Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-mc-80123/USCOURTS-cand-5_15-mc-80123-0/pdf.json

Nature of Suit Code: 111
Nature of Suit: other
Cause of Action: 

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United States District Court

For the Northern District of California

*E-Filed: May 12, 2015*

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MONTEREY BAY MILITARY HOUSING, 

LLC; et al.,

Plaintiffs, v.

PINNACLE MONTEREY LLC; et al.,

Defendants. ____________________________________/

No. C15-80123 HRL

ORDER DENYING DEFENDANTS’ 

MOTION TO COMPEL

[Re: Docket No. 1]

Before the court in this miscellaneous action is a motion to compel by Pinnacle Monterey 

LLC, Pinnacle Irwin LLC, American Management Services California Inc., American Management 

Services LLC d/b/a Pinnacle, and Stanley Harrelson (collectively, “Pinnacle”). Dkt. No. 1. This 

action was originally filed in the United States District Court for the Eastern District of 

Pennsylvania, and was later transferred to this District. See Dkt. No. 10. 

This action relates to Monterey Bay Military Housing, LLC v. Pinnacle Monterey LLC, C14-

03953 BLF (HRL) (N.D. Cal.). In that action, Monterey Bay Military Housing, LLC, Clark 

Pinnacle Monterey Bay LLC, Clark Monterey Presidio LLC, California Military Communities LLC, 

Clark Pinnacle California Military Communities LLC, and Clark Irwin, LLC sue Pinnacle Monterey 

LLC, Pinnacle Irwin LLC, American Management Services California Inc., American Management 

Services LLC d/b/a Pinnacle, Goodman Real Estate, Inc., Goodman Financial Services, Inc., Stanley 

Harrelson, and John Goodman for “a series of systematic frauds” relating to the defendants’ 

Case 5:15-mc-80123-HRL Document 13 Filed 05/12/15 Page 1 of 6
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United States District Court

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management of military housing at the Presidio of Monterey and Fort Irwin. Non-party Balfour 

Beatty Communities, LLC (“BBC”) is a real estate services company that delivers development, 

design, financing, construction, renovation, property, and facilities management services to multifamily, military, and student housing sectors. BBC is responsible for over 44,000 military homes 

and 150,000 residents on Army, Navy, and Air Force installations across the United States. 

In November 2014, Pinnacle served a subpoena duces tecum on BBC. BBC served 

objections to the subpoena, arguing that the requested documents were not relevant to the

underlying action, Pinnacle had alternative means to obtain the information it sought without 

burdening BBC, the subpoena was overbroad and burdensome, and the subpoena sought highly 

confidential competitively sensitive information that would harm BBC if disclosed. Pinnacle 

subsequently narrowed the scope of the subpoena to request documents sufficient to show the cost 

of property and general liability insurance on a per-unit or per $100 of total insured value basis 

incurred for each of the projects defined by the subpoena. Here, Pinnacle moves to compel BBC to 

comply with the narrowed scope of the subpoena. BBC argues that the subpoena seeks documents 

that (1) are not relevant to the underlying litigation; (1) are unduly burdensome to BBC to locate, 

review, and produce; and (3) contain BBC’s confidential and proprietary information that would 

competitively harm BBC if disclosed.

Rule 45 of the Federal Rules of Civil Procedure authorizes the issuance of a subpoena 

commanding a non-party to attend and testify; produce designated documents, electronically stored 

information, or tangible things in that non-party’s possession, custody or control; or permit the 

inspection of premises. Fed. R. Civ. P. 45(a)(1)(A)(iii). The scope of discovery through a Fed. R. 

Civ. P. 45 subpoena is the same as that applicable to Fed. R. Civ. P. 34 and the other discovery 

rules. Fed. R. Civ. P. 45 advisory committee’s note (1970).

Parties may obtain discovery about any nonprivileged matter that is relevant to any party’s 

claim or defense. Fed. R. Civ. P. 26(b)(1). “Relevance under Rule 26(b)(1) is construed more 

broadly for discovery than for trial.” Truswal Sys. Corp. v. Hydro-Air Eng’g, Inc., 813 F.2d 1207, 

1211 (Fed. Cir. 1987). “Relevant information need not be admissible at the trial if the discovery 

Case 5:15-mc-80123-HRL Document 13 Filed 05/12/15 Page 2 of 6
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United States District Court

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appears reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 

26(b)(1). 

Discovery is not unfettered, however. A court must limit the extent or frequency of 

discovery if it finds that (a) the discovery sought is unreasonably cumulative or duplicative or can 

be obtained from a source that is more convenient, less burdensome or less expensive; (b) the party 

seeking discovery has had ample opportunity to obtain the information through discovery; or (c) the 

burden or expense of the discovery sought outweighs its likely benefit, considering the needs of the 

case, the amount in controversy, the parties’ resources, the importance of the issues at stake, and the 

importance of the discovery in resolving those issues. Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii).

