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SLSJ, LLC v. Kleban

United States District Court, D. Connecticut

August 17, 2016

SLSJ, LLC, Plaintiff,
v.
ALBERT KLEBAN and THE LE RIVAGE LIMITED PARTNERSHIP, Defendants.

          DISCOVERY ORDER RE: FINAL PENDING ISSUE IN PLAINTIFF'S MOTION TO COMPEL [DOC. 44]

          CHARLES S. HAIGHT, JR. Senior United States District Judge.

         I. INTRODUCTION

         At the core of this case is a dispute relating to Sun Realty Associates ("Sun Realty"), a family-owned limited liability company. Plaintiff SLSJ, LLC ("Plaintiff" or "SLSJ") commenced this action against individual Albert Kleban ("Kleban") and Le Rivage Limited Partnership ("Le Rivage") (herein collectively "Defendants"), Plaintiffs' former partners in Sun Realty, alleging, inter alia, breach of fiduciary duty and fraud with respect to the sale of Plaintiff's one-third interest in Sun Realty, including its sole asset known as the Black Rock Shopping Center ("Black Rock"), a commercial property in Fairfield, Connecticut.[1] In particular, Plaintiff seeks money damages relating to the Membership Interest Purchase Agreement ("Purchase Agreement") it executed on June 27, 2013, in which Plaintiff agreed to sell its 33.3333 percent membership interest in Sun Realty and outstanding promissory notes to Kleban and his successor-in-interest, Le Rivage, for the sum of $2, 020, 540.41.[2] Plaintiff thereafter executed an "Assignment" of its interest in Sun Realty to Le Rivage on July 29, 2013. Doc. 1, at ¶ 47.

         Plaintiff alleges that in selling and assigning its interest in Sun Realty, it relied upon Kleban's fraudulent statements and misrepresentations regarding the value of Black Rock.[3] Within six months of that sale, in December 2013, Kleban Properties and Regency Centers Corporation ("Regency Centers") - "a real estate investment trust owning more than 300 retail properties [in] the United States with a total capitalization of $6.7 billion" - "publicly announced that they were entering into an agreement under which Regency Centers would acquire an 80% interest in a portfolio of three properties controlled by Kleban Properties, including Black Rock Shopping Center." Id., at ¶ 44. On or about March 12, 2014, Kleban Properties and Regency Centers closed that transaction for a purchase price of $150 million.[4] Id., at ¶ 56.

         II. PENDING MOTION TO COMPEL

         On June 27, 2016, the Court entered an Order [Doc. 62] to resolve the last remaining discovery dispute contained in Plaintiff's pending Motion to Compel [Doc. 44]. That dispute arises under Plaintiff's "Document Request No. 6, " which seeks the following:

All documents and ESI [electronically stored information] created or modified on or after January 1, 2010 concerning communications with one or more members of Sun Realty concerning Sun Realty or Black Rock Shopping Center, and all information provided to, or exchanged with, any member of Sun Realty, including but not limited to:
c. Communications and information concerning HFF; [5]
d. Communications and information concerning Regency Centers Corporation or Regency Centers, LP (hereinafter referred to collectively as "Regency Centers") or any transaction with Regency Centers;
e. Communications and information concerning distribution payments or any payment or consideration provided to any member; and
f. Communications and information concerning any financing or potential financing of Sun Realty or Black Rock Shopping Center, or any investment in or potential investment in Sun Realty or Black Rock Shopping Center by a party other than a member.

See Doc. 64 (Plaintiff's Reply to Defendants' Notice [Doc. 63]), at 2-3. According to Plaintiff, at the parties' discovery conference on May 14, 2015, Defendants confirmed that they would "produce the requested documents [in Request No. 6] subject to the parties' agreement that day to limit the production to materials created or modified on or after January 1, 2012, " as opposed to January 1, 2010. Doc. 45, at 7 (emphasis added). See also Doc. 59 (Plaintiff's Third Status Report), at 2; Doc. 64 (Plaintiff's Reply), at 2.

         In its Third Status Report to the Court on its motion to compel, Plaintiff represented that Defendants had failed to fully respond to Request No. 6 by producing only communications received on or before July 29, 2013, rather than providing all materials created or modified on or after January 1, 2012. See Doc. 59, at 2. According to Plaintiff, "[t]he terms of the transaction between Sun Realty Associates and Regency Centers Corporation, which closed in March 2014, and the financial implications for members of Sun Realty Associates who continued to hold their interests until then, are relevant to plaintiff’s damages." Id. ("The subject communications likely provide evidence of the value plaintiff could have realized for its membership interests had it not sold them to defendant Kleban in July 2013, just as he was secretly preparing to sell Sun Realty's single asset, Black Rock Shopping Center, to a third party."). Plaintiff thus asserted, and the Court agreed, that the documents sought are relevant to Plaintiff's alleged damages. In particular, these documents may demonstrate "what treatment and options were afforded members of Sun Realty Associates who continued to hold membership interests as a result of the transaction Albert Kleban entered into with Regency Centers Corporation."[6] Id.

         At the time Plaintiff filed its Third Status Report, Plaintiff's counsel had emailed Defendants' counsel to follow up regarding production of the requested documents, but Defendants failed to produce them. The Court thus ordered that "on or before July 8, 2016, Defendants either provide the responsive documents to Plaintiff or file a written objection with the Court, setting forth their specific grounds for refusing to produce the documents responsive ...


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