Warshaw Group Inc. v. Materialink LLC

Background

On September 13, 2023, the court entered a default judgment against Materialink LLC after it failed to defend or appear in the action. The judgment awarded Warshaw Group Inc. $166,704.48, plus $22,118.08 in prejudgment interest and post-judgment interest under 28 U.S.C. § 1961.

To obtain information relevant to enforcing that judgment, Warshaw personally served an information subpoena on Materialink’s registered agent, James Smith, on November 28, 2023. The subpoena sought information to identify assets that could satisfy the judgment. Materialink did not respond. Warshaw later emailed Smith seeking compliance, but that effort was also ignored.

Warshaw then moved to compel Materialink to respond, asked the court to hold Materialink in contempt, and requested that the court reserve jurisdiction to award fees and costs related to the failure to answer the subpoena. Warshaw served the motion on Smith by mail and personal service. The docket showed no response from Materialink.

Court’s Analysis

Federal Rule of Civil Procedure 69 allows a judgment creditor to enforce a federal money judgment using the procedures of the state where the federal court is located and to use federal or state discovery procedures to obtain information relevant to satisfying the judgment. Under applicable New York law, a judgment creditor may use an information subpoena to obtain that information. If the recipient does not respond within seven days, a court may order compliance.

The court concluded that Warshaw was entitled to the information requested, that the subpoena had been properly served, and that the requested information was discoverable under Rule 69(a)(2). The court therefore granted the motion to compel and reserved jurisdiction to award appropriate fees and costs arising from Materialink’s noncompliance.

The court found the contempt request premature. It explained that courts in the Second Circuit often first issue an order compelling compliance before imposing contempt for failure to obey a subpoena. New York law also requires a court order before failure to comply with an information subpoena can be punished by contempt.

Disposition

The court granted Warshaw’s motion to compel and denied its motion to hold Materialink in contempt without prejudice. Materialink was ordered to provide full and complete responses to the subpoena no later than thirty days from the date of the order. The court cautioned that Materialink could be immediately held in contempt for failing to comply with that order.

Warshaw was directed to serve the information subpoena and the order again on Materialink by first-class mail with a return receipt requested and by email within three days, and to file proof of service within two days after service.