Apa Excelsior III, L.P. v. Windley

• Decision Date: 27 July 2004
• Docket Number: No. CIV. 1:01-CV-3126-RWS.,CIV. 1:01-CV-3126-RWS.
• Parties: APA EXCELSIOR III, L.P., et al., Plaintiffs, v. Rodney D. WINDLEY, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

329 F.Supp.2d 1328

APA EXCELSIOR III, L.P., et al., Plaintiffs, v. Rodney D. WINDLEY, et al., Defendants.

No. CIV. 1:01-CV-3126-RWS.

United States District Court, N.D. Georgia, Atlanta Division.

July 27, 2004.

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Jonathan Terry McCants, Bird & Loechl, Richard L. Brittain, Bird & Loechl, Wendell R. Bird, Bird & Loechl, Atlanta, GA, William Terrence Casey, Jr., Hicks Casey & Barber, Marietta, GA, for APA Excelsior III L.P., Plaintiff.

Alison Danaceau, Paul Hastings Janofsky & Walker, Carl Wilson Mullis, III, Paul Hastings Janofsky & Walker, Cecil Francis Whitaker, III, Paul Hastings Janofsky & Walker, James Allen Maines Paul Hastings Janofsky & Walker, Michael D. Grider, Paul Hastings Janofsky & Walker, Atlanta, GA, for Rodney D. Windley, Defendant.

ORDER

STORY, District Judge.

Plaintiffs, shareholders in one of the Defendant corporations, brought this action alleging that they were wrongfully frozen out in connection with a transfer and acquisition of corporate assets. Plaintiffs are the following investment funds: APA Excelsior III, L.P., APA Excelsior III/Offshore, L.P., APA/Fostin Pennsylvania Venture Capital Fund, L.P., and Landmark Equity Partners V, L.P. (collectively referred to as the "Patricof Plaintiffs"); Humana, Inc. ("Humana"); and Fostin Capital Associates II LP ("Fostin Capital"). Defendant Healthfield, Inc. ("HFI") is a corporation providing home healthcare services that was founded in 1986 by Defendant Rod Windley. Plaintiffs were investors in HFI. In November 1996, HFI became a wholly-owned subsidiary of Defendant Healthfield Holdings, Inc. ("HHI").¹ In exchange for new financing, HHI gave a security interest in all of HFI's assets, including its stock, to Finova Capital Corporation ("Finova") in 1998.² After sending numerous notices of default, Finova commenced foreclosure proceedings against HHI in early 2001. Finova foreclosed on HHI's assets and held a public foreclosure auction on March 9, 2001. Defendants Four Seasons Healthcare, Inc. ("FSHI"), and Four Seasons Healthcare, LLC ("FSHLLC") (collectively, "Four Seasons"), which are owned by Windley, purchased HHI's assets at the auction.

Now before the Court for consideration are: Defendants' Motion for Summary Judgment [81-1] and Oral Argument [81-2]; Plaintiff APA's Motion for Summary Judgment on Counterclaim [84-1]; Plaintiff Humana's Motion for Summary Judgment on Federal Securities Claim [85-1]; Plaintiff Fostin Capital's Motion for Summary Judgment on Non-Securities Claims [89-1]; Defendant's Motion to Strike and to Disregard and Exclude Unauthenticated Documents [116-1]; Defendant's Motion to Disregard and Exclude Certain Inadmissible Documents [121-2]; Plaintiffs' Motion to Enforce July 22 Order [138-1]; and Plaintiffs' Motion for Permission to Name Expert Witnesses [138-2]. Having considered the record and the parties' briefs, the Court enters the following Order.

As an initial matter, the Court finds that the parties' briefs and exhibits are sufficient to enable the Court to rule on the pending motions; accordingly, Defendants's Motion for Oral Argument [81-2] is hereby DENIED. The Court turns to a number of outstanding evidentiary issues before considering the parties' motions for summary judgment.

I. Evidentiary Issues

A. Defendants' Motions to Disregard and Exclude Certain Evidence

Defendants raise objections to Plaintiffs' evidence attached to the affidavits of Collette Adams and Patti Stanley. In an Order entered March 31, 2004, the Court rejected Defendants' motions to strike the affidavits, but nevertheless concluded the affidavits were insufficient to authenticate the documents attached thereto. The Court reserved ruling on Defendants' other evidentiary objections. Those objections are now before the Court for consideration.

Attached to Collette Adams' affidavit are forty-five documents. With respect to most of those documents, Defendants concede that they can be authenticated by deposition testimony. However, Defendants specifically challenge six documents that they contend cannot be authenticated by any record evidence and contain hearsay: Plaintiffs' Exhibits 57, 58, 59, 60, 61, and 69.³ These six documents were produced in response to a non-party subpoena by a financial firm named Kugman & Associates ("Kugman").

