Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01258-LTB-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:04-cv-1258-LTB-BNB STUDENT MARKETING GROUP, INC., Plaintiff, v. COLLEGE PARTNERSHIP, INC., f/k/a COLLEGE BOUND STUDENT ALLIANCE, INC., Defendant. STUDENT MARKETING GROUP, INC.'S RESPONSE IN OPPOSITION TO MOTION FOR PROTECTIVE ORDER Plaintiff Student Marketing Group, Inc. ("SMG"), by and through its counsel, files this Response in Opposition to Motion for Protective Order and in support thereof states as follows: INTRODUCTION College Partnership, Inc.'s ("CPI's") Motion for Protective Order and/or to Quash or Modify Subpoena ("Motion") simply ignores key facts and the procedural posture of this Motion and mischaracterizes many other things, including SMG's position regarding rescheduling of the Rule 69 exam that is the subject of the Motion. The last minute Motion, which was filed just 15 hours before a continuation of a Rule 69 debtor's examination that began in October and was scheduled to reconvene before Magistrate Judge Boland, is a transparent attempt to avoid CPI's final day of reckoning in this matter. In another attempt to stave off SMG's debt collection efforts, CPI has refused to provide even the most basic information about its assets, e.g., the location of its bank accounts,

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information to which SMG is clearly entitled. Instead, CPI opted to file this Motion causing more expense, more delay and more needless filings with the Court. CPI's Motion should be denied because SMG is absolutely entitled to the information requested and the purported procedural defects claimed by CPI do not justify CPI's refusal to provide it promptly. Accordingly, CPI should be ordered to appear for and produce information at a debtor's exam within ten (10) days, CPI should be ordered to produce, within two (2) days, a list of its current bank accounts that is current as of the date and time that the information is provided (to the extent CPI opens or closes new bank accounts after that date, CPI should have an ongoing duty to provide SMG with such current information), and SMG should be awarded its fees and costs for opposing this Motion (to which SMG is contractually entitled). FACTUAL BACKGROUND A. SMG's Efforts to Execute on the Judgments In This Matter. On August 25, 2005, judgment was entered against CPI in favor of SMG in the amount of $127,462.59. On October 12, 2005, SMG conducted a debtor's exam pursuant to Rule 69 for purposes of discovering CPI's assets available for execution. CPI's designee, Janice Jones, appeared for the debtor's exam pro se. SMG sought both testimony and the production of documents that would identify CPI's assets available for execution, including its bank accounts and personal property. At the debtor's exam in October, CPI produced a number of documents but failed to produce all of the information requested. Moreover, during the course of the debtor's exam, CPI's designee was unable to provide information to which SMG was clearly entitled. See Exhibit A, excerpts from the testimony of Janice Jones from the October 12, 2005 debtor's exam, p.11:6-10; p.24:11-17; p.68:14-19; p.30:24-p.31:3; p.31:17-25; p.33:9-11; p.74:812; p.34:1-10; p.35:7-24; p.37:11-15; p.38:5-7; p.45:13-p.59:14; p.53:12-14; p.60:13-25; p.62:10-12; see also Exhibit 1 to CPI's Motion, for a listing of the information that CPI was

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unable to provide at the October debtor's exam. Because of the deficiencies in the information provided by CPI, the parties agreed that the Rule 69 debtor's exam would be held open and that CPI would provide supplemental information. See Exhibit A, p.75:16-p.76:23. Eventually, after SMG successfully garnished one of CPI's bank accounts containing funds to satisfy a portion of the judgment, CPI paid SMG the balance outstanding on the first judgment. Thereafter, on January 3, 2006, the Court awarded a second judgment against CPI in favor of SMG. This judgment was based on SMG's contractual right to recover attorneys' fees and expenses incurred in this matter from CPI. After the entry of the second judgment, SMG sent CPI a written demand for CPI on January 24, 2006 to produce the additional documents and/or to supplement the incomplete testimony which was not provided or given in response to the earlier Rule 69 subpoena. See Exhibit 1 to CPI's Motion. SMG further advised that it would accept the supplemental testimony in written form, provided it is signed under oath by a corporate officer of CPI. Id. Receiving no immediate response to the invitation for informal discovery, SMG served the Rule 69 subpoena on CPI to avoid delay in obtaining the information necessary to execute on the second judgment. Even though SMG's invitation for informal discovery remained open, CPI ignored this invitation. Accordingly, the continuation of the debtor's exam was scheduled for February 1, 2006 before Magistrate Judge Boland, seven (7) days after service of the subpoena. See Exhibit B, Return of Service on Rule 69 Subpoena; Exhibit 2 to CPI's Motion, Rule 69 Subpoena. B. CPI Refused SMG's Offer To Reschedule The Continuation of the Debtor's Exam If CPI Would Simply Identify Its Current Banking Institutions. On January 31, 2006, the day before the continuation of the debtor's exam was scheduled to occur, counsel for CPI requested that the debtor's exam be postponed, citing a purported scheduling conflict faced by CPI's counsel. Since CPI's representative appeared pro se at the first portion of the Rule 69 exam in this matter, it is unclear why counsel's scheduling -3-

