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Bricklayers and Allied Craftworkers Local 2 v. Focus One Construction Corp.

May 13, 2009

BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK PENSION FUND, BY ITS ADMINISTRATOR, STEPHEN J. O'SICK, ET. AL., PLAINTIFFS,
v.
FOCUS ONE CONSTRUCTION CORP., SANDRA VARDINE, INDIVIDUALLY AND AS AN OFFICER OF FOCUS ONE CONSTRUCTION CORP., AND IRENEUSZ BALASINOWICZ, A/K/A ERIC BALASINOWICZ, INDIVIDUALLY AND AS AN OFFICER OF FOCUS ONE CONSTRUCTION CORP. DEFENDANTS.



The opinion of the court was delivered by: Randolph F. Treece United States Magistrate Judge

MEMORANDUM-DECISION AND ORDER

Presently before the Court is Plaintiffs' Motion to Compel Discovery and Sanctions, pursuant to FED. R. CIV. P. 37. Dkt. No. 21.*fn1 Succinctly, Plaintiffs seek an order compelling (1) written responses to Plaintiffs' First Request for Production of Documents, (2) production of documents, (3) depositions of the Defendants, and (4) reasonable attorney fees for filing this Motion. Lastly, if the Motion is granted, and Defendants fail to comply with that order, Plaintiffs petition that Defendants' Answer be struck. Id.

Defendants oppose Plaintiffs' Motion, Dkt. No. 23,*fn2 to which Plaintiffs filed a Reply, Dkt. No. 26, Jennifer A. Clark, Esq., Aff., dated Feb. 25, 2009, with Exs. A-C.

For the reasons that following, Plaintiffs' Motion is granted in part.

I. HISTORY

On January 9, 2008, Plaintiffs, fiduciaries of employee benefit funds, brought an action arising under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., seeking both monetary and injunctive relief for Defendants' alleged failure to timely remit contributions to ERISA covered plans. Dkt. No. 1, Compl. The named Defendants are: (1) Focus One Construction Inc., (Focus One), currently a defunct corporation;*fn3 (2) Sandra Vardine, President of Focus One and its sole shareholder; and (3) Ireneusz Balasinowicz, an officer and the day to day manager of the business. Id. at ¶¶ 13-15; S. Vardine Aff. at ¶¶ 1-6.

Plaintiffs allege five causes of action against the Defendants. In the First Cause of Action, it is alleged that Defendants owe $47,555.42 in fringe benefit contributions for the period of March 2005 through July 2006. Compl. at ¶ 28. Plaintiffs also allege in their Second Cause of Action, which seek to compel an audit for the period August 2006 to date, that Defendants may owe additional sums to Plaintiffs. Dkt. No. 26, Clark's Reply Aff. at ¶¶ 4-6. Defendants Vardine and Balasinowicz are named in the Third Cause of Action which alleges that in addition to being officers and manager of Focus One, they were fiduciaries of the monies received to be utilized for the benefit of Plaintiffs' Funds and therefore are personally liable. Compl. at ¶¶ 37-44 (citing 29 U.S.C. § 1104); Clark Aff. at ¶ 4.*fn4 Only Defendants Focus One and Sandra Vardine have appeared in this action and filed an Answer.*fn5 Dkt. No. 10.

On May 13, 2008, the Court issued a Uniform Pretrial Scheduling Order, which, inter alia, set the discovery deadline as January 18, 2009. Dkt. No. 13. As a part of this Motion, Plaintiffs seek an extension of the discovery deadline, which is unopposed. Clark Aff. at p. 8; Couch Aff. at ¶ 21.

On April 24, 2008, Plaintiffs served a Request for Production and Notice of Deposition upon the Defendants. Clark Aff. at ¶ 5 & Ex. B. By a Status Report, dated August 29, 2008, Plaintiffs revealed to the Court that more than 90 days had passed and Defendants had not provided written responses, documents, nor appeared for a deposition, and have failed to provide their Rule 26 Disclosures. Dkt. No. 17. In lieu of waiting to see if Defendants would comply with Plaintiff's disclosure deadline of September 15, 2008, this Court promptly ordered a telephone conference, which was held on September 10, 2008. Based upon discussions had during that telephone conference, the Court issued the following Discovery Order:

Defendants shall serve responses to Defendants' [sic] outstanding discovery demands and provide the Rule 26 mandatory disclosure on or before October 10, 2008. If Defendants fail[] to provide the responses, Plaintiff may file a motion to compel and/or sanctions without seeking court permission.

Dkt. No. 20, Order, dated Sept. 10, 2008.

Rather than respond to the discovery demands and provide the Rule 26 mandatory disclosure, on October 24, 2008, Defendants made arrangements for Plaintiffs' auditor and attorney to appear at Defendants' accountant's office to review records. Based upon the review of those records present in the accountant's office, Plaintiffs were able to estimate Defendants' liability for the period of March 1, 2005 to January 31, 2007; however, Plaintiffs' auditors were unable to complete all of the tasks, primarily deciphering whether individuals were paid outside of the payroll, because Defendants did not provide the general ledger, cancelled checks, nor cash receipts and disbursements journal. Clark Aff. at ¶ 8 & Ex. D, Audit Rep. at p. 2.

Among the records Plaintiffs claim were not produced on October 24, 2008, which would have been responsive to Plaintiffs' Requests numbered 5, 6, 9, 10, 11, 14(2)-(12), 14(14-16), and 15 through 27, include, inter alia, Defendant Vardine's tax returns, cash disbursement journals, cash receipt journals, cancelled checks, general ledgers, audit reports, board minutes, various types of agreements, and other contracts. Clark Aff. at ¶ 10. In challenging the Motion, Defendant Vardine, who is a Florida resident, avers that, upon information and belief, contracts and documents were boxed and placed in storage by former employees, and she was unable to locate particular documents. Vardine Aff. at ¶ 12. Nevertheless, Vardine identified Focus One's former bookkeeper and accountant and stated that she believed all of the records for fiscal year 2006 were provided to Plaintiffs for an audit. Id. at ¶¶ 16-17 & 21. Lastly, Vardine acknowledges that she has not provided her tax returns because she files joint tax returns with her husband, who refuses to consent to their disclosure. Id. at ¶ 20.

On January 16, 2009, just two days shy of the discovery deadline, Plaintiffs filed this Motion. Approximately a month later, on February 12, 2009, Defendants produced additional records for review. Clark Reply Aff. at ΒΆ 7. Notwithstanding this additional production, Plaintiffs claim, inter alia, that Vardine's tax returns, the corporation's general ledgers, cash disbursement ...


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