ORDER GRANTING IN PART PLAINTIFFS’ MOTION FOR SANCTIONS [ECF No. 87]

*1 Plaintiffs filed these proceedings supplementary arising from a $3.5 million judgment against Defendant John Mark Ossenmacher. They are trying to set aside allegedly fraudulent transfers of interests in purchase and sale contracts for real property located at 17 Golfview Road, Palm Beach, Florida (“the Property”) as well as the proceeds of the sale of the Property. They have filed a five-count Complaint under the Florida Uniform Fraudulent Transfers Act against John Ossenmacher, Jason Ossenmacher, and Julia Mellerski (“the Individual Defendants”) as well as Transfer Trust, LLC, and OWM, LLC (“the Corporate Defendants”). ECF No. 1.

FACTS ALLEGED IN COMPLAINT

In March 2014, The Digital Trust contracted to purchase the Property for $8,950,000 (“the 2014 Purchase Contract”). ECF No. 1-9; ¶¶40-41.[1] A deposit of $100,000 was paid, with the balance owed as a balloon payment due on or before June 3, 2016. Id. The buyer was also required to make the Property's mortgage payments. ¶41.

Between June 1, 2014, and March 1, 2016, Central Fund Holdings, LLC, (“CFH”) paid all but three of the $19,047.28 monthly mortgage payments on the Property. ¶45. Digital Learning, another entity affiliated with John Ossenmacher, made two mortgage payments. Id. Ms. Mellerski made the other. Id.

The Digital Trust had until May 2016 to close the purchase of the Property. In May 2016, The Digital Trust contracted to sell the Property (“the 2016 Sale Contract”). ¶51. In June 2016, The Digital Trust assigned its rights under the 2014 Purchase Contract and the 2016 Sale Contract to a land trust. ¶¶60, 77. Defendant Transfer Trust, LLC was the sole beneficiary of the land trust. ¶¶60-61. The land trust immediately flipped the Property for a profit. ¶¶85-88. The profits were distributed to the Transfer Trust (approximately $2,000,000). Defendant OWM, LLC ($75,000), and Ms. Mellerski ($1,350,000). ¶¶89-91. Plaintiffs allege that the sale of the Property and the disbursements of the proceeds were fraudulent transfers.

DISCOVERY HISTORY

In March 2023, Plaintiffs served interrogatories, requests for admission, and requests for production on all Defendants (“the Discovery Requests”). Disputes arose over some of the Discovery Requests. Conferral efforts did not resolve all of the disputes. On September 28, 2023, I held a telephonic discovery hearing (“the Discovery Hearing”). ECF Nos 80; 87-1 (transcripts). I ordered all Defendants “to serve written responses by November 30, 2023, and identify all responsive documents that they claim have been produced.” ECF No. 81 (the “Discovery Order”). I also ordered each of them to serve a Notice of Completion under Local Rule 26.1(e)(7). Id. I further ordered the Individual Defendants to complete the following tasks by November 30, 2023:

1. Serve amended answers to Interrogatory Nos. 1-6, 8, 9, 18-22.

2. File a motion for protective order and privilege log if they assert a privilege in response to Interrogatory No. 15.
*2 3. Respond to Plaintiffs’ Requests for Admission Nos. 14, 15 and 28-30.

Id.

On November 30, the Individual Defendants responded to the Discovery Requests. ECF No. 87-2, 87-3, 87-4, 87-8, 87-9, 87-10, 87-12, 87-13, 87-14. The Individual Defendants filed Notices of Completion on January 24, 2024.

Plaintiffs say that the Individual Defendants did not comply with the Court's Discovery Order because:

None filed a Notice of Completion by November 30, 2023;
Their November 30, 2023 written responses asserted the attorney-client privilege but they did not serve a privilege log or file a motion for protective order;
They failed to conduct a reasonable search for responsive documents;
Their amended interrogatory answers did not cure the problems with the initial answers;
They did not respond to Requests for Admission 28-30.

ECF No. 87.

Plaintiffs ask for the following sanctions under Fed. R. Civ. P. 37 against the Individual Defendants:

Deem certain facts to be established;
Deem Requests for Admission 28-30 to be admitted;
Strike their affirmative defenses;
Hold an evidentiary hearing to determine if a reasonable search was conducted;
Find a waiver of the attorney-client privilege.

Id.

The Corporate Defendants did not respond in writing to the Discovery Requests, did not provide any responsive documents, did not answer any interrogatories, and did not respond to the Requests for Admission. Plaintiffs ask for a default judgment against the Corporate Defendants. They also ask for reasonable attorneys’ fees. And, they ask that the Corporate Defendants be compelled to respond to the Discovery Requests. ECF No. 98

On January 23, 2024, four days after Plaintiffs filed their sanctions motion, the Corporate Defendants filed a Notice of Confession of Judgment. ECF No. 90. The next day, the Individual Defendants filed Notices of Completion under Local Rule 26.1(e)(7). ECF No. 91. In that pleading, they withdrew all their attorney-client privilege objections. Id. ¶1.

I have reviewed the Sanctions Motion, the Response (ECF No. 94) and the Reply (ECF No. 98). I am fully informed and this matter is ripe for decision.

LEGAL PRINCIPLES

The Court entered the Discovery Order pursuant to Fed. R. Civ. P. 37(a)(3)(B), which authorizes an order compelling an answer, designation, production, or inspection. For purposes of Rule 37(a), “an evasive or incomplete disclosure, answer, or response is treated as a failure to disclose, answer, or respond.” Fed. R. Civ. P. 37(a)(4).

Plaintiffs now seek an order under Rules 37(b)(2) and 37(d)(1)(A). Rule 37(b)(2)(A) authorizes sanctions if “a party or a party's officer, director, or managing agent ... fails to obey an order to provide or permit discovery.” In that situation, the Court “may issue further just orders.” Id. The sanctions may include:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;

(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
*3 (iii) striking pleadings in whole or in part;

(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.

Fed. R. Civ. P. 37(b)(2)(A). Rule 37(d)(1)(A) authorizes these same sanctions “if a party, after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34 fails to serve its answers, objections, or written response.” When the non-complying party is a corporation, the Court can use its contempt powers against both the corporation and the people who control it. Diversified Lenders, LLC v. Amazon Logistics, Inc., No. 8:17-MC-37-T-36AEP, 2017 WL 10350672, at *3 (M.D. Fla. Dec. 4, 2017) (J. Porcelli) (collecting cases).

By signing a discovery response, a party and its counsel certify “that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry ... the discovery response is consistent with [the Federal Rules of Civil Procedure].” Fed. R. Civ. P. 26(g)(1)(B)(i). A false certification may be the basis for sanctions. Fed. R. Civ. P. 26(g)(3).

DISCUSSION

A. Requests for Admission

Under Rule 36, a party can (1) object to a Request for Admission, (2) admit or deny the fact (in whole or in part) or (3) say it lacks enough information to admit or deny the fact, but only after making a reasonable inquiry of readily obtainable information. If the Court determines that the answer is insufficient, it can order “either that the matter is admitted or that an amended answer be served” Fed. R. Civ. P. 36(a)(6).

Here, Requests for Admission 28-30 ask:

28. Admit that Mellerski did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the Mellerski Disbursement.

29. Admit that OWM did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the OWM Disbursement.
30. Admit that Transfer Trust did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the Transfer Trust Disbursement.

ECF No. 79-1 at 20.

1. Ms. Mellerski

Ms. Mellerski initially responded and denied all three Requests. them. ECF No. 79-2 at 20-21. She has now changed her answers to:

28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, Mellerski earned all benefits that she received.

29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, OWM earned all benefits that it received.

30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust.

ECF No. 87-12 at 3-4.

2. John Ossenmacher

In his initial response, John Ossenmacher claimed not to understand the questions, but said none of the disbursement had been given to him. ECF No. 79-5 at 19-20. He now objects and partially answers them:

*4 28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust.

29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust.
30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust.

ECF No. 87-13 at 3.

3. Jason Ossenmacher

In his initial response, Jason Ossenmacher said he had insufficient information to respond to Request 28. For the other two Requests, he claimed not to understand the questions, but said that none of the distributed money had been given to John Ossenmacher. ECF No. 79-6 at 19-20. He now gives the same response as Ms. Mellerski:

28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, Mellerski earned all benefits that she received.

