Preview
FILED
DALLAS COUNTY
4/9/2019 4:59PM
FELICIA PITRE
DISTRICT CLERK
Martin Reyes
CAUSE NO. DC-18-07841
EAST LAKE CAPITAL MANAGEMENT
LLC, SH REGENCY LEASING LLC, and
EL FW INTERMEDIARY I LLC, IN THE DISTRICT COURT OF
Plaintiffs and Counter-Defendants,
V.
NATIONAL HEALTH INVESTORS,
INC. and NHI-REIT OF AXEL LLC,
Defendants, Counter-Claimant, and
Th ird-Parly Plaintifl"
DALLAS COUNTY, TEXAS
WWWWWWWWWWWWWWWWWWWWWWWWWW
V.
ANDREW WHITE, Individually,
BENJAMIN LORD, Individually,
WESLEY MURRAY, Individually,
DAVID GAWLAS, Individually,
CHELSEA BALESTRA, Individually;
SH REGENCY CHARLOTTE LEASING,
LLC, SH REGENCY INDIANAPOLIS
LEASING, LLC, and SH REGENCY
MADISON LEASING, LLC. 95TH JUDICIAL DISTRICT
Third-Parly Defendants.
NHI-REIT OF AXEL, LLC’S EMERGENCY
MOTION TO COMPEL AND FOR SANCTIONS
Counter-Claimant and Third-Party Plaintiff NHI-REIT 0f Axel, LLC (“NHI-REIT” 0r
“Landlord”) hereby files this Emergency Motion to Compel and for Sanctions against Counter-
Defendants East Lake Capital Management (“East Lake”), SH Regency Leasing, LLC
(“Regency Tenant”) and Third-Party Defendants Andrew White, Benjamin Lord, Wesley
Murray, David Gawlas, Chelsea Balestra, SH Regency Charlotte Leasing, LLC, SH Regency
Indianapolis, LLC, and SH Regency Madison Leasing, LLC (collectively “Subtenants”) (East
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Lake, SH Regency, Subtenants, and White, Lord, Murray, and Balestra are collectively referred
to herein as “Counter-Defendants”). NHI-REIT respectfully shows the Court the following:
I. INTRODUCTION AND NEED FOR EMERGENCY RELIEF
1. Landlord asks the Court to hear this motion to compel on an emergency basis
because it concerns expedited discovery to facilitate Landlord’s response to Counter-
Defendants’ Motion to Dismiss under the Texas Citizens Participation Act (the “Motion to
Dismiss”). The Motion to Dismiss is currently set for hearing on May 8, 2019. Additionally,
Landlord has not yet been able to take depositions because Counter-Defendants have failed to
produce all documents ordered to be produced by the Court, all for unfair litigation advantage
as to their Motion to Dismiss.
2. The Court must compel the production of a number of important documents
Counter-Defendants have failed to produce. This failure is in violation of the Court’s order
specifically permitting this discovery in connection with the Motion to Dismiss. The Court
ordered Counter-Defendants to produce – and Counter-Defendants represented to the Court
that they would produce – responsive documents by March 25, 2019. Despite the Court’s
order and their representations, Counter-Defendants have failed to produce broad categories of
critical documents and communications that are necessary for Landlord to prepare its response
to the Motion to Dismiss. Their failure to produce these documents is particularly improper
and prejudicial in light of the limited amount of time Landlord is provided to conduct
discovery before the statutory deadline for the Motion to Dismiss to be heard.
3. In addition to an order compelling the expedited production of documents from
Counter-Defendants, Landlord asks the Court to award its attorneys’ fees required to bring this
motion to compel under Rule 215 of the Texas Rules of Civil Procedure because (1) Counter-
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Defendants’ failure to produce documents is in violation of the Court’s order; and (2) Andrew
White and his affiliated entities have a pervasive and troubling history of failing to comply
with orders from various courts throughout the country. Sanctions are appropriate under these
circumstances.
II. FACTUAL AND PROCEDURAL BACKGROUND
4. Landlord has asserted claims against Counter-Defendants for, among other
claims, fraudulent transfer, tortious interference with contract, conspiracy, and aiding and
abetting. These claims arise out of Counter-Defendants’ involvement in collecting and
transferring certain assets – primarily resident rent checks – in which Landlord had a security
interest to another entity affiliated with Andrew White and/or East Lake. Counter-Defendants
coordinated to gather and deposit these resident checks in October, November, and December
2018 shortly before they abandoned the assisted living facilities.
5. Counter-Defendants have filed a Motion to Dismiss Landlord’s claims under
the Texas Citizens’ Participation Act (the “Motion to Dismiss”). As required under the TCPA,
Landlord requested limited and specific discovery from Counter-Defendants related to the
Motion to Dismiss. After a lengthy hearing, the Court granted Landlord’s request for certain
discovery requests and ordered Counter-Defendants to respond to specific document requests
that were attached to the Court’s order (the “Discovery Order”). [Exhibit A].
6. Critically, during the hearing, Landlord requested an expedited timeframe in
which Counter-Defendants were to respond and produce documents. [Exhibit B, Hearing
Transcript at p. 142]. In response, Counter-Defendants’ counsel represented to the Court that
they would produce documents within 21 days of being served with the discovery requests:
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[Id. at 143:20-25].
7. Landlord served these discovery requests on March 4, 2019, the same day the
Discovery Order was signed, making the deadline to respond to these discovery requests and
produce documents March 25, 2019. [Exhibit C].
8. Counter-Defendants provided responses and objections and produced certain
documents that are responsive to the discovery requests on the deadline. [Exhibit D]. Counter-
Defendants supplemented their production on March 27th, March 31st, and again on April 3,
2019. [Exhibit E]. However, their document productions have been inadequate in that they
have wholly failed to produce documents in many categories already ordered to be produced
by the Court.
9. Prior to Counter-Defendants’ document production on the deadline, and in
anticipation that Counter-Defendants would comply with the Court’s order and produce all
responsive documents at that time, the parties had discussed proceeding with depositions in the
first two weeks of April. No depositions have been held, and the parties are now proposing
depositions in mid-to-late April because of Counter-Defendants’ delayed supplemental
productions and failure to produce responsive documents under the Court’s Discovery Order.
