Fidelity Natl Fin v. Friedman, et al, No. 2:2003cv01222 - Document 312 (D. Ariz. 2010)
Court Description: ORDER granting the 264 Request for "Motion for Discharge of the O.S.C." by Allen Hyman; granting the 268 Request to Take Judicial Notice by Allen Hyman; and Fidelity's Order to Show Cause seeking to hold in contempt defendants, The Anna and Noach Kramer Irrevocable Insurance Trust; Anita Meshkatai, individually and as trustee of the Anita Kramer Living Trust, dated July 23, 1987; and Farid Meshkatai; and nonparties, Daniel Campbell and Allen Hyman is in all respects denied. Signed by Judge Robert C Broomfield on 3/12/10.(REW)
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Fidelity Natl Fin v. Friedman, et al 1 Doc. 312 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 10 11 12 13 Fidelity National Financial, Inc., a Delaware corporation, et al., Plaintiffs, 14 vs. 15 16 17 18 19 20 21 22 Colin H. Friedman, individually and as trustee of the Friedman Family Trust UDT, dated July 23, 1987; Hedy Kramer Friedman, individually and as trustee of the Friedman Family Trust UDT, dated July 23, 1987; Farid Meshkatai, an individual; and Anita Kramer Meshkatai, individually and as trustee of the Anita Kramer Living Trust, dated July 23, 1987, 23 24 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. CIV 03-1222 PHX RCB O R D E R 25 26 27 28 Introduction In Fidelity Nat. Financial, Inc. v. Friedman, 2009 WL 890471, (D.Ariz. March 31, 2009) (“Fidelity I”), this court, inter alia, Dockets.Justia.com 1 granted a motion by plaintiffs, Fidelity National Financial, Inc. 2 and Fidelity Express Network, Inc. (“Fidelity”), for an Order to 3 Show Cause (“OSC”) as to why defendants Farid and Anita Meshkatai, 4 and the Kramer Insurance Trust (“the Trust”) and non-parties, 5 Daniel Campbell, and Allen Hyman,1 should not be held in civil 6 contempt for alleged violations of an October, 2006 subpoena to 7 non-party, Yariv Elazar, and subsequent order to compel, Fidelity 8 Nat. Financial, Inc. v. Friedman, 2007 WL 446134 (D.Ariz. Feb. 7, 9 2007).2 Fidelity’s theory is that this alleged contempt is part 10 of a larger scheme by the Meshkatai defendants and others to 11 fraudulently transfer assets to avoid Fidelity’s attempts to 12 collect on its nearly $8.5 million judgment against all of the 13 defendants herein. 14 Because “it would be impermissible to resolve the issue of 15 civil contempt based solely upon the competing affidavits, 16 declarations and other filed documents[,]” Fidelity I, 2009 WL 17 890471, at *8, the court held an evidentiary hearing. After 18 carefully considering the evidence, including the testimony of 19 eight witnesses, and the respondents’ respective arguments, the 20 court rules as follows. 21 . . . 22 23 24 25 26 27 1 For ease of reference, unless necessary to distinguish among them, the above-named individuals and the Trust collectively will be referred to throughout as “the respondents.” 2 28 The court assumes familiarity with Fidelity I and that order to compel, and incorporates by reference the relevant portions of those earlier decisions. -2- Discussion3 1 2 3 I. Personal Jurisdiction There is a threshold issue as to personal jurisdiction. Two 4 non-parties, “The Anna and Noach Kramer Irrevocable Insurance Trust 5 (“the Trust”)” and attorney Allen Hyman, are contesting personal 6 jurisdiction. 7 because “[p]ersonal jurisdiction. . . is an essential element of 8 the jurisdiction of a district court, without which the court is 9 powerless to proceed to an adjudication.” It is critical to resolve that issue at the outset Ruhrgas AG v. Marathon 10 Oil Co., 526 U.S. 574, 583, 119 S.Ct. 1563, 1570, 143 L.Ed.2d 760 11 (1999) (citation and internal quotation marks omitted); see also 12 Wells v. Kearney, 2009 WL 2568635, at *9 (D.Ariz. Aug. 18, 2009) 13 (citation and internal quotation marks omitted) (“Because a court 14 without jurisdiction over the parties cannot render a valid 15 judgment, [the court] must address Defendants' personal 16 jurisdiction argument before reaching the merits of the case.”) 17 This is equally true in the contempt context. 18 of Marcos 94 F.3d 539, 545 (9th Cir. 1996) (“Estate III”) (citation 19 20 21 22 23 24 25 26 27 28 3 See Hilao v. Estate There are two preliminary issues which need not detain the court for long. The first is a Request for Judicial Notice (“RJN”) by Mr. Hyman (doc. 268), which is unopposed. That RJN, pertaining to 20 separate documents, includes court orders; docket reports, or portions thereof, filed in this and other related actions; a Local Rule of this court; and several notices of motion filed in other related actions. Plainly those documents are all matters of public record. Therefore, pursuant to Fed. R. Evid. 201 the court grants in its entirety Mr. Hyman’s RJN, and will consider those exhibits to the extent necessary to resolve this OSC. See, e.g., Rein's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (taking judicial notice, as a matter of public record, “pleadings, memoranda, expert reports, etc., from [earlier] litigation[,]” which were thus “readily verifiable”). Second, during the hearing the court took under advisement the admission of two exhibits. The first is a February 8, 2007, e-mail from Ms. Hemann, an associate in attorney Campbell’s office (def. exh. 54). The second is a declaration in a related matter from the Trust’s former Trustee, Steven Spector (def. exh. 37). The objections to both exhibits are not well founded. See Hearing Transcript (doc. 288) (“Tr. I”) at 147-49; and 156-58. Thus, the court will receive these exhibits. As will be seen, however, neither exhibit is necessary to resolving the contempt issues herein. -3- 1 and internal quotation marks omitted) (“It is essential to the 2 power to punish for contempt that the court . . . have jurisdiction 3 of the person.”) 