Belluomo v. Tiger Schulmann's Mixed Martial Arts et al
Filing
33
ORDER denying 30 Motion to Compel. For the reasons set forth in the attached Order, Plaintiff's motion to compel discovery is denied. So Ordered by Magistrate Judge Anne Y. Shields on 10/7/2015. (Casalini, Rosalinde)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JOSEPH BELLUOMO, and all other individuals
similarly situated,
Plaintiff,
ORDER
CV 14-4402 (JS)(AYS)
-againstTIGER SCHULMANN’S MIXED MARTIAL
ARTS, and DANIEL SCHULMANN a/k/a TIGER
SCHULMANN,
Defendants.
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SHIELDS, Magistrate Judge:
This is a diversity case brought by Plaintiff Joseph Belluomo (“Plaintiff”) against
Defendants Tiger Schulman Mixed Martial Arts (“Tiger Schulman”) and individual defendant
Daniel Schulmann (“Schulman”) (collectively “Defendants”).1 The case arises out of the parties’
business relationship in connection with the ownership and management of three of Defendants
mixed martial arts schools, now or formerly located within this District. See Complaint
(“Compl.”) DE 1; Plaintiff’s Memorandum in Support (“Pl. Mem. in Sup.) DE 30-6 at 1.
Briefly stated, Plaintiff’s lawsuit arises out of the alleged breach of a claimed oral
partnership agreement which began in or around 1998, and lasted until June of 2014. The
complaint sets forth causes of action in breach of contract, unjust enrichment and quantum
meruit, partnership oppression, breach of fiduciary duty and conversion. While Plaintiff styles
1
Defendants’ argument that Tiger Schulman is a trade name, and therefore not a legal
entity capable of being sued, has been raised and recently rejected by District Judge Joanna
Seybert in her recent decision denying Tiger Schulman’s motion to dismiss. DE 32 at 16. As
recognized by Judge Seybert, Plaintiff may take discovery to determine how to accurately name
the entity that owns and operates martial arts schools operated under the Tiger Schulman name
and later amend the caption herein. For the purpose of this opinion the court refers to the
corporate defendant as Tiger Schulman.
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this matter as a class action brought on behalf of “all other individually similarly situated,” the
Complaint sets forth no particular class allegations. Presently before this court is Plaintiff’s
motion to compel responses to Plaintiffs’ Sixth Set of Interrogatories and Fifth Set of Document
Requests. For the reasons set forth below, the motion to compel is denied.
I.
Factual Allegations of the Complaint
The parties’ business relationship dates back to 1994, when Plaintiff alleges that he was
hired to manage one of Defendants’ martial arts schools located in Massapequa, New York (the
“Massapequa School”). DE 1 ¶ 10. Plaintiff states that approximately five years after his initial
employment the parties entered into a business agreement pursuant to which Plaintiff made a
$30,000 capital investment in Defendants’ business, entitling him to a 7.5% interest in the
Massapequa School. While the parties are alleged to have performed pursuant to that agreement
for the ensuing fifteen years, the terms thereof were never reduced to writing. DE 1 ¶ 12.
Plaintiff claims that, over the years of the parties’ agreement, his investment in the
Massapequa School grew to approximately $270,000, DE 1 ¶ 15, and his interest therein grew to
49%, DE 1 ¶ 14. While Plaintiff’s investment in the Massapequa School is stated to have been
49%, Plaintiff states that the parties’ oral agreement entitled him to collect 50% of the profits
generated, after payment of expenses. DE 1 ¶ 19. Plaintiff states that while he was provided with
“periodic access” the Massapequa School’s profit and loss statements, he was never afforded
access to any documents memorializing the Massapequa School’s operating expenses. DE 10 ¶¶
21-22.