29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, OWM earned all benefits that it received.
30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust.

ECF No. 87-14 at 3.

4. Remedy

At the discovery hearing, the Court explained:

It is perfectly clear to me what is being asked for. And it is perfectly clear to me that it has not been answered. The question is, “What consideration was given?” Mr. Ossenmacher Senior gave Ms. Mellerski the disbursement. What did Mr. [sic] Mellerski give back, if anything, in return for that?

[Plaintiffs’ counsel confirmed that the Court had correctly interpreted the Requests for Admission.]
[RFA] 29 asks the same question, about the OWM disbursement. And 30 asks the same thing about the Transfer Trust disbursement. It's a simple question: Was there any consideration given in return for those?

ECF No. 87-1 at 22-23. The Court ordered the Individual Defendants to respond to Requests for Admission 28-30.

John Ossenmacher again objected on the basis that the Requests incorrectly assumed that he owned OWM and/or owned or was associated with Transfer Trust. He provided no further response. Ms. Mellerski and Jason Ossenmacher made the same objections. For Requests 28 and 29, they added that Ms. Mellerski and OWM earned whatever distribution they received.

I overrule the current objections made by the Individual Defendants to Requests for Admission 28-30 as irrelevant and non-responsive.

Plaintiffs allege John Ossenmacher controlled the entity making the distributions. They can attempt to prove that fact through other evidence. These Requests for Admission 28-30 are not directed to that fact. They do not ask, directly or implicitly, whether John Ossenmacher made the distributions, nor do they ask if he controlled or was associated with the entity that made them or the entities that received them. They do not ask if Ms. Mellerski or OWM earned whatever distribution they got. They ask only whether John Ossenmacher got anything as a consequence of Ms. Mellerski, OWM, and Transfer Trust getting their distributions. That question is relevant to whether reasonably equivalent value was given in exchange for the distributions, which is an element of one or more of the causes of action in the Complaint. See Fla. Stat. §§ 726.105, 726.106.

*5 Plaintiffs ask that “the factual matters embraced by RFAs 28-30 should be deemed established.” ECF No. 87 at 10. I will not award that remedy, yet. In reviewing the transcript of the discovery hearing, I note that the Court referred to John Ossenmacher making the distribution to Ms. Mellerski. Because that reference may have confused the Individual Defendants’ understanding of Requests 28-30, I will give them one last chance to respond to those Requests as I have now clarified them. Failure to properly respond to these Requests for Admission will result in the Court deeming them admitted and proven for purposes of this case.

B. Notice of Completion

Local Rule 26.1(e)(7) requires a party responding to a Request for Production to serve a Notice of Completion when it produces “the last of the documents or other materials that are responsive to the request that are not being withheld pursuant to an objection.” The Individual Defendants say that the Discovery Order did not set a deadline for filing the Notice of Completion and, in any event, they have each now filed one. I agree with the Individual Defendants that the Discovery Order was ambiguous about the deadline. Regardless, Plaintiffs have not shown any prejudice from the timing of the Notices of Completion.

C. Rule 26(g) Compliant Search

Despite the Notice of Completion, Plaintiffs claim that Defendants did not conduct a reasonable search for records that complied with Rule 26(g). They say only 55 documents were produced, all of which came from Plaintiffs’ document production. They point out that the Individual Defendants answered at least 18 Requests for Production by saying they had no responsive documents. They ask for an evidentiary hearing on this issue. The Individual Defendants did not object in their Response.

I decline to hold a hearing at this time. Instead, Plaintiffs may serve up to three supplemental interrogatories on each Individual Defendants asking about the scope of the search that they conducted before serving their written discovery responses. These supplemental interrogatories shall be in addition to the 25 interrogatories authorized by Fed. R. Civ. P. 33(a)(1). I will also add 30 minutes to each Individual Defendants’ deposition to allow time to explore this topic. After these facts are more fully developed, Plaintiffs may seek an additional remedy if they believe it is warranted.

D. Attorney-Client Privilege

In their November 30, 2023 written responses to the Requests for Production, the Individual Defendants asserted the attorney-client privilege in response to Requests for Production 1, 30, and 31. ECF Nos. 87-2, 87-3, 87-4. They also asserted the attorney-client privilege in their November 30, 2023 written answers to Interrogatories 4 and 15. ECF Nos. 87-8, 87-9, 87-10. In their Notice of Completion two months later, they withdrew these privilege objections. ECF No. 91 ¶1. By withdrawing those objections, Defendants have waived any attorney-client privilege for the subject matters of the Discovery Requests. E.g., Kleiman v. Wright, No. 18-80176-CV, 2020 WL 1139067, at *5 (S.D. Fla. Mar. 9, 2020) (J. Reinhart) (privilege waived if not timely asserted) report and recommendation adopted 2020 WL 1849407 (S.D. Fla. Apr. 13, 2020) (J. Bloom).

E. Interrogatories

The Discovery Order required amended responses to Interrogatories 1-6, 8, 9, and 18-22. Plaintiffs say that the Individual Defendants’ amended responses are still non-responsive and evasive, and that some were not changed from the earlier version. See ECF Nos. 87-8, 87-9, 87-10. The Defendants do not address this argument in their Response, other than to say, “Contrary to the Plaintiffs’ assertions, the Court did not blanket order removal of all objections, but merely overruled objections to Interrogatory Nos. 18-22.” ECF No. 94 at 3.

*6 As a remedy, Plaintiffs ask that facts be deemed admitted and that seven Affirmative Defenses be stricken.

1. The Individual Interrogatories

Unless otherwise noted, all three Individual Defendants gave materially identical responses to each interrogatory.

Interrogatory 1 asks, “Please state the business purpose of CFH, and identify its ownership, state of incorporation (or organization), management, all persons who have had authority to direct its actions, employees, customers, assets and liabilities.”

The supplemental responses all say, “CFH was used for any kind of investment opportunities including but not limited to lending money to others. CFH had no involvement with the subject matter of this case.” ECF No. 87-11 at 1.

This response is evasive and not responsive. It does not identify the ownership of CFH, its state of incorporation, management, persons having control over the entity, its employees, customers, assets, and liabilities.

Interrogatory 2 asks for the same information as Interrogatory 1 but for Digital Trust. The supplemental responses all say, “The Digital Trust was a place holder used in the transaction for the property until the full details and likelihood of the transaction materializing could be established. Responding Party does not recall The Digital Trust ever being incorporated.” Id. at 2.

This response is evasive and not responsive and is essentially identical to the prior response that was found insufficient. It does not identify the ownership of Digital Trust, its management, persons having control over the entity, its employees, customers, assets, and liabilities.

Interrogatory 3 asks for the same information as Interrogatory 1 but for Digital Learning. The supplemental responses all say, “Digital Learning was a company that was set up to provide digital learning to lower income families.” Id. at 3. The supplemental response is evasive and not responsive. It does not identify the ownership of Digital Learning, its state of incorporation, management, persons having control over the entity, its employees, customers, assets, and liabilities.

Interrogatory 4 asks for the same information as Interrogatory 1 but for Transfer Trust. The supplemental responses asserted a privilege objection that has now been withdrawn. In addition to the objection, each Individual Defendant swore that they did not have enough information to respond to the interrogatory. Id. at 4.

Interrogatory 5 (Jason Ossenmacher only) asks for the same information as Interrogatory 1 but for OWM. The supplemental response says, “OWM was managed by Responding Party for his consulting/marketing business. OWM has been defunct for some time. The organization has no employees, customers, assets or liabilities.” Plaintiffs say this response is deficient because it “provides no information regarding the ownership, state of incorporation, and persons who had authority to direct the actions of OWM.” Id. at 5.

Interrogatory 8 asks “Please explain why Ossenmacher Sr. acted on behalf of the Digital Trust in connection with the 2014 Sale Contract, but ‘J. John Ossenmacher’ purported to act on behalf of the Digital Trust in connection with the 2016 Sale Contract, the 2014 Contract Assignment and the 2016 Contract Assignment.”

*7 The supplemental responses all say, “Ossenmacher Sr. acted as an agent of the Digital Trust placeholder as he was requested to do so in order to assist with negotiations and business consulting as needed. The placeholder Digital Trust included J. John Ossenmacher in connection with the project in order to help him learn how to build his knowledge and experience in the renovation business.” Id. at 6.

