MIAMI – The U.S. District Court for the Southern District of Florida rejected a subpoena March 12 demanding records from an accounting firm in a dispute over events that allegedly took place in a golf course country club development.
“Horton (defendant) also must be prepared to show the relevance of any requested financial records, consistent with the relevance standard for discovery purposes,” the District Court opinion held.
The defendant D.R. Horton Inc., a Texas-based home construction company, is being sued by the plaintiff West Coast Investors LLC (WCI). The suit was filed in September of 2019.
The dispute is over the construction of housing lots for the planned Tesoro Community, a housing development located next to the Tesoro Country Club golf course in Port St. Lucie.
WCI is the land owner/developer and owns and operates the Tesoro Country Club and the Tesoro Property Owners Association. WCI entered into a contract with Horton to build houses on a group of lots within the Tesoro development.
“Each side alleges that the other fell short of its contractual obligations,” the court brief said. “WCI complained Horton fell short of its house construction goal which caused the Tesoro Country Club to fall short of needed new memberships.”
That allegedly had an adverse impact on the Country Club and the extent of its offerings, the court opinion said, bringing down property values.
Horton laid blame with WCI, alleging that the property owner reduced the scope of the Tesoro Country Club's offerings, which made it harder for it to sell its lots to new residents.
Officials of the construction company decided to cease further construction activity given what they said was the loss of Country Club incentives and the cost of club fees.
Horton sent a subpoena to the accounting firm of Lamn, Krielow & Dytrych, PA. (LKD), seeking documents related to services provided by the firm for the Tesoro Property Owners Association and the Tesoro Country Club.
“Horton believes the Tesoro Property Owners Association hired LKD to provide accounting services for the 2011 to 2014 fiscal period,” the brief said. “All that the record shows is that the Tesoro Property Owners Association hired LKD to perform an audit for the year ending December 31, 2014. This court sees no indication in the available record the Tesoro Country Club hired LKD at any time. This court assumes the Association and Club are separate legal entities.”
The court determined that the range of documents being sought was “very broad,” invoices, billings, provisions of service and correspondence. Horton also sought documents relating to work LKD has done including all tax returns, financial accounting statements, bookkeeping, liability assessments, audits and budgeting.
“Horton seeks LKD's entire file related to the Association and the Club,” the opinion said. “The last part of the subpoena in which Horton seeks the entire files renders redundant the rest of the subpoena because it is all-inclusive,” the court opinion said.
The brief said statutes protect confidentiality between an accounting firm and its client. There was also no proof the Country Club was a client of LKD during the time period in question.
The U.S. District Court quashed the subpoena requested by Horton but left open the possibility the firm could revive a request to both the Country Club and the Tesoro Property Owners Association for separate subpoenas.