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Transcap Associates, Inc. v. Euler Hermes American Credit Indemnity Co.

October 9, 2009


The opinion of the court was delivered by: Michael T. Mason, United States Magistrate Judge.

Hon. Judge John W. Darrah


Plaintiff Transcap Associates, Inc. ("Transcap") has filed three motions against defendant Euler Hermes American Credit Indemnity Company ("Euler") that are presently before this Court. Transcap moves for sanctions and to compel Euler to comply with our June 3, 2009 Order [68] (the "motion to compel"). Plaintiff also filed a motion to strike the declaration of Andrew Saulitis [78] (the "motion to strike"), and a motion for leave to take more than ten depositions and to compel deposition scheduling [90] (the "motion for leave"). This Court heard oral arguments on those motions on September 30, 2009. After carefully considering the arguments set forth in the parties' briefs and those raised by their counsel in open court, we find that Euler has failed to comply with our prior Order and with its discovery obligations under the Federal Rules of Civil Procedure in the manner set forth below. Consistent with those findings, Transcap's motion to compel and motion for leave are granted in part and denied in part, and Transcap's motion to strike is denied.


This is an insurance coverage action brought by Transcap against Euler and its employee Robert M. Francisco ("Francisco") following the denial of coverage for claims made under a domestic markets business credit insurance policy (the "Policy"). Transcap purchased the Policy with an initial term of August 15, 2004 through August 14, 2005. The parties renewed the Policy on an annual basis, extending coverage through August 14, 2007. It is undisputed that Transcap paid the premium for the Policy, that Transcap subsequently filed claims under the Policy for non-payment of goods sold to non-parties Alco and New River, and that Euler denied coverage for those claimed losses.

In its complaint, Transcap alleges that Euler and defendant Francisco fraudulently misrepresented the scope of the Policy and that Euler denied its claims for coverage in bad faith. Transcap seeks damages for breach of contract and a declaratory judgment as to Euler's obligations under the Policy. Transcap also asserts related claims for consumer fraud, breach of the duty of ordinary care, and equitable estoppel. Euler filed a counterclaim seeking a declaration that there is no coverage under the Policy for the transactions at issue because there was no shipment of goods to Alco or New River. Euler also asserts that it erroneously paid $350,864 on a claim filed - and previously paid - under the Policy on the grounds that the goods at issue were never in Transcap's custody and physical control, but rather part of an inventory financing arrangement.

Transcap initially filled this case on December 26, 2007 in the Circuit Court of Cook County, Illinois. Euler removed this case on February 1, 2008. Although this matter has been pending for close to two years, the parties have yet to complete discovery. On April 13, 2009, Transcap moved this Court to order Euler to provide a complete response to discovery requests initially served on or around November 26, 2008. We granted that motion, and ordered Euler to produce additional documents and serve amended discovery responses by June 12, 2009. [58]. In its present motion to compel, Transcap contends that Euler failed to comply with that Order, and has continued to "thwart discovery into how it has interpreted and applied the policy provisions at the heart of this case."


A party is entitled to conduct discovery on any matter that is "relevant to the claim or defense of any party." Fed. R. Civ. P. 26(b)(1). Under the Federal Rules, a party may obtain discovery regarding matters that may not be admissible, provided that the "discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. When an opposing party fails to respond to discovery or provides evasive or incomplete responses, a party may seek an order compelling disclosure or discovery. Fed. R. Civ. P. 37(a). A party may also move for sanctions for failure to comply with a court order. Fed. R. Civ. P. 37(b). As the Seventh Circuit has recognized, the district court has "broad discretion over discovery matters," including motions to compel and/or for sanctions Spiegla v. Hull, 371 F.3d 928, 944 (7th Cir. 2004) (citing Rennie v. Dalton, 3 F.3d 1100, 1110 (7th Cir. 1993)).


Euler's response to Transcap's motion to compel consists of a four-page brief and a twenty-two-page declaration by its counsel, Andrew Saulitis (the "Saulitis Declaration"). Transcap moves to strike that declaration on the grounds that it exceeds the 15 page limit for briefs adopted in this District. See Local Rule 7.1 ("Neither a brief in support of or in opposition to any motion... shall exceed 15 pages without prior approval of the court."). Transcap further argues that the Saulitis Declaration is a legal brief masquerading as a declaration, and contains a number of statements that plaintiff characterizes as "improperly argumentative... not based on personal knowledge... hearsay... or otherwise inadmissible." Transcap's arguments are well taken. Nevertheless, we are persuaded by Euler's contention that striking the Saulitis Declaration in its entirety would not expedite the work of this Court. See, e.g. RLJCS Enters. v. Prof'l Benefit Trust, Inc., 438 F. Supp. 2d 903, 906 (N.D. Ill. 2006) ("Motions to strike are generally disfavored except when they serve to expedite."). To the extent the Saulitis Declaration contains legal argument, those statements will not be considered. Rather, our review of the declaration is confined to the statements that evidence Euler's compliance with its discovery obligations, including defendant's efforts to locate responsive documents. Transcap's request to strike the Saulitis Declaration is denied.


Transcap moves to compel Euler to comply with this Court's June 3, 2009 Order and requests that we award sanctions for Euler's continuing discovery violations. In its motion, Transcap states that the materials it seeks to compel are responsive to plaintiff's First Set of Interrogatories and First Set of Request for Production of Documents initially served on November 26, 2008. Euler does not dispute this fact.

Rather, defendant argues that it "has fully complied with its discovery obligations." We begin by reviewing each category of ...

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