Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_06-cv-00025/USCOURTS-casd-3_06-cv-00025-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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06cv0025

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DPR CONSTRUCTION, INC.,

Plaintiff,

v.

ANKA (CORTEZ HILL) LLC, et al.,

Defendants. 

 

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Case No. 06-CV-0025-R (JMA)

ORDER GRANTING IN PART AND

DENYING IN PART PLAINTIFF’S

MOTION FOR AN ORDER COMPELLING

PRODUCTION OF DOCUMENTS

Plaintiff DPR Construction, Inc. seeks an order compelling

the production of documents from various entities, including Anka

(Cortez Hill) LLC and Anka Developments, Inc., which are

defendants in this action, and PCL Construction Services, Inc.

and Anka (Gaslamp) LLC, which are not parties to this litigation. 

On September 7, 2006 and September 28, 2006, the

undersigned’s law clerk held joint conference calls with counsel

for Plaintiff, Elizabeth Pietanza, Esq., and counsel for

Defendants, Scott Omohundro, Esq., during which counsel fully set

forth their positions concerning the subject discovery issues. 

At the Court’s request, counsel for Plaintiff provided the

Case 3:06-cv-00025-JLS-JMA Document 21 Filed 10/27/06 Page 1 of 16
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The named defendants in the First Amended Complaint are Anka

(Cortez Hill) LLC, Anka Property Group, and Anka Developments, Inc. 

Answers have been filed on behalf of Anka (Cortez Hill) LLC and Anka

Developments, Inc. only. 

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undersigned’s chambers with the discovery requests at issue on

September 29, 2006. After considering the foregoing, and

counsels’ arguments in favor of and against the requested

discovery, the Court hereby GRANTS IN PART and DENIES IN PART

Plaintiff’s motion for an order compelling production of

documents.

I. CASE BACKGROUND

According to the allegations in the First Amended Complaint

(“FAC”), Defendant Anka Developments, Inc. is involved in the

construction and development of two high rise condominium

projects in Downtown San Diego, namely the “Alta Project” in the

Gaslamp District and the “Aria Project” on the corner of 9th

Avenue and Ash Street. FAC at ¶ 8. Anka Developments, Inc.

formed Anka (Gaslamp) LLC to develop the Alta Project and Anka

(Cortez Hill) LLC to develop the Aria Project. Id.

Plaintiff engaged in contract negotiations with Defendants1

in the summer and fall of 2004 for Plaintiff to act as the

general contractor on the Alta and Aria Projects. FAC at ¶ 9. 

On October 25, 2004, Plaintiff and Anka (Gaslamp) LLC entered

into a letter of intent for the construction of the Alta Project

which stated a construction price of $46,700,000. FAC at ¶ 10. 

Plaintiff alleges that the parties “arrived at this price based

on an express understanding that DPR would reduce its contract

price by the amount of $473,000 if DPR also became the general

contractor for the Aria Project . . . .” Id. This $473,000

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price reduction is referred to by the parties as the “Aria

Factor.” Id. On October 25, 2004, Plaintiff also entered into a

Pre-Construction Agreement with Anka (Cortez Hill) LLC regarding

the Aria Project. FAC at ¶ 11. 

Plaintiff and Defendants met again in December 2004, at

which time it was agreed that the purpose and nature of the Aria

Factor was for Plaintiff to provide the $473,000 discount so long

as Plaintiff also became the general contractor on the Aria

Project. FAC at ¶ 12. However, when the parties met on December

13, 2004 to finalize and sign the formal contract for the Alta

Project, the $473,000 discount did not reflect this contingency. 

FAC at ¶ 13. When Plaintiff identified this omission, Defendants

and Anka (Gaslamp) LLC suggested that the Aria Factor contingency

remain excluded from the Alta construction contract, so as to

expedite the signing of that contract. FAC at ¶¶ 14-16. 

