The opinion of the court was delivered by: Hon. William V. Gallo U.S. Magistrate Judge
ORDER SUSTAINING IN PART AND OVERRULING IN PART DEFENDANTS' OBJECTIONS TO PRODUCTION OF DOCUMENTS
On April 17, 2012, the Court received letters from counsel regarding Defendants' objections to producing documents to Plaintiff. Defendants object to producing agreements between themselves and Blue Line Food Service Distribution, Inc. ("BL"), and between themselves and Little Caesars Enterprises, Inc. ("LC").*fn1
The Court, having reviewed the letters of counsel and GOOD CAUSE APPEARING, HEREBY SUSTAINS in part and OVERRULES in part Defendants' objections to the production of contracts between Defendants and Blue Line Distribution, Inc., and Little Caesars Enterprises, Inc.
In March 2008, Plaintiff received a promissory note from Third Party Defendant Nascent Wine Company, Inc. ("Nascent") in the amount of $1 million ("Nascent Note"). In February 2010, Nery's entered into a Stock Purchase Agreement ("SPA") with Nascent and Targa, a wholly owned subsidiary of Nascent. As part of the SPA, Nery's acquired almost all of Targa's stock. In consideration, Nery's assumed Targa's accounts payable not to exceed $150,000, and executed a promissory note payable to Nascent in the amount of $1,850,000 ("2nd Note") which was the balance then due to Plaintiff in the Nascent Note. Apparently, all parties involved in the SPA and the execution of the 2nd Note were aware that Nascent would assign the 2nd Note to Plaintiff. On February 10, 2010, the assignment of the 2nd Note was made to secure Nascent's obligations under the Nascent Note. Pursuant to the assignment, Nascent directed Nery's to make all payments due on the 2nd Note directly to Plaintiff. Plaintiff's rights are derivative as the assignee of Nascent.
In 2010, Nery's stopped making payments to Plaintiff on the 2nd Note. Based on Nery's failure to pay, Plaintiff filed a Complaint in this Court, alleging breach of contract, unjust enrichment, conversion and negligent misrepresentation.
In 2011, Nery's filed a Third Party Complaint against Nascent and a Counter-Claim against Plaintiff.*fn2 The Third Party Complaint alleges that before the SPA was signed, Nascent failed to completely disclose Targa's liabilities. As a result of the incomplete disclosure, Nery's alleges that it was forced to divert its capital to address Targa's undisclosed liabilities. Consequently, Nery's claims damages for its inability to build Targa's business and increase Targa's value, as it would have done had the disclosure of Targa's liabilities been complete.
During the Early Neutral Evaluation Conference ("ENE")*fn3 in this matter, Plaintiff learned that in October 2010, after the SPA was signed and the assignment of the 2nd Note to Plaintiff, Nery's and Targa entered into an agreement with BL/LC. This agreement, the terms of which will not be fully described in this Order, was a new business relationship and no prior business arrangement existed between Nery's, Targa and BL/LC. Also, during the ENE, Plaintiff insisted that it needed to know the details of Nery's and Targa's agreement with BL/LC to evaluate potential settlement of this matter.
As noted above, the Court received letters from counsel regarding the production of the Nery's/Targa agreements with BL/LC. In Defendants' letter, Defendants informed the Court that they objected to production of the Nery's/Targa-BL/LC agreements. Specifically, Defendants argue that the agreements are not relevant to any claim or defense in this action and contain proprietary information that is designated as "Confidential Information." Defendants also posit that production of the agreements will not be protected by the Protective Order in place in this case because Plaintiff has already announced its intent to contact BL and LC.
Defendants argue that Plaintiff seeks information pertaining to a business transaction between themselves and an independent third party that was executed several months after the SPA and 2nd Note were executed. Therefore, the agreements memorializing the transaction have no bearing on Targa's value at the time the SPA and 2nd Note were executed. Further, Defendants ...