BARNFIELD v. HALBERTHAL et al

Filing 67

ORDER granting 61 Plaintiff's Motion to Compel Responses to Discovery; granting 65 Defendants' Alternative Motion for Protective Order. Signed by MAGISTRATE JUDGE GARY R JONES on 06/01/15. (grj)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA
PANAMA CITY DIVISION
SHORES OF PANAMA RESORT
COMMUNITY ASSOCIATION INC.,
Plaintiff,
v.

CASE NO. 5:14-cv-294-RH-GRJ

SOLLY HALBERTHAL, et al.,
Defendants.
_____________________________/
ORDER
Pending before the Court is Plaintiff’s Motion to Compel Responses to
Discovery. Doc. 61. Defendants have filed an Opposition to Plaintiff’s Motion to
Compel Responses to Discovery, or in the Alternative, Motion for Protective Order,
Doc. 65, and therefore the motion is ripe for consideration. For the reasons discussed
below, Plaintiff’s Motion to Compel is due to be granted, and Defendants’ Alternative
Motion for Protective Order also is due to be granted.
DISCUSSION
In this case Plaintiff seeks damages for breach of fiduciary duty against four
defendants who formerly served as directors of Plaintiff. Among other relief requested
in the Complaint, Plaintiff requests punitive damages. The instant motion to compel
concerns three requests for production and two interrogatories served by Plaintiff in
which Plaintiff sought information from the individual defendants relevant to its claim for
punitive damages.

In RFP nos. 3 and 4 and Interrogatories 2 and 3 Plaintiff requests Defendants to
produce their federal income tax returns for a four year period, provide information
concerning their adjusted gross income (for a five year period) and provide information
concerning their net worth for a four year period.
Defendants contend that Plaintiff is not entitled to their personal financial
documents at this stage in the case because in response to Plaintiff’s interrogatory
number 4, Defendants have sworn that they are not owners, investors, creditors,
directors, managers, agents or employees of the six entities, which Plaintiff
characterizes as the “Bulk Buyers.” Defendants argue that because they have sworn
they have no affiliation with the Bulk Buyers there is no predicate for requiring them to
reveal their personal financial information simply because they sat on a voluntary Board
of Directors for a condominium.
Under the Federal Rules of Civil Procedure, a party is permitted to “obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or
defense ... “ Fed. R. Civ. P. 26(b)(1). The information sought need not be admissible at
trial “if the discovery appears reasonably calculated to lead to the discovery of
admissible evidence.” Id. In most cases financial discovery is not appropriate until after
judgment for the obvious reason that a private plaintiff should not be permitted to
discovery an opponent’s assets until after a judgment against the opponent has been
rendered. FTC v. Turner, 609 F. 2d 743, 745 (5th Cir. 1980).
The situation is different, however, where punitive damages are sought. Where
there is a claim for punitive damages a defendant’s financial condition becomes
Case No: 5:14-cv-294-RH-GRJ

relevant because the wealth of the defendant is a factor for consideration in determining
the reasonableness of a punitive award. Myers v Cent. Fla. Invs. Inc., 592 F. 3d 1201,
1216 (11th Cir. 2010). The purpose of a punitive damage award is to punish and deter
the wrongdoer rather than to compensate the aggrieved party. Snapp v Unlimited
Concepts, Inc., 208 F. 3d 928, 934 (11th Cir. 2000). Thus, where, as here, there is a
claim for punitive damages the Defendant’s financial situation, particularly the
defendant’s net worth, is relevant and within the scope of permissible discovery under
Rule 26. See, e.g. Gottwald v Producers Group, I, LLC, no. 12-81297-CIV, 2013 WL
1776154, at *3 (S.D. Fla. April 25, 2013); Soliday v. 7-Eleven, Inc., No. 2:09-cv-807FTM-29SPC, 2010 WL 4537903, at *2 (M.D. Fla. Nov. 3, 2010); EEOC v Dimare
Ruskin, Inc., case no. 2:11-cv-158-FtM-36SPC, at *3-4 (M.D. Fla. Aug. 24, 2011).
In their responses to Plaintiff’s discovery requests Defendants resisted producing
tax return information contending that “[t]ax return information is protected under state
and federal law. At this stage of the lawsuit, the Defendant’s personal financial status is
not at issue, and Plaintiff has not obtained leave of court to obtain such information.”
While Defendant did not raise specifically Fla. Stat. § 768.72—which provides that
punitive damages are not allowable until the Plaintiff proffers evidence providing a
reasonable basis for the recovery of punitive damages—this argument is not mentioned
in Defendants’ response memorandum. Defendants did not advance this argument
apparently recognizing that most federal courts have concluded that § 768.72 is not
applicable to discovery of punitive damages in federal court. See. e.g. Pantages v
Cardinal Health 200, Inc., no. 5:08-cv-116-Oc-10GRJ, 2009 WL 1011048, at *3-4 (April
Case No: 5:14-cv-294-RH-GRJ

