Rullan v. Goden

1

Luis Rullan v. Jill K. Goden et al.

CIVIL No. 1:17-cv-03741-CCB

United States District Court, D. Maryland

March 20, 2024

LETTER ORDER AND OPINION TO COUNSEL

J. MARK COULSON, UNITED STATES MAGISTRATE JUDGE

Dear Counsel:

Plaintiff Luis Rullan, brought this action against Defendants “for damages and equitable relief to remedy injuries arising out of Defendants' criminal conspiracy to transfer and secrete the assets of companies and individuals sued by Rullan in Rullan v. Goden, et al. (D. Md. Case No. 1:12cv-02412-CCB.” (ECF No. 46 at 1).^[1] United States District Judge Catherine C. Blake referred this case to the undersigned on August 22, 2023, for discovery and all related scheduling. (ECF No. 136). A discovery dispute has arisen, and presently before the Court is Defendants' Motion to Quash, or in the Alternative, Modify Subpoena. (ECF No. 141). The undersigned has considered the motion as well as Plaintiff's opposition and Defendants' reply thereto. (ECF Nos. 154, 161).^[2] No hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). For the reasons that follow, Defendants' motion, construed as one for a protective order under Rule 26, will be granted in part and denied in part.

I. Background

A. Relevant Factual and Procedural History

According to Plaintiff's Amended Complaint, Defendant Frederick Greenberg founded the Timber Ridge Camp (the “Camp”) in High View, West Virginia, as early as 2010. (ECF No. 46 at 4).^[3] Since 2010, ownership of the Camp's real property and operation of the Camp have been divided between two entities-Timber Ridge, Inc. (“TRI”) who owns the Camp, and Youth World, Ltd. (“YWL”) who operates the Camp. Id. Mr. Greenberg “transferred half of his ownership interests in TRI and YWL” to Defendant Jill Goden “as a gift on or about December 15, 2010.” Id.

Mr. Greenberg and Ms. Goden “lured [Plaintiff] into investing and becoming Goden's partner in the Camp” in the Spring of 2011. Id. On March 30, 2011, “Goden and [Plaintiff] executed a stock purchase agreement in which Goden and [Plaintiff] each agreed to purchase fifty percent of YWI's stock. Under the agreement, Goden and [Plaintiff] are fifty percent co-owners of YWI; Goden is President and Treasurer; and [Plaintiff] is Vice President and Secretary.” Id. The parties memorialized their agreement on August 24, 2011, with a Written Partnership and Securities Purchase Agreement (“Partnership Agreement”), under which Mr. Greenberg “sold his fifty percent share in TRI and YWL to [Plaintiff] for $500,000 to be paid in $50,000 annual installments over a ten-year period.” Id. at 4-5. Ms. Goden executed stock purchase certificates on October 27, 2011, denoting that Plaintiff had purchased stock in YWL and TRI. Id. at 5.

Ms. Goden and Mr. Greenberg then “purported to ‘fire' [Plaintiff] and threatened to have him arrested if he arrived at Camp” in late May 2012. Id. After attempts at reconciliation and settlement broke down, Plaintiff filed suit against Ms. Goden and Mr. Greenberg on August 14, 2012, alleging claims of fraud, fraudulent inducement, shareholder oppression, breach of fiduciary duty, negligence, unjust enrichment, breach of contract, and financial accounting (“First Lawsuit”). Id. Plaintiff amended his First Lawsuit to add TRI, YWL, and Youth World International Company, Ltd. (“YWI”) on September 30, 2014. Id.

Plaintiff alleges that, during the First Lawsuit, Ms. Goden and Mr. Greenberg unilaterally executed promissory notes “in the stated principal amount of $550,000 payable to the order of Defendant The Frederick I. Greenberg Revocable Trust (‘Greenberg Revocable Trust')” and executed a deed of trust “conveying an interest in TRI's real property to the Greenberg Revocable Trust as security for the promissory note” in April 2013 and June 2013, respectively. Id. at 6. Defendants then supposedly formed Cacapon River Camps, Inc. and Cacapon Camps, Inc. (collectively the “Cacapon Companies”) in August 2014 to transfer substantially all of YWL and YWI's assets thereto. Id. at 7. “Upon information and belief, the Cacapon Companies are now operating the Camp, and the Camp's income and disbursements are now recorded in the books and records of the Cacapon Companies.” Id. Moreover, TRI, YWL, and YWI “effectively ceased operations, engaged in no business, and received no business revenue following the incorporation and transfer of assets to the Cacapon Companies” after “Greenberg and Goden diverted all business that had previously been exploited by TRI, YWL, and YWI to the Cacapon Companies.” Id.