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III. ARGUMENTS AND AUTHORITIES
10. “The ultimate purpose of discovery is to seek the truth so that disputes may be
decided by what the facts reveal, not by what is concealed.” In re Kimberly-Clark Corp.,
228 S.W.3d 480, 490 (Tex. App.—Dallas 2007, no pet.) (citing Jampole v. Touchy,
673 S.W.2d 569, 573 (Tex. 1984)). Discovery is meant to provide for the “administration of
justice by allowing the parties to obtain the fullest knowledge of the issues and facts prior to
trial.” Id.
11. This reasoning applies equally – and perhaps more so – in the present context
of Counter-Defendants’ Motion to Dismiss. Under the TCPA, discovery in this lawsuit is
stayed pending disposition of the Motion to Dismiss. However, the TCPA expressly allows for
“specified and limited discovery relevant to the motion” upon a showing of good cause. See
TEX. CIV. PRAC. & REM. CODE §§ 27.006(b), 27.003(b); see also Abraham v. Greer, 509
S.W.3d 609, 615 (Tex. App.—Amarillo 2016, pet denied) (holding TCPA’s provision of
limited discovery saves it from violating Texas citizens’ right to prosecute civil claims in
Texas state courts).
12. Here, the Court found that Landlord was entitled to specific and limited
discovery, as set forth in the document requests attached to the Discovery Order. [Ex. B].
Inherent in the Discovery Order is the fact that the discovery authorized therein is necessary
for Landlord to prepare a response to Counter-Defendants’ Motion to Dismiss. Indeed, the
parties spent several hours arguing the specific relevant subjects and discovery requests before
Judge O’Neill, who ultimately approved the specific document requests served by Landlord.
13. Counter-Defendants’ discovery responses and document production were due
on March 25, 2019. Instead, by their own admission, Counter-Defendants produced some, but
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not all, responsive documents by the deadline imposed by the Court, and they produced
additional documents 0n a “rolling basis.” [EX. D].
A. Counter-Defendants have failed t0 timely and completely produce responsive
documents required by the Court in the Discovery Order.
14. The documents and communications sought by Landlord relate to the key issue
for purposes 0f the Motion to Dismiss: the disposition 0f the assets 0f Regency Tenant and the
Subtenants, including the deposit and transfer of resident rent checks from the assisted living
facilities to an affiliate of Andrew White and/or East Lake. Landlord has also sought
communications between Counter—Defendants and with third parties about the assets of
Regency Tenant and Subtenants. These materials are critical t0 the Motion t0 Dismiss.
Counter-Defendants have failed to produce the following categories of materials that fall
within the scope of the discovery requests authorized by the Court:
15. Text Messages from Andrew White and Ben Lord: A11 of the individual
Counter-Defendants are under the age of 40, making the likelihood that communications were
made Via text message much greater. Indeed, a number 0f text messages between, for example,
Wes Murray and David Gawlas have already been produced. However, Counter-Defendants
have produced n0 text messages in Which Andrew White himself is the custodian, indicating
that White’s cell phone was not searched. Additionally, only one set of text messages in which
Ben Lord is the custodian has been produced.
16. Given the discovery requests at issue — including any communications between
Counter—Defendants (including White and Lord) about the monetary assets of Regency Tenant
and/or the Subtenants — itis inconceivable that no text messages from White and only one set
0f text messages from Lord have been produced.
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17. Landlord asks the Court to require White and Lord to turn over their cell
phones to an approved third-party forensic analyst with expertise in gathering and collecting
ESI, including text messages. See In re VERP Investment, LLC, 457 S.W.3d 255, 263 (Tex.
App–Dallas 2015, no pet.) (holding that a trial court may allow a third-party forensic analyst to
conduct a forensic analysis when the court determines that: (1) the nature of the case requires
direct access to an electronic storage device, and (2) it is not possible for the trial court to
describe search protocols with sufficient precision to capture only relevant, non-privileged
information). This is necessary given White’s demonstrated habit of ignoring court orders,
which, as described below in connection with the request for sanctions, recently led the
Delaware Chancery Court to hold White in contempt and sanction him for failing to obey court
orders to produce documents and materials to a court-appointed receiver.
_________________________________________________________
18. Landlord also asks the Court to order the production of materials responsive to
the following specific requests for production:
19. This request seeks communications between Counter-Defendants concerning
the receivables, monetary assets, and/or resident rent payments of Regency Tenant and
Subtenants. These communications should include at least the following categories of
responsive documents:
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Communications about resident rent checks that were delivered, but not
cashed, between March 2018 and December 2018;
Communications about the collection of rent checks by Counter-Defendants
in November and December 2018, including any communications
concerning directions, instructions, 0r logistics for the Counter-Defendants
to travel to the assisted living facilities to collect checks;
Communications about the depositing/cashing 0f rent checks by Counter-
Defendants;
Regency Tenant and Subtenants’ lack of operating bank accounts after
March 2018;
Communications about the transfer of funds from the closed bank accounts
0f Regency Tenant and Subtenants to East Lake Capital Management in
March 2018; and
Any agreements between East Lake (or other entities affiliated with Andrew
White) and Regency Tenant/Subtenants to purchase any receivables.1
20. Counter—Defendants have produced some, but not all, 0f these materials.
For example, they have produced bank statements for Regency Tenant and Subtenants in
January, February, and March 2018. But these statements show that these accounts were
closed in March 2018, at which time nearly $- was transferred to a bank account held
by East Lake. Yet, Counter-Defendants have produced n0 documents concerning these
transfers, even though they occurred at 0r near the time that Regency Tenant and Subtenants
were in default under the Master Lease. These communications, and the other categories of
communications, must be produced.
1
It isunclear whether any such agreements exist. White, during the receivership hearings
in Vermont, testified that East Lake had an agreement With the entities that owned and operated
the Vermont facilities t0 purchase their receivables, including resident rent payments. White
offered this testimony in an attempt t0 explain why he had not billed residents or deposited their
checks since March 2018, but yet claimed that the facilities were not undercapitalized. [EX. I].
The Vermont court, in ordering that a permanent receiver be installed over these facilities,
determined that White had n0 evidence of any such agreements. However, to the extent any such
agreements exist, they should be produced in this litigation.
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_________________________________________________________
21. This request simply seeks information about the bank accounts into which any
Resident Rent Payments were deposited in 2018 through the present. This is straightforward
and obviously relevant to, at a minimum, Landlord’s fraudulent transfer claim.
