GREAT WEST CAPITAL, LLC, Plaintiff, v. JACK PAYNE; JUNIPER MOUNTAIN CATTLE, LLC, a Nevada limited liability company; NEVADA LIVESTOCK MARKETING, LLC, a Nevada limited liability company; and RACHEL PAYNE, Defendants, v. EASTGATE CATTLE CO., LLC, a Nevada limited liability company; EASTGATE CATTLE COMPANY, a Delaware limited liability company; and ARTHUR H. BERG, an individual, Counterclaim Defendants Case No. 3:22-cv-00768-IM United States District Court, D. Oregon Filed October 04, 2023 Counsel Jason M. Ayres, Justice J. Brooks, Tara J. Schleicher, Foster Garvey P.C., Portland, OR, Andrew J. Geppert, Pilar C. French, Lane Powell, PC, Portland, OR, April Stone, Matthew A. Levin, Markowitz Herbold PC, Portland, OR, Richard A. White, First Commerce, Lake Oswego, OR, for Plaintiff. Erick J. Haynie, Renee E. Rothauge, Perkins Coie, LLP, Portland, OR, Tonya Van Walleghem, Lake Oswego, OR, for Defendants Jack Payne, Juniper Mountain Cattle, LLC, Nevada Livestock Marketing, LLC. Erick J. Haynie, Renee E. Rothauge, Perkins Coie, LLP, Portland, OR, for Defendant Rachel Payne. April Stone, Matthew A. Levin, Markowitz Herbold PC, Portland, OR, Pilar C. French, Lane Powell, PC, Portland, OR, Richard A. White, First Commerce, Lake Oswego, OR, for Counterclaim Defendants Eastgate Cattle Co., LLC, Arthur H. Berg. Immergut, Karin J., United States District Judge ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO COMPEL *1 Before this Court is Plaintiff Great West Capital, LLC's (“Plaintiff”) Motion to Compel Discovery. ECF 46.[1] Plaintiff moves to compel Defendants Jack Payne, Rachel Payne, Juniper Mountain Cattle, LLC (“Juniper”), and Nevada Livestock Marketing, LLC (“NLM”) (collectively, “Defendants”) to produce documents related to: (1) the Payne Family Trust; (2) the U.S. Department of Agriculture's (“USDA”) stipulation agreement between NLM and the USDA; (3) Defendants’ annual audits performed under Nevada Revised Statutes (“N.R.S.”) 573.104; (4) Defendants’ bank statements and tax documents; and (5) defendants Juniper and NLM's organizational documents. Id. at 6–12. For the reasons below, Plaintiff's Motion is GRANTED IN PART and DENIED IN PART. BACKGROUND On July 17, 2018, Plaintiff executed a Commercial Loan Agreement (“CLA”) and Consolidated Promissory Note (“Note”) agreeing to lend funds to Defendants Jack Payne, Juniper, NLM, and Eastgate Cattle Company, LLC (collectively, “Borrowers”). ECF 68-1; ECF 68-2. In the CLA and Note, Plaintiff agreed to lend Borrowers six million dollars to finance a cattle operation. ECF 68 at ¶ 13; see ECF 68-1; ECF 68-2. On the same day, the parties executed a Security Agreement giving Plaintiff a security interest in all cattle owned or later acquired by Borrowers and “[a]ny right to payment, or proceeds thereof, that [Defendants Jack Payne, NLM, and/or Juniper] has or hereafter acquires with respect to any agreement with Eastgate Cattle Company, LLC” (collectively, “Secured Property”). ECF 68-3 §§ 2–3. The Security Agreement informed Borrowers of their obligation “not [to] sell, offer to sell, lease, or otherwise transfer or encumber” the Secured Property without Plaintiff's prior written permission and that any disposition of the Secured Property contrary to the Security Agreement would violate Plaintiff's rights. ECF 68-3 § 5(C). On May 22, 2022, Plaintiff filed a complaint, alleging that Defendants violated the terms of the CLA and Note by defaulting on their loan obligation, selling the cattle at issue, and retaining the proceeds. ECF 1 at ¶¶ 8–11, 26–32, 41, 52–54. Defendants answered on July 29, 2022. ECF 12. On March 17, 2023, Plaintiff filed the Motion to Compel currently before this Court. ECF 46.[2] On April 10, 2023, Defendants filed a Second Amended Answer to Plaintiff's complaint. ECF 65. In their Second Amended Answer, Defendants bring counterclaims against Plaintiff, and third-party claims against Eastgate Cattle Company, LLC (“Eastgate”) and Arthur Berg (“Berg”), (collectively “Counterclaim Defendants”). Defendants seek an accounting of their various business agreements with Plaintiff and Counterclaim Defendants and allege fraud against Berg, conspiracy to commit fraud against Plaintiff and Counterclaim Defendants, breach of contract against Counterclaim Defendants, promissory estoppel against Counterclaim Defendants, unjust enrichment against Counterclaim Defendants, and unlawful trade practices against Plaintiff and Counterclaim Defendants. ECF 65 at ¶¶ 61–103. Defendants claim that Plaintiff and Counterclaim Defendants are related—Berg is a member, manager, and founder of both Great West Capital, LLC, and Eastgate Cattle Company, LLC. ECF 65 ¶ 50. On April 12, 2023, Plaintiff filed its First Amended Complaint, alleging new claims, including violation of the Packers