Alliant Tax Credit Fund 31-A, Ltd. et al v. Murphy et al

Filing 243

ORDER granting Plaintiffs' #184 Motion for Leave to File First Amended Complaint. Vincent Murphy's #198 Motion for Protective Order is DENIED, and Marilyn Murphy's #219 Motion to Compel Discovery is GRANTED. Plaintiffs are ORDERED to make Mr. Brian Doran available to complete his deposition within thirty (30) days of the docketing of this order. Because the Court has re-opened pleadings by granting Plaintiffs' Motion for Leave to Amend, Community Management Services, Inc., Multifamily Housing Developers, LLC and Vincent Murphy's #231 Motion for Summary Judgment is DENIED AS MOOT, and Marilyn Murphy's #233 Motion for Partial Summary Judgment is DENIED AS MOOT. The discovery period is EXTENDED for 45 days following the entry of this Order. Signed by Judge Richard W. Story on 8/7/2013. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ALLIANT TAX CREDIT FUND
31-A, LTD., ALLIANT TAX
CREDIT 31, INC., ALLIANT
TAX CREDIT FUND XXVII,
LTD., ALLIANT TAX CREDIT
XXVII, INC., ALLIANT TAX
CREDIT XI, INC., and ALLIANT
TAX CREDIT XI, LTD.,
Plaintiffs,
v.
M. VINCENT MURPHY, III,
MARILYN MURPHY, PATRICK
CARROLL, MULTIFAMILY
HOUSING DEVELOPERS, LLC,
COMMUNITY MANAGEMENT
SERVICES, INC., GAZEBO
PARK APARTMENTS OF
ACWORTH, LLC, and
AFFORDABLE REALTY
MANAGEMENT
INCORPORATED,
Defendants.

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CIVIL ACTION NO.
1:11-CV-00832-RWS

ORDER
This case comes before the Court on Plaintiffs’ Motion for Leave to File
First Amended Complaint [184], Defendant M. Vincent Murphy, III’s

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(“Vincent Murphy”) Motion for Protective Order [198], Defendant Marilyn
Murphy’s Motion to Compel Discovery [219], Defendants Vincent Murphy,
Community Management Services, Inc., and Multifamily Housing Developers,
LLC’s Motion for Summary Judgment [231], and Defendant Marilyn Murphy’s
Motion for Partial Summary Judgment [233]. After reviewing the record, the
Court enters the following Order.
Background
This case arises out of alleged fraudulent transfers of assets made by
Defendant Vincent Murphy to other Defendants. Vincent Murphy offered
personal guarantees on several loans, of which Plaintiffs were the creditors. On
August 31, 2010, the United States District Court for the Eastern District of
Kentucky entered a judgment against Vincent Murphy for Plaintiffs in the
amount of approximately $8.5 million. (Pls.’ Mot. for Leave to Amend, Dkt.
[184-3] at 3 of 14.) In the instant case, Plaintiffs are asserting claims for
fraudulent conveyance against Defendants under the Georgia Uniform
Fraudulent Transfers Act (“GUFTA”), O.C.G.A. § 18-2-71 et seq., arising from
Plaintiffs’ allegations that Vincent Murphy fraudulently transferred the majority

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of his assets to his wife Marilyn Murphy and the other Defendants before,
during and after Vincent and Marilyn Murphy’s 2008 divorce.
Vincent and Marilyn Murphy were divorced in January of 2008.
(Marilyn Murphy’s Reply Brief to Pls.’ Mot. to Amend, Dkt. [187] at 3 of 14.)
Plaintiff alleges that the sole purpose of this divorce was to divest Vincent
Murphy of valuable assets in anticipation of having a judgment returned against
him in the Kentucky case. Plaintiffs further allege that they have discovered
extensive asset transfers from Vincent Murphy to Marilyn Murphy, as well as
the other named Defendants, that were not revealed by Vincent Murphy during
his deposition or by extensive discovery. As a result, Plaintiffs are seeking
leave to amend their Complaint in order to integrate both the new factual
information discovered recently, as well as the substantive claims arising from
said conduct.
Defendants argue that Plaintiffs’ motion seeking leave to amend is
untimely, futile, and in bad faith. (Vincent Murphy’s Resp. to Pls.’ Mot. to
Amend, Dkt. [188] at 4-8 of 30.) Vincent Murphy also requests that the Court
enter a protective order preventing Plaintiffs from serving further discovery
requests on Defendants and apparently allowing Vincent Murphy to fail to
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respond to the most recent discovery notice served upon him. Marilyn Murphy
moves the Court to enter an order compelling Plaintiffs to respond to her
discovery requests in an adequate fashion, or re-submit their witness in order to
complete an adjourned May 1, 2013, deposition. The Court considers the
aforementioned motions on the merits.
Discussion
I.

