First Capital Real Estate Investments, L.L.C. v. SDDCO Brokerage Advisors, LLC
- John Koeltl
- 1:18-cv-02013
- U.S. District Court · Southern District of New York
- 10
In First Capital v. SDDCO, Magistrate Judge Fox denied, in part, and granted, in part, SDDCO’s post-judgment discovery motion, ordering subpoena answers and a fee application.
First Capital was ordered to answer the April 5, 2019 information subpoena, and Joshua Brinen was ordered to answer two questions in the March 1, 2019 subpoena. SDDCO was permitted to seek reasonable attorney’s fees incurred on the motion.
What happened
First Capital Real Estate Investments, L.L.C. v. SDDCO Brokerage Advisors, LLC concerned SDDCO’s efforts to obtain information to enforce a judgment against First Capital. SDDCO argued that First Capital and its attorney, Joshua Brinen, had not fully or truthfully answered subpoenas and that First Capital should post security for the judgment.
First Capital opposed the motion, denying that its responses were incomplete or untruthful. It argued that the court could not require it to post a security bond based on alleged obstruction and that there was no basis for contempt or fees because no discovery order had been violated.
Magistrate Judge Kevin Nathaniel Fox denied, in part, and granted, in part, SDDCO’s motion. He declined to require First Capital to post a bond or to provide more information in response to the March subpoena, but ordered Brinen to answer two questions and First Capital to answer the April subpoena; he also permitted SDDCO to file an application for reasonable attorney’s fees.
The detailed version
- First Capital Real Estate Investments, L.L.C. v. SDDCO Brokerage Advisors, LLC · No. 1:18-cv-02013
- John Koeltl
- Jan. 21, 2020
Background
SDDCO moved for an order requiring First Capital to post a supersedeas bond, alternatively requiring First Capital and its attorney, Joshua Brinen, to comply with post-judgment discovery, holding First Capital and Brinen in contempt or sanctioning them, and awarding attorney’s fees and expenses.
SDDCO relied on post-judgment information subpoenas and a restraining notice served in March 2019. It asserted that First Capital’s March response said it had no bank accounts and that its assets had been closed or levied in connection with another judgment, while a later response said First Capital owned more than $297 million in securities in private companies or a non-publicly traded real estate investment trust. SDDCO argued that this discrepancy showed the responses were incomplete or untruthful.
SDDCO also challenged Brinen’s reliance on attorney-client privilege in refusing to answer questions about contracts, transfers of assets or funds, fee arrangements, and payments to his law firm. It contended that First Capital never answered a second information subpoena served in April 2019. First Capital disputed these allegations and argued that the requested bond, contempt order, sanctions, and fees were unwarranted.
Legal standards
Federal Rule of Civil Procedure 69(a)(2) allows a judgment creditor to obtain discovery from any person, including the judgment debtor, to help collect a judgment. The court explained that post-judgment discovery is generally broad but must be aimed at assisting collection. Federal Rule of Civil Procedure 62(b) allows a party to obtain a stay of enforcement after judgment by providing a bond or other security approved by the court.
Rulings on the motion
The court declined to order First Capital to post a supersedeas bond based on alleged obstruction. It explained that Rule 62 concerns using a bond or other security to obtain a stay, while SDDCO sought a bond as a response to alleged conduct. SDDCO cited no authority permitting the requested order, so that request was not warranted.
The court also declined to order First Capital to provide additional answers to the March 1, 2019 information subpoena. SDDCO did not identify information that First Capital had failed to provide or explain why additional responsive information existed. The court also found that SDDCO had not provided evidence supporting its assertion that a financial document was forged or that Brinen had lied about the responses.
The court reached a different conclusion concerning Brinen’s answers to questions 5 and 9 of the March subpoena. It stated that, absent special circumstances, retainer agreements, a client’s identity, invoices, and payment of legal fees generally are not protected by attorney-client privilege. Because First Capital did not address SDDCO’s challenge to Brinen’s privilege objections, the court overruled those objections and required Brinen to answer questions 5 and 9.
The court found that First Capital had failed to answer the April 5, 2019 information subpoena and had provided no explanation for that failure. It ordered First Capital to provide timely answers and stated that failure to obey the order could lead to sanctions, including contempt and monetary sanctions. The court also found that First Capital’s unexplained failure warranted an award of the reasonable attorney’s fees SDDCO incurred in connection with the motion, and directed SDDCO to file a fee application.
The court did not consider SDDCO’s argument that sanctions were available under the court’s inherent power because SDDCO raised that argument for the first time in its reply brief.
Disposition
The court concluded that SDDCO’s motion was denied, in part, and granted, in part. By January 28, 2020, Brinen had to answer questions 5 and 9 of the March subpoena, First Capital had to answer the April subpoena, and SDDCO had to file its application for reasonable attorney’s fees. Any challenge to the amount of fees was due by January 31, 2020, with a reply due by February 4, 2020.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.