and Stockyards Act, 7 U.S.C. § 201, et seq., and various Nevada common-law claims. ECF 68 at ¶¶ 60–84. LEGAL STANDARDS *2 “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” based on the factors below: (1) “the importance of the issues at stake in the action,” (2) “the amount in controversy,” (3) “the parties’ relative access to relevant information,” (4) “the parties’ resources,” (5) “the importance of the discovery in resolving the issues,” and (6) “whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). If a party fails to obtain disclosures or discovery without court action, a party may move for an order compelling disclosure or discovery. Fed. R. Civ. P. 37(a)(1). Under the liberal discovery principles of the Federal Rules of Civil Procedure, the party resisting discovery bears a “heavy burden” of showing why discovery should not be allowed. Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975). DISCUSSION Plaintiff moves to compel the production of five categories of documents related to: (1) the Payne Family Trust; (2) the USDA's stipulation agreement between NLM and the USDA; (3) Defendants’ annual audits performed under N.R.S. 573.104; (4) Defendants’ bank statements and tax documents; and (5) defendants Juniper and NLM's organizational documents. Id. at 6–12. This Court will address each category in turn. 1. Payne Family Trust Documents This Court first considers Plaintiff's motion to compel “originating trust documents and any amendments [to] the Payne Family Trust.” ECF 46 at 6. Defendants answered Plaintiff's request for production by stating that the Payne Family Trust does not exist, thus there are no documents to produce. Id. In its motion, Plaintiff cites Malheur County records as evidence that the Trust exists or previously existed and contends that Defendants or their counsel misrepresented this fact and violated various ethical rules. ECF 46 at 6–7. Defendants respond that they diligently searched for the documents without finding them and even contacted the estate attorney of Defendant Jack Payne's deceased father to determine whether Jack Payne's father had created the Payne Family Trust. ECF 58 at 2–5. In support of their Response, Defendants also include an email from the estate attorney, David Brown, confirming that the elective trust referenced in the County records never came into existence. ECF 59-1, Ex. A. Defendant Jack Payne also affirmed that he diligently searched for Payne Family Trust documents and “could not find any documents indicating that there is, or ever was, a Payne Family Trust.” ECF 59 at ¶ 6. “This Court cannot compel the production of documents that do not exist.” Medina v. Cnty. of San Diego, No. 08cv1252 BAS (RBB), 2014 WL 4793026, at *19 (S.D. Cal. Sept. 25, 2014) (citation omitted). Based on the evidence provided by Defendants,[3] this Court finds that Defendants have established that no responsive documents related to the Payne Family Trust are in its “possession, custody, or control.” Fed. R. Civ. P. 34(a)(1). Plaintiff's motion is DENIED as to the Payne Family Trust documents. 2. U.S. Department of Agriculture's Stipulation Agreement with NLM Plaintiff also moves to compel all “documents related to the stipulation agreement between NLM and the U.S. Department of Agriculture, as described in USDA Release No. 053-22 dated June 23, 2022.” ECF 46 at 7. Plaintiff argues that these documents may establish Defendants’ pattern and practice of violating their custodial account obligations and may show where Defendants moved the proceeds after selling the Secured Property. ECF 46 at 7. Defendants respond that the requested materials are irrelevant and beyond the reasonable scope of discovery because they relate to different legal proceedings that occurred after the events alleged in the First Amended Complaint. ECF 58 at 5–6. *3 This Court finds that the documents related to the USDA enforcement proceedings are relevant. In the enforcement proceedings, NLM settled allegations that it breached its obligation to retain consignment revenue in a separate custodial account—revenue due consignors under the Packers and Stockyards Act, 7 U.S.C. § 181 et seq. ECF 47-7. Plaintiff's First Amended Complaint similarly alleges that Defendants improperly sold the Secured Property and did not remit the proceeds to Plaintiff as the security interest holder. ECF 68 at ¶¶ 46, 51, 57, 66. Given the relevance of the USDA investigation to these allegations in the First Amended Complaint, Plaintiff's motion is GRANTED as to the documents related to the stipulation agreement between NLM and the USDA. 3. Annual Audits Prepared Under N.R.S. 573.104 Next, Plaintiff moves to compel all “annual audits [ ] prepared and submitted in accordance with N.R.S. 573.104.” ECF 46 at 9. In response, Defendants