Legal Standard
In the Eleventh Circuit, case law provides that “[u]nless a substantial

reason exists to deny leave to amend, the discretion of the district court is not
broad enough to permit denial.” Fla. Power & Light Co. v. Allis Chalmers
Corp., 85 F.3d 1514, 1520 (11th Cir. 2006). Federal Rule of Civil Procedure
(“Rule”) 15(a)(2) states that “[t]he court should freely give leave when justice
so requires.” Fed. R. Civ. P. 15(a)(2). Additionally, Rule 15(c)(1) allows for
the amendment of a complaint when the amendment “relates back” to the
original claims. Rule 15(c)(1) allows this when “(A) the law that provides the
applicable statute of limitations allows relation back; [and] (B) the amendment
asserts a claim or defense that arose out of the conduct, transaction, or
occurrence set out--or attempted to be set out--in the original pleading[.]” Fed.
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R. Civ. P. 15(c)(1)(A); Fed. R. Civ. P. 15(c)(1)(B). “Generally, the applicable
limitations law will be state law. If federal jurisdiction is based on the
citizenship of the parties, the primary reference is the law of the state in which
the district court sits.” Saxon v. ACF Indus., Inc., 254 F.3d 959, 962 (11th Cir.
2001). Therefore, the applicable statute of limitations for relation back in this
case is that set forth by GUFTA, O.C.G.A. § 18-2-71 et seq.
II.

Analysis
A.

Plaintiffs’ Motion for Leave to Amend [184]

Plaintiffs make two arguments for why the Court should grant them leave
to amend their Complaint. First, Plaintiffs argue that despite the fact that the
financial transactions in question were completed outside of the applicable
statute of limitations, they both had not discovered and could not reasonably
have discovered said transactions until September 7, 2012, because of
Defendants’ continued obstruction of the discovery process. Plaintiffs argue
that the statute of limitations should run from the time of actual discovery.
Second, Plaintiffs argue that the running of the statute of limitations is
irrelevant because the proposed amendment to their Complaint relates back to
the original Complaint, which was filed within the statute of limitations.
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The relevant statute of limitations, O.C.G.A. § 18-2-79, states:
A cause of action with respect to a fraudulent transfer or obligation
under this article is extinguished unless action is brought: (1) Under
paragraph (1) of subsection (a) of Code Section 18-2-74, within four
years after the transfer was made or the obligation was incurred or, if
later, within one year after the transfer or obligation was or could
reasonably have been discovered by the claimant; [or] (2) Under
paragraph (2) of subsection (a) of Code Section 18-2-74 or subsection
(a) of Code Section 18-2-75, within four years after the transfer was
made or the obligation was incurred[.]
The Court disagrees with Defendants’ contention that Plaintiffs reasonably
could have discovered the transactions in question within the statute of
limitations because, as is apparent from the record, Defendants have not been
completely forthcoming with their discovery responses. Plaintiffs’ argument
that Defendants should have disclosed the transfers in question is completely
reasonable, and it seems that if not for Defendants’ actions, Plaintiffs would
have discovered said transactions much earlier.
Additionally, Plaintiffs’ Amended Complaint relates back to their
original complaint, which was filed within the statute of limitations, and thus
the point is moot. The Eleventh Circuit has held that “a pleading would relate
back if it ‘asserts a claim or defense that arose out of the conduct, transaction,
or occurrence set out-or attempted to be set out-in the original pleading.’”
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Makro Capital of Am., Inc. v. UBS AG, 543 F.3d 1254, 1258 (11th Cir. 2008)
(quoting Fed. R. Civ. P. 15(c)(1)(B)). It is clear here that additional allegedly
fraudulent transfers relate back to the original claims for fraudulent transfer.
There is also no evidence that Defendants would be prejudiced if the Court gave
Plaintiffs leave to amend their Complaint, as Defendants were the ones who
conducted the transfers, failed to disclose the transfers to Plaintiffs, and are
involved in litigation regarding fraudulent trasnfers that allegedly occurred
during the same time period. Therefore, because the district courts are required
to utilize a liberal standard when considering motions for leave to amend, the
Court finds that Plaintiffs’ Motion for Leave to File First Amended Complaint
[184] is GRANTED.
B.