4 “As [t]he personal jurisdiction requirement recognizes and 5 protects an individual liberty interest, . . . , 6 other such rights, be waived.” 7 F.3d 827, 831 (9th Cir. 2005) (citations and internal quotation 8 marks omitted). 9 is a waivable right, there are a variety of legal arrangements by it can, like Dow Chemical Co. v. Calderon, 422 “[B]ecause the personal jurisdiction requirement 10 which a litigant may give express or implied consent to the 11 personal jurisdiction of the court.” 12 quotation marks omitted). 13 Fidelity argues that it waived its right to contest personal 14 jurisdiction due to the untimely filing of the Trust’s response to 15 Fidelity’s OSC motion. 16 petitioned for relief in the Superior Court of Arizona, Maricopa 17 County, the Trust consented to personal jurisdiction in this court. 18 Both arguments are unavailing. Id. (citations and internal In the present case, as to the Trust, Fidelity further asserts that because it 19 A. 20 Initially, in opposing Fidelity’s motion for an OSC, the Trust Waiver 21 explicitly raised the issue of lack of personal jurisdiction. 22 “[F]ind[ing] the Trust’s personal jurisdiction arguments 23 ‘premature’ because [the court] deem[ed] the process to be the OSC, 24 which . . . ha[d] not yet issued[,]” the court left “for another 25 day the Trust’s” lack of personal jurisdiction argument. 26 I, 2009 WL 890471, at *6. Fidelity 27 Although from the outset the Trust expressly asserted lack of 28 personal jurisdiction, Fidelity insisted that the Trust waived the -4- 1 right to contest personal jurisdiction because of the Trust’s 2 untimely response to the OSC motion. 3 § II(A). 4 objection as untimely though. 5 *6. 6 find a waiver of personal jurisdiction on the basis of 7 untimeliness. 8 9 See Reply (doc. 222) at 2, This court denied Fidelity’s motion to strike the Trust’s See Fidelity I, 2009 WL 890471, at A logical corollary of that holding is that the court will not Attorney Bass has been representing the Meshkatais in this action since August, 2008. See Docs. 208 and 209. From that time 10 until the OSC hearing, every filing by Mr. Bass and every 11 appearance by him was solely on behalf of the Meshkatais. 12 e.g., Docs. 216; 217; and 229. 13 setting a date for the OSC hearing, Mr. Bass appeared on behalf of 14 the Meshkatais and Anita Meshkatai, as Trustee of the Anita Kramer 15 Living Trust, dated July 23, 1987 - also a party to this action. 16 Doc. 258 at 2:14-15; and at 8:13-21. 17 no attorney appeared on behalf of the respondent Trust. 18 10:6-10. 19 See Likewise at the status conference At that conference, however, Id. at Despite the foregoing, for the first time, at the OSC hearing 20 attorney Bass indicated that he was representing the Trust. 21 specifically, Mr. Bass identified himself as “counsel for the 22 Meshkatais and the party identified as the Trust in Your Honor’s 23 order.” 24 was referring to The Anna and Noach Kramer Irrevocable Insurance 25 Trust, as explained in Fidelity I, 2009 WL 890471, at *1 n. 2. 26 Tr. I (doc. 288) at 5:10-12. Presumably, More attorney Bass The court declines to find that the Trust waived its right to 27 contest personal jurisdiction based upon that purported appearance, 28 however. In contravention of LRCiv 83.3, Mr. Bass never filed a -5- 1 notice of appearance, a formal substitution or association of 2 counsel indicating that he was appearing as counsel of record on 3 behalf of the Trust. 4 in any action or file anything in any action without first 5 appearing as counsel of record. 6 a formal substitution or association of counsel before any 7 attorney, who is not an attorney of record, may appear.”) Indeed, 8 the only filings on behalf of the Trust were by attorney O’Rourke, 9 with the Phoenix, Arizona office of Lewis, Brisbois, Bisgaard & See LRCiv 83.3 (“[N]o attorney shall appear In any matter, . . . there must be 10 Smith LLP -- not by attorney Bass. 11 confused state of the record as to Mr. Bass’ purported 12 representation of the Trust, combined with the Trust’s initial 13 unequivocal objection to personal jurisdiction, the court declines 14 to find that the Trust waived its personal jurisdiction defense 15 based upon that supposed appearance at the OSC by attorney Bass. 16 See, e.g., Doc. 204. Given the The court similarly finds that attorney Hyman’s appearance at 17 the OSC did not constitute a waiver of his right to contest 18 personal jurisdiction. 19 waiver. 20 jurisdictional issue in his opposition to the OSC. 21 15. 22 the OSC hearing, and noted that in Fidelity I there had not been 23 any finding as to personal jurisdiction over him. 24 at 5:17; at 160:14-15. 25 between general and special appearances have [long since] been 26 abolished” by enactment of the Federal Rules of Civil Procedure, 27 Mr. Hyman did not need to specify the nature of his appearance to 28 preserve the personal jurisdiction argument. In fact, Fidelity never suggested such a Perhaps that is because Mr. Hyman raised that See Doc. 264 at Further, Mr. Hyman “especially appear[ed] for [him]self[]” at Tr. I (doc. 268) Given that the “technical distinctions -6- See Hamilton v. 1 Willms, 2007 WL 2904286, at *3 (E.D.Cal. Oct. 4, 2007). 2 B. 3 Fidelity’s consent argument is another of the personal 4 jurisdiction arguments which this court left in abeyance in 5 Fidelity I, 2009 WL 890471 at *6, and now must address. 6 premises its consent argument upon a 2005 Arizona state court 7 action. 8 “Petition for Instructions, and to Confirm Interpretation of 9 Irrevocable Insurance Trust[,]” which the court granted. Consent Fidelity In that action, then Trustee Steven Spector filed a Reply 10 (doc. 222), exh. 10 thereto at 86-90; and 101. 