Memorandum, arguing that it could not adequately respond to Defendants' Motion to Dismiss or Transfer because defendants have not responded to plaintiff's first discovery requests. Doc. No. 21.
On July 7, 2005, defendants withdrew their previously filed motion for a protective order. Doc. No. 19. On that same day, defendants filed Motion of Defendants for Protective Order. Doc. No. 20. In that motion, defendants ask to be protected from being required to respond to plaintiff's first request for production of documents. That motion is fully at issue.
On July 27, 2005, a preliminary pretrial conference was held before this Court. The following day, the Court issued an Order in which it stated, inter alia, that "only jurisdiction-related discovery will be permitted at this juncture." Doc. No. 26. The Court also permitted plaintiff to file a supplemental memorandum opposing the Motion of Defendants for Protective Order, in which it was to "identify that discovery necessary to the resolution of the jurisdictional issue."
On August 10, 2005, plaintiff filed its Supplemental Memorandum Contra Motion of Defendants Douglas Alan Cohn and Kathryn Cohn for a Protective Order (" Plaintiff's Supplemental Memorandum Contra Defendants' Motion for Protective Order"). Doc. No. 27. On August 24, 2005, defendants filed Reply of Defendants Douglas Alan Cohn and Kathryn J. Cohn to Plaintiffs's Memorandum Contra and Supplemental Memorandum Contra Motion for Protective Order (" Defendants' Reply in Support of their Motion for Protective Order"). Doc. No. 28.
II. ANALYSIS
A. Defendants' Motion for Protective Order
Rule 26(c) provides for issuance of a protective order and in relevant part provides:
(c) Protective Orders. Upon motion by a party or by the person from whom discovery is sought, accompanied by a certification that the movant has in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action, and for good cause shown, the court in which the action is pending or alternatively, on matters relating to a deposition, the court in the district where the deposition is to be taken may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following:
(1) that the disclosure or discovery not be had;
. . . .
(4) that certain matters not be inquired into, or that the scope of the disclosure or discovery be limited to certain matters;
Fed.R.Civ.P. 26(c). As noted, the Court is authorized to issue a protective order only after a showing that good cause exists for the protection of the material. The party requesting the protective order has the burden of demonstrating good cause. Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995). "Good cause" is established when it is specifically demonstrated that disclosure will cause a clearly defined and serious injury. Id.
The Court is satisfied that defendants have in good faith conferred with plaintiff in an effort to resolve the dispute without judicial intervention. See Affidavit of Michael L. Close, Exhibit B to Motion of Defendants for Protective Order.
Defendants request that the Court issue an order to protect them from being required to respond to plaintiff's document requests that were served upon them on May 23 and 24, 2005. Motion of Defendants for Protective Order, at 2. Defendants contend that the discovery requests are irrelevant, overly broad and designed to injure or harass. Defendants' Reply in Support of Their Motion for Protective Order, at 1. Additionally, defendants claim that plaintiff has misrepresented the facts related to the jurisdiction of Mrs. Cohn and Standard Holdings Ltd.
Contrarily, plaintiff contends that it needs the requested discovery to sufficiently oppose defendants' pending motion to dismiss or in the alternative to transfer, in which defendants argue, inter alia, that this Court cannot exercise personal jurisdiction over Kathryn J. Cohn and Standard Holdings Ltd. and that they should be dismissed as defendants under Fed.R.Civ.P. 12(b)(2). Plaintiff's Supplemental Memorandum Contra Motion of Defendants' for a Protective Order, at 3-4. Plaintiff takes the position that express provisions of Ohio's long-arm statute provide for personal jurisdiction over Mrs. Cohn and Standard Holdings Ltd. See O.R.C. § 2307.382. Specifically, plaintiff contends that it needs information related to the assets and liabilities of defendants so that it can support its allegations that Mrs. Cohn and Standard Holdings Ltd. conduct business in Ohio and/or supply services and goods in Ohio and to establish the nature of Mr. and Mrs. Cohn's relationship with Standard Holdings Ltd. and H-Quotient, Inc. so that it can support its contention that defendants have fraudulently transferred assets and liabilities between themselves and other members of their family to avoid their debt to plaintiff. Plaintiff argues that, if proven with the aid of jurisdiction-related discovery, its allegations would establish contacts with this state necessary to fall within the reach of Ohio's long-arm statute. Plaintiff's argument is well-taken.
O.R.C. § 2307.382. Personal jurisdiction
(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
. . . .
(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;. . . .
(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state;
(7) Causing tortious injury to any person by a criminal act, any element of which takes place in this state, which he commits or in the commission of which he is guilty of complicity.