Defendants and Anka (Gaslamp) LLC suggested instead that the

contingency be included as an amendment -- specifically, as a

termination fee -- to the Aria Pre-Construction Agreement. FAC

at ¶ 16. Shortly thereafter, Plaintiff and Defendants

participated in a telephone conference, during which the parties

orally agreed that in addition to $62,000 that Plaintiff was to

receive in exchange for its pre-construction services on the Aria

Project, Plaintiff would receive $473,000 if, despite Plaintiff’s

good faith efforts, Plaintiff did not become the general

contractor on the Aria Project. FAC at ¶ 17. Plaintiff refers

to this agreement as the “Aria Factor Agreement.” Id. 

Plaintiff provided Defendants with a Guaranteed Maximum

Price (“GMP”) proposal for the Aria Project in February 2005. 

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FAC at ¶ 21. Defendants, however, insisted on a lower price. 

Id. Further negotiations between the parties resulted in an

impasse, and ultimately Defendants chose not to use Plaintiff as

the general contractor for the Aria Project. FAC at ¶ 23.

Plaintiff requested its fees under the Aria Pre-Construction

Agreement, including the $62,000 due pursuant to the original

agreement and the $473,000 termination fee due under the Aria

Factor Agreement. FAC at ¶ 24. Defendants refused to pay the

$473,000 due. Id. Plaintiff’s claims for relief in this action

include: (1) breach of oral contract (the Aria Factor Agreement

of December 13, 2004) against Anka (Cortez Hill) LLC; (2) breach

of oral modification to written contract (the Aria Factor

Agreement of December 13, 2004, which modified the Aria PreConstruction Agreement) against Anka (Cortez Hill) LLC; and (3)

negligent misrepresentation against all Defendants. 

II. LEGAL STANDARDS

Rule 26 of the Federal Rules of Civil Procedure limits

discovery to matters that are “relevant to the claim or defense

of any party.” Fed. R. Civ. P. 26(b)(1). Information is

relevant if it is “reasonably calculated to lead to the discovery

of admissible evidence.” Id. All discovery is subject to the

limitations imposed by Rule 26(b)(2), which provides in relevant

part:

The frequency or extent of use of the discovery methods

otherwise permitted under these rules and by any local

rule shall be limited by the court if it determines

that: (i) the discovery sought is unreasonably

cumulative or duplicative, or is obtainable from some

other source that is more convenient, less burdensome,

or less expensive; (ii) the party seeking the discovery

has had ample opportunity by discovery in the action to

obtain the information sought; or (iii) the burden or

expense of the proposed discovery outweighs its likely

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benefit, taking into account the needs of the case, the

amount in controversy, the parties’ resources, the

importance of the issues at stake in the litigation,

and the importance of the proposed discovery in

resolving the issues. 

Fed. R. Civ. P. 26(b)(2). 

“The Committee intends that the parties and the court focus

on the actual claims and defenses involved in the action.” Fed.

R. Civ. P. 26 Advisory Committee Notes, 2000 Amendment. The

court has the authority to confine discovery to the claims and

defenses asserted in the pleadings, and the parties have no

entitlement to discovery to develop new claims or defenses that

are not already identified in the pleadings. Id. The court also

has the authority to define the actual scope of discovery to the

reasonable needs of the action. Id. 

III. DISCUSSION

A. Documents Relating to PCL

Plaintiff seeks various documents relating to PCL

Construction Services, Inc. (“PCL”), the current general

contractor on the Aria Project. Plaintiff seeks production of

documents responsive to the following discovery requests:

• Subpoena to PCL issued on June 23, 2006 commanding PCL

to produce and permit inspection and copying of the

documents and/or objects set forth in Exhibit 1 to the

subpoena (19 categories of documents designated).

• Demand for Production of Documents to Anka (Cortez

Hill) LLC, Set Two, Nos. 1-2 and 7-13.

• Demand for Production of Documents to Anka

Developments, Inc., Set Two, Nos. 1-2 and 7-13.

The subpoena issued to PCL seeks, in summary, all documents

pertaining to budgets, estimates, proposals, bids, bid

negotiations, and contracts relating to the Aria Project,

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PCL is not a party to this litigation. Counsel for Defendants

has represented to the Court that his firm has objected to the

subpoena to PCL on behalf of PCL, and has also objected to discovery

requests directed at Defendants which seek production of PCL’s

documents.