Vincent Murphy’s Motion for Protective Order [198]

With regards to Vincent Murphy’s Motion for Protective Order, the
Court finds this motion due to be DENIED. Vincent Murphy cites nothing in
his Brief in Support that would be a basis upon which the Court should grant
his motion.
Vincent Murphy argues that Plaintiffs’ discovery requests are
“cumulative, or can be obtained from some other source that is more
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convenient, less burdensome, or less expensive.” (Vincent Murphy’s Br. in
Supp. of Mot. for Protective Order, Dkt. [198-1] at 7 of 50.) The Court
disagrees. It is arguable that the reason Plaintiffs’ requests have been
continuous is because Defendants have not been forthcoming in their responses.
Also, Defendants themselves seem a convenient and inexpensive source of their
own bank and tax records.
Defendants also argue that Plaintiffs’ discovery requests exceed the
amount of interrogatories allowed them by the Federal Rules of Civil
Procedure. However, the limits set forth in Rule 26(b)(2) and Rule 33(a)(1) are
both subject to alteration at the discretion of the Court. This Court has
previously ordered the parties to cooperate with each other’s discovery requests.
(Dkt. [185].) Thus, Vincent Murphy’s Motion for Protective Order [198] is
DENIED. Thus, Vincent Murphy is ORDERED to respond to Plaintiffs’
discovery requests, including their Fourth Interrogatories, within fourteen (14)
days of the docketing of this Order.
C.

Marilyn Murphy’s Motion to Compel Discovery [219]

In its March 22, 2013 Order [185], the Court stated that discovery would
not be extended even if Plaintiffs’ Motion for Leave to File first Amended
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Complaint were granted. However, the Court was unable to rule on that motion
in as timely a manner as anticipated. For this reason, and because parties are
being ordered herein to comply with various discovery obligations following
the entry of this Order, the discovery period is extended for 45 days following
the entry of this Order.
Under these circumstances, the Court sees no reason why Plaintiffs
should not have to submit their witness to Defendants in order to complete their
May 1, 2013 deposition of Mr. Brian Doran. Plaintiffs’ argument that they
submitted written responses to Marilyn Murphy’s questions is unavailing, as the
discovering party is “permitted to adjourn the deposition before applying for an
order.” (Marilyn Murphy’s Reply Br. in Supp. of Mot. to Compel Disc., Dkt.
[229] at 3 of 6.) Accordingly, Marilyn Murphy’s Motion to Compel Discovery
[219] is GRANTED. Plaintiffs are ORDERED to make Mr. Brian Doran
available to complete his deposition within thirty (30) days of the docketing of
this order.
Conclusion
In accordance with the foregoing, Plaintiffs’ Motion for Leave to File
First Amended Complaint [184] is GRANTED, Vincent Murphy’s Motion for
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Protective Order [198] is DENIED, and Marilyn Murphy’s Motion to Compel
Discovery [219] is GRANTED. Because the Court has re-opened pleadings by
granting Plaintiffs’ Motion for Leave to Amend, Community Management
Services, Inc., Multifamily Housing Developers, LLC, and Vincent Murphy’s
Motion for Summary Judgment [231] is DENIED AS MOOT, and Marilyn
Murphy’s Motion for Partial Summary Judgment [233] is DENIED AS
MOOT. The discovery period is EXTENDED for 45 days following the entry
of this Order.
SO ORDERED, this 7th day of August, 2013.

_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE

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