Jarvis v. Taylor et al

MOTION to Compel Discovery Responses

M.D. Ala.March 1, 2019

01175239 01152109 Page 1 of 31 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION CHRISTOPHER JARVIS, ) ) Plaintiff, ) ) v. ) Case No.: 2:17-cv-396-ECM-GMB ) TAYLORCHANDLER, LLC, ) T. BRITT TAYLOR, ) NORMAN CHANDLER, and ) JAMES R. JOHNSON, ) ) Defendants. ) DEFENDANTS’ MOTION TO COMPEL DISCOVERY RESPONSES COME NOW the Defendants, TaylorChandler, LLC, T. Britt Taylor, Norman Chandler, and James R. Johnson, and move this Court to compel Plaintiff Christopher Jarvis (“Plaintiff” or “Jarvis”) to provide discovery responses pursuant to Fed. R. Civ. P. 37, stating as follows: I. SUMMARY OF REQUESTED RELIEF Defendants seek to have Plaintiff answer numerous interrogatories and requests for production which Plaintiff claims are not relevant to the present litigation or that he claims he has properly answered. In reality, Plaintiff has only provided conclusory statements that are, at times, more vague than the allegations in his Amended Complaint. The first category of discovery requests at issue involves Defendants’ requests for information and documents related to Mr. Jarvis’ sale of life insurance, his financial planning services, and referral fees received in relation to Arsenal, Jade Risk, and other clients. Plaintiff argues this information is irrelevant despite specifically claiming in his Amended Complaint that Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 1 of 31 01175239 01152109 Page 2 of 31 the tortious actions of Plaintiff have interfered with and damaged his ability to sell life insurance to pre-existing and future clients. (Doc. 6, ¶¶ 83-89). Moreover, the issue of life insurance sales and financial planning is central to Defendants’ counterclaims and defenses in this case. Specifically, Defendants claim that after they acquired Jarvis’ former company, Jade Risk, LLC (“Jade Risk”), Jarvis was competing against them in the captive insurance management business by recommending and/or facilitating captive insurance clients of Jade Risk to surrender their captive insurance licenses. This would then leave a residual entity—in most if not all jurisdictions a C-Corporation—which retained the assets (normally cash) of the former captive insurance company. As explained more fully below, Plaintiff Jarvis would advise the Jade Risk client to invest in or transfer assets to a limited liability company (a “Preferred LLC” or “PLLC”) in exchange for a preferred membership interest in the PLLC. From here, Mr. Jarvis, either directly or indirectly would have the Jade Risk client purchase a large life insurance policy from which he, either directly or indirectly, would receive a commission or referral fee. These actions violated both his duties as specifically outlined in his Employment Agreement with TaylorChandler, LLC (“TaylorChandler”) and his general duties as an employee. This scheme also violated the Restrictive Covenants Agreement between the parties. Mr. Jarvis, as alleged in Defendants counter-claims and defenses, also diverted commissions for life insurance products owed, in whole or in part, to Defendants pursuant to the Membership Interest Purchase Agreement and Restrictive Covenants Agreement between the parties, as well as Jarvis’ Employment Agreement with Defendant TaylorChandler (the “Agreements”). (Doc. 10 at ¶¶ 45-46, 60-63). In relation to these counterclaims and defenses, Defendants have requested that Jarvis identify the individuals and/or entities from which he received referral fees or other income related Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 2 of 31 01175239 01152109 Page 3 of 31 to management of captive insurance plans, life insurance products, and financial planning from 2016 to present and also requested the production of related documents. The second category of discovery sought to be compelled relates to responses given by Plaintiff that are at best rote recitations of his Amended Complaint. Despite numerous attempts to confer with Plaintiff’s counsel in good faith, as recounted herein, Plaintiff has failed to fully and properly supplement his responses. II. FACTUAL BACKGROUND This case arises from a business deal gone awry. Plaintiff Jarvis sold Jade Risk, LLC (“Jade Risk”), a captive management services business, to Defendants Taylor, Chandler, and Johnson and was subsequently employed by TaylorChandler, LLC (“TaylorChandler”), an entity owned by Taylor and Chandler. After the Jade Risk acquisition, Defendants found that what they acquired in Jade Risk was not what Jarvis promised. Further, they found evidence that Jarvis was actively competing against Jade Risk and Defendants’ own affiliated captive insurance management business, Arsenal Insurance Management, LLC (“Arsenal”).1 Defendant TaylorChandler eventually terminated Jarvis’ employment for cause in May 2017, and Jarvis filed this lawsuit against Defendants. A. The Jade Risk Acquisition In September 2016, after months of negotiations, the parties finalized the sale of Jade Risk2 to Defendants Taylor, Chandler, and Johnson. Defendants already operated a captive insurance management company (Arsenal), and they saw opportunities for growth through the acquisition of Jade Risk. 1 Jade Risk was subsumed into Arsenal from an operational standpoint beginning in 2017. 2 Jarvis co-owned Jade Risk with Lawrence Anderson. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 3 of 31 01175239 01152109 Page 4 of 31 According to the Membership Interest Purchase Agreement (“MIPA”) which governed the Jade Risk acquisition, Defendants purchased Jade Risk for $3,000,000.00, with $2,250,000.00 paid up front and $750,000.00 subject to a promissory note that was contingent upon the attainment of certain performance measures with respect to the business. (Doc. 6-1 at § 1.3). Namely, Jade Risk3 had to produce revenues of at least $1,010,000.00 between July 1, 2016 and December 31, 2016, or there would be a 2016 Revenue Shortfall. (Id. at §1.3(b)). In addition, the sum of Jade Risk’s cash revenues between July 1, 2016 and December 31, 2017 plus outstanding accounts receivable as of December 31, 2017 had to equal or exceed $3,260,000.00, or there would be a 2017 Revenue Shortfall. (Id.) When there was both a 2016 Revenue Shortfall and a 2017 Revenue Shortfall, the $750,000.00 promissory note was required to be reduced by the amount of the lesser of the 2016 Revenue Shortfall and the 2017 Revenue Shortfall, according to the MIPA. (Id.) B. Jarvis’ Employment with TaylorChandler and Subsequent Termination In order to fully capitalize on the Jade Risk acquisition and at the insistence of Jarvis, Defendants employed Jarvis to maintain relationships with Jade Risk clients and to continue to market Jade Risk/Arsenal’s services as a captive insurance management company. (Exhibit A, Employment Agreement (ver. 5)). Jarvis’ Employment Agreement was designed to incentivize his performance with respect to these objectives. During the latter part of 2016, Jarvis was guaranteed a salary of $15,000.00 per month, but he was also eligible for $175,000.00 in deferred salary and a bonus of $20,000.00 for each captive insurance client originated by Jarvis and licensed 3 Jade Risk was effectively merged into Arsenal at the time of the acquisition, but the two entities were not fully merged until the beginning of 2017. During 2016, Defendants continued to maintain separate records for the existing clients of Jade Risk until merging them with the Arsenal records in 2017, but any new clients that resulted from Jarvis contacts or referrals during this time period were managed by Arsenal. Per the MIPA and Jarvis’ Employment Agreement with TaylorChandler, pertinent calculations for Jarvis/Jade Risk revenues examined revenues received by Jade Risk immediately prior to the merger into Arsenal plus revenues received by Arsenal solely attributable to captive insurance companies originated by Jarvis or his referrals sources he introduced to Arsenal after the Effective Date of the agreements. