American Home Assurance Company v. Weaver Aggregate Transport, Inc. et al

Filing 371

ORDER granting 363 the Motion to Compel production of documents. See the order for details. Signed by Magistrate Judge Philip R. Lammens on 6/23/2017. (CAB)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION
AMERICAN HOME ASSURANCE
COMPANY, a New York corporation
Plaintiff,
v.

Case No: 5:10-cv-329-Oc-10PRL

WEAVER AGGREGATE TRANSPORT,
INC., BEACON INDUSTRIAL
STAFFING, INC., THE FARMERS AND
MECHANICS BANK and BIS GROUP
HOLDINGS, INC.
Defendants/Third Party Plaintiff
SALVATORE MANZO and SALCOR
PROPERTIES, INC.
Third Party Defendants

ORDER
Before the Court is a motion to compel filed by Judgment Creditor Weaver Aggregate
Transport Inc. (Weaver) in this proceedings supplementary action, (Doc. 363) to which thirdparty BIS Group Holdings, Inc./Beacon Tristate Solutions (BIS) has responded (Doc. 365).
After taking the motion under advisement (Docs. 366, 369), the motion is now ripe. I submit
that the motion is due to be granted to the extent set forth herein.
I.

BACKGROUND
A. The Proceedings Supplementary Background
This case has a rather protracted underlying history. For purposes of the instant motion,

however, it suffices to say that cross-plaintiff Weaver was awarded judgment and attorney’s fees
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against cross-defendant Beacon Industrial Staffing, Inc. (Beacon) for a total of over fourhundred-thousand dollars. (Docs. 237, 329).
After obtaining a writ of execution against Beacon (Doc. 340), which remains unexecuted
(Doc. 342), Weaver filed a Motion to Institute Proceedings Supplementary alleging that Beacon
was unable to fulfill the outstanding payments as it had fraudulently transferred its assets to BIS,
which is allegedly Beacon’s alter ego. (Doc. 343). Weaver asserts that BIS was incorporated in
2010 and that Beacon transferred its assets to BIS sometime after that. (Doc. 343 at ¶17).
Also according to Weaver, Beacon and BIS share the same physical address and each
have one-thousand shares of stock. (Doc. 343 at ¶19). Weaver further asserts that “BIS” is an
acronym for “Beacon Industrial Staffing;” that BIS does business under the name “Beacon” (e.g.,
BIS’s website provides this email address: [e-mail]); that Beacon’s former chief
operating officer, Salvonte Manzo, was listed (at the time BIS was incorporated) as the president
of BIS; and that BIS has attempted to capitalize upon the goodwill associated with Beacon’s
name.

(Doc. 343 at ¶¶19–20).

The Court granted Weaver’s motion and impleaded BIS,

beginning proceedings supplementary pursuant to Florida Statute § 56.29 and Federal Rule of
Civil Procedure 69. (Doc. 348 at 3).
BIS then moved to dismiss the supplementary proceedings. (Doc. 360). BIS argued, in
part, that Weaver had failed to meet the requirements of Florida’s recently amended statute, Fla.
Stat. § 56.29, which governs supplementary proceedings in aid of execution of judgment. (Doc.
360 at 3).
The Court rejected BIS’s arguments, found that Weaver had complied (or at least
substantially complied) with § 56.29 (or that section’s previous version), denied the motion to
dismiss, and allowed BIS thirty days to show why the judgments at issue should not be levied
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and executed against it. (Doc. 360 at 7–8). BIS then responded to the order to show cause and
asked the Court to reconsider the above-mentioned order arguing that Weaver has presented no
evidence that BIS has committed any wrongdoing—i.e., BIS asserted that Weaver has not
produced evidence that it fraudulently received assets from Beacon or that it is Beacon’s alter
ego. (Doc. 361 at 2–3). BIS also argued that it has been denied due process here. (Doc. 361 at
3–6).
The Court, again, rejected BIS’s effort to dismiss this action. (Doc. 364). In denying the
motion for reconsideration, the Court noted that the time for presentation of evidence had not yet
come and that, to date, there had been no infringement on BIS’s due process rights. Also in that
order, the Court designated this proceeding as a “Track Two” case under the Local Rules and
directed the parties to meet and confer and then file a Case Management Report. (Doc. 364 at 4).
B. The Motion to Compel
A few days before the Court designated this case under Track Two, Weaver filed the
instant motion. (Doc. 363). In dispute are twelve document requests.
According to Weaver, the discovery sought relates to its claims that Beacon fraudulently
transferred its assets to BIS and that BIS is Beacon’s alter ego. The disputed requests seek BIS’s
client, employee, and officer lists; financial and tax documents; asset lists; and other
documentation.1

