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Sberbank of Russia v. Traisman

United States District Court, D. Connecticut

August 23, 2016



          Warren W. Eginton Senior United States District Judge.

         In this action, plaintiff Sberbank of Russia sought to enforce its rights under three guaranty agreements executed by defendant Yuri Traisman in connection with commercial loans issued by plaintiff to a Russian company known as Sealand LLC. Traisman asserted affirmative defenses and counterclaims alleging bad faith conduct, failure to account for certain payments, lack of actual loan default, improper execution of the guaranties, and abuse of process.

         In prior rulings on summary judgment, this Court found in favor of Sberbank on its claims and against Traisman, and against Traisman on his affirmative defenses and counterclaims against Sberbank. After the Court issued a judgment for approximately $7.5 million, defendant failed to pay any amount owed under that judgment. Plaintiff pursued post-judgment discovery, issuing several subpoenas upon third parties. Defendant has filed motions to quash the post-judgment subpoenas and for protective order; third-party Kolbrenner & Alexander, LLC has filed a motion to quash; and plaintiff has filed a motion to compel Kolbrenner & Alexander, LLC's compliance with plaintiff's subpoena. For the following reasons, the motions to quash and for a protective order will be denied; and plaintiff's motion to compel will be granted.


         Pursuant to Federal Rule of Civil Procedure 45, a party may serve a subpoena commanding a nonparty “to attend and testify” or to “produce designated documents.” A & R Body Specialty and Collision Works, Inc. v. Progressive Cas. Ins. Co., 2013 WL 6511934, *1 (D. Conn.). At the same time, Rule 45(c)(3)(A)(iv) mandates that a court quash or modify a subpoena that “subjects a person to undue burden.” The party seeking to quash a subpoena bears the burden to show that compliance with the subpoena will prove burdensome. Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Americas, 262 F.R.D. 293, 299 (S.D.N.Y. 2009).

         Whether a subpoena imposes an undue burden depends upon factors such as relevance, the requesting party's need for the documents, the breadth of the document request, the time period covered by it, the particularity with which the documents are described, and the burden imposed. Concord Boat Corp. v. Brunswick Corp., 169 F.R.D. 44, 48 (S.D.N.Y. 1996). In considering the question of an undue burden, the Court should inquire into the reasonableness of the subpoena and balance the interests served by compliance against those served by quashing it. Aristocrat Leisure Ltd., 262 F.R.D. at 300. The Court retains discretion in determining whether the subpoena should be quashed due to an undue burden. In re Fitch, Inc., 330 F.3d 104, 108 (2d Cir. 2003).

         Federal Rule of Civil Procedure 69(a)(2) provides that a judgment creditor may conduct broad post-judgment discovery “[i]n aid of the judgment or execution.” EM Ltd. v. Republic of Argentina, 695 F.3d 201, 207-108 (2d Cir. 2012). Judgment creditors are “entitled to a very thorough examination of a judgment debtor with respect to its assets, including discovery of the identity and location of any of the judgment debtor's assets, wherever located.” British Int'l Ins. Co. Ltd. v. Seguros La Republica, S.A., 2000 WL 713057, at *5 (S.D.N.Y. June 2, 2000).

         In response to this Court's order granting Sberbank's application for a prejudgment remedy (“PJR”), Traisman provided financial disclosures, which indicated that he was the current or former owner of six different companies, and that he held only $17, 275 in assets other than his 50% interest in his property in Greenwich, Connecticut.[1] Traisman submitted documents in support of his affidavit or other motions that showed he had monthly credit card bills of approximately $20, 000 for personal expenses, monthly mortgage payments of $9, 400, and monthly taxes of $5, 500. Accordingly, Traisman's disclosures raise a question of whether he has additional assets that he uses to afford such monthly expenses.

         Sberbank argues that Traisman lacks standing to object to the subpeonas on third parties such as banks, accounting firms, insurance firms and Airbnb. However, for purposes of this ruling, the Court assumes that Traisman has standing to object to the subpeonas. Nevertheless, the Court finds that Traisman's objections lack merit.

         Wells Fargo, JP Morgan Chase Bank, First Niagara Bank, Palm Beach Community Bank

         Traisman objects to the Sberbank's subpoenas served upon institutions where he banks on the basis that the date range of the subpoena requests are too broad and unnecessarily invade his privacy. However, a judgment creditor may request asset information from banks during post-judgment discovery, EM Ltd., 695 F.3d at 207, and a judgment-debtor's privacy interest does not generally outweigh the judgment-creditor's entitlement to post-judgment discovery. Universitas Educ., LLC v. Nova Group, Inc., 2013 WL 57892 at *5.

         Traisman complains that Sberbank requests records from a time period prior to the commencement of the litigation and from his wife, who is not a party to this litigation. Sberbank asserts that Traisman's prior transfer of his interest in the Greenwich property to his wife after Sealand defaulted on its loan payments to Sberbank indicates that he may have a history of concealing assets.[2] Thus, Sberbank seeks discovery into Traisman's financial transactions prior to the time that Traisman guaranteed Sealand's debt, and into transfers to entities or individuals that may have facilitated concealment of assets.

         Sberbank is entitled to a broad inquiry to discover Traisman's hidden assets, if any. GMA Accessories, Inc. v. Electric Wonderland, Inc., 2012 WL 1933558, at *4 (S.D.N.Y.). However, inquiry into the assets of a non-party is only permitted “where the relationship between the judgment debtor and the non-party is sufficient to raise a reasonable doubt as to the bona fides of the transfer of assets between them.” Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 561-62 (S.D.N.Y. 1977). Post-judgment discovery into the assets of a non-party requires “a somewhat heightened showing of necessity and relevance” through some demonstration of concealed or fraudulent transfers or an alter ego relationship. Uniden Corp. of America v. Duce Trading Co., LTD., 1993 WL 286102, at *1 (W.D.N.Y. July 19, 1993). In light of Traisman's conveyence of his property interest to his wife, the Court finds that Sberbank is entitled to conduct discovery into Nelly Traisman's banking records. Sberbank's subpoenas served upon the banks are reasonably calculated to assist in identifying whether Traisman has hidden any assets that may be used to satisfy the judgment. The motions to quash will be denied.

         Traisman's ...

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