11 Meshkatai, among others, signed a declaration in support of that 12 Petition. Defendant Anita Id. at 97-98. 13 Based upon the foregoing, Fidelity maintains that by seeking 14 relief in an Arizona state court, the Trust consented to personal 15 jurisdiction in this federal district court action. 16 not offer any legal support for its argument; perhaps that is 17 because there is none. 18 contrary. 19 Fidelity does In fact, Ninth Circuit precedent is to the In Dow Chemical Co. v. Calderon, 422 F.3d 827 (9th Cir. 2005), 20 the Court held that defendants did not consent to personal 21 jurisdiction. 22 had not objected to personal jurisdiction in a prior federal court 23 action involving a different plaintiff, but the same underlying 24 judgments. 25 distinguished two decisions outside this Circuit holding that 26 “personal jurisdiction exists where a defendant also independently 27 seeks affirmative relief in a separate action before the same court 28 concerning the same transaction or occurrence.” The Court found no consent even though defendants Id. at 835-36. In so holding, the Ninth Circuit -7- Id. at 834 (bold 1 emphasis added). 2 the basis that the Dow Chemical defendants had not sought 3 affirmative relief in the first action, but instead were 4 defendants. 5 choice to defend on the merits “only after they were haled into the 6 district court” by plaintiff in the prior action. 7 contrast, the Ninth Circuit reasoned, “[w]ithout an independent 8 affirmative decision to seek relief in our courts, there can be no 9 imputation of a conscious decision to settle all aspects of a 10 11 Id. dispute here.” The Ninth Circuit distinguished those cases on Moreover, in the first action defendants made a Id. at 836. In Id. In the present case, the Trust is in a slightly different 12 position than the Dow Chemical defendants. 13 Chemical mandates the same result here: the Trust did not consent 14 to personal jurisdiction in this federal court by proceeding with 15 that Arizona state court action. 16 for affirmative relief in that prior state court action. 17 obviously the Trust was not seeking that relief before this federal 18 district court. 19 the Arizona state court action – instructions as to how to construe 20 the Trust 21 at issue here – a contempt proceeding stemming from Fidelity’s 22 attempt to execute on a foreign judgment. 23 rationale of Dow Chemical, the court finds that Trust’s prior 24 Petition to an Arizona state court does not establish that it has 25 consented to personal jurisdiction in this subsequent federal court 26 action. 27 28 – Nonetheless, Dow Admittedly, the Trust petitioned But Further, the relief which the Trustee sought in is wholly unrelated to the transaction or occurrence Thus, based upon the Having rejected Fidelity’s waiver and consent-based personal jurisdiction arguments, the court must address the personal -8- 1 jurisdiction issue on the merits. 2 F.Supp.2d 276, 292 (E.D.Pa. 2009) (“Because plaintiff may not rely 3 on Defendants’ waiver for the exercise of personal jurisdiction, he 4 must establish general or specific personal jurisdiction over 5 Defendants.”) Likewise, having found that attorney Hyman did not 6 waive personal jurisdiction by appearing at the OSC hearing, the 7 court also must address whether it has personal jurisdiction over 8 him. 9 10 C. See Ciolli v. Iravani, 625 Merits “In personam jurisdiction, simply stated, is the power of a 11 court to enter judgment against a person.” 12 F.3d 1180, 1138 (9th Cir. 2007). 13 test,” adopted in the seminal case of Int’l Shoe Co. v. Washington, 14 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945), “coupled with 15 statutory authorization, provides a basis for an exercise of 16 jurisdiction[.]” 17 hand, “service of process is the mechanism by which the court 18 [actually] acquires the power to enforce a judgment against the 19 defendant’s person or property.” 20 quotation marks omitted) (emphasis added by Ross Court). 21 although often conflated, “[s]ervice of process is a distinct and 22 separate concept from the court’s personal jurisdiction[.]” Rose v. 23 Miss Pacific LLC, 2009 WL 1688123, at *3 (D.Or. June 15, 2009). 24 Accordingly, “[w]ithout a proper basis for jurisdiction, or in the 25 absence of proper service of process, the district court has no 26 power to render any judgment against the defendant’s person or 27 property unless the defendant has consented to jurisdiction or 28 waived the lack of process.” S.E.C. v. Ross, 504 “The familiar ‘minimum contacts’ Id. (emphasis added by Ross Court). On the other Id. (citation and internal Ross, 504 F.3d at 1138-1139 -9- Thus, 1 2 (citations omitted) (emphasis added). Plainly then, before issuing an order of contempt against non- 3 parties such as the Trust and Mr. Hyman, there must be a basis for 4 the exercise of that jurisdiction and a mechanism by which this 5 court can assert personal jurisdiction. 6 will limit its inquiry to whether the Trust and Mr. Hyman were 7 properly served. 8 commentary on the Federal Rules, the Ninth Circuit has stated, 9 “‘[w]hen it is sought to charge a person with contempt who was not For the moment, the court As to service, quoting from one prominent 10 a party to the original action and thus not already within the 11 jurisdiction of the court, that party must be served with process 12 as in any other civil action.’” 13 (quoting 11A Wright, Miller & Kane, Federal Practice and Procedure: 14 Civil 2d § 2960 (1995)); accord Comverse, Inc. v. American 15 Telecommunications, Inc. Chile S.A., 2009 WL 464446, at *2 n.4 16 (S.D.N.Y. Feb. 24, 2009) (citation omitted) (where it “appear[ed]” 17 that the court lacked personal jurisdiction over non-parties 18 because there was no evidence of proper service, the court was 19 “[w]ithout personal jurisdiction” and could not “hold them in 20 contempt[]”). 