This lawsuit arises out of an insurance contract dispute between the Parties. In July of 2018, a large hailstorm swept through Albuquerque, New Mexico. Doc. 46 at 3; Doc. 49 at 2. Faraday, who at the time owned a commercial property at 4322 4th Street NW, Albuquerque, New Mexico (the “Property”),[1] claims that the Property's roof and HVAC systems were damaged by the storm and that Acuity wrongfully denied Faraday's insurance claim for property damage. Doc. 46 at 3; Doc. 49 at 2. Consequently, Faraday filed a complaint against Acuity in state court[2] on July 20, 2020 for negligence,[3] breach of insurance contract, violation of the New Mexico Unfair Insurance Claims Practices Act, and bad faith actions. See Doc. 1-1. Faraday claims that Acuity wrongfully denied the insurance claim by concluding, allegedly in bad faith, that there was no hail damage to the Property. After the claim was denied but prior to the filing of the lawsuit, Faraday retained the services of Allstar Public Adjuster, LLC (“Allstar”),[4] whose adjusters recommended comprehensive repairs to the Property's roof and estimated damages to the Property of $557,336.69. Id. ¶¶ 12-15.

After litigation commenced,[5] Acuity served its First Set of Interrogatories and Requests for Production on Faraday on September 24, 2020, and Faraday provided its answers, objections, and responses on November 6, 2020. On December 2, 2020, Acuity sent Faraday a good faith letter, requesting supplemental responses by December 9, 2020. Counsel for Faraday responded to the good faith letter, stating that “[w]e will review the items raised and supplement as necessary by the date you've proposed.” By December 22, 2020, Acuity had not received any of the promised supplemental responses, so it filed a motion to compel. The Court granted the motion to compel on February 12, 2021, ordering Faraday to supplement the requested information to Acuity by February 26, 2021. See Doc. 30 (Order Granting Defendant's Motion to Compel, hereinafter the “February 12th Order”). The February 12th Order notes that “[Faraday] appears to concede that supplementation is necessary, but failed to supplement in the time frame to which it agreed, failed to request additional time, and failed to supplement at least as of the end of the briefing period.” Id. at 4.

Approximately four months later, Acuity filed the instant Motion, contending that Faraday failed to properly supplement its discovery responses despite the Court's order to do so. Acuity states that the following discovery failures occurred after the Court issued its February 12th Order and have impeded litigation:

Acuity claims this conduct “flies in the face of open and honest discovery that is required of litigants.” Doc. 46 at 10. The Court agrees.

Acuity moves for sanctions pursuant to Federal Rule of Civil Procedure 37(b)(2)(A), which gives district courts the authority to issues sanctions against a party for failure to comply with discovery obligations. The Tenth Circuit has concluded that Rule 37(b)(2) serves a predominantly punitive purpose. Olcott v. Del. Flood Co., 76 F.3d 1538, 1555 (10th Cir. 1996). Rule 37(b)(2) lists several sanctions that include, but are not limited to, prohibiting a disobedient party from supporting claims or defenses or introducing designated matters into evidence, striking pleadings in whole or in part, staying further proceedings, dismissing the action, or treating the failure as contempt. Fed. R. Civ. P. 37(b)(2)(A)(i)–(vii). The Tenth Circuit has also made clear that Rule 37(b)(2) grants district courts substantial discretion to craft orders to serve the interests of justice, including ordering costs and fee shifting. Olcott, 76 F.3d at 1555. The district court's discretion to choose a sanction is limited in that the chosen sanction must be both “just” and “related to the particular ‘claim’ which was at issue in the order to provide discovery.” Ehrenhaus v. Reynolds, 965 F.2d 916, 920-21 (10th Cir. 1992) (quoting Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982)). In addition to being “in the interests of justice,” sanctions under Rule 37(b)(2) must be “proportional to the specific violations of the rules.” Olcott, 76 F.3d at 1557. A district court must generally limit its sanction to those expenses and attorney's fees directly attributable to a party's sanctionable conduct, i.e. but for the party's actions, the funds to pay the cost would have been allocated differently. Id; see also Fed. R. Civ. P. 37(b)(2)(C).

Even though Acuity is not seeking the dismissal of this action, Parties agree that the Court should consider the factors set forth in the Tenth Circuit's Ehrenhaus opinion, namely “(1) the degree of actual prejudice to the defendant; (2) the amount of interference with the judicial process; ... (3) the culpability of the litigant; (4) whether the court warned the party in advance that dismissal of the action would be a likely sanction for noncompliance ...; and (5) the efficacy of lesser sanctions.” 965 F.2d at 921 (listing factors a court should ordinarily consider before choosing dismissal as a just sanction). As the Ehrenhaus opinion notes, “[t]hese factors do not constitute a rigid test; rather, they represent a criteria for the district court to consider.” Id. The Court will consider these factors when ruling on the Motion, while keeping in mind that Acuity is seeking attorney's fees and costs as well as an adverse inference instruction and is not seeking the harsher sanction of dismissal.[7]

I. Requiring Faraday to Pay Acuity's Requested Attorney's Fees and Costs for the filing of this Motion, the March 29th 30(b)(6) deposition of Timothy Miller, and conducting a second 30(b)(6) deposition is a Just and Congruent Sanction for its Discovery Violations. However, Attorney's Fees and Costs will not be Awarded for Third Party Discovery.