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including documents transmitted or exchanged between PCL and its

prospective suppliers, contractors, or subcontractors on the Aria

Project. Pl.’s Subpoena to PCL, Nos. 1-19.2 

The Demands for Production of Documents, Set Two, to Anka

(Cortez Hill) LLC and Anka Developments, Inc. request much of the

same information sought via the subpoena to PCL:

Request No. 1: All DOCUMENTS that comprise each budget

or estimate prepared by PCL in connection with its

contract bid for the development or construction

management of the ARIA PROJECT.

Request No. 2: All spreadsheets prepared by PCL during

the budget, estimating, or bid negotiating process for

the ARIA PROJECT.

Request No. 7: All DOCUMENTS transmitted or exchanged

between PCL and [Anka/Anka (Cortez Hill) LLC] RELATING

to budgets or estimates prepared for the ARIA PROJECT.

Request No. 8: All DOCUMENTS transmitted or exchanged

between PCL and YOU RELATING to budgets or estimates

prepared for the ARIA PROJECT. 

Request No. 9: All DOCUMENTS transmitted or exchanged

between PCL and prospective suppliers that RELATE to

the ARIA PROJECT.

Request No. 10: All DOCUMENTS transmitted or exchanged

between PCL and prospective contractors or

subcontractors that RELATE to the ARIA PROJECT.

Request No. 11: All DOCUMENTS RELATING to all bids,

estimates, or proposals provided by PCL in negotiating

development or construction management contract(s) for

the ARIA PROJECT. 

Request No. 12: All DOCUMENTS RELATING to all bids,

estimates or proposals from prospective suppliers for

the development of the ARIA PROJECT.

Request No. 13: All DOCUMENTS RELATING to all bids,

estimates or proposals from prospective subcontractors

for the development of the ARIA PROJECT. 

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Pl.’s Demand for Produc. of Docs. to Anka (Cortez Hill) LLC, Set

Two, Nos. 1-2, 7-13 & Pl.’s Demand for Produc. of Docs. to Anka

Developments, Inc., Set Two, Nos. 1-2, 7-13 (various definitions

and explanations omitted). 

Plaintiff argues that the requested documents pertaining to

PCL are relevant because these documents will allow Plaintiff to

compare its bid on the Aria Project to PCL’s bid on the project. 

Plaintiff states that it wishes to make this comparison in order

to show that its bid on Aria was made in good faith. Defendants,

on behalf of both themselves and PCL, argue in response that

Plaintiff’s “good faith” in bidding on Aria is not at issue in

this case. Rather, Defendants argue that this case concerns

Plaintiff’s claim that there was a breach of an oral contract

(the Aria Factor Agreement), or of an oral modification (the Aria

Factor Agreement) to the written contract (the Aria PreConstruction Agreement) between Plaintiff and Anka (Cortez Hill)

LLC, pursuant to which Plaintiff was to receive $473,000 if it

was not selected as the general contractor on the Aria Project. 

Additionally, Defendants assert that PCL is concerned about its

privacy interests, and does not wish to release its proprietary

and sensitive commercial information to Plaintiff, a competitor. 

Although Plaintiff counters that responsive documents can be

produced by PCL pursuant to the protective order in this case

(see Doc. No. 16), PCL apparently believes that the protective

order is insufficient to protect its interests. Plaintiff also

contends that the Court’s June 6, 2006 Order (see Doc. No. 15),

which required Plaintiff to produce certain of its sensitive

commercial information pursuant to the protective order,

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The Court notes that while Defendants’ counsel stated during the

conference calls with the undersigned’s law clerk that Plaintiff’s

good faith in bidding on the Aria Project is not at issue, he also

indicated that Defendants are reserving the right to argue that

Plaintiff’s efforts were not reasonable.

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necessitates that PCL produce its sensitive commercial

information as well.

As an initial matter, the Court questions whether it is

truly necessary for Plaintiff to establish its “good faith” in

bidding on Aria. In order to prevail in this case, Plaintiff

must show the existence of either an oral contract or an oral

modification to a written contract, or demonstrate that a

negligent misrepresentation was made. This case is not about

whether Plaintiff should have been awarded the Aria contract, but

rather whether, not having obtained it, Plaintiff was entitled to

receive $473,000 pursuant to the alleged oral contract or oral

modification to a written contract. Thus, it is not clear to the

Court that Plaintiff’s good faith in bidding on Aria is an

element of its claim. 