21 Estate III, 94 F.3d at 545 In opposing Fidelity’s motion for an OSC, the Trust 22 specifically challenged whether this court has personal 23 jurisdiction over it. 24 Opposition” to Pl. OSC Mot. (doc. 204) at 3-6. 25 analysis of that issue did not mention service of process at all. 26 In the accompanying declaration of former Trustee Spector, however, 27 he avers that “[t]he Trust was never served.” 28 204) at 10, ¶ 7:18. See Trust’s “Objection to Jurisdiction and The Trust’s cursory Spector Decl’n (doc. Mr. Spector further questioned “[t]he - 10 - 1 purported service on the non-existent . . . Kramer Insurance 2 Trust[,]” which “consisted of service of Plaintiff’s [OSC] Motion 3 on [him], the Trustee of The Anna and Noach Kramer Irrevocable 4 Insurance Trust.” 5 averred that “[t]o [his] knowledge there has been no service of a 6 summons or any other means of properly bringing the Trust before 7 this Court.” Id. at 10, ¶ 7:18-20. Lastly, Mr. Spector Id. at 10, ¶ 7:20-22. 8 Fidelity counters that the Trust has no basis for disputing 9 service because the OSC Motion was properly served upon the Trust 10 in accordance with Ariz. R. Civ. P. 4.1(k)4 and 4.2(h).5 11 particular, Fidelity notes that it personally served the OSC Motion 12 upon Mr. Spector. Fidelity’s Reply (doc. 222), Kroll Decl’n, exh. 13 1 thereto at 15. In addition, Fidelity disagrees with the Trust’s 14 contention that it must be served with a summons before this court 15 has personal jurisdiction over the Trust. 16 In Mr. Hyman vaguely mentions, in opposing Fidelity’s OSC, that 17 he is “rais[ing] objection[s] based upon jurisdiction and due 18 process[,]” but he never expands upon that statement. 19 (doc. 264) at 15:26-27 (emphasis omitted). 20 that Fidelity did not “undertake” to meet its burden “to insure Hyman Resp. Hyman merely states 21 22 23 24 25 26 27 28 4 That Rule states in relevant part that “[s]ervice upon a[n]. . . unincorporated association which is subject to suit in a common name, . . . , shall be effected by delivering a copy of the summons and of the pleading to a partner, an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the party on whose behalf the agent accepted or received service.” Ariz. R. Civ. P. 4.1(k) (emphasis added). 5 This Rule governs service upon, among others, “[u]nincorporated [a]ssociations [l]ocated [o]utside Arizona but [w]ithin the United States[.]” Ariz. R. Civ. P. 4.2(h). “[S]ervice under th[at] Rule shall be made on one of the persons specified in Rule 4.1(k)[,]” quoted in the preceding footnote. Ariz. R. Civ. P. 4.2(h). - 11 - 1 that the Court’s jurisdiction extended to [him][.]” Id. at 15:28- 2 16:1. 3 be held in contempt. 4 Hyman then immediately proceeded to argue why he should not Later in his opposition Hyman again alluded to the personal 5 jurisdiction issue, broadly stating that “[t]here are . . . 6 troubling issues that FIDELITY did not serve” the OSC on him “until 7 April 23, 2009 by email.”6 8 added); see also Hyman Decl’n (doc. 265) at 15, ¶ 68:6-8 (citing 9 exh. 24 thereto). Id. at 20:16-18 (italicized emphasis Again, Mr. Hyman did not elaborate. Despite the 10 fact that it has the burden of proof as to personal jurisdiction, 11 Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 12 1392, 1397 (9th Cir. 1986), 13 lack of personal jurisdiction contentions, either at the OSC 14 hearing or in its “Bench Brief” submitted in support of that 15 hearing. 16 Fidelity did not respond to Mr. Hyman’s In any event, there is confusion here as to the manner in 17 which service must be accomplished and the documents which must be 18 served. 19 upon the Trust, and thus the court has personal jurisdiction over 20 the Trust are not germane in light of Fidelity I. 21 decision, this court specifically found that the “process here” is 22 the OSC itself, as opposed to Fidelity’s motion or a summons. 23 Fidelity I, 2009 WL 890471, at *6 (citation omitted). 24 this juncture it is irrelevant whether Fidelity properly served the 25 Trust with the OSC Motion. Fidelity’s argument that it properly served the OSC Motion In that Thus, at It is likewise irrelevant that the 26 27 28 6 As will be discussed above, the record shows that Fidelity attempted service of the OSC upon Mr. Hyman by overnight delivery, not by e-mail, as Mr. Hyman claims. - 12 - 1 Trust was not served with a summons. 2 whether Fidelity properly served the Trust with the OSC itself, 3 i.e. Fidelity I. 4 Instead, the focus is upon Because the process here is an OSC and not a summons, the 5 court must look to Rule 4.1(a). 6 service of 7 subpoena under Rule 45[.] Fed. R. Civ. P. 4.1(a) (emphasis added). 8 Rule 4.1(a) “directs who shall make service – a U.S. marshal, 9 deputy marshal, or special appointee[.]” Hilao v. Estate of 10 Marcos, 95 F.3d 848, 853 (9th Cir. 1996). That Rule further 11 specifies “where that officer can make such service - anywhere 12 within the state in which the district court sits[.]” Id. 13 Rule is silent, however, as to “the manner in which service shall 14 be made (e.g., personally, by mail, etc.) or upon whom service 15 shall be made.” 16 proceeding like the present action, the Ninth Circuit held that in 17 accordance with Rule 69(a)7, “state law” provides “those latter 18 requirements for service[.]” Id. 19 Court found that although the judgment creditor complied with Fed. 20 R. Civ. P. 4.1, that did not excuse its failure to comply with 21 California law governing service on a financial institution in That Rule governs the method for “[p]rocess . . . other than a summons under Rule 4 or a Id. That Therefore, in Hilao, a judgment enforcement When read together, the Hilao 22 23 24 25 26 27 28 7 Subsection (1) of that Rule provides that: [t]he procedure on execution – and in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of judgment or execution – must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies. Fed. R. Civ. P. 69(a)(1). Fidelity invoked subsection (2) of that Rule in seeking the order to compel which is one of the bases of this contempt proceeding. Fidelity, 2007 WL 446134, at *2. - 13 - 1 2 enforcement proceedings. Here, unlike Hilao, state law is not implicated in any way 3 as to service of the OSC or otherwise. 