In considering the Tenth Circuit's framework for Rule 37(b)(2) sanctions and the Ehrenhaus factors in light of the Parties’ arguments and the record in this case, the Court determines, based on the findings below, that imposing Acuity's requested attorney's fees and costs associated with the filing of this Motion and the March 29, 2021 deposition of Timothy Miller, as well as the expense of conducting a second 30(b)(6) deposition upon Faraday, is a just and congruent sanction for Faraday's discovery violations. See Morse v. County of Los Alamos, 2009 WL 5220170 at *3 (D.N.M. 2009). (“Determination of the correct sanction for a discovery violation is a fact-specific inquiry that the district court is best qualified to make.”) (quoting Ehrenhaus, 965 F.2d at 920). However, the Court is unable to make the finding that Faraday's actions caused Acuity to issue third party subpoenas to Allstar, Quality Masters, and Adobe Rio. In fact, the Motion fails to alert the Court that Acuity engaged in any third party discovery solely due to Faraday's production failures and, in general, suggests that Acuity did not take actions beyond its normal discovery obligations. See Doc. 46 at 5 (“While awaiting Plaintiff's supplementation, Acuity sent third-party discovery requests to parties referenced in what minimal discovery Plaintiff did provide ....”); Doc. 46 at 8 (“Following the Faraday 30(b)(6) deposition during which it became clear there was still documentation that had not been produced in this case, Acuity subpoenaed Adobe Rio Investments LLC, the owner of the Faraday Apartments when this litigation was filed.”). Thus, the expense incurred as a result of this third party discovery will not be shifted to Faraday. See Olcott, 76 F.3d at 1557 (affirming the district court's use of the “but for” standard in its determination that fee shifting sanction was just and proportional); see also Fed. R. Civ. P. 37(b)(2)(C) (stating that circumstances may make an award of expenses unjust).

In developing the record to support its imposition of sanctions, the Court will now turn to an analysis of the Ehrenhaus factors. First, Acuity has been prejudiced. Faraday's withholding of discoverable material caused defense counsel to unnecessarily expend time and resources. The record shows that Acuity uncovered discoverable material, possessed by Faraday, nearly every time it conducted a deposition or engaged in third party discovery, thus leading to unnecessary delay and generating uncertainty that undermined the discovery phase of this litigation. Acuity's counsel was also forced to depose a 30(b)(6) corporate representative who appeared to be unprepared to adequately testify about this matter. Cf. ICE Corp. v. Hamilton Sundstrand Corp., No. 05-4135-JAR, 2007 U.S. Dist. LEXIS 90678, at *6 (D. Kan. Dec. 6, 2007) (in context of sanctions under Rule 37(d), a party that produces an unprepared witness for a 30(b)(6) deposition “is tantamount to failure to appear at a deposition”).

Second, the Court finds that Faraday's counsel has interfered with the judicial process by ignoring the Court's February 12th Order. See Jones v. Thompson, 996 F.2d 261, 265 (10th Cir. 1993) (finding a sufficient amount of interference with the judicial process when plaintiffs “repeatedly ignored court orders and thereby hindered the court's management of its docket and its efforts to avoid unnecessary burdens on the court and the opposing party.”) This finding is not based on the tardy supplemented responses, which Faraday's counsel chalks up to a failure of its email system. The support for this finding comes from the fact that Acuity unearthed relevant, discoverable material that was or would have been in Faraday's possession long before the Court ordered deadline passed. Specifically, Acuity convincingly points to documents and communications produced at the Miller and Riggin depositions and in Quality Masters and Adobe Rio's third party subpoena responses. In its response brief, Faraday acknowledges that Acuity received evidence not produced in the supplemental responses but argues, without citing any authority, that it was Acuity's obligation to file an additional motion to compel rather than a move for sanctions. The Court rejects this argument.

Third, Faraday is culpable for its discovery violations. Indeed, the record provides no justification for Faraday's withholding of these documents and communications. Federal Rule of Civil Procedure 34 requires a party to produce designated documents that are “in [its] possession, custody, or control.” Fed. R. Civ. P. 34(a)(1). “Control does not require that the party have legal ownership or actual physical possession of the documents