Michigan Laborers' Pension Fund v. Rite Way Fence, Inc. et al

Filing 71

ORDER Granting 40 Motion to Compel; Denying as Moot 47 Motion for to Modify Subpoena; and Denying as Moot 48 Motion to Enlarge Time - Signed by Magistrate Judge Mona K. Majzoub. (LBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

BOARD OF TRUSTEES OF
THE MICHIGAN LABORERS’
PENSION FUND,
Plaintiff,

CIVIL ACTION NO. 14-cv-14142

v.

DISTRICT JUDGE MATTHEW F. LEITMAN

RITE WAY FENCE, INC.,
MARX CONTRACTING, INC.,
H & H RENTALS L.L.C., and
EUGENE M. ZAPCZYNSKI,

MAGISTRATE JUDGE MONA K. MAJZOUB

Defendants.
______________________________/

OPINION AND ORDER GRANTING PLAINTIFF’S MOTION TO COMPEL [40],
DENYING AS MOOT EUGENE R. ZAPCZYNSKI’S MOTION TO MODIFY
SUBPOENA [47], AND DENYING AS MOOT DEFENDANTS’ MOTION TO ENLARGE
TIME [48]
This matter comes before the Court on Plaintiff Board of Trustees of the Michigan
Laborers’ Pension Fund’s Motion to Compel Documents Subpoenaed from Non-Party Dilger &
Semaan, P.C. (Docket no. 40.) Plaintiff filed a Statement of Resolved and Unresolved Issues
with regard to this Motion, to which Dilger & Semaan, P.C. objected, and Plaintiff replied to
Dilger & Semaan, P.C.’s Objection. (Docket nos. 50, 57, and 58.) Also before the Court are
non-party Eugene R. Zapczynski’s Motion to Modify Subpoena to Testify at a Deposition and
Production of Documents for an Enlargement of Time and Protective Order (docket no. 47) and
Defendants Rite Way Fence, Inc., Marx Contracting, Inc., H & H Rentals L.L.C., and Eugene M.
Zapczynski’s Motion to Enlarge Time to Respond to Plaintiff’s Second Request for Production
of Documents (docket no. 48). Response and reply briefs have been filed with regard to each of

these Motions. (Docket nos. 49, 54, 55, and 59.) The Motions have been referred to the
undersigned for consideration. (Docket nos. 41 and 51.) 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
The Michigan Laborers’ Pension Fund (“Pension Fund”) receives contributions from

employers in the building and construction industry who are bound to collective bargaining
agreements (“CBAs”) with the Michigan Laborers’ District Council and/or its affiliated unions.
(Docket no. 1 ¶ 10.) According to Plaintiff, the CBAs require employers to make contributions
to the fund for covered work performed by their employees.

(Id.)

Plaintiff alleges that

Defendants Rite Way Fence, Inc. (“Rite Way”) and Marx Contracting, Inc. (“Marx”) were each
bound to a 2008-2013 CBA, which expired on June 1, 2013. (Id. ¶¶ 12, 26.) Plaintiff further
alleges that Defendants Rite Way and Marx terminated their CBAs on the expiration date and
permanently ceased making payments to the Pension Fund for work performed by their
employees after that date, but they continued to conduct business in the construction industry
within the geographical limits of the terminated CBA. (Id. ¶¶ 13-14, 27-28.) Plaintiff claims
that Defendants Rite Way and Marx’s termination of the CBAs, along with their continued
operation in the industry, constitute a complete withdrawal from the Pension Fund, resulting in a
combined withdrawal liability of almost $600,000.00 plus accrued interest under the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1382, 1383, and 1391. (Id. ¶¶
15-16, 29-30.) Plaintiff filed the instant Complaint to recover this withdrawal liability, for which

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Plaintiff claims that Defendants are jointly and severally liable based on alter ego, common
control, and veil piercing theories.1 (Docket no. 27 at 9.)
On August 30, 2016, the Court granted in significant part Plaintiff’s Motion to Enforce
Court Order, Compel Production of Documents, and Compel Depositions with regard to
Plaintiff’s First Request for Production of Documents and certain Rule 30(b)(6) depositions.
(Docket no. 63.) The Court will now address the three discovery motions remaining in this
matter.
II.

GOVERNING LAW
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, is relevant to any party’s claim or defense, and is
proportional to the needs of the case. 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.