4 an action to execute on a money judgment pursuant to Fed. R. Civ. 5 P. 69. 6 subpoena pursuant to Fed. R. Civ. P. 45(a)(2)(C) upon non-party 7 Elazar. 8 court’s opinion, warranted an award of sanctions pursuant to Fed. 9 R. Civ. P. 45(e). - In the first place, this is As subsection (2) of that Rule allows,8 Fidelity issued a Elazar’s failure to comply with that subpoena, in this See Fidelity, 2007 WL 446134, at *4. Fidelity 10 later brought a motion for an OSC seeking an order of contempt 11 pursuant to Fed. R. Civ. P. 37(b)(2)(D). 12 this court’s “inherent power to impose sanctions . . . for bad 13 faith conduct in litigation or for willful disobedience of a court 14 order[]” in accordance with federal case law. 15 at 12:14-16 (internal quotation marks and citation omitted). 16 Despite the absence of state law here, 17 instructive, especially as to Fed. R. Civ. P. 4.1. 18 Fidelity also relied upon OSC Mot. (Doc. 191) Hilao is nonetheless There is no dispute that neither the Trust nor Mr. Hyman were 19 served with the OSC by a United States marshal or deputy marshal or 20 by a special appointee, as Rule 4.1(a) requires. 21 “Proof of Service” filed with this court, Fidelity purported to 22 serve the Trust and Mr. Hyman, among others, by sending them the 23 OSC via “overnight delivery[.]” 24 8 According to a Def. Exh. 53 at 2-3 (emphasis Rule 69(a)(2) provides in relevant part: 25 26 27 28 In 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). - 14 - 1 omitted). 2 by overnight delivery the “civil minutes[,]” setting the hearing 3 date for the OSC and the completion date for the Elazar deposition. 4 See id. 5 4.1(a)’s requirement that service be made by “United States marshal 6 or deputy marshal or by a person specially appointed for that 7 purpose.” 8 compliance with Rule 4.1 upon either the Trust or Mr. Hyman, this 9 court does not have personal jurisdiction over those two non- Fidelity also purported to serve the Trust and Mr. Hyman Service by overnight delivery does not satisfy Rule Therefore, because Fidelity did not serve the OSC in 10 parties. 11 March 11, 2009) (citation omitted) (“Service of process (in the 12 absence of a voluntary appearance or a conscious waiver) is an 13 indispensable prerequisite to the court’s jurisdiction to 14 proceed.”) 15 See Liao v. Ashcroft, 2009 WL 636191, at *3 (N.D.Cal. Because neither the Trust nor Mr. Hyman were properly served, 16 there is no need to address Fidelity’s assertion that the Trust has 17 sufficient contacts with Arizona so as not to offend traditional 18 notions of due process. 19 court could properly exercise personal jurisdiction over the Trust 20 and Mr. Hyman, Fidelity has not been its burden of proving contempt 21 by clear and convincing evidence as to either. 22 II. Moreover, as will be seen, even if the Civil Contempt 23 A. 24 Fidelity contends that respondents should be found in contempt Background 25 for violating (1) the October, 2006 subpoena issued to non-party 26 Elazar; and (2) this court’s order to compel, 27 28 - 15 - also directed 1 solely to Mr. Elazar.9 2 produced in response to those orders. 3 also Pl. Exh. 11. 4 based upon the failure to timely produce a single document 5 “Deed of Full Release and Reconveyance (Beneficiary)” (“the Deed 6 Release”) (Pl. Exh. 15-1). 7 Ultimately roughly 400 documents were Tr. I (doc. 288) at 10; see Yet, Fidelity is seeking a finding of contempt – the That Release, dated January 19, 2007, is signed by defendants 8 Farid and Anita Meshkatai as “[m]anager[s]” of Eliani, LLC. 9 Exh. 15-1 Id. Pl. The Meshkatais also signed that Release as 10 “[b]eneficiar[ies]” under a “Deed of Trust executed by Yariv 11 Elazar, Trustors(s) [sic], to Transnation Title Insurance Company 12 Trustee, for the benefit of Eliani, . . . . , Beneficiary[.]” Id. 13 Pursuant to the terms of that Release: 14 Eliani, as ‘the Beneficiary under [that] Deed of Trust[,] . . . release[d] and reconvey[ed], without covenant or warranty, express or implied, unto the parties legally entitled thereto all right, title and interest which was heretofore acquired by . . . Trustee [Transnation Title] under said Deed of Trust, for the benefit of the [Eliani]. 15 16 17 18 Id. 19 produced it at his May 14, 2008 deposition. 20 that Release at his May 14, 2008 deposition, in response to an 21 April 8, 2008 subpoena duces tecum from Fidelity. 22 Fidelity was not aware of this Deed Release until Mr. Elazar Mr. Elazar produced At his deposition, Mr. Elazar first became aware that the 23 $1,170.00 in sanctions which this court ordered him to pay were 24 paid by a March 12, 2007 check actually paid on a check drawn on 25 the Eliani account, signed by Mrs. Meshkatai. Pl. Exh. 12-1. 26 9 27 28 “A subpoena duces tecum is itself a court order[.]” Fidelity, 2007 WL 446134, at *4. Thus, unless necessary to distinguish between the subpoena and the order to compel, hereinafter they shall be referred to collectively as “the orders.” - 16 - 1 Originally, in its OSC motion Fidelity was seeking a contempt order 2 based upon this sanction payment, as well as upon the untimely 3 production of the Deed Release. 4 proof, albeit scant, regarding the sanction payment. 5 expounded upon its contempt theory, it did not mention the sanction 6 payment at all. 7 Transcript (doc. 305) (“Tr. II”) at 293-303. 