Opinion ID: 1933310
Heading Depth: 1
Heading Rank: 3

Heading: the claim of fraud and the discovery issue

Text: In his oral decision granting judgment to the defense on the plaintiffs' claim of fraud, the trial judge analyzed that claim as embracing four separate categories of fraudulent misrepresentation. [10] After discussing in some detail the evidence applicable to each category, the judge concluded that the plaintiffs had failed to prove by clear and convincing evidence that the defendants had engaged in any kind of fraud. On appeal, the plaintiffs do not challenge the judge's ruling that the evidence of fraud was insufficient, [11] but contend that they were effectively precluded from proving certain of these claims because the motions judge had erroneously denied their motion to compel discovery. We agree with the plaintiffs regarding the relevance of some of the discovery, but disagree with them as to the proper remedy. Before trial, the plaintiffs served the defendants with interrogatories and with several requests for production of documents. The defendants objected to a substantial number of the plaintiffs' requests and refused to comply with them. The plaintiffs then filed a motion to compel discovery. On November 3, 1987, the motions judge entered an order granting the plaintiffs' motion in part, subject to a confidentiality agreement to be worked out between counsel. By implication, the motions judge denied the motion to compel discovery as to the remaining items. The plaintiffs now appeal from portions of this partial denial of their requested discovery. [12] In order to understand the contentions of the parties with respect to the discovery issue, it is necessary to distinguish the materials as to which discovery was ordered, which we will call Category A, and those as to which it was implicitly denied, which we will call Category B. Category A included all financial statements of Evangel Temple, all records reflecting the receipt and expenditure of church funds, the amount and purpose of each expenditure and the person to whom it was paid, the identities of the members of Evangel Temple, the number and identities of persons making pledges to the building funds, the amounts pledged, all requests by contributors for return of their money, and the identities of financial institutions at which Evangel Temple deposited its money. Category B included information relating to the financial condition of each individual defendant. In her written order, the judge gave no indication as to why she had denied the motion with respect to information in Category B. The defendants contend, however, that her decision should be sustained for three reasons: 1. the information sought was relevant only to the issue of punitive damages, and its production could therefore properly be deferred until after a determination of liability; 2. the plaintiffs were allegedly attempting to try their case in the press, and would have improperly publicized any information secured through discovery regarding the individual defendants' financial affairs; and 3. the plaintiffs failed to examine the documents in Category A which the defendants did produce for inspection. We address each of these contentions in turn.
The information regarding the financial condition of the individual defendants was concededly relevant to a remedial issue, namely, the amount of punitive damages that should be awarded if liability for such damages were imposed. See, e.g., Robinson v. Sarisky, 535 A.2d 901, 907 (D.C. 1988). Indeed, the judge ruled that this information would have to be disclosed if the plaintiffs established liability. We hold, however, that the significance of the requested information was not limited to punitive damages; it was also relevant to the issue whether the defendants had engaged in fraudulent misrepresentation. [13] In general, parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter of the action. Super.Ct.Civ.R. 26(b); Dunn v. Evening Star Newspaper Co., 232 A.2d 293, 295 (D.C.1967). Rule 26(b) specifically provides that it is no ground for objection that the matter sought will be inadmissible at trial, if it appears reasonably calculated to lead to the discovery of admissible evidence. Relevancy to the subject matter is construed most liberally, to the point that discovery should be granted where there is any possibility that the information sought may be relevant to the subject matter of the action. Dunn, supra, 232 A.2d at 295. Discovery rulings are confided to the discretion of the trial court, but that discretion must be exercised in conformity with these principles. Id. at 295-96. In the present case, the plaintiffs have alleged fraudulent conduct which is said to have included both misrepresentation and misappropriation. The claim of misrepresentation is based in part on the plaintiffs' allegation that Bishop Meares and his sons falsely represented to their parishioners that the church and its leadership were in dire economic straits and in desperate need of money. The plaintiffs claimed, in fact, that the defendants misrepresented the earnings of the individual defendants, and that they concealed from the parishioners that apparently generous pledges and contributions by Bishop Meares were in fact being offset at the Temple's expense ( e.g., by the Temple's purchase of a new home for the bishop in Largo, Maryland for $300,000). In effect, according to the plaintiffs, the defendants pretended that they were making financial sacrifices which they were not in fact making, depicted themselves as being worse off financially than they really were, and engaged in this deceptive conduct in order to induce the plaintiffs to make contributions which the plaintiffs could not reasonably afford to make. In the context of these allegations, we are satisfied that interrogatories and requests for production of documents relating to the financial situation of Bishop Meares and his sons, were reasonably likely to lead to the discovery of admissible evidence. Cf. Ambassador College v. Geotzke, 675 F.2d 662, 663-65 (5th Cir. 1982), cert. denied, 459 U.S. 862, 103 S.Ct. 138, 74 L.Ed.2d 118 (1982). One reason which the trial judge gave for granting judgment for the defendants on the plaintiffs' claims of fraud and misappropriation was that the plaintiffs had failed to produce evidence showing that any of the defendants had diverted to their personal use funds which had been contributed to the Temple for charitable purposes. [14] Although the judge did not explicitly address the point, the plaintiffs were likewise unable to prove that the individual defendants had lied about their own financial condition. Without the discovery which the motions judge had denied, however, the plaintiffs had no readily direct access to information regarding the individual defendants' financial circumstances. Such information would potentially shed light on the question whether these defendants had attempted to induce contributions by misrepresenting their own circumstances, and in effect by urging parishioners to emulate noble deeds which were never really done.