Information need not be admissible in evidence to be

discoverable. Fed. R. Civ. P. 26(b)(1). But the scope of discovery is not unlimited. “District
courts have discretion to limit the scope of discovery where the information sought is overly
broad or would prove unduly burdensome to produce.” Surles ex rel. Johnson v. Greyhound
Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007).

1

According to Plaintiff, Defendant Zapczynski is the sole officer and shareholder of Defendant Rite Way; a 60%
shareholder and an officer of Defendant Marx; and the sole member and owner of Defendant H & H Rentals L.L.C.
(“H & H”), which allegedly owns the real property used in the operations of Defendants Rite Way and Marx.
(Docket no. 1 ¶¶ 6, 7.) To support its theories of liability, Plaintiff makes several allegations against Defendants
throughout the Complaint, such as the making of advances, issuance of loans, and commingling of funds and other
assets amongst each other without written agreement; formation for a fraudulent purpose, undercapitalization; and
failure to follow corporate formalities. (Id. ¶¶ 50-51, 57-58.)
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Rules 33 and 34 allow a party to serve interrogatories and requests for production of
documents on an opposing party. Fed. R. Civ. P. 33, 34. A party receiving these types of
discovery requests has thirty days to respond with answers or objections. Fed. R. Civ. P.
33(b)(2), 34(b)(2)(A). Rule 30 allows a party to conduct a deposition of any person without
leave of court, subject to certain exceptions. Fed. R. Civ. P. 30(a)(1). If the party receiving
discovery requests under Rules 33 or 34 fails to respond properly, or if the person whose
deposition is sought under Rule 30 fails to properly comply with the rule, Rule 37 provides the
party who sent the discovery or noticed the deposition the means to file a motion to compel.
Fed. R. Civ. P. 37(a)(3)(B).
III.

ANALYSIS
A.

Plaintiff’s Motion to Compel Documents Subpoenaed from Non-Party Dilger
& Semaan, P.C. [40]

On January 29, 2016, Plaintiff served non-party Dilger & Semaan, P.C., the law firm that
represented Defendant Zapczynski’s ex-wife, Kelly Jean Zapczynski, in their 2007 and 2012
divorce proceedings, with a subpoena to produce certain documents related to those proceedings.
(Docket no. 40 at 2; docket no. 40-2.)

Plaintiff explains that the divorce cases involved

Defendant Zapczynski’s ownership and operation of the corporate defendants in this matter;
thus, the documents sought through the subpoena are relevant. (Id. at 2.) On February 17, 2016,
Kathleen M. Dilger, Esq. objected to the subpoena on behalf of Dilger & Semaan, P.C. for the
following reasons:

(1) the scope of the document request is overly broad and unduly

burdensome, especially where some of the documents are equally available to the subpoenaing
party as part of the public record; (2) the information is protected by the attorney-client privilege;
(3) the information requested is too voluminous, and the cost to locate and retrieve it from
storage and to copy it would be considerable, which would result in an undue financial expense
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and burden for both Ms. Dilger and Ms. Zapczynski; and (4) Defendant Zapczynski should
already possess, or have access to, many of the subpoenaed documents, and Plaintiff should seek
those documents through him. (Docket no. 40-4.)
On February 23, 2016, Plaintiff obtained records related to the 2012 divorce proceeding
from Defendant Zapczynski’s divorce attorney. (Docket no. 40 at 8; docket no. 40-5.) Plaintiff
subsequently informed Dilger & Semaan, P.C. of this development and effectively narrowed the
scope of its subpoena to the documents related to the 2007 divorce proceeding.2 (Id.; docket no.
40-6.) Plaintiff also informed Dilger & Semaan, P.C. that it was not seeking privileged material
and that it would reimburse the firm for the reasonable cost of production, noting that it recently
paid a total of $322.90 for the production of the subpoenaed documents from the 2012 divorce
proceeding at 10 cents per page for hard copy documents and $80 per hour of paralegal time.
(Id. at 8-9; docket no. 40-6.)
In the instant Motion, Plaintiff argues that the subpoenaed documents related to the 2007
divorce proceeding are relevant and that Dilger & Semaan, P.C. should be ordered to produce
them, but not at the requested rate of $300 per hour; Plaintiff argues that such a rate is grossly
excessive. (Docket no. 40 at 9-10.) Later, in its Statement of Resolved and Unresolved Issues,
Plaintiff indicates that it has since obtained the pleadings from the 2007 divorce proceeding from
the Oakland County Circuit Court, and, as a result, it has further narrowed the scope of the
subpoena to only the deposition transcripts from the 2007 proceeding, including any exhibits.
(Docket no. 50 at 2.) In an effort to obtain the transcripts from another source, Plaintiff informs
that it asked Dilger & Semaan, P.C. for the court reporter’s contact information, but Dilger &
Semaan, P.C. did not respond. (Id.) Plaintiff claims that Dilger & Semaan, P.C. refuses to