8 has abandoned the theory that payment of the sanctions by Eliani 9 constitutes contempt. 10 During the hearing there was As Fidelity See, e.g. Tr. I (doc. 288) at 6-11; and Hearing Evidently Fidelity Narrowing the scope of relief which Fidelity is now seeking 11 corresponds to the limitations which this court placed upon 12 Fidelity in terms of available relief. 13 held, if that sanctions check was a violation of any order, it was 14 the California RICO court’s preliminary injunction freezing 15 Eliani’s assets, among others. 16 *3 and *4. 17 its inquiry to whether any of the respondents, due to the belated 18 production of the Deed Release, can be held in contempt for 19 violating this court’s orders. As this court previously See Fidelity I, 2009 WL 890471, at Accordingly, as did Fidelity, the court will confine 20 B. 21 Fidelity argues that each of the respondents should be held in Legal Standards - Generally 22 contempt for violating prior orders of this court. 23 this argument, the court will continue to be guided by the basic 24 contempt principles set forth in Fidelity I.10 In considering The court stresses, 25 26 27 28 10 In Fidelity I, this court explained in relevant part: In a civil contempt proceeding, [t]he moving party has the burden of showing by clear and convincing evidence that the contemnors violated a specific and definite order of the court. . . . A mere[ ] . . . preponderance of the evidence[ ] will not - 17 - 1 however, that because respondents were not subject to those prior 2 court orders, there must be a showing that they “either abet[ted] 3 [Elazar] [in violating those orders] or 4 with [Elazar], . . . and that the[y] ha[d] notice of the 5 order[s][.]” Fidelity I, 2009 WL 890471, at *6 (quoting Peterson v. 6 Highland Music, Inc., 140 F.3d 1313, 1323 (9th Cir. 1998) (citations 7 and internal quotation marks omitted) (emphasis added)). 8 then, Elazar’s violation of this court’s orders is a necessary 9 predicate to a finding of contempt against any of the five [are] legally identified Logically 10 respondents. 11 Ltd., 2007 WL 3348594, at *2 (E.D. Wash. Nov. 9, 2007) (“[A] non- 12 party who is alleged to have acted in concert to aid and abet a 13 violation of an injunction can be held in contempt only upon the 14 ‘predicate’ finding that the enjoined party has violated the 15 order.”) (quoting Levin v. Tiber Holding Corp., 277 F.3d 243 (2d 16 Cir. 2002) (citations omitted) (reversing district court’s contempt 17 finding because an underlying violation of the consent decree was 18 not proven and hence there was no offense to aid and abet); Alemite 19 Mfg. Corp. v. Staff, 42 F.2d 832, 832-33 (2d Cir. 1930) (L.Hand, 20 J.) (“[N]o court can make a decree which will bind any one but a 21 party[.] . . . 22 may be punished [for contempt], is when he has helped to bring 23 about . . . what [the decree] has [the] power to forbid[.]”) Thus, 24 although Fidelity is not seeking an order of contempt against See Red 1 Investments, Inc. v. Amphion International Thus, the only occasion when a person not a party 25 26 27 28 suffice. . . . Generally, a violation is shown by the party's failure to take all reasonable steps within the party's power to comply. . . . Willfulness is not an element of contempt. Fidelity I, 2009 WL 890471, at *7 (citations and internal quotation marks omitted). - 18 - 1 Elazar, it is necessary to consider whether the record supports a 2 finding that he violated either of the court’s orders. 3 1. 4 Yariv Elazar a. Subpoena 5 Mr. Elazar credibly testified that he received the first page 6 of the October, 2006 subpoena and another page with the caption of 7 this action on it, but not the accompanying “DOCUMENT REQUESTS” 8 page. 9 documents requested on that page were “Any agreements, Tr. I (doc. 288) at 54-57 (emphasis in original). Among the 10 transactions, or communications between [him] and Eliani LLC, 11 including but not limited to loans, promissory notes, security 12 agreements, and contracts.” Pl. Exh. 1-3 (emphasis added). 13 Eliani is not a party to this action, and hence not named in the 14 caption, Mr. Elazar was unaware from the subpoena and the caption 15 that Fidelity was seeking information from him regarding his 16 relationship with Eliani. 17 foregoing is uncontroverted. 18 have actual notice from the subpoena that he was to produce Eliani- 19 related documents, such as the Deed Release, he cannot be held in 20 contempt for failing to do so. 21 Tr. I (doc. 288) at 56-57. Because The Therefore, because Mr. Elazar did not It is a closer call as to whether Elazar took all reasonable 22 steps in otherwise responding to the October, 2006 subpoena. 23 Elazar told the Meshkatais, as well as attorney Hyman, that he had 24 received the subpoena and provided documents to Fidelity. 25 96. 26 FAX number. 27 that Elazar took any actions to verify that Fidelity actually 28 received those faxed documents. Id. at Elazar faxed documents to what he believed to be Fidelity’s Id. at 86-89. The record does not establish, however, Obviously, if Fidelity had - 19 - 1 received them, it would not have filed a motion to compel against 2 Elazar. 3 id. 4 not amount to taking all reasonable steps to comply with a 5 subpoena. 6 the record supports a finding - consistent with the order to compel 7 -- that given the manner in which Elazar responded to the 2006 8 subpoena, he engaged in contemptuous conduct. Faxing documents to an unknown FAX number, as did Elazar, at 114- 115, and never following up to verify receipt, does Based upon the foregoing, except for the Deed Release, 9 b. Order to Compel 10 Conversely, the record does not support a finding of 11 contemptuous conduct by Elazar as to the order to compel. 