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Board of Trustees of Ken Lusby Clerks & Lumber Handlers Pension Fund v. Piedmont Lumber & Mill Co.

United States District Court, N.D. California

July 3, 2014

BOARD OF TRUSTEES OF THE KEN LUSBY CLERKS & LUMBER HANDLERS PENSION FUND, Plaintiff,
v.
PIEDMONT LUMBER & MILL COMPANY, et al., Defendants.

ORDER RE: PLAINTIFF'S MOTIONS TO COMPEL SUPPLEMENTAL INTERROGATORY RESPONSES

JACQUELINE SCOTT CORLEY, Magistrate Judge.

Now pending before the Court are the parties' joint discovery letters wherein Plaintiff Board of Trustees of the Ken Lusby Clerks & Lumber Handlers Pension Fund ("the Board") seeks to compel supplemental interrogatory responses from Defendants Piedmont Lumber & Mill Company ("Piedmont") and William C. Myer, Jr. ("Myer"). (Dkt. Nos. 67, 68.) After carefully considering the arguments and briefing submitted, the Court concludes that oral argument is unnecessary, see Civ. L.R. 7-1(b), and rules as follows.

BACKGROUND

In this ERISA withdrawal liability action, the Board seeks to collect amounts owed as a result of Piedmont's withdrawal from an employee benefit plan. Piedmont operated several lumber supply stores, including one located at 2465 South Main Street in Lakeport, California ("the Lakeport Property"). (Dkt. No. 62 ¶ 8.) The Board alleges that Piedmont's two shareholders are Myer and the Oliver Family Trust (with defendant Wendy Oliver as the alter ego of the Trust). ( Id. at ¶¶ 9-12.) The Second Amended Complaint, the operative complaint in this action, alleges that Myer and Oliver effectively operated a real estate business at the Lakeport Property, the operations of which included collecting rents from Piedmont as well as other tenants. (Dkt. No. 62 ¶¶ 16-23.) Because Piedmont and the real estate business were in common control, the theory goes, the unincorporated real estate business ( i.e., Myer and Oliver individually) are jointly and severally liable for Piedmont's withdrawal liability. (Dkt. No. 62 ¶¶ 24-29; see also Dkt. No. 67 at 1 (citing Bd. of Trs. of W. Conference of Teamsters Pension Trust Fund v. Lafrenz, 837 F.2d 892 (9th Cir. 1988)).)

The parties' present dispute involves whether Piedmont must answer interrogatories asking Defendants to identify payments from Piedmont to Myer and Oliver.

DISCUSSION

Under the Federal Rules of Civil Procedure a party "may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.... Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." See Fed.R.Civ.P. 26(b)(1). "The scope of discovery under the Federal Rules has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matters 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) (internal quotation marks omitted). If a party fails to make disclosures or cooperate in discovery, the discovering party may move for an order compelling discovery. Fed.R.Civ.P. 37(a). The moving party bears the burden of "informing the court of the reasons that any objections are not justified" and why the information sought is relevant to the action. Oyarzo v. Tuolumne Fire Dist., 2013 WL 1758798, at *4 (E.D. Cal. Apr. 24, 2013).

A. Piedmont Interrogatories

The Board seeks to compel responses from Piedmont to the following interrogatories:

Interrogatory No. 7: IDENTIFY all payments of money of any type (including but not limited to salary, dividends, rents, and/or expense reimbursement) that YOU made to co-defendant William C. Myer Jr. from 20 January 1, 2000 to the present.
Interrogatory No. 8: IDENTIFY all payments of money of any type (including but not limited to salary, dividends, rents, and/or expense reimbursement) that YOU made to co-defendant Wendy M. Oliver, in her personal capacity or as Trustee for the Oliver Family Trust, from January 1, 2000 to the present.

(Dkt. No. 67-1.) The Board subsequently limited the scope of these interrogatories to payments made by Piedmont to Myer or Oliver from January 1, 2008 to the present. Rather than provide a complete answer to these interrogatories, Piedmont referred the Board to its answers to other interrogatories regarding rental payments made to landlords at three separate properties not including the Lakeport Property. Piedmont refused to reveal any other payments of money made to Myer or Oliver. The Board asserts that the purpose of the two interrogatories is to determine whether "(1) Piedmont made rental payment to its co-defendants for use of the Lakeport Property, (2) Piedmont made payments to its co-defendants in lieu of rent for its use of the Lakeport Property, and (3) Piedmont distributed money to Myer and Oliver in transactions to evade or avoid withdrawal liability." ( Id. at 3.)

Piedmont must identify all rental payments it made to Myer or Oliver for use of the Lakeport property because that information is relevant to the Board's claim that Myer and Oliver are jointly and severally liable for Piedmont's withdrawal liability. Under the Board's theory, Myer and Oliver are liable for the amount due if they operated a trade or business under common control with Piedmont, such trade or business being the Lakeport property. Payments made from Piedmont to Myer or Oliver for rental of the Lakeport property could help establish that Myer and Oliver operated such a trade or business at the Lakeport property and that this business was under common control with Piedmont. The Court rejects Piedmont's contention that rental payments it made in relation to the Lakefront Property are irrelevant since the first amended complaint, which was the operative complaint at the time the interrogatories were answered, does not include any allegation regarding the Lakeport Property. Over a month ago, the Board filed an amended complaint that included allegations regarding the Lakeport Property; indeed, it focuses on the Lakeport Property. Piedmont must supplement its answers so they are responsive to the new allegations.

Piedmont's additional arguments to the contrary are unpersuasive. Piedmont asserts that the request for rental payments is cumulative because the Board can simply look to Myer's and Oliver's tax returns, which have been produced in this litigation, to figure out what payments Piedmont made to them. However, it is undisputed the tax returns provide only a lump sum amount for rent received for the Lakeport property. Because the returns do not identify the renter making the payments, the returns are no substitute to Piedmont directly revealing rental payments it made to Myer or Oliver. Further, while Piedmont asserts that Defendants have produced bank statements "clearly showing the rents received by Myer and Oliver from Piedmont" (Dkt. No. 67 at 7), the Board denies receiving any such statements ( id. at 3 n.6). Finally, Piedmont provides no non-conclusory argument as to why identifying rental payments it made to Myer and Oliver would ...


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