Ordos City Hawtai Autobody Company, Ltd. et al v. Dimond Rigging Company, LLC
OPINION and ORDER DENYING 184 MOTION to Quash Second Subpoena to Chase Bank, DENYING 202 Joint MOTION to Quash Subpoena Duces Tecum to Prime Financial AND DENYING 203 Second MOTION to Quash Chase 2 Subpoena by Ron One LLC - Signed by Magistrate Judge R. Steven Whalen. (CCie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
ORDOS CITY HAWTAI AUTOBODY
COMPANY, LTD, ET AL.,
District Judge Sean F. Cox
Magistrate Judge R. Steven Whalen
DIMOND RIGGING COMPANY, LLC,
D/B/A ABSOLUTE RIGGING &
OPINION AND ORDER
Following trial, Plaintiffs were granted a money judgment against Defendant
Dimond Rigging Company, LLC (“Dimond”) in the amount of $1,214,000.00 [Doc.
#171].1 Plaintiffs are pursuing discovery to collect on that judgment. Toward that end,
they served non-party subpoenas on JP Morgan Chase Bank, N.A. (“Chase”) and Prime
Financial, Inc. (“Prime”), seeking financial and other documents regarding Ron One,
LLC (“Ron One”). Plaintiffs contend that Dimond transferred assets to Ron One, and
that in fact, Ron One is the alter ego of Dimond. Dimond and Ron One have filed the
following motions seeking to quash the subpoenas:
Defendant’s Motion to Quash Second Invalid Subpoena [to Chase] [Doc. #184].
Defendant Dimond Rigging Company’s and Third Parties’ Ronald Lech and
Ron One, LLC’s Objections and Motion for Protective Order or to Quash
Subpoena to Prime Financial, Inc. [Doc. #202].
Previously, the Court granted summary judgment to Plaintiffs on liability as to
their breach of contract claim [Doc. #116].
Third Party Ron One, LLC’s Motion to Quash Subpoena [to Chase] and to
Continue Hearing on Judgment Debtor’s Motion to Quash Chase Subpoena
2 Until Completion of Judgment Debtor’s Creditor’s Examination [Doc.
For the reasons and under the terms set forth below, all three motions will be
LEGAL PRINCIPLES RE: POST-JUDGMENT DISCOVERY
“[T]he scope of postjudgment discovery is very broad.” Unites States v. Conces,
507 F.3d 1028, 1040 (6th Cir. 2007), quoting F.D.I.C. v. LeGrand, 43 F.3d 163, 172 (5th
Cir. 1995). Fed.R.Civ.P. 69(a)(2) provides that a judgment creditor “may obtain
discovery from any person-including the judgment debtor-as provided in these rules or by
the procedure of the state where the court is located.” A judgment creditor is entitled to
“a very thorough examination of the judgment debtor.” Credit Lyonnais, S.A. v. SGC Int'l,
Inc., 160 F.3d 428, 430–31 (8th Cir.1998) (quoting Caisson Corp. v. County West Bldg.
Corp., 62 F.R.D. 331, 335 (E.D.Pa.1974)), and “the presumption should be in favor of
full discovery of any matters arguably related to the [creditor's] efforts to trace [the
debtor's] assets and otherwise to enforce the judgment.” Id.
Moreover, discovery as to non-parties is appropriate where “the relationship
between [the judgment debtor and the non-party] is sufficient to raise a reasonable doubt
about the bona fides of any transfer of assets between them.” Id., 160 F.3d at 431 (quoting
Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 562 (S.D.N.Y.1977)). See also
Mountain Dudes, LLC v. Split Rock, Inc. 2013 WL 5435707, *3 (D.Utah 2013) (“[I]n
order to successfully move for discovery against a nonparty the movant need not prove
conclusively that the nonparty is an extension of the judgment debtor, but need only
present evidence sufficient to raise legitimate questions about the relationship between
the judgment debtor and the nonparty, and consequently, transactions between the two.”);
Scioto Constr., Inc. v. Morris, 2007 WL 108906, *2 (E.D. Tenn. 2007) “[T]he judgment
creditor must be given the freedom to make a broad inquiry to discover hidden or
concealed assets of the judgment debtor” (internal citations omitted); O.J. Distributing,
Inc. v. Hornell Brewing Co., Inc., 2012 WL 4757940, *2 (E.D. Mich. 2012)(judgment
creditor entitled “to obtain information from parties and non-parties alike, including
information about...assets that have been fraudulently transferred.”).
The facts regarding the underlying lawsuit are fully set forth in the Court’s
Opinion and Order granting the Plaintiffs’ summary judgment motion [Doc. #116].
Ronald W. Lech, II, was Dimond’s president, and is also the president of Ron One,
LLC. Prime Financial leased a facility to Ron One, and loaned money to both Ron One
and Dimond. Neither Mr. Lech, Ron One, nor Prime is a party to this action.