The supplemental responses by Mr. Ossenmacher, Sr., and Mr. Ossenmacher, Jr., are materially identical to their prior deficient responses. They do not explain why Mr. Ossenmacher, Sr. conducted one transaction for the Digital Trust in 2014 but Mr. Ossenmacher, Jr., conducted related transactions for the Digital Trust in 2016.

Interrogatory 9 asks, “Please identify the source of the payments made pursuant to the 2014 Sale Contract, including without limitation, the monthly mortgage payments and the payment to acquire the Golfview Road Property on or about June 28, 2016.” The supplemental responses by the Individual Defendants are identical to the prior deficient responses. They claim lack of knowledge about the source of funds used to make the mortgage payments between 2014 and 2016. Id. at 7.

Interrogatory 15 asks “Please state all legal advice that Katz gave in connection with: (a) the Golfview Road Property; (b) asset protection in light of the SDNY Judgment; (c) the transactions contemplated by the 2014 Sale Contract and the 2016 Sale Contract; (d) the creation of the Golfview Road Land Trust, including without limitation, its receipt of the assets described in the 2014 Contract Assignment and the 2016 Contract Assignment; (e) the formation of Transfer Trust, including without limitation, its role as the beneficiary of the Florida Land Trust Agreement; (f) the transfers of money evidenced by the Disbursement Authorization; (g) the OWM Disbursement; (h) the Mellerski Disbursement; (i) the Transfer Trust Disbursement; (j) the preparation of the statements, schedules and statement of financial affairs in Ossenmacher Sr.’s bankruptcy case; and (k) the subpoena issued by Plaintiffs to Katz/Katz Law Firm on or about October 8, 2019.” Id. at 8.

The supplemental responses all assert an attorney-client privilege that has now been withdrawn. On this basis, none of them respond to subparts (a), (c)-(i), and (k) of the interrogatory.

Interrogatory 22 asks, “Please state the factual basis for the Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth Affirmative Defenses.” Those defenses are:

the claims have been released (2nd Affirmative Defense);
the claims have been waived (3rd Affirmative Defense);
any damages were caused by third parties (4th Affirmative Defense);
failure to mitigate damages (5th Affirmative Defense);
failure to satisfy a condition precedent (6th Affirmative Defense);
failure to satisfy necessary statutory and procedural requirements (7th Affirmative Defense);
Defendants are innocent third parties who received any distribution in good faith and for fair value. (8th Affirmative Defense).

ECF Nos. ECF Nos. 37 (Jason Ossenmacher), 38 (Mellerski), 39 (John Ossenmacher), 69 (OWM), 70 (Transfer Trust). At the discovery hearing, the Individual Defendants said they needed to develop the facts more fully before responding to this interrogatory. The Court said:

The way I always look at these is you can't assert [affirmative defenses] under Rule 11 unless you have some factual basis for them. So I understand you may not have a fully developed factual basis yet, but what was the good faith factual basis to assert them in the first place. At a minimum you should be able to say that.

*8 ...
I'll order you to provide a better response to Interrogatory 22. And if you want to condition it at the beginning by saying, you know, these are the facts currently known, and we are continuing to develop additional facts.
...
At some point you're going to take depositions. You're going to flesh out all of these interrogatory responses. I'll order a better response to Interrogatory 22 and set a deadline for that.

ECF No. 87-1 at 20-21.[2]

2. Remedies

The Individual Defendants did not comply with the Court's Order to fully answer the interrogatories.

Interrogatories 1-5 relate to the business structure of CFH, Digital Trust, Digital Learning, Transfer Trust, and OWM. Plaintiffs seek to have extensive facts deemed admitted that go far beyond the scope of the interrogatories. That remedy is too extreme. I will give Defendants one last chance to fully answer these interrogatories.[3] Should Defendants not fully respond to Interrogatories 1-5 and/or provide evidence to the contrary. I am prepared to deem at least the following facts to be proven:

• CFH, Digital Trust, Digital Learning, Transfer Trust, and OWM were shell companies with no legitimate business purposes that were controlled, jointly and severally, by all three Individual Defendants.

Interrogatory 8 asks why Jason Ossenmacher conducted the 2016 transactions for Digital Trust relating to the sale of the Property even though John Ossenmacher had conducted the transactions related to performing under the 2014 Sale Contract. Plaintiffs ask me to deem it proven that John Ossenmacher conducted all transactions relating to the sale of the Property, and did so to conceal his interest in the Property. That expansive finding is not justified by the Defendants’ failure to fully explain the respective roles of Jason and John Ossenmacher. Defendants are given one last chance to fully answer Interrogatory 8. Failure to do so may result in Jason Ossenmacher being deemed to have been the agent and alter ego of John Ossenmacher for purposes of the 2016 transactions.

Interrogatory 9 asks about the sources of funds used to purchase the Property on or about June 28, 2016, and to make the mortgage payments between 2014 and 2016. Plaintiffs argue that the responses are deficient insofar as they claim to lack knowledge of the source of the mortgage payments. Plaintiffs say that other discovery shows that Ms. Mellerski and entities controlled by John Ossenmacher made some of the mortgage payments. They ask me to deem it proven that John Ossenmacher caused CFH to make three mortgage payments, that Digital Learning made two mortgage payments, and that Ms. Mellerski made one.

A discovery respondent must conduct a reasonable search before answering. Cutlass Collieries, LLC v. Jones, 2021 WL 6135152, at *3 (S.D. Fla. Dec. 7, 2021) (J. Reinhart). I will give the Individual Defendants one last chance to reconsider their answers to Interrogatory 9 given the specific evidence cited by Plaintiffs. The Individual Defendants can persist in saying they lack sufficient knowledge about the source of the mortgage payments, but I may then allow Plaintiffs additional discovery to test whether that statement is based on an adequate search. If that sworn statement is later proven to be intentionally false, there may be consequences including but not limited to further discovery sanctions, adverse credibility findings, contempt, and/or prosecution for perjury.

*9 Interrogatory 15 asked about legal advice given by Marvin Katz. It was not answered in large part because of a privilege objection that has now been withdrawn. Plaintiffs ask that I deem it proven that Mr. Katz gave advice on “asset protection” and on how to structure the sale of the Property to conceal it from John Ossenmacher's creditors. ECF No. 87-15 at 4. In light of my ruling that the Individual Defendants have waived any attorney-client privilege with Mr. Katz, which makes him available as a witness, I decline to deem those facts proven. The Individual Defendants shall fully answer Interrogatory 15.

F. Affirmative Defenses

Plaintiffs say the Court should strike Affirmative Defenses 2-8 as a sanction for not fully answering Interrogatory 22. ECF No. 87 at 10. Defendants did not respond to this argument. Plaintiffs’ request will be granted as to Affirmative Defenses 2-7. As Judge Cannon previously ruled, what is pled as Affirmative Defense 8 is actually a denial. ECF No. 66 at 1-2.

The Complaint in this case was filed in March 2022. All Defendants waived service in May 2022. The Individual Defendants filed Answers in November 2022. ECF Nos. 37, 38, 39. The Corporate Defendants answered in January 2023. ECF Nos. 43, 44. Those Answers asserted the same eight affirmative defenses that remain in the case. By filing these pleadings, they represented to the Court that they had conducted an “inquiry reasonable under the circumstances” and that there was a factual basis for each defense. Fed. R. Civ. P. 11(b); see, e.g., Cohen v. Burlington, Inc., No. 18-CV-81420, 2020 WL 1033349, at *3 (S.D. Fla. Mar. 3, 2020) (J. Bloom) (Rule 11 sanctions can be imposed for filing a pleading with no reasonable factual basis). Discovery has been permitted in this case since at least August 2022. ECF No. 26 (Scheduling Order).

Interrogatory 22, as modified by the Discovery Order, required the Defendants to allege the basic facts that supported these defenses, without prejudice to them supplementing their response after further discovery. Their Response did not allege any facts. Moreover, the nature of the affirmative defenses indicates they are based on facts that Defendants knew or should have known when they filed this lawsuit. For example, what agreement or conduct released and/or waived Plaintiffs’ claims, which third party caused the damages, how Plaintiffs could have mitigated their damages, what condition precedent that was not satisfied, and which statutory and procedural requirements were not satisfied.

