U.S. v. Hames
U.S. v. Hames
2020 WL 10139474 (N.D. Ala. 2020)
November 23, 2020
Smith Jr., Charles L., United States District Judge
Summary
The court ordered the defendants to provide supplemental responses to the private plaintiffs' interrogatories and requests for production, including ESI. The court found that the defendants' responses were inadequate and ordered them to provide further information regarding ESI, including the type of ESI, the custodians of the ESI, and the location of the ESI. The court also ordered the defendants to provide a privilege log for any ESI that was withheld, with failure to comply resulting in sanctions.
UNITED STATES OF AMERICA, Plaintiff,
v.
RANDY HAMES and HAMES MARINA d/b/a HAMES MARINA AND MOBILE HOME PARK, Defendants.
TOMEKA BARTLETT and KAYLA CARREKER, Plaintiffs,
v.
RANDY ALLAN HAMES, et al., Defendants
v.
RANDY HAMES and HAMES MARINA d/b/a HAMES MARINA AND MOBILE HOME PARK, Defendants.
TOMEKA BARTLETT and KAYLA CARREKER, Plaintiffs,
v.
RANDY ALLAN HAMES, et al., Defendants
Civil Action No. 5:18-CV-1055-CLS, Civil Action No. 5:18-cv-1096-CLS
United States District Court, N.D. Alabama, Northeastern Division
Signed
November 20, 2020
Filed November 23, 2020
Counsel
Candis A. McGowan, Lacey K. Danley, Wiggins Childs Pantazis Fisher & Goldfarb, Birmingham, AL, Robert Champ Crocker, R. Champ Crocker LLC, Cullman, AL, for Plaintiffs.Joseph E. Stott, Stott & Harrington, P.C., Gregory F. Yaghmai, Yaghmai Law LLC, Kile T. Turner, Norman Wood Kendrick & Turner, Birmingham, AL, for Defendants Randy Allan Hames, Hames Marina LLC.
Gregory F. Yaghmai, Yaghmai Law LLC, Birmingham, AL, for Defendants Christi Hames Dolbeer, Mary Catherine Hames, Jessica Hames Penner, Angela Hames Sahurie, Miranda Hames Self.
Gregory F. Yaghmai, Yaghmai Law LLC, Kile T. Turner, Norman Wood Kendrick & Turner, Birmingham, AL, for Defendant Marina Management Company LLC.
Smith Jr., Charles L., United States District Judge
ORDER
*1 These consolidated cases are before the court on the motion to compel filed by Tomeka Bartlett and Kayla Carreker (collectively, the “private plaintiffs” in Civil Action No. 5:18-cv-1096-CLS). Doc. no. 70.[1] The motion asks the court to compel defendants Randy Allan Hames and Hames Marina and Mobile Park (“Hames Marina”) to answer interrogatories and requests for production in two subject areas. First, private plaintiffs seek financial information from both defendants. Second, private plaintiffs seek non-privileged communications defendants had about this litigation or the underlying events. Each subject area of requests will be addressed in turn.
A. Financial Information
Private plaintiffs requested that defendants answer the following interrogatories regarding their finances (Note: The first number stated at the beginning of each paragraph is taken from the interrogatories served upon Randy Hames, and the bracketed number and bracketed information is taken from the interrogatories served upon Hames Marina):
10.[8.] Provide a complete list of all assets, including but not limited to real property, bank accounts, stock, mutual funds, retirement accounts, sources of income, and personal property owned solely or in part by, or for the benefit of Randy Hames [Hames Marina], from January 1, 2015 to the present, and identify the value of each asset.
11. [9.] Provide a complete list of all assets which Randy Hames [Hames Marina], or someone acting on his behalf, transferred, sold, gifted distributed, destroyed, reduced in value, etc., from January 1, 2015 to the present. This includes, but is not limited to real property, bank accounts, stocks, mutual funds, retirement accounts, cash, bonds, and personal property, owned solely or in part by, or for the benefit of Randy Hames [Hames Marina]. For each asset transaction, identify the value of the asset, date of transaction, method of transaction, and the recipient/buyer of each said asset.
