Preview
FILED
DALLAS COUNTY
11/5/2014 4:17:33 PM
GARY FITZSIMMONS
DISTRICT CLERK
Cause No. DC-14-09959-E
PRODAGIO HOLDINGS, INC.; § IN THE DISTRICT COURT OF
IMAGITEK HOLDINGS, LLC; and §
MARA S. HENDERSON, §
§
Plaintiffs, §
§
v. § DALLAS COUNTY, TEXAS
§
PRODAGIO INTERMEDIARY, LLC §
PRODAGIO, LLC, 221 PRO, LP §
SBOF II (Prodagio), LLC, §
PRODAGIO PARTICIPATION, LLC, §
and DIANA MASSARO §
§
Defendants. § 101st JUDICIAL DISTRICT
PLAINTIFFS’ MOTION TO STRIKE OBJECTION
AND TO COMPEL THE PRODUCTION OF DOCUMENTS
Plaintiffs Mara Henderson, Imagitek Holdings, LLC (“Imagitek”), and Prodagio
Holdings, LLC (“Prodagio”) (collectively “Plaintiffs”) respectfully request that the Court strike a
global objection to all production asserted by Defendants Prodagio Intermediary, LLC
(“Intermediary”) and Prodagio, LLC (“PLLC”) (collectively “PLLC Defendants”) and order the
PLLC Defendants to produce documents and information responsive to Plaintiffs’ requests for
production. The parties have met and conferred but are at an impasse.
I. BACKGROUND
Plaintiffs filed their Original Petition in this action on September 5, 2014, bringing claims
against the PLLC Defendants for breach of contract, unjust enrichment, declaratory relief, and
fraudulent inducement. In the complaint, Plaintiffs alleged that the PLLC Defendants have
failed to pay amounts owed to the Plaintiffs under several agreements and that the PLLC
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Defendants acknowledged their debts to Plaintiffs as recently as July 24, 2014.1
Soon after filing their complaint, Plaintiffs agreed to extend the deadline for the PLLC
Defendants to answer. See Rule 11 Letter Agreement (filed with Court on October 22, 2014). In
exchange, the PLLC Defendants agreed that written discovery requests could be served
immediately and that responses to requests would be due within 30 days of service. Id. Pursuant
to that agreement, Plaintiffs propounded written requests for production on the PLLC Defendants
on October 3, 2014.
On November 3, 2014, the PLLC Defendants refused to produce any responsive
documents to Plaintiffs, broadly stating the PLLC Defendants would not participate in any
discovery until the Court rules on the PLLC Defendants’ pending motion to stay this action. See
Exhibit A, Defendants’ Objections and Responses to Plaintiffs’ Requests for Production at ¶ 1.
Incredibly, the PLLC Defendants have not noticed for hearing their motion to stay. Despite this,
the PLLC Defendants took the position in the meet and confer conference that they should not
have to produce any documents while the motion to stay is pending. Thus, Defendants intend to
effectively stay discovery in this case by filing a motion on which they make no attempt to get a
ruling.
This Court should strike the PLLC Defendants’ objection on the basis that there is a
motion to stay pending and compel the production of documents responsive to Plaintiffs’
discovery requests. To the extent this Court considers the merits of the motion to stay in ruling
on this motion to strike and compel, this Court should also deny the motion to stay filed by the
PLLC Defendants in the interest of judicial efficiency and consistent judicial outcomes.
1
Plaintiffsamended their complaint on October 29, 2014 and November 4, 2014 to add a claim for access to
information and records under Delaware law, a request for receivership under Texas law, and a claim of defamation.
Plaintiffs also named additional defendants.
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II. ARGUMENT
A. Filing a motion does not stay discovery.
The PLLC Defendants’ argument that all discovery should be suspended pending a ruling
on their motion to stay this case runs contrary to normal discovery practices and the PLLC
Defendants’ own agreement with Plaintiffs. Pending motions do not, on their own, relieve
parties from their discovery obligations; in fact, even pending dispositive motions generally do
not halt the discovery process all together. See Escareno ex rel. A.E. v. Lundbeck, LLC, 3:14-
CV-257-B, 2014 WL 1976867, at *2 (N.D. Tex. May 15, 2014) (“Filing a Rule 12(b)(6) motion
to dismiss does not automatically stay discovery . . . .”);Glazer’s Wholesale Drug Co., Inc. v.
Klein Foods, Inc., 3-08-CV-0774-L, 2008 WL 2930482, at *1 (N.D. Tex. July 23, 2008) (noting
that a stay of discovery pending resolution of a motion to dismiss “is the exception rather than
the rule”). Moreover, a blanket objection to discovery requests based on a pending motion is
improper because, in asserting such an objection, the objecting party simply rehashes arguments
in the motion instead of offering a valid basis for why the requesting party is not entitled to
discovery. Texas rules prescribe specific bases to object to discovery, such as objections based
on relevance or privilege. Tex. R. Civ. P. § 192.3(a). In no part do the Texas rules list pending
motions to stay as a proper objection to discovery.
B. The parties’ Rule 11 agreement recognizes that discovery will proceed absent
an order dismissing, staying, or abating this action.
In addition, the PLLC Defendants already agreed in a Rule 11 agreement on file with this
Court to engage in discovery with Plaintiffs unless the case was stayed, dismissed, or otherwise
abated. See Rule 11 Letter Agreement (“[T]he other party agrees to serve objections and
responses within thirty (30) days of service of the requests, unless the case has been dismissed,
stayed or otherwise abated prior to the response deadline.”). The PLLC Defendants’ blanket
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refusal to engage in discovery before the Court has even addressed their motion to stay violates
this previous agreement.
The PLLC Defendants have yet to request a hearing on their motion to stay. If the PLLC
Defendants thought their motion had any merit, they would have requested a hearing on it so as
to obtain a ruling. Instead, whether for delay, increasing litigation costs or other dilatory
purpose, the PLLC Defendants have thwarted the progress of this case by claiming reliance on
the mere filing of a motion that has no merit.
C. The motion to stay has no merit.
The PLLC Defendants’ position is all the more unreasonable because their motion to stay
is wholly without merit. In their motion, the PLLC Defendants assert that a stay of this action is
warranted in favor of a Delaware action that the PLLC Defendants filed against Plaintiffs.
