right our next case for this morning is cats nelson against bruce scholtz and others john rogers good morning i'm can elson and thank you for all argument i'd like to make five points first to try to comply with the district court's order i don't know what else they could have done a second the judge failed to consider proportionality essential factor third warning that a case one i tried different play with the judge's order and i don't know what what else they could have done i knew that dismissal would cost me millions of dollars so i took the judge's warnings extremely seriously i did everything i could to comply produce bank statements but i do not have the bank statements to produce i did not produce begin to tell them that yes they did when i was late january i appeared it was the have subsequently gotten them it's not my fault that the i r s takes a while to produce things it would only some returns or some question about whether it was just us bank or other banks or footnote in brief saying actually it's a matter of fact there are other institutions and your answers appeared at least to the judge to be inconsistent you were saying repeatedly i've produced everything you asked for but i don't really have anything to produce i've produced everything you asked for but i don't really have anything and the judge banks you should be and he says i need a crystal clear affidavit at one point and you didn't comply with tax returns the tax returns themselves by the way not just summaries or transcripts apparently you didn't file tax returns for some number of years which is a question in itself but  you you were not forthcoming with either the judge or the parties on the other side about what it was that you had in the judge frankly was skeptical of your statement that a person in your position doesn't keep any tax returns or bank statements that i think is the heart of this well that ability determination isn't i was in front of him for all what two minutes or something like that maybe so but it's still credibility to terminate but even suppose well eventually he did state in his opinion that i was not accused of destroying any documents right now you're going off on this spoliation idea and the judge i think is willing to take it for purposes of this decision that what we're looking at is carelessness or something else that doesn't meet the criteria to be set so you're the one who keeps introducing the notion  yes i did you mentioned not filing returns if you don't have a certain threshold of income there's no requirement that you file a return nobody's ever suggested that i be able to file returns when i should file returns but that was part of the problem you go back ten years and there is an issue where there were ability you had as a security or whatever but the lease where they're saying that you were fifteen million dollars in the negative that and this is what would be expose i don't know why this took ten years to get as far as you bud but it seems that if you reflect all the way back to time zero when i guess the kuwaiti who came in with all the money and let the project done and and you missed out on whatever you would call the prep stuff whatever you do it on the background but i think you had to have a certain level of financial ability and you couldn't show it at the time and that's what you can't show ten years later i didn't know there was no requirement that i have that it was necessary to me for me to have any certain level of financial wherewithal that's an are making now but that's an oral argument i believe it's barred by the parole evidence rule the judge recognized that it may be barred but croll evidence but the judge also clearly said to you that it's an issue for way down the believed it was not relevant i accepted his decision what i'm saying is that the the suggestion that i breach some obligation to have financial wherewithal there was no such obligation ok well that's hand in the till in two thousand and five and they basically said you can't touch us because if you bring suit now it will bring down the whole house of cards the financing will fall apart nobody will ever buy condos from us in fact mr rogers invoked the doctrine of mutual assured destruction that you cannot touch us so yes i waited and i management of it and they outvoted you they said look your negative fifteen million net worth is hurting our ability to get financing for the project now these facts could be developed maybe that's right maybe that's wrong but the judge decides you are not sufficiently cooperating in discovery to allow the proper development of the facts so we're not here on the merits of what happened here on the did you comply with the court's discovery plan the judge did narrow it all to tax returns which i obtained and bank statements which i have not obtained but i cannot produce you can't be punished for not producing what you can't produce and i didn't destroy them most likely case is that i went paperless with my bank and never received paper lanterns you know i did you say that and i have a david i did not want the affidavit was simply i was supposed to set forth the steps i took to locate the documents well you just told us one thing if you said under oath might a save you in this case it might help but nevertheless even though that's what he wanted he wanted something under oath i'm not sure what he wanted supreme court in the national hockey league case in other cases in this court repeatedly has said there are times when it's appropriate it's an abuse of discretion standard we don't like that to be the first remedy out of the box but it certainly was not in this case there were a warnings but the judge failed to consider essential factors basically proportionality well we might get back to the he asked that you should provide a crystal clear affidavit that you did you the affidavit that you needed to explain and he says produce the documents crystal clear the actions you in your attorney took to locate that says that's common sense  explanatory i thought it i think i still think it does say that all right well you are out of time so we will hear from mr cur want you to talk to me about whether this dismissal order is under rule forty one b or whether it's under rule thirty seven b and the different standards that apply to those two rules they're not one hundred percent equivalent they are your honor and it would be that we move for dismissal under rule thirty seven b to a five but then says for want of prosecution which is not one of the thirty seven b heads that's correct your honor and in that respect this falls very similar to the fact pattern that was before the court or lamp opinion and in that case there was a question again by the appellant as to whether dismissal was under thirty seven b or under rule forty one and either way the court went through the analysis and said it was appropriate and we think the same thing is appropriate here this is a case where mr nelson did not give us any documents other than a few one page tax transcripts apart early for an incomplete two thousand and eleven tax return a letter from one bank saying hey we only go back seven years and a variety of incomplete and invasive ductal ration switch were essentially modified or revised versions of haitian national response to our request  back seven years i don't know your honor but we received a letter in response to the declaration that said that we weren't sure at the time when this was all been initially briefed as to where in fact mr nelson may have banked what was curious is in his february six two thousand and seventeen declaration his final declaration which the trial court reviewed and deemed to be again like his prior declarations prior responses insufficient but in that declaration in an apparent effort to at least appear like he was trying to comply with the court's order mr nelson said i've gone through i believe was forty two drawers or thirty seven drawers something like that file cabinet drawers he said i've got these seven ford or a file cabinets i've got it i've got a credenza what he doesn't say decision on the basis of a lack of candor with the court he never says that he can float sit out there like boy this is hard to believe but then he drops it he did say repeatedly that the responses in forms of declarations in the response to the request to produce were of faces and under thirty