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conflict required postponement of the continuation of the examination. CPI has never offered an explanation for this inconsistency. Nonetheless, and squarely contrary to CPI's assertion that counsel for SMG "refused to reschedule the deposition," SMG offered to postpone the deposition if CPI would provide SMG with a list of CPI's current banking institutions and if CPI's counsel would provide alternate dates within the next few days to reconvene the exam. A copy of an email from SMG's counsel to CPI's counsel detailing this discussion is attached as Exhibit C. These two conditions were necessary because SMG, relying upon information supplied by Ms. Jones in the first part of the Rule 69 exam, already had served writs of garnishment on banks identified by Ms. Jones during the Rule 69 examination in October. Those writs, however, were returned with a notation that CPI had no assets at the identified banks. In fact, at least one of these accounts had been closed for nearly two years. It was therefore clear that the information provided by Ms. Jones at the portion of the Rule 69 debtor's exam conducted in October was incomplete, outdated and/or inaccurate. Rather than supplying SMG with the basic, limited information to which SMG is clearly entitled and selecting a mutually convenient date for the continuation of the Rule 69 exam, CPI filed the instant Motion.1 ARGUMENT
1

In an effort to resolve the dispute in the most efficient and cost effective manner as possible, counsel for SMG also contacted Magistrate Judge Boland (before whom the examination was scheduled to be conducted the following day) to determine if he was available to resolve the dispute on an expedited basis, without formal motion practice. Magistrate Judge Boland agreed to hear the dispute at 4:00 p.m., the same day counsel for CPI raised her scheduling conflict. Counsel for CPI, however, asserted that she was in a meeting "all day" and would not be available at 4:00 p.m. to allow Magistrate Judge Boland to resolve the dispute. Nonetheless, CPI filed the motion for protective order at 5:47 p.m. that day, less than 4 hours after CPI rejected Magistrate Judge Boland's offer to resolve the dispute in a short telephone conference.

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A.

SMG Is Entitled To the Information Requested and the Purported Procedural Deficiencies Do Not Entitle CPI to Relief. Rule 69 of the Federal Rules of Civil Procedures identifies the process to enforce

a judgment for the payment of money. Specifically, Rule 69 contemplates that judgment creditors enforce a judgment through the use of writs of execution. Rule 69 further provides that "[i]n aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person, including the judgment debtor." Fed. R. Civ. P. 69. To that end, on October 12, 2005, SMG conducted a debtor's exam pursuant to Rule 69 for purposes of discovering the assets of CPI available for garnishment. SMG sought the production of documents from CPI that would identify CPI's assets including its bank accounts and personal property. CPI produced a number of documents at the debtor's exam in October, however, CPI failed to produce all the information requested. Moreover, during the course of the debtor's exam, CPI's designee was unable to provide information to which SMG was clearly entitled. Accordingly, after the entry of the second judgment on January 3, 2006, SMG sent CPI a written demand for CPI to produce the additional documents and/or the supplementation of testimony which were not produced or given in response to the earlier Rule 69 subpoena. SMG further advised that it would accept the supplemental testimony in written form, provided it is signed under oath by a corporate officer of CPI. CPI did not respond to this invitation, so SMG was entitled to reconvene the Rule 69 debtor's exam so that it could obtain the necessary information to execute on its judgment. Notwithstanding SMG's undisputable entitlement to the information, CPI claims that several procedural reasons justify not only a protective order in its favor, but also its fees and costs incurred in bringing the instant Motion. Each of the reasons asserted by CPI, however, is without merit and fails to consider the full factual scenario surrounding SMG's issuance of the Rule 69 subpoena.

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First, contrary to CPI's assertion, leave of court is not required because this is not a "second" deposition. This debtor's exam was a continuation of a debtor's exam that SMG begun back in October and held open because CPI's designee did not provide all responsive information and did not know the answers to a number of questions posed to her. See Exhibit A. Accordingly, this was not a second deposition, but a continuation of an earlier debtor's exam. Moreover, to the extent that this is considered a second deposition, there is a "second" judgment in place that should allow for a "second" debtor's exam, particularly when the debtor supplied incomplete, outdated and incorrect information during the first exam. Second, contrary to CPI's assertion, the Rule 69 subpoena was served with a sufficient notice period and with a reasonable time for compliance. D.C.Colo.L.CivR 45.1 provides that a subpoena shall be served at least 48 hours before the time for appearance set in the subpoena. See also Frequently Asked Questions associated with Rule 69 Proceedings at http://www.co.uscourts.gov/faq-main.htm. The Rule 69 subpoena was served on CPI on January 25, 2006, 7 days prior February 1, 2006, the time for appearance set in the subpoena. See Exhibit B. Accordingly, the subpoena was served with a sufficient notice period. Although CPI points to D.C.Colo.LcivR. 30.1, which provides the timeframe for noticing a discovery deposition, Rule 30.1 is not applicable here. SMG was not noticing a discovery deposition, but instead was serving a Rule 69 subpoena. There is a common sense reason for distinguishing between the two situations, as the Rules here do. Discovery in aid of execution, particularly when the debtor appears to be attempting to hide its assets and the identity of its banking institutions, should be conducted on a more expedited basis than general discovery in the ordinary course of litigation. Accordingly, CPI was provided ample notice and CPI's argument to the contrary is incorrect.