Specifically, the PLLC Defendants principally argue that the agreements that form the basis of
this action against them “arise out of the ‘same transaction’” that produced a completely separate
agreement that forms the basis of the Delaware action. As a result, so goes their argument, there
is “an ‘inherent interrelation’ between the factual allegations, evidence and legal issues” in this
case and the Delaware action that warrants a stay.
The PLLC Defendants are wrong on both the law and the facts.
1. The PLLC Defendants cite the wrong legal standard in their motion.
In their motion, the PLLC Defendants advocate that the Court use a legal standard that
applies when two suits are filed in separate Texas counties. All the cases on which the PLLC
Defendants rely involve competing actions within the State of Texas. See Guy v. Damson Oil
Corp., 13-91-028-CV, 1997 WL 33760709 (Tex. App.—Corpus Christi Mar. 27, 1997, no writ)
(holding in abatement a suit brought in Wharton County in favor of a suit filed in Harris
County); In re Servicios Legales de Mesoamerica S. de R.L., 13-12-00466-CV, 2014 WL 895513
4
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(Tex. App.—Corpus Christi Mar. 6, 2014, no pet.) (holding in abatement a suit filed in Nueces
County in favor of a suit filed in Hidalgo County).
When identical concurrent suits are filed in separate Texas counties, “[i]t is well settled
that ... the court in which suit is first filed acquires dominant jurisdiction to the exclusion of
other courts.” Id. When such concurrent suits are not identical, however, a stay may stillbe
appropriate if those cases are sufficiently related. See Wyatt v. Shaw Plumbing Co., 760 S.W.2d
245, 246-47 (Tex. 1988) (holding a second-filed suit in abatement because those claims should
have been filed in the initial action as compulsory counterclaims). The Texas Supreme Court has
explained that this approach is necessary to promote judicial economy and manage the case load
of Texas courts. Id.
That is not the legal standard to determine whether to stay a Texas case in favor of a
foreign action, i.e. a case filed in another state or foreign country.
2. The applicable legal standard requires that the two actions be
virtually identical.
Texas courts have repeatedly held, “the mere pendency of an action in one state will not
be a ground for abating suit in another state between the same parties and involving the same
subject matter.” See Crown Leasing Corp., 92 S.W.3d at 927; Space Master Int’l, Inc. v. Porta-
Kamp Manufacturing, 794 S.W.2d 944, 948 (Tex. App.—Houston [1st Dist.] 1990, no writ) (“It
is equally well settled that the mere pendency of an action in one state will not be grounds for
abating a suit in another state between the same parties and involving the same subject matter.”).
Instead, to stay a Texas action in favor of a foreign action, “it is, as a general rule,
necessary that the two suits involve the same cause of action, concern the same subject
matter, involve the same issues, and seek the same relief.” Nowell v. Nowell, 408 S.W.2d
550, 553 (Tex. Civ. App.—Dallas 1966, writ dism’d) (emphasis added); see also In re State
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Farm Mutual Auto. Ins. Co., 192 S.W.3d 897, 901 (Tex. App.—Tyler 2006, no pet.) (same).2
In other words, to stay a Texas action in favor of a foreign action, the Texas case must be
nearly identical to the foreign case. See Crown Leasing Corp., 92 S.W.3d at 926, 927 (staying a
Texas action that was filed after the plaintiff lost a motion for temporary injunction in Florida
because “[t]he Texas suit was identical to the Florida suit, except instead of seeking a temporary
injunction, Crown requested the Texas court to issue an ex parte write of sequestration”); Space
Master Int’l, Inc. v. Porta-Kamp Manufacturing, 794 S.W.2d 944, 948 (Tex. App.—Houston
[1st Dist.] 1990, no writ) (staying a Texas action because the plaintiff conceded that actions
pending in New Jersey state court and Massachusetts federal court “involved the same parties
and issues”).
3. Under the correct legal standard, a stay would be manifest error.
a. This action involves different parties.
Plaintiffs’ claims for breach of the Operating Agreement and defamation involve parties
who are not parties in the Delaware action. Specifically, the following parties in this action are
not parties in the Delaware action: Prodagio LLC, 221 PRO, LP, SBOF II (Prodagio), LLC,
PRODAGIO PARTICIPATION, LLC, and Diana Massaro.
b. This action involves different causes of action.
The causes of action alleged in the two lawsuits are completely different. The table
below reflects the current causes of action in each case.
2
Moreover, even if a Texas action is identical to a foreign action, the Texas court still has the discretion to stay the
Texas action; there is no automatic rule to do so. See Safeco Ins. Co. of Am. v. J. L. Henson, Inc., 601 S.W.2d 183,
185 (Tex. Civ. App.—Dallas 1980, writ ref’d n.r.e.) (“The rule is well settled that pendency of a suit in another state
does not bar another suiton the same claim in Texas.”); Mills v. Howard, 228 S.W.2d 906, 908-09 (Tex. Civ.
App.—Amarillo 1950, no writ) (“While, as we have said, the pendency of a prior suit involving the same parties and
subject matter strongly urges the court of the local forum to stay the proceedings pending determination of the prior
suit, yet the rule is not mandatory upon the court nor is it a matter of right to the litigant. It is, after all, a matter
resting within the sound discretion of the court.”).
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THIS ACTION DELAWARE ACTION
Breach of Modification Agreement Breach of Merger Agreement
Breach of Reimbursement Agreement Fraudulent Inducement of
Merger Agreement
Breach of Loan Agreement Indemnification pursuant to
the Merger Agreement
Breach of Severance Agreement
Breach of Operating Agreement
Unjust enrichment
Fraud, fraudulent inducement, and/or promissory fraud with
regard to the Modification, Reimbursement, Loan, and
Severance agreements
Access to information
Request for receivership
Defamation
Cf. Exhibit A to Defendants’ Motion to Stay with Plaintiffs’ Second Amended Petition.
Granting a stay of this action would preclude determination of a number of claims that
could not be brought in the Delaware action. Because the Modification Agreement contains a
mandatory venue provision requiring suit in this district, the breach of contract cause of action
for that contract could not be brought in Delaware or anywhere else. Because the defamatory
statements were made by a Texas resident in Texas, the defamation claim could not be brought
in Delaware. Nor could Plaintiffs bring their request for receivership pursuant to the Texas
statute in Delaware. The Texas Court of Appeals has held “[o]ne test to determine whether
causes of action are identical is to ascertain whether the parties could obtain all the relief in the
prior suit that they would be entitled to in the subsequent action.” Nowell, 408 S.W.2d at 553.
