Iantosca et al v. Benistar Administrative Services, Inc et al

Filing 352

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER "In accordance with the foregoing, the Motions to Compel of Benistar Admin Services, Inc. (Docket No. 323 and Benistar 419 Plan Services, Inc. (Docket No. 326 are ALLOWED, in part, and DENIED, in part, as set forth above. To the extent that the defendants' motions are allowed, in part, the government will supplement its responses on or before February 10, 2012..." (Duong, Diep)

United States District Court
District of Massachusetts
________________________________
)
JOSEPH IANTOSCA, Individually
)
and as Trustee of the Faxon
)
Heights Apartments Realty Trust )
and Fern Realty Trust, BELRIDGE )
Civil Action No.
CORPORATION, GAIL A. CAHALY,
)
08-11785-NMG
JEFFREY M. JOHNSTON, BELLEMORE
)
ASSOCIATES, LLC, and
)
MASSACHUSETTS LUMBER COMPANY,
)
INC.,
)
Plaintiffs,
)
)
v.
)
)
BENISTAR ADMIN SERVICES, INC.,
)
DANIEL CARPENTER, MOLLY
)
CARPENTER, BENISTAR PROPERTY
)
EXCHANGE TRUST COMPANY, INC.,
)
BENISTAR LTD., BENISTAR EMPLOYER )
SERVICES TRUST CORPORATION,
)
CARPENTER FINANCIAL GROUP, LLC, )
STEP PLAN SERVICE INC., BENISTAR )
INSURANCE GROUP, INC., and
)
BENISTAR 419 PLAN SERVICES INC., )
Defendants,
)
TRAVELERS INSURANCE COMPANY and )
CERTAIN UNDERWRITERS AT LLOYD’S, )
)
LONDON,
)
Reach and Apply
)
Defendants.
________________________________ )
)
CERTAIN UNDERWRITERS AT LLOYD’S, )
)
LONDON and All Participating
)
Insurers and Syndicates,
Third-Party Plaintiff, )
)
)
v.
)
)
WAYNE H. BURSEY,
Third-Party Defendant. )
________________________________ )
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MEMORANDUM & ORDER
GORTON, J.
This action arises from the plaintiffs’ effort to recover
against some of the defendants a multimillion dollar
Massachusetts state court judgment in what has previously been
described as “the Cahaly Litigation.”

The Court has already been

called upon to resolve several discovery disputes between the
parties in this matter.

It is now being asked to resolve a

dispute between the United States (“the government”), a plaintiff
by intervention, and defendants Benistar Admin Services, Inc.
(“BASI”) and Benistar 419 Plan Services, Inc. (“Benistar 419").
Before the Court are motions of those defendants to compel
disclosures from the government.

The government opposes both

motions.
I.

Background
On January 10, 2011, the government moved to intervene in

this case, alleging that federal tax liens against BASI and
Benistar 419 had attached to any proceeds to which those parties
may become entitled as a result of a Pennsylvania lawsuit they
brought (“the Pennsylvania Settlement”).

Those tax liens arose

when, on July 8, 2009, the Secretary of the Treasury made
identical assessments for tax penalties, pursuant to 26 U.S.C. §
6708, against both BASI and Benistar 419 for $1,120,000, neither
of which has been paid.

It sought to enforce those liens by
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attaching to any interest those entities or their alter egos have
in the Pennsylvania Settlement.
The Court allowed the government’s motion to intervene on
February 11, 2011.

In March, 2011, the Court granted the

government’s motion to conduct its own limited discovery and
ordered that such discovery be completed by August 15, 2011.

On

August 12, 2011, the government moved to extend discovery by four
months, stating that, despite its diligent discovery efforts, it
had received from defendants no initial disclosures, no documents
in response to production requests and few answers to its
interrogatories.

In late September, 2011, the government filed

three separate motions to compel discovery from defendants BASI,
Benistar 419 and Step Services.
In October, 2011, the Court granted the government’s motion
to extend the discovery deadline to December 31, 2011 because of
the defendants’ refusal to cooperate with its various requests.
It further admonished the parties to resolve the underlying
discovery disputes on their own, which, alas, they were unable to
do.