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 4 of 31 01175239 01152109 Page 5 of 31 after the Effective Date of the Employment Agreement (July 1, 2016), provided Jarvis met performance targets for revenue and number of captive insurance clients. (Exh. A at § 3.1). Jarvis’ duties as an employee of TaylorChandler included the promotion of TaylorChandler and its “Affiliates,” Arsenal and Jade Risk, as well as activities to establish and build new client relationships in the captive insurance industry while maintaining existing relationships. (Exh. A at § 2.1). He was also tasked with developing marketing strategies for increasing clients of Arsenal/Jade Risk’s insurance business. (Exh. at 2.1(c)). The parties agreed that Mr. Jarvis could continue to pursue other business activities (and retain all revenue therefrom), but only if those pursuits did not violate the terms of the Employment Agreement or the Restrictive Covenants Agreement, which was signed as part of the acquisition of Jade Risk and the employment of Jarvis by TaylorChandler. (Exh. at § 2.1 (“Employee is allowed to pursue other business activities and other forms of compensation, and Employee shall retain all revenue and profits therefrom, so long as Employee fulfills his obligations herein and does not violate the terms of the Restrictive Covenants Agreement entered by Employee incident to the Membership Interest Purchase Agreement.”) (emphasis added)). The Employment Agreement further provided: Employee is allowed to sell insurance to clients of the Company [TaylorChandler]; provided, however, Employee may not sell any life insurance products to captive insurance companies managed by the Company or Affiliates [Arsenal and Jade Risk] without the prior written consent of the Company. If Employee sells insurance to clients generated by his own efforts (including new clients and clients who were clients of Jade before the execution of the Membership Interest Purchase Agreement), Employee shall retain all revenue and profits therefrom. When clients obtained by the Company without the services of the Employee are introduced to Employee for insurance brokerage, a referral fee of 20% of the net commission received by the Employee shall be paid to the Company. (Exh. A at § 2.1). Although Jarvis was given latitude to pursue other business interests, he could not compete directly with TaylorChandler or its Affiliates, he could not sell life insurance to Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 5 of 31 01175239 01152109 Page 6 of 31 captive insurance company clients of Taylor Chandler or its Affiliates without prior written approval, and he owed referral fees to TaylorChandler for any insurance brokerage services provided to clients introduced to him by TaylorChandler. (Id.). In addition to the loss of a number of Jade Risk captive insurance clients that came over to Arsenal (and the discovery that some of the clients promised had already shuttered and would not become Arsenal clients), Defendants quickly realized that Jarvis: (1) was not performing the employment duties assigned to him in the Employment Agreement; (2) was advising current captives to shut down so he could sell life insurance products to these clients; (3) was using confidential and/or proprietary information of TaylorChandler and its Affiliates to promote his own business venture, JarvisTower; and (4) diverting commissions from life insurance sales for his own personal use when, in fact, they were due in whole or in part to TaylorChandler/Arsenal/Jade Risk. Based on Jarvis’ subversive behavior and systematic breach of duties to TaylorChandler as its employee, Defendants terminated Jarvis’ employment for cause in May, 2017. (Doc. 10 at ¶ 64). C. Jarvis Files the Instant Lawsuit; Defendants Counterclaim After termination from TaylorChandler, Jarvis filed suit against Defendants. He claimed that Defendants terminated him wrongfully, owed him money under both the MIPA and the Employment Agreement, and had damaged his professional integrity and client relationships, including his life insurance sales business. Defendants filed counterclaims against Jarvis related to the representations leading up to Defendants’ acquisition of Jade Risk and Jarvis’ conduct while an employee of TaylorChandler. Defendants specifically claimed that Jarvis had diverted commissions from life insurance sales that were due in whole or in part to Jade Risk and/or TaylorChandler. (Id. at ¶ 62). Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 6 of 31 01175239 01152109 Page 7 of 31 D. Discovery Issues Defendants requested that Jarvis identify individuals and entities from which he has received income related to the management of captive insurance plans or life insurance products and/or referral fees in relation to referring any individual or entity for the foregoing services from 2016 to present. Jarvis has steadfastly claimed that this information is not relevant and that Defendants’ request for the information is an improper attempt to “peer into Jarvis’ personal financial matters.” In addition, Jarvis has refused to completely answer several interrogatories propounded by Defendants in May 2018 and has instead generally recited the allegations in his Amended Complaint. (Doc. 6). For these reasons, Jarvis has refused to produce the information. III. STANDARDS FOR DISCOVERY AND MOTION TO COMPEL Discovery is available regarding “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b) (emphasis added). “The discovery provisions of the Federal Rules of Civil Procedure allow the parties to develop fully and crystalize concise factual issues for trial,” Sharp Realty Mgmt. LLC v. Capitol Specialty Ins. Corp., 2011 WL 13233728 (N.D. Ala. 2011) (quoting Burns v. Thiokol Chem. Corp., 483 F.2d 300, 304 (5th Cir. 1973) (internal quotation marks omitted)), and they “are to be applied as broadly and liberally as possible.” Hickman v. Taylor, 329 U.S. 495 (1947). Parties may use interrogatories “relate[d] to any matter that may be inquired into under Rule 26(b).” Fed. R. Civ. P. 33. Similarly, parties may request the production or inspection of documents within the scope of Rule 26(b). Fed. R. Civ. P. 34. If the relevant discovery is not forthcoming, a party may “move for an order compelling disclosure or discovery” if the movant has “in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.” Fed. R. Civ. P. 37(a). Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 7 of 31 01175239 01152109 Page 8 of 31 IV. ARGUMENT Despite Jarvis’ contentions to the contrary, the information requested by Defendants related to Jarvis’ sale of life insurance products—whether to Arsenal captive insurance clients or otherwise—is plainly relevant to Jarvis’ own claims and to Defendants’ counterclaims and defenses. In addition, Jarvis’ prior answers to Defendants original discovery requests are wholly incomplete and must be answered completely. A. Relevant Claims and Counterclaims Jarvis claims that Defendants wrongfully terminated his employment with TaylorChandler, failed to pay amounts owed pursuant to the MIPA governing the sale of Jade Risk to Defendants, and intentionally interfered with Jarvis’ independent business relationships. With respect to Jarvis’ claim of interference with business relationships (Count VI of Plaintiff’s Amended Complaint, Doc. 6, ¶¶83-89), Jarvis alleges that he has cultivated business and client relationships “in the tightly-knit circles of financial planning for ultra-high net worth individuals” over the course of several years and that Defendants’ actions have damaged Jarvis’ personal credibility with these clients and contacts. (Doc. 10, ¶ 50). More specifically, Jarvis claims that protectable business relationships exist in his sale to and management of life insurance policies and financial planning services for clients. (Doc. 10, ¶ 85). Jarvis claims that Defendants have intentionally interfered with these relationships and referral sources by deliberately failing to close and manage captive insurance deals set up by Jarvis for mutual clients and referral sources of Jade Risk and Jarvis. (Doc. 6, ¶ 88). Defendants have asserted counterclaims against Jarvis for violating the terms of his Employment Agreement, in accord with his termination letter. Jarvis’ Employment Agreement allowed him to sell life insurance, financial planning, and other products not in competition with Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 8 of 31 01175239 01152109 Page 9 of 31 Defendant’s business, provided that Jarvis had to fulfil his obligations under the Employment Agreement and could not sell life insurance products to captive insurance companies managed by Arsenal without the prior written consent of Arsenal. In addition, the Employment Agreement provided that Jarvis must pay to TaylorChandler a referral fee