22. Yet, Counter-Defendants objected to this request and inexplicably (and
unilaterally) limited the scope of this request such that they “are not producing documents
regarding any alleged ‘transfer’ of funds related to or following the deposit of any Resident
Rent Payments in a bank account of the Regency Tenant.” [Ex. D at p. 8]. This is an absurd
limitation, particularly since itis apparent that Regency Tenant and Subtenants did not have
operating bank accounts after March 2018.
23. Counter-Defendants have produce four months of bank statements of ELCM
Partners, LLC, an affiliate of Andrew White and/or East Lake. However, they produced such
statements only through January 2019, but did not produce such statements through the
present. Additionally, the bank statements produced are heavily redacted to only show the
actual deposits of resident rent checks, but nothing else. Thus, it is impossible to determine the
current balance of such account and, most importantly, whether ECLM Partners transferred
any such amounts to other individuals or entities. The full bank statements should be produced
and, to the extent any other transfers occurred, bank statements for those accounts should also
be produced.
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_________________________________________________________
24. This request seeks the production of the Security Agreement Demand Letter, a
letter in which Landlord provided notice that it was exercising its rights under the Security
Agreement. Counter-Defendants have asserted the objection “to the extent this request seeks to
require them to produce multiple copies of the requested document.” [Ex. D at p. 9].
25. This objection has no merit because a relevant issue in this case is who among
Counter-Defendants were aware of the Security Agreement Demand Letter sent by Landlord.
Thus, the custodian for each copy of the Security Agreement Demand Letter within Counter-
Defendants’ possession is relevant and goes directly to their knowledge of this
correspondence. Additionally, the burden of producing multiple copies of a single letter is
inconsequential. This objection should be overruled.
_________________________________________________________
26. This request seeks documents and communications exchanged between
Counter-Defendants and any “receivable debtors,” a term used in the Security Agreement. Yet,
Counter-Defendants have objected to this request on the grounds that the request is “vague and
ambiguous” in its reference to “Receivable Debtors.” [Ex. D at p. 10]. On the basis of this
alleged ambiguity, Counter-Defendants claim that they are “unable to identify documents
NHI-REIT OF AXEL, LLC’S EMERGENCY
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responsive to this request, if any . . . because the term ‘Receivable Debtors’ is not defined in
the Security Agreement, Regency Lease, or otherwise by Defendant.” [Id.].
27. This objection is baseless, as the Security Agreement between Landlord,
Regency Tenant, and Subtenants (and signed by Andrew White) uses the term “Receivable
Debtors” throughout the document in obvious reference to any party owing a “receivable.”
This is a standard accounting term meaning money owed to Regency Tenant and/or
Subtenants. For example, the Security Agreement contains the following references to
Receivable Debtors in the context of “receivables” or other payments owed by third parties:
***
[Exhibit F at §§ 5(i), 15(d) (emphasis added)].
28. The clear context of these terms – coupled with references to “receivables,”
“proceeds,” and “amounts owed” undercuts Counter-Defendants’ contention that they are
somehow unable to determine what this phrase means. At a minimum, this term obviously
means any residents in the assisted living facilities who owed - and paid – rent to Regency
Tenant/Subtenants on a monthly basis.
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29. These communications between Counter—Defendants and the residents are
relevant because Landlord demanded that Regency Tenant and Subtenants instruct their
“Receivable Debtors” — namely, the residents — t0 pay Landlord as authorized under the
Security Agreement. Instead, Counter-Defendants engaged in coordinated efforts t0 Visit the
assisted living facilities, collect and abscond with millions 0f dollars’ worth 0f undeposited
checks, and then collect as many payments from the residents as possible by going door-to-
door to collect rent checks in the facilities and sending invoices to the residents (Which had not
been performed since early 2018). [Exhibit G]. These communications, and all others during
this relevant period, should be produced.
ot the period November 29, 2018 tn the present,
all documents and communications concerning the use andlor disposition of the Collateral (as
defined in the Security Agreement).
30. This request seeks documents and communications about What Counter-
Defendants did with the resident rent checks from November 29, 2018 through the present.
Counter-Defendants have objected to this request, but have not indicated that they are
withholding any responsive documents. Yet, several categories of responsive documents and
communications that would clearly fall Within the scope of this request have not been
produced:
I Bank account statements reflecting where the rent checks were
deposited/transferred and where these funds currently are;
I
Any communications or documents between Regency Tenant/Subtenants
and ELCM Partners, LLC, the entity Who received more than $
in resident checks in November 201 8, December 2018, and January 2019;
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Copies of wire transfer confirmations or other documents concerning the
transfer of such funds to any other bank accounts;
Communications between the Counter-Defendants about their coordinated
visits to the Facilities during this time period;
Communications about the collection of rent checks by Counter-Defendants
in November and December 2018, including any communications reflecting
directions, instructions, or logistics for Counter-Defendants to travel to the
assisted living facilities to collect checks; and
Communications about the depositing/cashing of rent checks by Counter-
Defendants during this time period.
31. These categories of documents fall within the scope of Request for Production
No. 9, and the Court should order that Counter-Defendants produce all responsive documents
falling within these categories.
B. Counter-Defendants must produce all responsive documents immediately in order
for Landlord to respond to Movants’ TCPA motion.
32. Counter-Defendants’ delay in producing responsive documents has already
prejudiced Landlord, in that it has not yet been able to schedule depositions without a full
understanding of the documents related to the Motion to Dismiss. Because of the limited time
period between now and the hearing on the Motion to Dismiss, Counter-Defendants should be
ordered to produce these responses immediately and, in any event, no more than three days
after the hearing on this motion to compel.
IV. MOTION FOR SANCTIONS
A. The Court should sanction Counter-Defendants for their failure to produce
responsive documents timely and completely in accordance with the Court’s
Discovery Order.
33. Landlord asks the Court to impose sanctions against Counter-Defendants for
their inadequate production and the necessity for Landlord to file this Motion to Compel.
Rule 215.2 of the Texas Rules of Civil Procedure provides that the Court may impose
NHI-REIT OF AXEL, LLC’S EMERGENCY
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sanctions if a party “fails to comply with proper discovery requests . .. or to obey an order to
provide 0r permit discovery . .
.” TEX. R. CIV. P. 215.2(b).
34. Sanctions include “an order charging all or any portion of the expenses of
discovery .. . against the disobedient party.” Id. at Rule 215.2(b)(2). The rule also provides
that “the court shall require the party . . . to pay, at such time as ordered by the court, the
reasonable expenses, including attorney fees, caused by the failure, unless the court finds that
the failure was substantially justified or that other circumstances make an award of expenses
unjust.” Id. at Rule 215.2(b)(8) (emphasis added).