In November, 2011, the Court allowed the government’s

motions to compel disclosures with respect to the unresolved
issues.
On December 16, 2011, defendants BASI and Benistar 419 moved
to compel the government to answer particular requests for
admission, requests for production and interrogatories.

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The

government has opposed both motions.
Discovery in this case closed on December 31, 2011.

Trial

is currently scheduled for March 26, 2011.
II.

Analysis
A.

Failure to Confer

As an initial matter, the government contends that
defendants’ motions to compel should be denied because Benistar
and BASI failed to confer or attempt to confer with the
government prior to filing them, as required by Fed. R. Civ. P.
37 and Local Rule 37.1.

Correspondence was exchanged between

counsel, however, in which the matters in dispute were discussed.
Given the several prior discovery disputes in this case, it
appears unlikely that the issues would have been resolved through
additional efforts to confer between counsel.

The Court will

not, therefore, deny the motions on this ground and will proceed
to consider the merits (or demerits) of the motions.
B.

Requests for Admissions
1.

Legal Standard

Pursuant to Fed. R. Civ. P. 36(a),
A party may serve on any other party a written request to
admit, for purposes of the pending action only, the truth
of any matters within the scope of Rule 26(b)(1) relating
to: (A) facts, the application of law to fact, or
opinions about either....
Fed. R. Civ. P. 26(B)(1) provides that a party “may obtain
discovery regarding any nonprivileged matter that is relevant to
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any party's claim or defense.”

Information is relevant where it

“appears reasonably calculated to lead to the discovery of
admissible evidence.” Id.
2.

Application

With respect to requests for admission numbers 6, 7 and 9,
defendants’ motions are DENIED because they seek admission of
pure conclusions of law outside the scope contemplated by Fed. R.
Civ. P. 36(a).

Defendants’ arguments to the contrary are

frivolous.
With respect to request for admission number 15, defendants’
motions are DENIED because that request is argumentative and
calls for admissions of facts not established on the record.
Kasar v. Miller Printing Machinery Co., 36 F.R.D. 200, 203 (W.D.
Pa. 1964) (“Where a request for admission is argumentative and
only possibly could be proper if certain facts are established,
but such facts are not definitely on the record, objections to
such request should be sustained.”).
Regarding request for admission number 2, defendants’
motions are ALLOWED.

The government shall provide the defendants

with a summary of its inquiry in order to determine its
reasonableness.

Under Fed. R. Civ. P. 36(a)(4), a party may

assert lack of knowledge or information as a reason for failing
to admit or deny only if he states that he has made reasonable
inquiry and that the information known or readily obtainable is

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insufficient to enable him to admit or deny.

What constitutes

“reasonable inquiry” and is “readily obtainable” is a “relative
matter that depends upon the facts of each case.”

T. Rowe Price

Small-Cap Fund, Inc. v. Oppenheimer & Co., Inc., 174 F.R.D. 38,
43 (S.D.N.Y. 1997).

Reasonableness cannot simply be ascertained

absent a brief description of the inquiry made.
No other requests for admission are in dispute.
C.

Requests for Production
1.

Legal Standard

Pursuant to Fed. R. Civ. P. 34, a party may serve on another
party a request for production of documents within the scope of
Rule 26(b), and a responding party must
produce documents as they are kept in the usual course of
business or must organize and label them to correspond to
the categories in the request.
2.

Application

With respect to (1) both defendants’ requests for production
numbers 3, 4, 6, 7, (2) BASI’s request for production numbers 16
and 19 and (3) Benistar 419's request for production number 18,
defendants’ motions are DENIED.

For each request, the government

identified a range of labeled documents.

Defendants contend that

those ranges were not sufficiently responsive insofar as they
provided “identical or nearly identical” ranges for
“substantively different” requests and that the government should
therefore be compelled to amend its responses to include “more

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meaningful identification of the documents.”