of 20% of the net commission received by Jarvis for insurance brokerage services provided to clients obtained by TaylorChandler without the services of Jarvis. Jarvis diverted commissions from former Jade Risk clients for his own benefit by requesting that one of his life insurance carriers cancel any uncashed checks in the name of Jade Risk and have them reissued to a new bank account in his name. (Doc. 34, ¶ 62). As outlined above, Defendants also allege that Jarvis evaded the prohibition on selling life insurance products to captive insurance companies managed by Arsenal by advising captive owners to shut down captive insurance companies so he could sell insurance directly to the owners. (Doc. 34, ¶ 63). As outlined in more detail herein, this was accomplished through the recurring pattern of Mr. Jarvis providing financial and tax planning services to Jade and Arsenal clients and former clients in the form of structuring Preferred LLCs for these individuals and entities. The foregoing claims and counterclaims have explicitly made the sale of life insurance products by Jarvis an issue in this case. B. The Discovery Requests at Issue and Jarvis’ Objections 1. Information related to income from life insurance sales. In a series of interrogatories and requests for production, Defendants requested that Plaintiff Jarvis identify individuals and entities from which he has received income related to the sale or management of captive insurance plans or life insurance products, financial planning, as well as referral fees in relation to referring any individual or entity for the foregoing services from Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 9 of 31 01175239 01152109 Page 10 of 31 2016 to present. (Def.’s Second Set of Interrogs. and Req. for Produc., Interrog. Nos. 25 and 26, labeled Nos. 2 and 3 (The full requests and answers are listed infra.)). Similarly, Defendants requested that Jarvis produce documents reflecting Jarvis’ receipt of such income and referral fees. (Def.’s Second Set of Interrogs. and Req. for Produc., Req. for Prod. Nos. 19 and 20, labeled Nos. 2 and 3 (The full requests and answers are listed infra.)). Defendants’ Second Set of Interrogatories and Requests for Production are attached hereto as Exhibit B. Jarvis systematically objected to producing information and documentation in response to the foregoing requests on the grounds that “it is not ‘relevant to any party’s claim or defense and proportional to the needs of the case.’ ” (Pl.’s Objections and Resps. to Def.’s Second Set of Interrog. And Req. for Produc., Interrog. Nos. 25 and 26 and Req. for Produc. Nos. 19 and 20, attached hereto as Exhibit C; Pl.’s Supplemental Objections and Resps. to Def.’s Second Set of Interrogs. and Req. for Produc., Interrog. Nos. 25 and 26 and Req. for Produc. Nos. 19 and 20, attached hereto as Exhibit D). The pertinent discovery requests and Jarvis’ supplemental responses are set forth in full below: Interrogatory No. 25 (labeled No. 2): Please identify all individuals and/or entities from which You[4] received income related to management of captive insurance plans or life insurance products from 2016 to present. RESPONSE: Jarvis objects to this Interrogatory on the grounds that the information sought regarding “life insurance products” it [sic] is not “relevant to any party’s claim or defense and proportional to the needs of the case” under Fed. R. Civ. P. 26(b)(1). Jarvis further objects to this interrogatory on the grounds that it is unduly burdensome, overboard, and harassing, for the same reason: it seeks to peer into Mr. Jarvis’s personal financial matters that are completely unrelated to this case. Mr. Jarvis further objects to this Interrogatory on the grounds that it seeks information-namely, revenue regarding the management of captive insurance companies-that Defendants have refused to share with Mr. Jarvis despite his 4 You is defined as the Plaintiff Chris Jarvis in the discovery requests. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 10 of 31 01175239 01152109 Page 11 of 31 repeated attempts in this case to seek such information and that they know Mr. Jarvis is not in possession of. This information is within Defendants possession, custody, and control. Subject to and without waiving the foregoing objections, Jarvis responds as follows: In 2016, Mr. Jarvis received income from Jade Risk and TaylorChandler related to the management of captive insurance companies. In 2017, Mr. Jarvis received income from TaylorChandler related to the management of captive insurance companies. Mr. Jarvis is seeking in this lawsuit the damages arising from the payments that Defendants have wrongfully withheld from Mr. Jarvis. Mr. Jarvis has not sold life insurance products to captive insurance companies managed by Arsenal from 2016 to the present. Interrogatory No. 26 (labeled No. 3): Please identify all individuals and/or entities from which You have received referral fees in relation to referring an individual or entity for captive insurance management services or life insurance products from 2016 to present and indicate the amount of any such referral fee and the individual and/or entity to which the referral fee pertains. RESPONSE: Jarvis objects to this Interrogatory on the grounds that the information sought regarding “life insurance products” it [sic] is not “relevant to any party’s claim or defense and proportional to the needs of the case” under Fed. R. Civ. P. 26(b)(1). Jarvis further objects to this interrogatory on the grounds that it is unduly burdensome, overboard, and harassing, for the same reason: it seeks to peer into Mr. Jarvis’s personal financial matters that are completely unrelated to this case. Mr. Jarvis further objects to this Interrogatory on the grounds that it seeks information—namely, revenue regarding the management of captive insurance companies—that Defendants have refused to share with Mr. Jarvis despite his repeated attempts in this case to seek such information and that they know Mr. Jarvis is not in possession of. This information is within Defendants possession, custody, and control. Subject to and without waiving the foregoing objections, Jarvis responds as follows: From 2016 to the present, Mr. Jarvis has not received any referral fees for referring an individual or entity for captive insurance management services outside of any compensation that was paid to him by TaylorChandler during his employment. Mr. Jarvis is seeking in this lawsuit the damages arising from the payments that Defendants have wrongfully withheld from Mr. Jarvis. . . . Request For Production 19 (labeled No. 2): Please produce all Documents in Your possession, custody, or control reflecting payments and/or income You received from 2016 to present in relation to the provision of captive insurance plan Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 11 of 31 01175239 01152109 Page 12 of 31 management services or life insurance products, as identified in Your response to Interrogatory No. 2. RESPONSE: Jarvis objects to this Request on the grounds that the information sought regarding “life insurance products” it is not “relevant to any party’s claim or defense and proportional to the needs of the case” under Fed. R. Civ. P. 26(b)(1). Jarvis further objects to this interrogatory on the grounds that it is unduly burdensome, overboard, and harassing, for the same reason: it seeks to peer into Mr. Jarvis’s personal financial matters that are completely unrelated to this case. Mr. Jarvis further objects to this Request on the grounds that it seeks information— namely, revenue regarding the management of captive insurance companies—that Defendants have refused to share with Mr. Jarvis despite his repeated attempts in this case to seek such information and that they know Mr. Jarvis is not in possession of. This information is within Defendants possession, custody, and control. Moreover, Mr. Jarvis objects to the request that he produce information about his compensation from Jade Risk in 2016, or TaylorChandler in 2017, without any further narrowing. As written, the request is overbroad and unduly burdensome. Mr. Jarvis is willing to confer with Defendants in good faith regarding the scope of this request and Jarvis’s objections. Subject to and without waiving the foregoing objections, Mr. Jarvis has conducted a diligent search and is producing his 2016 and 2017 W-2s from TaylorChandler. Request For Production 20 (labeled No. 3): Please produce all documents in Your possession, custody, or control reflecting referral fees You received for referring an individual or entity for captive insurance management services or life insurance products from 2016 to present, as identified in Your response to Interrogatory No. 3. RESPONSE: Jarvis objects to this Request on the grounds that the information sought regarding “life insurance products” it is not “relevant to any party’s claim or defense and proportional to the needs of the case” under Fed. R. Civ. P. 26(b)(1). Jarvis further objects to this interrogatory on the grounds that it is unduly burdensome, overboard, and harassing, for the same reason: it seeks to peer into Mr. Jarvis’s personal financial matters that are completely unrelated to this case. Mr. Jarvis further objects to this Request on the grounds that it seeks information— namely, revenue regarding the management of captive insurance companies— that Defendants have refused to share with Mr. Jarvis despite his repeated attempts in this case to seek such information and that they know Mr. Jarvis is not in possession of. This information is within Defendants possession, custody, and control. