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LLC v. Cabot

United States District Court, S.D. Florida

June 5, 2018

TIC PARK CENTER, 9 LLC, a Delaware limited liability company, Plaintiff,
MICHAEL MANUEL CABOT, et al., Defendants.


          EDWIN G. TORRES United States Magistrate Judge

         This matter is before the Court on TIC Park Center, 9 LLC's (“Plaintiff”) motion to compel against Mark Wojnar (“Mr. Wojnar”), Patricia Wojnar (“Mrs. Wojnar”) (collectively, the “Wojnars”), and Jeffrey K. Miller (“Mr. Miller”), Park Centre Med-Suites, LLC, Gardens Med-Suites, LLC, and Medical Practice Operations, Inc. (collectively, the “Miller Defendants”). [D.E. 162]. The Miller Defendants responded to Plaintiff's motion on May 22, 2018 [D.E. 163] to which Plaintiff replied on May 30, 2018.[1] [D.E. 164]. Therefore, Plaintiff's motion is now ripe for disposition. After careful consideration of the motion, relevant authority, and for the reasons discussed below, Plaintiff's motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         Plaintiff commenced this action to seek remedies in relation to a 2014 loss of a multi-million dollar investment in commercial property (the “Property”) in Miami Gardens, Florida. The gist of Plaintiff's Complaint is that the Miller Defendants engaged in leasing schemes to steal money from the Property and then concealed the leasing schemes and aided the Property's ultimate loss to foreclosure.

         Plaintiff is a qualified and accredited investor who purchased a tenant in common interest in the Property in 2007. As part of that purchase, Plaintiff entered into a property and asset management agreement regarding the Property with Mariner Property Management Services, LLC, which was controlled by Cabot and Mr. Wojnar. Mariner Property Management Services, LLC managed the Property from 2007 until April 2011, when Plaintiff and other tenants in common selected a new manager for the Property. Midgard Management, Inc. began managing the Property in April 2011.

         Plaintiff alleges that Mariner Property Management Services, LLC, Cabot and Mr. Wojnar violated their duties under the Property Management Agreement and a separate Tenant in Common Agreement by entering into two fraudulent leases with Park Center Med-Suites, LLC and Garden Med-Suites, LLC in 2010 - who then subleased the Property to other tenants. Cabot and Mr. Wojnar purportedly used the Mariner Entities as a facade for their own personal economic benefit and harbored monies wrongfully taken from Plaintiff's Property, including through an entity established in their wives' names.

         As a result of those subleases, Plaintiff alleges that $130, 000 in rental income that otherwise would have been paid to the Property between 2011 and 2012 was diverted from the Property to the owner of those two entities, Mr. Miller, and $164, 848.59 in broker commissions was paid to WTK Realty, LLC, which Plaintiff alleges were disguised payments of Property income to Cabot and Mr. Wojnar. In other words, Mr. Miller allegedly acted through alter egos that made payments of unlawfully obtained monies to Miller's primary business entity, Medical Practice Operations, Inc. (“MPO”). After Midgard Management, Inc. took over the management of the Property in April 2011, it brought eviction actions against Park Centre Med-Suites, LLC and Garden Med-Suites, LLC.

         Among other defenses to Plaintiff's complaint, the Miller Defendants claim (1) that their actions are protected by the business-judgment rule, (2) that their actions are commercially reasonable, (3) that the Property suffered from the recent economic recession rather than misconduct, and (4) that there was inadequate capital for the Property to meet its financial obligations.[2]

         II. ANALYSIS

         There are two issues to address in Plaintiff's motion to compel. The first issue is directed against the Miller Defendants and the Wojnars for their failure to cooperate in producing their income tax returns. As background, Plaintiff's motion relates to a prior Order that we issued on February 12, 2018 [D.E. 147], where we found that income tax returns were relevant to the disposition of this case. We therefore granted Plaintiff's prior motion and compelled the Wojnars to provide written authorization forms for the release of their tax returns within seven (7) days from the date of that Order. The second issue presented is Plaintiff's motion to compel better responses and documents from Mrs. Wojnar because she failed to timely respond to Plaintiff's discovery requests or produce a privilege log. We will address both issues in turn.

         We begin with the first issue that the Miller Defendants and the Wojnars failed to provide their income tax returns. In our February 12, 2018 Order, we compelled the Wojnars to execute authorization forms for the release of their income tax returns by February 19, 2018. Neither timely executed a release. Plaintiff claims that when they finally did, the authorization forms were defective and that the Internal Revenue Service (the “IRS”) rejected them. Plaintiff suggests that the Wojnars either deliberately misspelled their names on the authorization forms or that the IRS rejected the returns for another reason. As such, Plaintiff alleges that the Wojnars have refused to cooperate in obtaining their income tax returns and that they must be compelled to provide additional authorization forms.

         As an initial matter, Plaintiff's motion to compel against the Wojnars is unclear because it makes conclusory assertions that the Wojnars knowingly filed defective authorizations and then retreats from that accusation to allege that the reason for the IRS denial is still unknown. In any event, it appears that the Wojnars have not provided revised authorization forms for their income tax returns once it became known on April 13, 2018 that the IRS rejected the initial request. Because revised authorization forms are necessary to obtain the Wojnars' income tax returns, Plaintiff's motion to compel is GRANTED and the Wojnars are compelled to provide the necessary items within seven (7) days from the date of this Order.

         As for the Miller Defendants, Plaintiff suggests that the release of their tax returns have encountered an administrative delay and that they have refused to (1) place any phone calls to the IRS, (2) obtain the items from accountants, or (3) submit written taxpayer requests to the IRS. Because the Miller Defendants have failed to produce the information requested, Plaintiff concludes that its motion to compel must be granted.

         Plaintiff's motion against the Miller Defendants fails because they have fully complied with their discovery obligations. By Plaintiff's own admission, the Miller Defendants signed their authorization forms and provided them to Plaintiff. It appears that Plaintiff wants the Miller Defendants to do more to expedite the process, but the time needed to process the returns is within the sole purview of the IRS - not the Miller Defendants. In other words, there is nothing left for the Miller Defendants to do. And although the IRS has not moved swiftly in producing the tax returns requested, the Miller Defendants have ...

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