12.[10.] Please identify the name and address of every financial institution (including banks, stockbrokers, retirement accounts etc.) that has held or managed any asset, owned solely or in part by, or for the benefit of Randy Hames [Hames Marina], from January 1, 2015 to the present. Please provide any additional account holders, trustees, or managers of said accounts.
13.[11.] Identify any [and] all trusts and estates in which you [Randy Hames or Hames Marina] are a grantor, trustee, [and/or] beneficiary. For each of these, please identify the date of creation, purpose, other beneficiaries, your role/responsibilities, and value of any assets contained in the same.
Doc. no. 70-1 (Private Plaintiffs' First Interrogatories and Requests for Production to Randy Hames), at 11-12 (alterations supplied); doc. no. 70-2 (Private Plaintiffs' First Interrogatories and Requests for Production to Hames Marina), at 10-11.
*2 Private plaintiffs also requested that defendants produce the following documents (Note: As stated previously, the first number stated at the beginning of each paragraph is taken from the requests for production served upon Randy Hames, and the bracketed number and bracketed information is taken from the requests for production served upon Hames Marina):
10.[9.] Produce all financial statements or loan applications prepared by or on behalf of Randy Hames, Hames Marina and/or by or on behalf of Randy Hames in conjunction with any other person or entity, from January 1, 2015 to the present, for any purpose, including to obtain a personal or business loan on their behalf or on behalf of another person, and including (without limitation) to obtain any loan secured by a mortgage.
12.[11.] Produce Tax Returns for Defendant Randy Hames [Hames Marina], and for any entity owned by Randy Hames [Hames Marina], any entity for which Randy Hames served as an officer, or any entity, trust or estate for the benefit of Randy Hames for each tax year from 2015-present, [or any entity that owns Hames Marina or any of its assets for each tax year from 2015 to the present.]
13.[12.] Produce any documents relating to any and all assets including but not limited to real property, bank accounts, stock, mutual funds, retirement accounts, sources of income, and personal property, owned solely or owned in part by, or for the benefit of Randy Hames [Hames Marina] from January 1, 2015 to the present.
14.[13.] Produce any documents relating to any assets transferred, sold, gifted, distributed, destroyed, reduced in value, etc., by Randy Hames [Hames Marina], or on behalf of Randy Hames [Hames Marina], from January 1, 2015 to the present. This includes but is not limited to, real property, bank accounts, stock, mutual funds, retirement accounts, cash and personal property, owned solely or in part by, or for the benefit of Randy Hames [Hames Marina].
Doc. no. 70-1 (Private Plaintiffs' First Interrogatories and Requests for Production to Randy Hames), at 16-17; doc. no. 70-2 (Private Plaintiffs' First Interrogatories and Requests for Production to Hames Marina), at 15-17.
Defendants objected to the foregoing interrogatories and requests for production on four grounds: (1) the court already ruled that private plaintiffs are not entitled to discovery of defendants' financial information; (2) “tax records are subject to qualified privilege”; (3) the request is overly broad; and (4) the Alabama Fraudulent Transfer Act claim was brought solely against Randy Hames, not Hames Marina.[2]
Defendants' first (and main) objection stems from the court's order on the government's motion to compel filed in March of this year, seeking the financial information and tax records of defendants Randy Hames and Hames Marina.[3] The court granted the government's motion to compel, but ruled that Ala. Code § 6-11-23(b), which prohibits the discovery of defendants' financial information until after liability has been established and punitive damages awarded, applies to the private plaintiffs “who have willingly brought state law claims.” Doc. no. 45 (Order on Motion to Compel), at 6. Accordingly, defendants were ordered to serve their responses to the government's interrogatories under seal.
*3 Defendants have now objected to answering these interrogatories and producing financial information based on the court's order that stated private plaintiffs did not have the right to access defendants' financial information before liability has been established.[4] Private plaintiffs' requests, however, fall into the exception outlined in Alabama Code § 6-11-23(b) because the information is “otherwise discoverable” based on private plaintiffs' claim for equitable rescission under the Alabama Fraudulent Transfers Act, Ala. Code § 8-9A-4.
