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Hoggatt v. Allstate Insurance

United States District Court, N.D. Mississippi, Aberdeen Division

August 19, 2019




         Before the Court are several related motions which are ripe for review.

         This case involves fraud and civil RICO claims by Ethan Hoggatt and his father, Dr. Eric Hoggatt, against Allstate Insurance and its employees, Andy Dyson and Suzanne Hand.[1] Plaintiffs are represented by attorney Victoria Hoggatt-Eric's wife and Ethan's mother. The plaintiffs originally filed this case in Monroe County Circuit Court, and on January 15, 2019, the defendants timely removed it to this Court. Plaintiffs moved to remand the case to state court, arguing that, because the state courts are competent to hear federal claims, removal was improper. The Court denied that motion.[2] By letter dated February 9, 2019, Allstate notified Eric and Victoria that it would not renew their automobile insurance based on Ethan's driving record and claim history. The notice also informed the Hoggatts that, pursuant to Section 612 of the Fair Credit Reporting Act, they had “the right to obtain a free copy of the report(s) from the consumer reporting agency(ies) that provided it to [Allstate] if [they] request it within 60 days of receiving this notice.” It also provided the contact information for the agency (identified as LexisNexis Risk Solutions) that supplied the motor vehicle report.

         Rather than seeking the report from LexisNexis Risk Solutions, Plaintiffs sought the report from Allstate.[3] Counsel for Allstate, Charles Cowan and Cory Radicioni-both with Wise, Carter, Child, and Caraway, P.A.-informed plaintiff that “[s]ince this matter is the subject of active litigation, any request for documents related to this litigation will need to be formalized in a discovery request following the Rule 16 conference in this matter.”

         On June 13, 2019, Allstate filed a motion to dismiss [30]. The individual Allstate defendants filed a motion to dismiss the next day [32].[4]

         On May 29, 2019, Plaintiffs submitted a letter and sworn criminal affidavit to Mississippi Insurance Commissioner Mike Cheney, United States Attorney for the Northern District of Mississippi Chad Lamar, and District Attorney for the First Circuit of Mississippi John Weddle.[5]The letter and criminal affidavit asked the recipients to investigate and prosecute Allstate and various others for acts related to this lawsuit. Notably, it charged Cowan, Radicioni, and their firm with “intentional and egregious obstruction of . . . Allstate's[] compliance with the legal requirements of the Fair Credit Reporting Act” and for conspiring to obstruct justice.[6]

         Upon learning of this letter and affidavit, Allstate's counsel contacted the Court by email on June 26, 2019, to request a telephonic conference pursuant to Fed. R. Civ. Pro. 16(b)(3)(B)(v) to discuss the discovery dispute and the outstanding affidavit. Allstate informed the Court of its intent to seek a protective order, but, recognizing this Court's practice-as well as the directive of Rule 16-sought a telephonic conference before filing any motions. The next day, the Court noticed a telephonic status conference for 2:00 that afternoon.[7] Allstate's counsel provided all parties, including the Court, with a call-in number. The Court delayed calling to give the parties time to all be on the line. At approximately 2:10, the undersigned's clerk called into the conference. He was informed that Plaintiffs' counsel was not on the line, but that defense counsel was attempting to reach her. Defense counsel was placed on hold, and the clerk checked in five-minute intervals whether Plaintiffs' counsel was on the line. Just prior to informing defense counsel that the conference would be rescheduled, the clerk was informed that Plaintiffs' counsel was joining the call. Only then did the undersigned join the conference.[8]

         At the conference, Plaintiffs' counsel informed the Court that she would be filing an amended complaint the next week to add Allstate's defense counsel as parties for what she termed as “obstructing her clients' statutory right to documents.” Defense counsel stated that if Plaintiffs were pursuing that course, they would be forced to file a motion for a protective order. The Court informed the parties that with these developments, along with the outstanding motions to dismiss, the case management conference would continue to be postponed[9] and the Court would await the proposed filings.

         The following Monday, Allstate filed its [38] Motion for Protective Order and Sanctions. The next day, Plaintiffs filed their [41] Motion for Leave to File First Amended Complaint. Although requesting leave, Plaintiffs filed their First Amended Complaint [44] without this Court granting leave to do so. Allstate filed a [45] Motion to Expedite Briefing and Ruling on its Motion for Protective Order and Sanctions. Subsequently, on August 8, 2019, Plaintiffs filed a [56] Second Motion for Leave to Amend Complaint.[10]

