CH Holding Company et al v. MILLER PARKING COMPANY et al

Filing 73

ORDER granting in part and denying in part 56 Motion to Compel and denying 57 Motion to Quash - Signed by Magistrate Judge Mona K. Majzoub. (LBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

CH HOLDING COMPANY, et. al.,
Plaintiffs,

Civil Action No.: 12-CV-10629

vs.

District Judge David M. Lawson
Magistrate Judge Mona K. Majzoub

MILLER PARKING COMPANY,
et al..
Defendants.
_____________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’
MOTION TO COMPEL [56] AND DENYING THE STEIN/WEINSETEIN
DEFENDANTS’ MOTION TO QUASH [57]
This matter comes before the Court on Plaintiffs CH Holding Company, Alan Ackerman,
and CH/Brand Parking Associates’ Motion to Compel Discovery (docket no. 56) and Defendants
Amy Weinstein, Emily Weinstein, Benjamin Weinstein, Matthew Stein, Andrew Stein, and Janet
Stein’s (together, the “Stein/Weinstein Defendants”) Motion to Quash Subpoena (docket no. 57).
Defendants Miller Parking Company, James Miller, James N. Miller Revocable Trust UTA Dates
11-19-98, Nathan L. Miller Trust, Allison J. Miller Trust, David M. Miller Trust, and Miller Parking
Services, LLC (together, the “Miller Defendants”) filed a Response to Plaintiffs’ Motion to Compel.
(Docket no. 62.) And although the Court entered Plaintiffs’ and the Stein/Weinstein Defendants’
Stipulated Order allowing Plaintiffs to respond to the Stein/Weinstein Defendants’ Motion to Quash
and allowing the Stein/Weinstein Defendants to respond to Plaintiffs’ Motion to Compel by April
29, 2013, no such responses have been filed. (See docket no 63.) The Parties did, however, file a

1

Joint Statement of Resolved and Unresolved Issues on August 2, 2013. (Docket no. 72.) The
motions have been referred to the undersigned for consideration. (Docket no. 59.) The Court has
reviewed the pleadings and dispenses with oral argument pursuant to Eastern District of Michigan
Local Rule 7.1(f)(2). The Court is now ready to rule pursuant to 28 U.S.C. § 636(b)(1)(A).
I.

Background
This matter arises out of a failed business relationship between Plaintiffs and Defendant

Miller Parking Company. In April 2007, Plaintiffs filed a Complaint in Oakland County Circuit
Court against Bruce Miller, Miller LLC, and CH/Brand Parking Associates. On June 30, 2009, a
jury awarded Ackerman and CH Holding several million dollars in damages. On October 7, 2009,
Miller Parking Company, LLC, filed a voluntary Chapter 11 bankruptcy petition. (See docket no.
1 at 1-5.)
On October 7, 2011, the Trustee appointed in the bankruptcy case instituted an adversary
proceeding against the Miller Defendants and the Stein/Weinstein Defendants asserting that they
“manipulated the debtors’ financial affairs to enrich themselves at debtors’ expense and they did so
in order to put assets outside the reach of [Plaintiff] Ackerman.” (Id. at 3.) Ackerman objected to
the adversary proceedings and to the Trustee’s authority to enter into a binding settlement
agreement; he then filed this instant lawsuit in Oakland County Circuit Court raising essentially the
same claims as those raised by the Trustee. (See id. at 3.) Defendants then removed the matter to
this Court. (Id. at 1-5.)
On May 18, 2012, Plaintiffs’ served Defendants with Plaintiffs’ Interrogatory and Requests
for Production of Documents (the “May Requests”). (See docket no. 56-2.) On November 10, 2012,
Plaintiffs served Defendants with another Interrogatory and Request for Production of Documents

2

(the “November 10 Requests”). (See docket no. 56-3.) On November 20, 2012, Plaintiffs served
Defendants with a third Interrogatory and Request for Production of Documents (the “November
20 Requests”). (See docket no. 56-4.) On February 13, 2013, Plaintiffs served on Defendants a
Notice of Taking Deposition of James N. Miller. (See docket no. 56-5.) And on March 25, 2013,
Plaintiffs served on Bienenstock Court Reporting & Video a subpoena under Fed. R. Civ. P. 45
commanding production of the deposition transcripts of Martin Stein and Bruce Miller taken in two
previous Oakland County Circuit Court matters. (See docket no. 57-1.) Defendants’ responses to
Plaintiffs’ Requests for Production of Documents as well as Defendant James Miller’s failure to
appear for his deposition are at issue in Plaintiffs’ Motion to Compel. The reasonableness and scope
of Plaintiffs’ subpoena to Bienenstock is at issue in the Stein/Weinstein Defendants’ Motion to
Quash.
II.