35. Pursuant t0 the Court’s Discovery Order, Counter—Defendants’ discovery
responses and document production were due on March 25, 2019. Instead, by their own
admission, Counter-Defendants produced some, but not all, responsive documents by this
deadline, and instead produced documents on a “rolling basis” for an additional 10 days after
the Court’s deadline.
36. In the context of a traditional discovery process, such a delay may not be
material. However, in the context of Counter-Defendants’ Motion t0 Dismiss — With a statutory
deadline for the motion to be heard — this delay has inhibited Landlord’s ability t0 gather
evidence t0 respond t0 the Motion t0 Dismiss. Not only have Counter-Defendants failed t0
produce allresponsive documents, but this delay has prevented Landlord from proceeding With
depositions (also ordered in the Discovery Order).
37. There is no justifiable basis for Movants’ refusal t0 timely and completely
respond t0 Landlord’s production requests, as each request was addressed at length during a
hearing on Landlord’s motion for discovery. In connection with this in-depth analysis of each
NHI-REIT OF AXEL, LLC’S EMERGENCY
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request, the Court ordered that Counter-Defendants produce responsive documents, which they
have failed to do.
38. Sanctions are appropriate here, not only because of the nature of Counter-
Defendants’ failure to produce documents, but because of their collective history of ignoring
and disobeying court orders. Andrew White is the owner and/or manager of East Lake,
Regency Tenant, Subtenants, and various other affiliated entities. White and East Lake are
parties to litigation in Delaware brought by one of East Lake’s investors (the “Delaware
Litigation”). That lawsuit is directly related to the events and circumstances in this lawsuit.
Indeed, the plaintiff’s complaint in the Delaware lawsuit relies heavily on the pleadings and
evidence submitted by Landlord in this lawsuit.
39. Because of the financial instability of White and East Lake, the Delaware Court
of Chancery has appointed a receiver to oversee the operations of East Lake (the “Receiver”).
However, several months into his appointment, the Receiver has reported to the Chancery
Court that White and East Lake have not cooperated with him in gathering documents or
providing information necessary for him to fulfill his responsibilities as receiver. [Exhibit H].
The court subsequently issued additional orders requiring White to cooperate with the
Receiver and to provide information and documentation. White also ignored these orders.
40. As a result of White’s failure to cooperate with the Receiver and to obey the
Chancery Court’s orders, the court ordered White to appear at a Show Cause hearing on March
29, 2019. White also failed to appear at the Show Cause hearing, supposedly for medical
reasons. When the court allowed White to provide evidentiary support for his alleged medical
reasons for his failure to appear, White again failed to do so. As a result of these extensive
failures by White and East Lake, on April 3, 2019, the court held White in contempt and
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sanctioned him by requiring him to pay the attorneys’ fees and expenses of the plaintiffs and
the fees and expenses of the Receiver. [Id.].
41. White’s instability has also resulted in a court in Vermont placing several East
Lake-affiliated entities into receivership. [Exhibit I].In doing so, the Vermont court noted at
various points White’s failure to provide evidence to support his positions and the overall
disorganization he demonstrated in running East Lake and the specific assisted living facilities
at issue in that proceeding.
42. These proceedings in Delaware and Vermont are not isolated or unrelated
occurrences. These cases demonstrate a pattern of behavior by White and his companies,
particularly because each lawsuit involves similar facts and circumstances, centered around the
chaotic and disorganized operations of White’s companies that have endangered the elderly
residents who live in these various assisted living facilities.
43. White, East Lake, and the other Counter-Defendants are likewise disobeying
the Discovery Order issued by this Court. The Court should take into consideration these prior
proceedings – and the receivership and sanctions necessitated therein – when evaluating
Counter-Defendants’ efforts in complying with the Discovery Order and producing documents
in response to Landlord’s pre-approved discovery requests.
44. Accordingly, Landlord asks the Court to impose sanctions against Counter-
Defendants and order them to pay Landlord’s attorneys’ fees and costs incurred in connection
with filing this Motion to Compel and attending the hearing on the Motion to Compel.
Landlord’s counsel will submit additional documentation and support for the award of
attorneys’ fees should the Court request such information.
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V. CONCLUSION AND PRAYER
For the foregoing reasons, Landlord asks the Court t0 grant Landlord’s Motion to
Compel, order Counter-Defendants to produce all documents and communications responsive to
Landlord’s discovery requests no later than three days after the Court’s order granting this
Motion, grant Landlord’s Motion for Sanctions, and sanction Counter—Defendants by ordering
them to pay Landlords’s attorneys’ fees and costs incurred in connection with this Motion to
Compel, and award Landlord all other relief, in law or in equity, t0 which Landlord may be justly
entitled.
Respectfully submitted,
/s/ Daniel D. McGuire
Daniel D. McGuire
State Bar N0. 2408 1 282
Michael M. Besser
State Bar No. 240 1 0464
POLSINELLI PC
2950 N. Harwood, Suite 2100
Dallas, Texas 75201
Telephone: (214) 397-0030
Facsimile: (214) 397-0033
dmcguire@polsinelli.com
mbesser@polsinelli.com
Counsel for Defendant, Counter-Claimant and
Third—Parly Plaintifi’NHI—REIT ofoel, LLC
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CERTIFICATE OF CONFERENCE
I hereby certify that Landlord’s counsel has conferred with counsel for Counter-
Defendants Via email on March 25, 2019, March 26, 2019, March 27, 2019, March 28, 2019,
March 29, 2019, April 3, 2019, and April 4, 2019 in connection With the issues presented in this
Motion t0 Compel. As of the date 0f this filing, counsel for Counter—Defendants have indicated
that they do not plan to produce any additional documents. Therefore, the undersigned certifies
that reasonable efforts have been made t0 reach an agreement regarding the discovery proposed
herein Without judicial intervention in accordance with Rule 191.2 0f the Texas Rules of Civil
Procedure and the local rules of Dallas County. Accordingly, this motion is submitted as
OPPOSED.