Under that test, this action is not only not identical to the Delaware action, this action could
never be identical to the Delaware action.
c. The two actions do not even arise out of the same transactions.
The PLLC Defendants’ contention that the actions arise out of the same transaction is
also incorrect. In the Delaware action, the PLLC Defendants assert three causes of action (fraud,
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breach of agreement, and indemnification), all based on the terms of a merger agreement (“the
Merger Agreement”) and events leading up to its execution. The PLLC Defendants’ overarching
claim in the Delaware action is that Henderson, Imagitek, and Prodagio made false
representations to induce them to overpay for their software company.3
In contrast, Plaintiffs here assert in this case causes of action related to several other
agreements—none of which are the Merger Agreement—that obligate the PLLC Defendants to
make payments to Plaintiffs. The PLLC Defendants themselves previously acknowledged the
validity of four of these agreements (i.e. the Modification, Reimbursement, Loan and Severance
Agreements) as well as Plaintiffs’ entitlement to payments owed under them. The terms of these
four agreements are separate from and do not depend on the terms of the Merger Agreement.
The circumstances leading to these agreements are different from those leading to the Merger
Agreement because the four agreements were separately bargained for from the Merger
Agreement. Indeed, each of four agreements was executed after the Merger Agreement was
executed, and the breaches of those agreements thus post-date the Merger Agreement.
Similarly, the defamation claim and failure to provide information claims arise out of
conduct that post-date the Merger Agreement. Neither claim involves the Merger Agreement.
III. CONCLUSION
The PLLC Defendants refuse to produce any responsive documents because they have
filed a motion to stay. The PLLC Defendants take this position even though they have not even
attempted to set a hearing on their motion to stay.
Texas law is clear that filing a motion does not stay a case and, here, it would be manifest
error to grant a stay because the Delaware action and this action are not identical. This action
3
Plaintiffs Imagitek and Prodagio asserted a counterclaim in the Delaware action against the PLLC Defendants for
fraudulently inducing them to enter into the Merger Agreement. But this counterclaim likewise is limited to the
terms of the Merger Agreement and the facts leading up to its execution.
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involves different parties, does not overlap with the Delaware action on a single claim, and
involves parties and claims that due to jurisdiction, statutory and mandatory venue provisions
could not be brought in Delaware. The PLLC Defendants agreed in a Rule 11 agreement on file
with this Court that they would “serve objections and responses within thirty (30) days of service
of the requests, unless the case has been dismissed, stayed or otherwise abated prior to the
response deadline.” The PLLC Defendants should be held to their agreement.
This Court should grant this motion to strike and compel, strike Defendants’ objections
on the basis of the stay, and compel the production of responsive documents from the PLLC
Defendants. In the interest of judicial efficiency, to the extent this Court considers the motion to
stay argument in the course of disposing of this motion, this Court should simultaneously deny
the PLLC Defendants’ motion to stay. A proposed order is attached for the convenience of this
Court.
Dated: November 5, 2014. Respectfully submitted,
/s/ Omar Ochoa
Erica W. Harris
State Bar No.
SUSMAN GODFREY LLP
1000 Louisiana Street, Suite 5100
Houston, Texas 77002
Telephone: (713) 651-9366
Facsimile: (713) 654-6666
eharris@susmangodfrey.com
Omar Ochoa
State Bar No. 24079813
SUSMAN GODFREY LLP
901 Main Street, Suite 5100
Dallas, Texas 75202
Telephone: (214) 754-1900
Facsimile: (214) 754-1933
oochoa@susmangodfrey.com
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Attorneys for plaintiffs Prodagio Holdings,
Inc.; Imagitek Holdings, LLC; and Mara S.
Henderson
CERTIFICATE OF CONFERENCE
Counsel for Plaintiffs conferred with counsel for the PLLC Defendants on November 3,
2014 throughout the day by email and then by phone at approximately 4:15 pm CST and counsel
for the PLLC Defendants is opposed as to the disposition of the matters raised in this motion.
/s/ Erica Harris
Erica Harris
10
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CERTIFICATE OF SERVICE
This is to certify that on this the 5th day of November, 2014, a true and correct copy of
the above and foregoing instrument was properly forwarded to the following counsel of record in
accordance with Rule 21 of the Texas Rules of Civil Procedure as indicated below:
David J. Drez III
Joseph R. Callister
Lindsey E. Marsh
Wick Phillips Gould & Martin, LLP
3131 McKinney Avenue, Suite 100
Dallas, Texas 75204
/s/ Omar Ochoa
Omar Ochoa
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EXHIBIT 1
CAUSE NO. DC-14-09959
PRODAGIO HOLDINGS, INC., § IN THE DISTRICT COURT OF
IMAGITEK HOLDINGS, LLC, §
and MARA S. HENDERSON, §
§
Plaintiffs, §
§ DALLAS COUNTY, TEXAS
v. §
§
PRODAGIO INTERMEDIARY, LLC, §
and PRODAGIO, LLC §
§
Defendants. § 101ST JUDICIAL DISTRICT
DEFENDANTS’ OBJECTIONS AND RESPONSES
TO PLAINTIFFS’ REQUESTS FOR PRODUCTION
Defendants Prodagio Intermediary, LLC and Prodagio, LLC (collectively, “Defendants”
or “Prodagio”) hereby object and respond as follows to Plaintiffs Prodagio Holdings, Inc.,
Imagitek Holdings, LLC and Mara S. Henderson’s (collectively, “Plaintiffs”) Requests for
Production (the “Requests”):
I.
GENERAL OBJECTIONS AND OBJECTIONS
TO DEFINITIONS AND INSTRUCTIONS
1. Defendants have filed a Motion to Stay this case in its entirety (the “Stay
Motion”), including any discovery, due to a prior pending lawsuit in Delaware (Prodagio
Intermediary, LLC and Prodagio, LLC v. Prodagio Holdings, Inc., et al.; in the Court of
Chancery of the State of Delaware; Cause No. 10059) that concerns substantially related facts
and issues. Defendants object to participating in discovery until the court rules on the pending
Stay Motion.
