United States District Court, D. South Dakota, Southern Division
LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., SUPERIOR HOMES, LLC, Plaintiffs/Counterclaim Defendants,
AMERICAN MODULAR HOUSING GROUP, LLC and PAUL THOMAS, Defendants, and WESTERN SHOW HOMES, INC. and AMERICAN MODERN HOUSING GROUP, INC. Defendants/Counterclaim Plaintiffs.
ORDER DENYING DEFENDANTS' MOTION TO QUASH
SUBPOENAS DOCKET NO. 54
VERONICA L. DUFFY UNITED STATES MAGISTRATE JUDGE.
matter is before the court on the basis of diversity
jurisdiction, 28 U.S.C. § 1332, after defendants removed
the matter from South Dakota state court. See Docket
No. 1, 1-1. The parties have consented to this magistrate
judge handling their case pursuant to 28 U.S.C. §
636(c). Now pending is defendants' motion to quash
subpoenas. See Docket No. 54. Plaintiffs oppose the
motion. See Docket No. 65.
Background Facts and Claims
court states the following facts from plaintiffs' second
amended complaint in order to evaluate defendants'
pending motion. Plaintiff Larson Manufacturing Company of
South Dakota, Inc. (Larson) is the parent company of
plaintiff Superior Homes, LLC (Superior). See Docket
No. 58 at p. 1. Both are South Dakota business entities.
Id. Superior is in the business of manufacturing and
selling modular homes. Id. at p. 2.
Western Showcase Homes, Inc. ("Western") is a
Nevada corporation in the business of purchasing, reselling,
and financing modular homes. Id. at p. 2. Defendant
Paul Thomas, a Nevada resident, is the sole member of
American Modular Housing Group, LLC (AMHG, LLC), a Nevada
company in the business of buying and reselling modular
homes. Id. American Modular Housing Group, Inc.
(AMHG, Inc.), is a Canadian corporation with its principal
place of business in Nevada that also buys and resells
modular homes. Id. Thomas is the principal agent and
owner of both AMHG entities. Id.
defendant entities purchased modular homes from Superior and
then re-sold those homes to customers, sometimes arranging
for delivery, set and completion of the home at the
customer's location. Id. at pp. 2-3. Larson and
Superior extended credit to the defendant entities for these
purchases; AMHG would then repay the loans when its customer
paid the defendant entities. Id. at p. 3.
second amended complaint recites that defendant entities
placed orders for fourteen modular homes with plaintiffs.
Plaintiffs constructed the homes. Of the homes that were
delivered to defendants, full payment was never made even
though the complaint alleges the ultimate customers who
received these homes paid defendants. Other modular homes
ordered by defendants were custom-built and never delivered
because defendants never paid for the homes. As to the homes
plaintiffs retain possession of, plaintiffs allege the custom
nature of the homes makes resale of the homes at a reasonable
addition, Larson entered into a loan agreement with Western
which was guaranteed by AMHG, Inc. This loan agreement
ultimately encompassed $14 million in funds. Larson alleges
that Western defaulted on the loan and AMHG, Inc. refused to
pay pursuant to its guarantee. For all these matters,
plaintiffs assert three counts of breach of contract, two
counts of fraud, two counts of conversion, one count each of
debt and guarantee, and one count of piercing the corporate
veil. Plaintiffs also allege defendant Thomas
converted money which was received from third parties and
intended for plaintiffs, but was instead used by Mr. Thomas
for his own personal use. See Docket No. 58 at
¶¶ 15, 20, 49- 51.
their answer to the second amended complaint, defendants
generally deny nearly all of plaintiffs' allegations.
See Docket No. 62. Defendants Western Showcase,
Inc., and American Modular Housing Group, Inc., assert five
counterclaims against Larson and Superior. Docket No. 57.
Those counterclaims include breach of contract (failure to
pay rebates, failure to repay personal loans from Thomas and
failure to provide future promised business); unjust
enrichment (rebates, warranty and service fees); tortious
interference with business expectancy (Aspen Links Country
Club and Aspen Village Properties); breach of contract
(manufacturing defects in modular homes); and fraud and
deceit (fraudulent inducement to sign a mortgage in
connection with Aspen Village and McKenzie Lane, assignment
of mortgage interest in Moose Ridge, fraudulent building
practices). See Docket No. 57 at pp. 7-9.
Defendants/counterclaim plaintiffs Western Showcase, Inc. and
AMHG, Inc. seek compensatory and punitive damages on their
counterclaims, pre- and post-judgment interest,
attorney's fees, and other remedies. Id. at 9.
dates of the business transactions alleged by plaintiffs in
their second amended complaint go back as far as April, 2012,
and extend into the year 2016. See Docket No. 58.
Subpoenas Subject To The Motion to Quash
for defendants has submitted a declaration (Docket No. 56)
summarizing the subpoenas served by the plaintiffs which are
the subject of the defendants' motion to quash. They are
• American Express (Docket 56-1)
• Barclay's (Docket 56-2)
• Bank of America, N.A. (Docket 56-3)
• Capital One Bank, N.A. (Docket 56-4)
• Capital One, N.A. (Docket 56-5)
• Citibank, N.A. (Docket 56-6)
• City National Bank (Docket 56-7)
• Wells Fargo Bank, N.A. (Docket 56-8).
(hereinafter “the subpoenas.”).
the subpoenas requests the non-privileged financial records
from January 1, 2012, through December 1, 2017, pertaining
• Paul D. or Wendy G. (Smith) Thomas;
• Western Showcase Homes, Inc.;
• American Modular Housing Group, LLC and/or;
• American Modular Housing Group, Inc.
counsel served the above-described non-parties with subpoenas
duces tecum seeking the following:
1. All non-privileged account records which are held,
maintained, or controlled with [the named entity] and any of
its parent, subsidiary, and sister entities for the period of
January 1, 2012 to the present relating to any
accounts of the following: Paul Dean Thomas or Wendy
G. (Smith) Thomas; 1463 Graystone Canyon, Las Vegas, NV
89183; Western Showcase ...