Nonetheless, assuming arguendo that demonstrating its good

faith efforts in bidding on Aria is necessary,3

 the Court finds

that Plaintiff does not need the PCL documents it seeks in order

to establish its good faith. In the Court’s view, it is not

necessary for Plaintiff to compare its own bid with PCL’s bid on

Aria to show its own good faith efforts to obtain that project,

particularly when this endeavor would require the invasion of

PCL’s commercially sensitive, proprietary information. There are

other means by which Plaintiff, if necessary, can demonstrate its

good faith efforts. The terms of Plaintiff’s own bid, and

Plaintiff’s actions during the bid process, should stand on their

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own merit. In the First Amended Complaint, for example,

Plaintiff alleges that it submitted its initial proposal on Aria

in February 2005, and “[f]or the ensuing five months, DPR worked

diligently to find ways to reduce the proposal to a price

acceptable to Defendants.” FAC at ¶ 22. It appears to the Court

that Plaintiff should be able to utilize its own documents, and

its representatives’ own testimony, to establish that its efforts

in bidding on Aria were made in good faith. Additionally,

Plaintiff can utilize expert testimony to demonstrate that its

bid was made in good faith. Furthermore, the intrusive search

through the winning bidder’s documents that Plaintiff seeks to

undertake is wholly unnecessary because, as discussed above,

Plaintiff need not establish that it should have been awarded the

Aria contract. Instead -- assuming this is even at issue --

Plaintiff would only have to establish that it engaged in a

reasonable, good faith effort to obtain the contract. Therefore,

obtaining the commercially sensitive information of a non-party

to the case is neither justified nor necessary for Plaintiff to

establish its good faith efforts in bidding on the Aria Project. 

Moreover, the Court is concerned about the burden that

producing responsive documents would place on PCL, a non-party to

this litigation, whose only conceivable link to this case -- and

an attenuated one at that -- is that it was ultimately chosen,

instead of Plaintiff, as the general contractor on the Aria

Project. PCL’s selection as the general contractor on Aria does

not require it to produce its undoubtedly voluminous and

proprietary information in relation to this matter. Plaintiff

and PCL operate in a highly competitive industry and each has a

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keen interest in keeping its proprietary, commercially sensitive

information confidential vis-à-vis the other. While Plaintiff,

who initiated this lawsuit, must expect to produce information in

connection with this case, the pendency of this litigation does

not entitle Plaintiff to unfettered access to PCL’s documents. 

The Court finds that the burden that production would place on

PCL, whether PCL itself is called upon to produce documents

pursuant to the subpoena, or whether PCL’s documents are produced

by Defendants pursuant to the document requests, greatly

outweighs Plaintiff’s need for the requested information. See

Fed. R. Civ. P. 26(b)(2)(iii). 

Finally, the Court is not persuaded that it should compel

production of PCL’s documents simply because the Court previously

ordered Plaintiff to produce certain documents similar to the

documents Plaintiff now seeks from PCL and Defendants. The

circumstances underlying the Court’s discovery order of June 6,

2006 are distinguishable from the circumstances here because the

documents that Plaintiff was required to produce in that

situation were relevant to the central issue in the case, i.e.,

the manner in which the parties characterized the $473,000

contract price reduction, or the reasons for the reduction. See

June 6, 2006 Order at 2. Here, as discussed above, a comparison

of Plaintiff’s bid to PCL’s bid on the Aria Project is not

necessary for Plaintiff to establish its good faith efforts in

bidding on Aria, as there are other more efficient and less

intrusive means by which Plaintiff can make this showing. 

Additionally, the Court’s previous order required production by

Plaintiff, a party to the litigation, of its own documents,

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whereas here, Plaintiff is seeking the documents of a non-party

to the action both directly (via the subpoena issued to PCL) and

indirectly (via requests for production of PCL’s documents from

Defendants’ files). The discovery rules instruct that nonparties are entitled to protection from unduly burdensome

discovery. See Fed. R. Civ. P. 45(c)(1); see also Del Campo v.