Beyond mere

conjecture, however, BASI and Benistar 419 have failed to show
this Court how or why the government’s responses are
insufficient.
With respect to both defendants’ request for production
number 10, defendants’ motions are ALLOWED, in part, and DENIED,
in part.

The government has not waived its privilege by

producing a privilege log one week after its response but it
shall produce any nonprivileged, responsive documents which are
potentially relevant to defendants’ defense with respect to the
delayed due process hearing.

Although the government contends

(and is likely correct) that that defense is not legally
sustainable, the Court has not yet so ruled.
Benistar 419's request for production number 19 is DENIED.
Correspondence from Koresko to the Internal Revenue Service or
Department of Justice has no bearing on the validity of the tax
assessment made against Benistar 419.
Regarding Benistar 419's request for production number 20
and BASI’s request for production number 21, defendants’ motions
are DENIED because those requests are overly broad and unduly
burdensome.

The Court cautions the government, however, that, to

the extent it has not already done so, it shall produce all
documents relevant to its tax assessment.

If any responsive

documents are withheld, they will not be admitted at trial.

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No other requests for production are in dispute.
D.

Interrogatories
1.

Legal Standard

Pursuant to Fed. R. Civ. P. 33, a party may serve on another
party an interrogatory that relates to any matter that may be
inquired into under Rule 26(b).

Furthermore, an interrogatory

may ask for an opinion or contention that relates to fact or the
application of law to fact.

A party objecting to an

interrogatory must state with specificity its grounds for
objection.
2.

Application

With respect to BASI interrogatory number 2 and Benistar 419
interrogatory number 12, BASI’s motion is DENIED because the
interrogatories call for pure conclusions of law outside the
scope contemplated by Rule 33(a)(2).
Regarding BASI interrogatory number 4 and Benistar 419
interrogatory number 15, BASI’s motion is DENIED because, as the
government contends, the question is ambiguous and argumentative.
As to BASI interrogatory numbers 5 and 6, BASI’s motion is
ALLOWED because the government did not respond to that portion of
BASI’s motion to compel in its opposition.
With respect to BASI’s interrogatory number 7 and Benistar
419's interrogatory number 17, defendants’ motions are DENIED as
unnecessary and unduly burdensome because the government’s

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reasons for objecting to the various requests for admission are
stated in its responses to those requests.
As to Benistar 419 interrogatory numbers 1, 2, 4 and 13,
Benistar 419's motion is DENIED because the government’s response
is sufficient.
Benistar 419's motion to compel a further answer to
interrogatory number 6 is DENIED.

The government has already

summarized instances in which it engaged in telephone and inperson conversations with plaintiffs’ counsel and produced nonprivileged written correspondence between the government and
plaintiff.

If and to the extent Benistar 419 contends the

government must summarize each and every in-person and telephone
conversation between the government and plaintiffs’ counsel, its
request is overly broad and unduly burdensome and seeks
privileged and irrelevant information.
Regarding Benistar 419 interrogatory number 8, Benistar
419's motion is DENIED.

Any settlement arrangement between the

government and the plaintiffs is irrelevant to the legitimacy of
the tax assessment made against the defendants.

Benistar 419's

conclusory assertion that the information is relevant to “bias or
unclean hands” is without merit.
As to Benistar 419 interrogatories 9 and 16, Benistar 419's
motion to compel is DENIED because the information sought is not
relevant to the validity of the government’s assessment against

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Benistar 419.
No other interrogatories are in dispute.
ORDER
In accordance with the foregoing, the Motions to Compel of
Benistar Admin Services, Inc. (Docket No. 323) and Benistar 419
Plan Services, Inc. (Docket No. 326) are ALLOWED, in part, and
DENIED, in part, as set forth above.

To the extent that

defendants’ motions are allowed, in part, the government will
supplement its responses on or before February 10, 2012.
Sanctions will not be imposed on either party at this time, but
if the Court is called upon to resolve any further discovery
disputes, sanctions will be assessed against the losing party.

So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated January 24, 2012

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