Deponent Sanction Not Applied Against Defendants

In this suit by plaintiff investors in a wood products business against their business manager’s alleged kickback scheme, an Abingdon U.S. District says although several defendants who refused to answer deposition questions may not use their own testimony at trial, other defendants are not subject to this sanction and may use those defendants’ testimony.

These regrettably long-pending cases all involve claims by plaintiff investors in a wood products business, that their business manager and his wife (and related entities) enlisted an unscrupulous supplier who sold equipment to the business at inflated prices and then paid kickbacks to the manager. Plaintiffs also claim the manager lied to investors about the financial situation of the business, mismanaged it and stole from it.

The court previously entered summary judgment against the supplier, Lobo Machinery Corp., Lobo Power tools Inc., and two individuals connected with these companies, Robin Yuan and his wife Esther Chang. The court previously entered summary judgment against Lobo Machinery Corp., Lobo Power Tools and Yuan, as to liability, but denied summary judgment as to defendant Chang. The case was set for a bench trial as to Chang’s liability and damages as to the other defendant. After summary judgment motions were filed, the trial was cancelled.

In Treads v. USA LLC v. Boyd LP I, No. 1:08cv00027, plaintiffs assert claims against the business manager’s wife, Teresa Colston-Boyd, Boyd LP I and Creative Wood Works Inc. Burke LP I v. Boyd, No. 1:10cv00038, is a withdrawn adversary proceeding from the bankruptcy court that asserts against the business manager, Luther Boyd, the same claims as in No. 1:08cv00027. The court previously granted summary judgment and a default judgment as to liability against L. Boyd.

Plaintiffs seek summary judgment as to damages against each of the defendants, except Chang, as to whom the court denied summary judgment on liability.

I find there are still genuine issues of material fact as to such damages which must be resolved at trial. The court also rules on several pretrial motions on evidentiary issues.

A prior order sanctioned Yuan from offering any defense, evidence or argument as to the true cost to Yuan and his companies of finishing machines, the amount of markup by Yuan or the companies in the sale of finishing machines that would have justified the price paid or the value of the machines. However, there has been insufficient cause shown to justify imposing this sanction against the remaining defendants, who will not be precluded from using Yuan’s relevant testimony.

Similarly, other defendants can use Chang as a witness on certain matters at trial, even though she has been limited as a sanction after she invoked her Fifth Amendment rights at deposition.

The court entered default judgments against L. Boyd and Teresa Colston-Boyd because of their refusal to answer questions at depositions, even though they had waived their Fifth Amendment rights by their prior testimony in the case. But the court finds insufficient cause to justify imposition of this sanction against the other defendants.

VFI Associates LLC v. Lobo Machinery Corp. (Jones) No. 1:08cv00014, Sept. 12, 2011; USDC at Abingdon, Va.; Thomas A. Leggette for plaintiffs; Jay H. Steele, Steven R. Minor, R. Lucas Hobbs, John M. Lamie for defendants. VLW 011-3-503, 8 pp.