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Giudice v. Harlan

United States District Court, S.D. New York

February 10, 2017


          Douglas A. Kellner, Esq., Thomas P. Vandenabeele, Esq. Kellner Herlihy Getty & Friedman LLP.

          Jack A. Gordon, Esq., Joshua B. Katz, Esq. Kent, Beatty & Gordon, LLP.



         Each of the parties in this case is a member of Rockland Capital, LLC ("Rockland"), a private equity fund manager. The plaintiffs allege, among other things, that the defendants breached Rockland's Operating Agreement by making certain distributions. The plaintiffs now move for an order precluding the defendants from calling at trial seven witnesses - Peter Van Raalte, C. Kenneth Clay, Tony Pucillo, Gerson Guzman, Adam Fitzner, Jason Ghoshhajira, and Jackson Yang (the "Disputed Witnesses") - on the ground that these individuals were not identified in the defendants' initial disclosures. The motion is granted in part and denied in part.


         As the relationship among the parties deteriorated, the defendants sent one of the plaintiffs, Michael Del Giudice, a Notice of Default, accusing him of breaching a term of the Operating Agreement that prohibits members of Rockland from participating in competing businesses. (Third Amended Complaint (“TAC”), ¶ 32; Notice of Default dated Oct. 9, 2015 (“Notice of Default”), attached as Exh. B to Declaration of Joshua B. Katz dated Jan. 11, 2017 (“Katz Decl.”)). Specifically, the Notice of Default alleged that Mr. Del Giudice violated the non-compete provision through his involvement with Carnegie Hudson Resources and Corinthian Capital Group (“Corinthian Capital”). (TAC, ¶ 32; Notice of Default). Accordingly, one of the causes of action in the complaint seeks a declaratory judgment that Mr. Giudice did not violate the Operating Agreement. (TAC, ¶¶ 31-38).

         On January 4, 2016, the parties exchanged initial disclosures pursuant to Rule 26(a)(1) of the Federal Rules of Civil Procedure. Both the plaintiffs and the defendants identified Steven J. Kumble, Chairman of Corinthian Capital Group, LLC, as a witness likely to have discoverable information about Corinthian Capital and Mr. Del Giudice's relationship to that entity. ([Plaintiffs'] Rule 26(a)(1) Initial Disclosures, attached as Exh. F to Katz Decl., ¶ I; Initial Disclosures of Defendants W. Scott Harlan, James Maiz, Shane Litts and Willie Zapalac, attached as Exh. G to Katz Decl., ¶ 1(k)). On September 21, 2016, the defendants took the deposition of Mr. Kumble, both as an individual and as a designee of Corinthian Capital pursuant to Rule 30(b)(6). (Deposition of Steven Kumble, attached as Exh. I to Katz Decl.; Katz Decl., ¶ 4; Deposition Notice to Corinthian Capital Group, LLC, attached as Exh. 3 to Plaintiffs' Memorandum of Law in Support of Their Motion to Preclude Defendants' Addition of Witnesses and for Attorney's Fees and Costs (“Pl. Memo.”)). Discovery closed two days later. (Order dated Aug. 4, 2016).

         So things remained until December 13, 2016, when counsel exchanged proposed designations of exhibits and witnesses. The defendants' list included the seven Disputed Witnesses, all of whom are officers or employees of Corinthian. (Email from Joshua B. Katz dated Dec. 13, 2016 (“Katz 12/13/16 email”), attached as part of Exh. K to Katz Decl.). Defendants' attorney suggested that testimony of these new witnesses “could be obviated by some simple factual stipulations, ” which he would propose shortly. (Katz 12/13/16 email). The plaintiffs declined the defendants' invitation to enter into a stipulation, objected to the Disputed Witnesses, and filed the instant motion. (Letter of Douglas A. Kellner dated Dec. 23, 2016, attached as Exh. 4 to Pl. Memo.).

         In the course of briefing the motion, the defendants shed some additional light on the rationale for identifying the Disputed Witnesses. According to defendants' counsel, Mr. Kumble had turned out to be an unsatisfactory witness:

While Mr. Kumble was able to answer some questions about the four portfolio companies, he was unable to answer many others, and sometimes testified that others at Corinthian would know the answers. Further, at some points in his testimony it appeared that Mr. Kumble may have been guessing or reading from a document rather than testifying from personal knowledge.

(Katz Decl., ¶ 5). Defendants' counsel therefore turned to other sources of information:

While preparing our list of trial witnesses in December 2016, I became concerned about Mr. Kumble's ability to give complete testimony about the Corinthian portfolio companies at trial. Accordingly, I visited Corinthian's web site,, and clicked on the “Team” link on its home page. The Team section listed four members of the “Investment Committee” (including Kumble) and four additional “Investment Professionals.”

(Katz Decl., ΒΆ 6) (citation omitted). The Disputed Witnesses are the seven additional persons identified ...

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