A just remedy is to strike these Affirmative Defenses. Defendants bear the burden of proof on these defenses. Discovery now closes in approximately 120 days. Plaintiffs were entitled to fair notice of the basic facts supporting the affirmative defenses so that they could plan their discovery strategy accordingly. By not having that notice, they are prejudiced. Striking the Affirmative Defenses cures that prejudice. A different conclusion applies to a denial. A denial merely puts the Plaintiff to its burden of proof, so the prejudice (if any) is less.

G. Corporate Defendants

Plaintiffs served Requests for Production, Interrogatories, and Requests for Admission in March 2023 on the Corporate Defendants’ counsel of record. ECF No. 79-1. The Corporate Defendants have not responded to any discovery, despite being specifically ordered to do so. There is no evidence in the record that they asserted any objections or claimed any privileges. They say that these issues are moot because they have agreed to have a default entered against them. They are wrong. Although they have withdrawn their Answers and agreed to a default, they remain parties to this case. As such, they remain obligated to respond to discovery. See Cloer v. Green Mountain Specialties Corp., No. 618CV999ORL40LRH, 2020 WL 11272379, at *1 (M.D. Fla. May 15, 2020) (courts routinely require defaulted defendants to respond to post-judgment discovery) (collecting cases).

*10 The Corporate Defendants are capable of responding to discovery. They have meaningfully participated in this litigation. They waived service, (ECF Nos. 11, 12), filed Answers, (ECF Nos. 43, 44, 69, 70) retained counsel, (ECF Nos. 48, 60, 61), consented to Magistrate Judge jurisdiction, (ECF No. 72), and consented to have their Answers stricken. ECF No. 90. They have appeared through counsel at hearings. In short, someone is empowered to take action and make decisions on behalf of the Corporate Defendants; those actions include responding to discovery.

Several people could be the human embodiment of the Corporate Defendants. There is evidence in the record that, at one point, John Ossenmacher controlled the Transfer Trust LLC. On June 16, 2016, Transfer Trust, LLC was incorporated in Florida. ECF No. 1-12. Public records from the Florida Secretary of State show that the Articles of Organization listed Martin V. Katz as the Manager of the LLC. The next day, “J. Ossenmacher” executed the Operating Agreement as Member of Transfer Trust, LLC. Id. The Operating Agreement listed the address for “J. Ossenmacher” as 102 NE 2nd Street, #261, Boca Raton, Florida. Id.; ¶63. In a bankruptcy filing in August 2016, John Ossenmacher swore under penalty of perjury that his address was 102 NE 2nd Street, #261, Boca Raton, Florida. ¶63; ECF No. 1-20 at 3. The current Florida Secretary of State records show that the Registered Agent for the Transfer Trust LLC is Martin V. Katz, Esq. and the Authorized Representative is Phillip R. Guerts. The Individual Defendants’ answers to interrogatories swear that Jason Ossenmacher managed OWM, LLC before it became defunct. ECF Nos. 87-8 at 5, 87-9 at 5, 87-10 at 5.

A party cannot simply ignore the discovery process and Court Orders enforcing discovery obligations. I will impose just sanctions under Rule 37(b)(2) as discussed more fully below.

WHEREFORE, it is ORDERED THAT:

Individual Defendants

1. On or before March 8, 2024, at 5:00 p.m. Eastern time:

a. the Individual Defendants may file second amended answers to Interrogatories 1-5, 8 and 9.
b. the Individual Defendants may file second amended answers to Requests for Admission 28-30.

2. The Individual Defendants have waived any privileges relating to the subject matter of the Discovery Requests, which includes all transactions related to the Property between 2014-16 and all persons and entities involved in those transactions.
3. On or before March 15, 2024, at 5:00 p.m. Eastern time, the Individual Defendants shall file a full response to Interrogatory 15.
4. The Individual Defendants’ Affirmative Defenses 2-7 are stricken.
5. Plaintiffs may serve up to three supplemental interrogatories on each Individual Defendant asking about the scope of the search that they conducted before serving their written discovery responses. These supplemental interrogatories are in addition to the 25 interrogatories authorized by Fed. R. Civ. P. 33(a)(1). Thirty (30) minutes is added to each Individual Defendant's deposition to allow for time to explore this topic.

Corporate Defendants[4]

6. The Corporate Defendants have waived any legal objections to the Plaintiffs’ discovery requests. See S.D. Fla. Local Rule 26.1(g) (objections waived unless timely asserted).
7. The Corporate Defendants have waived any privileges related to the subject matter of the Discovery Requests which includes all transactions related to the Property between 2014-16 and all persons and entities involved in those transactions. S.D. Fla. Local Rule 26.1(e)(2) (privileges waived unless timely asserted).
*11 8. All of the Plaintiffs’ Requests for Admission are admitted by the Corporate Defendants. Fed. R. Civ. P. 36(a)(3).

9. On or before March 8, 2024, at 5:00 p.m. Eastern time, the Corporate Defendants shall serve answers to the Plaintiffs’ interrogatories that are verified by a corporate officer, manager, director, or other person authorized to bind the corporation.
10. On or before March 8, 2024, at 5:00 p.m. Eastern time, the Corporate Defendants shall serve written responses indicating whether, after a reasonable search, they have any documents responsive to each of Plaintiffs’ Requests for Production. All responsive documents shall be served on Plaintiffs on or before March 15, 2024, at 5:00 p.m. Eastern time. If any of the documents qualify as business records under Federal Rule of Evidence 803(6), the production shall include a certification under Federal Rule of Evidence 902(11).

11. On or before March 29, 2024, Plaintiffs may take initial Rule 30(b)(6) depositions of the Corporate Defendants. Plaintiffs may unilaterally extend this deadline. Unless otherwise agreed by the parties, each deposition shall not exceed three hours each and shall be limited to the following topics: (1) what corporate records existed between 2014 and the present, (2) where they were kept, (3) whether they continue to exist and if so, who has them, and (4) what steps the Corporate Defendants took to identify and produce responsive documents. These depositions will be in addition to the 10 depositions permitted by Fed. R. Civ. P. 30 and are without prejudice to Plaintiffs taking a second 30(b)(6) deposition later.

The Corporate Defendants are reminded that they have a duty to produce one or more deponents who are able to provide binding testimony on these topics, even if those deponents lack personal knowledge. QBE Ins. Corp. v. Jorda Enterprises, Inc., 277 F.R.D. 676, 688-90 (S.D. Fla. 2012) (J. Goodman). “The mere fact that an organization no longer employs a person with knowledge on the specified topics does not relieve the organization of the duty to prepare and produce an appropriate designee.” Id. at 689.

12. If the Corporate Defendants fail to comply with this Order, the Court may initiate contempt proceedings against the Corporate Defendants and their officers, directors, managers, and other authorized representatives.

Fees and Costs

13. Plaintiffs are granted leave to file a separate motion for their fees and costs based on the Court's rulings.

DONE and ORDERED in Chambers this 26th day of February, 2024, at West Palm Beach in the Southern District of Florida.

Footnotes

[1]

Unless otherwise noted, the citation “¶” refers to the numbered paragraphs of the Complaint.

[2]

The transcript erroneously attributes the first paragraph to defense counsel, instead of the Court. ECF No. 87-1 at 20.

[3]

The Order as to Interrogatory 5 applies only to Jason Ossenmacher. If, in fact, after conducting an appropriate inquiry, Defendants lack sufficient information to respond truthfully to any interrogatory, they should say so.

[4]

On February 2, 2024, I ordered Plaintiffs to file a Motion for a Clerk's Entry of Default against Defendants OWM, LLC and Transfer Trust, LLC based on their confession of judgment. ECF No. 92. Plaintiffs shall file the motion by March 8, 2024.

Capitol Records, LLC v. Mellerski

Citation: 2024 WL 5433254 (S.D. Fla. 2024)

Summary: The court has ordered the defendants to provide better responses to the plaintiffs' interrogatories and has granted the plaintiffs' request to strike certain affirmative defenses. The court has also ruled that the defendants have waived any attorney-client privilege with their attorney and must fully answer an interrogatory related to legal advice given by their attorney.

Court: United States District Court, S.D. Florida

Date decided: February 26, 2024

Judge: Reinhart, Bruce E.

