United States District Court, D. North Dakota
Madjid Berd, et. al., Plaintiffs,
Paul De Bastos and Paul Real Estate, Defendants.
ORDER GRANTING IN PART MOTION TO COMPEL AND ORDER TO
CHARLES S. MILLER, JR., MAGISTRATE JUDGE.
filed this action in the wake of proceedings filed against
North Dakota Developments, LLC (“NDD”), Robert
Gavin, Daniel Hogan, and several “relief
defendants” by the United States Securities and
Exchange Commission, alleging that NDD, Gavin, and Hogan had
fraudulently raised more than $62 million from investors
through the sale of interests in North Dakota man camps.
See Case No. 4:15-cv-053 (D.N.D. May 5, 2015). In
the complaint in this action, plaintiffs allege Paul De
Bastos and Paul Real Estate, Inc. (“Paul Real
Estate”), acting as NDD's sales agents, actively
assisted NDD in offering and selling unregistered, nonexempt,
and fraudulent securities from May 2012 to April 2015.
Specifically, plaintiffs assert claims against Paul Real
Estate and De Bastos, by separate counts, for violations of
Section 10(b)-5 of the Securities Exchange Act of 1934 (15
U.S.C. § 78(j)) and SEC Rule 10b-5 (17 C.F.R. §
240.10b-5) in connection with the offer or sale of NDD
securities and for violations of N.D.C.C. § 10-04-17 by
offering and selling unregistered securities and selling
securities as an unlicensed agent. De Bastos is president of
Paul Real Estate, a Florida corporation and alleged alter ego
of De Bastos.
Real Estate did not respond to the complaint and a
clerk's entry of default was filed as to it on March 2,
2017. Paul Real Estate subsequently filed for bankruptcy in
the Southern District of Florida on or about June 8, 2017.
And, on November 27, 2017, De Bastos filed a motion to stay
this action in its entirety pending Paul Real Estate's
bankruptcy, averring that his assets and those of Paul Real
Estate may be intertwined. This motion was denied.
Bastos responded to the complaint by filing a motion to
dismiss for lack of personal jurisdiction. This motion was
denied on November 2, 2017. Since that time, if De Bastos has
served an answer to the complaint, he has not filed it with
November 2, 2018, plaintiffs filed a Motion to Compel
Discovery pursuant to Fed.R.Civ.P. 37. Plaintiffs seek an
order directing De Bastos to produce documents responsive to
their first request for production of documents and provide
more detailed responses to their first set of
interrogatories. Additionally, they seek an order determining
that De Bastos's answers and objections to their requests
for admissions are insufficient and that the matters either
be admitted or that an amended response be served. Plaintiffs
have filed copies of their discovery requests, De
Bastos's responses to these requests, and their e-mail
correspondence with De Bastos as exhibits. De Bastos has not
responded to the motion to compel.
Civ. P. 26(b)(1) addresses the scope of discovery in civil
actions and provides as follows:
(1) Scope in General. Unless otherwise
limited by court order, the scope of discovery is 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.
26(a) requires the parties to make certain initial
disclosures without a demand having been served by the
of Federal Rules of Civil Procedure sets forth the recourse
available to a party if the opposing party fails to fulfill
its discovery obligations. Relevant here, it provides that
“[i]f a party fails to make a disclosure required by
Rule 26(a), any other party may move to compel disclosure and
for appropriate sanctions.” Fed. R. Civ. P 37(a)(3)(A).
It also provides that a party may move to compel a response
from a party who fails to properly answer interrogatories or
produce requested documents. Fed.R.Civ.P.
respect to requests for admissions, Fed.R.Civ.P. 36(a)(6)
(6) Motion Regarding the Sufficiency of an Answer or
Objection. The requesting party may move to
determine the sufficiency of an answer or objection. Unless
the court finds an objection justified, it must order that an
answer be served. On finding that an answer does not comply
with this rule, the court may order either that the matter is
admitted or that an amended answer be served. The court may
defer its final decision until a pretrial conference or a
specified time before trial. Rule 37(a)(5) applies to an
award of expenses.
a party proceeding pro se is not excused from
complying with court orders or substantive and procedural
law. Farnsworth v. City of Kansas City, Mo., 863
F.2d 33, 34 (8th Cir.1988); Am. Inmate Paralegal Assoc. v
Cline, 859 F.2d 59, 61 (8th Cir. 1988); Burgs v.
Sissel, 745 F.2d 526, 528 (8th Cir. 1984) (per curiam).
Rule 26(a) Disclosures
Bastos must comply with the Rule 26(a) disclosure
requirements. The fact he is proceeding pro se is
not an excuse. Consequently, De Bastos shall make his Rule
26(a) disclosures on or before April 19, 2019. Failure to
comply may result in sanctions, including assessment of
attorney's fees and costs incurred because of the
non-disclosure, the exclusion of any evidence favorable to
him, the striking of defenses, or even the entry of a default
judgment against him. Fed.R.Civ.P. 37(c)(1).
Plaintiffs' First Request for Production of
April 16, 2018, plaintiffs served De Bastos with requests for
the production of documents in his possession, custody, or
control. (Doc. No. 45-1). On May 31, 2018, De Bastos
responded as follows:
Please note that many of my files and other office materials,
including NDD related documents were ruined by Hurricane
Irma. This notwithstanding, I have requested that my attorney
check his files to see what, if any information he can
provide to me that is not “work product” or other
privileged materials. He informed me that he will check and
provide what he may have, although this may take several
Such production would likely include “generic”
materials which the Plaintiffs may have received. I have
nothing specific to any of them. Nor do I have access to
certain email accounts any longer. Once I receive the
documents from my former attorney, I may be able to ascertain
whether any documents may have existed.
(Doc. No. 45-4).
Bastos's summary response as set forth above is
inadequate. Further, there is nothing in the record
indicating that he followed through on his promise to provide
what documents are subject to his control, including
specifically those in the possession of his attorney.
Bastos shall have until April 19, 2019, to file a proper
response to plaintiffs' requests for production of
documents. The response must include a separate response for
each request as required by Fed.R.Civ.P.
34(b)(2)(A). In responding to each request, De Bastos must
state either (1) that he has produced with his response the
documents sought in the request that are within his
possession, custody, or control (including those in the hands
of his attorneys) or (2) explain why the documents sought in
the particular request cannot be produced. As for the actual
production of the documents, the court concludes in this
instance that De Bastos, by not properly responding to
plaintiffs' document requests and plaintiffs' motion,
has waived any right (1) to object to the production requests
based on grounds of lack of relevancy, overbreadth, or
vagueness, or (2) to complain about plaintiffs' failure
to specify in their request for production of documents a
reasonable time, manner, and place for inspection of the same