         Allstate argues that Plaintiffs' submission of a criminal affidavit charging its attorneys with obstruction of justice and related conspiracy “is wholly improper and constitutes an abuse of process.” Allstate asks that this Court “require Plaintiffs, by written correspondence, to request a withdrawal of the criminal affidavit;” “prohibit Plaintiffs and their counsel . . . from adding Allstate's . . . counsel in this case, Charles Cowan and Cory Radicioni, and their firm Wise Carter Child & Caraway as defendants in this matter or otherwise filing a separate action based . . . upon their conduct in defending their client in this litigation;” “require Plaintiffs and their counsel . . . to cease and desist from contacting Allstate and its employees/agents regarding any matter related to this litigation;” and “hold Plaintiffs and their counsel, Victoria Hoggatt, jointly, responsible for compensating Allstate for its reasonable attorney's fees incurred in responding to the May 28, 2019[, ] criminal affidavit and moving for the instant protective order and sanctions.”[11]

         Before responding to Allstate's motion, Plaintiffs sought leave to amend their complaint to, among other things, add defense counsel and their firm as defendants. As a preliminary matter, the Court notes that as grounds for granting leave to amend, Plaintiffs in their motion cite only to the Mississippi Rules of Civil Procedure-which do not apply to this action. Plaintiffs filed no memorandum supporting their motion and the sole basis sought for granting leave is to add parties and claims “due to newly discovered evidence.” However, Plaintiffs' proposed amended complaint[12] contains their arguments for amendment. Plaintiffs argue that the FCRA provides them an absolute statutory right to the documents requested from Allstate, and that if there is a conflict between that “federal law” and “state law” regarding discovery, then the supremacy clause mandates that “the federal law must be applied.” However, what Plaintiffs fail to appreciate is that this case is not governed by state rules of procedure, but rather by the Federal Rules of Civil Procedure. The Federal Rules, as well as this Court's Local Rules, are “laws of the United States.” Marshall v. Gates, 44 F.3d 722, 724 (9th Cir. 1995) (quoting U.S. v. Hvass, 355 U.S. 570, 575 (1958)). See also 28 U.S.C. § 2071; Fed.R.Civ.P. 83.

         Allstate's argument is two-fold. First, it argues that the FCRA directs that Plaintiffs have a right to request the documents from the reporting agency, not Allstate. Second, Allstate argues the documents relate to this litigation and therefore must be requested through formal discovery. However, the document-dispute itself is not before this Court. Plaintiff has not filed a motion to compel production. While Allstate has filed a motion for protective order, it does not ask the Court to determine whether it must produce the documents. What is before the Court are the following pertinent facts:

1. Plaintiff requested documents directly from Allstate, in response to a FCRA notice.
2. Allstate's attorneys responded that the documents relate to ongoing litigation and must be requested through formal discovery.
3. Plaintiffs submitted a criminal affidavit accusing Allstate's counsel of obstruction of justice.
4. Plaintiffs filed a motion for leave to amend and an amended complaint to add Allstate's counsel as defendants for obstructing justice and related conspiracy by refusing to produce the documents outside formal discovery.

         At bottom, Plaintiffs-and their counsel-claim they are entitled to documents outside of discovery. Allstate and its attorneys argue the documents must be requested through discovery. That-in and of itself-is a discovery dispute. The proper way to bring a discovery dispute to the Court's attention is by motion. As a matter of course, this Court's case management orders contain a provision that “before moving for an order relating to discovery, the movant must request a conference with the court.” See Fed. R. Civ. Pro. 16(b)(3)(B)(v). Although a case management order has not been entered in this case, the parties are encouraged to request a conference with the Court prior to filing a discovery motion-as Allstate's counsel sought to do. Plaintiffs neither requested a conference nor filed a motion. Instead, they submitted a criminal affidavit and amended complaint adding defense counsel for what is, ultimately, a discovery dispute.

         While the Court understands defense counsels' request that the Court order Plaintiffs to “take it back” and withdraw their criminal affidavit, the Court cannot do so. Plaintiffs have sworn-out a criminal affidavit. This Court has determined the accusations against defense counsel to be clearly baseless. If the letter is, as defense counsel argue, “harassing, malicious, and libelous, ”[13]then counsel may seek redress through the state's law of torts.[14]

         However, the Court finds that Plaintiffs'-through their own and their attorney's actions- have “unreasonably and vexatiously multiplie[d] the[se] proceedings.” See Rossmann v. Pulaski, 2017 WL 9512372, at *3 (N.D. Miss. Nov. 17, 2017). The Court has inherent power-emanating from the “control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases”-to impose sanctions for such conduct. Id. (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)). The particular sanction to impose is “uniquely committed to the sound discretion of the imposing court.” Id. (quoting Crowe v. Smith, 151 F.3d 317, 241 n. 39 (5th Cir. 1998)). ...

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