2

Plaintiff points out that it is unable to obtain any documents from the attorney who represented Defendant
Zapczynski in the 2007 divorce proceeding because he has passed away. (Docket no. 40 at 2.)
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produce the transcripts until Plaintiff pays a $1,000 deposit to be applied to Dilger & Semann,
P.C.’s cost of production at $300 per hour for attorney time and $85 per hour for paralegal time.
(Id. at 3.) Plaintiff argues that any cost to produce the deposition transcripts would be minimal,
for which Dilger & Semaan, P.C. is not protected under Federal Rule of Civil Procedure
45(d)(2)(B)(ii). (Id.) Plaintiff therefore asserts that although it has previously offered to pay the
reasonable expenses associated with production, in light of the minimal expense required and the
fact that Dilger & Semaan, P.C. has not responded to Plaintiff’s Motion, the Court should
compel Dilger & Semaan, P.C. to produce the transcripts without reimbursement. (Id.)
On May 5, 2016, Dilger & Semaan, P.C., through counsel, filed an objection to Plaintiff’s
Statement of Resolved and Unresolved Issues. (Docket no. 57.) In this Objection, Dilger &
Semaan, P.C. informs the Court that at all times, it has expressed willingness to cooperate in
attempting to locate, retrieve, review, and copy the subpoenaed documents, which may be
located off-site in closed file storage. (Id. ¶ 4.) Dilger & Semaan, P.C. argues that despite its
willingness to cooperate, Plaintiff has refused to agree to reimburse the firm for the “arduous”
task of responding to the subpoena, which is expected to involve several banker boxes of
information, all containing attorney-client privileged material. (Id. ¶ 5.) Dilger & Semaan, P.C.
then sets forth its position that it is not a party to these proceedings, it has not been ordered or
directed by the Court to submit or contribute to any pleading of any kind, and that it is willing to
cooperate upon reimbursement of its reasonable costs. (Id. ¶ 7.) Dilger & Semaan, P.C.
indicates that it submitted this Objection to fully advise the Court of the status of this matter,
despite its inability as a non-party to formally participate (including filing a response to the
instant Motion)3 and to avoid any further “absurd and improper use of discovery to increase the

3

Dilger & Semaan is misguided in this instance; pursuant to Federal Rule of Civil Procedure 45, a party served with
a subpoena may file a motion to quash or modify the subpoena. Fed. R. Civ. P. 45(d)(3).
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costs of litigation.” (Id. ¶ 9.) Lastly, Dilger & Semaan, P.C. requests that Plaintiff be ordered to
reimburse the firm for all of its costs, including the attorney’s fees that it has been forced to incur
in addressing the subpoena. (Id.)
Federal Rule of Civil Procedure 45 governs subpoenas and provides that a non-party
served with a subpoena may make written objections to the subpoena before the earlier of the
time specified for compliance or 14 days after the subpoena is served.
45(d)(2)(B).

Fed. R. Civ. P.

“The filing of the objection suspends any duty to produce the subpoenaed

documents, until the party serving the subpoena procures an order compelling production” from
the issuing court. Matthias Jans & Assoc., Ltd. v. Dropic, No. 01-MC-26, 2001 WL 1661473, at
*1 (W.D. Mich. Apr. 9, 2001); see also Fed. R. Civ. P. 45(d)(2)(B)(i). Any order compelling
production, however, “must protect a person who is neither a party nor a party’s officer from
significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii). This section of
Rule 45 was added to protect non-parties “against significant expense resulting from involuntary
assistance to the court.” Fed. R. Civ. P. 45 (Advisory Committee Notes, 1991 Amendment,
Subdivision (c)).
Here, Plaintiff has significantly reduced the scope of its subpoena to only the deposition
transcripts and their exhibits from the 2007 divorce proceeding. While the Court does not opine
regarding the expense of compliance with the entire subpoena as written, the Court is persuaded
by Plaintiff’s assertion that the time and expense required to comply with the subpoena as
limited to the 2007 deposition transcripts is minimal, especially where Defendant Zapczynski’s
2012 divorce attorney was able to produce all of the documents related to the 2012 divorce
proceeding in accordance with the subpoena as originally written for $322.90. Notably, Dilger
& Semaan, P.C. has failed to demonstrate otherwise. Accordingly, the Court finds that non-party

