Tibble v. Daniels

Filing 21

ORDER taking under advisement 12 motion to compel. The Court hereby orders the Daniels to sit for another Rule 69 examination at the Trustee's and magistrate's convenience. Signed on 7/26/16 by Chief District Judge Greg Kays. (Francis, Alexandra)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHWESTERN DIVISION
THOMAS R. TIBBLE,
Trustee,
v.
DAWN ANGEL DANIELS
d/b/a AD CONSULTING SERVICES,
Defendant.

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Case No. 3:14-mc-05006-DGK

ORDER REGARDING MOTION TO COMPEL
This matter arises from a bankruptcy trustee’s attempt to locate assets and satisfy a
default judgment against Defendant Dawn Daniels. After Defendant and her husband, Tony
Daniels (collectively “the Daniels’”), failed to provide certain documents and declined to answer
questions during a Rule 69 examination by making a suspect invocation of their right against
self-incrimination, the bankruptcy trustee moved to hold the Daniels in contempt (Doc. 12). This
Court subsequently ordered the Daniels to provide all the requested documents and to file a brief
explaining the factual basis for their invocation of their right to remain silent for each question
they refused to answer (Doc. 18).
Now before the Court is the Daniels’ response (Doc. 20). After careful review, the Court
finds the Daniels have not established reasonable cause to apprehend danger from directly
answering any of the Trustee’s questions. Accordingly, the Court orders the Daniels to sit for
another Rule 69 examination and provide full responses to the questions posed during the initial
Rule 69 examination, as well as to answer any reasonable follow-up questions. If they fail to
appear or fail to do so, they will be placed in contempt of court.

Background
The Bankruptcy Court for the Western District of Michigan appointed Plaintiff Thomas
R. Tibble the Chapter 7 Bankruptcy Trustee (“the Trustee”) for Michigan Biodiesel, LLC in In re
Michigan Biodiesel, LLC, Case No. 10-05786-SWD. On October 9, 2013, the Trustee filed suit
against Defendant in the Western District of Michigan for receiving money that her brother-inlaw, Tracy Daniels, had improperly transferred to her in 2011 from Michigan Biodiesel’s
operating account. On January 8, 2014, the Trustee obtained a default judgment for $328,221.64
(“the Judgment”) against Defendant which was certified and registered in this district on January
22, 2014.
To determine Defendant’s ability and means to satisfy the Judgment and to locate her
non-exempt assets, the Trustee sought to conduct a Rule 69 post-judgment examination1 of the
Daniels. The Court referred the matter to a magistrate judge.2 On April 3, 2015, the magistrate
issued an order (Doc. 4) (“the Magistrate’s Order”) directing the Daniels to produce twenty-two
types of documents, including: deeds, contracts and other papers identifying any real estate in
which Defendant had an interest; earnings statements and employment contracts; income tax
returns; bank statements from all banks or other financial institutions in which Defendant had an
account of any kind; and other documents or accounts tending to show Defendant’s net worth.
Order at 1-3. The Rule 69 examination was rescheduled to July 21, 2015, at Defendant’s request
to provide the Daniels additional time to gather the documents.

1

Federal Rule of Civil Procedure 69 provides that “[i]n aid of the judgment or execution, the 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.” Fed. R. Civ. P. 69(a)(2). This entitles a judgment creditor to
conduct “a very thorough examination of the judgment debtor,” and to depose “almost anyone [] who may provide
relevant information.” Credit Lyonnais, S.A. v. SGC Int’l, Inc., 160 F.3d 428, 430 (8th Cir. 1998).
2

The Honorable David Rush, Magistrate Judge for the Western District of Missouri.

2

Prior to and on the day of the examination, the Daniels produced some, but not all, of the
requested documents, but did not produce those most helpful in discerning Defendant’s ability
and means to pay the default Judgment. They did not produce any bank or financial statements
for personal accounts held by them either individually or jointly, even though they provided bank
records from business accounts showing regular transfers in excess of $250,000 in a three-month
period to checking accounts which they apparently controlled. They also produced documents
indicating that they had three mortgages, but declined to provide any documents that a bank
would presumably require them to provide before giving them a loan, such as W-2 forms, 1099
forms, paycheck stubs, current/prior real estate holdings, salary information, earnings statements,
and statements of debts and assets.