1
The twelve document requests are as follows:
1. A list of all clients of BIS organized by year in chronological order from 2005 to
present.
2. A list of all officers, directors, and shareholders of BIS organized by year in
chronological order from 2005 to present.
3. A list of employees of BIS organized by year in chronological order from 2005 to
present.
4. Copy of the minutes from any and all directors’ meetings held from January 1, 2005
to present.
5. A ledger of any and all of BIS’ bank accounts from 2005 to present.
3

Attached to the motion was evidence that BIS had declined to produce any documents
and, instead, objected to eleven of the twelve requests and responded to one request (Request 7)
stating that it held no responsive documents. (Doc. 363-2 at 1–2). The objections to each
request are the same: the requests, according to BIS, are “overbroad, unduly burdensome, and
not reasonably calculated to lead to admissible evidence,” with the exception that one of the
requests (Request 8) is also vague. (Doc. 363-2). BIS then responded to the motion, argued that
Weaver lacked grounds to propound such discovery as Weaver could not recover its judgment
from BIS (who is impleaded as a third party here), and noted several purported reasons why
Weaver’s motion fails to set forth a sufficient basis for relief. (Doc. 365 at 2–5).
The Court then, given the case’s procedural posture, took the motion under advisement.
(Doc. 366). Indeed, based on the Track Two designation (and noting that the parties had not yet,
at that time, filed their case management report), the Court afforded the parties an opportunity to
discuss the disputed discovery during their case management conference and commanded
Weaver to notify the Court of what discovery issues, if any, remained. (Doc. 366).

6. A list of assets owned by BIS in chronological order from 2005 to present.
7. Any and all documentation related to the transfer or sale of any assets, property, or
accounts from BEACON INDUSTRIAL STAFFING, INC., to BIS from 2005 to
present.
8. Any and all tax returns filed by BIS from 2005 to present.
9. A copy of any judgment(s) entered against BIS from 2005 to present.
10. A list of any real estate owned by BIS from 2005 to present.
11. Any documentation regarding: a. Beacon Tristate Solutions; b. BIS Group Holdings,
Inc.; c. Beacon Enterprises, Inc.; d. Beacon Industrial Staffing, Inc.; and e. Better
Integrated Systems, Inc.
12. Any correspondence regarding: a. Beacon Tristate Solutions; b. BIS Group Holdings,
Inc.; c. Beacon Enterprises, Inc.; d. Beacon Industrial Staffing, Inc.; and e. Better
Integrated Systems, Inc.
(Doc. 363-1).
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Weaver has now filed a response to that order. (Doc. 369).2 Weaver’s response, which
includes apparent emails between counsel (Docs. 369-1–5), shows that the parties made some
headway in narrowing the focus of the discovery dispute before me.
First, Weaver agreed to narrow all of its requests to 2009 onward, which is one year
before BIS’s incorporation, as opposed to 2005. (Compare Doc. 363 at ¶4 with Doc. 369 at ¶13).
Second, Weaver also agreed to remove subsections “a” and “b” from the eleventh and twelfth
requests.3 (Doc. 369 at ¶13).
And third, but no less importantly, the email correspondence attached to Weaver’s
response indicates that Requests 3, 10, 11, and 12 are now moot. For Request 3, the email
correspondence shows that, according to BIS’s counsel, “BIS does not have employees beyond
its officers.” (Doc. 369-5 at 1). As to Request 10, BIS’s counsel states that BIS owns no real
property. (Doc. 369-5 at 2). And as to Requests 11 and 12, BIS’s counsel states that “BIS does
not possess documents or communications related to Beacon Enterprises, Inc., Beacon Industrial
Staffing, Inc., or Better Integrated Systems, Inc.”4 (Doc. 369-5 at 2). Thus, the remaining
requests at issue—for purposes of the motion before the Court—are Requests 1, 2, 4–6, 8, and 9.
II.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 69(a)(2), “[i]n aid of the judgment or execution,