Governing Law
A.

Discovery Standard

The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite
broad. Lewis v. ACB Bus. Servs., 135 F.3d 389, 402 (6th Cir. 1998). Parties may obtain discovery
on any matter that is not privileged and is relevant to any party’s claim or defense if it is reasonably
calculated to lead to the discovery of admissible evidence. Fed.R.Civ.P. 26(b)(1). “Relevant
evidence” is “evidence having any tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable than it would be without the
evidence.” Fed.R.Evid. 401.
Rules 34 allows a party to serve requests for production of documents on an opposing party.
Fed.R.Civ.P. 34. A party receiving these types of discovery requests has thirty days to respond with

3

answers or objections. Fed.R.Civ.P. 34(b)(2)(A). If the receiving party fails to respond to RFPs,
Rule 37 provides the party who sent the discovery the means to file a motion to compel.
Fed.R.Civ.P. 37(a)(3)(B)(iii) and (iv). If a court grants a Rule 37 motion to compel, then the court
must award reasonable expenses and attorney’s fees to the successful party, unless the successful
party did not confer in good faith before the motion, the opposing party’s position was substantially
justified, or other circumstances would make an award unjust. Fed.R.Civ.P. 37(A)(5)(a).
Federal Rule of Civil Procedure 45 governs subpoenas and provides that a nonparty served
with a subpoena may make written objections to the subpoena before the time specified for
compliance. Fed. R. Civ. P. 45(c)(2)(B). The court must, upon motion, quash or modify a subpoena
if it fails to allow a reasonable time to comply, requires a person to travel more than 100 miles from
where they reside, requires disclosure of privileged or protected material, or subjects a person to
undue burden. Fed. R. Civ. P. 45(c)(3)(A). Ordinarily, a party does not have standing to quash a
subpoena directed to a nonparty unless the party claims a privilege or personal right in the
information sought by the subpoena. United States v. Wells, No. 06-10589, 2006 WL 3203905, at
*2 (E.D. Mich. Nov. 3, 2006). The party seeking to quash a subpoena bears a heavy burden of
proof. Id. (citation omitted). A Rule 45 subpoena duces tecum is a discovery device that is subject
to applicable discovery deadlines. McGuire v. Warner, No. 05-40185, 2009 WL 2370738, at *1
(E.D. Mich. July 29, 2009).
III.

Analysis
A.

Plaintiffs’ Motion to Compel Regarding the Stein/Weinstein Defendants and the
Stein/Weinstein Defendants’ Motion to Quash

Plaintiffs’ Motion to Compel raises independent issues with regard to the Miller Defendants
and the Stein/Weinstein Defendants. (See e.g., docket no. 56 at 3.) In the Parties’ Joint Statement,
4

they informed the Court that “Plaintiffs and the Stein/Weinstein Defendants continue to work toward
documenting a proposed settlement of all of Plaintiffs’ claims against the Stein/Weinstein
Defendants.” (Docket no. 72 at 2.) Thus, they ask the Court to “continue to hold the Motion to
Compel in abeyance with regard to the Stein/Weinstein Defendants, only, pending their efforts to
obtain approval of their proposed settlement.” (Id.) Thus, it appears that the Parties would like the
Court to address the Motion to Compel in part and then wait for the Parties to let the Court know
when to proceed with the rest. The Parties did not address the status of the Stein/Weinstein
Defendants’ Motion to Quash.
The parties, however, give the Court no indication of how long it may take to obtain an
approval of the proposed settlement. The Stein/Weinstein Defendants have not filed a Response to
Plaintiffs’ Motion to Compel and Plaintiffs’ have not filed a Response to the Stein/Weinstein
Defendants’ Motion to quash even though such responses were due nearly four months ago. Thus,
it appears that negotiating and obtaining approval for the proposed settlement has already been
ongoing for some time. The Court will, therefore, deny Plaintiffs’ Motion to Compel without
prejudice with regard to the Stein/Weinstein Defendants. Should the parties fail to obtain approval
for their proposed settlement, Plaintiffs will be permitted to file a new Motion to Compel with regard
to the Stein/Weinstein Defendants, provided that such a motion must be filed without unreasonable
delay upon determination that the proposed settlement has not been approved. The Court, however,
strongly encourages the parties to resolve their discovery issues without court intervention.
With regard to the Stein/Weinstein Defendants’ Motion to Quash, it does not appear that the
Stein/Weinstein Defendants sought Plaintiffs’ concurrence with their Motion as required by E.D.
Mich. L.R. 7.1. At a minimum, the Stein/Weinstein Defendants failed to include a statement