The Daniels never invoked their right against self-

incrimination with respect to any act of production.
During the debtor examination, the Daniels refused to answer any substantive questions.
Through their attorney, Dee Wampler, they stated that they were invoking their right against selfincrimination under the Fifth Amendment to the United States Constitution and its state analog
under Article 1, Section 9 of the Missouri Constitution, and they would refuse to answer any
question other than their name, address, Social Security number, and date of birth. July 21,
2015, Hr’g Tr. at 8-9 (Doc. 13-2). The Daniels claimed they were going to be prosecuted in the
Western District of Michigan “for false tax returns and false claims and mail fraud and wire
fraud under the applicable statutes and they may also conceivably be prosecuted in state court
there, as well as state court here.” Id. at 9. They did not provide any factual basis for the
invocation, despite being cautioned by the magistrate that they needed to provide some factual
basis for their invocation. Id. at 7-57.
In fact, although a federal criminal case had been brought in the Western District of
Michigan against Tony Daniels’s brother and one other individual, the Daniels had already made

3

an agreement in that case to receive limited immunity in exchange for their testimony. While
they could theoretically be prosecuted in some other jurisdiction for the subject of their
testimony, they are not currently or prospectively the targets of any criminal investigations.
The Trustee subsequently moved to hold the Daniels in contempt or to compel discovery
(Doc. 12), and the Court partially granted the motion. The Court ordered the Daniels to provide
all of the requested documents, and warned them that if they failed to do so, they would be held
in contempt. The Court also ordered them to file individual briefs explaining “the detailed
factual and legal basis for their belief that they have ‘reasonable cause to apprehend danger
from’ directly answering each of the questions they refused to answer during the first
examination and that they still refuse to answer.” Order at 9 (Doc. 18) (emphasis added).3
In response, the Daniels filed a short brief claiming that they had produced all the
requested documents. Defense counsel wrote, “They have what they have and if any documents
are allegedly omitted or have not been produced, Defendants are willing to sign the necessary
consent forms for the production of such additionally required documents that the court might
direct.” Resp. at 2. With respect to explaining the factual and legal basis for the invocation of
their right against self-incrimination, Defense counsel wrote:
It is true that they refused to answer almost every question by
making “blanket invocation” of the Fifth Amendment Privileges
since current state and federal law, in counsel’s opinion, would
hold that if they answered some questions, then they potentially
would waive their Fifth Amendment Rights and cannot pick and
choose which answers to give so therefore a blanket invocation
complies with the current status of Fifth Amendment law.
Resp. at 4 (Doc. 20). This response did not cite any caselaw or other legal authority.
Discussion
3

To avoid any risk that explaining why they could not answer these questions might incriminate them, the Court
allowed the Daniels to file their briefs ex parte and under seal.

4

The Trustee asks the Court to hold the Daniels in contempt for failing to produce all
documents. The Daniels state they have produced all responsive documents.4
Although the Court doubts they have, the existing record is insufficiently developed for
the Court to hold the Daniels in contempt for failing to do so. If the Trustee can identify a
particular document the Daniels have not provided, but should have, the Court will revisit the
issue of whether they should be held in contempt.
With respect to whether the Daniels have made a valid invocation of their state or federal
right against self-incrimination, the Court finds they have not. The law here is clear and wellestablished; the previous order discussed it at length. After noting that federal privilege law
applies to this case, the order observed:
While the privilege extends not only “to answers that would in
themselves support a conviction . . . but likewise embraces those
which would furnish a link in the chain of evidence needed to
prosecute the claimant,” Hoffman, 341 U.S. at 486, “[t]here is no
blanket Fifth Amendment right to refuse to answer questions
in noncriminal proceedings.” Capitol Prods. Corp. v. Hernon,
457 F.2d 541, 542 (8th Cir. 1972).
To invoke the privilege in a noncriminal proceeding, the
witness must specifically claim it with respect to a particular
question. Id. The court then determines whether the witness is
facing a real risk of incrimination. Id. at 542-43.
Order at 7 (emphasis added).