Nevertheless, the relationship between these entities is fair game for inquiry. The
transcript of Mr. Lech’s creditor’s examination under oath is instructive in this regard.2
Mr. Lech testified as follows: Ron One leases warehouse space from Prime
Financial. Lech Transcript, 33-34. This is where Dimond had its equipment. Id. Like
Dimond, Ron One does rigging work, although Mr. Lech qualified this, stating that Ron
One “does light rigging work or light moving work, yes, but it does no heavy work for
Dimond.” Id. 42.3 Dimond had no employees in 2013, so it contracted employees to do its
business; Ron One stepped in and did that. Id. 42. Ron One’s address at 2590 Pembroke
The pertinent portions of Mr. Lech’s examination transcript are found at Exhibit
1 to Plaintiff’s response [Doc. #192] to the motion to quash subpoena to Chase.
At odds with Mr. Lech’s testimony is a job listing for Ron One that describes the
company as “a Rigging Company that Moves heavy Machinery.” Plaintiff’s Response
[Doc. #192], Exhibit 3. This job posting also lists Ron One’s website as
“Absoluterigging.net.” Absolute Rigging is the DBA of Dimond.
in Birmingham, MI is the same as Dimond’s address. Id. 44. Ron One’s telephone
number, (248) 649-2222, is the same as Dimond’s telephone number. Prime One provided
credit to both Ron One and Dimond for equipment and working capital. Ron One was the
guarantor on the loans, and Prime One had a security agreement on Ron One’s and
Dimond’s assets. Id. 52-55.4 Thirteen days before its loan with Prime, Dimond received
the $975,000 insurance payment from Traveler’s, regarding Plaintiff’s elevator that was
lost at sea. Id. 62.5 Prime has taken steps to foreclose on the security agreement, including
title to equipment. Mr. Lech was unsure if Prime was in actual possession of any
equipment, including Dimond’s equipment. Id. 67-68. The value of the equipment on
which Prime has a security interest is about one million dollars. Id 70. Dimond made
payments to Ron One for “reimbursement” and labor fees, and Ron One loaned money to
Dimond. Id. 71-72.
Plaintiff contends that Ron One and Dimond are one in the same, or alter egos of
each other, but again, that is not a prerequisite to ordering discovery. Mountain Dudes,
LLC v. Split Rock, Inc., supra. The Plaintiff “need only present evidence sufficient to
raise legitimate questions about the relationship between the judgment debtor and the
nonparty, and consequently, transactions between the two.” Id. Based on the above
evidence, there is a clear interconnection between Dimond, Ron One, and Prime,
The Security Agreement, submitted as Exhibit 2 to Plaintiff’s response [Doc.
#192], provides for a loan of $735,000.00 to Dimond and Ron One. Mr. Lech signed the
agreement on behalf of both Dimond and Ron One.
Pursuant to contract, Defendant transported certain of Plaintiffs’ equipment by
ship, including an elevator in late 2011/early 2012. This equipment was covered against
loss or damage during transit by a Travelers Insurance Company policy obtained by
Defendant. The elevator fell overboard and was lost at sea. Around February 19, 2013,
Defendant received payment from Travelers in the amount of $975,000 to rebuild the
including common ownership of Dimond and Ron One, intermingling of equipment, and
a joint loan and security agreement with Prime, signed less that two weeks after Dimond
received $975,00.00 in insurance proceeds relative to the loss of Plaintiff’s elevator. The
relationship among these entities “is sufficient to raise a reasonable doubt6 about the bona
fides of any transfer of assets between them.” Magnaleasing, Inc. v. Staten Island Mall,
76 F.R.D. 559, 562 (S.D.N.Y.1977). See also, Falicia v. Advanced Tenant Servs., Inc.,
235 F.R.D. 5, 9 (D.D.C. 2006) (denying third party corporations' motions to quash bank
record subpoenas where the same family owned the judgment debtor corporation and two
subpoenaed third party corporations).
There is no basis to quash these subpoenas. I note, however, that the original
subpoenas seek records going back to 2010, which significantly predates the events
giving rise to this lawsuit. In its response to Ron One’s motion to quash [Doc. #207, pg.
ID 3950], Plaintiff indicates a willingness to reduce the time frame from January 2013 to
the present. I find that modification to be reasonable.
This is not to be confused with the “reasonable doubt” standard of proof that
applies to criminal cases. Instead, Plaintiff “need only present evidence sufficient to raise
legitimate questions about the relationship between the judgment debtor and the nonparty,
and consequently, transactions between the two.” Mountain Dudes, LLC, supra, 2013
WL 5435707 at *3. Nonetheless, if this were a criminal case, there would be probable
cause to issue a search warrant for the subpoenaed material.
Therefore, the motions to quash [Doc. #184, #202, and #203] are DENIED. The
entities to whom the subpoenas are directed will produce the requested documents,
subject only to the restriction that the applicable time frame will be January, 2013 to the
IT IS SO ORDERED.
s/ R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
Dated: September 22, 2016
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing document was sent to parties of record on
September 22, 2016, electronically and/or by U.S. mail.
s/Carolyn M. Ciesla
Case Manager to the
Honorable R. Steven Whalen
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