Judge Orders AGA to Turn Over Financial Records

Judge Leslie Hoffman was clearly frustrated with both sides.

Hoffman, a magistrate judge for the U.S. District Court in the Middle District of Florida (Orlando) had summoned lead attorneys involved in the Allstate Insurance vs. Auto Glass America and its owner Charles Isaly to a hearing on number of discovery motions.

The result was 11 lawyers—four for Allstate*and seven for AGA/Isaly (AGA)—all at the same hearing on Friday morning to argue five motions concerning discovery. In the course of the hearing, the Judge made it plain that she felt neither side had been cooperating with the other.

The suit, which was filed just before Christmas 2018, alleges AGA and Isaly directed an “extensive and complex scheme … to pressure Allstate’s insureds into hiring AGA for windshield replacements, obtaining assignments of benefits from insureds, submitting invoices to Allstate for excessive and unreasonable amounts and fil[ing] over 1,400 lawsuits for recovery of excessive and unreasonable amounts.” AGA has since filed a counterclaim as well.

The first motion argued on Friday was the insurer’s motion to that would order AGA to produce AGA financial records in response to a subpoena for said information. AGA’s attorney’s alleged that the information Allstate was seeking did not appear to involve specific elements from any specific claims or defenses as framed in the pleadings and was, therefore irrelevant. “Relevancy is what matters when we are talking about private financial matters,” said AGA attorney Mac Phillips of Allstate’s request for a subpoena to AGA’s CPA firm for information going back to 2014. Information sought by the insurer included state and federal income tax returns, detailed financial statements, all accounts payable journals, auditing work papers, info about all bank accounts and financial instruments , all communications between the CPA firm and AGA and all earnings reports. That ruling rendered the Defendant’s motion protecting it from such an order moot.

“We need these financial records. We need the income and expenses so that Allstate can calculate the profit margins,” said Allstate attorney Sally Culley. “We need them so that our expert can determine if what AGA is charging is in line with others.”

Culley also said that Isaly had testified in his deposition that there was no specific formula used for setting prices charged to cash customers. “We need to see how AGA pays its techs and salespeople to help determine this,” said Culley. “What AGA charges other insurance companies is also relevant,” she added.

The Judge ultimately ordered that Allstate receive much of the financial information it sought. “The subpoena was overly broad,” said Judge Hoffman, “but I never said it wasn’t relevant. I agree that Allstate is not entitled to get every bit of your financial information,” she added, ruling though that AGA was to provide all its financial statements, its QuickBooks reports, documents showing what AGA charged all its customers, whether insured by Allstate or not and all expenses including payments to employees and 1099 contractors, all going back to 2014. She did not require release of tax returns, nor correspondence between AGA and its CPA. Shen then gave the defendant 14 days to produce the documents.

Next up was Allstate’s motion to compel subpoenas of certain AGA employees and subcontractors and to impose sanctions against AGA’s lawyers for certain alleged conduct around such subpoenas. The insurer’s attorneys alleged the AGA’s lawyers have not cooperated with Allstate in scheduling depositions and did not produce employee Brad Isaly for deposition despite having been served properly. “It looks like you are not responding [not communicating] so you can play this game with Allstate,” the Judge told the attorneys for AGA. She ordered AGA’s attorneys and ordered them to pay legal fees and costs for a failed deposition that Allstate attended but denied as moot a motion for sanctions regarding Brad Isaly’s deposition and alleged bad faith conduct.

This type of behavior, she said “is frankly insulting to the Court. So let me make this clear: Stop. Stop. I am putting this in the order, because if this continues you will be violating my ruling. My patience has just about run out.”

Hoffman was clearly frustrated with the pace of the trial and turned her attention to Allstate. “There is plenty of blame to go around. Ms. Culley, you have had 18 months to depose witnesses. 18 months. How many have you deposed?”

“One, your honor,” Culley replied.

In addition to the sanctions, the Judge ordered that Brad Isaly appear for deposition and that Charles Isaly be re-deposed. “He has already sat for more than 14 hours of deposition,” said Miller of Charles Isaly. “More is over-reaching. Could he not submit an affidavit or answer written questions?” Miller asked.

Judge Hoffman said no, with some conditions. She ordered that Charles Isaly sit for one additional hour of deposition but that questions be limited to ones that were asked and objected to in the original deposition.

She ended the hearing repeating her earlier admonishment. “Do not ask for further extensions. They will not be granted,” she said, “except for truly exigent circumstances.”

Note: Allstate Insurance Company, Allstate Fire and Casualty Insurance Company, Allstate Indemnity Company and Allstate Property and Casualty Insurance Company (collectively Allstate). They, as well as Auto Glass America and Charles Isaly (known as AGA) are all represented by outside counsel.

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