Defense counsel’s suggestion otherwise—that “a blanket

invocation complies with the current status of Fifth Amendment law”—is erroneous. Indeed, the

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The Court is unsure what to make of Defense counsel’s statement that “if any documents are allegedly omitted or
have not been produced, [the Danielses] are willing to sign the necessary consent forms for the production of such
additionally required documents that the court might direct.” The Magistrate’s Order and the Court’s previous order
clearly identified what documents should have be provided. Being willing to sign a consent form is not compliance.
If such documents exist and have not been provided to the Trustee, the Court will hold the Danielses responsible.

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Court already corrected this misstatement of the law: “This is not a criminal case; this is a civil
case where a blanket invocation is impermissible. See Capitol Prods., 457 F.2d at 542.”5
The previous order also found:
[T]he Daniels have failed to show that they are facing a real risk of
incrimination with respect to answering the questions they refused
to answer. Indeed, their indiscriminate invocation of the waiver
appears designed to prevent the Trustee from satisfying the
Judgment. In the context of this case, it is difficult to see how the
answer to “Does your wife own any patents, copyrights, licenses,
franchises or any other general intangible property?” could be
incriminating, much less how the answer to “Are you currently
married?” or “What’s your husband’s full name?” could be. Yet
the Daniels have refused to answer each of these questions. Hr’g
Tr. at 26, 48-49. As in the Koenig, Schembre, and Capitol
Products cases, there is nothing in the record that suggests “the
purpose of the examination was anything other than an ordinary
Rule 69 deposition for the purpose of discovering assets to satisfy
the judgment.” Koenig, 2015 WL 1411937, at *3; see Capitol
Prods., 457 F.2d at 543 (“The defendant has not alleged that the
purpose of the examination was anything other than an ordinary
search of his assets in order to satisfy the judgment against him.”);
Schembre 2007 WL 3268443, at *3 (“As in the present matter,”
there was not “any reason to believe that the purpose of the
examination was anything other than a search of his assets to
satisfy the judgment.”).
Id. at 7-8. The Court concluded, “This weighs in favor of ordering the Daniels to answer the
Trustee’s questions.” Id.
Instead of ordering the Daniels to answer the questions immediately, the Court gave them
one last opportunity to make a record supporting the invocation of their rights. In fact, the Court
directed them to file briefs making such a record. Id. at 9.

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This makes the Court wonder if Defense counsel is reading its orders. The Court reminds Defense counsel that the
representations in his filings must be warranted by existing law or by a nonfrivolous argument for reversing existing
law. Fed. R. Civ. P. 11(b)(2).

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The Daniels, however, failed to make such a record with respect to any one of the Rule
69 examination questions posed. Their brief does not establish reasonable cause to apprehend
danger from directly answering any of the Trustee’s questions, much less all of the questions
they refused to answer. It is patently insufficient.
Accordingly, the Court hereby orders the Daniels to sit for another Rule 69 examination
at the Trustee’s and magistrate’s convenience. Prior to this examination, the Daniels must
comply with any of the Trustee’s outstanding discovery requests. During this examination, the
Daniels shall not refuse to answer any question posed during the first Rule 69 examination by
invoking their right against self-incrimination, or any other privilege.6 The Daniels shall provide
full responses to the questions posed, included answering any reasonable follow-up questions. If
either of the Daniels fails to appear or fails to comply with this order, he or she will be placed in
contempt of court. If placed in contempt of court, the Daniels will face a range of potential
sanctions, including, but not limited to, imprisonment, fines, and having to reimburse the Trustee
all costs associated with these examinations.
Conclusion
For the reasons discussion above, the Trustee’s motion (Doc. 12) is taken under
advisement pending the Daniels’ compliance with this order.
IT IS SO ORDERED.
Date: July 26, 2016

/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT

6

That is, the Danielses will not be permitted to attempt an “end run” around this order by asserting a new privilege
that they could have asserted during the first Rule 69 examination, but did not.

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