Sprint Nextel Corporation et al v. Yoak

Filing 243

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Movants motion to modify the subpoena served by Plaintiffs on First State Bank of St. Charles, Missouri, in aid of execution of judgment is DENIED. (Doc. No. 222.) Movants shall have seven days from t he date of this Memorandum and Order to propose an appropriate written protective order, and if not agreed to by Plaintiffs, to submit said protective order to the Court for review. re: 222 MOTION to Quash by James and Virginia Yoak filed by Movant James Yoak Signed by District Judge Audrey G. Fleissig on 6/10/15. (JWJ)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
SPRINT NEXTEL CORPORATION
and SPRINT COMMUNICATIONS
COMPANY,
Plaintiffs,
v.
JAMIE D. YOAK,

Defendant.

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Case No. 4:13CV01292 AGF

MEMORANDUM AND ORDER
This matter is before the Court on the motion (Doc. No. 222) of nonparties
Virginia E. Yoak and James D. Yoak (“Movants”), who are the parents of Defendant
Jamie D. Yoak, to modify and quash in part a post-judgment subpoena served by
Plaintiffs on First State Bank of St. Charles, Missouri (“First State Bank”), in aid of
execution of judgment. For the reasons set forth below, the motion to modify shall be
denied.
BACKGROUND
Plaintiffs, Sprint Nextel Corporation and Sprint Communications Company, filed
this action on July 9, 2013, alleging that Defendant engaged in illegal business practices
involving the unauthorized access and alteration of Plaintiffs’ customer accounts, the
theft of mobile devices and related equipment, and the conversion and transfer
(“porting”) of Plaintiffs’ customers’ vanity phone numbers for the purpose of selling the

numbers for profit. Default judgment was entered in favor of Plaintiffs on June 30, 2014,
in the amount of $655,440.42. Defendant filed an appeal and this Court granted her
motion for a stay of execution of the judgment during the pendency of the appeal. On
January 26, 2015, the Eighth Circuit Court of Appeals dismissed Defendant’s appeal for
failure to prosecute, and on March 17, 2015, denied Defendant’s motion for
reconsideration.
Thereafter, Plaintiffs sought discovery in aid of execution of the judgment, under
Federal Rule of Civil Procedure 69(a)(2), by serving interrogatories on numerous banks,
including First State Bank. The interrogatories asked, in relevant part, whether
Defendant currently or within the past year had an interest in any account, as the owner
of the account or as a beneficiary, contingent or otherwise. (Doc. No. 217.) First State
Bank responded that Defendant had no account with that bank, but that prior to March
18, 2015, she was the named beneficiary of two accounts owned by Movants totaling
approximately $138,000, and was removed as beneficiary on that date. Id.
On May 5, 2015, Plaintiffs served a subpoena on First State Bank seeking
“documents and records . . . regarding any account opened and/or maintained by or on
behalf of Virginia E. Yoak, James D. Yoak, Jamie D. Yoak or in which Jamie D. Yoak
has or had any interest.” (Doc. No. 218-1 at 5.) On May 11, 2015, Movants filed the
motion now under consideration. They move to modify the subpoena to the extent it
relates to accounts in which only they have an interest, and to restrict the release of any
information to bank accounts in which Defendant has an interest. Movants contend that
the subpoena requesting documents and records relating to their own accounts violates
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their privacy rights. They note that they are not legally liable for any judgment
Defendant owes Plaintiffs.
In response to the motion to modify, Plaintiffs assert that Defendant has a history
of hiding her assets to defraud creditors and using accounts in Movants’ names to conceal
her funds. Plaintiffs contend that the timing and circumstances surrounding the two
accounts at First State Bank suggest that Defendant is again intentionally concealing her
assets in an effort to fraudulently prevent Plaintiffs from collecting on the judgment in
this case. Plaintiffs maintain that the discovery from First State Bank is sought “in order
to determine what transpired and whether to file a motion to invalidate a fraudulent
conveyance.” They note that post-judgment discovery into the assets of a nonparty is
permitted where the relationship between the judgment debtor and the nonparty is
sufficient to raise a reasonable doubt about the bona fides of the transfer of assets by the
judgement debtor, and here Movants’ relationship with Defendant, and Movants’
removing her as a beneficiary on Movants’ accounts on the day after this Court’s stay
expired on March 17, 2015, raises such a doubt. Plaintiffs state that they have
“compelling