the judgment creditor or a successor in interest whose interest appears of record may obtain
discovery from any person—including the judgment debtor—as provided in these rules or by the

2
Weaver actually filed two responses, which appear to be identical. (Docs. 368, 369). I will
refer to the most recent version. (Doc. 369).
3
Subsections “a” and “b” of Requests 11 and 12 sought, in combination, any documentation and
correspondences regarding Beacon Tristate Solutions and BIS Group Holdings, Inc. (Doc. 363 at 3).
4
Subsections “c,” “d,” and “e” of Requests 11 and 12 sought, in combination, any documentation
and correspondences regarding Beacon Enterprises, Inc.; Beacon Industrial Staffing, Inc.; and Better
Integrated Systems, Inc. (Doc. 363 at 3). So, with Weaver withdrawing subsections “a” and “b,” and
with BIS responding that it has no responsive documents to subsection “c,” “d,”, and “e,” Requests 11
and 12 are no longer at issue at this time.
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procedure of the state where the court is located.” Here, the parties have briefed the issues under
the federal rules.
Motions to compel discovery under Rule 37(a) of the Federal Rules of Civil Procedure
are committed to the sound discretion of the trial court. See Commercial Union Ins. Co. v.
Westrope, 730 F.2d 729, 731 (11th Cir. 1984). Pursuant to Rule 26(b), “[p]arties may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case, considering the importance of the issues at stake in the
action, the amount in controversy, the parties’ relative access to relevant information, the parties’
resources, the importance of the discovery in resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).
“The overall purpose of discovery under the Federal Rules is to require the disclosure of
all relevant information so that the ultimate resolution of disputed issues in any civil action may
be based on a full and accurate understanding of the true facts, and therefore embody a fair and
just result.” Oliver v. City of Orlando, No. 6:06-cv-1671-Orl-31DAB, 2007 WL 3232227, * 2
(M.D. Fla. Oct. 31, 2007) (citing United States v. Proctor & Gamble Co., 356 U.S. 677, 682
(1958)). The moving party ‘“bears the initial burden of proving that the information sought is
relevant.”’

Douglas v. Kohl’s Dep’t Stores, Inc., No. 615CV1185ORL22TBS, 2016 WL

1637277, at *2 (M.D. Fla. Apr. 25, 2016) (quoting Moore v. Lender Processing Servs. Inc., No.
3:12-CV-205-J, 2013 WL 2447948, at *2 (M.D. Fla. June 5, 2013)). “Relevancy is determined
based on the ‘tendency to make a fact more or less probable than it would be without the
evidence, and the fact is of consequence in determining the action.’