12 court issued that order on February 7, 2007, but Elazar did not 13 receive a copy of it then. 14 that the court had ordered him to produce documents responsive to 15 the subpoena, and that he had been ordered to pay sanctions. 16 at 60 and 67. 17 attorney Hyman to represent him in this matter, Elazar further 18 testified that he was unaware that on February 21, 2007, Hyman 19 provided to Fidelity, purportedly on Elazar’s behalf, roughly 400 20 pages of documents. 21 Id. at 67. The Elazar was thus unaware Id. In keeping with his testimony that he never hired Id. at 70-73. Eventually, in response to an April 8, 2008 subpoena duces 22 tecum issued to Mr. Elazar at Fidelity’s behest, at his May 8, 2008 23 deposition Elazar produced the lone document which is the subject 24 of this proceeding - the Deed Release. 25 is not among the 35 “persons” identified in the attached document 26 request, the requested documents also pertain to “any affiliated 27 entity” of those persons, such as Eliani. 28 The record as presently constituted establishes that Elazar did not - 20 - Id. 77-79. Although Eliani Pl. Exh. 17-3 - 17-6. 1 have notice that he was to produce any Eliani-related documents 2 until he received that subpoena duces tecum. 3 has not met its burden of showing that Elazar violated the order to 4 compel. Accordingly, Fidelity 5 To summarize, the record supports a predicate finding of 6 contempt by Elazar as to the subpoena, although not in terms of the 7 Deed Release. 8 Elazar 9 to compel. 10 On this record Fidelity has not shown, however, that engaged in contemptuous conduct with respect to the order Nonetheless, the court will assume such a finding for the sake of analysis. 11 C. 12 In light of the preceding analysis, the next issue is whether Legal Standards - Respondents 13 any of the respondents abetted Elazar in violating either or both 14 of the court’s orders, or whether they are “legally identified” 15 with him, such that his contemptuous conduct can be imputed to 16 them. 17 abetting for purposes of finding a non-party in civil contempt. 18 The court will therefore borrow Black’s Law Dictionary definition 19 of abet, recognizing that that definition is in the criminal 20 context. 21 or assist[ing] (someone), . . . in the commission of” an act, or 22 support[ing] . . . by active assistance[.]” 23 (8th ed. 2004). 24 There is a paucity of case law as to what constitutes That Dictionary defines abet as “aid[ing], encourag[ing], Black’s Law Dictionary In contrast to abetting a contemnor, there is case law, albeit 25 scant, as to what it means for a non-party to be “legally 26 identified” with a contemnor. 27 to a corporation or other entity binds those who are legally 28 responsible for the conduct of its affairs.” It is well settled that “[a]n order - 21 - U.S. v. Laurins, 857 1 F.2d 529, 535 (9th Cir. 1988) (citations omitted) 2 principle, in United States v. Montgomery Global Advisors V LLC, 3 2006 WL 950101 (N.D.Cal. Mar. 2, 2006), although the contempt order 4 was directed solely to a corporate defendant, the court found that 5 the managing member could be held personally liable for that 6 defendant’s contempt. 7 managing member of [the corporate defendant], clearly [that member] 8 had and continues to have the ability to act on behalf of that 9 entity and is therefore legally identified with it.” Id. at *2. Relying upon that The court reasoned that “as the Id.; see also 10 NLRB v. Sequoia Dist. Council of Carpenters, 568 F.2d 628, 633 (9th 11 Cir. 1977) (“It can hardly be argued that the principal officers of 12 a labor union are not legally identified with it, and thus liable 13 in contempt for disobeying an order directed to the union.”) 14 1st Technology, LLC v. Rational Enterprises LTDA, 2008 WL 15 4571057, at *8 (D.Nev. July 29, 2008), adopted and affirmed, 2008 16 WL 4974580 (D.Nev. Nov. 21, 2008), is particularly instructive in 17 that it addresses the burden of proof issue. 18 sought an OSC why a non-party, Bodog IP Holdings, “should not be 19 held in contempt for [defendant] Bodog.com’s failure or refusal to 20 comply with the Court’s discovery order.” 21 found that “if Defendant Bodog.com was and is a ‘d/b/a’ of Bodog IP 22 Holdings, which is legally responsible for its compliance with the 23 discovery order, then Bodog IP Holdings is potentially subject to 24 contempt for Bodog.com’s failure or refusal to comply with the 25 Court’s order.” 26 burden is upon Plaintiff to show that Bodog.com is a d/b/a of Bodog 27 IP Holdings.” 28 to establish that d/b/a relationship, the 1st Technology court Id. Id. The plaintiff there Id. at *8. The court Significantly, the court held that “[t]he Due to “insufficient evidence or information” - 22 - 1 declined to issue an order to Bodog IP Holdings to show cause why 2 it should not be held in contempt. 3 prejudice “to Plaintiff demonstrating facts or evidence which would 4 support an issuance of an [OSC] to Bodog IP Holdings.” 5 course, in the present case, Fidelity has had more than ample 6 opportunity to obtain and marshal the evidence to establish legal 7 identity. 8 9 1. Id. That ruling was without Id. Of The Trust As previously discussed, this court lacks personal 10 jurisdiction over the Trust because it was not properly served with 11 the OSC in accordance with Fed. R. Civ. P. 4.1. 12 arguendo that this court has personal jurisdiction over the Trust, 13 Fidelity has not met its burden of showing that the Trust should be 14 held in contempt for violating this court’s orders. 15 Even assuming In the first place, Fidelity has not met its burden of showing 16 that the Trust abetted Elazar in violating those orders. 17 has not shown that the Trust had any involvement in Elazar’s 18 production of the subpoenaed documents. 