Private plaintiffs allege that defendant Randy Hames “fraudulently transferred his ownership of all of his properties in Cullman County, including the property on which Hames Marina, LCC [sic] was located to his daughters.”[5] Defendant Hames argues that because private plaintiffs have alleged fraudulent transfer of real estate only, and he has provided “copies of all deeds to all the property that Mr. Hames has owned in Cullman County since 2015,” there is no need for discovery of his financial information.[6] Even so, part of what private plaintiffs must prove when alleging a violation of the Alabama Fraudulent Transfers Act is that defendant's “remaining assets were unreasonably small in relationship to the business or transaction.” APJI 18.21. To prove that, private plaintiffs need access to defendants' relevant financial information. Accordingly, defendants' objections on this ground are OVERRULED.
Defendants' second objection is that “tax records are subject to qualified privilege,” and as support for that assertion they cite an Alabama Supreme Court decision which noted that some federal courts have recognized a privilege that “impos[ed] high standards of relevancy before parties will be ordered to reveal such records.” Ex parte Morris, 530 So. 2d 785, 788 (Ala. 1988). There are several out-of-circuit district courts that have established a heightened relevancy standard for discovery of tax returns. See, e.g., Lemanik v. McKinley Allsopp, Inc., 125 F.R.D. 602, 609 (S.D. N.Y. 1989) (holding that there is a public policy of confidentiality of tax returns, and that to require discovery a party must establish relevancy and the court must find a compelling need for the returns because the information is not otherwise discoverable); Biliske v. American Live Stock Inc., 73 F.R.D. 124, 126 n.1 (W.D. Okla. 1977) (observing that there is a public policy against unnecessary disclosure of tax returns). The Eleventh Circuit, however, has “not required a showing of compelling need before tax information may be obtained by a party in discovery, but instead [has] determined that such information need be only arguably relevant.” Erenstein v. Securities & Exchange Commission, 316 F. App'x 865, 869-70 (11th Cir. 2008) (alteration supplied) (citing Maddow v. Procter & Gamble Co., Inc., 107 F.3d 846, 853 (11th Cir. 1997)). Therefore, this objection also is OVERRULED.
Defendant's third objection is that the request is overly broad, because it requests financial information going back to January 1, 2015, “more than three years before Randy Hames was allegedly on notice that he might be subject to civil lawsuits.”[7] Private plaintiffs deny that the request is overly broad, saying that they need to know the difference between defendants' assets “before and after the transactions at issue in 2018.”[8] Balancing defendants' burden of production with private plaintiffs' need for a comparison point in the information, the discovery time frame will be limited to October 2016, a year before the first private plaintiff began to rent from Randy Hames, through the present.
*4 Defendants' final objection is that the claim for equitable rescission under the Alabama Fraudulent Transfer Act was brought solely against Randy Hames, not Hames Marina.[9] Private plaintiffs argue that Randy Hames was the sole owner and operator of Hames Marina, and that the allegation is that Randy Hames fraudulently transferred all of his properties, including Hames Marina.[10] While the language of the complaint does not clearly allege that Hames Marina as a corporation fraudulently transferred assets, evidence of financial dealings and transfer of the Marina itself will likely show up in the Marina's financial documents. Therefore, defendants' objections on this ground are OVERRULED.
B. Communications Regarding Litigation and Underlying Events
Private plaintiffs also seek any non-privileged communications defendants had with any party or non-party about the litigation or the underlying events.[11] Private plaintiffs requested that defendants answer the following interrogatory (Note: The first number stated at the beginning of each paragraph is taken from the interrogatories served upon Randy Hames, and the bracketed number and bracketed information is taken from the interrogatories served upon Hames Marina):
8.[6.] Please provide the name of each and every person Randy Hames, [and/or any agent of Hames Marina LLC,] and/or his [its] representatives and agents have spoken to about, or relating in any way to, Plaintiffs, aggrieved individuals, or this lawsuit and/or the claims therein, the date of communication, and whether a written or recorded statement was taken.
Doc. no. 70-1 (Private Plaintiffs' First Interrogatories and Requests for Production to Randy Hames), at 10; doc. no. 70-2 (Private Plaintiffs' First Interrogatories and Requests for Production to Hames Marina), at 9-10.