5

informing the Court that such concurrence was sought and denied. E.D. Mich. L.R. 7.1(a).
Moreover, the Stein/Weinstein Defendants challenge the subpoena issued to non-party Bienenstock,
arguing that there was not enough time to comply with the subpoena, that “defendants [will] incur
an undue burden,” and that the transcripts are protected by a confidentiality agreement limiting the
transcripts’ use to the litigation in which the depositions were taken. (Docket no. 57 at 2.) The
Stein/Weinstein Defendants do not have standing to challenge the subpoena to non-party
Bienenstock because they have not raised a privilege or personal right in the information sought.
Any burden in production would be on Bienenstock, not on the Stein/Weinstein Defendants. And
to the extent that the asserted confidentiality agreement confers a personal right, such a right would
appear to be held by the individual deponents, Bruce Miller and Martin Stein, who are not
Defendants in this matter.1 Therefore, the Court will deny the Stein/Weinstein Defendants’ Motion
to Quash.
C.

Plaintiffs’ Motion to Compel Regarding the Miller Defendants

With regard to the Miller Defendants, Plaintiffs assert that the Miller Defendants improperly
objected to Request for Production Nos. 6, 7, 8, and 9 of the May Requests, failed to provide
responsive documents to such requests, and failed to respond at all to their November 10 Request.
(Docket no. 56 at 3, 6.) Plaintiffs further assert that Defendant James N. Miller failed to appear for
a properly noticed deposition on March 21, 2013. (Id. at 10-11.)
1.

Plaintiffs’ May Requests for Production

Plaintiffs’ May Requests for Production ask Defendants, in relevant part, to produce the

1

Notably, the Stein/Weinstein Defendants did not attach a copy of the asserted
confidentiality agreement to their Motion.
6

following:
[Request No. 6] Please produce any documents which were provided to you freely,
or upon request, by K. Jin Lim, the bankruptcy trustee of Miller Parking Company,
LLC.
[Request No. 7] Please produce any documents which were provided to you freely,
or upon request, by Kenneth M. Schneider, as counsel to K. Jin Lim involving in any
way the Miller Parking Company, LLC’s bankruptcy proceeding and/or Miller
Parking Company.
[Request No. 8] Please produce all correspondence between you and K. Jin Lim
relating in any way to the Miller Parking Company, LLC’s bankruptcy proceeding,
Miller Parking Services, LLC, Miller Parking Company, or any other parties
involved in this litigation.
[Request No. 9] Please Produce all correspondence between you and Kenneth M.
Schneider relating in any way to the Miller Parking Company LLC’s bankruptcy
proceeding, Miller Parking Services, LLC, Miller Parking Company, or any other
parties involved in this litigation.

(Docket no 56-2 at 9-10.) With regard to Request Nos. 6, 7, and 8, the Miller Defendants responded
as follows:
Subject to the General Objections, Defendant objects on the grounds that the request
is overly broad, ambiguous and seeks to require Defendants to undertake an
unreasonable investigation.
(See docket no. 56-6 at 9-10.) With regard to May Request No. 9, the Miller Defendants responded
in kind but added the following:
. . . However, in the spirit of cooperation and without waiving said objection, all
responsive non-privileged documents which relate to the specific allegations made
in Plaintiffs complaint, to the extent they are in the possession of Defendants, have
been categorized pursuant to this particular request and are available for inspection
at [Defendant’s law firm].
Defendants further acknowledge that Kenneth M. Schneider recently
provided them with several external hard drives containing over 500,000 emails
which Defendants have not had the opportunity to review. In this regard, Defendants
note that they also have not had the opportunity to review the files located at the
7