Fed. R. Evid. 401”

Hankinson v. R.T.G. Furniture Corp., No. 15-81139-civ-Cohn/Seltzer, 2016 WL 1182768, at *1

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(S.D. Fla. Mar. 28, 2016) (quoting Garcia v. Padilla, No. 2:15-cv-735-FtM-29CM, 2016 WL
881143, at *2 (M.D. Fla. Mar. 8, 2016)).
Proportionality requires counsel and the court to consider whether relevant information is
discoverable in view of the needs of the case. In making this determination, the court is guided
by the non-exclusive list of factors in Rule 26(b)(1). Graham & Co., LLC v. Liberty Mut. Fire
Ins. Co., No. 2:14-cv-2148-JHH, 2016 WL 1319697, at *3 (N.D. Ala. April 5, 2016). “Any
application of the proportionality factors must start with the actual claims and defenses in the
case, and a consideration of how and to what degree the requested discovery bears on those
claims and defenses.” Id. (quoting Witt v. GC Servs. Ltd. P'ship, 307 F.R.D. 554, 569 (D. Colo.
2014)).
When objecting to a discovery request, the “[p]arties are not permitted to assert . . .
conclusory, boilerplate objections that fail to explain the precise grounds that make the request
objectionable.” Martin v. Zale Delaware, Inc., No. 8:08-CV-47-T-27EAJ, 2008 WL 5255555, at
*1 (M.D. Fla. Dec. 15, 2008). Indeed, an objecting party “must explain its reasoning in a
specific and particularized way” and “an objection that a discovery request is irrelevant . . . must
include a specific explanation describing why.” Id. at *1–2. Finally, “[o]bjections based on
privilege or work product protection must be made expressly.” Nationwide Mut. Fire Ins. Co. v.
Kelt, Inc., No. 6:14-CV-749-ORL-41, 2015 WL 1470971, at *4 (M.D. Fla. Mar. 31,
2015) (noting that “[a] party cannot assert a privilege by saying that responsive documents might
be privileged”).
III.

DISCUSSION
As an initial matter, and as noted above, in its response to Weaver’s production requests,

BIS offered only identical boilerplate objections; it offered Weaver no explanation as to why any
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particular request was deficient. (Doc. 363-2 at 1–2). Such generalized statements are usually
deemed meaningless and are rejected. Martin, 2008 WL 5255555, at *1.
Now, in its response to the motion to compel, BIS has raised issues of relevancy and
proportionality. (Doc. 365 at 2–5). I will address these issues in turn.5
A. Relevancy
BIS asserts that Weaver’s document requests seek irrelevant discovery as Weaver has
failed to state any claim for relief. (Doc. 365 at 2–3); see Fed. R. Civ. P. 26(b)(1) (stating that
“[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s
claim”). I submit, however, that Weaver asserts a sufficient basis for discovery here. See
McSweeney v. Kahn, No. 4:05-CV-0132-HLM, 2009 WL 10670187, at *4 (N.D. Ga. Dec. 21,
2009) (noting that the ‘“judgment creditor must be given the freedom to make a broad inquiry to
discover hidden or concealed assets of the judgment debtor.”’) (quoting Caisson Corp. v. County
West Building Corp, 62 F.R.D. 331 (E.D. Pa. 1974)).
Undeniably, the Court granted Weaver’s motion to initiate proceedings supplementary
(Doc. 348), a motion that asserts two bases for BIS’s liability for the underlying judgments
against Beacon (that Beacon fraudulent transferred its assets to BIS and that BIS is Beacon’s
alter ego) (Doc. 343). And the Court also declined BIS’s request to reconsider that order. (Doc.
364). Further, in its motion to compel, Weaver addresses the relevancy of its requests in light of
its fraudulent transfer and alter ego theories. (Doc. 363 at 6–8).

5
To the extent that BIS states that it does not have responsive documents for numerous requests
(Requests 3, 7, 10, 11(c–e), 12(c–e)), see (Docs. 363-2 at 5; 369-5 at 2), and no dispute is presented that
this is inaccurate, the motion to compel as to these requests is denied without prejudice. See Griffith v.
Landry’s, Inc., No: 8:14-cv-3213-T-35JSS, 2015 WL 6468134 at *3 (M.D. Fla. Oct. 9, 2015). The Court
notes, however, that a party must produce newly acquired, responsive documents in the event that they
become available. Id.
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1.

