Varbero v. Belesis

Background

The plaintiff sued Anastaios P. Belesis and other defendants seeking payment of legal fees allegedly owed under two promissory notes. The plaintiff alleged that Belesis had arranged fraudulent transfers among himself, Tabitha Belesis, and corporate defendants to shield assets from creditors.

On October 7, 2020, the plaintiff served a subpoena on Michael F. Schwartz, a nonparty attorney who represented the defendants in this case. The subpoena requested all financial transactions between January 1, 2016, and the present involving Schwartz’s company and Tabitha Belesis, Crown Enterprises LLC, Lugano Ventuesr LLC, and Anastasios Belesis. The plaintiff argued that discovery suggested Schwartz might have helped hide money from creditors, pointing to certain payments from Schwartz to Tabitha Belesis. Schwartz argued that the request was overbroad and sought information protected by the attorney-client privilege.

Court’s Analysis

Federal Rule of Civil Procedure 26(b)(1) permits discovery of nonprivileged information that is relevant to a claim or defense and proportional to the needs of the case. The court explained that requests directed at an opposing party’s lawyer require particular care because they may burden the adversary process or interfere with a party’s choice of counsel.

The court identified several reasons the subpoena should not be enforced. As written, it could implicate attorney-client communications and attorney work product, including information connected to the pending litigation. Although general attorney-fee arrangements are not usually protected by the attorney-client privilege, particular billing or financial records may reveal a client’s reasons for seeking legal representation, litigation strategy, or the specific legal services provided.

The court also found that the plaintiff had not sufficiently shown that the requested records were more than marginally relevant. The complaint did not allege that Schwartz participated in the asserted fraud or that the defendants transferred money to Schwartz. The subpoena covered transactions beginning in 2016, after the conduct alleged in the complaint. The court described the plaintiff’s argument that Schwartz was a channel for ongoing fraudulent transfers as appearing, on the record before it, to be based largely on speculation.

Finally, the plaintiff had not shown that the information could not be obtained from another source. The court identified financial institutions involved in possible transfers as alternative sources that would not create the same risk of harassing or interfering with the defendants’ choice of counsel.

Disposition

Judge Lewis J. Liman concluded that the burden of the proposed discovery outweighed its likely benefit and that the subpoena was not proportional to the needs of the case. The court granted the motion to quash.

Names in the Opinion

The caption identifies the plaintiff as Antony Varbero and the lead defendant as Anastasios P. Belesis. The body uses variant spellings for those names in places; this summary follows the caption.