In 2012, the Massapequa School was closed, and a new school was opened in Seaford,
New York (the “Seaford Location”). Plaintiff claims that the opening of the Seaford Location
was merely a relocation of the Massapequa School. He states further that he executed a personal
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guarantee on the lease for the Seaford location, and that the move had no effect on the parties’
prior oral agreement. DE 1 ¶ 24-25. According to Plaintiff, the parties continued to perform
pursuant to their unwritten agreement, albeit at the Seaford location, until June of 2014. At some
point during that month, while Plaintiff was attending his weekly martial arts training and
business meeting at Defendants’ headquarters, Plaintiff discussed his entitlement to a “generation
check.” DE 1 ¶ 30. Plaintiff’s right to that check, which appears to be unrelated to the parties’
oral agreement, is alleged to be due to Plaintiff pursuant to Defendant’s referral policy. That
policy, as set forth in the Complaint, applies when an instructor’s former student obtains an
ownership interest in a Tiger Schulman school. According to Plaintiff, a former student of his
opened a Tiger Schulman’s school in Manhasset, New York (the “Manhasset Location”). That
opening is alleged to entitle Plaintiff to the payment of 10% of the net profits of the Manhasset
Location. DE 1 ¶¶ 32. Plaintiff alleges that his discussion of the generation check led to a verbal
and physical altercation with the individual defendant who “ejected Plaintiff from Defendants’
headquarters.” DE 1 ¶ 35.
After the alleged altercation at Defendants’ headquarters, the parties’ business
relationship declined and eventually came to an end. Plaintiff states that he was locked out of the
Seaford Location and his interest therein was sold to an individual named Michael Ficetti. Mr.
Ficetti is alleged to be currently operating the school located at the Seaford Location. DE 1 ¶¶
36-38.
II.
Causes of Action Alleged in the Complaint
Plaintiff’s complaint sets forth five separate causes of action. Specifically, Plaintiff
alleges causes of action for: (1) breach of contract; (2) unjust enrichment and quantum meruit (3)
partnership oppression; (4) breach of fiduciary duty and (5) conversion. As to relief, Plaintiff
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seeks a valuation and dissolution of his partnership agreement, along with an accounting and
damages to be determined at trial or, in the alternative, an award of Plaintiff’s pro rata share of
the revenue from the Seaford Location. Plaintiff also seeks declaratory relief in the form of
judgments declaring Defendants in breach of the parties’ partnership agreement, finding that
Defendants committed an act of partnership oppression and that they are in breach of fiduciary
duties owed to Plaintiff.
III.
The Present Motion
The parties have been engaging in discovery. As noted, the motion presently before the
court is Plaintiff’s motion to compel responses to Plaintiff’s Fifth Set of Interrogatories and Sixth
Request for the Production of Documents. DE 30. The interrogatories and document requests in
dispute are set forth in the chart below and grouped, for convenience, into two categories: real
property transactions (Interrogatory 1, Doc. Req. 1-3) and financial transactions (Interrogatory 2,
Doc. Req. 4-6). Descriptive information as to the requests are reproduced in bold type.
Interrogatories:
Document Requests:
1.
1.
"Identify, with particularity and detail,
any and all real property transactions
to which Defendant Daniel Schulmann
was a participant either in his individual
capacity or on behalf of Defendant Tiger
Schulmann's Mixed Martial Arts (and all
related entities) between January 2015
and the present;"
2.
3.
4
"Produce any and all documentation reflecting
any and all real property transactions (sales,
transfers or· conveyances) to which Defendant
Daniel Schulmann was a participant either in
his individual capacity or on behalf of Defendant
Tiger Schulmann's Mixed Martial Arts (and all
related entities) between January 2015 and the
present;"
"Produce any and all correspondence
concerning any and all real property
transactions (sales, transfers or conveyances)
to which Defendant Daniel Schulmann was a
participant either in his individual capacity or on
behalf of Defendant Tiger Schulmann's Mixed
Martial Arts (and all related entities) between
January 2015 and the present;"
"Produce any and all documents reflecting
Defendant Daniel Schulmann's status as an
2.
owner, co-owner, shareholder, member,
partner, and/or co-venturer in any real
property acquired, sold and/or transferred
between January 2015 and the present;"
Produce any and all documents, including,
but not limited to, bank records, financial
statements, and profit and loss statements,
reflecting all transfers of funds exceeding
$10,000:
"Identify, with particularity and detail,
any and all transfers of sums over
$10,000 from bank accounts: (a)
owned maintained or utilized by
Defendant's Mixed Martial Arts
Schools (and related entities); and (b)
owned, maintained or utilized by
Defendant Daniel Schulmann
individually between January 2015 and
the present."
