Free Order on Motion to Compel - District Court of Arizona - Arizona

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WO

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Fidelity National Financial, Inc., et al., Plaintiffs,

14 vs. 15 Colin H. Friedman, et al., 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants.

) ) ) ) ) ) ) ) ) ) ) )

No. CIV 03-1222 PHX RCB O R D E R

This matter is before the Court on Plaintiffs' motion to compel and motion for sanctions. Mot. (doc. # 119). Plaintiffs

seek an order compelling third party Yariv Elazar to comply with a subpoena for the production and inspection of documents. 5. Id. at 2-

In addition, Plaintiffs seek sanctions in the amount of

$1,170.00, representing attorney's fees incurred in bringing this motion due to Elazar's refusal to comply with their subpoena. at 5-6. On December 4, 2006, a response was filed as being on Id.

behalf of Defendants Farid and Anita Kramer Meshkatai and third

Case 2:03-cv-01222-RCB

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Filed 02/07/2007

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party Yariv Elazar by name.1

Resp. (doc. # 125) at 2, 6.

On

December 8, 2006, Plaintiffs filed their reply. 126).

Reply (doc. #

Having carefully considered the arguments raised, the Court

now rules. I. BACKGROUND On July 12, 2002, Plaintiffs Fidelity National Financial, Inc. and Fidelity Express Network, Inc. obtained a judgment for $8,475,978.00 in the United States District Court for the Central District of California against Defendants Colin H. Friedman, Hedy Friedman, Anita Kramer Meshkatai, and Farid Meshkatai. Fid. Nat'l

Fin., Inc. v. Friedman, No. CV 00-06902-GAF-RZ (C.D. Cal. 2002) (doc. # 235) at 2.2 On November 14, 2002, Plaintiffs registered

the California judgment by filing a certified copy in this Court. (doc. # 1). Post-judgment proceedings in the California action are

currently before the Honorable Gary A. Feess. On July 6, 2006, Plaintiffs filed another action against the judgment debtors in the United States District Court for the Central District of California, alleging RICO violations and fraudulent conveyances in connection with their evasion of the underlying judgment. Fid. Nat'l Fin., Inc. v. Friedman, No. CV 06The RICO action is

04271-CAS-JWJ (C.D. Cal. 2006) (doc. # 1).

currently before the Honorable Christina A. Snyder.

Because counsel has appeared on his behalf, the Court has jurisdiction over Elazar. For ease of discussion, the Court shall hereafter in this Order refer to the party Defendants and Elazar collectively as "Defendants," except as otherwise indicated. The Court takes judicial notice of the related cases in the United States District Court for the Central District of California as matters of public record having a direct relation to the matters in this case between the same parties. See Fed. R. Evid. 201. Case 2:03-cv-01222-RCB -2Document 142 Filed 02/07/2007 Page 2 of 9
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On September 27, 2006, Plaintiffs filed an ex parte application for an order scheduling expedited discovery concerning a motion for preliminary injunction filed by them in the RICO action. Id. (doc. # 63). On October 10, 2006, Judge Snyder issued

an order authorizing a number of expedited depositions and document production requests related to Plaintiffs' motion for preliminary injunction. Id. (doc. # 75).

Meanwhile, in September of 2006, during the course of ongoing investigations3 related to their collection efforts, Plaintiffs apparently learned that the judgment debtors who are Defendants in this action had loaned a large sum of money to Yariv Elazar, a third party residing in Scottsdale, Arizona. # 119) at 7 ¶ 4. Cabanday Decl. (doc.

On October 10, 2006-- the same date as Judge

Snyder's order permitting expedited discovery in the RICO action-Plaintiffs served Elazar with a subpoena issued by this Court for documents related to transactions with the judgment debtors. 5; Mot. (doc. # 119), Ex. 1; Resp. (doc. # 125) at 3. On October 19, 2006, one day before he was to appear, Elazar's counsel sent Plaintiffs a letter objecting to the subpoena, arguing that it was untimely and inconsistent with Judge Snyder's order regarding expedited discovery in the RICO action. 119), Ex. 2 at 2. Mot. (doc. # Id. ¶

Counsel also maintained that Elazar could not be

required to appear in California, and that the subpoena would be unenforceable if costs were not advanced. Id. In an effort to

reach an out-of-court resolution of the matter, Plaintiffs' counsel

Plaintiffs have been conducting post-judgment discovery pursuant to Rule 69(a) of the Federal Rules of Civil Procedure. Case 2:03-cv-01222-RCB -3Document 142 Filed 02/07/2007 Page 3 of 9

