Bajjuri v. Karney

319 Neb. 273Neb

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Nebraska Supreme Court Advance Sheets
319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
Pranay Bajjuri et al., appellees, v. Amogh Karney
et al., appellees, and Anand Karney and
Sudha Karney, appellants.
___ N.W.3d ___
Filed June 20, 2025. 	No. S-24-409.
1. Pretrial Procedure: Appeal and Error. Discovery sanctions rest within
the discretion of the trial court and will not be disturbed on appeal
absent an abuse of discretion.
2. Judgments: Appeal and Error. An appellate court reviews rulings on a
motion to alter or amend for an abuse of discretion.
3. Judges: Words and Phrases. A judicial abuse of discretion exists when
the reasons or rulings of a trial judge are clearly untenable, unfairly
depriving a litigant of a substantial right and denying just results in mat-
ters submitted for disposition.
4. Rules of the Supreme Court: Pretrial Procedure. Neb. Ct. R. Disc.
§ 6-337 provides a range of sanctions that a court may impose for spe-
cific violations of discovery rules, including entry of a default judgment
and an award of attorney fees.
5. ____: ____. Neb. Ct. R. Disc. § 6-337(b)(2) empowers the court to
order the party failing to obey the order or the attorney advising him
or her, or both, to pay the reasonable expenses, including attorney fees,
caused by the failure, unless the court finds that the failure was substan-
tially justified or that other circumstances make an award of expenses
unjust.
6. Pretrial Procedure. The primary purpose of the discovery process is
to explore all available and properly discoverable information to nar-
row the fact issues in controversy so that a trial may be an efficient and
economical resolution of a dispute.
7. Rules of the Supreme Court: Pretrial Procedure. A party’s failure
to answer properly served interrogatories or to seasonably supplement
discovery responses may be grounds for sanctions imposed under Neb.
Ct. R. Disc. § 6-337.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/14/2026 08:04 AM CDT
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Nebraska Supreme Court Advance Sheets
319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
8. ____: ____. Factors relevant to Neb. Ct. R. Disc. § 6-337 sanctions
include (1) the prejudice or unfair surprise suffered by the party seeking
sanctions, (2) the importance of the evidence which is the root of the
misconduct, (3) whether the court warned the sanctioned party about the
consequences of its misconduct, (4) whether the court considered less
drastic sanctions, (5) the sanctioned party’s history of discovery abuse,
and (6) whether the sanctioned party acted willfully or in bad faith.
9. Rules of the Supreme Court: Pretrial Procedure: Words and
Phrases. Under Neb. Ct. R. Disc. § 6-334, a party is required to produce
documents if the documents are within the party’s possession, custody,
or control. Documents are within the party’s possession if the party has
a legal right to obtain them.
10. Corporations: Records. Members and managers of limited liability
companies are empowered to obtain limited liability company records
under Neb. Rev. Stat. § 21-139 (Reissue 2022).
Appeal from the District Court for Douglas County: Shelly
R. Stratman, Judge. Affirmed.
Sean A. Minahan and Darlene Gomez, Senior Certified Law
Student, of Lamson, Dugan & Murray, L.L.P., for appellants.
Josiah J. Shanks and Scott D. Jochim, of Croker Huck Law
Firm, for appellees Pranay Bajjuri et al.
Funke, C.J., Cassel, Stacy, Papik, Freudenberg, and
Bergevin, JJ.
Per Curiam.
I. NATURE OF CASE
The district court for Douglas County sustained a motion
for discovery sanctions under Neb. Ct. R. Disc. § 6-337 (Rule
37) and entered default judgment and attorney fees against
Anand Karney and Sudha Karney (the appellants) and Sarkit,
Inc. Although the discovery rules were amended in 2025, the
district court applied the prior rules, as do we. These discovery
sanctions were based on, inter alia, the district court’s finding
that the appellants had “repeated discovery violations [and]
inexcusable recalcitrance” and had “been previously warned of
sanctions.” Because we find no abuse of discretion, we affirm.