reasons” to suspect that Movants’ accounts at First State Bank contain

fraudulent transfers of Defendant’s funds. They point to the Court’s finding in a different
case against Defendant, alleging similar illegal conduct as in the present case, that she
transferred title to her house to Movants for no consideration, and fraudulently
transferred approximately $140,000 to accounts held in the name of Virginia Yoak in an
attempt to move the funds out of the reach of the plaintiff in that case. See T-Mobile
USA, Inc. v. Jamie D. Yoak, et al., No. 4:10CV02244AGF (Order dated March 15, 2012).
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In reply, Movants have presented evidence that in using the term “beneficiary” in
its answer to the interrogatories, First State Bank meant “payable-on-death” beneficiary.
Relying on Missouri law for the proposition that a payable-on-death designation creates
no interest in the designee and the person who established the account owns and has sole
control over it, Movants assert that Defendant never had an interest in the accounts in
question and Plaintiffs should not have the right to subpoena information regarding the
accounts. Defendant filed a separate pro se reply, arguing that the subpoena served on
First State Bank is oppressive, and that Plaintiffs’ attorneys engaged in misconduct with
respect to Movants’ monies in the T-Mobile USA case.
DISCUSSION
Discovery in aid of execution is controlled by Federal Rule of Civil Procedure 69,
which states, in relevant part, that “[i]n aid of the judgment or execution, the judgment
creditor . . . may obtain discovery from any person . . . as provided in these rules or by the
procedure of the state where the court is located.” Fed. R. Civ. P. 69(a)(2). Missouri's
Rules of Civil Procedure allow postjudgment discovery of “matters . . . relevant to the
discovery of assets or income subject to . . . the satisfaction of judgments.” Mo. R. Civ.
P. 76.28. Rule 69(a) allows the “judgment creditor . . . freedom to make a broad inquiry
to discover hidden or concealed assets of the judgment debtor.” ITOCHU Int’l, Inc. v.
Devon Robotics, LLC, 303 F.R.D. 229, 232 (E.D. Pa. 2014) (citation omitted). As with
general civil discovery, this is not unlimited, and “must be kept pertinent to the goal of
discovering concealed assets of the judgment debtor and not be allowed to become a
means of harassment of the debtor or third persons.” Id.
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Rule 45 provides the specific rules for discovery directed at nonparties. Relevant
here is subsection (d)(3), which requires the court to quash or modify a subpoena “if it
requires disclosure of privileged or other protected matter, if it risks unfair prejudice to
persons who are the subject of a subpoena’s commands, or subjects a party to an undue
burden.” Id. Discovery, in aid of execution of a judgment, into the assets of a nonparty
to a suit is “permitted where the relationship between the judgment debtor and the
nonparty is sufficient to raise a reasonable doubt about the bona fides of the transfer of
assets.” Strick Corp. v. Thai Teak Prods. Co., 493 F. Supp. 1210, 1218 (E.D. Pa. 1980.)
The Court concludes that here the familial relationship between Movants and
Defendant, the timing of the removal of Defendant as a named beneficiary, and the
judicial finding in T-Mobile USA of fraudulent transfers by Defendant of her assets to
Movants to hide the assets from potential judgment creditors, is sufficient to raise such
doubts. See, e.g., Credit Lyonnais, S.A. v. SGC Int’l, Inc., 160 F.3d 428, 431 (8th Cir.
1998) (allowing postjudgment discovery regarding personal finances of an individual
with a close business relationship to the judgment debtor; citing Mo. R. Civ. P. 76.28);
Andrews v. Holloway, No. CIV.A. 95-1047(JBS), 2003 WL 22227855, at *3 (D.N.J.
Sept. 29, 2003) (allowing postjudgment discovery from judgment debtor’s nonparty
spouse to track transactions “which may tend to be probative of plaintiff’s allegations of
postjudgment co-mingling or concealment of assets owned or controlled by” the
defendant).

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CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Movants’ motion to modify the subpoena
served by Plaintiffs on First State Bank of St. Charles, Missouri, in aid of execution of
judgment is DENIED. (Doc. No. 222.) Movants shall have seven days from the date of
this Memorandum and Order to propose an appropriate written protective order, and if
not agreed to by Plaintiffs, to submit said protective order to the Court for review.

______________________________
AUDREY G. FLEISSIG
UNITED STAES DISTRICT JUDGE
Dated this 10th day of June, 2015.

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