15, 2009)(“Consequently, just as § 768.72 must yield to the application of Rule 8, of the
Federal Rules of Civil Procedure, it also must yield to the federal rules governing the
scope and timing for discovery in federal courts.”); Gottwald, at * 3; Ward v Estaleiro
Itajai S/A, 541 F. Supp. 2d 1344, 1349 (S.D. Fla. 2008).
Defendants instead advance the argument that their personal financial
information is not relevant because they have denied any affiliation with the “Bulk
Buyers,” and therefore there is no factual basis to support a claim for punitive damages.
The problem with this argument is that it implicitly is based upon the premise that the
Plaintiff must “prove” its claim for punitive damages before entitlement to punitive
damages discovery is triggered. As discussed above that is not the law in federal court.
The only requirement is that the discovery must be relevant to a claim or defense.
Unless or until the claim for punitive damages is removed from the claims in this case
the Plaintiff is entitled to take discovery relating to the claims. Because the requested
financial information is relevant to the claim for punitive damages Plaintiff is entitled to
obtain this information and therefore Plaintiff’s motion to compel is due to be granted.
Even though Plaintiff is entitled to obtain Defendants’ financial information the
Court fully recognizes that the personal financial information is both sensitive and
private in nature, particularly in a case like this where the dispute is between differing
factions of homeowners and current and past members of the Board of Directors of a
community association. As such, the Court determines there is good cause to enter a
protective order as requested by Defendants so that their personal financial information
is not freely disseminated among the residents, managers, officers, and owners of the

Case No: 5:14-cv-294-RH-GRJ

condominium association. The dissemination of Defendants’ financial information,
including the tax returns, will be deemed confidential and disclosure will be limited to
those persons to whom disclosure is reasonably necessary for the prosecution of this
action. So that the parameters of the protective order may be more clearly defined, the
parties are instructed to discuss the terms of a more detailed protective order to submit
to the Court, or in the absence of agreement on the language of a protective order,
Defendant may file an appropriate motion.
Accordingly, upon due consideration, it is ORDERED:
1. Plaintiff’s Motion to Compel Responses to Discovery, Doc. 61, is GRANTED.
2. Defendants must produce documents responsive to Plaintiff’s Requests for
Production nos. 1, 3 and 4 and respond to Plaintiff’s Interrogatory nos. 2 and 3
on or before June 16, 2015.
3. Defendants’ Alternative Motion for Protective Order, Doc. 65, is GRANTED.
All personal financial information produced by Defendants shall be considered
confidential, and may only be used in this lawsuit. The disclosure of financial
information by Defendants is limited to those persons to whom disclosure is
reasonably necessary for the prosecution of this action. If the parties wish to
have the Court enter a more detailed protective order they may file an
appropriate motion.
DONE AND ORDERED this 1st day of June, 2015.

s/ Gary R. Jones
GARY R. JONES
United States Magistrate Judge

Case No: 5:14-cv-294-RH-GRJ