Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ashmore v. Allied Energy Inc.

United States District Court, D. South Carolina, Anderson/Greenwood Division

May 18, 2016

Beattie B. Ashmore, In His Capacity as Court-Appointed Receiver for Ronnie Gene Wilson and Atlantic Bullion and Coin, Inc., Plaintiff(s),
v.
Allied Energy, Inc., Defendant.

          ORDER AND OPINION

         Plaintiff Beattie B. Ashmore (“Plaintiff”), in his capacity as court-appointed receiver for Ronnie Gene Wilson (“Wilson”) and Atlantic Bullion and Coin, Inc. (“AB&C”), filed the instant action against Defendant Allied Energy, Inc. (“Defendant”), to recover money from the Wilson-AB&C Ponzi scheme[1] used to purchase an investment interest in 2 oil wells that were to be drilled in Grimes County, Texas. (See ECF No. 1.)

         This matter is before the court pursuant to Plaintiff’s Motion for Rule to Show Cause for Sanctions pursuant to Fed.R.Civ.P. 37. (ECF No. 62.) Specifically, Plaintiff moves for an order compelling Defendant “to appear before the Court and show cause why the Court should not find Defendant in contempt and order such sanctions as are just for its failure to comply with the Court’s Orders dated December 9, 2015 and January 25, 2016.” (Id. at 1 (citing ECF Nos. 51, 61).) Defendant opposes Plaintiff’s Motion for Rule to Show Cause in its entirety. (ECF No. 63.) For the reasons set forth below, the court DENIES WITHOUT PREJUDICE Plaintiff’s Motion for Rule to Show Cause.

         I. RELEVANT BACKGROUND TO PENDING MOTION

         Plaintiff is the court appointed Receiver in In Re: Receiver for Ronnie Gene Wilson and Atlantic Bullion & Coin, Inc., C/A No. 8:12-cv-02078-JMC, ECF No. 1 (D.S.C. July 25, 2012), a case related to the instant matter. Defendant develops oil and gas wells in Oklahoma and Texas. (ECF No. 12 at 1.)

         Plaintiff alleges that “[o]n or about February 19, 2011, Cassie Wilson, at the direction of and in concert with Ronnie Wilson, signed a subscription agreement for the purchase of [an investment interest in] one unit of [an oil well project identified as] 2011 Allied Grimes #3 PUD JV and paid the amount of $104, 448.00 via a wire transfer.” (ECF No. 1 at 5 ¶ 31.) Plaintiff further alleges that “[o]n or about April 15, 2011, Cassie Wilson, at the direction of and in concert with Ronnie Wilson, signed a subscription agreement for the purchase of [an investment interest in] one unit in the [an oil well] partnership named Grimes County #4 and paid the amount of $128, 428.00 for one unit via a wire transfer.” (Id. at ¶ 36.) In conjunction with the foregoing, Plaintiff alleges that Defendant was aware that investment by Cassie Wilson was made using funds that flowed directly from the Wilson-AB&C Ponzi scheme. (Id. at 1 ¶ 14, 5 ¶ 34 & 6 ¶ 39.)

         Based on his appointment as Receiver tasked with “locating, managing, recouping, and distributing the assets of the Wilson-AB&C investment scheme, ” Plaintiff commenced the instant action against Defendant on January 27, 2014, seeking to rescind the securities investment in the 2 aforementioned wells and recover approximately $232, 876.00 in damages. (ECF No. 1 at 1 ¶ 1 & 8 ¶ 59-11 ¶ 82.) In response to Plaintiff’s Complaint, Defendant filed an Answer on April 4, 2014. (ECF No. 9.)

         Thereafter, Plaintiff served his First Set of Interrogatories and First Set of Requests to Produce on Defendant on or about April 1, 2015. (ECF No. 37-1 at 3.) Defendant served responses to these discovery requests on or about June 26, 2015. (ECF No. 37-3 at 34.) Because of perceived deficiencies in Defendant’s discovery responses, Plaintiff filed a Motion to Compel on September 2, 2015, seeking to have Defendant “more fully and accurately respond to Interrogatories Nos. 1, 2, 8, 9, 10, 11, 12, 14, 20, 22, 23, 24 and Requests for Production Nos. 10, 12, 13, 15, 16, 17, 21, 25, 26, 32, and 33 . . . .” (ECF No. 37 at 1.) The court granted Plaintiff’s Motion to Compel on December 9, 2015, and ordered Defendant “to respond to Plaintiff’s discovery requests addressed in its Motion to Compel (ECF No. 37) . . . .” (ECF No. 51 at 3.)

