American Home Assurance Company v. Weaver Aggregate Transport, Inc.
5:10-cv-00329
M.D. Fla.Jun 23, 2017Background
- Weaver obtained a judgment (including fees) against Beacon Industrial Staffing, Inc. for over $400,000 and sought to collect via proceedings supplementary, alleging Beacon fraudulently transferred assets to BIS Group Holdings, Inc. (BIS) and that BIS is Beacon’s alter ego.
- Court permitted proceedings supplementary and impleaded BIS under Fla. Stat. § 56.29 and Fed. R. Civ. P. 69; BIS moved to dismiss and for reconsideration, both denied. The matter was set as a Track Two case.
- Weaver served 12 document requests (client lists, officers/shareholders lists, employee lists, meeting minutes, bank ledgers, asset lists, tax returns, judgments, real estate, and communications) originally covering 2005–present.
- After meet-and-confer, Weaver narrowed requests to 2009–present and withdrew some subparts; several requests were resolved as BIS represented it had no responsive documents, leaving Requests 1, 2, 4–6, 8, and 9 in dispute.
- BIS initially responded with boilerplate objections claiming overbreadth, burden, and irrelevance; Weaver moved to compel. The court reviewed relevance under theories of fraudulent transfer and alter ego and proportionality under Fed. R. Civ. P. 26.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether disputed discovery is relevant to fraudulent-transfer claim | Documents (bank ledgers, asset lists, tax returns showing dispositions) will show if BIS now holds Beacon assets and thereby reveal fraudulent transfer | Discovery is irrelevant because Weaver cannot recover from BIS; requests are overbroad and burdensome | Relevant. Financial records and asset/account information from 2009 onward are discoverable to test fraudulent-transfer theory; tax returns limited to portions showing asset dispositions |
| Whether disputed discovery is relevant to alter-ego claim | Lists of officers/shareholders, client lists, minutes, asset/judgment lists and tax returns will show common control and continuity of assets/resources | Discovery is irrelevant and disproportional because Weaver lacks a viable claim against BIS | Relevant. Requests targeting common control, continuity, and shared assets are reasonably calculated to support alter-ego theory |
| Sufficiency of BIS’s boilerplate objections to requests | N/A (Weaver argues objections are insufficient) | BIS relied on generic objections (overbroad, unduly burdensome, irrelevant) without particularized explanations | Boilerplate objections are inadequate; party must state particularized grounds for objections and privileges expressly |
| Proportionality and scope (time period and burdens) | Requests narrowed to 2009–present and limited to materials tied to alter-ego/fraud claims; amount in controversy justifies discovery | Discovery not proportional to needs; amount in controversy allegedly unknown; burden too great | Discovery is proportional given narrowed scope, judgment size (~$400k+), and relevance; production ordered by July 7, 2017; costs denied to both parties now |
Key Cases Cited
- Commercial Union Ins. Co. v. Westrope, 730 F.2d 729 (11th Cir.) (motions to compel are reviewed for abuse of discretion)
- United States v. Procter & Gamble Co., 356 U.S. 677 (Supreme Court) (discovery’s purpose is disclosure of relevant information to resolve disputes on true facts)
- In re PSI Indus., Inc., 306 B.R. 377 (Bankr. S.D. Fla.) (elements of fraudulent transfer inquiry)
- Old W. Annuity & Life Ins. Co. v. Apollo Grp., 605 F.3d 856 (11th Cir.) (three-part test for alter-ego / piercing corporate veil)