seven a four if a response is a vase if it's the same as being a non response and that is a violation of response of an obligation to apply the discovery rules and that gets us into whether  thirty seven b to a five to smithville is appropriate where you have to think though that failure to prosecute is that right concept for a situation where there's actually a huge amount of activity things are being filed motions repeatedly tendering declarations that say more or less the same thing of all responses documents michael custody possession or control for this undefined relevant period have been produced and that was actually amended from where they  are believed to have been produced which was completely nothing but where they say had been produced and then follows up with but where in the custody possession of control of any such documents and that this is circular logic where you keep going back and forth and at the end of the day we never had any idea as to did mr nelson ever have these documents so what we got would have been better if forgetting let's let's assume he didn't put the first sentence in there he just started the second sentence you know you've asked for x y and z but i don't have x y and z and here are the reasons why i don't have it you know my bank didn't keep the records i'm a person who hates clutter so i throw everything away after six months you know whatever he might say if he had made responses that gave different answers we could have addressed those at the time looking back on it now what he might have said we can't really say what we know is this is a man that has that many file drawers worth of documents but doesn't keep this this is a man that said in a deposition that he knew as of two thousand and five at some point there's no dispute that he was removed as a manager from the l l c in november of two thousand and five he subsequently gave a deposition in one of his many other cases that said yeah i knew i was back in two thousand and five i had claims against these guys mr nelson stated during his argument that there were been a mutually assured destruction we could've gotten financing what have you well the project was fully financed in i believe april two thousand nature of getting the construction loan was done i believe in april of two thousand and eight the thirtieth if i recall there wasn't leave two there was litigation with the next door neighbor the metropolitan water reclamation district there wasn't access to the site necessary for the demolition until i believe july of two thousand and eight so all of this was going on long after mr nelson was removed as a manager so his arguments which we saw in the brief in which he alluded to a little bit in oral argument of proportionality of all of the heavy lifting is really done before i got volved that there's really not any basis for that this was something that was very new in late two thousand and four and early two thousand and five that they'd secured some rights that were dependent upon getting financing and other qualifications pursue the project but in terms of he was just removed i believe in november of two thousand and five there was a construction financing until april of two thousand and eight there was a lot of long years in between trying to find financing and so forth and as we indicated anything else happening during ascent engineering work or some other there references like were some development there was some pre sales trying to get a qualified mass to try and show there is sufficient interest in the project to obtain construction financing there was litigation of the d filed against the project i believe in two thousand and six trying to keep them from using the reason it rights all of these things were going on and these are things that my clients were actively involved in in which they believe they are in their development fee this was not an issue of mr nelson performing all these services for the project and as we indicated given regardless of whether the dispute as to whether he was going to be required to personally guarantee the construction loan or not and my clients were for hundred thirty seven and a half million was that personally guarantee that the the issue where you get to this is none of the lenders or at least the lenders told my clients we won't loan you one hundred thirty seven a half million dollars if one of the managers that's going to have control over this money is this deep in the hole because the the risks of him taking it and going off with it and doing something inappropriate with it were far too high for the risk tolerance so we don't think the project ever could have moved forward with him involved in in terms of the proportionality ask you this i mean he has said do you know why couldn't there have been a lesser sanction just say you can't use any of the materials that were or at least that he couldn't use any of the materials were not produced by would that work well the only one that knows whether those materials would have been helpful to him or helpful to us would be mr nelson so to the fact that he says you know if you find them i'll agree you can't use them really doesn't help us because to the extent that they're harmful to his position or beneficial for our position the fact that he's going to be barred from using them some point the future gives us absolutely no help or assurance in our case your honor we're going in this trying to defend against claims that he waited ten years to bring in by waiting so long and not preserving any of his records were in a spot where not only can we not get them from the party that suing us and knew we had these claims that had a duty to preserve these documents but by waiting so long he's made it so they aren't available anywhere else the i r s has they don't have records that long the banks at least the one bank he disclosed which incidentally we found out about others but but the one bank you disclose said we don't go back that far what we didn't see in any of mr nelson's declarations where i worked at so and so for this year of this year where i didn't work during this year i made this money i didn't make this money i received w k ones or i didn't receive them and if i didn't get any of those documents what happened to them in my basement flood that i move them one when we moved houses what happened to them all of these things that somebody in the position to bring a claim or you know you're seeking a share of development fees basically earned compensation for a particular time period you would want to be able to show what you were doing the plaintiff has an affirmative duty to mitigate their damages once their way or the contract has been breached that would be this type of documents that's an issue here for the post november two thousand and five for the pre november two thousand and five it's what were you doing during the time period you were a manager and claimed are entitled to a development fee were you devoting your efforts to this project or were you devoting them elsewhere we don't know similarly in terms of the finances were we correct that what the lenders were telling us is that your finances are such in a business we can't qualify for financing those are the documents that we think would justify his removal as a manager and go to whether he's entitled to any share of the development fee that there's any other questions i'd be happy to answer them yours i just want to know that one final time certainly your basic position is that it the same result happens whether we see this under rule thirty disagree with many things that we just said but i don't have time to get into a one point fifteen million dollar negative net worth nobody's mentioned and that's a recent invention that it was a concern of lenders the debt was owed to my wife had a lender ever asked that would have been easily explained this talk about lenders being concerned about it it's an invention i don't know where it came from there was no evidence of that to proportionality the absolute worst prejudice that they can suffer from not having my bank statements from two thousand and six two thousand and eight is failing to prove that i made millions of dollars of income from other projects during that period completely mitigating my damages and and as a result i could be barred from any recovery from two thousand steps to try those of me all right thank you