only request that this Court grant Defendants’ proposed protective order to guard this and other private and confidential financial information from public disclosure. ECF 58 at 6. This Court previously denied Defendants’ request for a protective order, finding that Defendants failed to show specific prejudice or harm in the absence of a protective order. ECF 81. The parties then submitted an amended protective order, which this Court granted. ECF 103; ECF 105. Regardless, this Court finds that the audits at issue are relevant. N.R.S. 573.104 requires licensees who sell cattle on consignment to deposit sales proceeds into a separate trust account for the consignor. N.R.S. 573.104(1). Licensees are also required to submit an audit of their trust accounts to the State of Nevada on a yearly basis. N.R.S. 573.104(3)(c). Thus, the audits at issue are intended to identify the type of behavior alleged in the First Amended Complaint—the misappropriation of assets held in trust for third parties. Accordingly, Plaintiff's motion is GRANTED as to the audit documents under N.R.S. 573.104. 4. Bank Statements and Tax Documents Plaintiff also moves to compel all “monthly account statements, checks, wire transfers, or any other Documents [sic] related to any bank accounts of Defendants since November 1, 2016”; “annual state and federal tax returns for each of Defendants for the years 2016, 2017, 2018, 2019, 2020, 2021, and 2022, and all schedules thereto”; and every “monthly bank statement for the last six years for each bank account in the names of the following persons: NLM, Juniper, Jack Payne, Rachel Payne, and the Payne Family Trust.” ECF 46 at 9–11. Plaintiff claims that it needs this breadth of information to perform a full audit of the transactions relevant to this dispute. ECF 46 at 10–11. In response, Defendants agree to produce bank and tax returns related to the purchase and sale of the cattle at issue pursuant to a stipulated protective order. ECF 58 at 7. This Court agrees with Defendants that Plaintiff's requests are impermissibly overbroad because the request covers years prior to the parties’ CLA—2016 and 2017—and because the scope of documents requested extends beyond the sale of cattle at issue. Despite its stated justification, Plaintiff need not audit all of Defendants’ financial transactions to quantify the proceeds from the Secured Property and identify what happened to those proceeds. The bounds of allowable discovery extend only to “relevant” information. See Fed. R. Civ. P. 26(b)(1). Here, relevancy requires that information relate to the purchase and sale of cattle at issue or another allegation in the First Amended Complaint. Accordingly, Plaintiff's motion is GRANTED IN PART as to documents related to the purchase and sale of the cattle at issue. Therefore this Court ORDERS Defendants to produce monthly account statements, checks, wire transfers, other documents related to any bank accounts, as well as any tax returns and underlying schedules related to the purchase and sale of cattle at issue since July 17, 2018. Plaintiff's motion is otherwise DENIED. 5. Defendants’ Organizational Documents *4 Lastly, Plaintiff moves to compel the “membership agreement and operating agreements, and any amendments, modifications, or resolutions” for Defendants NLM and Juniper. ECF 46 at 11–12. Plaintiff claims that these documents would reveal how Defendants carried out the alleged wrongdoing. Id. at 12. On the other hand, Defendants characterize these requests as a “fishing expedition” and argue that the organizational documents are not at issue in this proceeding. ECF 58 at 7. This Court finds that the organizational documents of Defendant LLCs are relevant. Plaintiff's motion is GRANTED as to Defendants Juniper and NLM's organizational documents. CONCLUSION For the reasons stated above, Plaintiff's Motion to Compel is GRANTED IN PART and DENIED IN PART. IT IS SO ORDERED. DATED this 4th day of October, 2023. Footnotes [1] This Court reminds the parties to abide by the District of Oregon's Local Rule 26-3(b), which requires that motions to compel not exceed ten pages or not exceed 3,000 words. Failure to comply with these requirements can be grounds for this Court to deny a party's motion without consideration. [2] Although Plaintiff's Motion to Compel, ECF 46, predates its First Amended Complaint, ECF 58, and Defendants’ Second Amended Answer, ECF 65, these later filings do not change this Court's analysis or the outcome of this order. [3] This Court notes that attorneys are officers of the court and are expected to comply with discovery requests in good faith. This Court will not hesitate to sanction attorneys who flout these expectations and violate their discovery responsibilities. See Fed. R. Civ. P. 37.