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Dilger & Semaan, P.C. will not incur significant expense in complying with Plaintiff’s subpoena
as limited to only the deposition transcripts and their exhibits from the 2007 divorce proceeding,
and it will order Dilger & Semaan, P.C. to produce the same without the reimbursement of costs
within twenty-one (21) days of this Opinion and Order.
B.

Non-Party, Eugene R. Zapczynski’s Motion to Modify Subpoena to Testify at
a Deposition and Production of Documents for an Enlargement of Time and
Protective Order [47]

Plaintiff served Defendant Zapczynski’s father, non-party Eugene R. Zapczynski, with a
subpoena ad testificandum and duces tecum on January 29, 2016, which required him to appear
for a deposition and produce certain documents on February 17, 2016. (Docket no. 49 at 4, 6;
docket no. 49-2.) The deposition was rescheduled for April 11, 2016, at Mr. Zapczynski’s
request. (Id.; docket no. 49-4 at 3.) On April 8, 2016, Mr. Zapczynski filed the instant Motion to
Modify Subpoena to Testify at a Deposition and Production of Documents for an Enlargement of
Time and Protective Order. (Docket no. 47.) In this Motion, Mr. Zapczynski challenges
document request no. 8 of the subpoena, which requests that he produce financial documents for
businesses that he allegedly owned and operated. The request provides as follows:
For the period of January 1, 2007 to present, each and every financial statement
and tax return for Michigan Bark, Putt, Inc., [and] Kern Co-Partnership that show
any financial transaction or business dealings with Rite Way, Marx, H & H or
Eugene M. Zapczynski.
(Docket no. 47 at 2-3, 12.) Specifically, Mr. Zapczynski argues that Plaintiff is not entitled to
the entire contents of Michigan Bark, Putt, Inc., and Kern Co-Partnership’s financial records and
tax returns because the information is confidential and would not lead to the discovery of
admissible evidence. (Id. at 3, 17.) He further argues that document request no. 8 should
therefore be limited to only the specific parts and portions of those financial statements and tax
returns that show specific financial transactions or business dealings with Defendants. (Id.) Mr.
8

Zapczynski also requests that his deposition testimony be similarly limited. (Id. at 4, 20.)
Lastly, Mr. Zapczynski asks that he be given additional time to produce the documents, until
April 30, 2016, because the documents are in the possession of his accountant, who is unable to
compile the documents because it is “tax season,” and he is busy preparing tax returns for his
clients. (Id. at 3, 19, 20.)
In its April 22, 2016 Response to Mr. Zapczynski’s Motion, Plaintiff informs that Mr.
Zapczynski did appear for his April 11, 2016 deposition, but he did not produce documents
responsive to request no. 8, and he was deposed on other matters. (Docket no. 49 at 7.) Plaintiff
then argues that Mr. Zapczynski’s Motion should be denied because (1) Mr. Zapczynski failed to
object to the subpoena within fourteen days of service as required by Federal Rule of Civil
Procedure 45(d)(2); (2) Mr. Zapczynski’s Motion is not timely under Rule 45(d)(3); and (3) Mr.
Zapczynski’s Motion is not based on any of the grounds for modification specified in Rule
45(d)(3). (Id. at 4, 8-11.) Plaintiff further argues that the financial and business dealings
between Defendants and Michigan Bark, Putt, Inc., and Kern Co-Partnership are relevant to
Plaintiff’s alter-ego theory and its claims of veil piercing by Defendant Zapczynski and that
Defendants have conceded the relevancy of those dealings.

(Id. at 7-8, 11-12.)