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Nebraska Supreme Court Advance Sheets
319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
II. STATEMENT OF FACTS
In February 2022, Pranay Bajjuri; Nirmal Gorla; Sathwik
Madishetti; Terraland Holdings, LLC; and SSRRW, LLC (col-
lectively the appellees), sued the appellants and others for, inter
alia, unjust enrichment, fraud, and civil conspiracy.
This appeal concerns discovery sanctions entered against the
appellants, and we limit our statement of facts to their appel-
late claims. The discovery sanctions stem from the appellants’
failure to produce financial and organizational documents and
records related to defendants Shiba Prop Limited Liability
Company, Narke Holdings LLC, and Ark Capital Brookside
LLC. Defendant Sarkit, against whom judgment was also
entered, waived its appellate rights in reliance on a settlement
with various parties, and we make incidental reference to
Sarkit as necessary.
The operative complaint generally alleged that the appellants
conspired to fraudulently induce the appellees to invest money
in various limited liability companies (LLCs) that would pur-
chase real property and then operate the real property as rental
properties. The appellants allegedly diverted the investments
for their own personal gain. Specifically, as it related to
defendant Shiba Prop, the appellees alleged that although they
believed they purchased membership interests in Shiba Prop,
they did not ultimately receive those interests. In this regard,
they alleged that appellant Anand Karney executed at least five
different operating agreements of Shiba Prop in a short period
of time, thereby confusing ownership interests to the detriment
of investors.
The appellees argued that the appellants solely owned, con-
trolled, and operated defendants Shiba Prop and Ark Capital
Brookside, and it is undisputed that the companies’ principal
place of business was the appellants’ Omaha residence.
In August 2022, the court issued a scheduling order direct-
ing that discovery be completed by February 1, 2023, and
trial was set for April 2023. Discovery requests were served
on the defendants in September 2022. Evidence produced
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319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
was subject to a protective order for attorneys’ eyes only, but
because discovery was not progressing, the court removed the
protective order. Before and after removal of the protective
order, the appellants opposed discovery.
In February 2023, one defendant, Amogh Karney, filed a
motion to dismiss the appellees’ amended complaint, asserting
that it was frivolous. The appellants also filed a motion to dis-
miss and requested attorney fees. See Neb. Rev. Stat. § 25-824
et seq. (Reissue 2016).
In a March 2023 order, the district court denied Amogh
Karney’s and the appellants’ motions to dismiss. At that time,
the court held all questions of attorney fees and costs raised by
the parties in abeyance. In its order, the district court empha-
sized that § 25-824 allows for
an award of attorney’s fees when an action is frivolous or
when an “action or any part of the action was interposed
solely for delay or harassment. If the court finds that an
attorney or party unnecessarily expanded the proceed-
ings by other improper conduct, including, but not lim-
ited to, abuses of civil discovery procedures, the court
shall assess attorney’s fees and costs.”
(Emphasis in original.)
Thereafter, the appellants served written responses to the
first set of requests for production of documents but did not
produce documents. The record shows that the appellees noti-
fied the appellants that the responses were deficient. Although
the defendants objected to each of their subpoenas, the appel-
lees obtained records subpoenas.
In May 2023, the appellees moved to compel production
of documents. The district court addressed each request for
production of documents listed and the appellants’ objections
thereto. In an order to compel, the court ordered the appellants
to produce discovery in compliance with its order by July 18.
Although the appellants ultimately produced some documents
before this deadline, the documents produced omitted com-
munications known to be in the possession of appellant Anand
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319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
Karney, including emails between himself and financial insti-
tutions (who were subpoenaed by the appellees) and between
appellant Anand Karney and defendant Amogh Karney.