In ruling on a motion for summary judgment, a court may consider only evidence that would be admissible at trial. White v. Wells Fargo Guard Servs., 908 F.Supp. 1570, 1577 (M.D.Ala.1995). However, evidence produced for summary judgment need not be in an admissible form if it could be reducible to admissible form for trial. United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1444 (11th Cir.1991).

Generally, documents must be properly authenticated in order for them to be considered on summary judgment. Burnett v. Stagner Hotel Courts, Inc., 821 F.Supp. 678, 683 (N.D.Ga.1993). Federal Rule of Evidence 901(a) provides that "[t]he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." "To meet this standard, the proponent need only demonstrate a rational basis for its claim that the evidence is what the proponent asserts it to be." United States v. Coohey, 11 F.3d 97, 99 (8th Cir.1993). Thus, courts may look to other evidence in the case to determine whether a challenged document meets the standard of Rule 901. See, e.g., Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1259 (11th Cir.1983) (examining other evidence and determining document was properly admitted under Rule 901).

With the exception of an invoice (Pls.' Ex. 60), the documents here all purport to be correspondence, or drafts of correspondence, prepared at Kugman to be conveyed to Defendants or Finova. Defendants contend these documents were never identified by their authors, recipients, or custodians in depositions. Plaintiff responds, however, that these documents were produced in response to a subpoena that requested "any and all documents which in any way relate to the foreclosure sale of Healthfield, Inc. ... and all correspondence with any person employed at or representing Healthfield, Inc. or Four Seasons Healthcare, Inc. from January 1, 2000 through August 31, 2001." Kugman's general counsel stipulated that all documents produced by Kugman were accurate copies responsive to the subpoena. Moreover, he stipulated that the firm did not have a records custodian, but that he had contacted the parties necessary to ensure that Kugman properly responded to the subpoena.

The Court has reviewed all of the six challenged documents. They fall within the relevant timeframe specified in the subpoena and are consistent with the undisputed facts showing there was some negotiation between Windley, Finova, and Kugman prior to the foreclosure. Moreover, based on deposition testimony regarding these documents, the Court concludes that they have been sufficiently identified and connected to the circumstances of this case to provide a basis for being considered in connection with the pending motions for summary judgment. (See, e.g., Kugman Dep. at 81-83 (discussing "Four Seasons Healthcare Proposal" referenced in Pls.' Ex. 57); id. at 87-88 (testifying with respect to Pls.' Ex. 58, "[i]t's a letter I prepared that is addressed to Michael Keller and Randy Abrahams at Finova.");⁴ id. at 104-05 (stating Pls.' Ex. 60, an invoice, appeared to have been prepared by Kugman firm); id. at 111-12 (stating, with respect to Pls.' Ex. 61, "I would guess that I did send the letter"); id. at 130-31 (testifying to circumstances referenced in Pls.' Ex. 69); Abrahams Dep. at 109-111, 121 (connecting Pls.' Ex. 59 with circumstances of case).)

Defendants also argue that these documents are offered for the truth of the matter asserted and are therefore hearsay; they contend that the business records exception in Federal Rule of Evidence 803(6) is inapplicable here. Plaintiffs respond that these documents are not hearsay because the statements in them were made by Defendants' agent, Kugman. Plaintiffs further emphasize that Kugman was authorized to speak on Defendants' behalf at the time the challenged exhibits were written.

The Court need not decide whether Kugman was acting as Defendants' agent because it finds that the documents are not offered for the truth of the matter asserted. See Fed.R.Evid. 801(c) (defining hearsay). Instead, the documents are offered to show such things as knowledge, state of mind, and prior planning. Accordingly, Defendants' Motion to Strike Affidavit of Collette Adams and to Disregard and Exclude Unauthenticated Documents [116-1] is hereby DENIED in part.⁵

In Defendants' Motion to Disregard and Exclude Certain Inadmissible Documents [121-2], Defendants challenge the following additional documents attached to Patti Stanley's affidavit: Plaintiffs' Exhibits 39, 59, 62, 70, 71, 72, 73, 75, 76, 77, 78, 81, 82, 83, 84, 85, 86, 90, and 91. It has not been necessary for the Court to consider these objections to reach its conclusions at summary judgment. At trial, Defendants may renew any objections to evidence that has not been discussed herein. Thus, Defendant's Motion to Disregard and Exclude Certain Inadmissible Documents [121-2] is hereby DENIED without prejudice.

B. Plaintiffs' Motion to Enforce and for Permission to Name Expert Witness

1. Motion to Enforce

Plaintiffs contend that Defendants failed to comply with the Court's Order entered July 23, 2003, regarding the production of financial documents. That Order gave Defendants five days within which to produce to Plaintiffs any audited and unaudited financial statements of FSHI as may exist for January 1, 2000 through April 25, 2003. According to Plaintiffs, Defendants waited six weeks and then produced only a single...