Kennedy, 236 F.R.D. 454, 458 (N.D. Cal., 2006) (“Underlying the

protections of Rule 45 is the recognition that the word ‘nonparty’ serves as a constant reminder of the reasons for the

limitations that characterize ‘third-party’ discovery.”)

(citation omitted and internal quotations partially omitted).

Therefore, for all of the reasons set forth above,

Plaintiff’s motion for an order compelling production of PCL’s

documents in response to the discovery requests set forth above

is DENIED.

B. Exhibit C to the PCL/Anka Contract

Plaintiff’s Demand for Inspection and Production of

Documents to Anka (Cortez Hill) LLC, Set One, No. 24 seeks the

following:

Request No. 24: All contracts between YOU and the

current general contractor for the ARIA PROJECT.

Pl.’s Demand for Inspec. and Produc. of Docs. to Anka (Cortez

Hill) LLC, Set One, No. 24. According to Plaintiff, Anka has

produced the requested contract, but has withheld Exhibit C to

the contract from production.

According to Defendants, Exhibit C consists of a 90 page

document containing PCL’s Guaranteed Maximum Price (“GMP”) bid on

Aria. The first 2 pages of Exhibit C are summary pages that

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contain an itemization of the bid, including breakdowns of the

various costs on the project, as well as PCL’s total bid on Aria. 

The remaining 88 pages of Exhibit C provide a more detailed

breakdown of each aspect of the bid. Defendants have offered, as

a compromise, to produce the 2 page summary document to

Plaintiff. Defendants are not willing to produce the remaining

88 pages of Exhibit C as these pages contain PCL’s sensitive

commercial information. Plaintiff, on the other hand, insists

that the summary is not sufficient to permit a comparison of its

own bid to PCL’s bid, nor to establish that its own efforts in

bidding on Aria were made in good faith. 

The Court concludes that only the information contained in

the 2 page summary of Exhibit C to the contract between PCL and

Anka (Cortez Hill) LLC should be produced, as offered by

Defendants. Notwithstanding the Court’s view that a comparison

of the bids is unnecessary for Plaintiff to establish its good

faith efforts to obtain the Aria Project, the information offered

by Defendants is sufficient to satisfy Plaintiff’s alleged need

to compare PCL’s bid on Aria with its own bid. Accordingly,

Plaintiff’s motion for an order compelling production of Exhibit

C to the contract is accordingly GRANTED IN PART and DENIED IN

PART. Plaintiff’s motion is GRANTED with respect to the 2 page

summary document contained in Exhibit C. Plaintiff’s motion is

DENIED with respect to the remainder of Exhibit C. 

C. Documents Relating to Anka’s Anticipated Profits

Plaintiff seeks documents relating to Anka’s anticipated

profits on the Aria Project, and therefore seeks further

responses to its Demand for Inspection and Production of

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Documents to Anka (Cortez Hill) LLC, Set One, No. 13. This

request seeks the following:

Request No. 13: All ARIA PROJECT budgets, including

without limitation, the original cost budget, the bid

conforming budget, and all budget updates and

transfers.

Pl.’s Demand for Inspec. and Produc. of Docs. to Anka (Cortez

Hill) LLC, Set One, No. 13. According to Plaintiff, Anka (Cortez

Hill) LLC produced the requested budgets, but redacted the line

containing the anticipated profits. 

Plaintiff argues that it needs the anticipated profit

information to “test” Defendants’ contention that they rejected

Plaintiff’s bid on Aria because they were constrained by their

lender and could not agree to a higher price on the project. 

Plaintiff states that the anticipated profits would have been

part of the equation considered by the lender. Plaintiff further

explains that this information will further assist it in

demonstrating its good faith efforts in bidding on Aria. 

Defendants counter that any documents pertaining to anticipated

profits are irrelevant and inadmissible, and contain protected

financial information as well as prejudicial information. 

Defendants also believe that the information sought goes far

afield of the $473,000 at issue in this case. 