The appellants did not produce anything with respect to the
following requests for production:
• Request No. 3 — Any and all documents relied upon
or referred to in responding to Plaintiffs’ First Set of
Requests for Admissions to Defendants;
• Request No. 9 — Any expert report prepared by any
testifying expert you intend to call in this case;
• Request No. 10 — Any and all communications with
any testifying expert you intend to call in this case;
• Request No. 11 — Copies of all bank statement[s] in
the possession, custody and/or control of the Defendants
which evidence any payments made by any party to this
case (whether a Plaintiff or a Defendant) related in any
way to the investments which are the subject matter of
this case;
• Request No. 12 — Copies of all bank statements in the
possession, custody, and/or control of the Defendants
which evidence any payments made to any party to this
case (whether a Plaintiff or a Defendant) related in any
way to the investments which are the subject matter of
this case;
• Request No. 14 — Copies of all financial statements
provided to the Plaintiffs in connection with the invest-
ments which are the subject matter of this case;
• Request No. 15 — Copies of all distributions made
by any limited liability company related in any way
to the investments which are the subject matter of this
case; [and]
• Request No. 19 — Copies of all financial statements
of any limited liability company associated with the
Defendants that was in any way involved with the
investments which are the subject matter of this case
from November 1, 2019 to the present.
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Nebraska Supreme Court Advance Sheets
319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
In September 2023, the appellees filed a motion for sanc-
tions against the appellants and against Amogh Karney, Shiba
Prop, Narke Holdings, and Sarkit. The motion sought default
judgment and attorney fees under Rule 37, based on the appel-
lants’ discovery violations and failure to comply with the
court’s order to compel. The court scheduled an evidentiary
hearing and warned the appellants that evidence would need
to be produced to the court at the evidentiary hearing and that
sanctions were likely.
The appellants did not correct the discovery violations, and
the court sustained the motion for sanctions. In doing so, the
district court stated that the appellants had “frustrated the dis-
covery process at every stage of litigation.” The court found
that the appellants had had “every chance to comply with
discovery” and that the documents and records pertaining to
the corporate entities were necessarily within the appellants’
possession and control. It noted that members of a limited
liability company (LLC), including the appellants, are respon-
sible for the possession, custody, and control of documents
and may not escape liability and simply shed responsibilities
by claiming that an alleged manager is in possession and con-
trol of the documents of the LLC. The district court concluded
that the sanctions of a default judgment and attorney fees were
appropriate, based on the appellants’ and other defendants’
“inexcusable recalcitrance” with the discovery process.
Default judgment was entered against the appellants for
$2,201,385.82. The amount of damages was supported by
affidavit and documentation showing, inter alia, that the appel-
lants had inflated ownership interests in six properties in
which they claimed ownership of a total of $2,518,626.26
of net equities although they had invested only $274,520.70.
The court specifically found that based on the evidence, and
under the totality of the circumstances, the appellants were
jointly and severally liable to the appellees under a theory of
civil conspiracy. Pursuant to Rule 37, the court also awarded
the appellees attorney fees of $180,645.68 and interest at
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319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
the statutory rate. The amount of damages is not at issue in
this appeal.
Subsequently, the appellants filed a motion to alter or amend.
The court denied the motion and found that all requirements
for discovery sanctions were satisfied and that the appellees
would have been extremely prejudiced had the motion for
sanctions been denied. The district court found that throughout
the course of litigation, the appellants “continued to oppose
discovery and failed to turn over any meaningful documents.”
This appeal followed.
III. ASSIGNMENTS OF ERROR
The appellants claim, summarized and restated, that the dis-
trict court erred when it (1) sustained the motion for sanctions
for discovery abuse, (2) entered default judgment against the
appellants and awarded attorney fees to the appellees, and (3)
overruled the appellants’ motion to alter or amend.
IV. STANDARDS OF REVIEW
[1] Discovery sanctions rest within the discretion of the trial
court and will not be disturbed on appeal absent an abuse of
discretion. See Eletech, Inc. v. Conveyance Consulting Group,
308 Neb. 733, 956 N.W.2d 692 (2021).
[2] An appellate court reviews rulings on a motion to alter
or amend for an abuse of discretion. In re Interest of D.H., 315
Neb. 458, 996 N.W.2d 867 (2023).
[3] A judicial abuse of discretion exists when the reasons or
rulings of a trial judge are clearly untenable, unfairly depriving
a litigant of a substantial right and denying just results in mat-
ters submitted for disposition. Trausch v. Hagemeier, 313 Neb.
538, 985 N.W.2d 402 (2023).