4.
"from any of Defendant Daniel
Schulmann' s individual accounts between
January 2015 and the present;"
5.
“from any of Defendants' Martial Arts
schools and/or locations between January 2015
and the present;"
"Produce any and all financial documents,
including, but not limited to, bank records,
monthly statements, and transaction receipts,
from Defendants' Manhasset Mixed Martial
Arts School located at 1205 Northern Boulevard,
Manhasset, New York 11030 between January
2015 and the present.”
6.
Defendants object to all of the foregoing requests on the ground that they are overly
broad, not related to the claims or defenses in the action, and are burdensome and oppressive.
The parties have conferred and raised their dispute with this court via a telephone conference.
They thereafter briefed this matter and the dispute is now properly before this court for decision.
III.
Disposition of the Motion
A.
Legal Principles
The scope of permissible discovery, and the standards to be applied to motions to compel
discovery, are familiar and are generally agreed upon by the parties. Thus, there is no question
but that parties are entitled to discovery of relevant, non-privileged information which “appears
reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b).
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The concept of relevance is “construed broadly to encompass any matter that bears on, or that
reasonably could lead to other matter that could bear on any issue that is or may be in the case.”
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978); Maresco v. Evans Chemetics,
Div. of W.R. Grace & Co., 964 F.2d 106, 114 (2d Cir. 1992); Greene v. City of New York, 2012
WL 5932676, at *3 (E.D.N.Y. 2012). Additionally, information need not be admissible at trial to
be discoverable. Barrett v. City of New York, 237 F.R.D. 39, 40 (E.D.N.Y. 2006) (noting that
the information sought “need not be admissible at trial to be discoverable”).
The broad scope of discovery is not, however, a license to conduct a “fishing expedition”
into a parties’ documents and other information, Barbara v. MarineMax, Inc., 2013 WL
1952308, at *2 (E.D.N.Y. 2013), and the trial court has “broad latitude to determine the scope of
discovery and to manage the discovery process.” Perry v. The Margolin & Weintreb Law Group
LLP, 2015 WL 4094352, * 2 (E.D.N.Y. 2015) (citations omitted).
B.
The Motion to Compel is Denied
As the chart above makes clear, the discovery requests that are the subject of this motion
are broad. Indeed, Plaintiff seeks an unlimited range of information regarding “all real property
transactions” including sales, transfers and conveyances, and the transfer of “all sums over
$10,000” from all bank accounts “maintained or utilized” by Individual Defendant Schulman,
Defendants’ schools, and “related entities.” The only limit to the requests is that such documents
relate to the time period of January 2015 to the present – a time period after the alleged
termination of Plaintiff’s interest in the business that is the subject of this lawsuit.
In support of this virtually unlimited request for real estate and financial transactions,
Plaintiff relies on nothing more than the allegations that this matter asserts a breach of fiduciary
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duty, and is styled as a class action. See DE 31 at 3-4. Neither argument renders the broad
discovery sought to fall within the range of permissible discovery.
As set forth in detail above, Plaintiff’s claims arise out of his particular business
relationship with Defendants. With the exception of the claim for the “generation check” as to
the Manhasset Location, all of Plaintiff’s claims arise out of the alleged oral partnership
agreement, pursuant to which the parties are alleged to have performed over a fifteen year
period. Discovery is broad, but is properly circumscribed by reference to the claims asserted.
Discoverable information in this case would properly include, for example, financial information
evidencing the parties’ course of conduct (so as to support Plaintiff’s claims as to the terms of
the parties’ oral agreement), documents regarding the alleged sale of the Seaford Location, and
Plaintiff’s alleged interest therein. Also discoverable would be financial information regarding
Defendants’ alleged referral policy and payments made to Plaintiff with respect to so-called
“generation” checks. In contrast, the pending requests for all of Defendants’ real estate and
financial records, even if limited to the time period of January 2015 to the present (which period
follows the alleged termination of the partnership agreement) are simply irrelevant to the claims
asserted.
