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ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

MACLEAN TOWNHOMES, LLC, a

Washington limited liability company, as

assignee of American Heritage Builders, a

Washington corporation,

Plaintiff,

v.

CHARTER OAK FIRE INSURANCE

CO., a foreign insurance company,

Defendant and Third-Party

Plaintiff,

 v.

FIRST SPECIALTY INSURANCE

COMPANY, a foreign insurance

company,

 Third-Party Defendant.

CASE NO. C06-1093BHS

ORDER GRANTING IN PART

AND DENYING IN PART

PLAINTIFF’S REQUEST FOR

SANCTIONS

This matter comes before the Court on the Court’s Order to Show Cause. Dkt.

168. The Court has considered the pleadings filed in support of and in opposition to the

order and the remainder of the file and hereby grants in part and denies in part Plaintiff’s

request for sanctions for the reasons stated herein.

I. PROCEDURAL AND FACTUAL BACKGROUND

On August 3, 2006, Plaintiff MacLean Townhomes, LLC filed a complaint for

declaratory relief and monetary damages against Defendant Charter Oak Fire Insurance

Co. Dkt. 1. Plaintiff’s claims are based on the assignment of an insurance contract
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ORDER – 2

between assignor American Heritage Builders (AHB) and Defendant Charter Oak. Dkt.

56 at 1. 

On December 18, 2007, the Court issued a scheduling order requiring discovery to

be completed by May 12, 2008. Dkt. 63. On May 8, 2007, Mark Thorsrud of the law

firm of Thorsrud Cane & Paulich appeared in this action for Defendant. Dkt. 28.

On July 27, 2007, the parties exchanged their initial disclosures. Second

Declaration of Michael J. Crisera (“Second Crisera Decl.”), Dkt. 127, Exh. C. In its

initial disclosures, Defendant did not list Mr. Thorsrud as a potential fact witness. Id. 

Plaintiff asserts that:

at no time before the May 12, 2008 discovery cut-off date in this case did

Charter Oak seek to amend its initial disclosures to list Mr. Thorsrud as a

potential fact witness. Moreover, at no time prior to the discovery cut-off

did Charter Oak ever indicate it believed Mr. Thorsrud should be a witness

in the matter, even though Charter Oak now claims Mr. Thorsrud is a

“witness” to events occurring in 2004.

Dkt. 126 at 2.

 On June 2, 2008, the law firm of Cole Lether Wathen & Leid, PS, associated as

counsel for Defendant and appeared in this action. Dkt. 110. Defendant’s counsel claims

that he informed Plaintiff’s counsel on June 3, 2008, that Mr. Thorsrud would be a

potential fact witness. Declaration of Thomas Lether, Dkt. 140 ¶ 2. Defendant’s counsel

also claims that he has repeatedly advised Plaintiff’s counsel that Mr. Thorsrud would be

available for a deposition at Plaintiff’s convenience. Id. ¶ 5.

On June 13, 2008, Plaintiff filed a Motion to Strike Defendant’s Supplemental

Witness Disclosure. Dkt. 126. On July 22, 2008, the Court denied Plaintiff’s motion

allowing Defendant to use Mr. Thorsrud as a fact witness. Dkt. 168. The Court also

ordered Defendant to show cause why sanctions should not be imposed for Defendant’s

late disclosure. Id. On August 1, 2008, Defendant filed a brief in response to the order

to show cause. Dkt. 174. On August 6, 2008, Plaintiff responded. Dkt. 175. On August

8, 2008, Defendant replied. Dkt. 176.
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ORDER – 3

II. DISCUSSION

A. Show Cause

Fed. R. Civ. Pro. 37(c)(1) provides, in part, as follows:

If a party fails to provide information or identify a witness as

required by Rule 26(a) or (e), the party is not allowed to use that

information or witness to supply evidence on a motion, at a hearing, or at a

trial, unless the failure was substantially justified or is harmless. In addition

to or instead of this sanction, the court, on motion and after giving an

opportunity to be heard:

(A) may order payment of the reasonable expenses, including attorney's

fees, caused by the failure;