V. ANALYSIS
The appellants claim generally that the district court abused
its discretion when it granted the appellees’ motion for sanc-
tions and entered a default judgment of $2,201,385.82 and
attorney fees of $180,645.69 as sanctions. They specifically
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Nebraska Supreme Court Advance Sheets
319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
contend that the sanctions were not warranted; that the appel-
lants were not at fault for the violations of discovery; that they
were not provided reasonable notice that default judgment
could be imposed; and that, if warranted, lesser sanctions
should have been imposed. The appellees argue that the trial
court’s decision to impose sanctions, including the sanctions
of default judgment and attorney fees, was not an abuse of
discretion under the circumstances. We agree with the appel-
lees and find no abuse of discretion.
1. Rule 37 Sanctions
[4] Rule 37 provides “a range of sanctions” that a court
may impose for specific violations of discovery rules, includ-
ing entry of a default judgment and an award of attorney fees.
See John P. Lenich, Nebraska Civil Procedure, § 28:2 at 1291
(2025). Regarding a failure to comply with an order compel-
ling discovery, Rule 37 provides that if a party or a party’s
officer, director, or managing agent—or a witness “designated
under Rule 30(b)(6) or 31(a)”—fails to obey an order to
provide or permit discovery, the court may issue further just
orders, which may include the following:
(A) An order that the matters regarding which the order
was made or any other designated facts shall be taken to
be established for the purposes of the action in accord-
ance with the claim of the party obtaining the order;
(B) An order refusing to allow the disobedient party to
support or oppose designated claims or defenses, or pro-
hibiting him or her from introducing designated matters
in evidence;
(C) An order striking out pleadings or parts thereof or
staying further proceedings until the order is obeyed or
dismissing the action or proceeding or any part thereof,
or rendering a judgment by default against the disobedi-
ent party;
(D) In lieu of any of the foregoing orders or in addi-
tion thereto, an order treating as a contempt of court the
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BAJJURI v. KARNEY
Cite as 319 Neb. 273
failure to obey any orders except an order to submit to a
physical or mental examination[.]
Neb. Ct. R. Disc. § 6-337(b)(2).
[5] Rule 37 also empowers the court to order “the party fail-
ing to obey the order or the attorney advising him or her, or
both[,] to pay 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.” Neb. Ct. R. § 6-337(b)(2).
[6] We have explained that the primary purpose of the
discovery process is to explore all available and properly dis-
coverable information to narrow the fact issues in controversy
so that a trial may be an efficient and economical resolution
of a dispute. Eddy v. Builders Supply Co., 304 Neb. 804, 937
N.W.2d 198 (2020). The discovery process also provides an
opportunity for pretrial preparation so that a litigant may
conduct an informed cross-examination. Id. Moreover, pretrial
discovery enables litigants to prepare for a trial without the ele-
ment of an opponent’s tactical surprise, a circumstance which
might lead to a result based more on counsel’s legal maneuver-
ing than on the merits of the case. Id.
Where parties fall short of their discovery obligations, Rule
37 sanctions serve several purposes: (1) They punish a litigant
or counsel who might be inclined to frustrate the discovery
process, (2) they deter those who are tempted to break the
rules, and (3) they prevent parties who have failed to meet
their discovery obligations from profiting from their miscon-
duct. Hill v. Tevogt, 293 Neb. 429, 879 N.W.2d 369 (2016).
Sanctions under Rule 37 exist
not only to punish those whose conduct warrants a sanc-
tion but to deter those, whether a litigant or counsel, who
might be inclined or tempted to frustrate the discovery
process by their ignorance, neglect, indifference, arro-
gance, or, much worse, sharp practice adversely affecting
a fair determination of a litigant’s rights or liabilities.
Eddy v. Builders Supply Co., 304 Neb. at 817, 937 N.W.2d
at 210.
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319 Nebraska Reports
BAJJURI v. KARNEY
Cite as 319 Neb. 273
2. Appellees’ Motion for Sanctions
[7] We have previously held that a party’s failure to answer
properly served interrogatories or to seasonably supplement
discovery responses may be grounds for sanctions imposed
under Rule 37. Eletech, Inc. v. Conveyance Consulting Group,
308 Neb. 733, 956 N.W.2d 692 (2021) (affirming dismissal
of counterclaim); Eddy v. Builders Supply Co., supra (affirm-
ing exclusion of witness’ testimony). We have also upheld the
dismissal of a plaintiff’s complaint as a sanction for failure
to produce documents related to the claims. See Stanko v.
