BUCKFELDER vs. ARIAS, et al No. 2011-01331

Civil Action – Discovery – Tax Returns – Relevance – Prejudice – Motion to Compel.

 

 

1. As a general rule, discovery is liberally allowed with respect to any matter, not privileged, which is relevant to the cause being tried.
2. Subject to the provisions of Rules 4003.2 to 4003.5 inclusive and Rule 4011, a party may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, content, custody, condition and location of any books, documents or other tangible things and the identity and location of persons having knowledge of any discoverable matter.
3. A party’s tax returns are subject to production where the information contained in the returns is relevant to the issues involved.  Furthermore, courts can limit the production of tax returns to those dates and portions of the return that are relevant to the action.
4. The Court did not compel production of the tax returns and income information of Defendant Dorfhuber since the focus of this lawsuit is on the dog breeding business and not on Defendant Dorfhuber’s personal income.  In reaching this decision, the Court noted that the prejudicial value of this information outweighed its probative value and that Plaintiff’s knew approximately what the Defendant’s her yearly income was.  Accordingly, the Court denied Plaintiff’s Motion to Compel.

Plaintiff’s Motion to Compel.  C.P. of Lebanon County, Civil Action-Law, No. 2011-01331.

David Tshudy, Esquire, for Plaintiffs

James Kutz, Esquire, for Defendants

Wiley Parker, Esquire, for Additional Defendants Biegler

Timothy Huber, Esquire, for Additional Defendants Raugh

Kerry and Danielle Gingrich, Pro Se

 

 

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA

CIVIL DIVISION

 

WILLIAM AND DEBORAH              :

BUCKFELDER,                                 :

:

Plaintiffs,              :

:

v.                                      :      Case No: 2011-01331

:

ANGELO JULIAN ARIAS and         :

CHRISTINA MARIE                         :

DORFHUBER, husband and           :

wife,                                                    :

:

Defendants,          :

:

v.                                      :

:

BARRY and KERRY BIELER,         :

husband and wife, RODNEY           :

and KAREN RAUGH, husband       :

and wife, and KERRY L.                  :

GINGRICH and DANIELLE            :

GINGRICH, husband and wife,      :

:

Nominal Defendants.    :

 

APPEARANCES:

David Tshudy, Esq. for William and Deborah Buckfelder

James Kutz, Esq. for Angelo Julian Arias and Christina Marie Dorfhuber

Wiley Parker, Esq. for Barry and Kerry Bieler

Timothy Huber, Esq. for Rodney and Karen Raugh

Kerry and Danielle Gingrich, Pro se

 

OPINION, KLINE, J., MAY 15, 2013

Before the Court is Plaintiffs’ Motion to Compel.  For the reasons set forth herein, we deny the Motion to Compel, as specified below.

FACTS AND PROCEDURAL HISTORY

          On June 30, 2011, Plaintiffs filed their Complaint against only Defendant Dorfhuber, and a Motion for a Preliminary Injunction.  In that Complaint, Plaintiffs aver that they and the Defendant are property owners in a development known as Heather Glen Estates.  Plaintiffs allege that the property owners in that development are subject to certain protective covenants.  Plaintiffs aver that the protective covenants provide that the property owners cannot operate business activities in their private residences; however, Defendant Dorfhuber operates a Doberman breeding business.  In the Complaint, Plaintiffs sought: (1) a preliminary injunction until a final hearing and a permanent injunction thereafter restraining Defendant Dorfhuber from operating any commercial or business enterprise from her property; (2) a permanent injunction requiring Defendant Dorfhuber to remove a kennel on her property that is in violation of the protective covenants; and (3) other relief that is just and proper.

The Plaintiffs and Defendant Dorfhuber entered a Stipulation on February 6, 2012.  The parties stipulated that Plaintiffs may file an Amended Complaint to add Defendant Arias, and the Defendants shall be entitled to file Preliminary Objections and other related responses permitted by the Pennsylvania Rules of Civil Procedure.

Plaintiffs filed their Amended Complaint on February 22, 2012, in which they added Defendant Arias as a party, and they narrowed the issues in the matter.  In the Amended Complaint, Plaintiffs only request: (1) an injunction restraining Defendants Dorfhuber and Arias from operating or permitting to be operated any commercial or business enterprise on or from their property; and (2) other relief that is just and proper.

Defendants Dorfhuber and Arias filed Preliminary Objections on March

12, 2012.  They argued that the Amended Complaint was legally insufficient because Plaintiffs did not plead facts sufficient to establish their right to injunctive relief.  Defendants Dorfhuber and Arias also argued that Plaintiffs failed to join numerous indispensable parties to the action. Oral argument was heard on the Preliminary Objections on April 27, 2012.

On June 26, 2012, this Court issued its Order and Opinion disposing of the Preliminary Objections.  First, we overruled the Preliminary Objection in the nature of a demurrer.  Second, we sustained in part and overruled in part the Preliminary Objection for failure to join certain indispensable parties.  This Court ordered that all record property owners of Heather Glen Estates were to be joined to this action.

On July 16, 2012, Plaintiffs filed a Second Amended Complaint, whereby they joined the other record property owners, named Barry and Kerry Bieler, Rodney and Karen Raugh, and Kerry L. Gingrich and Danielle L. Gingrich, as Nominal Defendants.  On August 6, 2012, Defendants Dorfhuber and Arias filed their Answer, New Matter, Cross-claim, and Counterclaims.  One of the counterclaims raised was abuse of process.