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responded to these objections by letter dated October 25, 2006. Mot. (doc. # 119), Ex. 3. Plaintiffs' counsel then sent a second

letter on November 6, 2006, advising Elazar's counsel that Elazar's continued noncompliance would result in the filing of a motion to compel. Mot. (doc. # 119), Ex. 4 at 1-2. As promised, Plaintiffs

filed this motion (doc. # 119) on November 15, 2006. Subsequently, at a status conference on November 27, 2006, Judge Snyder indicated that she would confer with Judge Feess regarding the possibility of appointing a master to oversee discovery in the RICO action and the original action. to Defs.' Resp. (doc. # 131), Ex. E at 21:17-23. II. DISCUSSION Plaintiffs seek an order compelling Elazar's compliance with their subpoena for the production and inspection of documents related to transactions with the judgment debtors. 119) at 3-5. Mot. (doc. # Supplement

Plaintiffs maintain that their request for discovery

from this third party is appropriate under Rule 69(a) of the Federal Rules of Civil Procedure. Id. In addition, Plaintiffs

seek monetary sanctions for attorney's fees related to the research and drafting of this motion to compel, arguing that Elazar's noncompliance with the subpoena has been unjustified. A. Motion to Compel Defendants object to the subpoena served on Elazar on three grounds. First, they contend that the discovery sought is improper Resp. (doc. # 125) at 5. Second, they believe Id. at 5-6.

under Rule 69(a).

that it violates Judge Snyder's order regarding expedited discovery in the RICO action. Id. at 4-5. Finally, they argue that the

discovery sought would violate an order by Judge Snyder regarding -4Document 142 Filed 02/07/2007

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the coordination of discovery in the related cases. 1. Propriety of Request Under Rule 69(a) Defendant's first argument is without merit.

Id. at 3-4.

Rule 69(a) of

the Federal Rules of Civil Procedure unambiguously provides that a judgment creditor "may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held." Fed. R. Civ. P. 69(a) (emphasis added).

Nevertheless, Defendants contend that "Rule 69(a) generally does not contemplate discovery to non-parties in aid of execution of judgment." Resp. (doc. # 125) at 5. Interestingly enough, the

case on which Defendants rely for this erroneous proposition contradicts their position. See Magnaleasing, Inc. v. Staten

Island Mall, 76 F.R.D. 559, 561 (S.D.N.Y. 1977) ("'In aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person . . . .'") (quoting Fed. R. Civ. P. 69(a)). Moreover, as recognized by the Magnaleasing court, the

purpose of post-judgment discovery under Rule 69(a) is to discover "concealed or fraudulently transferred assets." Id. In this

instance, Plaintiffs have made a strong showing that the documents sought from Elazar are both relevant and necessary in light of their discovery of a substantial loan from the judgment debtors to Elazar. See Cabanday Decl. (doc. # 119) at 7 ¶ 4; Mot. (doc. # Accordingly, the Court finds that Plaintiffs'

119), Ex. 1 at 3.

use of Rule 69(a) to seek discovery from Elazar is proper. 2. Judge Snyder's Order in the RICO Action On October 10, 2006, Judge Snyder issued an order authorizing a number of expedited depositions and document production requests -5Document 142 Filed 02/07/2007

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related to a motion for preliminary injunction filed by Plaintiffs in the RICO action. Fid. Nat'l Fin., Inc. v. Friedman, No. CV 06In response to the

04271-CAS-JWJ (C.D. Cal. 2006) (doc. # 75).

present motion to compel, Defendants insinuate that the subpoena here at issue is nothing more than a ruse by Plaintiffs intended to circumvent Judge Snyder's order, which they believe "severely limit[s] discovery in the RICO action." Resp. (doc. # 125) at 4. The order to

The Court does not share Defendants' suspicions.

which Defendants refer simply provides for expedited discovery concerning Plaintiffs' motion for preliminary injunction in the RICO action, which has already been argued and granted. See Fid.

Nat'l Fin., Inc. v. Friedman, No. CV 06-04271-CAS-JWJ (C.D. Cal. 2006) (doc. ## 79, 152) (minutes of order to show cause re preliminary injunction hearing; order granting motion for preliminary injunction). Dealing only with discovery concerning

Plaintiffs' motion for preliminary injunction, Judge Snyder's order neither imposes any "severe limit[s] on discovery" in the RICO action nor, more importantly, does it appear that Judge Snyder intended to seek to bind this Court. The Court also rejects Defendants' suggestion that the close timing of the subpoena and Judge Snyder's discovery order is somehow indicative of Plaintiffs' improper motive. Given the

revelation in September of 2006 of a substantial loan transaction between the judgment debtors and Elazar, see Cabanday Decl. (doc. # 119) at 7 ¶ 4, the Court perceives nothing sinister about Plaintiffs' motives in subpoenaing Elazar in October of 2006 for the production and inspection of documents related to that transaction. Indeed, Defendants cast greater doubt on their own -6Document 142 Filed 02/07/2007

