Travelers Commercial Cas. Co. v. Sielfleisch Roofing, Inc.

• Court: U.S. District Court — Eastern District of Missouri
• Writing for the Court: David D. Noce
• Decision Date: 07 May 2013
• Docket Number: No. 4:12 CV 1550 DDN,4:12 CV 1550 DDN
• Citation: Travelers Commercial Cas. Co. v. Sielfleisch Roofing, Inc., No. 4:12 CV 1550 DDN (E.D. Mo. May 07, 2013)
• Parties: TRAVELERS COMMERCIAL CASUALTY COMPANY, Plaintiff, v. SIELFLEISCH ROOFING, INC. et al., Defendants.

TRAVELERS COMMERCIAL CASUALTY COMPANY, Plaintiff,

v.SIELFLEISCH ROOFING, INC. et al., Defendants.

No. 4:12 CV 1550 DDN

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

Signed on May 7, 2013

MEMORANDUM & ORDER

This action is before the court on the motions of defendants Sielfleisch Roofing, Inc., Mark Sielfleisch, and Lynette Guignard to quash the subpoenas plaintiff Travelers Commercial Casualty Company issued to Concord Bank and to accountants Thomas W. Cunniff, LLC and James T. O'Brien. (Docs. 25, 26.) The court heard oral argument on May 3, 2013.

I. BACKGROUND

On August 8, 2012, plaintiff Travelers Commercial Casualty Company commenced this action against defendants Sielfleisch Roofing, Inc., Mark Sielfleisch, and Lynette Guignard. (Doc. 1.) According to the complaint, the following occurred. Plaintiff is a stock insurance company organized under Connecticut law. (Id. at ¶ 2.) Defendant Sielfleisch Roofing, Inc. is a corporation organized under Missouri law. (Id. at ¶ 3.) Defendants Mark Sielfleisch and Lynette Guignard are Missouri citizens and the principals and the sole supervisors and executives of Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance and Repair, Inc. (Id. at ¶¶ 4, 20.)

Plaintiff issued a workers' compensation and employer liability insurance policy to Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance and Repair, Inc. to cover the period of May 9, 2003 to May 9, 2004. (Id. at ¶ 8.) On February 6, 2004, plaintiff canceled the policy due to a failure to cooperate with plaintiff's auditor. (Id. at ¶ 8.) Subsequently, plaintiff billed Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance and Repair, Inc. for overdue premiums, but they refused to pay. (Id. at ¶¶ 10-11.)

On July 28, 2009, plaintiff filed suit against Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance and Repair, Inc. in Missouri circuit court to recover the unpaid premiums. (Id. at ¶ 12.) On December 9, 2010, the circuit court awarded plaintiff $145,412.83. (Id. at ¶ 14.)

On February 15, 2011, counsel for Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance and Repair, Inc. e-mailed plaintiff's counsel, stating for the first time that neither corporation had actively conducted business for several years and that the value of their aggregate assets was $25,000. (Id. at ¶ 21, Doc. 1-1.) Thereafter, Mark Sielfleisch and Lynette Guignard stated that they formed Sielfleisch Roofing, Inc. to take advantage of preferential contracting opportunities for women-owned businesses. (Doc. 1 at ¶ 23.) However, the Missouri Office of Equal Opportunity reports no record of defendants applying for or receiving certification as a women-owned business. (Id. at ¶ 23.)

Plaintiff alleges successor liability and piercing the corporate veil against defendant Sielfleisch Roofing, Inc. (Id. at ¶¶ 26-48.) Plaintiff further alleges against all defendants actual and constructive fraudulent transfer, tortious interference with business expectancy, and negligent misrepresentation. (Id. at ¶¶ 49-98.)

II. DISCUSSION

Defendants move to quash the subpoena directed to Concord Bank, arguing that it is overbroad, vague, and not reasonably calculated to lead to the discovery of admissible evidence. Defendants move to quash the subpoenas directed to accountants Thomas W. Cunniff, LLC and James T. O'Brien, arguing that they violate the accountant-client privilege and the Fifth Amendment right against self-incrimination and that they are overbroad and not reasonably calculated to lead to the discovery of admissible evidence. Alternatively, defendants move that any production of documents be produced under a protective order. (Docs. 25, 26.)

A. Motion to Quash the Subpoena Directed to Concord Bank

On April 3, 2013, plaintiff issued a subpoena to Concord Bank that requested the production of:

All notes, financing statements, or other documents by which the Bank obtained any interest in the assets, inventory, equipment, or other property of any one or more of the following: Mark H. Sielfleisch Roofing, Inc.; MHS Roofing Maintenance & Repair, Inc.; Mark H. Sielfleisch; Lynette Guignard, a/k/a Lynette Sielfleisch; and Sielfleisch Roofing, Inc.