CAPITOL RECORDS, LLC, and CAPITOL CMG, INC., Plaintiffs, v. JULIA MELLERSKI JOHN MARK OSSENMACHER, JASON JOHN OSSENMACHER, TRANSFER TRUST, LLC, and OWM, LLC, Defendants CASE NO. 22-CV-80380-BER United States District Court, S.D. Florida Entered on FLSD Docket February 26, 2024 Reinhart, Bruce E., United States Magistrate Judge ORDER GRANTING IN PART PLAINTIFFS’ MOTION FOR SANCTIONS [ECF No. 87] *1 Plaintiffs filed these proceedings supplementary arising from a $3.5 million judgment against Defendant John Mark Ossenmacher. They are trying to set aside allegedly fraudulent transfers of interests in purchase and sale contracts for real property located at 17 Golfview Road, Palm Beach, Florida (“the Property”) as well as the proceeds of the sale of the Property. They have filed a five-count Complaint under the Florida Uniform Fraudulent Transfers Act against John Ossenmacher, Jason Ossenmacher, and Julia Mellerski (“the Individual Defendants”) as well as Transfer Trust, LLC, and OWM, LLC (“the Corporate Defendants”). ECF No. 1. FACTS ALLEGED IN COMPLAINT In March 2014, The Digital Trust contracted to purchase the Property for $8,950,000 (“the 2014 Purchase Contract”). ECF No. 1-9; ¶¶40-41.[1] A deposit of $100,000 was paid, with the balance owed as a balloon payment due on or before June 3, 2016. Id. The buyer was also required to make the Property's mortgage payments. ¶41. Between June 1, 2014, and March 1, 2016, Central Fund Holdings, LLC, (“CFH”) paid all but three of the $19,047.28 monthly mortgage payments on the Property. ¶45. Digital Learning, another entity affiliated with John Ossenmacher, made two mortgage payments. Id. Ms. Mellerski made the other. Id. The Digital Trust had until May 2016 to close the purchase of the Property. In May 2016, The Digital Trust contracted to sell the Property (“the 2016 Sale Contract”). ¶51. In June 2016, The Digital Trust assigned its rights under the 2014 Purchase Contract and the 2016 Sale Contract to a land trust. ¶¶60, 77. Defendant Transfer Trust, LLC was the sole beneficiary of the land trust. ¶¶60-61. The land trust immediately flipped the Property for a profit. ¶¶85-88. The profits were distributed to the Transfer Trust (approximately $2,000,000). Defendant OWM, LLC ($75,000), and Ms. Mellerski ($1,350,000). ¶¶89-91. Plaintiffs allege that the sale of the Property and the disbursements of the proceeds were fraudulent transfers. DISCOVERY HISTORY In March 2023, Plaintiffs served interrogatories, requests for admission, and requests for production on all Defendants (“the Discovery Requests”). Disputes arose over some of the Discovery Requests. Conferral efforts did not resolve all of the disputes. On September 28, 2023, I held a telephonic discovery hearing (“the Discovery Hearing”). ECF Nos 80; 87-1 (transcripts). I ordered all Defendants “to serve written responses by November 30, 2023, and identify all responsive documents that they claim have been produced.” ECF No. 81 (the “Discovery Order”). I also ordered each of them to serve a Notice of Completion under Local Rule 26.1(e)(7). Id. I further ordered the Individual Defendants to complete the following tasks by November 30, 2023: 1. Serve amended answers to Interrogatory Nos. 1-6, 8, 9, 18-22. 2. File a motion for protective order and privilege log if they assert a privilege in response to Interrogatory No. 15. *2 3. Respond to Plaintiffs’ Requests for Admission Nos. 14, 15 and 28-30. Id. On November 30, the Individual Defendants responded to the Discovery Requests. ECF No. 87-2, 87-3, 87-4, 87-8, 87-9, 87-10, 87-12, 87-13, 87-14. The Individual Defendants filed Notices of Completion on January 24, 2024. Plaintiffs say that the Individual Defendants did not comply with the Court's Discovery Order because: None filed a Notice of Completion by November 30, 2023; Their November 30, 2023 written responses asserted the attorney-client privilege but they did not serve a privilege log or file a motion for protective order; They failed to conduct a reasonable search for responsive documents; Their amended interrogatory answers did not cure the problems with the initial answers; They did not respond to Requests for Admission 28-30. ECF No. 87. Plaintiffs ask for the following sanctions under Fed. R. Civ. P. 37 against the Individual Defendants: Deem certain facts to be established; Deem Requests for Admission 28-30 to be admitted; Strike their affirmative defenses; Hold an evidentiary hearing to determine if a reasonable search was conducted; Find a waiver of the attorney-client privilege. Id. The Corporate Defendants did not respond in writing to the Discovery Requests, did not provide any responsive documents, did not answer any interrogatories, and did not respond to the Requests for Admission. Plaintiffs ask for a default judgment against the Corporate Defendants. They also ask for reasonable attorneys’ fees. And, they ask that the Corporate Defendants be compelled to respond to the Discovery Requests. ECF No. 98 On January 23, 2024, four days after Plaintiffs filed their sanctions motion, the Corporate Defendants filed a Notice of Confession of Judgment. ECF No. 90. The next day, the Individual Defendants filed Notices of Completion under Local Rule 26.1(e)(7). ECF No. 91. In that pleading, they withdrew all their attorney-client privilege objections. Id. ¶1. I have reviewed the Sanctions Motion, the Response (ECF No. 94) and the Reply (ECF No. 98). I am fully informed and this matter is ripe for decision. LEGAL PRINCIPLES The Court entered the Discovery Order pursuant to Fed. R. Civ. P. 37(a)(3)(B), which authorizes an order compelling an answer, designation, production, or inspection. For purposes of Rule 37(a), “an evasive or incomplete disclosure, answer, or response is treated as a failure to disclose, answer, or respond.” Fed. R. Civ. P. 37(a)(4). Plaintiffs now seek an order under Rules 37(b)(2) and 37(d)(1)(A). Rule 37(b)(2)(A) authorizes sanctions if “a party or a party's officer, director, or managing agent ... fails to obey an order to provide or permit discovery.” In that situation, the Court “may issue further just orders.” Id. The sanctions may include: (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; *3 (iii) striking pleadings in whole or in part; (iv) staying further proceedings until the order is obeyed; (v) dismissing the action or proceeding in whole or in part; (vi) rendering a default judgment against the disobedient party; or (vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. Fed. R. Civ. P. 37(b)(2)(A). Rule 37(d)(1)(A) authorizes these same sanctions “if a party, after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34 fails to serve its answers, objections, or written response.” When the non-complying party is a corporation, the Court can use its contempt powers against both the corporation and the people who control it. Diversified Lenders, LLC v. Amazon Logistics, Inc., No. 8:17-MC-37-T-36AEP, 2017 WL 10350672, at *3 (M.D. Fla. Dec. 4, 2017) (J. Porcelli) (collecting cases). By signing a discovery response, a party and its counsel certify “that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry ... the discovery response is consistent with [the Federal Rules of Civil Procedure].” Fed. R. Civ. P. 26(g)(1)(B)(i). A false certification may be the basis for sanctions. Fed. R. Civ. P. 26(g)(3). DISCUSSION A. Requests for Admission Under Rule 36, a party can (1) object to a Request for Admission, (2) admit or deny the fact (in whole or in part) or (3) say it lacks enough information to admit or deny the fact, but only after making a reasonable inquiry of readily obtainable information. If the Court determines that the answer is insufficient, it can order “either that the matter is admitted or that an amended answer be served” Fed. R. Civ. P. 36(a)(6). Here, Requests for Admission 28-30 ask: 28. Admit that Mellerski did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the Mellerski Disbursement. 29. Admit that OWM did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the OWM Disbursement. 30. Admit that Transfer Trust did not provide any value or other consideration to or for the benefit of Ossenmacher Sr. in exchange for the Transfer Trust Disbursement. ECF No. 79-1 at 20. 1. Ms. Mellerski Ms. Mellerski initially responded and denied all three Requests. them. ECF No. 79-2 at 20-21. She has now changed her answers to: 28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, Mellerski earned all benefits that she received. 29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, OWM earned all benefits that it received. 30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust. ECF No. 87-12 at 3-4. 2. John Ossenmacher In his initial response, John Ossenmacher claimed not to understand the questions, but said none of the disbursement had been given to him. ECF No. 79-5 at 19-20. He now objects and partially answers them: *4 28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. 29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. 30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust. ECF No. 87-13 at 3. 