Private plaintiffs also requested that defendants produce the following documents (Note: As stated previously, the first number stated at the beginning of each paragraph is taken from the requests for production served upon Randy Hames, and the bracketed number and bracketed information is taken from the requests for production served upon Hames Marina):
6.[5.] Produce all documents that are in any way related to the Plaintiffs' claims, the Defendants' defenses, or the Defendants' investigation into Plaintiffs' claims. These include but are not limited to, statements (including audio and video recordings) and any documents relating to any such statements, including notes of any such statements, whether signed or unsigned, communications, emails, voicemails, text messages, Facebook messages, call records, handwritten notes, memos, etc.
7.[6.] Produce all documents relating to the communications identified in Interrogatory Number 8[6], including, but not limited to, emails, voicemails, text messages, Facebook messages, call records, handwritten notes, etc.
Doc. no. 70-1 (Private Plaintiffs' First Interrogatories and Requests for Production to Randy Hames), at 14-15; doc. no. 70-2 (Private Plaintiffs' First Interrogatories and Requests for Production to Hames Marina), at 14-15.
Defendants' objections are three-fold: (1) private plaintiffs are seeking privileged information and documents; (2) defendants have already produced any relevant, non-privileged documents; and (3) the request is overly broad.[12]
*5 First, defendant Randy Hames contends that the conversations he had with his daughters all occurred while his attorneys were present, and, thus, are subject to privilege.[13] He further contends that, even though he objected on privilege grounds, he did not need to produce a privilege log because it was defense counsel's understanding that private plaintiffs were not seeking discovery of conversations defendant Hames had with his attorneys.[14]
Defendant Hames also admits to discussing the allegations with his daughters (seemingly without attorneys present), but contends that he cannot produce any of the communications because he speaks to his daughters daily on a variety of topics, he does not memorialize these conversations in writing, and he cannot remember each and every conversation he has had with them over the past few years.[15] Private plaintiffs argue that they have “information to believe” that there are text and call records of conversations between Hames and his daughters that they should be compelled to produce.[16]
The objection on privilege grounds is OVERRULED, and defendants are ORDERED to conduct a search for any non-privileged records of texts, emails, and telephone calls discussing the allegations, the litigation, or the plaintiffs, and produce those documents or a privilege log of any documents or communications they believe to be privileged.
Second, defendant Randy Hames objects on the grounds that any relevant documents have already been produced, but fails to identify those documents. That objection is OVERRULED, and defendant Randy Hames is ORDERED to identify the Bates numbers of those documents for private plaintiffs.
Third, defendant Hames Marina objects to the request to produce “all documents that are in any way related to the Plaintiff's claim, the Defendants' defense, or the Defendants' investigation into Plaintiffs' claim” as overly broad. The next sentence of the request, however, narrows the production to communications. That objection is OVERRULED.
CONCLUSION
All of defendants objections are OVERRULED as stated above, except the discovery of defendants' financial information is limited to the time frame of October, 2016, to the present. Defendants are ORDERED to produce a privilege log of all responsive communications.
DONE and ORDERED this 20th day of November, 2020.
Footnotes
Nota bene: Unless otherwise noted, all document numbers cited in this Order will refer to the numbers imprinted upon pleadings listed on the docket sheet for the first of these consolidated actions, i.e., United States v. Randy Hames, et al., 5:18-cv-1055-CLS.
See doc. no. 70-6 (Randy Hames's Supplemental Discovery Responses to Private Plaintiffs' Interrogatories and Requests for Production); doc. no. 70-7 (Hames Marina's Supplemental Discovery Responses to Private Plaintiffs' Interrogatories and Requests for Production).
Doc. no. 58 (Amended Complaint), in 5:18-cv-1096-CLS, at ¶¶ 120-22 (alteration supplied).
Doc. no. 74 (Response to Motion to Compel), at 6.
Doc. no. 74 (Response to Motion to Compel), at 8.
Doc. no. 70 (Motion to Compel), at 18.
See doc. no. 70-7 (Hames Marina's Supplemental Response to Private Plaintiffs' Interrogatories and Requests for Production), at 4.
Doc. no. 70-6 (Randy Hames's Supplemental Responses to Private Plaintiffs' Interrogatories and Requests for Production), at 5, 7-8; doc. no. 70-7 (Hames Marina's Supplemental Responses to Private Plaintiffs' Interrogatories and Requests for Production), at 3, 5.