The Court agrees with Defendants. As discussed above,

Plaintiff and Defendants are not litigating whether Plaintiff

should have been awarded the Aria contract; rather, the issue is

whether Plaintiff, not having obtained the Aria contract, was

entitled to receive $473,000 pursuant to an oral contract or oral

modification to a written contract. As such, the requested

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discovery does not appear to have any bearing on the claims in

this case. Further, as previously discussed, there are

alternative and less intrusive means by which Plaintiff can

demonstrate its good faith efforts, if necessary. The

information Plaintiff seeks here goes far afield of the claims in

this case and far beyond the reasonable needs of this action. 

See Fed. R. Civ. P. 26 Advisory Committee Notes, 2000 Amendment.

Accordingly, Plaintiff’s motion for an order compelling

production of information concerning Defendants’ anticipated

profits on the Aria Project is DENIED.

D. Documents Relating to Anka’s Formation, Ownership, and

Operation

Plaintiff seeks documents relating to the formation,

ownership, and operation of Anka Developments, Inc. and Anka

(Gaslamp) LLC, and therefore seeks responses to its Demand for

Production of Documents to Anka Developments, Inc., Set One, No.

23 as well as to its subpoena issued to Anka (Gaslamp) LLC, No.

16. These requests seek the following:

All DOCUMENTS RELATING to YOUR formation, ownership,

and operations, including without limitation, all

minute books, articles, bylaws, operating agreements

and statements of information.

Pl.’s Demand for Produc. of Docs. to Anka Developments, Inc., Set

One, No. 23; Pl.’s Subpoena to Anka (Gaslamp) LLC, No. 16. 

Plaintiff’s stated reasons for this information are to

ensure that it has named the proper parties in this lawsuit, and

to determine whether there are any alter ego and/or agency

relationships between the various Anka entities. Defendants

contend that this is a fishing expedition. Defendants have

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Defendants also state that Anka (Gaslamp) LLC, a non-party to

this action, is the owner of the Alta Project. The Court observes

that Plaintiff was well aware of Anka (Gaslamp) LLC at the time it

commenced this action, and apparently made a conscious decision not to

sue this entity.

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explained that Anka Developments, Inc. is a management group, and

that Anka (Cortez Hill) LLC is the owner of the Aria Project. 

Thus, Defendants concede that Plaintiff has named the proper

parties in this case.4 Plaintiff responds that it is

contemplating adding Anka (Gaslamp) LLC as a party, as well as

alter ego allegations, to this action, but wishes to conduct

discovery on these issues before doing so. 

The Court finds that these requests also seek information

that goes beyond the reasonable needs of the action. The

Advisory Committee notes accompanying Rule 26 provide that the

primary target of the amendments to Rule 26(b) in 2000 was

“discovery that swept ‘far beyond the claims and defenses of the

parties,’ discovery that imposed unjustifiable expenses and

delays and that sometimes seemed designed not to fairly litigate

the issues presented by the pleadings but to ‘develop new claims

or defenses.’” Bernstein v. Travelers Ins. Co., --- F.Supp.2d --

-, 2006 WL 2474747 (N.D. Cal., Aug. 28, 2006) at *1 (citing Fed.

R. Civ. P. 26 Advisory Committee Notes, 2000 Amendment). In this

case, Plaintiff, by way of these discovery requests,

unjustifiably appears to be seeking to develop new claims in the

case. The discovery sought does not pertain to the claims

already identified in the pleadings. Additionally, the deadline

set by the Court for filing a motion to join other parties or

amend the pleadings, June 5, 2006, has long since passed. See

Apr. 5, 2006 Order at 1. Accordingly, Plaintiff’s motion for an

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order compelling production of information regarding the

formation, ownership, and operation of Anka Developments, Inc.

and Anka (Gaslamp) LLC is DENIED.

IV. CONCLUSION

For the reasons set forth above, Plaintiff’s motion for an

order compelling production of the documents requested in the

discovery requests set forth above is GRANTED IN PART and DENIED

IN PART. Defendants shall be required to produce only the 2 page

summary of Exhibit C to the contract between PCL and Anka (Cortez

Hill) LLC. Plaintiff’s motion to compel production of documents

is otherwise denied.

IT IS SO ORDERED.

DATED: October 27, 2006

Jan M. Adler

U.S. Magistrate Judge

Case 3:06-cv-00025-JLS-JMA Document 21 Filed 10/27/06 Page 16 of 16