Franklin Avenue Holdings, LLC v. County of Benton
| Decision Date | 15 March 2021 |
| Docket Number | 05-CV-19-736 |
| Parties | Franklin Avenue Holdings, LLC, Petitioner, v. County of Benton, Respondent. |
| Court | Tax Court of Minnesota |
This matter came before the Honorable Jane N. Bowman, Judge of the Minnesota Tax Court, on respondent's motions to compel discovery, request for attorney fees, or in the alternative motion to dismiss.
Christopher A. Stafford and Thomas R. Wilhelmy, Fredrikson & Byron, P.A., represent petitioner Franklin Avenue Holdings, LLC.
Michelle L. Meyer, Assistant County Attorney, represents respondent Benton County.
ORDER ON RESPONDENT'S MOTIONS
This matter concerns the value of real estate for taxes payable in 2019. Benton County moves for an order to compel discovery seeks attorney fees, or in the alternative, moves for dismissal. Franklin Avenue Holdings, LLC (Franklin Avenue) agrees it owes discovery responses, but otherwise opposes the motions. Based upon all of the files, records and proceedings herein, the court now makes the following:
1. The County's motion to compel discovery is granted.
a. By prior ruling from the bench, Franklin Avenue had until December 31, 2020, to respond to Benton County's First Set of Interrogatories and Requests for the Production of Documents and Things.[1]
b. Benton County had until December 31, 2020, to submit a request for fees and expenses associated with this motion.[2]
c. Franklin Avenue had until January 14, 2021, to submit any response to the County's request for fees and expenses.[3]
2. Benton County's motion for attorney fees associated with bringing its motion to compel is granted. Franklin Avenue shall pay to Benton County its reasonable attorney fees, totaling $1, 500.
3. The County's motion to dismiss for failure to respond to discovery is denied as moot.
IT IS SO ORDERED.
On September 11, 2020, Benton County served its First Set of Interrogatories and Requests for Production of Documents and Things.[4] With no response, the County followed up by email on October 16, 2020.[5] Still with no response, the County sent Franklin Avenue a letter via U.S. Mail noting its lack of discovery responses.[6] As of November 13, 2020, Benton County had not received any responses or communication from Franklin Avenue concerning the outstanding discovery.[7] With its motions, the County asked this court for an order compelling responses and requested expenses, including attorney fees, or alternatively, dismissal.[8]
In response, Franklin Avenue candidly acknowledged the County is entitled to discovery responses, and stipulated to an order compelling discovery by December 31, 2020.[9] Franklin Avenue, however, opposed the request for fees and expenses, as well as the County's motion to dismiss.[10] Counsel explained Franklin Avenue had recently informed counsel that its email and data manager was the victim of a November 24, 2020 ransomware attack, implying the ransomware attack prevented Franklin Avenue from responding to the County's discovery requests.[11]
In reply, Benton County noted that while a ransomware attack is unfortunate, it should not have prevented responding to discovery that was due approximately one month before the attack, nor should it haven prevented counsel from addressing the outstanding discovery with the County until it filed its December 10, 2020 responsive motion.[12]
At the hearing, this court ordered Franklin Avenue to respond to the County's discovery by December 31, 2020.[13] The court also gave the County until December 31, 2020, to submit an affidavit of fees and expenses, and Franklin Avenue until January 14, 2021, to submit any opposition to the County's expense request.[14]
By the deadline, Benton County filed an expense affidavit attesting to six hours of attorney time spent on the motion, totaling $1, 500.[15] In response, Franklin Avenue did not dispute the time or rate spent on the motions as unreasonable, and presented a copy of its Responses to Respondent's First Set of Interrogatories and Requests for Production of Documents and Things.[16]Franklin Avenue's discovery responses confirmed certain-but not all-data were inaccessible due to a ransomware attack, but did not state when the attack occurred.[17] Franklin Avenue continued to oppose the County's request for fees, arguing the ransomware attack-which was outside of Franklin Avenue's control-justified its failure to respond.[18]
Parties may obtain discovery by methods including written interrogatories and requests for production of documents. Minn. R. Civ. P. 26.02(a).[19] Rule 26.02(b) of the Minnesota Rules of Civil Procedure governs the scope and limits of discovery and provides in part as follows:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.
Minn. R. Civ. P. 26.02(b). A party seeking discovery may move for an order compelling an answer or production. Minn. R. Civ. P. 37.01(b)(2). Here, Franklin Avenue agreed the County was entitled to responsive discovery.[20] At the December 17, 2020 hearing, this court ordered Franklin Avenue to respond to the County's discovery by December 31, 2020, and now so memorializes.[21]
Benton County next requests $1, 500 in attorney fees associated with bringing the motion.[22] Rule 37 of the Minnesota Rules of Civil Procedure governs fee awards, stating in part:
If [a motion to compel] is granted … the court shall, after affording an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in making the motion, including attorney fees ….
Franklin Avenue acknowledges the rule mandates cost-shifting, but argues an exception should apply.[23] Specifically, Franklin Avenue argues its nondisclosure "was substantially justified" because it responded to the County's discovery by December 31, 2020, and-where the ransomware attack prevented it from responding-it is seeking responsive materials from third parties.[24] See id.
This court need not analyze whether an undated ransomware attack substantially justified the late responses, as Franklin Avenue failed to communicate with the County about discovery until its December 10, 2020 response.[25] Benton County, without any communication from Franklin Avenue, was forced to bring the current motion. Additionally, Franklin Avenue's responses confirm that the ransomware attack did not affect its ability to respond to much of the County's discovery.[26] The County's request for $1, 500 in attorney fees is granted.
Lastly, the County alternatively moved to dismiss Franklin Avenue's petition for failure to comply with its discovery obligations.[27] Because this court granted the County's motion to compel discovery at the December 17, 2020 hearing, the court also denied the County's alternative motion to dismiss as moot. This court now memorializes that ruling as well.[28]
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Notes:
[2] Tr. 12.
[3] Tr. 12.
[5] Meyer Aff. Ex. B.
[6] Meyer Aff. Ex. C.
[7] Meyer Aff. ¶¶ 4-5.
[8] Resp't's Statement of Points and Authorities 2-3 (Nov. 16, 2020).
[9] Pet'r's Response 1 (Dec. 10 2020) ("Taxpayer Franklin Avenue Holdings, LLC acknowledges that Benton County is entitled to the information requested in discovery.").
[10] Pet'r's Response 2.
[11] Pet'r's Response 1-2. At the hearing, counsel for Franklin Avenue clarified that although the details of the attack were still unknown to counsel, it was likely the attack occurred prior to November 24, 2020). Tr. 7.
[12] Resp't's Reply Mem 1-2 (Dec. 14, 2020).
[13] Tr. 11-12.
[14] Tr. 12. In so doing, the court also explained that this...
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