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 12 of 31 01175239 01152109 Page 13 of 31 Moreover, Mr. Jarvis objects to the request that he produce information about his compensation from Jade Risk in 2016, or TaylorChandler in 2017, without any further narrowing. As written, the request is overbroad and unduly burdensome. Mr. Jarvis is willing to confer with Defendants in good faith regarding the scope of this request and Jarvis’s objections. Subject to and without waiving the foregoing objections, Mr. Jarvis has conducted a diligent search and is producing his 2016 and 2017 W-2s from TaylorChandler and his 2016 K-1 from Jade Risk. (emphasis added). In the foregoing responses, Jarvis contends that information regarding his life insurance sales is irrelevant because the parties explicitly agreed that Jarvis could continue to sell life insurance products, provided he did not sell such products to captive insurance companies managed by TaylorChandler and its Affiliates (including Arsenal) without the consent of TaylorChandler. (Cor. from Tim Cleveland to Royal Dumas dated Jan. 29, 2019, attached as Exhibit E). He also contends that Defendants’ simple request regarding income from captive management services and the sale of life insurance products is an impermissible attempt to “peer into Jarvis’ personal financial matters that are completely unrelated to this case.” (Exh. D, Interrog. Nos. 25 and 26 and Req. for Produc. Nos. 19 and 20). Jarvis’ objections misapprehend the scope of the claims at issue in this case and the full impact of the provisions in Jarvis’ Employment Agreement with respect to the sale of life insurance products. Mr. Jarvis’ position is wholly incorrect since he specifically claims Defendants tortuously interfered with his “business relationships . . . and his financial planning and life insurance clients and referral sources who have attempted to purchase captive management services from Jade Risk under its new management.” (Doc. 6 at ¶ 84). The management and sale of life insurance policies, Mr. Jarvis claims, “constitutes a protectable business relationship,” and Defendants actions have damaged those relationships. (Doc. 6, ¶ 85-89; see also Pl./CounterDef. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 13 of 31 01175239 01152109 Page 14 of 31 Christopher Jarvis’s Obj. and Resp. to Interrogs. and Req. for Produc., Interrog. No. 18, attached as Exhibit F). Jarvis cannot make his case that Defendants’ actions impacted his financial planning and life insurance business without, at a minimum, showing some decline in the volume of income related to these services or evidence of specific life insurance sales which fell through. By that same token, Defendants cannot possibly defend against this claim without information related to Jarvis’ income from life insurance sales and financial planning services. Moreover, this information is wholly relevant to determine who Jarvis’ clients are and whether he has continued to sell life insurance to these individuals, either appropriately or in violation of the Employment Agreement. Jarvis also fails to recognize the relevance of information related to his life insurance sales on Defendants’ counterclaims. He contends that information related to his life insurance sales is not discoverable because Defendants agreed that he could continue to sell life insurance products after the sale of Jade Risk and his employment with TaylorChandler and gave him broad authority to do so. (Exh. E at p. 2-3). Essentially, Plaintiff argues that through the Employment Agreement Defendants allowed him to sell life insurance products to anyone and everyone, except captive insurance companies managed by Arsenal.5 He further contends that Defendants have no claim unless they can show that Jarvis sold life insurance products to an Arsenal captive insurance company client without the prior written consent of TaylorChandler. To be sure, Jarvis does state that, from 2016 to present, he has not sold life insurance products to captive insurance companies managed by Arsenal (Exh. D, Resp. to Interrog. 25). Jarvis would contend that, based on this information alone, Defendants do not have a right to the 5 Jarvis could sell life insurance products to captive insurance companies managed by Arsenal with the prior written consent of TaylorChandler. (Doc. 6-3, Section 2.1). Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 14 of 31 01175239 01152109 Page 15 of 31 requested discovery regarding his life insurance sales. However, his oversimplified reading of his Employment Agreement does not take into account Defendant TaylorChandler’s right to commissions on life insurance sales to clients introduced to Jarvis by TaylorChandler, regardless of whether they were captive insurance companies managed by Arsenal. For clients who were introduced to Jarvis by TaylorChandler for insurance brokerage services and did not have any prior connection to Jarvis, a referral fee of 20% of the net commission received by Jarvis was due to TaylorChandler. Defendants have specifically alleged that Jarvis was diverting commissions rightfully due to Jade Risk and/or TaylorChandler. (Doc. 34, ¶ 62). Therefore the information regarding Jarvis’ income from life insurance sales is relevant and discoverable. Moreover, Jarvis cannot unilaterally state that all individuals or entities were not clients of Arsenal/Jade Risk and thereof discovery is irrelevant. The broad scope of the relevancy rules in regard to discovery allows Defendants to review this information to determine if this assertion is correct. There is a protective order in place in this matter that will protect against any improper disclosure of this information. More pointedly, Jarvis’ contention that “he has not sold life insurance products to captive insurance companies managed by Arsenal,” is inaccurate. Jarvis regularly engaged in a financial planning scheme in which captive insurance companies managed by Jade Risk or Arsenal surrendered their captive insurance licenses and either invested in or transferred assets to a limited liability company (a “Preferred LLC” or “PLLC”) in exchange for a preferred membership interest in the PLLC. The Preferred LLC plan involves the purchase of a life insurance policy as an asset of the PLLC, and if Jarvis has not directly sold life insurance products to former Jade Risk or Arsenal clients, he has been integrally involved in the orchestration of the same. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 15 of 31 01175239 01152109 Page 16 of 31 For instance, at the time of the sale of Jade Risk, it managed two captives named Central Texas (“CT”) and ASC and that were owned by Dr. Vivek Mahendru. Dr. Mahendru surrendered one of the two captive insurance licenses (CT) and assigned the outstanding risk from CT to ASC on or around December 2, 2016. He chose to keep the CT entity intact to serve as an investment entity. In a convoluted scheme and at the direction of Mr. Jarvis, Dr. Mahendru transferred the cash assets from CT to another entity owned by Dr. Mahendru, a PLLC called Medventures. (ARSENAL 145274-145283, attached as Exhibit G). From here, Mr. Jarvis directed the transfer of $1 million from Compass Bank into a Merrill Lynch savings account. (See Exh. G at ARSENAL 145274). Mr. Jarvis engaged in a similar scheme where Westlake, one of the former Jade Risk captives located in Nevis, St. Kitts, surrendered its license and was redomesticated as a Delaware C-corporation. From there, Mr. Jarvis helped Westlake’s owner, Paul Playfair, create a PLLC investment for funds from the C-Corporation and contribute an existing life insurance policy to the LLC, with plans to add a new life insurance policy as well. (ARSENAL 009200, attached as Exhibit H; see also ARSENAL 144958-144961, attached as Exhibit I). Mr. Jarvis was also involved in the creation of a Preferred LLC for Csongor Bibza in relation to the Belmont Family Office, for which Jade Risk and Arsenal managed several captive insurance companies. These captives included Eastcliff Insurance Company, Edgecliff Insurance Company, Greycliff Insurance Company, and Northcliff Insurance Company (the “Cliffs”).6 Jarvis arranged for the Cliffs to become preferred members of a PLLC, Brynhill Investments, LLC (“Brynhill”). (See ARSENAL 97870-97933, attached as Exhibit J). Contemporaneously, he was involved with the placement of a substantial life insurance policy on the life of Gloria Eulich, with 6 The original Cliffs have since surrendered their captive insurance licenses and redomesticated to Alabama as Eastcliff 2 Insurance Company, Edgecliff 2 Insurance Company, etc. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 16 of 31 01175239 01152109 Page 17 of 31 Brynhill serving as the owner and beneficiary for the policy. (See ARSENAL 145043-145046, attached as Exhibit K, and ARSENAL 145092-145098, attached as Exhibit L). These are just three examples of a prevailing trend of current and former captive insurance clients of Jade Risk and Arsenal to whom Mr. Jarvis has sold, or coordinated the placement of, life insurance products. Mr. Jarvis’ response that he has not sold life insurance to Jade Risk or Arsenal clients since 2016 is simply incorrect. The information Defendants requested regarding referral fees, commissions, and other income from life insurance sales and financial planning is clearly relevant and required to be produced under Fed. R. Civ. P. 26. Defendants respectfully ask this Court to compel full and complete responses to Defendants’ Second Set of Interrogatories Number 25 and 26 and Defendants’ Second Set of Requests for Production Number 19 and 20. 2. Complete Responses to Defendants’ Original Interrogatories (Interrogatory Nos. 2, 3, 4, 6, 13, 14, 15, 16, 17, 18, & 19) Defendants additionally requested that Plaintiff Jarvis amend or supplement his responses to several interrogatories originally propounded by Defendants on May 3, 2018. Defendants made this request with respect to Interrogatory Nos. 2, 3, 4, 6, 13, 14, 15, 16, 17, 18, and 19 because Jarvis’ responses to these interrogatories contained nothing more than recitations from his Amended Complaint (Doc. 10) and conclusory statements regarding the alleged conduct of Defendants upon which his Amended Complaint was based: 2. Identify and describe exactly how Defendants breached their obligations under the Member Purchase Agreement for Jade Risk, the Employment Agreement, and the Promissory Note entered into between Plaintiff and Defendants and as referenced in Paragraph 8 of Your Amended Complaint (Doc. 6 at ¶8). ANSWER: Jarvis objects to this Interrogatory to the extent it seeks to have Jarvis marshal his evidence for trial. Jarvis objects to the use of “Member Purchase Agreement” as vague because he knows of no such relevant document with that name; he will interpret the term to mean “Membership Interest Purchase Agreement.” Jarvis further objects to this Interrogatory on the ground that his Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 17 of 31 01175239 01152109 Page 18 of 31 investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information, that would allow him to more fully answer the Interrogatory. Jarvis objects to this Interrogatory under Fed. R. Civ. P. 33(a)(1) on the grounds that it contains at least three discrete subparts that should be counted as three distinct interrogatories. Subject to the foregoing objections, Jarvis answers as follows: The Defendants have breached their obligations under the Membership Interest Purchase Agreement, the Employment Agreement, and the Promissory Note in a number of ways, including by failing to pay amounts owed to Jarvis under those agreements. Defendants have also breached the agreements by manipulating revenue in a manner to avoid paying money owed to Jarvis under the Membership Interest Purchase Agreement, Employment Agreement, and Promissory Note. Defendants have intentionally prevented Jade Risk, LLC from making its 2016 revenue target as outlined in the Membership Interest Purchase Agreement, both by failing to account for 2016 revenues and by failing to timely collect revenues owed in 2016. Defendants have failed to account for at least hundreds of thousands of dollars of revenue in 2016 from their calculation of Jade Risk’s 2016 revenue for purposes of calculating the moneys owed to Jarvis under the Membership Interest Purchase Agreement and Promissory Note. Defendants have also alternated between cash basis accounting and accrual basis accounting to minimize the revenues recorded for Jade Risk in 2016. Defendants also have unreasonably delayed the formation of Employee Originated Captives as defined in the Employment Agreement that were ready to close in 2016. By delaying the formation of these captives, Defendants further depressed the 2016 revenues of the company and additionally impacted Jarvis’s compensation under his Employment Agreement with Defendant TaylorChandler. The extent of Defendants’ misconduct is still being investigated, as Defendants have refused to comply with their obligation to provide Jarvis with complete financial reports to substantiate the claimed 2016 Revenue Shortfall or track Jade Risk’s activity in 2017. Defendants are believed to have manufactured a second revenue shortfall in 2017 using these same methods, and discovery on that matter is ongoing. In early 2017, Jarvis was able to quickly collect over $100,000 in accounts receivable that Defendants had made no effort to collect. After Defendants manufactured a “for-cause” termination of Jarvis, they closed several captives for whom Jarvis has not been compensated. The identity of all Employee Originated Captives for which Jarvis is owed compensation that has not been paid is still under investigation in discovery. Defendants have breached their obligations under the Promissory Note because they have refused to pay Jarvis the $750,000 plus interest that they owe under the note, making the anticipated full term cost $1,066,500. The Defendants have also failed to pay Jarvis $20,000 per Employee Originated Captive as his Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 18 of 31 01175239 01152109 Page 19 of 31 bonus under the Employment Agreement, the agreed monthly compensation under the Employment Agreement, and an additional $175,000 owed under the Employment Agreement. Defendants’ termination of Jarvis under false pretense of “cause” further violated obligations to Jarvis; the termination of Jarvis was without cause. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). Defendants requested that Jarvis supplement or amend these responses such that they are actually responsive and provide details as to the allegations he makes against Defendants. (See Cor. from Royal Dumas to Tim Cleveland dated Jan. 22, 2019, attached as Exhibit M). For instance, Plaintiff responded that “Defendants have intentionally prevented Jade Risk, LLC from making its 2016 revenue target as outlined in the Membership Interest Purchase Agreement, both by failing to account for 2016 revenues and by failing to timely collect revenues owed in 2016.” (emphasis added). Plaintiff’s response does not state which revenue was accounted for in 2016, nor does it state which revenue was not accounted for and/or collected in 2016. Plaintiff then claims “that Defendants have also alternated between cash basis accounting and accrual basis accounting to minimize the revenues recorded for Jade Risk in 2016.” (emphasis added). Plaintiff fails to state the when and where of this claim. In fact, the response to this portion is more vague than the Amended Complaint, where Mr. Jarvis clams “Defendants have also selectively alternated between cash basis accounting and accrual basis accounting to minimize the revenues recorded for Jade Risk in 2016, in violation of Generally Accepted Accounting Principles (GAAP).” (Doc. 6, ¶ 11). Plaintiff then claims that Defendants unreasonably delayed in forming captives, but he fails to list which captives Defendants delayed or refused to form, and he has not stated which EOCs he is entitled to payment for under the Employment Agreement. Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 19 of 31 01175239 01152109 Page 20 of 31 In response to Defendants’ request for Plaintiff to properly respond, Mr. Jarvis suggested that Defendants are unreasonably requesting updated discovery responses based on additional documents recently produced pursuant to this Court’s Order on Plaintiff’s Motion to Compel. (Exh. E). However, Defendants did not request updated responses based on new information, but supplemental responses to cure the deficiencies in Jarvis’ original answers to the Interrogatories. 3. Identify and describe in detail how Defendants intentionally prevented Jade Risk, LLC from making its 2016 Revenue Target, as defined in the substantive agreements, by failing to account for revenues earned in 2016 by failing to timely collect revenues owed in 2016. ANSWER: Jarvis objects to this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information. Plaintiff objects to this Interrogatory as duplicative of Interrogatory No. 2. Subject to the foregoing objections, Jarvis answers as follows: Jarvis refers Defendants to his answer to Interrogatory No. 2, which is incorporated in this Answer as if fully restated herein. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 3, see argument as to Interrogatory No. 2, supra. 4. Identify and describe how Defendants unreasonably delayed the formation of captive insurance companies that were ready to close in 2016 and 2017, as alleged in Paragraphs 12 and 13 of Your Amended Complaint. (Id. at ¶12-13). ANSWER: Jarvis objects to this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information. Subject to the foregoing objections, Jarvis answers as follows: Jarvis refers Defendants to his answer to Interrogatory No. 2, which is incorporated in this Answer as if fully restated herein. Defendants unreasonably delayed the formation of Employee Originated Captives that were ready to close in Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 20 of 31 01175239 01152109 Page 21 of 31 2016 by not following through to close the formation of those captives in 2016 despite the fact that they were ready to close. Those actions included at least the following: not sending engagement letters to clients who were ready to form captive insurance companies, not following through with clients in a timely manner, and not ensuring that the proper steps had been taken to form those captives. Prior to his termination, Jarvis made requests for Defendants to procure engagement letters for multiple potential clients who wished to engage Arsenal for captive management services. It is believed that engagement letters were never created and sent out to these potential clients by Defendants before Jarvis was terminated. Because Defendants have not furnished financials in discovery, it is not known whether those prospects became clients. Jarvis had multiple outstanding engagement letters at the time of termination, which may have become clients. This is also part of the ongoing discovery. Prior to termination, Jarvis introduced Defendants to the Kennedy Law Firm and Kennedy PCS in Dallas, Texas. Defendants terminated Jarvis when they had meetings scheduled with the Kennedy firms for the following week in Dallas to discuss nine new captives. Defendants delayed these meetings until after Jarvis was terminated to avoid paying him money he was rightfully owed. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 4, see argument as to Interrogatory No. 2, supra. Also, Plaintiff states that Defendants failed to send out “engagement letters to clients who were ready to form captive insurance companies,” and failed to follow through “with clients in a timely manner, and not ensuring that the proper steps had been taken to form those captives.” Again, Plaintiff is required to supply more than mere conclusory statements which only follow those made in his complaint. Defendants are entitled to the specifics as to which captives Defendants allegedly failed to form and what steps were not taken. The same argument applies to Plaintiff’s statement that “Defendants [failed] to procure engagement letters for multiple potential clients who wished to engage Arsenal for captive Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 21 of 31 01175239 01152109 Page 22 of 31 management services.” Finally, Plaintiff fails to state which potential captives he had engagement letters with at the time of his termination. 6. Identify and describe in complete detail how the Defendants are conspiring to avoid paying You over two-million dollars ($2,000,000.00). (Id. at ¶95). ANSWER: Jarvis objects to this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely calculate exact amounts that he is owed. Jarvis further objects to the request for “complete detail” to the extent that it exceeds the scope of an answer as required by Federal Rule of Civil Procedure 33(b)(3). Subject to the foregoing objections, Jarvis answers as follows: Jarvis refers Defendants to his answers to Interrogatory No. 2 and No. 23, which are incorporated in this Answer as if fully restated herein. Defendants conspired to perform the actions described in the Answer to Interrogatory No. 2, which explains how Defendants are attempting to avoid paying Jarvis the money that he is owed under the agreements. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 6, see response to Interrogatory No. 2, supra. 13. Identify and describe fully how Defendants breached their implied covenants of good faith as alleged in Paragraphs 53-58 of your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate how he has been harmed. Subject to the foregoing objection, Jarvis answers as follows: The Individual Defendants have breached their implied covenant of good faith regarding the Membership Interest Purchase Agreement and Promissory Note by intentionally or recklessly acting to frustrate Jarvis’s right to the full benefit of those agreements. Jarvis refers Defendants to his Answer to Interrogatory No. 2, which is fully incorporated in this answer as if fully restated herein. Defendants have used the mechanisms in those agreements—including the 2016 and 2017 Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 22 of 31 01175239 01152109 Page 23 of 31 Revenue Shortfalls—as well as vacillating accounting schemes to allegedly offset the amounts owed Jarvis under those agreements. Defendants have also failed to close captives in 2016 and 2017 that were introduced by Jarvis, further breaching their covenant of good faith. Finally, Defendants mismanaged several captives, causing revenue from those captives to be artificially depressed, which was then used to offset compensation due to Jarvis. Taylor Chandler also breached an implied covenant of good faith and fair dealing by manufacturing a bogus “for cause” termination of Jarvis, which was caused by all Defendants to avoid financial obligations to Jarvis. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 13, see response to Interrogatory No. 2, supra. Additionally, Jarvis fails to identify the alleged conduct of Defendants that constitutes the manufacturing of a “bogus” for-cause termination of Jarvis. 