As to its fraudulent transfer theory, Weaver, at the most general level, “must demonstrate

that there was (i) a creditor to be defrauded; (ii) a debtor intending fraud; and (iii) conveyance of
property that could have been applicable to payment of the debt due.” In re PSI Indus., Inc., 306
B.R. 377, 387 (Bankr. S.D. Fla. 2003); see also Fla Stat. § 56.29(3)(a) (“When, within 1 year
before the service of process on the judgment debtor in the original proceeding or action, the
judgment debtor has had title to . . . any personal property to which . . . any person on
confidential terms with the judgment debtor claims title and right of possession, the judgment
debtor has the burden of proof to establish that such transfer or gift was not made to delay,
hinder, or defraud creditors.”).
Weaver asserts that its requests for BIS’s tax returns, assets, and bank account ledgers
from 2009 onward (Requests 5, 6, 8) seek information that would help Weaver determine if BIS
(which was incorporated in 2010) holds the same assets that Beacon once held. (Doc. 363 at 6–
7). Assuming that Weaver holds copies of Beacon’s assets and bank accounts, a juxtaposition of
BIS’s assets and accounts would certainly be helpful to Weaver’s theory of fraudulent transfer
and thus I find that these financial documents are relevant here.
As to the tax returns, they are another matter. Although Weaver does not brief the issue
(or even state whether state or federal or local returns are sought), and though BIS is silent on the
matter too, I submit that there could be at least one possible way that federal returns may be
relevant to Beacon’s alleged fraudulent transfer of assets to BIS. Such returns could, possibly,
show the disposition of an asset by BIS that was once held by Beacon, which is information that
Weaver may not otherwise be able to obtain as such an asset would no longer be listed among
BIS’s current assets. See, e.g., In re Parker, 488 B.R. 794, 797 (Bankr. N.D. Ga. 2013) (“[A]
federal tax return is discoverable if it contains information relevant to the issues and the
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information in the returns is not otherwise readily obtainable.”). Thus, based on the showing
before the Court, I submit that Weaver is entitled to discovery into BIS’s federal tax returns but
only to the extent that such returns involve the disposition of assets.
2.

As to Weaver’s claim that BIS is an alter ego of Beacon, “Florida courts have adopted a

very stringent three-part test, which requires persuasive evidence that: (1) the shareholder
dominated and controlled the corporation to such an extent that the corporation’s independent
existence was in fact nonexistent and the shareholders were in fact alter egos of the corporation;
(2) the corporate form must have been used fraudulently or for an improper purpose; and (3) the
fraudulent or improper use of the corporate form caused injury to the claimant.” Old W. Annuity
& Life Ins. Co. v. Apollo Grp., No. 5:03-CV-354-OC-10GRJ, 2008 WL 2993958, at *7 (M.D.
Fla. Aug. 1, 2008), aff’d, 605 F.3d 856 (11th Cir. 2010). Weaver claims here that it seeks to
demonstrate that “the same individuals that controlled Beacon control BIS” and that “BIS is a
mere continuation of Beacon, controlled by the same persons and . . . made up of essentially the
same resources” in order to show that BIS was created for the improper purpose of enabling
Beacon to avoid Weaver’s judgments.

(Doc. 363 at 7–8).

These claims find support in

Weaver’s previous motion to institute proceedings supplementary, which asserts that Beacon and
BIS share the same address, that they have the same number of shares, that “BIS” is an acronym
for “Beacon Industrial Staffing,” that BIS seeks to profit from Beacon’s goodwill, and that they
share a significant officer, Savatore Manzo. (Doc. 343 at ¶¶19–20).
Weaver’s request for lists of shareholders, directors, and officers, (Request 2) to establish
that the same individuals control both entities (Doc. 363 at 8 & n.1) obviously seeks information
relevant to whether BIS is a mere attempt by Beacon’s shareholders to avoid Weaver’s
judgments. Weaver also asserts that a client list, director meeting minutes, an asset list, tax
10