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motives through their silence on the issue of the alleged loan transaction, and their hollow assertions that the documents sought from Elazar are irrelevant. Therefore, the Court finds that

Plaintiffs' efforts to obtain post-judgment discovery from Elazar in the action pending before this Court are proper, and are not affected by any order entered by Judge Snyder in the RICO action. 3. Judge Snyder's Order Regarding Coordination of Discovery In a similar vein, Defendants paint Plaintiffs' present efforts at obtaining discovery in this action as a veiled attempt at circumventing Judge Snyder's plan to coordinate discovery in the RICO action and original action. Resp. (doc. # 125) at 3-4. At a

status conference on November 27, 2006, Judge Snyder indicated that she would confer with Judge Feess regarding the possibility of appointing a master to oversee discovery in those two cases. Supplement to Defs.' Resp. (doc. # 131), Ex. E at 21:17-23. Because the present action arises out of Plaintiffs' registration of the California judgment in this Court, Defendants believe that "Judge Snyder's statements affects [sic] this case." 125) at 4. Resp. (doc. #

Defendants cite no legal authority for this erroneous

proposition. This Court has not been contacted by any other court regarding the possibility of coordinating discovery in all three actions, and is consequently unaware of how the other courts wish to proceed. More importantly, the parties have not petitioned or demonstrated to this Court the need for coordinating discovery with the other courts. Therefore, it would be premature to delay discovery on the

speculation that a master may be appointed with authority to oversee discovery in this case. Post-judgment discovery will

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continue to proceed in this case as it has since its inception with the full cooperation of all parties. Plaintiffs motion to compel will be granted. The parties

should arrange for Elazar to produce the requested documents at a reasonable time and place in Arizona. 3. See Mot. (doc. # 119), Ex.

Alternatively, if the parties agree, they may arrange for

Elazar's production of the requested documents at the California offices of Plaintiffs' counsel at Plaintiffs' expense. B. Motion for Sanctions Plaintiffs seek $1,170.00 in attorney's fees for researching and drafting this motion to compel. Mot. (doc. # 119) at 5-6. The

request is supported by the declaration of Thomas H. Case, reflecting 5 hours of research and drafting at an hourly rate of $235.00. Case Decl. (doc. # 119) at 9 ¶ 2. Although Defendants

have had notice of Plaintiffs' motion for sanctions, the motion is essentially unopposed-- save for the unmeritorious objections to the subpoena discussed above. Resp. (doc. # 125) at 1-6. Under

Local Rule of Civil Procedure 7.2(i), the Court may deem a party's lack of opposition-- or untimely opposition-- as consent to the granting of a motion, and may grant the motion summarily if it is facially meritorious. LRCiv 7.2(i); Henry v. Gill Indus., Inc., The Court finds that

983 F.2d 943, 950 (9th Cir. 1993).

Plaintiffs' request for fees is facially meritorious. A subpoena duces tecum is itself a court order, noncompliance with which may warrant contempt sanctions. 45(e). See Fed. R. Civ. P.

The Court finds that counsel's hourly rate of $235.00 for 5

hours of research and drafting are reasonable measures of the fees incurred by Plaintiffs in bringing this motion. -8Document 142 Filed 02/07/2007 See Case Decl.

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(doc. # 119) at 9 ¶ 2.

More importantly, as explained above,

Defendants' underlying objections to the subpoena served on Elazar border on frivolous. Defendants have not raised any other grounds

in their response to suggest that an award of fees would be unwarranted under the circumstances. Plaintiffs' motion for

sanctions will therefore be granted, ordering Elazar to pay monetary sanctions of $1,170.00 to Plaintiffs for attorney's fees incurred in bringing this motion to compel. III. CONCLUSION In light of the foregoing analysis, IT IS ORDERED that Plaintiffs' motion to compel (doc. # 119) is GRANTED. Yariv Elazar shall produce the requested documents as

described in the foregoing order. IT IS FURTHER ORDERED that Plaintiffs' motion for sanctions is (doc. # 119) GRANTED. IT IS FURTHER ORDERED directing Yariv Elazar to pay monetary sanctions in the amount of $1,170.00 to Plaintiffs for attorney's fees incurred in bringing this motion to compel. DATED this 6th day of February, 2007.

Copies to counsel of record

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