offices of Kenneth M. Schneider. As a result, these responses will be supplemented
accordingly upon review.
(Id. at 10.)
Plaintiffs assert that the scope of their requests is narrowly tailored to the issues at hand and
the relevant time period because “the activities giving rise to the instant action date back to the early
1990s when Bruce Miller generally began disposing of his assets.” (Docket no. 56 at 4-5.)
Moreover, Plaintiffs argue, the Miller Defendants have failed to support their general, conclusory
objections with any factual assertions regarding burden and expense that would make their
production “unreasonable.” (Id. at 5-6.) With regard to Request Nos. 6, 7, and 8, the Miller
Defendants now assert that “[a]ll of the parties knew that Mr. Schneider and K. Jin Lim had
commandeered all of the records of Miller Parking and that Mr. Schneider has been more than
forthcoming in allowing people to review the documents in his offices.” (Docket no. 62 at 3.) The
Miller Defendants further contend with regard to Request No. 7 that “[e]ven were there to have been
documents from Mr. Schneider that contained suggestions as to evidence, which there were not, they
would have been part of settlement negotiations pursuant to Fed. R. Evid. 408.” (Id.)
The Court agrees with Plaintiffs that Defendants’ boiler-plate objections of breadth,
ambiguity, and unreasonableness with regard to Request Nos. 6, 7, and 8 are unsupported.
Moreover, the Miller Defendants do not even attempt to support these contentions in their Response
to Plaintiffs’ Motion. Instead, the Miller Defendants raise new objections that they did not include
in their initial response. Nevertheless, it appears that the Miller Defendants are claiming that any
documents that are responsive to Plaintiffs’ Request Nos. 6, 7, and 8 are in the possession, custody,
and control of Mr. Schneider and K. Jin Lim, and the Court cannot order the Miller Defendants to
produce that which is not in their possession, custody, or control. Therefore, with regard to
8

Plaintiffs’ Request Nos. 6, 7, and 8, the Court will order the Miller Defendants to produce any
responsive documents that are in their possession, custody, or control. Moreover, the Miller
Defendants will be prohibited from using in this matter any responsive documents that are in their
possession, custody, or control that are not produced in accordance with this Order.
With regard to Plaintiffs’ Request No. 9, the Miller Defendants assert that they offered to
produce any responsive documents (except for privileged communications) for Plaintiffs’ inspection
at Defendants’ law firm. (Docket no. 62 at 2.) Such an offer is specifically contemplated under Fed.
R. Civ. P. 34 so long as the place and time of inspection is reasonable. See Fed. R. Civ. P.
34(b)(1)(B). The Court finds that Defendants’ response indicating that the documents “are available
for inspection” is reasonable, and therefore, Plaintiffs’ Motion to Compel a response to their Request
No. 9 will be denied as Defendants have already provided a sufficient response.
2.

Plaintiffs’ November 10 Request for Production

The November Request for Production seeks, in full, the following:
To the extent not previously produced, please produce all Federal and State Income
tax returns from 1997 - 2010 for all Defendants other than Miller Parking Services,
LLC.
(Docket no. 56-3 at 7.) Although the Miller Defendants now raise objections to the November 10
Requests, the Miller Defendants do not deny that they failed to respond to the November 10
Requests. (See docket no. 62 at 4-6.)
In the companion bankruptcy case that accompanies this matter, the Trustee served a
subpoena on the Miller Defendants’ accounting firm, Deloitte Tax, LLP, seeking documents similar
to those requested by Plaintiffs in their November 10 Request for Production. (See docket no. 62-1.)
Non-party Deloitte objected, raising prohibitions from disclosure under the Internal Revenue