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CPI's assertion that there was not sufficient time for compliance is likewise factually flawed. SMG agreed to postpone the debtor's exam on condition that CPI identifies its current banking institutions. This information could be gathered and provided in a matter of minutes. Moreover, the documents requested in the subpoena at issue were nearly identical to the documents requested with the earlier portion of the Rule 69 debtor's exam which was conducted in October. At the conclusion of that exam, CPI agreed that it would gather and produce the documents that it failed to produce in the first instance. When the second judgment was issued, surely it came as no surprise to CPI that SMG would resurrect the same requests that it had made in October 2005 ­ over 3 months ago ­ in order to execute on the latter judgment. Accordingly, CPI's assertion that it had insufficient time to comply is without merit. Third, the request for the "creation of new documents" is borne out of CPI's inability to provide specific information at the first portion of the debtor's exam and clearly is reasonable under the circumstances. While it is entirely possible that the subpoena and the correspondence from Attorney Scheid would require CPI to create new documents (such as a list of assets which are owned by CPI versus those that are leased), SMG's request for this type of information was precipitated by Ms. Jones's claimed uncertainty at the earlier debtor's exam regarding exactly which assets are owned by CPI versus those that are leased by CPI. SMG, as a judgment creditor, has a right to seize assets and personal property to collect its judgment. SMG is not interested in seizing assets owned by third parties that are in the possession of CPI. Accordingly, SMG is entitled to a listing of such information, particularly since CPI's designee claimed not to know this information in the first instance. Fourth, CPI's assertion that SMG did not confirm the availability of opposing counsel before sending the Rule 69 subpoena ignores the fact that Ms. Jones appeared pro se at the first part of the debtor's exam. Based on her prior lack of representation, SMG had no basis

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to expect that CPI would desire representation and bring counsel to the continuation of the debtor's exam. Further, as identified as Exhibit 1 to CPI's Motion, SMG's counsel attempted to keep costs down by inviting CPI to provide the supplemental documentation in lieu of a continuation of the debtor's exam. As specifically stated by SMG's counsel: Student Marketing Group hereby requests that College Partnership supplement its prior document production and its prior testimony by this Friday, January 27, 2006. We will accept the testimony in written form, provided it is signed under oath by a corporate officer of College Partnership. Otherwise, Student Marketing Group will immediately reconvene the Rule 69 deposition. See Depo. Trans. 7576:16-23. Exhibit 1 to CPI's Motion. CPI declined its invitation and failed to produce the requested documentation. Accordingly, it was CPI and not SMG who has needlessly caused increased expense. WHEREFORE, Plaintiff Student Marketing Group, Inc. respectfully requests that the Court deny CPI's Motion for Protective Order, order CPI to appear for and produce information at a debtor's exam within ten (10) days, order CPI to produce, within two (2) days, a list of its current bank accounts that is current as of the date and time that the information is provided (to the extent CPI opens or closes new bank accounts after that date, CPI should have an ongoing duty to provide SMG with such current information), and award SMG its attorneys fees and costs for opposing this Motion (to which SMG is contractually entitled). Dated: February 3, 2006 Respectfully submitted: s/R. Daniel Scheid ______________ LEWIS SCHEID LLC R. Daniel Scheid River Point Building 2300 Fifteenth Street, Suite 320 Denver, CO 80202 Telephone: (303) 534-5040

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Facsimile: (303) 534-5039 KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP Patrick J. McElhinny, Esquire Dianna S. Karg, Esquire 535 Smithfield Street Henry W. Oliver Building Pittsburgh, PA 15222 Telephone: (412) 355-6500 Facsimile: (412) 355-6501 Counsel for Plaintiff, Student Marketing Group, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on this 3rd day of February, 2006, I electronically filed the foregoing STUDENT MARKETING GROUP, INC.'S RESPONSE IN OPPOSITION TO MOTION FOR PROTECTIVE ORDER with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Rosemary Orsini, Esquire Brian Matise, Esquire BURG, SIMPSON, ELDREDGE, HERSH, JARDINE, P.C. [email protected] [email protected]

s/Claudia Cooper