Plaintiff

concludes that Mr. Zapczynski should be ordered to immediately produce the complete tax
returns and financial statements as requested. (Id. at 13.)
Mr. Zapczynski replied to Plaintiff’s Response on May 2, 2016. (Docket no. 54.) In his
Reply, Mr. Zapczynski advises that after consulting with his accountant, he has learned that there
are no financial statements for Michigan Bark, Putt, Inc., or Kern Co-Partnership for the period
requested, as financial statements were never prepared for those entities. (Id. at 2-3.) Mr.
Zapczynski also advises that the tax returns prepared for Michigan Bark, Putt, Inc., and Kern Co-

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Partnership do not show any itemized financial transactions or business dealings with
Defendants.4 (Id. at 3.) Essentially, Mr. Zapczynski advises that there are no documents
responsive to document request no. 8 of Plaintiff’s subpoena, and the Court accepts this assertion
as true. The non-existence of documents responsive to Plaintiff’s request no. 8 renders it
unnecessary to limit the scope of the request or to grant the other related relief sought by Mr.
Zapczynski. The Court will therefore deny Non-Party, Eugene R. Zapczynski’s Motion to
Modify Subpoena to Testify at a Deposition and Production of Documents for an Enlargement of
Time and Protective Order as moot.
C.

Defendants’ Motion to Enlarge Time to Respond to Plaintiff’s Second
Request for Production of Documents [48]

Defendants filed the instant Motion on April 20, 2016, seeking a thirty-day extension of
time within which to reply to Plaintiff’s Second Request of Production of Documents, which
were served upon Defendants on March 22, 2016. (Docket no. 48.) Defendants assert that the
documents requested by Plaintiff are voluminous and are located at three separate locations, and
they argue that an extension of the response deadline to May 23, 2016 will not prejudice Plaintiff
because the court recently extended the fact discovery deadline to July 21, 2016, and because
Plaintiff does not plan to take any depositions until after May 23, 2016. (Id. at 2-3, 14.)
In response, Plaintiff asserts that its Second Request for Production of Documents
consists of requests for Defendants’ QuickBooks accounting software records and other
documents that could be easily transferred onto an electronic storage device and produced within
the thirty-day time for response and that Defendants have failed to establish good cause for their
request for an extension.

(Docket no. 55 at 4, 10-11.)

Plaintiff argues that it would be

prejudiced by the requested thirty-day extension because the extension would effectively
4

Mr. Zapczynski provided Plaintiff with this information in an April 29, 2016 letter accompanied by a formal
response to document request no. 8. (Docket no. 54 at 4-7.)
10

truncate the recent extension of the discovery deadline. (Id. at 4, 10.) Plaintiff also argues that it
would be prejudiced because it scheduled the deposition of Defendant Rite Way’s former
controller for May 24, 2016, before which it needs time to review the requested documents, and
if the extension is granted, it will not have adequate time to do so. (Id. at 8.) Plaintiff argues that
Defendants’ actions have forced Plaintiff to delay the deposition. (Id.) Finally, Plaintiff argues
that Defendants have abused discovery throughout this litigation, and the instant Motion is a
continuation of that abuse. (Id. at 4, 9.)
Defendants replied to Plaintiff’s response on May 11, 2016, and informed the Court that
they have fully responded to Plaintiff’s Second Request for Production of Documents. (Docket
no. 59.) Accordingly, Defendants’ Motion to Enlarge Time to Respond to Plaintiff’s Second
Request for Production of Documents is now moot, and the Court will deny it as such.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel Documents
Subpoenaed from Non-Party Dilger & Semaan, P.C. [40] as limited by Plaintiff’s Statement of
Resolved and Unresolved Issues [50] is GRANTED. Non-Party Dilger & Semaan, P.C. will
produce the deposition transcripts and their exhibits from the 2007 divorce proceeding between
Kelly Jean Zapczynski and Eugene M. Zapczynski to Plaintiff without the reimbursement of
costs within twenty-one (21) days of this Opinion and Order.
IT IS FURTHER ORDERED that Non-Party, Eugene R. Zapczynski’s Motion to
Modify Subpoena to Testify at a Deposition and Production of Documents for an Enlargement of
Time and Protective Order [47] and Defendants’ Motion to Enlarge Time to Respond to
Plaintiff’s Second Request for Production of Documents [48] are DENIED as moot.

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NOTICE TO THE PARTIES
Pursuant to Fed. R. Civ. P. 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: October 25, 2016

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

PROOF OF SERVICE
I hereby certify that a copy of this Opinion and Order was served upon counsel of record
on this date.
Dated: October 25, 2016

s/ Lisa C. Bartlett
Case Manager

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