returns, and a judgment list (Requests 1, 4, 6, 9)—all from, of course, 2009 forward—are all
tailored to obtain information relevant to showing that BIS is a mere continuation of Beacon,
controlled by the same people and made up of the same assets. (Doc. 363 at 8 n.2). I agree with
Weaver.
As to meeting minutes, this Court has compelled the production of business minutes in an
alter ego case. See NetJets Aviation, Inc. v. Peter Sleiman Dev. Grp., LLC, No. 3:10-CV-483-J32MCR, 2011 WL 6780879, at *7 (M.D. Fla. Dec. 27, 2011). And if BIS has retained the same
clients, assets, and judgments that Beacon used to hold, surely this would tend to show that BIS
was created to avoid the judgments against Beacon pending here. Lastly, as to BIS’s tax returns,
for the reasons and to the very limited extent set forth supra, those are relevant too. Compare
Guarantee Ins. Co. v. Brand Mgmt. Serv. Inc., No. 12-61670-CIV, 2013 WL 11971273, at *2
(S.D. Fla. Dec. 23, 2013) (finding that the plaintiffs “have a compelling need for the tax returns
with respect to [their] alter ego claim”) with Coach, Inc. v. Swap Shop, Inc., No. 12-60400-CIV,
2013 WL 4407064, at *3 (S.D. Fla. Aug. 13, 2013) (affirming a magistrate judge’s discovery
order and finding that the defendants’ “tax returns and related documents are arguably relevant to
[the plaintiffs’] vicarious copyright infringement and alter ego theories”).
B. Proportionality
BIS raises several arguments asserting that the discovery sought is not proportional.
(Doc. 365 at 2–3). I disagree.
To begin with, the scope of discovery at issue has already been reduced. Weaver has
narrowed its requests to target the time period beginning one year (2009) before BIS’s
incorporation until the present, (Doc. 369-1 at 1) and numerous requests (Requests 3, 7, 10, 11,
and 12) are no longer at issue.
11

Although BIS asserts that the discovery sought is not proportional with respect to
“importance of the issues at stake in the matter,” Weaver has sufficiently explained that the
discovery sought will be used for a juxtaposition of Beacon’s and BIS’s documents to establish
the fraudulent transfer and alter ego theories—theories which may be the only way that Weaver
will ever recover on its judgments. (Compare Docs. 363 at 7–8 with 365 at 2). BIS similarly
opposes the requests with respect to the importance of the discovery, but Weaver requires such
documents to make its case that BIS is liable for the over four-hundred-thousand dollars in
judgments that Beacon owes Weaver. (Doc. 365 at 3).
Lastly, BIS also claims that the amount in controversy is unknown (Doc. 365 at 3); yet it
is clear that Weaver seeks to recover a judgment and attorney’s fees totaling over four-hundredthousand dollars. (Docs. 341 at 1; 343 at ¶¶15–20). Thus, given the judgment amount sought,
Weaver’s requests are proportional.
IV.

CONCLUSION
Accordingly, and upon due consideration, the motion to compel is GRANTED to the

extent stated above. BIS Group Holdings, Inc. should produce the requested documents on or
before July 7, 2017.6 Given the unique procedural posture of this motion (that is, that it was
filed before this proceeding supplementary was designated under Track Two), along with the fact
that several production requests were apparently resolved by the parties after an additional meet
and confer, the parties are to bear their own costs associated with this matter at this time. Grams
v. American Medical Instruments Holdings Long Term Disability Plan, 2009 WL 2926844 *5
(M.D. Fla. Sept. 14, 2009) (declining to award fees to either party when the court denied in part

6
While the Court is cognizant of Weaver’s request that any compelled discovery be due prior to a
deposition scheduled next week (Doc. 369 at ¶14), BIS will need a reasonable amount of time to respond.
12

and granted in part a motion to compel). The request for fees is therefore denied without
prejudice.
DONE and ORDERED in Ocala, Florida on June 23, 2017.

Copies furnished to:
Counsel of Record
Unrepresented Parties

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