United States District Court, D. Arizona
DOMINIC W, LANZA UNITED STATES DISTRICT JUDGE.
before the Court is a motion to quash/modify filed by
non-parties Wilenchik & Bartness, P.C. (“the
Wilenchik Firm”) and Lisa Loftis. (Doc. 179.) The
motion is directed at a pair of Rule 45 deposition subpoenas
that were issued by CWT Canada II Limited Partnership,
Resource Recovery Corporation, and Jean Noelting
(collectively, the “Judgment Creditors”), who
have filed an opposition to the motion. (Doc.
184.) As explained below, the motion will be
granted in part and denied in part.
a civil interpleader action in which two sets of
adversaries-(1) Wyo Tech Investment Group LLC (“Wyo
Tech”) and (2) the Judgment Creditors-are fighting over
2016, the Judgment Creditors obtained a $7 million judgment
against Dennis Danzik in New York state court.
October 2017, the Judgment Creditors attempted to collect on
a portion of the outstanding judgment by freezing a bank
account at Wells Fargo, which had a balance of $546, 282.55.
Notably, this account wasn't held in Danzik's name.
Instead, it was held in the name of Wyo Tech. To freeze the
account, the Judgment Creditors' attorneys utilized an
unusual procedural tool known as a “restraining notice,
” which is governed by section 5222 of the New York
Civil Practice Law and Rules.
Tech protested when it learned its account had been frozen,
arguing that it had no connection with Danzik and that Wells
Fargo should immediately release the frozen funds. In
response, Wells Fargo filed an interpleader action in this
court. Functionally, this meant that Wells Fargo deposited
the disputed funds into the Court's bank account so the
Court could referee the fight between Wyo Tech and the
Judgment Creditors over who has the superior entitlement to
The Ruling That The Judgment Creditors Are Entitled To
Conduct Discovery Concerning The Legal Fees Remitted To The
Wilenchik Firm By Wyo Tech
the key disputed issues in this case has been whether the
Judgment Creditors should be entitled to conduct discovery
concerning their theory that Danzik secretly controls Wyo
Tech or otherwise has an interest in Wyo Tech's funds. In
a lengthy order issued in April 2019, the Court concluded
that the Judgment Creditors should be entitled to pursue such
discovery. (Doc. 119.)
order, the Court also addressed a related discovery dispute,
which concerned a Rule 45 document subpoena the Judgment
Creditors had issued to the Wilenchik Firm in February 2019.
(Id. at 11-13.) That subpoena sought all
“documents sufficient to show all payments made to
Wilenchik by Wyo Tech and by third party Inductance Energy
Corporation (‘Inductance') and the client(s) on
whose behalf and the matter for which the payments were
made.” (Id. at 11.) The Judgment Creditors
argued the subpoena was appropriate because they had a
good-faith basis to believe Wyo Tech and Inductance had been
paying the Wilenchik Firm to represent Danzik in various
legal matters and “the more money Wyo Tech paid for
Danzik's and his cronies' legal fees-especially in
matters in which Wyo Tech has no interest-the more probable
it is that Danzik has an interest in the disputed
funds.” (Id., citation omitted.) The Wilenchik
Firm disagreed, arguing the subpoena should be quashed
because, inter alia, the payment records are
irrelevant. (Id.) The Court rejected the Wilenchik
Firm's relevance argument and ordered it to comply,
reasoning as follows:
To be sure, the Court agrees with Wilenchik that whether Wyo
Tech paid Danzik's attorneys' fees does not
conclusively establish Danzik has an interest in the
interpleaded funds. But the standard for relevance does not
require that the evidence sought conclusively prove any issue
in the case. If Wyo Tech paid Danzik's attorneys'
fees, that at least makes it more likely Danzik had an
interest in Wyo Tech's funds. [Citing New York cases.]
Additionally, because some of Wyo Tech's funds were
transferred to Inductance for the ‘opening' of an
Inductance account immediately before the restraining notice
was issued on the Wyo Tech account, whether Inductance paid
Danzik's legal bills also bears on whether Danzik has an
interest in the interpleaded funds.
(Id. at 13, citations omitted.)
The Wilenchik Firm's Belated Production Of The
Subpoenaed Payment Records
The Motion Papers
was not, unfortunately, the end of the dispute over the
payment records. On May 13, 2019, the Judgment Creditors
filed a motion for an order to show cause (“OSC”)
why the Wilenchik Firm should not be held in civil contempt
for failing to comply with the subpoena. (Doc. 131.) This
motion stated that the Wilenchik Firm had simply ignored the
April 26, 2019 production deadline that was set forth in the
Court's earlier order and not produced any responsive
15, 2019, the Wilenchik Firm filed a response to the OSC
motion. (Doc. 134.) The Wilenchik Firm asserted that it
mistakenly thought it had sent responses to the subpoena to
the Judgment Creditors on April 26, 2019 and only came to
realize, after receiving the OSC Motion, that the responses
had never been delivered due to a miscommunication.
(Id. at 2, 4.) The Wilenchik Firm also asserted that
it supplemented its responses by producing responsive
documents after corresponding with the Judgment
Creditors' counsel after the OSC motion was filed.
(Id. at 4-5.)
that day, the Judgment Creditors filed an amended motion for
an OSC. (Doc. 135.) In this motion, the Judgment Creditors
asserted that the belatedly-produced documents were still
insufficient because, among other things, (1)
“Wilenchik's production of 14 pages . . .
doesn't show which payments were for which clients or
which matter, nor do they show the ‘account source'
of the payments, all of which were required by the
subpoena”; and (2) “Wilenchik continues to
withhold documents related to other payments we know it got
from Wyo Tech and Inductance. Indeed, we submit with this
motion several checks from Wyo Tech and Inductance to
Wilenchik showing payments that Wilenchik did not disclose in
its production.” (Id. at 3-4.)
16, 2019, the Court issued an order setting a hearing on the
Judgment Creditors' OSC request. (Doc. 136.) In this
order, the Court expressed “significant concerns about
discovery conduct of Wilenchik . . . . These concerns have
nothing to do with the timing of the discovery responses-like
the Judgment Creditors, the Court accepts the [Wilenchik
Firm's] representation that [it] mistakenly believed
[its] discovery responses had been sent on April 26, 2019.
Instead, these concerns flow from the substance of the
discovery responses and the seeming ...