Opinion ID: 2156635
Heading Depth: 2
Heading Rank: 4

Heading: Reopening of discovery.

Text: In order to support his claim that the judgment should be offset by amounts which, according to Allen, represent settlement of AAI's indebtedness on the promissory Notes, Allen requested authorization to reopen discovery. Allen contends that through discovery, he could potentially obtain information pertaining to the settling parties' understanding regarding the claims that were being settled and the amount properly and fairly attributable to each claim. Although discovery had been closed on May 30, 2002, Allen did not learn, nor could he have learned, of the contents of the settlement agreement until September 26, 2002, the date on which Yates was ordered by the court to provide Allen with a copy of that agreement. Nevertheless, the trial judge concluded that Allen had failed to raise a genuine issue of material fact, and she granted summary judgment in Yates' favor and denied Allen's motion to reopen discovery. In general, [d]iscovery rulings are confided to the discretion of the trial court.... Roberts-Douglas v. Meares, 624 A.2d 405, 415 (D.C.1992). However, [j]udicial discretion must ... be founded on correct legal principles, and a trial court abuses its discretion when it rests its conclusions on incorrect legal standards. In re J.D.C., 594 A.2d 70, 75 (D.C.1991) (citations omitted). A [trial] court by definition abuses its discretion when it makes an error of law. Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996). The trial judge denied Allen's motion to reopen discovery on the basis of her belief that Allen was not entitled to any reduction in his liability as a result of the compromise of any obligations by AAI. This holding is contrary to the RESTATEMENT and the principles discussed above, and therefore the judge exercised her discretion, at least in part, on the basis of an incorrect legal standard. Koon, 518 U.S. at 100, 116 S.Ct. 2035. Following the disclosure to him of the terms of the settlement agreement, Allen was in a far stronger position to argue that a genuine issue of material fact existed with regard to the nature of the obligations satisfied by AAI's payments pursuant to the settlement agreement and the effect of these payments on Allen's liability. In other words, once Allen had learned of the provisions of the settlement agreement, he was in a position to assert a defense which was not previously available to him. This reinforced the need for additional discovery, and we do not agree with the trial judge's conclusion, as a matter of law, that Allen was not entitled to an offset, that no further discovery was warranted, and that Yates was entitled to summary judgment. On remand, Allen should be given the opportunity to conduct reasonable discovery regarding the circumstances that led to the settlement agreement, any representations that may have been made at the time by the parties, and the purpose or purposes of any and all payments and other consideration received (or to be received) by Yates from the settling defendants. The trial court should also take into consideration the legal principles discussed in the authorities we have cited, including the RESTATEMENT; [11] Sere, 443 A.2d at 37; Berg, 673 A.2d at 1249; and Chicago Title Ins. Co., 707 A.2d at 925; as well as the lack of any fiduciary duty on the part of a debtor (or persons in privity with the debtor) to the creditor in this case. Finally, the court should determine whether, in contravention of these legal principles, the relief sought by Yates, or any part of it, would constitute a double recovery.