The defendants also seek to sustain the motions judge's refusal to order discovery of the Category B materials upon the ground that the plaintiffs were allegedly attempting to try their case in the press, and that disclosures about the individual defendants' financial condition would therefore have threatened to bring about unwarranted intrusions into their privacy. Denial of discovery of information relevant to the subject matter of the action, however, is not an appropriate remedy for the alleged conduct on the part of the plaintiffs of which the defendants complain. Superior Court Civil Rule 26(c) authorizes the trial court to grant a protective order for good cause shown. To prevent abuse of the discovery process, the order may impose specific terms and conditions for discovery and may require that confidential information be disclosed in a certain manner, or not be disclosed at all. Mampe v. Ayerst Labs., 548 A.2d 798, 803 (D.C.1988); see also Seattle Times Co. v. Rhinehart, 467 U.S. 20, 34-36, 104 S.Ct. 2199, 2209-10, 81 L.Ed.2d 17 (1984). Indeed, the motions judge directed the parties to attempt to negotiate an appropriate confidentiality agreement with respect to the Category A information as to which she ordered disclosure. There are no findings in the record to suggest that anything more drastic than that was or could be warranted with respect to Category B.
The defendants also contend that they produced for inspection by opposing counsel those Category A records and documents as to which the motions judge granted the plaintiffs' motion to compel discovery, but that opposing counsel never examined these records. At argument, the plaintiffs' counsel conceded that this was true. Although, to put it charitably, there is little to commend a practice of demanding access to records and documents and of then ignoring them after they have been duly produced for inspection and copying, [15] the plaintiffs' unorthodox approach to the Category A records is essentially irrelevant to their right to receive Category B information, at least in the absence of overlap between the two groups. Whether or not the plaintiffs made use of available information relating to one set of issues, they had the right to receive relevant information on other issues. The defendants have provided us with no authority for the proposition that discovery to which the plaintiffs were otherwise entitled may be denied for reasons relating to the manner in which they exercised (or, in this case, failed to exercise) other discovery rights. Moreover, absent a crystal ball, the motions judge could not have based her denial of access to Category B information on the plaintiffs' failure to inspect Category A records, for that conduct had not yet occurred at the time of her order. [16] We note, at the same time, that the defendants are obviously under no obligation, simply because the plaintiffs have failed to exercise their rights, to produce something for the plaintiffs' inspection more than once. If it is established to the satisfaction of the trial judge that any Category B records now sought by the plaintiffs were made available under Category A, but not inspected or copied, the judge may exercise his or her discretion accordingly.
The plaintiffs have taken the position that if the motions judge's discovery order was erroneous, then they are entitled to a new trial on their claims of fraud. Such a remedy would, however, be out of proportion to the error. A more balanced disposition, under the circumstances of this case, is to remand the case to the trial court with directions to reconsider the plaintiffs' motion to compel discovery, see note 12, supra, in conformity with our holding that information as to each individual defendant's financial condition is relevant not only to the issue of punitive damages, but also to the question of liability, and specifically to the merits of the claim of fraudulent misrepresentation. While holding that the subjects embraced by the plaintiff's motion to compel were relevant, we leave to the trial court the initial balancing of the interests involved. In the trial court, the defendants made a generalized objection that the proposed discovery was unduly intrusive, burdensome and oppressive. See Super.Ct.Civ.R. 26(c). Conclusory assertions of this kind are insufficient. Lewis v. Capital Mortgage Investments, 78 F.R.D. 295, 311 (D.Md.1977); Klausen v. Sidney Printing & Publishing Co., 271 F.Supp. 783, 784 (D.Kan.1967); see generally 4 JAMES WM. MOORE, MOORE'S FEDERAL PRACTICE, § 26-69, at 26-435 (2d ed. 1991). In the present case, however, the trial judge never explicitly addressed the question of intrusiveness and burdensomeness or its interplay with relevance. A demand for all of an individual's financial records for a significant period of time is potentially intrusive. Since the motions judge did order the defendants to provide (in Category A) a significant amount of information from which the individual defendants' dealings with the Temple might be traceable, the plaintiffs' need for the information was arguably less compelling. Given the availability to the plaintiffs of Category A records, the judge may well find it unnecessary to order all of the extensive discovery, some of it going back seventeen years, which the plaintiffs now seek as to each individual defendant. Especially in the context of a case of this kind, in which issues of religious liberty are potentially implicated, the court should, screen out irrelevant, broad based discovery when the answers might implicate [the defendants'] constitutional rights. Geotzke, supra, 675 F.2d at 665. Once the trial judge has balanced, in conformity with this decision, the interests implicated by the plaintiffs' motion to compel discovery, he or she should order the defendants to make any appropriate response. After any further answers to interrogatories have been provided, and after any appropriate records and documents have been produced, [17] the plaintiffs should be given the opportunity to proffer any new evidence they believe would further substantiate their claims of fraud. The trial judge should then determine whether the evidence presented at trial, as supplemented by any newly-proffered evidence, has the potential to survive a defense motion pursuant to Super.Ct.Civ.R. 41(b). If the new materials have no such potential, the judge may reaffirm his prior decision, but should make a sufficient assessment of any newly-proffered evidence to render his ruling amenable to appellate review. If renewed discovery does provide information which might affect the result, the trial judge should reopen the record and receive the newly available evidence or, if necessary, order a new trial on the claim of fraud. [18]