This Court is given broad discretion in determining when to rule on a motion to dismiss for lack of personal jurisdiction filed under Rule 12(b)(2).
The case law establishes a settled procedural scheme to guide trial courts in the exercise of this discretion. If it decides that the motion can be ruled on before trial, the court "may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2nd Cir. 1981).Serras v. First Tennessee Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989). The plaintiff, however, always bears the burden of establishing personal jurisdiction. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Weller v. Cromwell Oil Co., 504 F.2d 927, 929 (6th Cir. 1974). Recognizing that defendants contested this Court's exercise of personal jurisdiction over Mrs. Cohn and Standard Holdings Ltd, the preliminary pretrial order entered in this case provided that "jurisdiction-related discovery will be permitted at this juncture."
Accordingly, the Court concludes that plaintiff is entitled to jurisdiction-related discovery even if such discovery also relates to the merits of the claims or defenses. The Court further concludes that defendants have not met their burden of establishing good cause for a protective order to preclude that discovery. Defendants are ORDERED to respond to plaintiff's jurisdiction-related discovery requests within thirty (30) days of the date of this Opinion and Order and Report and Recommendation. Moreover, while defendants may object to certain of the requests or to the breadth of certain requests, they must clearly articulate the reasons for the objection and must in any event respond to that portion of the request to which no objection may properly be made. See Fed.R.Civ.P. 34(b).
B. Defendants' Motion to Dismiss or Transfer and Plaintiff's Motion to File Supplemental Memorandum
In the Defendants' Motion to Dismiss or Transfer, defendants argue that this Court cannot exercise personal jurisdiction over Kathryn J. Cohn and Standard Holding Ltd. Doc. No. 15. In addition, all defendants contend that venue is improper in this Court and that this action should be transferred to the United States District Court for the Eastern District of Virginia. Id.
In opposition, plaintiff, inter alia, argues that, in the absence of discovery from defendants, it cannot meaningfully respond to the Defendants' Motion to Dismiss or Transfer. Indeed, plaintiff's Motion for Leave to File Supplemental Memorandum seeks leave to file a supplemental memorandum opposing Defendants' Motion to Dismiss or Transfer after its requested discovery. Doc. No. 21.
Because the Court has concluded that plaintiff is entitled to jurisdiction-related discovery, Defendants' Motion to Dismiss or Transfer, Doc. No. 15, should be denied without prejudice to refiling within thirty (30) days after defendants serve their jurisdiction-related discovery responses upon plaintiff. Similarly, Plaintiff's Motion for Leave to File Supplemental Memorandum, Doc. No. 21, is denied as moot. Of course, if defendants choose to refile Defendants' Motion to Dismiss or Transfer, plaintiff may respond in accordance with the Federal Rules of Civil Procedure and the local rules of this Court.
WHEREUPON, in light of the foregoing:
(1) Plaintiff's Motion for Leave to File Supplemental Memorandum Pending Completion of Discovery Necessary to Fully Respond to Defendants' Motion to Dismiss, Doc. No. 21, is DENIED as moot. If defendants chose to refile their motion to dismiss or transfer, plaintiff may respond to it according to the Federal Rules of Civil Procedure and the local rules of this Court;
(2) The Motion of Defendants for Protective Order, Doc. No. 20, is DENIED. Defendants are ORDERED to respond to plaintiff's jurisdiction-related discovery requests within thirty (30) days of the date of this Opinion and Order and Report and Recommendation; and
(3) It is RECOMMENDED that the Motion of Defendants to Dismiss Plaintiff's Complaint, or in the Alternative, Transfer to the United States District Court for the Eastern District of Virginia, Doc. No. 15, be DENIED without prejudice to refiling within thirty (30) days after defendants serve their responses to plaintiff's jurisdiction-related discovery requests. Defendants are given until that date to answer or otherwise respond to plaintiff's complaint.
If any party seeks review by the District Judge of this Report and Recommendation, that party may, within ten (10) days, file and serve on all parties objections to the Report and Recommendation, and the part thereof in question, as well as the basis for the objection thereto. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Responses to objections must be filed within ten (10) days after being served with a copy thereof. Fed.R.Civ.P. 72(b).
The parties are specifically advised that failure to object to the Report and Recommendation, will result in a waiver of the right to de novo review by the District Judge and of the right to appeal the decision of the District Court adopting the Report and Recommendation. See Thomas v. Arn, 474 U.S. 140 (1985); Harris v. City of Akron, 20 F.3d 1396 (6th Cir. 1994); Smith v. Detroit Fed'n of Teachers, Local 231, Am. Fed'n of Teachers, AFL-CIO, 829 F.2d 1370 (6th Cir. 1987).