3. Jason Ossenmacher In his initial response, Jason Ossenmacher said he had insufficient information to respond to Request 28. For the other two Requests, he claimed not to understand the questions, but said that none of the distributed money had been given to John Ossenmacher. ECF No. 79-6 at 19-20. He now gives the same response as Ms. Mellerski: 28: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, Mellerski earned all benefits that she received. 29: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. owned Transfer Trust. Notwithstanding, OWM earned all benefits that it received. 30: Objection. This admission makes assumptions that are inaccurate, specifically that Osssenmacher Sr. was associated with Transfer Trust. ECF No. 87-14 at 3. 4. Remedy At the discovery hearing, the Court explained: It is perfectly clear to me what is being asked for. And it is perfectly clear to me that it has not been answered. The question is, “What consideration was given?” Mr. Ossenmacher Senior gave Ms. Mellerski the disbursement. What did Mr. [sic] Mellerski give back, if anything, in return for that? [Plaintiffs’ counsel confirmed that the Court had correctly interpreted the Requests for Admission.] [RFA] 29 asks the same question, about the OWM disbursement. And 30 asks the same thing about the Transfer Trust disbursement. It's a simple question: Was there any consideration given in return for those? ECF No. 87-1 at 22-23. The Court ordered the Individual Defendants to respond to Requests for Admission 28-30. John Ossenmacher again objected on the basis that the Requests incorrectly assumed that he owned OWM and/or owned or was associated with Transfer Trust. He provided no further response. Ms. Mellerski and Jason Ossenmacher made the same objections. For Requests 28 and 29, they added that Ms. Mellerski and OWM earned whatever distribution they received. I overrule the current objections made by the Individual Defendants to Requests for Admission 28-30 as irrelevant and non-responsive. Plaintiffs allege John Ossenmacher controlled the entity making the distributions. They can attempt to prove that fact through other evidence. These Requests for Admission 28-30 are not directed to that fact. They do not ask, directly or implicitly, whether John Ossenmacher made the distributions, nor do they ask if he controlled or was associated with the entity that made them or the entities that received them. They do not ask if Ms. Mellerski or OWM earned whatever distribution they got. They ask only whether John Ossenmacher got anything as a consequence of Ms. Mellerski, OWM, and Transfer Trust getting their distributions. That question is relevant to whether reasonably equivalent value was given in exchange for the distributions, which is an element of one or more of the causes of action in the Complaint. See Fla. Stat. §§ 726.105, 726.106. *5 Plaintiffs ask that “the factual matters embraced by RFAs 28-30 should be deemed established.” ECF No. 87 at 10. I will not award that remedy, yet. In reviewing the transcript of the discovery hearing, I note that the Court referred to John Ossenmacher making the distribution to Ms. Mellerski. Because that reference may have confused the Individual Defendants’ understanding of Requests 28-30, I will give them one last chance to respond to those Requests as I have now clarified them. Failure to properly respond to these Requests for Admission will result in the Court deeming them admitted and proven for purposes of this case. B. Notice of Completion Local Rule 26.1(e)(7) requires a party responding to a Request for Production to serve a Notice of Completion when it produces “the last of the documents or other materials that are responsive to the request that are not being withheld pursuant to an objection.” The Individual Defendants say that the Discovery Order did not set a deadline for filing the Notice of Completion and, in any event, they have each now filed one. I agree with the Individual Defendants that the Discovery Order was ambiguous about the deadline. Regardless, Plaintiffs have not shown any prejudice from the timing of the Notices of Completion. C. Rule 26(g) Compliant Search Despite the Notice of Completion, Plaintiffs claim that Defendants did not conduct a reasonable search for records that complied with Rule 26(g). They say only 55 documents were produced, all of which came from Plaintiffs’ document production. They point out that the Individual Defendants answered at least 18 Requests for Production by saying they had no responsive documents. They ask for an evidentiary hearing on this issue. The Individual Defendants did not object in their Response. I decline to hold a hearing at this time. Instead, Plaintiffs may serve up to three supplemental interrogatories on each Individual Defendants asking about the scope of the search that they conducted before serving their written discovery responses. These supplemental interrogatories shall be in addition to the 25 interrogatories authorized by Fed. R. Civ. P. 33(a)(1). I will also add 30 minutes to each Individual Defendants’ deposition to allow time to explore this topic. After these facts are more fully developed, Plaintiffs may seek an additional remedy if they believe it is warranted. D. Attorney-Client Privilege In their November 30, 2023 written responses to the Requests for Production, the Individual Defendants asserted the attorney-client privilege in response to Requests for Production 1, 30, and 31. ECF Nos. 87-2, 87-3, 87-4. They also asserted the attorney-client privilege in their November 30, 2023 written answers to Interrogatories 4 and 15. ECF Nos. 87-8, 87-9, 87-10. In their Notice of Completion two months later, they withdrew these privilege objections. ECF No. 91 ¶1. By withdrawing those objections, Defendants have waived any attorney-client privilege for the subject matters of the Discovery Requests. E.g., Kleiman v. Wright, No. 18-80176-CV, 2020 WL 1139067, at *5 (S.D. Fla. Mar. 9, 2020) (J. Reinhart) (privilege waived if not timely asserted) report and recommendation adopted 2020 WL 1849407 (S.D. Fla. Apr. 13, 2020) (J. Bloom). E. Interrogatories The Discovery Order required amended responses to Interrogatories 1-6, 8, 9, and 18-22. Plaintiffs say that the Individual Defendants’ amended responses are still non-responsive and evasive, and that some were not changed from the earlier version. See ECF Nos. 87-8, 87-9, 87-10. The Defendants do not address this argument in their Response, other than to say, “Contrary to the Plaintiffs’ assertions, the Court did not blanket order removal of all objections, but merely overruled objections to Interrogatory Nos. 18-22.” ECF No. 94 at 3. *6 As a remedy, Plaintiffs ask that facts be deemed admitted and that seven Affirmative Defenses be stricken. 1. The Individual Interrogatories Unless otherwise noted, all three Individual Defendants gave materially identical responses to each interrogatory. Interrogatory 1 asks, “Please state the business purpose of CFH, and identify its ownership, state of incorporation (or organization), management, all persons who have had authority to direct its actions, employees, customers, assets and liabilities.” The supplemental responses all say, “CFH was used for any kind of investment opportunities including but not limited to lending money to others. CFH had no involvement with the subject matter of this case.” ECF No. 87-11 at 1. This response is evasive and not responsive. It does not identify the ownership of CFH, its state of incorporation, management, persons having control over the entity, its employees, customers, assets, and liabilities. Interrogatory 2 asks for the same information as Interrogatory 1 but for Digital Trust. The supplemental responses all say, “The Digital Trust was a place holder used in the transaction for the property until the full details and likelihood of the transaction materializing could be established. Responding Party does not recall The Digital Trust ever being incorporated.” Id. at 2. This response is evasive and not responsive and is essentially identical to the prior response that was found insufficient. It does not identify the ownership of Digital Trust, its management, persons having control over the entity, its employees, customers, assets, and liabilities. Interrogatory 3 asks for the same information as Interrogatory 1 but for Digital Learning. The supplemental responses all say, “Digital Learning was a company that was set up to provide digital learning to lower income families.” Id. at 3. The supplemental response is evasive and not responsive. It does not identify the ownership of Digital Learning, its state of incorporation, management, persons having control over the entity, its employees, customers, assets, and liabilities. Interrogatory 4 asks for the same information as Interrogatory 1 but for Transfer Trust. The supplemental responses asserted a privilege objection that has now been withdrawn. In addition to the objection, each Individual Defendant swore that they did not have enough information to respond to the interrogatory. Id. at 4. Interrogatory 5 (Jason Ossenmacher only) asks for the same information as Interrogatory 1 but for OWM. The supplemental response says, “OWM was managed by Responding Party for his consulting/marketing business. OWM has been defunct for some time. The organization has no