(Doc. 25-1.)

Defendants argue that the subpoena is overbroad because it does not specify a time frame. Specifically, defendants argue that because Sielfleisch Roofing, Inc. commenced operations in 2004, Mark H. Sielfleisch Roofing, Inc. ceased operations in 2004 and MHS Roofing Maintenance & Repair, Inc. ceased operations in 2009, the relevant time periods are the years 2004 and 2009.

"[P]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the claim or defense of any party." Fed R. Civ. P. 26(b)(1). Plaintiff argues that the request is relevant for their fraudulent transfer and successor liability claims.

Under Missouri law, generally, "where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the former." Roper Elec. Co. v. Quality Castings, Inc., 60 S.W.3d 708, 711 (Mo. Ct. App. 2001). However, one exception is where the purchasing corporation is merely a continuation of the selling corporation. Id. The relevant factors recognized by Missouri include "whether the business operations are identical" and "whether the transferee uses the same trucks, equipment, labor force, supervisors and name of the transferor." Id. The court finds that the documents requested by plaintiff could demonstrate these factors.

Moreover, use of the same equipment could be demonstrated, for example, by a financing statement regarding a piece of equipment with MHS Roofing Maintenance & Repair, Inc. as debtor and a second financing statement regarding the same equipment with Sielfleisch Roofing, Inc. as debtor, regardless of the dates of either financing statements. Further, fraudulent transfer and successor liability actions typically involve fact-intensive inquiries and circumstantial evidence. See e.g., id. at 713 (successor liability); Brockmann v. O'Neill, 565 S.W.2d 796, 798-99 (Mo. Ct. App. 1978) (successor liability); Allison v. Mildred, 307 S.W.2d 447, 454 (Mo. 1957); Herrold v. Hart, 290 S.W.2d 49, 55 (Mo. 1956) (fraudulent transfer). Thus, defendants' argument that the request is overbroad due to not limiting the request to particular years is without merit.

Defendants also argue that the subpoena is vague because it is unclear whether plaintiff seeks documents that transfer no interest to Concord Bank. However, the court finds that the subpoena clearly states that plaintiff does not seek such documents and the parties agree on this interpretation of the subpoena. (Doc. 25 at 2; Doc. 27 at 7-8.)

Defendants further argue that because Mark H. Sielfleisch Roofing, Inc. and MHS Roofing Maintenance & Repair, Inc. did not own real property, requesting documents regarding the Concord Bank's security interests in real property is not reasonably calculated to lead to the discovery of admissible evidence. However, plaintiff does not limit the request to real property. Further, even assuming the truth of defendants'allegation, the fact that a request will not result in the discovery of admissible evidence does not mean that the request is not reasonably calculated to do so. Demanding that discovery requests result in admissible evidence would undercut the fundamental purposes of discovery, which include narrowing the issues and obtaining knowledge of relevant facts. See Mawby v. United States, 999 F.2d 1252, 1254 (8th Cir. 1993).

Finally, defendants argue that the subpoena does not specifically describe the relevant personal property or fixtures and, therefore, the request is not reasonably calculated to lead to the discovery of admissible evidence. Considering plaintiff's claims and the scope and purposes of discovery, such specificity is not required for this subpoena.

Accordingly, defendants' motion to quash the subpoena issued to Concord Bank is denied.

B. Motion to Quash the Subpoenas Directed to Thomas W. Cunniff, LLC and James T. O'Brien

On April 3, 2013, plaintiff issued subpoenas to Thomas W. Cunniff, LLC, and James T. O'Brien that requested production of:

1. All tax returns and any other documents filed with the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of Sielfleisch Roofing, Inc. at any time.

2. All documents received from the Internal Revenue Service and/or Missouri Department of Revenue regarding Sielfleisch Roofing, Inc. at any time.

3. All tax returns any other documents filed with the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of Mark H. Sielfleisch regarding tax years from 2004-2008.

4. All documents received from the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of Mark H. Sielfleisch regarding tax years 2004-2008.

5. All tax returns and any other documents filed with the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of Lynette Guignard aka Lynette Sielfleisch for tax years 2004-2008.

6. All documents received from the Internal Revenue Service and/or Missouri Department of Revenue regarding Lynette Guignard aka Lynette Sielfleisch for tax years 2004-2008.

7. All tax returns and any other documents filed with the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of Mark H. Sielfleisch Roofing, Inc. regarding tax years 2003 to present.

8. All documents received from the Internal Revenue Service and/or Missouri Department of Revenue regarding Mark H. Sielfleisch Roofing, Inc. regarding tax years 2003 to present.

9. All tax returns and any other documents filed with the Internal Revenue Service and/or Missouri Department of Revenue by or on behalf of MHS Roofing Maintenance & Repair, Inc. regarding tax years 2003 to present.

10. All documents received

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