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YCB International, Inc. v. UCF Trading Co., Ltd.

United States District Court, Seventh Circuit

January 13, 2014

YCB INTERNATIONAL, INC., Judgment Creditor,
UCF TRADING CO., LTD., Judgment Debtor.


JAMES F. HOLDERMAN, District Judge.

On October 22, 2013, judgment creditor YCB International, Inc. ("YCB") filed a motion to overrule the objections of non-party Schopf & Weiss LLP ("S&W") to YCB's subpoena for documents pursuant to Fed.R.Civ.P. 69(a)(2). (Dkt. No. 333.) On December 4, 2013, YCB filed a second motion (Dkt. No. 338) asking this court to order judgment debtor UCF Trading Company, Limited ("UCF Trading") to execute an assignment of any claims UCF Trading has or may have against S&W and its attorneys, Anand Mathew ("Mathew") and Arthur Howe[1] ("Howe"), both of whom represented UCF Trading in the underlying case until this court granted their motion to withdraw as counsel for UCF Trading on January 10, 2013 (Dkt. No. 296). On December 12, 2013, YCB amended its motion for assignment of claims against S&W, Howe, and Mathew to provide an additional basis for assignment. (Dkt. No. 343.) For the reasons explained below, YCB's motions are denied.


On September 10, 2013, this court granted a final judgment (Dkt. No. 327) in favor of YCB and against UCF Trading in the amount of $1, 408, 236.69. On October 1, 2013, YCB served UCF Trading and a third party, UCF Company Limited, with citations to discover assets or income not exempt from enforcement of a judgment. (Dkt. No. 332.) On November 5, 2013 this court ordered UCF Trading to produce documents responsive to the citation by December 9, 2013. (Dkt. No. 336.) As of January 3, 2013, UCF Trading had produced only a limited set of documents to YCB. ( See Dkt. Nos. 345, 354.)

On September 16, 2013, before serving UCF Trading with a citation to discover assets, YCB subpoenaed UCF Trading's former attorneys, S&W, seeking: (i) information regarding UCF Trading's payments for legal services (Dkt. No. 333-1 ¶¶ 1-2); (ii) information regarding accounts controlled for the benefit of or on behalf of UCF Trading and its affiliates ( Id. ¶ 3); (iii) information relating to any physical address, telephone number, email address, or other point of contact ever used by UCF Trading and a number of its principals ( Id. ¶¶ 4); (iv) all documents relating to UCF Company Ltd. ( Id. ¶ 5); (v) all documents relating UCF Trading's assets, products, and customers from 2009 to the present ( Id. ¶ 5); and (vi) all documents relating to asset transfers, planned asset transfers, or plans to conceal assets ( Id. ¶ 6). Because S&W has raised objections to the subpoena and has purportedly produced only a limited set of documents in response to the subpoena, YCB has moved to compel their compliance pursuant to Fed.R.Civ.P. 69(a)(2). (Dkt. No. 333.)

Notwithstanding S&W's allegedly insufficient document production, YCB discovered that UCF Trading paid over $437, 000 to S&W for legal services rendered in connection with the underlying case prior to S&W's withdrawal on January 10, 2013. (Dkt. No. 338 ¶ 4.) As a result of this discovery, YCB filed a motion asking this court, pursuant to Fed.R.Civ.P. 69 and 735 ILCS 5/2-1402(c)(5), to assign to YCB a legal malpractice claim YCB contends UCF Trading has against S&W, Howe, and Matthew. ( Id. ¶¶ 6-8.) On December 12, 2013, YCB amended its motion for assignment of claims to include 735 ILCS 5/2-1402(c)(6) as a basis for assigning to YCB any claims UCF Trading has or may have against S&W, Howe, or Mathew. (Dkt. No. 343 ¶ 4.)


Federal Rule of Civil Procedure 69 requires federal courts to apply "the law of the forum state" in choosing the procedures to enforce federal court judgments. Cacok v. Covington, 111 F.3d 52, 53 (7th Cir.1997). In Illinois, supplementary proceedings to enforce a judgment are governed by section 5/2-1402 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-1402 (2013). Under section 5/2-1402, a judgment creditor who seeks to enforce a judgment may initiate supplementary proceedings to discover assets of the judgment debtor, and may seek an order from the court "compelling the application of non-exempt assets or income discovered toward the payment of the amount due under the judgment." 735 ILCS 5/2-1402(a). If the court determines that the judgment has not been satisfied, it may compel the judgment debtor to assign to the judgment creditor "any chose in action" in aid of enforcement of a judgment. 735 ILCS 5/2-1402(c)(5).

Rule 69(a)(2) also states that, "in aid of the judgment or execution, the judgment creditor... may obtain discovery from any person-including the judgment debtor-as provided in these rules." Fed.R.Civ.P. 69(a)(2). The "rules" mentioned in Rule 69(a)(2) are the federal rules governing pre-trial discovery. Rubin v. Islamic Republic of Iran, No. 03 C 9370, 2008 WL 192321, at *4 (N.D.Ill. Jan.18, 2008). Federal Rule of Civil Procedure 26(b) governs the scope of pre-trial discovery and vests the court "with broad discretion in determining the scope of discovery, which the court exercises mindful that the standard for discovery... is widely recognized as one that is necessarily broad in its scope in order to allow the parties essentially equal access to the operative facts.'" Scott v. Edinburg, 101 F.Supp.2d 1017, 1021 (N.D. Ill. 2000) (quoting Craig v. Exxon Corp., No. 97 C 8936, 1998 WL 850812, at *1 (N.D. Ill.Dec. 2, 1998)).


I. YCB's Motion to Compel

Ordinarily, post-judgment discovery sought from third parties is limited to information about the assets of the judgment debtor and must be balanced against the privacy interests of third party. See Wright & Miller 2d § 3014; see also Blaw Knox v. AMR Indus., Inc., 130 F.R.D. 400, 403-04 (E.D. Wis. 1990) (denying third-party discovery regarding certain assets because "a judgment creditor must make a threshold showing of necessity and relevance when attempting to obtain discovery of a non-judgment debtor pursuant to Rule 69(a)"); Cassion Corp. v. County West Bldg. Corp., 62 F.R.D. 331, 334 (E.D. Pa. 1974) ("the inquiry 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.... It has also been said that third persons can only be examined about assets of the judgment debtor and cannot be required to disclose their own assets.") Moreover, "a court may limit discovery if it determines that the burden of the discovery outweighs its benefit." In re IKB Deutsche Industriebank AG, No. 09 C 7852, 2010 WL 1526070, *5 (N.D. Ill. Apr. 8, 2010) (Darrah, J.).

To support its discovery requests, YCB relies on this court's holding in F.T.C. v. Trudeau, No. 03 C 3904, 2013 WL 842599 (N.D. Ill. Mar. 6, 2013) (Gettlemen, J.). In Trudeau, this court found the defendant had repeatedly violated the court's financial disclosure orders. Id. at *1. To rebut the defendant's purported allegations of poverty, the court permitted the FTC to subpoena the defendant's current attorneys and required his attorneys "to produce forthwith all records showing payments and source of payments received for its legal services." Id. at *4.

Here, S&W has already provided YCB with the retention agreement between S&W and UCF Trading (Dkt. No. 337-3 ¶ 4), accounting records showing any funds S&W received from, or paid to, UCF Trading (Dkt. 337-6), and a statement that S&W is not aware of ever having received funds from, or provided funds to, any of the other "UCF Trading-Affiliated Persons" ( Id. ). The foregoing information is all that was required by the ...

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