PHL Variable Insurance v. Sheldon Hathaway Family Trust, The et al

Filing 65

MEMORANDUM DECISION AND ORDER granting 51 Motion to Quash Subpoenas Duces Tecum; granting 51 Motion for Protective Order. Signed by Magistrate Judge David Nuffer on 7/15/11 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
PHL VARIABLE INSURANCE COMPANY,
Plaintiff,
v.
THE SHELDON HATHAWAY FAMILY
INSURANCE TRUST, by and through
its trustee, DAVID HATHAWAY,

MEMORANDUM DECISION and
ORDER GRANTING MOTION TO QUASH
SUBPOENAS DUCES TECUM and
ORDER GRANTING MOTION FOR
PROTECTIVE ORDER

Defendant,
Case No. 2:10-cv-67 DAK- DN
WINDSOR SECURITIES, LLC, a Nevada
Limited Liability Company,
Intervenor Defendant.

District Judge Dale A. Kimball
Magistrate Judge David Nuffer

Plaintiff PHL Variable Insurance Company (Phoenix) moves this court to quash the
subpoenas duces tecum issued by Intervenor Defendant Windsor Securities, LLC (Windsor) to
non-parties in this case. 1 On May 31, 2011, Windsor served Phoenix with notice of its intent to
issue subpoenas duces tecum to lawyers or law firms that have represented parties in past or
present litigation against Phoenix. The court took the motion to quash under advisement and
ordered Windsor to “notify those upon whom subpoenas were served that the subpoenas are
subject to a pending motion and that no response is necessary until further order of the court.” 2
Subsequently, Windsor served at least two of the subpoenas. 3

1

Plaintiff’s Emergency Motion to Quash Subpoenas Duces Tecum and for Protective Order (Motion), docket no. 51,
filed June 7, 2011.

2

Docket Text Order, docket no. 53, filed June 7, 2011.

3

See Returns of Service, docket nos. 60-63, filed July 7, 2011.

Jurisdiction
Windsor raises the issue of this court’s jurisdiction to quash the subpoenas now that they
have been served. 4 Windsor served Phoenix with notice of its intent to issue the subpoenas and
Phoenix communicated its objections to the subpoenas. In the course of the parties’ discussions,
Windsor agreed to withdraw its intent to serve one of the subpoenas, but Windsor refused to
stay service of two other subpoenas. Phoenix then filed the current motion to quash before
Windsor served the subpoenas. The same day the motion was filed, court took the motion under
advisement and ordered Windsor to notify the subpoena recipients that no response was
necessary until the court ruled on the motion. 5 Instead of waiting for the court to rule on the
motion, Windsor chose to serve the subpoenas after the court took the motion under advisement.
Windsor argues that “only the court issuing the subpoena has jurisdiction to quash or
modify the subpoena.” 6 While Rule 45(c)(3) gives the issuing court power to quash or modify a
subpoena, 7 there is nothing in the rules giving that issuing court exclusive power or specifically
prohibiting the court in the district where the litigation is pending from acting on a motion to
quash a subpoena. 8 The Tenth Circuit has specifically held “that the issuing court is not the only
court with authority to rule on a motion to quash,” 9 and that the court in the district where the
underlying case is pending has authority to rule on the motion to quash, as that court has a better

4

Memorandum in Opposition to Plaintiff’s Emergency Motion to Quash Subpoena Duces Tecum and for Protective
Order (Opposition) at 7-8, docket no. 56, filed June 13, 2011.

5

Docket Text Order, docket no. 53, filed June 7, 2011.

6

Opposition at 7 (citing Fed. R. Civ. P. 45(c)(3)).

7

See Fed. R. Civ. P. 45(c)(3)(A).

8

See Petersen v. Douglas Cnty. Bank & Trust Co., 940 F.2d 1389, 1390-91 (10th Cir. 1991); see also Yanaki v.
Daniel, No. 2:07-CV-648 DAK, 2009 WL 2030287, at *2 (D. Utah July 9, 2009).
9

Yanaki, 2009 WL 2030287, at *2 (relying on Petersen, 940 F.2d at 1391).

2

understanding of the case. 10 Because the Utah court acted on the motion to quash before service
of the subpoenas, no deference to the issuing district is appropriate.
Subpoenas
Phoenix claims that “the documents sought by the subpoenas are Phoenix’s own
“documents from litigation in other jurisdictions, having nothing to do with the Policy,
Hathaway, the Trust and/or Windsor.” 11 Phoenix argues that the subpoenas are very broad and
seek documents produced in other cases that are policy specific. Phoenix asserts that Windsor
can request the documents that are not policy specific “directly from Phoenix without trying to
end-run the rules applicable to discovery from a party.” 12
Windsor counters that “[t]he subpoenaed documents have everything to do with the
Trust, the Policy, Hathaway, and likewise have everything to do with the Defendants’ defenses
to Phoenix’s allegations of fraud and material misrepresentation which serve as the predicate to
its rescission claims.” 13 Yet Windsor fails describe how any of the documents requested from
the other cases relate to the Policy, Hathaway or the Trust at issue in this case. Instead, Windsor
claims the documents are needed to “demonstrate that Phoenix has devised a company-wide
scheme to trick individuals” into buying insurance policies that Phoenix intends to rescind. 14 If
Windsor believes there are documents to support that defense theory in this case, Windsor should
request the documents directly from Phoenix through the discovery process. Windsor has failed

10

See Petersen, 940 F.2d at 1391; see also Anastasion v. Credit Serv. of Logan, No. 2:08-CV-180, 2010 WL
3081434, at *2 (D. Utah Aug. 6, 2010).

11

Plaintiff’s Memorandum of Law in Support of Its Emergency Motion to Quash Subpoenas Duces Tecum and for
Protective Order (Memo) at 6, docket no. 52, filed June 7, 2011.
12

Id.

13

Memorandum in Opposition to Plaintiff’s Emergency Motion to Quash Subpoena Duces Tecum and for Protective
Order (Opposition) at 1-2, docket no. 56, filed June 13, 2011.
14

Opposition at 2.

3

to show how the subpoenaed documents from other cases in other jurisdictions will relate to the
specific policy and issues in this case.
Order
IT IS HEREBY ORDERED that Emergency Motion to Quash Subpoenas Duces Tecum
and for Protective Order 15 is GRANTED. The Notice and the Subpoenas are hereby
QUASHED. Windsor shall advise the subpoenaed parties of this Order quashing the subpoenas
and the court restrains Windsor from serving similar third-party subpoenas.

Dated July 15, 2011.
BY THE COURT:

____________________________
David Nuffer
U.S. Magistrate Judge

15

Docket no. 51.

4