On August 27, 2012, Plaintiffs filed their Answer to the New Matter and a Preliminary Objection and a supporting brief.  Plaintiffs’ Preliminary Objection was raised pursuant to Pa.R.C.P. 1028(a)(4), and they argued that the abuse of process counterclaim was a premature malicious prosecution claim and was legally insufficient.  Defendants Dorfhuber and Arias filed their Answer to the Preliminary Objection and a brief in support of their position on September 18, 2012.

The Preliminary Objection was listed for the September 2012 Term of

Argument Court.  The parties waived oral argument and agreed to have the

matter decided on the briefs.  On October 23, 2012, this Court sustained the

Preliminary Objection and dismissed the Abuse of Process Counterclaim, having found that Plaintiffs have not done anything wrong in instituting their lawsuit at that time.

Thereafter, Plaintiffs filed a Motion for Summary Judgment and a supporting brief on September 24, 2012.  Defendants Dorfhuber and Arias filed a brief in support of their position on November 28, 2012.  The Motion for Summary Judgment was listed for the December 2012 Term of Argument Court.  Oral argument was heard on the Motion for Summary Judgment on December 7, 2012.  On December 19, 2012, this Court denied the Motion for Summary Judgment having found that there were genuine issues of material fact.[1]

The Plaintiffs filed the instant Motion to Compel and supporting brief on March 15, 2013.  Plaintiffs seek production of the following: (1) Defendant Dorfhuber’s federal income tax returns, including all schedules and attachments from the years, 2010, 2011, and 2012 and (2) Defendant Dorfhuber’s income for the years 2011 and 2012.  Defendants Dorfhuber and Arias filed a response to the Motion to Compel and a supporting brief on April 1, 2013.  The Plaintiffs filed a reply thereto on April 5, 2013.

The matter was listed for the April 2013 Term of Argument Court.  The parties waived oral argument and agreed to have the matter decided on the briefs.  The case is thus before us and ripe for disposition.

DISCUSSION

As a general rule, discovery is liberally allowed with respect to any matter, not privileged, which is relevant to the cause being tried. PECO Energy Co. v. Insurance Co. of North America, 852 A.2d 1230 (Pa. Super. 2004).  Scope of discovery is provided for in Pennsylvania’s Rules of Civil Procedure 4003.1 and states as follows:

Rule 4003.1. Scope of Discovery Generally. Opinions and Contentions

 

(a) Subject to the provisions of Rules 4003.2 to 4003.5 inclusive and Rule 4011, a party may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, content, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter.

 

Pa.R.C.P. 4003.1.

A party’s tax returns are subject to production where the information contained in the returns is relevant to the issues involved. Kine v. Forman, 209 A.2d 1 (Pa. Super. 1965).  It has been ruled by the Court of Common Pleas of Luzerne County that where a plaintiff claimed loss of earnings, he was required to produce his personal income tax returns and the returns of his partnership even though they might be inadmissible at the trial.  Gagliardi v. Tozzi, 44 Pa. D. & C. 2d 492 (Pa. Com. Pl. 1968).  It has also been ruled by the Court of Common Pleas of Montgomery County that where examination of tax returns is not necessary in order to obtain particular information and where the returns contain confidential information having no relation to the respective case, a protective order will be issued prohibiting such discovery. Shapiro v. Hofkin, 36 Pa. D. & C. 2d 719 (Pa. Com. Pl. 1965).  Furthermore, courts can limit the production of tax returns to those dates and portions of the return that are relevant to the action.  Appeal of Greco, 30 Pa. D. & C.3d 661 (Pa. Com. Pl. 1984).

Plaintiffs contend that Defendants Dorfhuber and Arias have identified

Defendant Arias’ income but refuse to identify Defendant Dorfhuber’s.  Plaintiffs argue that the income information and tax returns are relevant because the Defendants have “placed their finances directly at issue in this lawsuit by claiming that they will suffer a greater injury and financial hardship if an injunction is granted.”  Plaintiffs contend that the requested information is relevant to determine if that harm and hardship would actually occur.  Plaintiffs also claim that the parties have entered into a confidentiality agreement, and pursuant to that, they may designate the requested documents as confidential if they are concerned about keeping the information secure.

Defendants Dorfhuber and Arias counter Plaintiffs by arguing that the request is vexatious and was only made to embarrass Dorfhuber.[2]  Defendants argue that they have already produced more than sufficient responsive discovery supporting the asserted harm including:

(1) costs incurred in starting the business, including constructing a specially designed building at a cost and taking out a private loan;

 

(2) financial records of the business, including cost and sales information;

 

(3) income and related records for Mr. Arias, the sole owner of the business; and

 

(4) Dorfhuber’s previous deposition testimony where she concedes she makes a base salary exceeding $175,000.

 

The Defendants also contend that Defendant Dorfhuber is not a member of the puppy-breeding business, and Defendant Arias is the sole member.[3]

The Court will not compel production of the tax returns and income information of Defendant Dorfhuber.  The focus of this lawsuit is on the dog breeding business and not on Defendant Dorfhuber’s personal income.  Therefore, the tax returns for the business itself are certainly relevant and discoverable.[4]  The Plaintiffs argue that since the Defendants claim that they will suffer a financial hardship in the event the injunction is granted, they have placed her income directly at issue.  However, the Court finds that the prejudicial value outweighs any probative value.

Furthermore, Defendant Dorfhuber testified in a deposition, “sometimes I may make more than 175,000 a year, sometimes I may not…” (Deposition dated August 25, 2011, p.144).  There is nothing that suggests that Defendant Dorfhuber was not being truthful when making this statement.  Therefore, Plaintiffs know approximately what her yearly income is.

Accordingly, the Motion to Compel is denied.[5]  We will enter an Order consistent with the foregoing.