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 1 OF 13
2. Defendants object to the Requests on that basis that Plaintiffs’ First Amended
Original Petition fails to comply with Rule 47(c) of the Texas Rules of Civil Procedure and
therefore Plaintiffs should be prohibited from conducting any discovery until the Petition is
amended to comply with Rule 47(c).
3. Defendants object to the definition of the terms “You” and “Your” as including
Defendants’ attorneys, and therefore seeking information protected by the attorney-client, work
product and/or other applicable privileges.
4. Defendants object to the definitions of “Promissory Note,” “Modification,”
“Severance Agreement,” “Reimbursement Agreement,” and “Loan Agreement,” to the extent the
definitions assume that those agreements and the specified debts are valid.
5. The specific responses below are each expressly made subject to these objections
concerning definitions and instructions.
6. Defendants object to the time and location of production, and will make
documents available for inspection and copying at a mutually agreeable time and place, if and
when the Court orders that discovery proceed.
II.
RESPONSES TO SPECIFIC REQUESTS FOR PRODUCTION
REQUEST FOR PRODUCTION NO. 1: All documents and communications that relate to the
Promissory Note, the Modification, Severance Agreement, Reimbursement Agreement and/or
Loan Agreement.
RESPONSE: Defendants object to this Request as overbroad and not reasonably calculated to
lead to the discovery of admissible evidence to the extent it calls for documents that do not
concern the validity of the agreements, or the parties’ obligations and performance there under.
Defendants further object to the Request to the extent it asks for privileged documents.
Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 2 OF 13
any withheld documents as required by the Texas Rules of Civil Procedure, if and when this
Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and
general objections, and if and when the Court orders that discovery proceed, Defendants will
produce responsive documents that relate to the specific claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 2: All non-privileged drafts of the Promissory Note, the
Modification, or Severance Agreement and all documents and communications that relate to
those drafts.
RESPONSE: Subject to and without waiver of the foregoing general objections, and if and
when the Court orders that discovery proceed, Defendants will produce responsive documents.
REQUEST FOR PRODUCTION NO. 3: All documents and communications that relate to the
$235,103 in business expenses incurred by Henderson that Defendants acknowledged in a letter
to Henderson dated July 24, 2014.
RESPONSE: Defendants object to the extent that the Request assumes the referenced business
expenses are valid and owed to Plaintiffs. Defendants further object to the statement that
“Defendants acknowledged in a letter to Henderson dated July 24, 2014” because that letter was
a confidential settlement communication. Defendants further object to the Request to the extent
it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on
the basis of privilege and identify any withheld documents as required by the Texas Rules of
Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without
waiver of the foregoing specific and general objections, and if and when the Court orders that
discovery proceed, Defendants will produce responsive documents that relate to the specific
claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 4: All documents and communications that relate to the
$85,000 loan from Henderson that Defendants acknowledged in a letter to Henderson dated July
24, 2014.
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 3 OF 13
RESPONSE: Defendants object to the extent that the Request assumes the referenced debt is
valid and owed to Plaintiffs. Defendants further object to the statement that “Defendants
acknowledged in a letter to Henderson dated July 24, 2014” because that letter was a confidential
settlement communication. Defendants further object to the Request to the extent it asks for
privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis
of privilege and identify any withheld documents as required by the Texas Rules of Civil
Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver
of the foregoing specific and general objections, and if and when the Court orders that discovery
proceed, Defendants will produce responsive documents that relate to the specific claims and
defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 5: All documents and communications that relate to any
proposals to amend or terminate the Promissory Note, the Modification, or Severance
Agreement.
RESPONSE: Defendants object to the Request to the extent it asks for privileged documents.
Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify
any withheld documents as required by the Texas Rules of Civil Procedure, if and when this
Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and
general objections, and if and when the Court orders that discovery proceed, Defendants will
produce responsive documents that relate to the specific claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 6: All documents and communications that relate to
your claim of set off referenced in your letter dated July 24, 2014.
RESPONSE: Defendants object to the reference to the letter dated July 24, 2014 because that
letter was a confidential settlement communication. Defendants object to the Request to the
extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 4 OF 13
withheld on the basis of privilege and identify any withheld documents as required by the Texas
Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and
without waiver of the foregoing specific and general objections, and if and when the Court orders
that discovery proceed, Defendants will produce responsive documents that relate to the specific
claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 7: All documents and communications that relate to any
meetings between you and Henderson regarding the Promissory Note, the Modification,
Severance Agreement, Reimbursement Agreement and/or Loan Agreement.
RESPONSE: Defendants object to the Request to the extent it asks for privileged documents.
Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify
any withheld documents as required by the Texas Rules of Civil Procedure, if and when this
Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and
general objections, and if and when the Court orders that discovery proceed, Defendants will
produce responsive documents that relate to the specific claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 8: All documents and communications that relate to any
affirmative defense you assert in this action.
RESPONSE: Defendants object to the Request as not reasonably tailored to alert Defendants to
the specific documents requested. Defendants further object to the Request to the extent it asks
for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the
basis of privilege and identify any withheld documents as required by the Texas Rules of Civil
Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver
of the foregoing specific and general objections, and if and when the Court orders that discovery
proceed, Defendants will produce responsive documents that relate to the specific claims and
defenses at issue in this case.
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 5 OF 13
REQUEST FOR PRODUCTION NO. 9: All documents and communications that relate to
your plans, desires, or comments about terminating Henderson’s employment.
RESPONSE: Defendants object to the Request as vague and ambiguous, and will construe the
Request as calling for documents relating to Ms. Henderson’s termination as CEO of Prodagio.
Defendants further object to this Request as overbroad and not reasonably calculated to the
claims or defenses asserted in this case. Defendants further object to the Request to the extent it
asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on
the basis of privilege and identify any withheld documents as required by the Texas Rules of
Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without
waiver of the foregoing specific and general objections, and if and when the Court orders that
discovery proceed, Defendants will produce responsive documents that relate to the specific
claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 10: All documents and communications that relate to
the decision to terminate Henderson’s employment.
RESPONSE: Defendants object to this Request as overbroad and not reasonably calculated to
the claims or defenses asserted in this case. Defendants further object to the Request to the
extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are
withheld on the basis of privilege and identify any withheld documents as required by the Texas
Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and
without waiver of the foregoing specific and general objections, and if and when the Court orders
that discovery proceed, Defendants will produce responsive documents that relate to the specific
claims and defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 11: All documents and communications that relate to
Henderson’s compensation or payments owed Henderson, Prodagio, or Imagitek.
DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 6 OF 13
RESPONSE: Defendants object to the Request to the extent it assumes payments are owned
Plaintiffs. Defendants further object that Henderson’s compensation is not relevant to the claims
or defenses at issue in this case. Defendants further object to the Request to the extent it asks for
privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis
of privilege and identify any withheld documents as required by the Texas Rules of Civil
Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver
of the foregoing specific and general objections, and if and when the Court orders that discovery
proceed, Defendants will produce responsive documents that relate to the specific claims and
defenses at issue in this case.
REQUEST FOR PRODUCTION NO. 12: All financial statements, tax returns and other
schedules of the assets, liabilities, income, expenses or cash flow of yours or any property or
company owned in whole or in part by you during any portion of the period from February 5,
2013 to the present.
RESPONSE: Defendants object to this Request on the basis that it is overbroad, unduly
burdensome and harassing. Documents relating to Defendants’ financial condition are not
relevant to the claims or defenses at issue. Defendants stand on their objections.
REQUEST FOR PRODUCTION NO. 13: All documents that identify, contain, or reflect a
valuation of the assets or companies owned by you during any portion of the period from
February 5, 2013 to the present.
RESPONSE: Defendants object to this Request on the basis that it is overbroad, unduly
burdensome and harassing.
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FILED DALLAS COUNTY 11/5/2014 4:17:33 PM GARY FITZSIMMONS DISTRICT CLERK Cause No. DC-14-09959-E PRODAGIO HOLDINGS, INC.; § IN THE DISTRICT COURT OF IMAGITEK HOLDINGS, LLC; and § MARA S. HENDERSON, § § Plaintiffs, § § v. § DALLAS COUNTY, TEXAS § PRODAGIO INTERMEDIARY, LLC § PRODAGIO, LLC, 221 PRO, LP § SBOF II (Prodagio), LLC, § PRODAGIO PARTICIPATION, LLC, § and DIANA MASSARO § § Defendants. § 101st JUDICIAL DISTRICT PLAINTIFFS’ MOTION TO STRIKE OBJECTION AND TO COMPEL THE PRODUCTION OF DOCUMENTS Plaintiffs Mara Henderson, Imagitek Holdings, LLC (“Imagitek”), and Prodagio Holdings, LLC (“Prodagio”) (collectively “Plaintiffs”) respectfully request that the Court strike a global objection to all production asserted by Defendants Prodagio Intermediary, LLC (“Intermediary”) and Prodagio, LLC (“PLLC”) (collectively “PLLC Defendants”) and order the PLLC Defendants to produce documents and information responsive to Plaintiffs’ requests for production. The parties have met and conferred but are at an impasse. I. BACKGROUND Plaintiffs filed their Original Petition in this action on September 5, 2014, bringing claims against the PLLC Defendants for breach of contract, unjust enrichment, declaratory relief, and fraudulent inducement. In the complaint, Plaintiffs alleged that the PLLC Defendants have failed to pay amounts owed to the Plaintiffs under several agreements and that the PLLC 3394790v1/014438 Defendants acknowledged their debts to Plaintiffs as recently as July 24, 2014.1 Soon after filing their complaint, Plaintiffs agreed to extend the deadline for the PLLC Defendants to answer. See Rule 11 Letter Agreement (filed with Court on October 22, 2014). In exchange, the PLLC Defendants agreed that written discovery requests could be served immediately and that responses to requests would be due within 30 days of service. Id. Pursuant to that agreement, Plaintiffs propounded written requests for production on the PLLC Defendants on October 3, 2014. On November 3, 2014, the PLLC Defendants refused to produce any responsive documents to Plaintiffs, broadly stating the PLLC Defendants would not participate in any discovery until the Court rules on the PLLC Defendants’ pending motion to stay this action. See Exhibit A, Defendants’ Objections and Responses to Plaintiffs’ Requests for Production at ¶ 1. Incredibly, the PLLC Defendants have not noticed for hearing their motion to stay. Despite this, the PLLC Defendants took the position in the meet and confer conference that they should not have to produce any documents while the motion to stay is pending. Thus, Defendants intend to effectively stay discovery in this case by filing a motion on which they make no attempt to get a ruling. This Court should strike the PLLC Defendants’ objection on the basis that there is a motion to stay pending and compel the production of documents responsive to Plaintiffs’ discovery requests. To the extent this Court considers the merits of the motion to stay in ruling on this motion to strike and compel, this Court should also deny the motion to stay filed by the PLLC Defendants in the interest of judicial efficiency and consistent judicial outcomes. 1 Plaintiffsamended their complaint on October 29, 2014 and November 4, 2014 to add a claim for access to information and records under Delaware law, a request for receivership under Texas law, and a claim of defamation. Plaintiffs also named additional defendants. 2 3394790v1/014438 II. ARGUMENT A. Filing a motion does not stay discovery. The PLLC Defendants’ argument that all discovery should be suspended pending a ruling on their motion to stay this case runs contrary to normal discovery practices and the PLLC Defendants’ own agreement with Plaintiffs. Pending motions do not, on their own, relieve parties from their discovery obligations; in fact, even pending dispositive motions generally do not halt the discovery process all together. See Escareno ex rel. A.E. v. Lundbeck, LLC, 3:14- CV-257-B, 2014 WL 1976867, at *2 (N.D. Tex. May 15, 2014) (“Filing a Rule 12(b)(6) motion to dismiss does not automatically stay discovery . . . .”);Glazer’s Wholesale Drug Co., Inc. v. Klein Foods, Inc., 3-08-CV-0774-L, 2008 WL 2930482, at *1 (N.D. Tex. July 23, 2008) (noting that a stay of discovery pending resolution of a motion to dismiss “is the exception rather than the rule”). Moreover, a blanket objection to discovery requests based on a pending motion is improper because, in asserting such an objection, the objecting party simply rehashes arguments in the motion instead of offering a valid basis for why the requesting party is not entitled to discovery. Texas rules prescribe specific bases to object to discovery, such as objections based on relevance or privilege. Tex. R. Civ. P. § 192.3(a). In no part do the Texas rules list pending motions to stay as a proper objection to discovery. B. The parties’ Rule 11 agreement recognizes that discovery will proceed absent an order dismissing, staying, or abating this action. In addition, the PLLC Defendants already agreed in a Rule 11 agreement on file with this Court to engage in discovery with Plaintiffs unless the case was stayed, dismissed, or otherwise abated. See Rule 11 Letter Agreement (“[T]he other party agrees to serve objections and responses within thirty (30) days of service of the requests, unless the case has