/s/ Daniel D. McGuire
Daniel D. McGuire
CERTIFICATE OF SERVICE
I hereby certify that 0n April 9, 2019, a true and correct copy of the foregoing has been
served on the following counsel 0f record in accordance With Texas Rule of Civil Procedure
Rule 21a:
Eric W. Pinker
Patrick Disbennett
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
epinker@lynnllp.com
pdisbennett@lynnllp.c0m
/s/Daniel D. McGuire
Daniel D. McGuire
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EXHIBIT A
omenivAL
Cause No. DC—I 8-07841-D
I
EAST LAKE CAPITAL MANAGEMENT 1N THE DISTRICT
§ COURT 0F
LLC,ET A_L. -
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FILED DALLAS COUNTY 4/9/2019 4:59PM FELICIA PITRE DISTRICT CLERK Martin Reyes CAUSE NO. DC-18-07841 EAST LAKE CAPITAL MANAGEMENT LLC, SH REGENCY LEASING LLC, and EL FW INTERMEDIARY I LLC, IN THE DISTRICT COURT OF Plaintiffs and Counter-Defendants, V. NATIONAL HEALTH INVESTORS, INC. and NHI-REIT OF AXEL LLC, Defendants, Counter-Claimant, and Th ird-Parly Plaintifl" DALLAS COUNTY, TEXAS WWWWWWWWWWWWWWWWWWWWWWWWWW V. ANDREW WHITE, Individually, BENJAMIN LORD, Individually, WESLEY MURRAY, Individually, DAVID GAWLAS, Individually, CHELSEA BALESTRA, Individually; SH REGENCY CHARLOTTE LEASING, LLC, SH REGENCY INDIANAPOLIS LEASING, LLC, and SH REGENCY MADISON LEASING, LLC. 95TH JUDICIAL DISTRICT Third-Parly Defendants. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS Counter-Claimant and Third-Party Plaintiff NHI-REIT 0f Axel, LLC (“NHI-REIT” 0r “Landlord”) hereby files this Emergency Motion to Compel and for Sanctions against Counter- Defendants East Lake Capital Management (“East Lake”), SH Regency Leasing, LLC (“Regency Tenant”) and Third-Party Defendants Andrew White, Benjamin Lord, Wesley Murray, David Gawlas, Chelsea Balestra, SH Regency Charlotte Leasing, LLC, SH Regency Indianapolis, LLC, and SH Regency Madison Leasing, LLC (collectively “Subtenants”) (East 679528892 Lake, SH Regency, Subtenants, and White, Lord, Murray, and Balestra are collectively referred to herein as “Counter-Defendants”). NHI-REIT respectfully shows the Court the following: I. INTRODUCTION AND NEED FOR EMERGENCY RELIEF 1. Landlord asks the Court to hear this motion to compel on an emergency basis because it concerns expedited discovery to facilitate Landlord’s response to Counter- Defendants’ Motion to Dismiss under the Texas Citizens Participation Act (the “Motion to Dismiss”). The Motion to Dismiss is currently set for hearing on May 8, 2019. Additionally, Landlord has not yet been able to take depositions because Counter-Defendants have failed to produce all documents ordered to be produced by the Court, all for unfair litigation advantage as to their Motion to Dismiss. 2. The Court must compel the production of a number of important documents Counter-Defendants have failed to produce. This failure is in violation of the Court’s order specifically permitting this discovery in connection with the Motion to Dismiss. The Court ordered Counter-Defendants to produce – and Counter-Defendants represented to the Court that they would produce – responsive documents by March 25, 2019. Despite the Court’s order and their representations, Counter-Defendants have failed to produce broad categories of critical documents and communications that are necessary for Landlord to prepare its response to the Motion to Dismiss. Their failure to produce these documents is particularly improper and prejudicial in light of the limited amount of time Landlord is provided to conduct discovery before the statutory deadline for the Motion to Dismiss to be heard. 3. In addition to an order compelling the expedited production of documents from Counter-Defendants, Landlord asks the Court to award its attorneys’ fees required to bring this motion to compel under Rule 215 of the Texas Rules of Civil Procedure because (1) Counter- NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 2 67952889.2 Defendants’ failure to produce documents is in violation of the Court’s order; and (2) Andrew White and his affiliated entities have a pervasive and troubling history of failing to comply with orders from various courts throughout the country. Sanctions are appropriate under these circumstances. II. FACTUAL AND PROCEDURAL BACKGROUND 4. Landlord has asserted claims against Counter-Defendants for, among other claims, fraudulent transfer, tortious interference with contract, conspiracy, and aiding and abetting. These claims arise out of Counter-Defendants’ involvement in collecting and transferring certain assets – primarily resident rent checks – in which Landlord had a security interest to another entity affiliated with Andrew White and/or East Lake. Counter-Defendants coordinated to gather and deposit these resident checks in October, November, and December 2018 shortly before they abandoned the assisted living facilities. 5. Counter-Defendants have filed a Motion to Dismiss Landlord’s claims under the Texas Citizens’ Participation Act (the “Motion to Dismiss”). As required under the TCPA, Landlord requested limited and specific discovery from Counter-Defendants related to the Motion to Dismiss. After a lengthy hearing, the Court granted Landlord’s request for certain discovery requests and ordered Counter-Defendants to respond to specific document requests that were attached to the Court’s order (the “Discovery Order”). [Exhibit A]. 6. Critically, during the hearing, Landlord requested an expedited timeframe in which Counter-Defendants were to respond and produce documents. [Exhibit B, Hearing Transcript at p. 142]. In response, Counter-Defendants’ counsel represented to the Court that they would produce documents within 21 days of being served with the discovery requests: NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 3 67952889.2 [Id. at 143:20-25]. 7. Landlord served these discovery requests on March 4, 2019, the same day the Discovery Order was signed, making the deadline to respond to these discovery requests and produce documents March 25, 2019. [Exhibit C]. 8. Counter-Defendants provided responses and objections and produced certain documents that are responsive to the discovery requests on the deadline. [Exhibit D]. Counter- Defendants supplemented their production on March 27th, March 31st, and again on April 3, 2019. [Exhibit E]. However, their document productions have been inadequate in that they have wholly failed to produce documents in many categories already ordered to be produced by the Court. 9. Prior to Counter-Defendants’ document production on the deadline, and in anticipation that Counter-Defendants would comply with the Court’s order and produce all responsive documents at that time, the parties had discussed proceeding with depositions in the first two weeks of April. No depositions have been held, and the parties are now proposing depositions in mid-to-late April because of Counter-Defendants’ delayed supplemental productions and failure to produce responsive documents under the Court’s Discovery Order. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 4 67952889.2 III. ARGUMENTS AND AUTHORITIES 10. “The ultimate purpose of discovery is to seek the truth so that disputes may be decided by what the facts reveal, not by what is concealed.” In re Kimberly-Clark Corp., 228 S.W.3d 480, 490 (Tex. App.