9

Regulations, Accountant-Client Privilege, and Attorney-Client Privilege. (Id. at 3-5.) The Miller
Defendants now “rely on this position taken by Deloitte.” (Docket no. 62 at 4-5.) The Miller
Defendants further object to Plaintiffs’ request as irrelevant because “the Defendants’ personal
federal and state income tax treatment have no bearing on the alter ego or fraudulent transferee
claims encompassing this matter.” (Id. at 5.)
The Miller Defendants’ failure serve a timely response or objection to Plaintiffs’ November
10 Request for Production of Documents is fatal as “[a] failure [to respond to a Rule 34 Request for
Production of Documents] is not excused on the ground that the discovery sought was objectionable,
unless the party failing to act has a pending motion for a protective order under Rule 26(c).” Fed.
R. Civ. P. 37(d)(2). Moreover, the Miller Defendants’ reliance on Deloitte’s objections to a
nonparty subpoena in another matter is misplaced, particularly when Deloitte’s objections were filed
nearly two months after the Miller Defendants’ response was due. (See docket no. 62-1.) Therefore,
the Court will order the Miller Defendants to provide full and complete responsive documents to
Plaintiffs’ November 10 Request for Production of Documents No. 1.
3.

The James N. Miller Deposition Notice

Plaintiffs’ assert that they noticed the deposition of Defendant James N. Miller for March
21, 2013. Apparently, Defendants’ counsel notified Plaintiffs’ counsel that they were not available
for a deposition on March 21, 2013; neither Miller nor his counsel appeared for the deposition.
(Docket no. 56 at 10.) Plaintiffs assert that “[d]espite reasonable and diligent attempts . . . the
parties have been unable to reschedule [Mr. Miller’s deposition] based upon, among other things,
lack of response by counsel for the Defendants.” (Id. at 11.) The Miller Defendants did not respond
to Plaintiffs’ Motion to Compel in this regard. Therefore, the Court will grant Plaintiffs’ unopposed

10

Motion and order Defendant James N. Miller to appear for his deposition. The Court will order
counsel to find a mutually convenient time and place for Mr. Miller’s deposition, but if the Parties
cannot agree on such a date, the Court will allow Plaintiffs’ counsel to set a reasonable time and
place for Mr. Miller’s deposition.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel [56] is GRANTED IN
PART AND DENIED IN PART.
a.

Plaintiffs’ Motion to Compel a Response to their May Requests for Production of
Documents Nos. 6, 7, and 8 is GRANTED; the Miller Defendants are only required
to produce those documents that are in their possession, custody, or control. The
Miller Defendants must produce any responsive documents within 21 days.

b.

The Miller Defendants will be precluded from using in this matter any documents
responsive to Plaintiffs’ May Requests for Production of Documents Nos. 6, 7, and
8 that are not produced in accordance with this Order.

c.

Plaintiffs’ Motion to Compel a Response to their May Request for Production of
Documents No. 10 is DENIED.

d.

Plaintiffs’ Motion to Compel a Response to their November 10 Request for
Production of Documents No. 1 is GRANTED. The Miller Defendants must produce
any responsive documents within 21 days.

e.

Plaintiffs’ Request to Compel the deposition of James N. Miller is GRANTED.
Defendant James N. Miller is ordered to make himself available for a deposition
within 21 days at a time and place mutually convenient for the Parties and their
counsel. If the Parties are unable to reach a mutually convenient time and place for

11

Mr. Miller’s deposition after a reasonable effort, Plaintiffs’ counsel may set the
deposition for a reasonable time and place.
f.

Plaintiffs’ Motion to Compel discovery responses from the Stein/Weinstein
Defendants is DENIED without prejudice. Should the parties fail to obtain approval
for their proposed settlement, Plaintiffs are permitted to file a new Motion to Compel
with regard to the Stein/Weinstein Defendants, but such a motion must be filed
without unreasonable delay upon determination that the proposed settlement has not
been approved.

IT IS FURTHER ORDERED that the Stein/Weinstein Defendants’ Motion to Quash [57]
is DENIED.
NOTICE TO THE PARTIES
Pursuant to Federal Rule of Civil Procedure 72(a), the parties have a period of fourteen days
from the date of this Order within which to file any written appeal to the District Judge as may be
permissible under 28 U.S.C. § 636(b)(1).

Dated: August 26, 2013

s/ Mona K. Majzoub
MONA K. MAJZOUB
UNITED STATES MAGISTRATE JUDGE

PROOF OF SERVICE
I hereby certify that a copy of this Order was served upon Counsel of Record on this date.
Dated: August 26, 2013

s/ Lisa C. Bartlett
Case Manager

12