Phoenix Fashion, Inc. v. Saadia Group LLC, et al.

Background

Phoenix Fashion had obtained a default judgment against the defendants. The court had previously found damages of $4,346,289.99 plus statutory interest from December 20, 2022, and later entered a default judgment for $5,293,539.38.

To enforce that judgment, Phoenix Fashion served Valley National Bank with an information subpoena and restraining notice under New York law. The subpoena sought financial information about the defendants, and the notice restrained the bank from selling, transferring, or assigning property in which the defendants had an interest.

The defendants moved to quash the subpoena. Although they brought the motion under Federal Rule of Civil Procedure 45, the court explained that the subpoena was a post-judgment information subpoena issued under Federal Rule of Civil Procedure 69(a)(2) and New York Civil Practice Law and Rules § 5224.

Court’s Analysis

Rule 69(a)(2) allows a judgment creditor to obtain discovery to help enforce a judgment, using federal procedures or the procedures of the state where the court is located. The court explained that New York law permits an information subpoena before a judgment is satisfied or vacated when the creditor reasonably believes the recipient has information that could assist in collecting the judgment.

The defendants argued that they should have received advance notice under Rule 45(a)(4). The court rejected that argument because the subpoena was not a Rule 45 subpoena duces tecum. The court held that the notice requirement for that type of subpoena did not apply to this information subpoena. The court also rejected the defendants’ due-process argument because they did not identify a property or liberty interest in the information held by Valley National Bank that entitled them to notice.

The defendants also argued that the subpoena was overly broad. The court stated that broad post-judgment discovery is generally permitted, so long as it is calculated to help collect the judgment. It found that the questions were tailored to identifying property or interests that could currently be used to satisfy the judgment.

The court rejected the defendants’ argument that the subpoena sought confidential information about third parties. It explained that the people and entities about whom Phoenix Fashion sought information were the defendants, not third parties, and that the information was relevant to locating executable assets.

Finally, the defendants argued that the subpoena was premature because Saadia had appealed and the default judgment might be vacated. The court noted that Saadia had filed a notice of appeal, but no bond had been filed and no request to avoid the bond requirement had been made. Under Rule 62(d), the court held, an appeal does not prevent enforcement of a judgment when no stay has been obtained. The appeal therefore did not prevent Phoenix Fashion from enforcing the judgment against Saadia or the other defendants.

Disposition

The court denied the defendants’ motion to quash the information subpoena and directed the Clerk of Court to close the motion at Dkt. No. 247. The opinion does not state that the court ordered Valley National Bank to produce any particular document or information; it leaves the subpoena in place.