—Dallas 2007, no pet.) (citing Jampole v. Touchy, 673 S.W.2d 569, 573 (Tex. 1984)). Discovery is meant to provide for the “administration of justice by allowing the parties to obtain the fullest knowledge of the issues and facts prior to trial.” Id. 11. This reasoning applies equally – and perhaps more so – in the present context of Counter-Defendants’ Motion to Dismiss. Under the TCPA, discovery in this lawsuit is stayed pending disposition of the Motion to Dismiss. However, the TCPA expressly allows for “specified and limited discovery relevant to the motion” upon a showing of good cause. See TEX. CIV. PRAC. & REM. CODE §§ 27.006(b), 27.003(b); see also Abraham v. Greer, 509 S.W.3d 609, 615 (Tex. App.—Amarillo 2016, pet denied) (holding TCPA’s provision of limited discovery saves it from violating Texas citizens’ right to prosecute civil claims in Texas state courts). 12. Here, the Court found that Landlord was entitled to specific and limited discovery, as set forth in the document requests attached to the Discovery Order. [Ex. B]. Inherent in the Discovery Order is the fact that the discovery authorized therein is necessary for Landlord to prepare a response to Counter-Defendants’ Motion to Dismiss. Indeed, the parties spent several hours arguing the specific relevant subjects and discovery requests before Judge O’Neill, who ultimately approved the specific document requests served by Landlord. 13. Counter-Defendants’ discovery responses and document production were due on March 25, 2019. Instead, by their own admission, Counter-Defendants produced some, but NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 5 67952889.2 not all, responsive documents by the deadline imposed by the Court, and they produced additional documents 0n a “rolling basis.” [EX. D]. A. Counter-Defendants have failed t0 timely and completely produce responsive documents required by the Court in the Discovery Order. 14. The documents and communications sought by Landlord relate to the key issue for purposes 0f the Motion to Dismiss: the disposition 0f the assets 0f Regency Tenant and the Subtenants, including the deposit and transfer of resident rent checks from the assisted living facilities to an affiliate of Andrew White and/or East Lake. Landlord has also sought communications between Counter—Defendants and with third parties about the assets of Regency Tenant and Subtenants. These materials are critical t0 the Motion t0 Dismiss. Counter-Defendants have failed to produce the following categories of materials that fall within the scope of the discovery requests authorized by the Court: 15. Text Messages from Andrew White and Ben Lord: A11 of the individual Counter-Defendants are under the age of 40, making the likelihood that communications were made Via text message much greater. Indeed, a number 0f text messages between, for example, Wes Murray and David Gawlas have already been produced. However, Counter-Defendants have produced n0 text messages in Which Andrew White himself is the custodian, indicating that White’s cell phone was not searched. Additionally, only one set of text messages in which Ben Lord is the custodian has been produced. 16. Given the discovery requests at issue — including any communications between Counter—Defendants (including White and Lord) about the monetary assets of Regency Tenant and/or the Subtenants — itis inconceivable that no text messages from White and only one set 0f text messages from Lord have been produced. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 6 679528892 17. Landlord asks the Court to require White and Lord to turn over their cell phones to an approved third-party forensic analyst with expertise in gathering and collecting ESI, including text messages. See In re VERP Investment, LLC, 457 S.W.3d 255, 263 (Tex. App–Dallas 2015, no pet.) (holding that a trial court may allow a third-party forensic analyst to conduct a forensic analysis when the court determines that: (1) the nature of the case requires direct access to an electronic storage device, and (2) it is not possible for the trial court to describe search protocols with sufficient precision to capture only relevant, non-privileged information). This is necessary given White’s demonstrated habit of ignoring court orders, which, as described below in connection with the request for sanctions, recently led the Delaware Chancery Court to hold White in contempt and sanction him for failing to obey court orders to produce documents and materials to a court-appointed receiver. _________________________________________________________ 18. Landlord also asks the Court to order the production of materials responsive to the following specific requests for production: 19. This request seeks communications between Counter-Defendants concerning the receivables, monetary assets, and/or resident rent payments of Regency Tenant and Subtenants. These communications should include at least the following categories of responsive documents: NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 7 67952889.2 Communications about resident rent checks that were delivered, but not cashed, between March 2018 and December 2018; Communications about the collection of rent checks by Counter-Defendants in November and December 2018, including any communications concerning directions, instructions, 0r logistics for the Counter-Defendants to travel to the assisted living facilities to collect checks; Communications about the depositing/cashing 0f rent checks by Counter- Defendants; Regency Tenant and Subtenants’ lack of operating bank accounts after March 2018; Communications about the transfer of funds from the closed bank accounts 0f Regency Tenant and Subtenants to East Lake Capital Management in March 2018; and Any agreements between East Lake (or other entities affiliated with Andrew White) and Regency Tenant/Subtenants to purchase any receivables.1 20. Counter—Defendants have produced some, but not all, 0f these materials. For example, they have produced bank statements for Regency Tenant and Subtenants in January, February, and March 2018. But these statements show that these accounts were closed in March 2018, at which time nearly $- was transferred to a bank account held by East Lake. Yet, Counter-Defendants have produced n0 documents concerning these transfers, even though they occurred at 0r near the time that Regency Tenant and Subtenants were in default under the Master Lease. These communications, and the other categories of communications, must be produced. 1 It isunclear whether any such agreements exist. White, during the receivership hearings in Vermont, testified that East Lake had an agreement With the entities that owned and operated the Vermont facilities t0 purchase their receivables, including resident rent payments. White offered this testimony in an attempt t0 explain why he had not billed residents or deposited their checks since March 2018, but yet claimed that the facilities were not undercapitalized. [EX. I]. The Vermont court, in ordering that a permanent receiver be installed over these facilities, determined that White had n0 evidence of any such agreements. However, to the extent any such agreements exist, they should be produced in this litigation. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 8 679528892 _________________________________________________________ 21. This request simply seeks information about the bank accounts into which any Resident Rent Payments were deposited in 2018 through the present. This is straightforward and obviously relevant to, at a minimum, Landlord’s fraudulent transfer claim. 22. Yet, Counter-Defendants objected to this request and inexplicably (and unilaterally) limited the scope of this request such that they “are not producing documents regarding any alleged ‘transfer’ of funds related to or following the deposit of any Resident Rent Payments in a bank account of the Regency Tenant.” [Ex. D at p. 8]. This is an absurd limitation, particularly since itis apparent that Regency Tenant and Subtenants did not have operating bank accounts after March 2018. 