been dismissed, stayed or otherwise abated prior to the response deadline.”). The PLLC Defendants’ blanket 3 3394790v1/014438 refusal to engage in discovery before the Court has even addressed their motion to stay violates this previous agreement. The PLLC Defendants have yet to request a hearing on their motion to stay. If the PLLC Defendants thought their motion had any merit, they would have requested a hearing on it so as to obtain a ruling. Instead, whether for delay, increasing litigation costs or other dilatory purpose, the PLLC Defendants have thwarted the progress of this case by claiming reliance on the mere filing of a motion that has no merit. C. The motion to stay has no merit. The PLLC Defendants’ position is all the more unreasonable because their motion to stay is wholly without merit. In their motion, the PLLC Defendants assert that a stay of this action is warranted in favor of a Delaware action that the PLLC Defendants filed against Plaintiffs. Specifically, the PLLC Defendants principally argue that the agreements that form the basis of this action against them “arise out of the ‘same transaction’” that produced a completely separate agreement that forms the basis of the Delaware action. As a result, so goes their argument, there is “an ‘inherent interrelation’ between the factual allegations, evidence and legal issues” in this case and the Delaware action that warrants a stay. The PLLC Defendants are wrong on both the law and the facts. 1. The PLLC Defendants cite the wrong legal standard in their motion. In their motion, the PLLC Defendants advocate that the Court use a legal standard that applies when two suits are filed in separate Texas counties. All the cases on which the PLLC Defendants rely involve competing actions within the State of Texas. See Guy v. Damson Oil Corp., 13-91-028-CV, 1997 WL 33760709 (Tex. App.—Corpus Christi Mar. 27, 1997, no writ) (holding in abatement a suit brought in Wharton County in favor of a suit filed in Harris County); In re Servicios Legales de Mesoamerica S. de R.L., 13-12-00466-CV, 2014 WL 895513 4 3394790v1/014438 (Tex. App.—Corpus Christi Mar. 6, 2014, no pet.) (holding in abatement a suit filed in Nueces County in favor of a suit filed in Hidalgo County). When identical concurrent suits are filed in separate Texas counties, “[i]t is well settled that ... the court in which suit is first filed acquires dominant jurisdiction to the exclusion of other courts.” Id. When such concurrent suits are not identical, however, a stay may stillbe appropriate if those cases are sufficiently related. See Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 246-47 (Tex. 1988) (holding a second-filed suit in abatement because those claims should have been filed in the initial action as compulsory counterclaims). The Texas Supreme Court has explained that this approach is necessary to promote judicial economy and manage the case load of Texas courts. Id. That is not the legal standard to determine whether to stay a Texas case in favor of a foreign action, i.e. a case filed in another state or foreign country. 2. The applicable legal standard requires that the two actions be virtually identical. Texas courts have repeatedly held, “the mere pendency of an action in one state will not be a ground for abating suit in another state between the same parties and involving the same subject matter.” See Crown Leasing Corp., 92 S.W.3d at 927; Space Master Int’l, Inc. v. Porta- Kamp Manufacturing, 794 S.W.2d 944, 948 (Tex. App.—Houston [1st Dist.] 1990, no writ) (“It is equally well settled that the mere pendency of an action in one state will not be grounds for abating a suit in another state between the same parties and involving the same subject matter.”). Instead, to stay a Texas action in favor of a foreign action, “it is, as a general rule, necessary that the two suits involve the same cause of action, concern the same subject matter, involve the same issues, and seek the same relief.” Nowell v. Nowell, 408 S.W.2d 550, 553 (Tex. Civ. App.—Dallas 1966, writ dism’d) (emphasis added); see also In re State 5 3394790v1/014438 Farm Mutual Auto. Ins. Co., 192 S.W.3d 897, 901 (Tex. App.—Tyler 2006, no pet.) (same).2 In other words, to stay a Texas action in favor of a foreign action, the Texas case must be nearly identical to the foreign case. See Crown Leasing Corp., 92 S.W.3d at 926, 927 (staying a Texas action that was filed after the plaintiff lost a motion for temporary injunction in Florida because “[t]he Texas suit was identical to the Florida suit, except instead of seeking a temporary injunction, Crown requested the Texas court to issue an ex parte write of sequestration”); Space Master Int’l, Inc. v. Porta-Kamp Manufacturing, 794 S.W.2d 944, 948 (Tex. App.—Houston [1st Dist.] 1990, no writ) (staying a Texas action because the plaintiff conceded that actions pending in New Jersey state court and Massachusetts federal court “involved the same parties and issues”). 3. Under the correct legal standard, a stay would be manifest error. a. This action involves different parties. Plaintiffs’ claims for breach of the Operating Agreement and defamation involve parties who are not parties in the Delaware action. Specifically, the following parties in this action are not parties in the Delaware action: Prodagio LLC, 221 PRO, LP, SBOF II (Prodagio), LLC, PRODAGIO PARTICIPATION, LLC, and Diana Massaro. b. This action involves different causes of action. The causes of action alleged in the two lawsuits are completely different. The table below reflects the current causes of action in each case. 2 Moreover, even if a Texas action is identical to a foreign action, the Texas court still has the discretion to stay the Texas action; there is no automatic rule to do so. See Safeco Ins. Co. of Am. v. J. L. Henson, Inc., 601 S.W.2d 183, 185 (Tex. Civ. App.—Dallas 1980, writ ref’d n.r.e.) (“The rule is well settled that pendency of a suit in another state does not bar another suiton the same claim in Texas.”); Mills v. Howard, 228 S.W.2d 906, 908-09 (Tex. Civ. App.—Amarillo 1950, no writ) (“While, as we have said, the pendency of a prior suit involving the same parties and subject matter strongly urges the court of the local forum to stay the proceedings pending determination of the prior suit, yet the rule is not mandatory upon the court nor is it a matter of right to the litigant. It is, after all, a matter resting within the sound discretion of the court.”). 