Also in August 2014, Ms. Goden and Mr. Greenberg submitted conflicting discovery responses during the First Lawsuit by indicating in sworn interrogatory responses that Ms. Goden did not own any stock in YWL despite Defendants' previous representation that Mr. Greenberg gifted Ms. Goden a fifty percent stake in YWL in 2010. Id. Those interrogatory responses were signed and submitted by attorney Jonathan M. Davidoff of Davidoff Law Firm, P.L.L.C., “their then-lead counsel” in the First Lawsuit. Id. Defendants were also represented by attorneys Mark A. Simanowith and Mathew A. Haven of Saul Ewing, LLP as “local Maryland counsel” during the First Lawsuit. Id. at 7-8.

Ms. Goden and Mr. Greenberg simultaneously “executed another promissory note [on behalf of TRI] promising to pay $530,000 to the Greenberg Revocable Trust-thereby saddling TRI with a total of at least $1,080,000 in bogus debt to the Greenberg Revocable Trust” before executing another deed of trust on behalf of TRI “conveying an interest in TRI's real property to the Greenberg Revocable Trust as security for the promissory note.” Id. at 8. Ms. Goden and Mr. Greenberg subsequently filed two Maryland state court actions to dissolve YWI and YWL, which were filed on their behalf by attorney Bart Colombo of O'Reilly & Mark, PC. Id. Ms. Goden and Mr. Greenberg affirmed in their sworn complaint for dissolution that Ms. Goden owned fifty percent of YWL, in line with their previous representations but in contradiction to the August 2014 written discovery responses. Id. The complaint for dissolution also “represented that ‘YWL has recently ceased operations,' apparently reflecting the brand new Cacapon Companies' assumption of management and operation of the Camp four days earlier.” Id.

On August 18, 2014, Mr. Greenberg and TRI, through Mr. Davidoff, filed suit in Florida state court to invalidate the Partnership Agreement, again representing in their ensuing complaint that Mr. Greenberg and Ms. Goden each had a fifty-percent interest in YWL. Id. Mr. Greenberg obtained a default against Plaintiff in the Florida state court case on September 19, 2014, before Plaintiff removed that case to the U.S. District Court for the Southern District of Florida. Id. at 9.^[4]

Also on August 18, 2014, Ms. Goden “filed her Chapter 13 Voluntary Petition in the Bankruptcy Court” for the U.S. District of Maryland. Id. Plaintiff avers that Ms. Goden concealed her interests in YWL and YWI “by failing to disclose them in her schedules,” “fail[ing] to disclose the pending dissolution lawsuits,” and improperly “schedul[ing] the value of her share in TRI as $0.” Id.

On August 21, 2014, Defendant Alex Reece, a former manager of the Camp, “concealed [the Cacapon Companies'] existence during his deposition as a 30(b)(6) witness for TRI, YWL, and YWI” in Plaintiff's First Lawsuit. Id. at 3, 9. Specifically, Reece allegedly falsified that YWL operates the Camp despite Ms. Goden's “allegation in the verified YWL dissolution complaint that YWL had ‘recently ceased operations' and Greenberg's testimony that the Cacapon Companies had assumed operation of the Camp.” Id. at 9-10. Mr. Davidoff represented Reece during his deposition as a 30(b)(6) witness for TRI, YWL, and YWI. Id. at 10.

On November 20 and December 15, 2014, Mr. Greenberg submitted bids to purchase the bankruptcy estate's assets from the Trustee “in order to reacquire Goden's share of the Camp assets.” Id. Mr. Davidoff submitted those bids on Mr. Greenberg's behalf. Id. Then, on December 19, 2014, after Plaintiff “filed his original Complaint in this case as an Adversary Proceeding in the Bankruptcy Court,” Ms. Goden “moved to voluntarily dismiss the entire proceeding three days later. Upon information and belief, she did so because she realized from the original Complaint that [Plaintiff] had discovered Defendants' scheme to use Goden's bankruptcy filing to cover up the fraudulent transfers of TRI's, YWL's, and YWI's assets.” Id. at 10. Plaintiff submits that the above actions constitute criminal conduct in violation of 18 U.S.C. §§ 152(1), (3), and (7), 157, 371, and 1621. Id.

Plaintiff's Amended Complaint also alleges that Defendants improperly failed to pay corporate bills and file corporate reports. For instance, Plaintiff alleges that Capon Valley Bank informed Mr. Greenberg on September 17, 2013, that a $2.4 million loan issued jointly to TRI and Mr. Greenberg individual was in default and required Mr. Greenberg to establish an escrow account with a minimum balance of at least $208,526. Id. at 11. Capon Valley Bank then issued a notice of foreclosure sale initiating foreclosure proceedings against TRI and Mr. Greenberg personally for the sale of TRI's 70.5-acre property that served as collateral for the $2.4 million loan. Id. “[U]pon information and belief, Greenberg and TRI defaulted on the Capon Bank loan so that the Capon Bank would foreclose on the TRI property, allowing an insider to buy the land back at a foreclosure sale and freeing the Camp from a lis pendens that [Plaintiff] had placed on the Camp property.” Id. Plaintiff also contends that YWL failed to pay state and federal taxes throughout the pendency of Plaintiff's First Lawsuit as...