Seychelles Organics Incorporated v. Rose

Filing 30

ORDER denying 26 Motion for Protective Order. (See document for further details). Signed by Senior Judge Frederick J Martone on 3/20/13. (LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Seychelles Organics, Inc.,
Plaintiff,

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vs.

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John R. Rose,
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Defendant.
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No. CV-11-01746-PHX-FJM
ORDER

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Before the court is defendant Rose and non-party AnuMed’s motion for protective
order (doc. 26), plaintiff’s response (doc. 27), and defendant’s reply (doc. 28).

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In November 2006, Seychelles entered into an asset purchase agreement with the Rose

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Entities, under which Seychelles paid over $7 million to acquire assets of the Rose Entities

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(“Acquired Business”). As part of the asset purchase agreement, Rose executed a non-

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compete agreement, agreeing not to participate in any business similar to the Acquired

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Business. After Rose violated the terms of the non-compete agreement, Seychelles filed a

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complaint in Utah state court seeking injunctive relief. The Utah court issued a temporary

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restraining order, followed by a preliminary injunction, ordering Rose to stop violating the

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terms of the non-compete agreement. Nevertheless, Rose continued to violate the agreement.

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One day before Rose was scheduled to appear to show cause as to why he should not be held

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in contempt, Rose filed for Chapter 13 bankruptcy protection in the United States Bankruptcy

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Court for the District of Arizona. Seychelles then filed an adversary proceeding in Rose’s

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bankruptcy case, and a trade dress infringement action in the United States District Court for

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the District of Utah. The parties subsequently agreed to settle all claims, whereby Seychelles

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agreed to dismiss the litigation and withdraw its proof of claim in exchange for Rose’s

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agreement to the immediate entry of judgment against him in the amount of $1 million, and

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the entry of a permanent injunction, prohibiting him from participating in any business in

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competition with the Acquired Business. As part of the settlement agreement, Seychelles

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agreed to forbear taking any action to collect upon the judgment so long as Rose timely

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complied with his obligation to pay $180,000 over a 5-year period and “remain[ed] in

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compliance with the terms of the injunction.” Motion, ex F ¶ 6. The bankruptcy court

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approved the settlement agreement and issued proposed findings of fact and conclusions of

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law. We subsequently adopted the bankruptcy court’s proposed findings and conclusions

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and granted the parties’ stipulated motion for entry of final judgment and permanent

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injunction (doc. 6), and this case was closed. When Rose later allegedly defaulted on his

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payment obligations under the settlement agreement, and failed to comply with the terms of

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the injunction, Seychelles sent notice of termination of its forbearance obligation and began

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efforts to enforce the $1 million stipulated judgment. As part of those efforts, Seychelles

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noticed the deposition of Rose and one of his affiliated entities, AnuMed International, LLC.

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Now before us is Rose and AnuMed’s motion for protective order, seeking to quash

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the notices of deposition and subpoenas, arguing that the $1 million judgment is not

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enforceable, the underlying debt is not currently due, and therefore the subpoenas serve to

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annoy, oppress, and burden Rose and AnuMed and should be quashed. See Fed. R. Civ. P.

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26(c)(1).

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A final, stipulated judgment has been entered in this case (doc. 6). Rose cannot attack

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the validity of that final judgment by way of a motion for protective order. Under Rule 69(a),

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Fed. R. Civ. P., Seychelles is within its right to obtain discovery “from any person” in aid of

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enforcing that judgment. It is unlikely that Rose can support a claim for relief from judgment
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under Rule 60(b), Fed. R. Civ. P. There are no allegations of mistake, surprise, newly

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discovered evidence or fraud.

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interpretation and enforceability of the settlement agreement. Any such claim must be

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presented in a separate action.

Instead, Rose appears to raise challenges as to the

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IT IS ORDERED DENYING the motion for protective order (doc. 26).

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DATED this 20th day of March, 2013.

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