6 3394790v1/014438 THIS ACTION DELAWARE ACTION Breach of Modification Agreement Breach of Merger Agreement Breach of Reimbursement Agreement Fraudulent Inducement of Merger Agreement Breach of Loan Agreement Indemnification pursuant to the Merger Agreement Breach of Severance Agreement Breach of Operating Agreement Unjust enrichment Fraud, fraudulent inducement, and/or promissory fraud with regard to the Modification, Reimbursement, Loan, and Severance agreements Access to information Request for receivership Defamation Cf. Exhibit A to Defendants’ Motion to Stay with Plaintiffs’ Second Amended Petition. Granting a stay of this action would preclude determination of a number of claims that could not be brought in the Delaware action. Because the Modification Agreement contains a mandatory venue provision requiring suit in this district, the breach of contract cause of action for that contract could not be brought in Delaware or anywhere else. Because the defamatory statements were made by a Texas resident in Texas, the defamation claim could not be brought in Delaware. Nor could Plaintiffs bring their request for receivership pursuant to the Texas statute in Delaware. The Texas Court of Appeals has held “[o]ne test to determine whether causes of action are identical is to ascertain whether the parties could obtain all the relief in the prior suit that they would be entitled to in the subsequent action.” Nowell, 408 S.W.2d at 553. Under that test, this action is not only not identical to the Delaware action, this action could never be identical to the Delaware action. c. The two actions do not even arise out of the same transactions. The PLLC Defendants’ contention that the actions arise out of the same transaction is also incorrect. In the Delaware action, the PLLC Defendants assert three causes of action (fraud, 7 3394790v1/014438 breach of agreement, and indemnification), all based on the terms of a merger agreement (“the Merger Agreement”) and events leading up to its execution. The PLLC Defendants’ overarching claim in the Delaware action is that Henderson, Imagitek, and Prodagio made false representations to induce them to overpay for their software company.3 In contrast, Plaintiffs here assert in this case causes of action related to several other agreements—none of which are the Merger Agreement—that obligate the PLLC Defendants to make payments to Plaintiffs. The PLLC Defendants themselves previously acknowledged the validity of four of these agreements (i.e. the Modification, Reimbursement, Loan and Severance Agreements) as well as Plaintiffs’ entitlement to payments owed under them. The terms of these four agreements are separate from and do not depend on the terms of the Merger Agreement. The circumstances leading to these agreements are different from those leading to the Merger Agreement because the four agreements were separately bargained for from the Merger Agreement. Indeed, each of four agreements was executed after the Merger Agreement was executed, and the breaches of those agreements thus post-date the Merger Agreement. Similarly, the defamation claim and failure to provide information claims arise out of conduct that post-date the Merger Agreement. Neither claim involves the Merger Agreement. III. CONCLUSION The PLLC Defendants refuse to produce any responsive documents because they have filed a motion to stay. The PLLC Defendants take this position even though they have not even attempted to set a hearing on their motion to stay. Texas law is clear that filing a motion does not stay a case and, here, it would be manifest error to grant a stay because the Delaware action and this action are not identical. This action 3 Plaintiffs Imagitek and Prodagio asserted a counterclaim in the Delaware action against the PLLC Defendants for fraudulently inducing them to enter into the Merger Agreement. But this counterclaim likewise is limited to the terms of the Merger Agreement and the facts leading up to its execution. 8 3394790v1/014438 involves different parties, does not overlap with the Delaware action on a single claim, and involves parties and claims that due to jurisdiction, statutory and mandatory venue provisions could not be brought in Delaware. The PLLC Defendants agreed in a Rule 11 agreement on file with this Court that they would “serve objections and responses within thirty (30) days of service of the requests, unless the case has been dismissed, stayed or otherwise abated prior to the response deadline.” The PLLC Defendants should be held to their agreement. This Court should grant this motion to strike and compel, strike Defendants’ objections on the basis of the stay, and compel the production of responsive documents from the PLLC Defendants. In the interest of judicial efficiency, to the extent this Court considers the motion to stay argument in the course of disposing of this motion, this Court should simultaneously deny the PLLC Defendants’ motion to stay. A proposed order is attached for the convenience of this Court. Dated: November 5, 2014. Respectfully submitted, /s/ Omar Ochoa Erica W. Harris State Bar No. SUSMAN GODFREY LLP 1000 Louisiana Street, Suite 5100 Houston, Texas 77002 Telephone: (713) 651-9366 Facsimile: (713) 654-6666 eharris@susmangodfrey.com Omar Ochoa State Bar No. 24079813 SUSMAN GODFREY LLP 901 Main Street, Suite 5100 Dallas, Texas 75202 Telephone: (214) 754-1900 Facsimile: (214) 754-1933 oochoa@susmangodfrey.com 9 3394790v1/014438 Attorneys for plaintiffs Prodagio Holdings, Inc.; Imagitek Holdings, LLC; and Mara S. Henderson CERTIFICATE OF CONFERENCE Counsel for Plaintiffs conferred with counsel for the PLLC Defendants on November 3, 2014 throughout the day by email and then by phone at approximately 4:15 pm CST and counsel for the PLLC Defendants is opposed as to the disposition of the matters raised in this motion. /s/ Erica Harris Erica Harris 10 3394790v1/014438 CERTIFICATE OF SERVICE This is to certify that on this the 5th day of November, 2014, a true and correct copy of the above and foregoing instrument was properly forwarded to the following counsel of record in accordance with Rule 21 of the Texas Rules of Civil Procedure as indicated below: David J. Drez III Joseph R. Callister Lindsey E. Marsh Wick Phillips Gould & Martin, LLP 3131 McKinney Avenue, Suite 100 Dallas, Texas 75204 /s/ Omar Ochoa Omar Ochoa 11 3394790v1/014438 EXHIBIT 1 CAUSE NO. DC-14-09959 PRODAGIO HOLDINGS, INC., § IN THE DISTRICT COURT OF IMAGITEK HOLDINGS, LLC, § and MARA S. HENDERSON, § § Plaintiffs, § § DALLAS COUNTY, TEXAS v. § § PRODAGIO INTERMEDIARY, LLC, § and PRODAGIO, LLC § § Defendants. § 101ST JUDICIAL DISTRICT DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION Defendants Prodagio Intermediary, LLC and Prodagio, LLC (collectively, “Defendants” or “Prodagio”) hereby object and respond as follows to Plaintiffs Prodagio Holdings, Inc., Imagitek Holdings, LLC and Mara S. Henderson’s (collectively, “Plaintiffs”) Requests for Production (the “Requests”): I. GENERAL OBJECTIONS AND OBJECTIONS TO DEFINITIONS AND INSTRUCTIONS 1. Defendants have filed a Motion to Stay this case in its entirety (the “Stay Motion”), including any discovery, due to a prior pending lawsuit in Delaware (Prodagio Intermediary, LLC and Prodagio, LLC v. Prodagio Holdings, Inc., et al.; in the Court of Chancery of the State of Delaware; Cause No. 10059) that concerns substantially related facts and issues. Defendants object to participating in discovery until the court rules on the pending Stay Motion. DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 1 OF 13 2. Defendants object to the Requests on that basis that Plaintiffs’ First Amended Original Petition fails to comply with Rule 47(c) of the Texas Rules of Civil Procedure and therefore Plaintiffs should be prohibited from conducting any discovery until the Petition is amended to comply with Rule 47(c). 