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Adams v Island Homes Construction Inc [2002] FMSC 29; 11 FSM Intrm. 130 (Pon. 2002) (9 September 2002)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Adams v. Island Homes Constr., Inc.[2002] FMSC 29; , 11 FSM Intrm. 130 (Pon. 2002)

[2002] FMSC 29; [11 FSM Intrm. 130]

YVETTE ETSCHEIT ADAMS, d/b/a POHNPEI
ACE HARDWARE, and ADAMS BROTHERS
CORPORATION,
Plaintiffs,

vs.

ISLAND HOMES CONSTRUCTION, INC., FSM
DEVELOPMENT BANK, and PAULUS PERMAN,
Defendants.

CIVIL ACTION NO. 2000-012

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: September 9, 2002

APPEARANCES:

For the Plaintiff:
Craig D. Reffner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Defendant (FSM Dev. Bank):
James Woodruff, Esq.
Legal Counsel
P.O. Box M
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Discovery
A bank's internal confidentiality policy is not dispositive as to whether its records are subject to discovery. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 131 (Pon. 2002).

Civil Procedure - Discovery
Discovery restrictions may be broadened when a nonparty is the target. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 131 (Pon. 2002).

Civil Procedure - Discovery
Records which are confidential, but not asserted to be privileged, are discoverable because parties may obtain discovery regarding any matter, not privileged, which is relevant to the pending action's subject matter. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002).

[11 FSM Intrm. 131]

Civil Procedure - Discovery
The party resisting discovery has the burden of clarifying and explaining its objections and to provide support therefor. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002).

Civil Procedure - Discovery
The mere fact that discovery is burdensome is not a sufficient objection to that discovery provided the information sought is relevant or may lead to discovery of admissible evidence. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002).

Civil Procedure - Discovery
A party, assuming that it is being truthful, may refuse discovery on the basis that it does not have the documents requested because it cannot produce documents that it does not have, but it must produce documents regardless of whether they are named by the document's actual title or not because it may not evade discovery through semantic equivocation. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002).

Civil Procedure - Discovery
When a party has stated it has already produced the documents, it need not produce those documents again, but it must specifically identify the documents previously produced that are responsive to the requests. Adams v. Island Homes Constr., Inc., [2002] FMSC 29; 11 FSM Intrm. 130, 132 (Pon. 2002).

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COURT'S OPINION

MARTIN YINUG, Associate Justice:

On July 26, 2002, the plaintiffs filed their most recent motion to compel discovery; the defendant FSM Development Bank ("the Bank") filed its response on August 5, 2002; and the plaintiffs filed their reply on August 19, 2002.

Issues in this case involve a construction loan made by the Bank, and the plaintiffs seek to discover, as part of their May 31, 2002, production request, the Bank's files for other construction loans to non-party borrowers for specified construction projects. The plaintiffs argue that if those records show that the Bank disbursed loan proceeds to suppliers directly, and not to the borrowers, then this shows the Bank's practice is this respect. Plaintiffs contend that the Bank agreed to direct payment of suppliers in the case at bar. Citing no authority, the Bank contends that the records sought are not relevant because they involve non-parties as the borrowers. The Bank also claims that it is the Bank's practice to maintain confidentiality as to records of this sort.

The Bank's internal confidentiality policy is not dispositive. Cf. Sig M. Glukstad v. Lineas Aereas Nacional-Chile, 656 F.2d 976, 978 (5th Cir. 1981) (holding that a party should not be allowed to defeat discovery simply by stating that it has contracted to not to reveal certain information). However, discovery restrictions may be broadened when a nonparty is the target. Dart Indus. Co. v. Westwood Chem. Co., [1980] USCA9 327; 649 F.2d 646, 649 (9th Cir. 1980) (noting "‘[t]here appear to be quite strong considerations indicating that . . . discovery would be more limited to protect third parties from harassment, inconvenience, or disclosure of confidential documents’" (quoting Collins & Aikens Corp. v. J.P. Stevens & Co., 51 F.R.D. 219, 221 (D.S.C. 1971)). The documents sought by the plaintiffs are probative as to the Bank's practice with respect to direct payment of suppliers in construction contract settings. While the Bank contends that these records are confidential, it does not assert that

[11 FSM Intrm. 132]

this information is privileged. "Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action." FSM Civ. R. 26(b)(1).

The Bank will make the records for the other specified construction projects available to plaintiffs' counsel for a preliminary examination at its offices during business hours on Tuesday, Wednesday, and Thursday, September 10-12. Plaintiffs' counsel will keep any information gathered confidential, and will not reveal it to anyone absent further order of court. Based on the preliminary examination, plaintiffs' counsel will advise the court generally of the categories of documents, if any, he wishes to copy and why and how the information will be used. The court will then issue the appropriate order as to how the documents will be copied and used.

The party resisting discovery has burden of clarifying and explaining its objections and to provide support therefor. Tele-Radio Sys. Ltd. v. De Forest Electronics, Inc., 92 F.R.D. 371, 375 (D.N.J. 1981); Zucker v. Sable, 72 F.R.D. 1, 3 (S.D.N.Y. 1975). The mere fact that discovery is burdensome is not a sufficient objection to that discovery provided the information sought is relevant or may lead to discovery of admissible evidence. Alexander v. Parsons, 75 F.R.D. 536, 539 (W.D. Mich. 1977). In response to certain of the production requests, the Bank recites that the "FSMDB does not organize the type of record sought by this request in any manner in which it can be easily retrieved." See FSMDB Response to Second Request for Production at 14 (July 1, 2002). Without more, this does not adequately meet the Bank's burden of clarifying and explaining its objections and providing support for those objections. The Bank will fully respond to these production requests if this qualification means that it has not done so already.

To the extent that the Bank has refused discovery on the basis that it does not have the documents requested, this court proceeds on the assumption that the Bank is being truthful. The Bank cannot produce documents that it does not have, with the proviso that the Bank is expressly ordered to produce the document that the Bank president, Ms. Mendiola, referred to in her deposition as the "Administration Manual," regardless of whether this is the actual title of the document or not. The Bank may not evade discovery through semantic equivocation. Where the Bank has stated it has already produced documents, it need not produce those documents again. It will, however, specifically identify the documents previously produced that are responsive to the requests.

In sum, with the qualifications noted above, the Bank will respond completely to the plaintiffs' May 31, 2002, discovery requests. The documents required for production will be produced for copying at the plaintiffs' counsel's office at an agreed upon time or times during the week of September 15, 2002. Plaintiffs' counsel will keep the copies of the Bank's current internal operations manuals confidential, and will not disclose information from the manuals without first advising the court of the use intended. The court will then make the appropriate order.

The prior orders indicating that the pending motions for sanctions and attorney's fees would be disposed of at time of trial are vacated to the extent, and only to the extent, that the orders indicated the disposition of the motions and requests would be at the time of trial. Responses to all pending motions for sanctions and attorney's fee requests which have not already been responded to will be filed on or before September 23, 2002. The court will then enter an order on those motions and fee requests.

An order addressing the remaining pending motions will be forthcoming.

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