Chalopuka, 239 Neb. 101, 474 N.W.2d 470 (1991).
[8] Courts determining appropriate Rule 37 sanctions con-
sider several relevant factors, including (1) the prejudice or
unfair surprise suffered by the party seeking sanctions, (2) the
importance of the evidence which is the root of the miscon-
duct, (3) whether the court warned the sanctioned party about
the consequences of its misconduct, (4) whether the court con-
sidered less drastic sanctions, (5) the sanctioned party’s his-
tory of discovery abuse, and (6) whether the sanctioned party
acted willfully or in bad faith. See Eletech, Inc. v. Conveyance
Consulting Group, supra. Dismissal may be an appropriate dis-
covery sanction under Rule 37 for an inexcusably recalcitrant
party. Eletech, Inc. v. Conveyance Consulting Group, supra.
The district court’s orders detailed its reasoning under the
factors set forth above. We agree with the court’s overall analy-
sis but nevertheless address several of the appellants’ specific
arguments. All other arguments advanced by the appellants not
discussed herein have been considered and rejected.
(a) Notice of Sanctions
The appellants assert that they were not on notice of a pos-
sible sanction of default judgment or attorney fees. We do not
agree. Based on our review of the record and the procedural
history outlined above, it is clear that the appellants had
been repeatedly put on notice at least since September 2022
of their obligation to respond to discovery. The appellants
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BAJJURI v. KARNEY
Cite as 319 Neb. 273
did not make a meaningful attempt to respond to repeated
requests for production of documents and did not comply
with the district court’s order to compel. The March 2023
order warned all parties that if the court found that an attor-
ney or party “‘“unnecessarily expanded the proceedings by
other improper conduct, including, but not limited to, abuses
of civil discovery procedures,”’” it would impose sanctions.
(Emphasis omitted.)
The 	operative 	motion 	for 	sanctions 	specifically 	sought
default judgment and attorney fees for the appellants’ failure
to comply with the court’s order to compel under Rule 37.
Despite warnings from the court that evidence should be pro-
duced, the appellants did not cure the discovery violations. As
requested by the appellees, sanctions were entered as foretold
by the court in its March 2023 order. Sanctions under Rule 37
for failure to comply with a court order explicitly include “ren-
dering a judgment by default against the disobedient party”
and payment of expenses, including attorney fees. Neb. Ct. R.
Disc. § 6-337(b)(2)(C).
(b) History of Discovery Abuse
[9] The appellants also contend that they did not abuse dis-
covery, because they did not have control of documents and
records sought to be produced. The record and law refute this
contention. Under Neb. Ct. R. Disc. § 6-334, a party is required
to produce documents if the documents are within the party’s
possession, custody, or control. Documents are within the
party’s possession if the party has a legal right to obtain them.
See, e.g., Rhodes v. Edwards, 178 Neb. 757, 135 N.W.2d 453
(1965) (stating party could obtain copies of tax returns from
federal government).
The appellants claim that the business documents sought
are in the possession of Amogh Karney and beyond their con-
trol. We do not agree. Although our record is incomplete as
to the extent of the alleged conspiracy among the defendants,
the appellants were not powerless to produce documents. As
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BAJJURI v. KARNEY
Cite as 319 Neb. 273
members of the LLCs, the appellants were empowered by
law to make demand for, inspect, and copy certain records.
See, e.g., Neb. Rev. Stat. § 21-139 (Reissue 2022) (describing
rights of members under Nebraska Uniform Limited Liability
Company Act).
The record provides references to the LLCs as both member
managed and manager managed. But similar language applies
to either form.
Section 21-139(a) provides that in a member-managed LLC:
(1) On reasonable notice, a member may inspect and
copy during regular business hours, at a reasonable loca-
tion specified by the company, any record maintained by
the company regarding the company’s activities, finan-
cial condition, and other circumstances, to the extent the
information is material to the member’s rights and duties
under the operating agreement or the Nebraska Uniform
Limited Liability Company Act.