23. Counter-Defendants have produce four months of bank statements of ELCM Partners, LLC, an affiliate of Andrew White and/or East Lake. However, they produced such statements only through January 2019, but did not produce such statements through the present. Additionally, the bank statements produced are heavily redacted to only show the actual deposits of resident rent checks, but nothing else. Thus, it is impossible to determine the current balance of such account and, most importantly, whether ECLM Partners transferred any such amounts to other individuals or entities. The full bank statements should be produced and, to the extent any other transfers occurred, bank statements for those accounts should also be produced. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 9 67952889.2 _________________________________________________________ 24. This request seeks the production of the Security Agreement Demand Letter, a letter in which Landlord provided notice that it was exercising its rights under the Security Agreement. Counter-Defendants have asserted the objection “to the extent this request seeks to require them to produce multiple copies of the requested document.” [Ex. D at p. 9]. 25. This objection has no merit because a relevant issue in this case is who among Counter-Defendants were aware of the Security Agreement Demand Letter sent by Landlord. Thus, the custodian for each copy of the Security Agreement Demand Letter within Counter- Defendants’ possession is relevant and goes directly to their knowledge of this correspondence. Additionally, the burden of producing multiple copies of a single letter is inconsequential. This objection should be overruled. _________________________________________________________ 26. This request seeks documents and communications exchanged between Counter-Defendants and any “receivable debtors,” a term used in the Security Agreement. Yet, Counter-Defendants have objected to this request on the grounds that the request is “vague and ambiguous” in its reference to “Receivable Debtors.” [Ex. D at p. 10]. On the basis of this alleged ambiguity, Counter-Defendants claim that they are “unable to identify documents NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 10 67952889.2 responsive to this request, if any . . . because the term ‘Receivable Debtors’ is not defined in the Security Agreement, Regency Lease, or otherwise by Defendant.” [Id.]. 27. This objection is baseless, as the Security Agreement between Landlord, Regency Tenant, and Subtenants (and signed by Andrew White) uses the term “Receivable Debtors” throughout the document in obvious reference to any party owing a “receivable.” This is a standard accounting term meaning money owed to Regency Tenant and/or Subtenants. For example, the Security Agreement contains the following references to Receivable Debtors in the context of “receivables” or other payments owed by third parties: *** [Exhibit F at §§ 5(i), 15(d) (emphasis added)]. 28. The clear context of these terms – coupled with references to “receivables,” “proceeds,” and “amounts owed” undercuts Counter-Defendants’ contention that they are somehow unable to determine what this phrase means. At a minimum, this term obviously means any residents in the assisted living facilities who owed - and paid – rent to Regency Tenant/Subtenants on a monthly basis. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 11 67952889.2 29. These communications between Counter—Defendants and the residents are relevant because Landlord demanded that Regency Tenant and Subtenants instruct their “Receivable Debtors” — namely, the residents — t0 pay Landlord as authorized under the Security Agreement. Instead, Counter-Defendants engaged in coordinated efforts t0 Visit the assisted living facilities, collect and abscond with millions 0f dollars’ worth 0f undeposited checks, and then collect as many payments from the residents as possible by going door-to- door to collect rent checks in the facilities and sending invoices to the residents (Which had not been performed since early 2018). [Exhibit G]. These communications, and all others during this relevant period, should be produced. ot the period November 29, 2018 tn the present, all documents and communications concerning the use andlor disposition of the Collateral (as defined in the Security Agreement). 30. This request seeks documents and communications about What Counter- Defendants did with the resident rent checks from November 29, 2018 through the present. Counter-Defendants have objected to this request, but have not indicated that they are withholding any responsive documents. Yet, several categories of responsive documents and communications that would clearly fall Within the scope of this request have not been produced: I Bank account statements reflecting where the rent checks were deposited/transferred and where these funds currently are; I Any communications or documents between Regency Tenant/Subtenants and ELCM Partners, LLC, the entity Who received more than $ in resident checks in November 201 8, December 2018, and January 2019; NHI—REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 12 679528892 Copies of wire transfer confirmations or other documents concerning the transfer of such funds to any other bank accounts; Communications between the Counter-Defendants about their coordinated visits to the Facilities during this time period; Communications about the collection of rent checks by Counter-Defendants in November and December 2018, including any communications reflecting directions, instructions, or logistics for Counter-Defendants to travel to the assisted living facilities to collect checks; and Communications about the depositing/cashing of rent checks by Counter- Defendants during this time period. 31. These categories of documents fall within the scope of Request for Production No. 9, and the Court should order that Counter-Defendants produce all responsive documents falling within these categories. B. Counter-Defendants must produce all responsive documents immediately in order for Landlord to respond to Movants’ TCPA motion. 32. Counter-Defendants’ delay in producing responsive documents has already prejudiced Landlord, in that it has not yet been able to schedule depositions without a full understanding of the documents related to the Motion to Dismiss. Because of the limited time period between now and the hearing on the Motion to Dismiss, Counter-Defendants should be ordered to produce these responses immediately and, in any event, no more than three days after the hearing on this motion to compel. IV. MOTION FOR SANCTIONS A. The Court should sanction Counter-Defendants for their failure to produce responsive documents timely and completely in accordance with the Court’s Discovery Order. 33. Landlord asks the Court to impose sanctions against Counter-Defendants for their inadequate production and the necessity for Landlord to file this Motion to Compel. Rule 215.2 of the Texas Rules of Civil Procedure provides that the Court may impose NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 13 67952889.2 sanctions if a party “fails to comply with proper discovery requests . .. or to obey an order to provide 0r permit discovery . . .” TEX. R. CIV. P. 215.2(b). 34. Sanctions include “an order charging all or any portion of the expenses of discovery .. . against the disobedient party.” Id. at Rule 215.2(b)(2). The rule also provides that “the court shall require the party . . . to pay, at such time as ordered by the court, the reasonable expenses, including attorney fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.” Id. at Rule 215.2(b)(8) (emphasis added). 