3. Defendants object to the definition of the terms “You” and “Your” as including Defendants’ attorneys, and therefore seeking information protected by the attorney-client, work product and/or other applicable privileges. 4. Defendants object to the definitions of “Promissory Note,” “Modification,” “Severance Agreement,” “Reimbursement Agreement,” and “Loan Agreement,” to the extent the definitions assume that those agreements and the specified debts are valid. 5. The specific responses below are each expressly made subject to these objections concerning definitions and instructions. 6. Defendants object to the time and location of production, and will make documents available for inspection and copying at a mutually agreeable time and place, if and when the Court orders that discovery proceed. II. RESPONSES TO SPECIFIC REQUESTS FOR PRODUCTION REQUEST FOR PRODUCTION NO. 1: All documents and communications that relate to the Promissory Note, the Modification, Severance Agreement, Reimbursement Agreement and/or Loan Agreement. RESPONSE: Defendants object to this Request as overbroad and not reasonably calculated to lead to the discovery of admissible evidence to the extent it calls for documents that do not concern the validity of the agreements, or the parties’ obligations and performance there under. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 2 OF 13 any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 2: All non-privileged drafts of the Promissory Note, the Modification, or Severance Agreement and all documents and communications that relate to those drafts. RESPONSE: Subject to and without waiver of the foregoing general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents. REQUEST FOR PRODUCTION NO. 3: All documents and communications that relate to the $235,103 in business expenses incurred by Henderson that Defendants acknowledged in a letter to Henderson dated July 24, 2014. RESPONSE: Defendants object to the extent that the Request assumes the referenced business expenses are valid and owed to Plaintiffs. Defendants further object to the statement that “Defendants acknowledged in a letter to Henderson dated July 24, 2014” because that letter was a confidential settlement communication. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 4: All documents and communications that relate to the $85,000 loan from Henderson that Defendants acknowledged in a letter to Henderson dated July 24, 2014. DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 3 OF 13 RESPONSE: Defendants object to the extent that the Request assumes the referenced debt is valid and owed to Plaintiffs. Defendants further object to the statement that “Defendants acknowledged in a letter to Henderson dated July 24, 2014” because that letter was a confidential settlement communication. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 5: All documents and communications that relate to any proposals to amend or terminate the Promissory Note, the Modification, or Severance Agreement. RESPONSE: Defendants object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 6: All documents and communications that relate to your claim of set off referenced in your letter dated July 24, 2014. RESPONSE: Defendants object to the reference to the letter dated July 24, 2014 because that letter was a confidential settlement communication. Defendants object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 4 OF 13 withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 7: All documents and communications that relate to any meetings between you and Henderson regarding the Promissory Note, the Modification, Severance Agreement, Reimbursement Agreement and/or Loan Agreement. RESPONSE: Defendants object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 8: All documents and communications that relate to any affirmative defense you assert in this action. RESPONSE: Defendants object to the Request as not reasonably tailored to alert Defendants to the specific documents requested. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 5 OF 13 REQUEST FOR PRODUCTION NO. 9: All documents and communications that relate to your plans, desires, or comments about terminating Henderson’s employment. RESPONSE: Defendants object to the Request as vague and ambiguous, and will construe the Request as calling for documents relating to Ms. Henderson’s termination as CEO of Prodagio. Defendants further object to this Request as overbroad and not reasonably calculated to the claims or defenses asserted in this case. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 10: All documents and communications that relate to the decision to terminate Henderson’s employment. RESPONSE: Defendants object to this Request as overbroad and not reasonably calculated to the claims or defenses asserted in this case. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 11: All documents and communications that relate to Henderson’s compensation or payments owed Henderson, Prodagio, or Imagitek. DEFENDANTS’ OBJECTIONS AND RESPONSES TO PLAINTIFFS’ REQUESTS FOR PRODUCTION PAGE 6 OF 13 RESPONSE: Defendants object to the Request to the extent it assumes payments are owned Plaintiffs. Defendants further object that Henderson’s compensation is not relevant to the claims or defenses at issue in this case. Defendants further object to the Request to the extent it asks for privileged documents. Defendants will inform Plaintiffs if documents are withheld on the basis of privilege and identify any withheld documents as required by the Texas Rules of Civil Procedure, if and when this Court orders that discovery proceed. Subject to and without waiver of the foregoing specific and general objections, and if and when the Court orders that discovery proceed, Defendants will produce responsive documents that relate to the specific claims and defenses at issue in this case. REQUEST FOR PRODUCTION NO. 12: All financial statements, tax returns and other schedules of the assets, liabilities, income, expenses or cash flow of yours or any property or company owned in whole or in part by you during any portion of the period from February 5, 2013 to the present. RESPONSE: Defendants object to this Request on the basis that it is overbroad, unduly burdensome and harassing. Documents relating to Defendants’ financial condition are not relevant to the claims or defenses at issue. Defendants stand on their objections. REQUEST FOR PRODUCTION NO. 13: All documents that identify, contain, or reflect a valuation of the assets or companies owned by you during any portion of the period from February 5, 2013 to the present. RESPONSE: Defendants object to this Request on the basis that it is overbroad, unduly burdensome and harassing.