employees, customers, assets or liabilities.” Plaintiffs say this response is deficient because it “provides no information regarding the ownership, state of incorporation, and persons who had authority to direct the actions of OWM.” Id. at 5. Interrogatory 8 asks “Please explain why Ossenmacher Sr. acted on behalf of the Digital Trust in connection with the 2014 Sale Contract, but ‘J. John Ossenmacher’ purported to act on behalf of the Digital Trust in connection with the 2016 Sale Contract, the 2014 Contract Assignment and the 2016 Contract Assignment.” *7 The supplemental responses all say, “Ossenmacher Sr. acted as an agent of the Digital Trust placeholder as he was requested to do so in order to assist with negotiations and business consulting as needed. The placeholder Digital Trust included J. John Ossenmacher in connection with the project in order to help him learn how to build his knowledge and experience in the renovation business.” Id. at 6. The supplemental responses by Mr. Ossenmacher, Sr., and Mr. Ossenmacher, Jr., are materially identical to their prior deficient responses. They do not explain why Mr. Ossenmacher, Sr. conducted one transaction for the Digital Trust in 2014 but Mr. Ossenmacher, Jr., conducted related transactions for the Digital Trust in 2016. Interrogatory 9 asks, “Please identify the source of the payments made pursuant to the 2014 Sale Contract, including without limitation, the monthly mortgage payments and the payment to acquire the Golfview Road Property on or about June 28, 2016.” The supplemental responses by the Individual Defendants are identical to the prior deficient responses. They claim lack of knowledge about the source of funds used to make the mortgage payments between 2014 and 2016. Id. at 7. Interrogatory 15 asks “Please state all legal advice that Katz gave in connection with: (a) the Golfview Road Property; (b) asset protection in light of the SDNY Judgment; (c) the transactions contemplated by the 2014 Sale Contract and the 2016 Sale Contract; (d) the creation of the Golfview Road Land Trust, including without limitation, its receipt of the assets described in the 2014 Contract Assignment and the 2016 Contract Assignment; (e) the formation of Transfer Trust, including without limitation, its role as the beneficiary of the Florida Land Trust Agreement; (f) the transfers of money evidenced by the Disbursement Authorization; (g) the OWM Disbursement; (h) the Mellerski Disbursement; (i) the Transfer Trust Disbursement; (j) the preparation of the statements, schedules and statement of financial affairs in Ossenmacher Sr.’s bankruptcy case; and (k) the subpoena issued by Plaintiffs to Katz/Katz Law Firm on or about October 8, 2019.” Id. at 8. The supplemental responses all assert an attorney-client privilege that has now been withdrawn. On this basis, none of them respond to subparts (a), (c)-(i), and (k) of the interrogatory. Interrogatory 22 asks, “Please state the factual basis for the Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth Affirmative Defenses.” Those defenses are: the claims have been released (2nd Affirmative Defense); the claims have been waived (3rd Affirmative Defense); any damages were caused by third parties (4th Affirmative Defense); failure to mitigate damages (5th Affirmative Defense); failure to satisfy a condition precedent (6th Affirmative Defense); failure to satisfy necessary statutory and procedural requirements (7th Affirmative Defense); Defendants are innocent third parties who received any distribution in good faith and for fair value. (8th Affirmative Defense). ECF Nos. ECF Nos. 37 (Jason Ossenmacher), 38 (Mellerski), 39 (John Ossenmacher), 69 (OWM), 70 (Transfer Trust). At the discovery hearing, the Individual Defendants said they needed to develop the facts more fully before responding to this interrogatory. The Court said: The way I always look at these is you can't assert [affirmative defenses] under Rule 11 unless you have some factual basis for them. So I understand you may not have a fully developed factual basis yet, but what was the good faith factual basis to assert them in the first place. At a minimum you should be able to say that. *8 ... I'll order you to provide a better response to Interrogatory 22. And if you want to condition it at the beginning by saying, you know, these are the facts currently known, and we are continuing to develop additional facts. ... At some point you're going to take depositions. You're going to flesh out all of these interrogatory responses. I'll order a better response to Interrogatory 22 and set a deadline for that. ECF No. 87-1 at 20-21.[2] 2. Remedies The Individual Defendants did not comply with the Court's Order to fully answer the interrogatories. Interrogatories 1-5 relate to the business structure of CFH, Digital Trust, Digital Learning, Transfer Trust, and OWM. Plaintiffs seek to have extensive facts deemed admitted that go far beyond the scope of the interrogatories. That remedy is too extreme. I will give Defendants one last chance to fully answer these interrogatories.[3] Should Defendants not fully respond to Interrogatories 1-5 and/or provide evidence to the contrary. I am prepared to deem at least the following facts to be proven: • CFH, Digital Trust, Digital Learning, Transfer Trust, and OWM were shell companies with no legitimate business purposes that were controlled, jointly and severally, by all three Individual Defendants. Interrogatory 8 asks why Jason Ossenmacher conducted the 2016 transactions for Digital Trust relating to the sale of the Property even though John Ossenmacher had conducted the transactions related to performing under the 2014 Sale Contract. Plaintiffs ask me to deem it proven that John Ossenmacher conducted all transactions relating to the sale of the Property, and did so to conceal his interest in the Property. That expansive finding is not justified by the Defendants’ failure to fully explain the respective roles of Jason and John Ossenmacher. Defendants are given one last chance to fully answer Interrogatory 8. Failure to do so may result in Jason Ossenmacher being deemed to have been the agent and alter ego of John Ossenmacher for purposes of the 2016 transactions. Interrogatory 9 asks about the sources of funds used to purchase the Property on or about June 28, 2016, and to make the mortgage payments between 2014 and 2016. Plaintiffs argue that the responses are deficient insofar as they claim to lack knowledge of the source of the mortgage payments. Plaintiffs say that other discovery shows that Ms. Mellerski and entities controlled by John Ossenmacher made some of the mortgage payments. They ask me to deem it proven that John Ossenmacher caused CFH to make three mortgage payments, that Digital Learning made two mortgage payments, and that Ms. Mellerski made one. A discovery respondent must conduct a reasonable search before answering. Cutlass Collieries, LLC v. Jones, 2021 WL 6135152, at *3 (S.D. Fla. Dec. 7, 2021) (J. Reinhart). I will give the Individual Defendants one last chance to reconsider their answers to Interrogatory 9 given the specific evidence cited by Plaintiffs. The Individual Defendants can persist in saying they lack sufficient knowledge about the source of the mortgage payments, but I may then allow Plaintiffs additional discovery to test whether that statement is based on an adequate search. If that sworn statement is later proven to be intentionally false, there may be consequences including but not limited to further discovery sanctions, adverse credibility findings, contempt, and/or prosecution for perjury. *9 Interrogatory 15 asked about legal advice given by Marvin Katz. It was not answered in large part because of a privilege objection that has now been withdrawn. Plaintiffs ask that I deem it proven that Mr. Katz gave advice on “asset protection” and on how to structure the sale of the Property to conceal it from John Ossenmacher's creditors. ECF No. 87-15 at 4. In light of my ruling that the Individual Defendants have waived any attorney-client privilege with Mr. Katz, which makes him available as a witness, I decline to deem those facts proven. The Individual Defendants shall fully answer Interrogatory 15. F. Affirmative Defenses Plaintiffs say the Court should strike Affirmative Defenses 2-8 as a sanction for not fully answering Interrogatory 22. ECF No. 87 at 10. Defendants did not respond to this argument. Plaintiffs’ request will be granted as to Affirmative Defenses 2-7. As Judge Cannon previously ruled, what is pled as Affirmative Defense 8 is actually a denial. ECF No. 66 at 1-2. The Complaint in this case was filed in March 2022. All Defendants waived service in May 2022. The Individual Defendants filed Answers in November 2022. ECF Nos. 37, 38, 39. The Corporate Defendants answered in January 2023. ECF Nos. 43, 44. Those Answers asserted the same eight affirmative defenses that remain in the case. By filing these pleadings, they represented to the Court that they had conducted an “inquiry reasonable under the circumstances” and that there was a factual basis for each defense. Fed. R. Civ. P. 11(b); see, e.g., Cohen v. Burlington, Inc., No. 18-CV-81420, 2020 WL 1033349, at *3 (S.D. Fla. Mar. 3, 2020) (J. Bloom) (Rule 11 sanctions can be imposed for filing a pleading with no reasonable factual basis). Discovery has been permitted in this case since at least August 2022. ECF No. 26 (Scheduling Order). Interrogatory 22, as modified by the Discovery Order, required the Defendants to allege the basic facts that supported these defenses, without prejudice to them supplementing their response after further discovery. Their Response did not allege any facts. Moreover, the nature of the affirmative defenses indicates they are based on facts that Defendants knew or should have known when they filed this lawsuit. For example, what agreement or conduct released and/or waived Plaintiffs’ claims, which third party caused the damages, how Plaintiffs could have mitigated their damages, what condition precedent that was not satisfied, and which statutory and procedural requirements were not satisfied. A just remedy is to strike these Affirmative Defenses. Defendants bear the burden of proof on these defenses. Discovery now closes in approximately 120 days. Plaintiffs were entitled to fair notice of the basic facts supporting the affirmative defenses so that they could plan their discovery strategy accordingly. By not having that notice, they are prejudiced. Striking the Affirmative Defenses cures that prejudice. A different conclusion applies to a denial. A denial merely puts the Plaintiff to its burden of proof, so the prejudice (if any) is less. G. Corporate Defendants Plaintiffs served Requests for Production, Interrogatories, and Requests for Admission in March 2023 on the Corporate Defendants’ counsel of record. ECF No. 79-1. The Corporate Defendants have not responded to any discovery, despite being specifically ordered to do so. There is no evidence in the record that they asserted any objections or claimed any privileges. They say that these issues are moot because they have agreed to have a default entered against them. They are wrong. Although they have withdrawn their Answers and agreed to a default, they remain parties to this case. As such, they remain obligated to respond to discovery. See Cloer v. Green Mountain Specialties Corp., No. 618CV999ORL40LRH, 2020 WL 11272379, at *1 (M.D. Fla. May 15, 2020) (courts routinely require defaulted defendants to respond to post-judgment discovery) (collecting cases). *10 The Corporate Defendants are capable of responding to discovery. They have meaningfully participated in this litigation. They waived service, (ECF Nos. 11, 12), filed Answers, (ECF Nos. 43, 44, 69, 70) retained counsel, (ECF Nos. 48, 60, 61), consented to Magistrate Judge jurisdiction, (ECF No. 72), and consented to have their Answers stricken. ECF No. 90. They have appeared through counsel at hearings. In short, someone is empowered to take action and make decisions on behalf of the Corporate Defendants; those actions include responding to discovery. Several people could be the human embodiment of the Corporate Defendants. There is evidence in the record that, at one point, John Ossenmacher controlled the Transfer Trust LLC. On June 16, 2016, Transfer Trust, LLC was incorporated in Florida. ECF No. 1-12. Public records from the Florida Secretary of State show that the Articles of Organization listed Martin V. Katz as the Manager of the LLC. The next day, “J. Ossenmacher” executed the Operating Agreement as Member of Transfer Trust, LLC. Id. The Operating Agreement listed the address for “J. Ossenmacher” as 102 NE 2nd Street, #261, Boca Raton, Florida. Id.; ¶63. In a bankruptcy filing in August 2016, John Ossenmacher swore under penalty of perjury that his address was 102 NE 2nd Street, #261, Boca Raton, Florida. ¶63; ECF No. 1-20 at 3. The current Florida Secretary of State records show that the Registered Agent for the Transfer Trust LLC is Martin V. Katz, Esq. and the Authorized Representative is Phillip R. Guerts. The Individual Defendants’ answers to interrogatories swear that Jason Ossenmacher managed OWM, LLC before it became defunct. ECF Nos. 87-8 at 5, 87-9 at 5, 87-10 at 5. A party cannot simply ignore the discovery process and Court Orders enforcing discovery obligations. I will impose just sanctions under Rule 37(b)(2) as discussed more fully below. WHEREFORE, it is ORDERED THAT: Individual Defendants 1. On or before March 8, 2024, at 5:00 p.m. Eastern time: a. the Individual Defendants may file second amended answers to Interrogatories 1-5, 8 and 9. b. the Individual Defendants may file second amended answers to Requests for Admission 28-30. 2. The Individual Defendants have waived any privileges relating to the subject matter of the Discovery Requests, which includes all transactions related to the Property between 2014-16 and all persons and entities involved in those transactions. 3. On or before March 15, 2024, at 5:00 p.m. Eastern time, the Individual Defendants shall file a full response to Interrogatory 15. 4. The Individual Defendants’ Affirmative Defenses 2-7 are stricken. 5. Plaintiffs may serve up to three supplemental interrogatories on each Individual Defendant asking about the scope of the search that they conducted before serving their written discovery responses. These supplemental interrogatories are in addition to the 25 interrogatories authorized by Fed. R. Civ. P. 33(a)(1). Thirty (30) minutes is added to each Individual Defendant's deposition to allow for time to explore this topic. Corporate Defendants[4] 6. The Corporate Defendants have waived any legal objections to the Plaintiffs’ discovery requests. See S.D. Fla. Local Rule 26.1(g) (objections waived unless timely asserted). 7. The Corporate Defendants have waived any privileges related to the subject matter of the Discovery Requests which includes all transactions related to the Property between 2014-16 and all persons and entities involved in those transactions. S.D. Fla. Local Rule 26.1(e)(2) (privileges waived unless timely asserted). *11 8. All of the Plaintiffs’ Requests for Admission are admitted by the Corporate Defendants. Fed. R. Civ. P. 36(a)(3). 9. On or before March 8, 2024, at 5:00 p.m. Eastern time, the Corporate Defendants shall serve answers to the Plaintiffs’ interrogatories that are verified by a corporate officer, manager, director, or other person authorized to bind the corporation. 10. On or before March 8, 2024, at 5:00 p.m. Eastern time, the Corporate Defendants shall serve written responses indicating whether, after a reasonable search, they have any documents responsive to each of Plaintiffs’ Requests for Production. All responsive documents shall be served on Plaintiffs on or before March 15, 2024, at 5:00 p.m. Eastern time. If any of the documents qualify as business records under Federal Rule of Evidence 803(6), the production shall include a certification under Federal Rule of Evidence 902(11). 11. On or before March 29, 2024, Plaintiffs may take initial Rule 30(b)(6) depositions of the Corporate Defendants. Plaintiffs may unilaterally extend this deadline. Unless otherwise agreed by the parties, each deposition shall not exceed three hours each and shall be limited to the following topics: (1) what corporate records existed between 2014 and the present, (2) where they were kept, (3) whether they continue to exist and if so, who has them, and (4) what steps the Corporate Defendants took to identify and produce responsive documents. These depositions will be in addition to the 10 depositions permitted by Fed. R. Civ. P. 30 and are without prejudice to Plaintiffs taking a second 30(b)(6) deposition later. The Corporate Defendants are reminded that they have a duty to produce one or more deponents who are able to provide binding testimony on these topics, even if those deponents lack personal knowledge. QBE Ins. Corp. v. Jorda Enterprises, Inc., 277 F.R.D. 676, 688-90 (S.D. Fla. 2012) (J. Goodman). “The mere fact that an organization no longer employs a person with knowledge on the specified topics does not relieve the organization of the duty to prepare and produce an appropriate designee.” Id. at 689. 12. If the Corporate Defendants fail to comply with this Order, the Court may initiate contempt proceedings against the Corporate Defendants and their officers, directors, managers, and other authorized representatives. Fees and Costs 13. Plaintiffs are granted leave to file a separate motion for their fees and costs based on the Court's rulings. DONE and ORDERED in Chambers this 26th day of February, 2024, at West Palm Beach in the Southern District of Florida. Footnotes [1] Unless otherwise noted, the citation “¶” refers to the numbered paragraphs of the Complaint. [2] The transcript erroneously attributes the first paragraph to defense counsel, instead of the Court. ECF No. 87-1 at 20. [3] The Order as to Interrogatory 5 applies only to Jason Ossenmacher. If, in fact, after conducting an appropriate inquiry, Defendants lack sufficient information to respond truthfully to any interrogatory, they should say so. [4] On February 2, 2024, I ordered Plaintiffs to file a Motion for a Clerk's Entry of Default against Defendants OWM, LLC and Transfer Trust, LLC based on their confession of judgment. ECF No. 92. Plaintiffs shall file the motion by March 8, 2024.