35. Pursuant t0 the Court’s Discovery Order, Counter—Defendants’ discovery responses and document production were due on March 25, 2019. Instead, by their own admission, Counter-Defendants produced some, but not all, responsive documents by this deadline, and instead produced documents on a “rolling basis” for an additional 10 days after the Court’s deadline. 36. In the context of a traditional discovery process, such a delay may not be material. However, in the context of Counter-Defendants’ Motion t0 Dismiss — With a statutory deadline for the motion to be heard — this delay has inhibited Landlord’s ability t0 gather evidence t0 respond t0 the Motion t0 Dismiss. Not only have Counter-Defendants failed t0 produce allresponsive documents, but this delay has prevented Landlord from proceeding With depositions (also ordered in the Discovery Order). 37. There is no justifiable basis for Movants’ refusal t0 timely and completely respond t0 Landlord’s production requests, as each request was addressed at length during a hearing on Landlord’s motion for discovery. In connection with this in-depth analysis of each NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 14 679528892 request, the Court ordered that Counter-Defendants produce responsive documents, which they have failed to do. 38. Sanctions are appropriate here, not only because of the nature of Counter- Defendants’ failure to produce documents, but because of their collective history of ignoring and disobeying court orders. Andrew White is the owner and/or manager of East Lake, Regency Tenant, Subtenants, and various other affiliated entities. White and East Lake are parties to litigation in Delaware brought by one of East Lake’s investors (the “Delaware Litigation”). That lawsuit is directly related to the events and circumstances in this lawsuit. Indeed, the plaintiff’s complaint in the Delaware lawsuit relies heavily on the pleadings and evidence submitted by Landlord in this lawsuit. 39. Because of the financial instability of White and East Lake, the Delaware Court of Chancery has appointed a receiver to oversee the operations of East Lake (the “Receiver”). However, several months into his appointment, the Receiver has reported to the Chancery Court that White and East Lake have not cooperated with him in gathering documents or providing information necessary for him to fulfill his responsibilities as receiver. [Exhibit H]. The court subsequently issued additional orders requiring White to cooperate with the Receiver and to provide information and documentation. White also ignored these orders. 40. As a result of White’s failure to cooperate with the Receiver and to obey the Chancery Court’s orders, the court ordered White to appear at a Show Cause hearing on March 29, 2019. White also failed to appear at the Show Cause hearing, supposedly for medical reasons. When the court allowed White to provide evidentiary support for his alleged medical reasons for his failure to appear, White again failed to do so. As a result of these extensive failures by White and East Lake, on April 3, 2019, the court held White in contempt and NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 15 67952889.2 sanctioned him by requiring him to pay the attorneys’ fees and expenses of the plaintiffs and the fees and expenses of the Receiver. [Id.]. 41. White’s instability has also resulted in a court in Vermont placing several East Lake-affiliated entities into receivership. [Exhibit I].In doing so, the Vermont court noted at various points White’s failure to provide evidence to support his positions and the overall disorganization he demonstrated in running East Lake and the specific assisted living facilities at issue in that proceeding. 42. These proceedings in Delaware and Vermont are not isolated or unrelated occurrences. These cases demonstrate a pattern of behavior by White and his companies, particularly because each lawsuit involves similar facts and circumstances, centered around the chaotic and disorganized operations of White’s companies that have endangered the elderly residents who live in these various assisted living facilities. 43. White, East Lake, and the other Counter-Defendants are likewise disobeying the Discovery Order issued by this Court. The Court should take into consideration these prior proceedings – and the receivership and sanctions necessitated therein – when evaluating Counter-Defendants’ efforts in complying with the Discovery Order and producing documents in response to Landlord’s pre-approved discovery requests. 44. Accordingly, Landlord asks the Court to impose sanctions against Counter- Defendants and order them to pay Landlord’s attorneys’ fees and costs incurred in connection with filing this Motion to Compel and attending the hearing on the Motion to Compel. Landlord’s counsel will submit additional documentation and support for the award of attorneys’ fees should the Court request such information. NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 16 67952889.2 V. CONCLUSION AND PRAYER For the foregoing reasons, Landlord asks the Court t0 grant Landlord’s Motion to Compel, order Counter-Defendants to produce all documents and communications responsive to Landlord’s discovery requests no later than three days after the Court’s order granting this Motion, grant Landlord’s Motion for Sanctions, and sanction Counter—Defendants by ordering them to pay Landlords’s attorneys’ fees and costs incurred in connection with this Motion to Compel, and award Landlord all other relief, in law or in equity, t0 which Landlord may be justly entitled. Respectfully submitted, /s/ Daniel D. McGuire Daniel D. McGuire State Bar N0. 2408 1 282 Michael M. Besser State Bar No. 240 1 0464 POLSINELLI PC 2950 N. Harwood, Suite 2100 Dallas, Texas 75201 Telephone: (214) 397-0030 Facsimile: (214) 397-0033 dmcguire@polsinelli.com mbesser@polsinelli.com Counsel for Defendant, Counter-Claimant and Third—Parly Plaintifi’NHI—REIT ofoel, LLC NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 17 679528892 CERTIFICATE OF CONFERENCE I hereby certify that Landlord’s counsel has conferred with counsel for Counter- Defendants Via email on March 25, 2019, March 26, 2019, March 27, 2019, March 28, 2019, March 29, 2019, April 3, 2019, and April 4, 2019 in connection With the issues presented in this Motion t0 Compel. As of the date 0f this filing, counsel for Counter—Defendants have indicated that they do not plan to produce any additional documents. Therefore, the undersigned certifies that reasonable efforts have been made t0 reach an agreement regarding the discovery proposed herein Without judicial intervention in accordance with Rule 191.2 0f the Texas Rules of Civil Procedure and the local rules of Dallas County. Accordingly, this motion is submitted as OPPOSED. /s/ Daniel D. McGuire Daniel D. McGuire CERTIFICATE OF SERVICE I hereby certify that 0n April 9, 2019, a true and correct copy of the foregoing has been served on the following counsel 0f record in accordance With Texas Rule of Civil Procedure Rule 21a: Eric W. Pinker Patrick Disbennett LYNN PINKER COX & HURST, LLP 2100 Ross Avenue, Suite 2700 Dallas, Texas 75201 epinker@lynnllp.com pdisbennett@lynnllp.c0m /s/Daniel D. McGuire Daniel D. McGuire NHI-REIT OF AXEL, LLC’S EMERGENCY MOTION TO COMPEL AND FOR SANCTIONS PAGE 18 679528892 EXHIBIT A omenivAL Cause No. DC—I 8-07841-D I EAST LAKE CAPITAL MANAGEMENT 1N THE DISTRICT § COURT 0F LLC,ET A_L. -