Morelli v. Alters

Background

Benedict P. Morelli and The Morelli Law Firm, PLLC sued Jeremy Alters. The opinion states that Morelli and Alters were once partners and that the litigation concerned the breakdown of their relationship. Alters sought permission to amend his answer and counterclaims to add allegations against Morelli. Morelli separately moved to quash subpoenas issued to nonparty witnesses and financial institutions.

Motion to Amend

The court applied Federal Rule of Civil Procedure 16(b), which requires a party seeking to change a case-management deadline to show good cause, and Rule 15(a), which generally allows amendments when justice requires. Once a case-management plan sets an amendment deadline, the moving party must primarily show diligence: that it worked diligently and that the deadline could not reasonably have been met.

The deadline to amend the pleadings was March 11, 2020. Although the parties later extended discovery deadlines, they did not create a new deadline for amending the pleadings. Alters sought permission to amend on July 16, 2020. The court found that Alters relied mainly on information that had been publicly available since the beginning of the lawsuit, including alleged improprieties involving Morelli’s litigation against City National Bank and a settlement Morelli negotiated for actor Tracy Morgan. The court concluded that Alters should have investigated whether he had counterclaims when Morelli sued him and should have sought an extension if necessary.

The court also found that allowing the amendments would prejudice Morelli by likely causing additional motion practice and some expansion of discovery. Because Alters failed to show good cause under Rule 16(b), the court did not decide Morelli’s arguments that the proposed amendments were futile or made in bad faith. The motion to amend was denied.

Motion to Quash

A motion to quash asks the court to cancel or limit a subpoena. The court first held that Morelli had standing, meaning he had a sufficient personal interest to challenge subpoenas directed to nonparties. The subpoenas sought financial records in which Morelli had a personal privacy interest.

The court then considered whether the requested information was relevant and proportional to the needs of the case. It held that three subpoenas directed to City National Bank, Esquire Bank, and Funding Holding Inc., doing business as LawCash, sought broad financial information over an extended period. The court found that the subpoenas had little, if any, relevance to the single loan at issue in the case and were substantially overbroad. Because the subpoenas appeared to be a fishing expedition and any relevant information would be disproportionate to the needs of the case, those three subpoenas were quashed.

The court did not limit the subpoena directed to Hirschfield at that time. It appeared more tailored to the case, although some requests might be overbroad. The court expected Hirschfield and Alters to negotiate reasonable limits and stated that it could resolve any remaining dispute.

Disposition

The court denied Alters’s motion to amend his answer. It granted in part and denied in part the plaintiffs’ motion to quash Alters’s subpoenas. The Clerk of Court was directed to terminate the motions at docket numbers 84 and 90.