Defendant has violated Rule 26 and, therefore, is subject to sanctions under Rule 37. See

Dkt. 168. Defendant asserts that it took actions to correct its violation and that Plaintiff is

compounding the issue with multiple pleadings. Dkt. 174 at 2. Defendant argues that

sanctions are not appropriate because Plaintiff could have mitigated the late disclosure of

Mr. Thorsrud by not only immediately taking his deposition but also cooperating to

determine the scope of discovery regarding Mr. Thorsrud. Id.; see also Dkt. 177

(Defendant’s response to Plaintiff motion for subpoena). Defendant, however, concedes

that it will pay for five hours of Plaintiff’s counsel’s fees and costs in conducting Mr.

Thorsrud’s deposition. Dkt. 174 at 3.

Plaintiff argues that “the Court should award [it] (1) the attorneys’ fees and costs it

will incur to prepare for and take Mr. Thorsrud’s deposition; and (2) the attorneys’ fees

and costs [Defendant] has, and will continue to incur to compel production of documents

from Mr. Thorsrud’s firm Thorsrud Cane & Paulich.” Dkt. 175 at 2.

The parties have over pleaded what is arguably a simple matter. Defendant has not

shown cause why sanctions should not be imposed. Defendant has made a mistake and

the rules of federal procedure give the Court authority to determine the appropriate

remedy for that mistake. The Court has already ruled that witness preclusion is not

appropriate given the time to conduct the necessary additional discovery. See Dkt. 168. 

Defendant, however, should be responsible for the costs of that necessary discovery. 
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ORDER – 4

Therefore, the Court orders that Defendant shall pay the reasonable expenses, including

attorney’s fees, caused by its failure to comply with Rule 26. 

The Court cannot determine what are the reasonable expenses based on the parties’

continuing inability to cooperate. Plaintiff’s costs on the underlying motion to strike and

its costs of deposing Mr. Thorsrud are most likely reasonable. Defendant’s cooperation

shall be taken into consideration when determining what expenses that both have been

and may be incurred are reasonable in light of the facts and circumstances involving Mr.

Thorsrud. If the parties are unable to determine what fees are reasonable, Plaintiff may

submit a bill of costs once discovery regarding Mr. Thorsrud has been completed. The

Court is hopeful that the parties can solve this matter without further Court involvement.

B. Defendant’s use of Mr. Thorsrud

Plaintiff claims that Defendant “incorrectly asserts that the Court has allowed Mr.

Thorsrud to testify at the parties’ reasonableness hearing.” Dkt. 175 at 3. In its response

to the underlying motion to strike, Defendant specifically stated that “it is respectfully

requested that the Court allow Mr. Thorsrud to testify if necessary at trial and that

Plaintiff be given an opportunity to take his deposition in advance of trial regardless of

the pending discovery cut-off.” Dkt. 138 at 11-12. In its reply to the order to show cause,

Defendant states that “[i]t was [Defendant’s] understanding that given the Court’s ruling

Mr. Thorsrud would be allowed to testify both at trial and in the reasonableness hearing.” 

Dkt. 176 at 2.

Under Rule 37, the Court may preclude a witness from testifying “at a hearing, or

at a trial.” See supra. Plaintiff’s argument regarding preclusion of Mr. Thorsrud at the

reasonableness hearing is unpersuasive. Defendant disclosed Mr. Thorsrud as a witness

on June 3, 2008. Plaintiff has had ample time to conduct discovery on Mr. Thorsrud. 

Defendant should not be held liable for Plaintiff’s choice to settle this discovery dispute

through multiple pleadings instead of amicable agreements. Moreover, Defendant claims

that Mr. Thorsrud’s testimony will be sufficiently limited. See Dkt. 174 at 1-3. 
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ORDER – 5

Therefore, the Court denies Plaintiff’s request that Mr. Thorsrud be precluded from

testifying at the reasonableness hearing.

III. ORDER

Therefore, it is hereby

ORDERED that Plaintiff’s request for sanctions is GRANTED in part and

DENIED in part as stated herein.

DATED this 18th day of August, 2008.

A 

BENJAMIN H. SETTLE

United States District Judge