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Bio-Behavioral Care Solutions, LLC v. Doctors Behavioral Hospital, LLC

United States District Court, E.D. Michigan, Southern Division

June 8, 2017

BIO-BEHAVIORAL CARE SOLUTIONS, LLC, Plaintiff,
v.
DOCTORS BEHAVIORAL HOSPITAL, LLC, d/b/a/ Doctors Neuropsychiatric Hospital, an Indiana Limited Liability Company, Defendant.

          MEMORANDUM AND ORDER DENYING PLAINTIFF'S MOTION FOR CONTEMPT (DOC. 45) [1]

          AVERN COHN UNITED STATES DISTRICT JUDGE.

         I. Introduction

         This is a contract case. It has moved sideways rather than forward. Plaintiff Bio-Behavioral Care Solutions, LLC is suing defendant Doctors Behavioral Hospital, LLC claiming that defendant breached a contract (Marketing Agreement) between the parties in which plaintiff provided management and consulting services to defendant.

         Plaintiff says that it provided the required services under the Marketing Agreement and defendant has refused to pay. The complaint (Doc. 1) is in four counts:

Count I - Account Stated
Count II - Breach of Contract
Count III - Unjust Enrichment/Quantum Meruit
Count IV - Promissory Estoppel

         Defendant filed a one count counterclaim, stating that plaintiff breached the Marketing Agreement by failing to fulfill its obligations. (Doc. 3). Both sides seek money damages.

         Before the Court is plaintiff's motion for contempt on the grounds that defendant has failed to comply with Court ordered discovery. For the reasons that follow, the motion will be denied.

         II. Background

         Shortly after the complaint was filed, plaintiff filed a motion for summary judgment (Doc. 12) claiming that there is no genuine issue of material fact that defendant has breached the Marketing Agreement and owes plaintiff $195, 000.00 in damages.[2] In response, defendant filed a motion to strike portions of the affidavit testimony of two individuals or to compel answers to deposition questions (Doc. 32).[3]

         Plaintiff then filed a filed a motion to compel, contending that discovery requests sent to defendant after it filed its motion for summary judgment are relevant to plaintiff's claims for liability and damages. (Doc. 39).[4] The motion to compel sought several documents in response to plaintiff's June 30, 2016 discovery request. The Court granted the motion and directed defendant to produce the following:

1. Ledgers, spreadsheets, or other writings showing accounts payable by defendant for years 2012-2015, with redaction of names other than plaintiffs
2. Copies of tax returns for the same years, and work papers showing reconciliation between the amounts shown on the Accounts Payable Ledger and the related deductions and liabilities on the tax returns.

         The Court also found that defendant's position in refusing to produce the requested relevant discovery was not substantially justified and therefore granted plaintiff's request for attorney fees and costs in bringing the motion to compel. (Doc. 43).

         To date, plaintiff says that defendant has not produced the ordered discovery. Specifically, plaintiff says that after the Court's October 28, 2016 order granting its motion to compel, on December 6, 2016 defendant produced tax returns of Doctors Development Company, LLC, a different company than the named defendant-Doctors Behavioral Hospital, LLC-for tax years ending 2013, 2014, and 2015. Plaintiff also says that defendant failed to produce any documents showing the reconciliation between the amounts shown owed to plaintiff on defendant's Accounts Payable Ledgers and deductions taken on defendant's federal tax returns.

         After receiving the responses to the discovery, counsel for plaintiff advised counsel for defendant that tax returns for the named defendant were not produced. In response, counsel for defendant explained that Doctors Development Company, LLC owned Defendant Doctors Behavioral Hospital, LLC and that no tax returns had to be filed by the named defendant.

         Plaintiff's counsel, disputing defendant's contention, wrote to counsel for defendant pointing out the deficiencies in the produced documents. The December 14 letter also noted that in response to questions regarding other entities owned by Doctors Development Company, LLC, the named defendant Doctors Behavioral Hospital, LLC was not listed. Plaintiff's counsel found this curious, to say the least:

...on each of the returns filed by Doctors Development Company, LLC, Schedule B, question 4, Page 2 of Form 1065 asks the following question:
At the end of the tax year, did the partnership . . . b. Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust?
The response to this question was checked “No” on the 2014 and 2015 returns indicating that Doctors Development Company did not own any interest in another partnership such as the named defendant Doctors Behavioral Hospital, LLC. On the 2013 return the response was “Yes” and referred to Statement 4. Statement 4 identified ...

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