14. Identify and describe fully how Defendants fraudulently induced You to enter the Membership Purchase Agreement, and Employment Agreement as alleged in Paragraphs 59-63 of your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate how he has been harmed. Subject to the foregoing objection, Jarvis answers as follows: Defendants Taylor, Chandler, and Johnson fraudulently induced Jarvis into entering into the Membership Interest Purchase Agreement, and TaylorChandler fraudulently induced Jarvis into entering the Employment Agreement, by negotiating and including terms in those agreements that they never intended to follow through. Defendants intentionally or recklessly misrepresented that they would exercise good faith and commercially reasonable efforts to meet the 2016 and 2017 revenue targets identified in the Jade Risk sale documents, including the Membership Interest Purchase Agreement and the Employment Agreement. But they did not. As Jarvis has explained in answers to Interrogatory Nos. 2, 3, 7, and 12, which are incorporated in this Answer as if fully restated herein, Defendants have engaged in multiple tactics, including questionable accounting protocols, withholding payments due under the Promissory Notes, suppressing revenue from Jade Risk or Jarvis-originated captives, neglecting to close Jarvis- originated captives, refusing to collect accounts receivable, and other activities that Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 23 of 31 01175239 01152109 Page 24 of 31 demonstrate that Defendants never intended to follow through on the promises and contract terms that they used to induce Jarvis into selling Jade Risk to them and become employed by TaylorChandler. Defendants represented that they had a viable captive management program that was compliant under the new Internal Revenue Code rules and consistent with the concerns brought up by the Internal Revenue Service in recent court cases. Defendants secured licenses for their clients in 2016 without having first drafting policies, creating a reinsurance program, or completing the necessary documents to create a valid program. At the time of the termination of Jarvis, many of the former Jade Risk clients had still not received insurance policies or finalized their agreements with Arsenal. This put clients at risk for IRS scrutiny improperly. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 14, see response to Interrogatory No. 2, supra. In addition, Plaintiff failed to identify how Defendants failed to exercise commercially reasonable efforts to meet the 2016 and 2017 revenue targets. Plaintiff also made conclusory allegations that Defendants secured licenses for clients in 2016 without having policies, creating a reinsurance program, or completing necessary documents, but he fails to identify which captive insurance clients were impacted by these alleged failures. 15. Identify and describe fully how Defendants committed negligence as alleged in Paragraphs 64-69 of Your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate the extent of Defendants’ negligence. Subject to the foregoing objection, Jarvis answers as follows: Jarvis refers Defendants to his Answer to Interrogatory No. 2, which is fully incorporated in this answer as if fully restated herein. Defendants Taylor, Johnson, and Chandler each voluntarily undertook to manage Jade Risk in such a way that it would meet the 2016 and 2017 revenue targets set out in the Membership Interest Purchase Agreement and Promissory Note. Jarvis was an intended beneficiary of Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 24 of 31 01175239 01152109 Page 25 of 31 the Defendants’ performance. Defendants knew that Jarvis was dependent on their performance and reasonably relied on their performance of these duties. Defendants, in voluntarily undertaking to manage Jade Risk, did so in such a negligent and slipshod manner that Jade Risk failed to meet the 2016 revenues and will fail to meet the 2017 revenues. As Jarvis has explained in his answers to several of the Interrogatories above, including Interrogatory No. 2 (which is incorporated in this Answer as if fully restated herein), the Individual Defendants mismanaged the active and prospective client roster of Jade Risk after their acquisition of Jade Risk, including not collecting accounts receivable, not closing prospective clients in both 2016 and 2017, losing prospective clients by terminating Jarvis, using inconsistent accounting principles to account for Jade Risk revenues, and the like. Defendants were negligent in not handling leads properly, not getting out engagement letters in a appropriate fashion, and not trying to collect funds appropriately. Defendants were negligent in failing to build a captive management program that actually works. Jarvis refers Defendants to his Answer to Interrogatory No. 14 as well. These negligent acts have damaged Jarvis. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 15, see response to Interrogatory No. 2, supra. 16. Identify and describe fully how Defendant TaylorChandler breached the Employment Agreement as alleged in Paragraphs 70-75 of Your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate the extent of Taylor Chandler’s breach. Subject to the foregoing objection, Jarvis answers as follows: Taylor Chandler is a party to the Employment Agreement with Jarvis. The Employment Agreement includes a deferred compensation provision obligating Taylor Chandler to pay Jarvis $175,000 beginning, at the latest, on April 1, 2018, as well as $20,000 per Employee Originated Captive. At this time, none of those amounts have been paid. The Employment Agreement also includes a provision for severance pay averaging $280,000 per year over the remaining period of the 60- month contract Term in the event Jarvis is terminated without cause. Taylor Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 25 of 31 01175239 01152109 Page 26 of 31 Chandler terminated Jarvis without cause with 49 months remaining in the term of the Employment Agreement. Taylor Chandler has refused to perform its contractual obligations by failing to pay Jarvis the severance pay owed under the Employment Agreement. Jarvis has been damaged by Defendants’ conduct in amounts yet to be determined, but on information and belief calculated at in excess of $1,295,000, based on the deferred compensation and severance pay outstanding under the Employment Agreement. TaylorChandler has also, by manufacturing a bogus “for cause” termination, breached the implied duty of good faith and fair dealing in the Employment Agreement. By refusing to pay Jarvis his just compensation, and by manufacturing a for-cause reason for termination based on behavior that is carved out in the Employment Agreement, TaylorChandler has breached its contract (and the implied duty of good faith and fair dealing) with Jarvis. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 16, see argument as to Interrogatory No. 2, supra. In addition, Plaintiff makes a conclusory allegation that he was terminated by TaylorChandler without cause and that the Defendants “manufactur[ed] a for-cause reason for termination based on behavior that is carved out in the Employment Agreement.” However, Plaintiff does not identify any facts showing that Defendants “manufactured” the for- cause reasons for his termination, or where the conduct for which he was terminated was expressly allowed by his Employment Agreement. 17. Identify and describe fully how Defendants interfered with any of Your contracts as alleged in Paragraphs 76-82 of Your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate the extent of Defendants’ interference. Subject to the foregoing objection, Jarvis answers as follows: The Employment Agreement between Jarvis and TaylorChandler is a protectable business relationship. The Individual Defendants had actual knowledge Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 26 of 31 01175239 01152109 Page 27 of 31 of the existence of the Employment Agreement. The Individual Defendants were not parties to the Employment Agreement and had no rights with respect to that agreement. The Defendants intentionally interfered with Jarvis’s ability to earn the compensation contemplated by the Employment Agreement. Defendants further interfered with the Employment Agreement by causing TaylorChandler to terminate Jarvis’ employment shortly after Jarvis asked for financial information to support the artificially low revenue numbers reported by Jade Risk. Individual Defendants committed tortious interference for the reasons described in the Answer to Interrogatory No. 2, which is incorporated in this Answer as if fully restated herein, including by manipulating the accounting of Jade Risk and failing to collect accounts receivable and close captives such that Jarvis’s compensation with TaylorChandler would be affected. Further, since Jarvis’s compensation by TaylorChandler was dependent on Jade Risk’s revenues from 2016 and 2017, the Individual Defendants’ refusal to provide Jarvis with an accurate accounting of Jade Risk’s revenues for 2016 or 2017 was tortious interference. Jarvis has still not received that accounting. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ answer to Interrogatory No. 17, see response to Interrogatory No. 2, supra. Moreover, every aspect of this answer is conclusory and provides no factual background to support Mr. Jarvis’ contention. 18. Identify and describe fully how Defendants tortiously interfered with any of Your business relationships as alleged in Paragraphs 83-89 of Your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate the extent of Defendants’ interference. Subject to the foregoing objection, Jarvis answers as follows: The conduct of Taylor, Chandler, and Johnson and TaylorChandler constitutes tortious interference with the business relationships of Jarvis and his financial planning and life insurance clients and referral sources who have attempted to purchase captive management services from Jade Risk under its new management. Jarvis’s management of life insurance policies and sale of new life insurance policies and financial planning services to his clients constitute Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 27 of 31 01175239 01152109 Page 28 of 31 protectable business relationships. The Defendants had actual knowledge of the existence of Jarvis’s business relationships with life insurance and financial planning clients who are also clients of Jade Risk. The Individual Defendants are not parties to any agreements or negotiations between Jarvis and his financial planning and life insurance clients and have no rights with respect to any such agreements. The Defendants intentionally interfered with Jarvis’ client relationships and referral sources by deliberately failing to close and manage captive insurance deals set up by Jarvis for mutual clients and referral sources of Jade Risk and Jarvis. Those actions have damaged Jarvis’s personal credibility with his clients and contacts in the tightly-knit circles of financial planning for ultra-high net worth individuals. These relationships take many years to develop and only a single bad interaction to destroy. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 18, see response to Interrogatory No. 2, supra. Moreover, every aspect of this answer is conclusory and provides no factual background to support Mr. Jarvis’ contention. 19. Identify and describe fully how Defendants committed wanton conduct as alleged in Paragraphs 90-92 of Your Amended Complaint. ANSWER: Jarvis objects to the use of “fully” in this Interrogatory on the ground that his investigation is ongoing, and that Defendants have not yet or refused to produce relevant information, including financial statements and client information that would allow him to precisely articulate the extent of Defendants’ interference. Subject to the foregoing objection, Jarvis answers as follows: Jarvis refers Defendants to his Answers above to Interrogatories No. 2 through 18, which are incorporated in this Answer as if fully restated herein. All of Defendants’ behavior was carried out with a reckless or conscious disregard of Jarvis’s rights and therefore constitutes wanton behavior. Specifically, Defendants’ actions have been deliberate because Defendants’ actions were performed with the knowledge that those actions would injure Jarvis by depressing his compensation under the Membership Interest Purchase Agreement, the Promissory Note, and the Employment Agreement. For example, Individual Defendants’ manipulation of Jade Risk accounting, failure to collect accounts Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 28 of 31 01175239 01152109 Page 29 of 31 receivable, failure to close prospective clients when all that needed to be done was send an engagement letter, the manufactured and baseless for-cause termination, and the like were done to avoid obligations to Jarvis. As a result of all Defendants’ wanton behavior, Jarvis has suffered damages. Discovery is ongoing and Defendants have failed to produce responsive information that would relate to this interrogatory. Jarvis thus reserves his right to supplement this answer. (emphasis added). For the deficiencies with respect to Jarvis’ response to Interrogatory No. 19, see response to Interrogatory No. 2, supra. Moreover, every aspect of this answer is conclusory and provides no factual background to support Mr. Jarvis’ contention. Mr. Jarvis originally did nothing more than recite the allegations in his Amended Complaint (Doc. 10) in order to answer several of the Interrogatories. The responses provide few additional details beyond what was contained in the Amended Complaint, and they are simply insufficient. Accordingly, the Court should compel Jarvis to supplement or amend his responses to the foregoing Interrogatories. C. Defendants’ Attempts to Confer in Good Faith Defendants served Jarvis with their Second Set of Interrogatories and Requests for Production on December 21, 2018. On January 21, 2019, Jarvis responded largely with objections and promises that he was “investigating and will supplement his response to this [Interrogatory/Request].” (Exh. C, Pl.’s Resps. to Interrog. No. 24 and Req. for Produc. Nos. 18, 24, 25, 26). After the exchange of correspondence between counsel for Defendants (Exh. M) and counsel for Jarvis (Exh. E) in relation to these objections and the deficiencies in the discovery responses, as well as a discussion regarding the same, Jarvis supplemented his responses. (Exh. D). Defendants sent counsel for Mr. Jarvis another letter to help resolve the discovery issue. (Cor. from Royal Dumas to Tim Cleveland dated Feb. 21, 2019, attached as Exhibit N). Plaintiff’s Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 29 of 31 01175239 01152109 Page 30 of 31 and Defendants’ counsel conferred on February 25, 2019 and again on February 27, 2019 to discuss the deficiencies with respect to Plaintiff’s discovery responses and other discovery matters. Ultimately, Jarvis continues to object to the production of information related to his income from the sale of life insurance products. He also has completely failed to answer numerous interrogatories and only provides conclusory allegations which merely mimic the claims found in his complaint. As outlined above, Defendants seek this Court’s involvement to compel Jarvis to produce this information, which is clearly relevant and discoverable. V. CONCLUSION Documents and information related to Jarvis’ income from the sale of life insurance products is relevant to Jarvis’ claims and Defendants’ defenses and counterclaims, regardless of whether such sales were to captive insurance companies managed by Arsenal. Because this information is relevant, Defendants respectfully request that the Court compel Jarvis to respond to the subject discovery requests. Additionally, the Defendants request that the Court compel Jarvis to supplement his responses to Defendants’ original discovery requests with complete answers, rather than simply reciting allegations from his Amended Complaint. WHEREFORE, for the above stated reasons, Defendants request that the Court compel Jarvis to provide the requested discovery responses regarding income from life insurance sales from 2016 to present and to fully and completely supplement his answers to Defendants’ original discovery requests. Respectfully Submitted, this 1st day of March, 2019. /s/ Royal C. Dumas Royal C. Dumas (ASB: 1404-R60D) Chris L. Richard (ASB: 1207Z84Q) Attorney for TaylorChandler, LLC, T. Britt Taylor, Norman Chandler, and James R. Johnson Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 30 of 31 01175239 01152109 Page 31 of 31 OF COUNSEL: GILPIN GIVHAN, PC 2600 EastChase Lane, Suite 300 Montgomery, Alabama 36117 Telephone: (334) 244-1111 Fax: (334) 244-1969 Email: rdumas@gilpingivhan.com Email: crichard@gilpingivhan.com CERTIFICATE OF SERVICE I hereby certify that on this 1st day of March, 2019, I electronically filed the above and foregoing document via CM/ECF system which will send notification of such filing to the following electronically: Marcus M. Maples, Esq. Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. 420 North 20th Street Suite 1400, Wells Fargo Tower Birmingham, Alabama 35203 mmaples@bakerdonelson.com Attorneys for Plaintiff Timothy Cleveland, Esq. (Pro Hac Vice) Kevin J. Terrazas, Esq. (Pro Hac Vice) Cleveland Terrazas, PLLC 4611 Bee Cave Road, Suite 306B Austin, Texas 78746 tcleveland@clevelandterrazas.com kterrazas@clevelandterrazas.com Attorneys for Plaintiff /s/Royal C. Dumas OF COUNSEL Case 2:17-cv-00396-ECM-GMB Document 58 Filed 03/01/19 Page 31 of 31