Plaintiff’s reference to possible class claims does nothing to change this Court’s
conclusion. First, the complaint fails to set forth any class-based factual allegations in support of
the assertion that this matter should be properly conducted as to a class action. Indeed,
Plaintiff’s factual allegations point to precisely the opposite conclusion, and Plaintiff sets forth
no reason, either in his pleadings or in documents submitted in support of the present motion, to
support a conclusion that class treatment is desirable.
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Plaintiffs’ claims arise out of his particular oral agreement with Defendants. That
agreement spans fifteen years, and appears to have changed over the course of the parties’
business relationship. Thus, while Plaintiff alleges an initial interest of 7.5% in the Massapequa
School, that interest is alleged to have grown, over time, to a 49% interest. In view of the fact
that the agreement was oral, the terms thereof can be discerned only by reference to the parties’
performance and particular documents, generated over the course of the parties’ fifteen year
relationship, evidencing that performance.
Plaintiff does not identify any individual with an oral agreement similar to his own.
Indeed it is, at the very least, highly unrealistic to assume that Plaintiff will be able to show that
his particular partnership agreement was, in any way, similar to other agreements, entered into
by unnamed class members, during the fifteen year period of the parties’ agreement herein. Thus,
it does not appear that Plaintiff will be able to show that consideration of any factor set forth in
Rule 23 of the Federal Rules of Civil Procedure, governing class actions, militates in favor of
class treatment of this action. It is indeed implausible to believe that Plaintiff can show that there
exists a class of individuals so numerous that joinder is impracticable, whose claims are so
similar to Plaintiffs as to be considered to share common questions of law and fact, and subject
to typically similar claims and defenses. See Fed. R. Civ. P. 23.
That the Complaint alleges a claim for breach of fiduciary duty on behalf of a class does
not change this court’s conclusion as to the irrelevant nature of the information sought. Plaintiff
complains that Defendants breached their fiduciary duties by failing to pay Plaintiff the
percentage of profits owed to him and taking Plaintiff’s business away from him without
compensation, both in violation of the parties’ partnership agreement. These claims are fact
specific as to the parties’ business relationship and in no way support any argument in favor of
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class treatment. Moreover, even if responses to discovery could prove that the Defendant acted in
a way that violated a fiduciary duty owed to other, unnamed individuals, there is nothing to
suggest those breaches of fiduciary duty were in any way similar to the breach of fiduciary duty
that is alleged to arise as a result of the specific oral partnership agreement at issue here.
Finally, if the broad nature of the requests themselves were not enough to invalidate the
requests as overly broad, the time frame for which information is sought would. Plaintiff seeks
financial and real estate records generated after termination of the parties’ alleged agreement. He
asserts that such post-termination financial and real estate transactions are relevant to his claims
because they evidence Defendants’ pattern and practice of utilizing corporate assets for personal
gain and/or benefit all to the detriment of their “partners.” This assertion, while possibly relevant
to a claim for post judgment collection of damages judged to be due, in no way supports any
argument that such information is relevant to Plaintiff’s claims for relief.
In sum, Plaintiff fails to show that the broad range of discovery sought is relevant to any
claim or defense or that such evidence is reasonably calculated to lead to the discovery of
admissible evidence. As such, the requests at issue here constitute nothing more than an
impermissible fishing expedition. See Kindle v. Dejana, 2015 WL 5117797, at *2 (E.D.N.Y.
2015) (citations omitted). Any holding to the contrary would allow a plaintiff open-ended and
unlimited discovery of all of a defendant’s financial and real estate investment documents based
on nothing more than a bare statement that the lawsuit is “being pursued as a class action.” While
the scope of discovery is broad, it is not so unlimited as to allow such a result.
The Court is unaware as to whether Defendants have already produced financial records
in response to any earlier discovery requests for the production of documents in the nature of
those described above as appropriately discoverable in this matter. In the event that such
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production has not already been requested and responded to, this decision is without prejudice to
seeking such discovery.
CONCLUSION
For the foregoing reasons, Plaintiff’s motion to compel discovery, as set forth in Docket
Entry No. 30 herein is denied.
SO ORDERED
Dated: Central Islip, New York
October 7, 2015
/s/ Anne Y. Shields
ANNE Y. SHIELDS
United States Magistrate Judge
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