Fed. R. Civ. P. 45(d)(3)(B) provides that the court may quash or modify a subpoena if it 

requires: “(i) disclosing a trade secret or other confidential research, development, or commercial 

information; or (ii) disclosing an unretained expert’s opinion or information that does not describe 

specific occurrences in dispute and results from the expert’s study that was not requested by a 

party.” Additionally, Fed. R. Civ. P. 45(c)(3) provides that the court must quash or modify a 

subpoena that imposes an undue burden.

First, the information sought by the subpoena is not relevant. BBC’s insurance program is 

not similar to Pinnacle’s. BBC’s costs for insurance are not indicative of a common benchmark for 

Pinnacle’s insurance costs. BBC’s insurance premiums are determined through a negotiation 

process that is based on several factors unique to BBC, including: (1) loss history and claims made 

for all covered properties collectively; (2) location and type of all covered properties; (3) 

deductibles, aggregate claim limits, and other policy terms; and (4) number of units online. In 

addition, BBC’s insurance program differs from Pinnacle’s program in several significant ways,

which would affect the insurance rates procured by both companies. For instance, BBC does not 

have any alternative risk financing arrangements to maintain a self-funded and/or prepaid aggregate 

deductible program; BBC does not charge back to its projects any of the expense, costs, and 

overhead for risk management services; and less than 1% of BBC’s assets in its master insurance 

portfolio are non-military properties.

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Second, the documents required to be searched, collected, and reviewed are unduly 

burdensome. Pinnacle seeks numerous documents for multiple projects, for each year, over a 13-

year period. To produce documents sufficient to meet Pinnacle’s request, BBC would need to locate 

and compile the following types of documents for each property, for each year: (1) documents 

reflecting what the premium allocation was; (2) documents reflecting the precise number of average 

units online for over the term of the policy; (3) documents reflecting the number of online changes 

in units throughout a policy term due to ongoing construction, renovation and demolition; (4) 

documents reflecting any reimbursement or charge based on the changes in units insured during the 

term; and (5) documents reflecting the value of each property. It would take significant time and 

resources to locate and compile these supporting documents.

BBC has managed three California properties. To determine the allocation charged,

however, it would be necessary for BBC to review all documents exchanged with its insurance 

carriers for all properties in its master portfolio. These documents are maintained partly in off-side 

storage, and Pinnacle anticipates that it could take a significant amount of time to identify and locate 

these records. 

In addition, BBC does not have relevant records from January 2002 to about April 2008. 

Pinnacle seeks BBC’s documents from January 1, 2002 to the present. During much of this time 

period, the military housing portfolio that is now owned by BBC was owned and operated by GMH 

Communities Trust (“GMH”), which later merged into American Campus Communities (“ACC”). 

GMH sold the military housing portion of its business to BBC around April 2008. Any records 

relating to the master insurance procurement for GMH—including those pertaining to the military 

housing properties now owned and operated by BBC—may not be in the possession of ACC. Thus, 

BBC will likely not have possession, custody, or control of all responsive documents for the time 

period of January 1, 2002 to approximately April 2008. 

Third, the subpoena seeks BBC’s confidential commercial information. The terms and 

pricing of BBC’s insurance program are based on numerous factors and extensive negotiations. 

BBC’s ability to negotiate the terms of its insurance portfolio makes its rates proprietary and also 

allows BBC to offer more competitive pricing. Further, BBC protects the documents and 

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information relating to its insurance program as confidential and proprietary. Pinnacle does not 

dispute this. Accordingly, Pinnacle must demonstrate a substantial need for the documents that 

cannot otherwise be met without undue hardship. Pinnacle has not done so here. Pinnacle asserts

that its expert requires the information sought by the subpoena in order to respond to the underlying 

expert’s report in the related action. Pinnacle does not explain, however, why its expert requires 

another developer’s insurance information, which is not comparable to the insurance program 

obtained by Pinnacle.

Accordingly, Pinnacle’s request for an order compelling BBC to comply with the narrowed 

scope of the subpoena is denied. 

IT IS SO ORDERED.

Dated: May 12, 2015

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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C15-80123 HRL Notice will be electronically mailed to:

CHRISTIANA L. SIGNS signsc@gtlaw.com

GREGORY T. STURGES sturgesg@gtlaw.com

JOHN P. MCSHEA jmcshea@mcshealawfirm.com

Lora A. Brzezynski lbrzezynski@mckennalong.com, mantoline@mckennalong.com

Thomas E. Dutton phdkh-efiling@pittmanhooks.com, donnag@pittmanhooks.com

Counsel are responsible for distributing copies of this document to co-counsel who have not 

registered for e-filing under the court’s CM/ECF program.

Case 5:15-mc-80123-HRL Document 13 Filed 05/12/15 Page 6 of 6