The opinion of the court was delivered by: Andrea M. Simonton United States Magistrate Judge
ORDER ON INFORMAL DISCOVERY CONFERENCE
This matter was before the undersigned Magistrate Judge for an informal discovery conference on January 11, 2012, with respect to the production of documents sought by Plaintiff Regions Bank from Defendant Eddy Garcia and non-party Waterman Pinnacle, Inc. The Honorable Patricia A. Seitz, United States District Judge, has referred all discovery disputes to the undersigned United States Magistrate Judge (DE # 13). Non-party Waterman Pinnacle, Inc., was represented at the hearing by counsel for Defendant Eddy Garcia; counsel stated that he would file a Notice of Appearance on behalf of Waterman Pinnacle, Inc. following the conclusion of the hearing.
Plaintiff Regions Bank has filed a two-Count Amended Complaint against Defendants Eddy Garcia, Kassandra Garcia, and EKG Family Holdings LLLP (DE # 24). In Count 1, Plaintiff seeks to recover approximately $19 million from Eddy Garcia, based upon his personal guaranty of a loan made to Waterman-St. Johns in connection with the acquisition of 2800 acres of vacant land located in St. John's County, Florida. In Count 2, Plaintiff Regions Bank seeks to set aside certain transfers of assets that it claims were fraudulent transfers under sections 222.29-30 and 726.105 of the Florida Statutes. Plaintiff contends that the purpose of these transfers was to insulate the assets of Eddy Garcia by making them exempt from execution. Specifically, as it relates to this discovery dispute, Plaintiff has alleged that the following transfers were made with the intent to hinder, delay and defraud Regions Bank:
1. The transfers by Eddy Garcia of Four LLC Membership Interests to himself and his wife as tenants by the entireties, and then to EKG Family Holdings (DE # 24 at ¶¶ 47, 49, 50).
2. The transfers of the proceeds of property sales by Waterman Pinnacle, Inc. into EKG Family Holdings (DE # 24 at ¶¶ 48, 51).
The crux of the discovery dispute can be briefly summarized as follows. Plaintiff Regions Bank contends that the discovery it seeks is directly related to the above alleged fraudulent transfers since the requests seek to determine information concerning the transfers, and to trace the proceeds of the allegedly fraudulent transfers so that the Court can grant meaningful relief. Defendant Eddy Garcia and non-party Waterman Pinnacle contend that the requests are thinly disguised improper attempts to obtain discovery in aid of execution of a judgment before a judgment has been obtained; and, they argue vigorously that there is insufficient evidence of fraudulent intent connected with the transfers to permit discovery to go forward.
With respect to the requests related to Waterman Pinnacle, Inc., the parties agree that Waterman Pinnacle, Inc. is a special purpose subchapter S corporation, the only business of which involved a 126-acre parcel of property in Lee County, Florida; and, that the stock of Waterman Pinnacle was initially owned only by Eddy Garcia and a third-party. Subsequently, in 2009, Eddy Garcia transferred his shares of stock in Waterman Pinnacle to himself and his wife as tenants by the entirety. Thereafter, in 2010, the property owned by Waterman Pinnacle was sold, and the proceeds of the sales were transferred into EKG Family Holdings, LLLP, an entity owned and controlled by defendants Eddy Garcia and Kassandra Garcia.
Prior to the hearing, several of the disputed requests identified in the Notice of Hearing were resolved. At the time of the hearing, Plaintiff Regions Bank sought to compel production of the following documents:
1. Documents requested in Request For Production No. 17 relating to Defendants' transfer of ownership and disposition of an estimated $5 million in the proceeds of asset sales relating to Waterman Pinnacle Inc. including:
a. documents evidencing expenses paid from the proceeds of sale of the Waterman Pinnacle properties (as requested at Garcia Depo. 149/2 - 150/5)
b. documents identifying the bank deposit of the proceeds of the sale of the Waterman Pinnacle properties (as requested at Garcia Depo. 150/16 - 151/8)
c. documents relating to the sale of the second Waterman Pinnacle Inc. parcel (as requested at Garcia Depo. 152/2 - 152/8)
2. Documents requested in Request For Production No. 11 relating to EKG Family Holdings LLLP, including: documents evidencing any encumbrances, liens or mortgages that presently exist on the 4 LLC Membership Interests or mortgages that presently exist on the 4 LLC Membership Interests or on assets owned by EKG Family Holdings LLLP (as discussed at Garcia Depo. 137/20 - 141/13)
3. Documents subpoenaed from Waterman Pinnacle Inc. relating to Eddy Garcia's transfer of his solely owned shares in Waterman Pinnacle to himself and his wife as tenants by the entireties; and the subsequent sale of real estate owned by Waterman Pinnacle, and the transfer of an estimated $5 million in cash proceeds to EKG Family Holdings LLLP. The subpoena at issue seeks production of ...