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First Benefits, Inc. v. Amalgamated Life Insurance Co.

United States District Court, M.D. Georgia, Macon Division

December 8, 2014



MARC T. TREADWELL, District Judge.

Before the Court is Defendant Amalgamated Life Insurance Company's ("ALICO") amended motion for summary judgment. (Doc. 49). Plaintiffs First Benefits, Inc. ("First Benefits") and Union Services of America, LLC ("Union Services") assert various claims arising out of an alleged partnership between ALICO and the Plaintiffs. After oral argument on ALICO's original motion for summary judgment (Doc. 33), the Court ordered ALICO to amend its motion to address whether the terms of the alleged partnership agreement have been sufficiently shown so that the agreement is capable of enforcement (Doc. 47). For the following reasons, the amended motion for summary judgment is GRANTED in part and DENIED in part.


A. Failure to Disclose/Supplement Under Rule 26

1. Damages

ALICO objects to the Plaintiffs' evidence on their theory and computation of damages. Rule 26 requires parties to make certain initial disclosures without awaiting a discovery request, including "a computation of each category of damages claimed, " and to supplement their disclosures if "in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed.R.Civ.P. 26(a)(1)(A)(iii), (e)(1)(A). Pursuant to Fed.R.Civ.P. 37(c)(1), "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." However, "[i]n addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure; (B) may inform the jury of the party's failure; and (C) may impose other appropriate sanctions...." Fed.R.Civ.P. 37(c)(1)(A)-(C).

Because of the Plaintiffs' claim for accounting, ALICO's objection is largely moot.[1] Nonetheless, it is clear the Plaintiffs failed to provide a computation of their lost profits theory of damages.[2] Because the Plaintiffs have not responded to ALICO's objection and thus have provided no explanation, the Court cannot say their failure to disclose this information was substantially justified. Further, due to the fact discovery closed in February and it seems the Plaintiffs had not fully formulated their theory of damages until their latest response brief, [3] which was filed on September 11, 2014, the Court cannot say the failure was harmless.

The Court could decline to consider the Plaintiffs' evidence on damages at all. Fed.R.Civ.P. 37(c)(1). However, the Court does not believe the exclusion sanction is appropriate in this case due to the fact that there has been a failure to conduct meaningful discovery on both sides.[4] At the pretrial conference, the Court will determine the appropriate sanction, most likely an instruction to the jury.

2. Affidavit of Josh Spivak

ALICO objects to Josh Spivak's affidavit because Spivak, who is associated with Benefit Associates, [5] was not named in the Plaintiffs' initial disclosures. See Fed.R.Civ.P. 26(a)(1)(A)(i) (requiring the Plaintiffs to disclose the name and contact information of "each individual likely to have discoverable information... that [they] may use to support [their] claims or defenses"). The Plaintiffs contend their failure to disclose was harmless because it does not surprise or prejudice ALICO. While it is true that Benefit Associates has been mentioned throughout this litigation, there are only two references to Spivak that the Parties have pointed to: (1) an interrogatory response where he and several other individuals are listed, and (2) a topic noticed for ALICO's Rule 30(b)(6) deposition where he is erroneously referred to as John Spivak. (Docs. 32-1 at 8; 43-6 at 6). This is hardly adequate notice to ALICO that Spivak might have discoverable information the Plaintiffs intend to rely on to support their claims. Though ALICO did not conduct much discovery, the Court cannot fault it for failing to depose someone it did not know the Plaintiffs would rely on to support their case. Therefore, exclusion is an appropriate sanction. See Fed.R.Civ.P. 37(c)(1). The Plaintiffs are prohibited from relying on testimony from Spivak.

B. Roscoe Douglas's Affidavits

The Plaintiffs submitted two affidavits of Roscoe Douglas, who is the Plaintiffs' sole owner. ALICO first objects to Exhibit B to Douglas's first affidavit because it is an incomplete string of emails. ALICO attaches the complete string of emails to its notice of objection but also notes that even the "complete" string of emails produced to it during discovery is missing the top portion. The Plaintiffs explain the top portion of the email was redacted because it was forwarded to counsel and contained privileged information. Yet, the Plaintiffs did not provide a privilege log as ALICO requested. See Fed.R.Civ.P. 26(b)(5)(A) (explaining party claiming privilege must expressly make the claim and "describe the nature of the documents... not produced or disclosed" to "enable other parties to assess the claim"). ALICO's contention that the email chain is incomplete is not a proper basis for exclusion. Rather, ALICO may introduce other parts "that in fairness ought to be considered at the same time." Fed.R.Evid. 106. ALICO did this by filing the rest of the email chain produced to it. Though the Plaintiffs should have complied with Rule 26(b)(5)'s requirements in redacting the top portion of the email, ALICO has not asked the Court to assess their claim of privilege.

ALICO also objects to two statements in Douglas's first affidavit as inadmissible hearsay: (1) "I was informed that hiring Benefit Associates to enroll the account was a business decision"; and (2) "At this meeting I reminded Amalgamated that First Benefits and USA had brought Boston Mutual's account to Amalgamated; helped facilitate the partnership between Amalgamated, Boston Mutual and USA/First Benefits; and had continued to share the profits on all enrollments per the partnership agreement." (Doc. 36-1, ¶ 20). The affidavit makes it clear that representatives of ALICO made the first statement to Douglas. Thus, it is an admission of a party-opponent and therefore not hearsay. Fed.R.Evid. 801(d)(2). As to the second statement, it is not hearsay if not considered for the truth of the matter asserted, i.e., that the Plaintiffs actually did the things in the statement. Fed.R.Evid. 801(c).

Finally, ALICO objects to several statements in both Douglas's first affidavit (Doc. 36-1, ¶¶ 6-12, 15, 16, 18, 20-22, 25) and supplemental affidavit (Doc. 51-2, ¶¶ 4-16) as being conclusory. For the majority of these statements, the Court disagrees. Some of the statements ALICO cites, such as those referring to the Parties as "partners" or saying the October 22, 2004 letter "solidified the partnership, " could be deemed conclusory in isolation. However, the statements must be read in the context of the affidavit as a whole. The fact that Douglas calls the Parties "partners" or says they split "profits" is certainly not enough to create a genuine issue of fact on whether there was a partnership. But ...

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