United States District Court, D. Maryland
TIMOTHY J. SULLIVAN, Magistrate Judge.
Plaintiff Kent Construction Company ("Kent") brought this action against Defendant Harry R. Ruby ("Mr. Ruby") for breach of fiduciary duty (Count Six), misappropriation (Count Seven), conversion (Count Eight) and fraud (Count Nine). (ECF No. 61.) Now pending before the Court is Kent's Motion for Summary Judgment ("Motion") (ECF No. 64). Mr. Ruby opposes the Motion. ( See ECF No. 66.) Having considered the submissions of the parties (ECF Nos. 64, 66 & 67), I find that a hearing is unnecessary. See Loc. R. 105.6. For the reasons set forth below, Kent's Motion (ECF No. 64) is GRANTED IN PART and DENIED IN PART.
A. Kent's Allegations
According to the Revised Second Amended Complaint (ECF No. 61), in February 2012, Kent entered into a contract with Global Force Auction Group, LLC ("Global") to auction some of Kent's personal property. (ECF NO. 61 ¶ 7.) Under the terms of the contract, Global was required to remit to Kent the proceeds of the auction, less Global's costs and commissions, within 15 business days of the conclusion of the action. (Id. ) Kent alleges that Mr. Ruby negotiated the contract on behalf of Global. (Id. ¶ 8.) Mr. Ruby told Kent that Global "was a reputable and financially sound auctioneer, " that Global "would hold the proceeds of the auction for Kent's benefit, " and that Global would ultimately remit the auction proceeds soon after the end of the auction. (Id. ¶¶ 9-11.) Kent alleges that it relied on Mr. Ruby's representations and contracted with Global for its auction service. (Id. ¶¶ 12-13.)
Global held the auction of Kent's property on May 5, 2012. (Id. at 13.) Global collected payments from the purchasers who had bid on the items and "transferred titles to approximately 438 items" to the purchasers. (Id. ) Global took its costs and commission from the proceeds of the auction and held the remainder of the proceeds in trust for Kent. (Id. at 15.) After the auction, however, Global failed to remit to Kent $97, 946.98 of the proceeds, plus accrued interest. (Id. at 16.) Thereafter, Kent demanded that Global send the auction proceeds to Kent, but Mr. Ruby admitted that "Global no longer had Kent's money." (Id. at 17.) Mr. Ruby explained that "unforeseen circumstances" obstructed Global's ability to forward the net proceeds of the auction to Kent. (Id. at 18.)
In May 2014, more than two years after the auction was held, Kent learned that Mr. Ruby had made "false and fraudulent" representations regarding Global and its financial state. (Id. at 19.) Specifically, Kent learned from Global and Mr. Ruby's responses to interrogatories that Global had been operating at a deficit at the time that Mr. Ruby had assured Kent that Global was a "solid, financially sound company." (Id. at 20.) In addition, Mr. Ruby admitted that although he had promised to remit the auction proceeds held in trust for Kent within 15 days of the action, it was the practice of Global and Mr. Ruby to use the proceeds of one auction to pay off clients from previous auctions and other creditors. (Id. ) Had Kent known that Mr. Ruby had misrepresented Global's financial condition and its practice of handling auction proceeds, it would not have entered into the auction contract. (Id. at 21.)
B. Discovery Sanctions
On April 21, 2014, the Court granted in part and denied in part a motion (ECF No. 28) filed by Kent seeking an order compelling Defendants to "serve complete, substantive and non-evasive responses" to certain discovery requests. (ECF No. 34.) In contravention of this order, Mr. Ruby produced incomplete responses to Kent's discovery requests. ( See ECF No. 59 at 2.) Kent filed a motion for sanctions (ECF No. 43), which the Court granted in part and denied in part. (ECF No. 59.) The Court found that the imposition of sanctions against Mr. Ruby was warranted, and awarded Kent attorney's fees in the amount of $5, 687.50. (Id. ) In addition to an award of attorney's fees to Kent, the Court imposed the following sanctions against Mr. Ruby:
1. Mr. Ruby is precluded from presenting any evidence, whether in motion or at trial, disputing Kent's assertions as to the content of communications between the parties;
2. Mr. Ruby is prohibited from making any affirmative assertions as to communications between the parties other than that there were innumerable communications, that Defendants have no record of these communications, and that, generally, they discussed the fact that the funds due from Global Force to Kent are no longer in Global Force's possession and also include the various steps taken by Global Force to satisfy its obligations to Kent;
3. Mr. Ruby is precluded from presenting any evidence as to the specifics of such communications;
4. Mr. Ruby is precluded from contesting the authenticity and accuracy of the contract, sale report and other documents attached to Kent's Requests for Admissions and/or produced by Kent in discovery;
5. Mr. Ruby is precluded from contesting that remaining unpaid amount due from Defendants to Kent is $97, 946.98 in principal, $19, 895.95 in accrued interest as of December 31, 2013, and additional interest of $16.10 per day for each day beginning on January 1, 2014; Mr. Ruby transferred hundreds of thousands of dollars from Global Force to himself and his family;
7. It shall be conclusively established that Mr. Ruby misappropriated, to his own benefit, net proceeds from the auction sale of Kent's personal property; and,
8. It shall be conclusively established that Defendants held the net proceeds of the auction in trust for Kent, and Mr. Ruby is precluded from introducing any evidence that they did not hold the net proceeds in trust for Kent.
(Id. at 3-4.)