. . . .
(3) The duty to furnish information under subdivision
(a)(2) of this section also applies to each member to
the extent the member knows any of the information
described in such subdivision.
In a manager-managed LLC, § 21-139(b) provides:
(2) During regular business hours and at a reasonable
location specified by the company, a member may obtain
from the company and inspect and copy full information
regarding the activities, financial condition, and other
circumstances of the company as is just and reasonable if:
(A) the member seeks the information for a purpose
material to the member’s interest as a member;
(B) the member makes a demand in a record received
by the company, describing with reasonable particularity
the information sought and the purpose for seeking the
information; and
(C) the information sought is directly connected to the
member’s purpose.
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BAJJURI v. KARNEY
Cite as 319 Neb. 273
[10] Here, the record shows, for example, that under an
LLC operating agreement for Shiba Prop dated February 22,
2020, Anand Karney owned 99 percent and Sudha Karney
owned 1 percent of the LLC. Shiba Prop was subsequently
converted to a manager-led LLC in which Anand Karney was
the sole manager. Therefore, it was possible for the appellants
to obtain requested documents, and the appellants failed to
demonstrate an inability to obtain the discovery. The district
court was within its discretion when it determined that the
appellants’ efforts were not adequate. The district court did not
abuse its discretion when it determined that the appellants, as
members and managers of the LLCs for the relevant time peri-
ods, were empowered to obtain LLC records under, inter alia,
§ 21-139. The appellants were properly required to produce
such documents, and they failed to demonstrate an inability or
any frustrated attempts to do so.
By way of other examples, and in contrast to their failure
to produce documents, the record shows that the appellants
were able to obtain documents for the sale of real property
when it was to their benefit. Moreover, the appellees dem-
onstrated the existence of numerous records personal to the
appellants and not the LLCs (e.g., banking records and email
correspondence), which were in the control of the appellants
but were not furnished in discovery and had to be obtained
through records subpoenas. The district court also noted that
the appellants did not supply any documents or evidence
at the November 2023 hearing, with the exception of the
unsworn affirmation of Anand Karney.
(c) Frivolousness, Delay, or Harassment
The appellants also argue that the district court erred when it
found that they engaged in frivolousness, delay, or harassment.
The record is to the contrary, and we reject this argument.
The district court found that the appellants had “repeated
discovery violations [and] inexcusable recalcitrance” and had
“been previously warned of sanctions.” The district court
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BAJJURI v. KARNEY
Cite as 319 Neb. 273
noted a pattern in the appellants’ conduct to delay or frustrate
the discovery process throughout the proceedings, including
after the motion to compel. At one point, the court explained:
[The appellants] hid[] behind and abused a protective
order, failed to turnover [sic] requested financial docu-
ments, then opposed a third party subpoena for those
financial documents. [The appellants] also refused to
schedule a deposition or continually misl[e]d [the appel-
lees] in their efforts to schedule a deposition and violated
local meet and confer rules. [The appellants] additionally
willfully violated the Court’s orders for discovery by not
only failing to produce any meaningful documents, but by
knowingly attending an evidentiary hearing in November
2023, in which they were required to produce evidence,
yet attended the hearing and produced nothing.
Rule 37 permits entry of default judgment and an award
of attorney fees as sanctions. The trial court’s reasoning for
assessing Rule 37 discovery sanctions, including default judg-
ment and attorney fees, against the appellants is supported by
the record. Given our approval of the discovery sanctions, the
appellants’ assignment of error regarding denial of the motion
to alter or amend based on erroneous sanctions is likewise
rejected. We find no abuse of discretion.
VI. CONCLUSION
The district court did not abuse its discretion when it
assessed discovery sanctions against the appellants, entered
default judgment against the appellants, and awarded attorney
fees to the appellees. We affirm the orders of the district court
that granted the motion for discovery sanctions and denied the
appellants’ motion to alter or amend the judgment.
Affirmed.
Miller-Lerman, J., participating on briefs.

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