Allstate Insurance Company et al v. Mirvis et al

Filing 470

ORDER denying 344 Motion to Quash. Queens Billing, Inc.'s motion to quash Plaintiffs' subpoena is denied, pursuant to the annexed order. Plaintiffs and Queens Billing are ordered to file by February 3, 2017 a proposed Protective Order for the Court to so-order. Ordered by Magistrate Judge Peggy Kuo on 1/25/2017. (Feldman, Shira)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------------------ALLSTATE INSURANCE COMPANY, et al.,

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Plaintiffs,
-againstMARK MIRVIS, et al.,

Defendants.
-----------------------------------------------------------Peggy Kuo, United States Magistrate Judge:

MEMORANDUM AND ORDER
08-CV-4405 (SLT)(PK)

Before the Court is Queens Billing, Inc.’s (“Queens Billing”) Motion to Quash Subpoena,
regarding a third-party subpoena served by Plaintiffs upon JPMorgan Chase seeking bank records of
Queens Billing. (See Queens Billing Mot. to Quash, Dkt. 344; Subpoena, Dkt. 344-3.) The
subpoena is part of Plaintiffs’ post-judgment discovery, pursuant to Rule 69 of the Federal Rules of
Civil Procedure (see Pls.’ Resp. at 1, Dkt. 364), seeking to locate the assets of Nortmed
Management, Inc. (“Nortmed”) and other judgment debtors (id. at 2).
For the reasons discussed below, Queens Billing’s motion is denied.
DISCUSSION
Rule 69(a)(2) provides:
In aid of [a money] judgment or execution, the judgment creditor or a successor in interest
whose interest appears of record 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.
F. R. Civ. P. 69(a)(2). This post-judgment discovery must be “calculated to assist in collecting on a
judgment.” EM Ltd. v. Republic of Argentina, 695 F.3d 201, 207 (2d Cir. 2012). Discovery sought
pursuant to Rule 69, therefore, must relate to the existence or transfer of a judgment debtor’s assets.
See id.; see also GMA Accessories, Inc. v. Electric Wonderland, Inc., No. 07-CV-3219 (PKC)(DF), 2012 WL
1933558, at *4 (S.D.N.Y., May 22, 2012); Costomar Shipping Co., Ltd. v. Kim-Sail, Ltd., No. 95-CV-3349
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(KTD)(JCF), 1995 WL 736907, at *3 (S.D.N.Y. Dec. 12, 1995); Magnaleasing, Inc. v. Staten Island Mall,
76 F.R.D. 559, 561 (S.D.N.Y. 1977). However, post-judgment discovery is broad. EM Ltd., 695
F.3d at 207.
In post-judgment discovery, “[p]laintiff is entitled to examine third parties to determine if a
judgment debtor has concealed or transferred assets applicable to satisfying its judgment.” D’Avenza
S.p.A. in Bankr. v. Garrick & Co., No. 96-CV-166 (DLC)(KNF), 1998 WL 13844, at *3 (S.D.N.Y.
Jan. 15, 1998). “It is not uncommon to seek asset discovery from third parties…that possess
information pertaining to the judgment debtor’s assets.” EM Ltd., 695 F.3d at 207. Such discovery
is permitted when the non-party and the judgment debtor have a relationship “sufficient to raise a
reasonable doubt about the bona fides of the transfer of assets between them.” Costomar, 1995 WL
736907, at *3 (internal citations omitted). Whether to limit Rule 69 post-judgment discovery
remains within the discretion of the district court pursuant to its powers under Federal Rule of Civil
Procedure 26(b)(2). EM Ltd., 695 F.3d at 207.
Queens Billing purports to handle insurance billing for medical offices and is not a party to
the suit giving rise to the judgment Plaintiffs seek to enforce. (Queens Billing Mot. to Quash, Dkt.
344.) It does not dispute that it paid money to Nortmed, purportedly for “prepar[ing] physical
litigation and arbitration files.” (Decl. of Matatov ¶ 10, Dkt. 344-1.) However, it denied ever
receiving money from Nortmed. According to a declaration submitted by Roman Matatov, who
represents himself as the owner of Queens Billing, “I state unequivocally that Queens [Billing] has
never received any money from any Defendant in the above-captioned suit or on behalf of any
Defendant in this suit.” 1 (Id. ¶ 7.)
After being confronted by a check from Nortmed to Queens Billing, submitted by Plaintiffs
in support of their opposition to the instant Motion, Matatov submitted another unnotarized
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Although Matatov makes the declaration “under penalty of perjury,” the statement is not notarized.

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declaration admitting that he had “misstated the amount of money and checks that Queens [Billing]
had written to Nortmed,” and that he had “failed to recall” that Nortmed made a payment to
Queens Billing for $3,000. (Suppl. Decl. of Matatov ¶¶ 2 & 8-9, Dkt. 377-2). He attributed this
discrepancy to a “miscommunication” with his accountant. (Id. ¶ 2.) He tried to explain the $3,000
as a “partial refund” because Nortmed did not fully complete work it had agreed to do. (Id. ¶¶ 8-9.)
The information presented from both Plaintiffs and Queens Billing establishes that there
were, in fact, transfers of assets between Queens Billing and Nortmed. The nature of these
transfers, along with the relationship between these two entities, raises questions about the transfers’
legitimacy. When default judgment was granted in this case, Nortmed was found to have
participated in a RICO conspiracy in which it served as a clearinghouse “by receiving significant
transfers of cash and checks from the [medical service provider] Defendants, which the
Management Defendants [including Nortmed] funneled back to the Principal Defendants.” Allstate
Ins. Co. v. Mirvis, No. 08-CV-4405 (SLT)(VVP), 2015 WL 1247103, at *5 (E.D.N.Y. Mar. 2, 2015),
R&R adopted, 2015 WL 1539671 (E.D.N.Y. Mar. 31, 2015). This finding alone raises the specter that
any services Nortmed claimed to have performed for a medical insurance billing entity such as
Queens Billing were purely illusory, and that, therefore, any payments (or refunds) connected with
such services were not legitimate. Matatov’s conflicting statements, along with his strained
explanations for them, do nothing to allay those suspicions.
The undersigned finds, therefore, that the relationship between Queens Billing and Nortmed
“is sufficient to raise a reasonable doubt about the bona fides of the transfer of assets between
them.” Costomar, 1995 WL 736907, at *3. Because Queens Billing may be holding assets of the
judgment debtors, or it may have been used to funnel money that is subject to judgment collection
to other entities, Plaintiffs are entitled to obtain the discovery sought by the subpoena.
Queens Billing asks that, if the Court denies its motion, a protective order between Plaintiffs
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and Queens Billing be ordered. (See Queens Billing Mot. to Quash at 3, Dkt. 344.) Plaintiffs do not
object. (See Pls.’ Resp. at 6, Dkt. 364.) The Court therefore orders Plaintiffs and Queens Billing to
submit by February 3, 2017 a joint proposed Protective Order for the Court to so-order.
CONCLUSION
The Motion to Quash Plaintiffs’ subpoena served on JPMorgan Chase that seeks records
related to Queens Billing is denied. The documents are to be produced once the Protective Order is
so-ordered.

Dated: Brooklyn, New York
January 25, 2017
SO ORDERED:

Peggy Kuo

PEGGY KUO
United States Magistrate Judge

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