         On December 15, 2015, Defendant filed a Motion to Clarify seeking permission to either (1) charge Plaintiff a reasonable copying cost of $1.00 per page to copy and produce documentation in compliance with the court’s order or (2) require “Plaintiff’s counsel to come to . . . [Defendant’s] headquarters in Bowling Green, Kentucky so that Plaintiff can inspect and copy the documents that are desired by Plaintiff.” (ECF No. 52 at 2.) On January 8, 2016, Defendant electronically transmitted Supplemental Answers to Plaintiff’s First Set of Interrogatories (ECF No. 62-5) and “provided Plaintiff with the username and password for an internet server where Plaintiff could download 96 gigabytes of purportedly responsive data- well over 19, 737 documents-and a table of contents identifying 50 categories of documents within the production set.” (ECF No. 62 at 3-4.) On January 25, 2016, the court denied Defendant’s Motion to Clarify and ordered it to “produce all documentation required by the December 9, 2015 Order (ECF No. 51) granting Plaintiff’s Motion to Compel (ECF No. 37) within fourteen (14) days . . . .”

         After Defendant failed to address any further deficiencies in its production of documents as identified by Plaintiff (see ECF No. 62-6), Plaintiff filed the instant Motion for Rule to Show Cause on March 16, 2016. (ECF No. 62.) Defendant filed a Response to Plaintiff’s Motion for Rule to Show Cause on April 4, 2016, to which Plaintiff filed Reply to Defendant’s Response to Plaintiff’s Motion for Rule to Show Cause on April 14, 2016. (ECF Nos. 63, 64.)

         II. JURISDICTION

         The court has jurisdiction over this matter under 28 U.S.C. § 1331 pursuant to Plaintiff’s allegation that the Complaint “is so related to the In Re Receiver case and the underlying criminal case, United States v. Wilson, et al[, ]” cases in which the court has jurisdiction, “that it forms part of the underlying case or controversy.” (ECF No. 1 at 1 ¶ 2.) The court may properly hear Plaintiff’s state law claims for violation of South Carolina’s Securities Laws and contract rescission based on supplemental jurisdiction since these claims “are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . . .” 28 U.S.C. § 1367(a).

         III. LEGAL STANDARD

         Fed. R. Civ. P. 37 (“Rule 37”) permits the district court to enter orders compelling discovery and to impose an array of sanctions for the failure to comply with such orders. Fed.R.Civ.P. 37(b)(2)(A). Rule 37(b)(2)(A) governs the appropriate sanctions for failure to obey a discovery order, stating in pertinent part: “If a party . . . fails to obey an order to provide or permit discovery . . . the court . . . may issue further just orders . . . [including] . . . dismissing the action or proceeding in whole or in part; rendering a default judgment against the disobedient party; or treating as contempt of court the failure to obey any order . . . .” Fed.R.Civ.P. 37(b)(2)(A). “In exercising its discretion to select sanctions appropriate to the particular violation, however, the district court should consider four factors: (1) whether the noncomplying party acted in bad faith; (2) the amount of prejudice his noncompliance caused his adversary, which necessarily includes an inquiry into the materiality of the evidence he failed to produce; (3) the need for deterrence of the particular sort of noncompliance; and (4) the effectiveness of less drastic sanctions.” McKenna v. Sovran Bank NA, 836 F.2d 546, 1987 WL 30159, at *3 (4th Cir. 1987) (citations omitted). “A district court must consider all of these factors; however, no one factor is dispositive.” Elmore v. City of Greenwood, C/A No. 3:13-cv-01755-TLW-KDW, 2015 WL 3868068, at *7 (D.S.C. June 23, 2015) (quoting Cox v. Deal, No. CIV. 2:09-CV-2715, 2011 WL 3418397, at *5 (D.S.C. Aug. 3, 2011)).

         “In general, the drastic sanctions of dismissal and default are appropriate only where the noncomplying party’s conduct represents such flagrant bad faith and callous disregard for his obligations under the Rules that the sanctions are warranted not merely to prevent prejudice to his current adversary, but also to deter those who might be tempted, in the future, to engage in similar misconduct.” McKenna, 1987 WL 30159, at *3 (citation omitted). ‚ÄúNevertheless, in considering what sanctions are appropriate, the court must focus on determining a sanction that fits the case at hand, considering the potential harm to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.