19 several times that he acted alone in producing the subpoenaed 20 documents. Further, as already noted, Mr. Elazar believed that he 21 was to provide documents pertaining to only the parties named in 22 the caption of this action. 23 Therefore, it would have made no sense for the Trust to have been 24 aiding or assisting Elazar in responding to that subpoena. The 25 absence of record proof connecting the Trust to Elazar’s October 26 2006 document production, precludes a finding that the Trust 27 abetted Elazar in that production. 28 proof in terms of the Trust abetting Elazar in violating this Fidelity Mr. Elazar testified The Trust is not one of those parties. - 23 - There is a similar lack of 1 court’s order to compel. 2 not met its burden of showing that the Trust abetted Elazar in 3 violating either of this court’s prior orders. 4 The court thus finds that Fidelity has Interestingly, despite arguing that “[t]he Trust is legally 5 identified with Eliani and Farid and Anita Meshkatai[,]” Fidelity 6 did not explicitly argue that the Trust was legally identified with 7 Elazar. Reply (doc. 222) at 7:2-3. 8 just found that the Trust cannot be held liable for abetting 9 contempt, it will briefly consider whether the Trust could be held However, because the court has 10 liable on the theory that it is legally identified with Elazar. 11 with abetting, Fidelity also has not met this burden of proof. 12 As Fidelity makes much of the fact that the Trust was the funding 13 mechanism for Eliani. 14 with Eliani for real estate development of three properties. 15 (doc. 288) at 40; 42-44; see also Pl. Exh. 11-257-259. 16 funding does not establish that the Trust is legally identified 17 with Elazar absent a showing by Fidelity that the Trust was 18 “legally responsible” for Mr. Elazar’s individual or personal 19 “affairs.” 20 not shown that the Trust “had and continues to have the ability to 21 act on behalf of” Elazar individually or personally. 22 Montgomery Global, 2006 WL 950101, at *2. 23 whether the focus is upon the subpoena or the order to compel, 24 Fidelity has not met its burden of showing that the Trust is 25 legally identified with Elazar such that the Trust should be held 26 in contempt for Elazar’s violations, if any, of this court’s prior 27 orders. 28 . . . Mr. Elazar, in turn, had a joint venture See Laurins, 857 F.2d at 553. - 24 - Tr. I That Likewise, Fidelity has See Hence, regardless of 1 2 2. Anita Meshkatai For the same reasons discussed above as to the Trust, the 3 court finds that Fidelity also has not met its burden of showing 4 that Mrs. Meshkatai was legally identified with Mr. Elazar. 5 has Fidelity met its burden of showing that Mrs. Meshkatai abetted 6 Elazar in violating this court’s orders. 7 October 2006 Mrs. Meshkatai assisted Mr. Elazar in any way in 8 responding to the subpoena. 9 faxed the documents to what he believed to be Fidelity. Nor There is no proof that in Again, Mr. Elazar acted alone when he Given that 10 lack of proof, clearly the record does not support a finding that 11 Mrs. Meshkatai “aided, encouraged, assisted, or supported by active 12 assistance,” Mr. Elazar in responding to that subpoena. 13 Black’s Law Dictionary (8th ed. 2004). 14 See Although Mrs. Meshkatai received the order to compel, she 15 never instructed Mr. Elazar to take any action with respect 16 thereto. 17 Meshkatai, Elazar never asked her about the order. 18 Mrs. Meshkatai did recall a “casual conversation” with Mr. Elazar 19 in February, 2007, shortly after the issuance of the order to 20 compel. 21 get Elazar’s assistance in producing documents to comply with that 22 order, however. 23 Elazar in contempt with respect to the order to compel, Fidelity 24 has not met its burden of showing that Mrs. Meshkatai abetted that 25 contempt. 26 27 28 Tr. II (doc. 305) at 99. Id. at 120. 3. Id. Moreover, according to Mrs. Id. at 99-100. The purpose of that conversation was not to Consequently, even if the court were to find Attorney Campbell As with the other respondents, the court’s focus is upon whether attorney Campbell was “legally identified” with Elazar or - 25 - 1 whether he abetted Elazar in violating the subpoena or the order to 2 compel. 3 a. Subpoena 4 In October 2006, when Elazar responded to the subpoena by 5 faxing documents to what he believed to be Fidelity, he had no 6 connection with attorney Campbell. 7 did notify Fidelity that he was representing the Meshkatais; but 8 there is no mention of Elazar. 9 see why Elazar is not mentioned in that letter. Prior to that time, Campbell Def. Exh. 34 at 1. It is easy to As Mr. Campbell 10 explained his role to Fidelity then, he was “assuming the 11 representation” of the Meshkatais from another attorney in 12 connection with judgment debtors’ examinations. 13 although Elazar was completely unaware of it, attorney Campbell did 14 not file a Notice of Appearance on Elazar’s behalf until December 15 4, 2006 – a couple of months after Elazar responded to the 16 subpoena. 17 Consequently, Fidelity has not shown, as it must, that attorney 18 Campbell was legally identified with Elazar when Elazar responded 19 to the subpoena in early October 2006. 20 Mr. Campbell could be found in contempt as to the subpoena is if he 21 abetted Mr. Elazar in violating it. 22 and uncontroverted disavowal of any association with Mr. Campbell 23 during the relevant time frame, plainly Campbell did nothing to 24 abet Elazar’s actions. 25 26 Id. In any event, See Tr. I (doc. 288) at 64; and Pl. Exh. 7. The only way then in which Given Mr. Elazar’s repeated Further, even if Campbell became legally identified with Elazar through the filing of December 4, 2006, Notice of 27 28 - 26 - 1 Appearance,11 Campbell cannot be held in contempt based upon 2 Elazar’s actions prior to that date, i.e., Elazar’s faxing of 3 documents in October 2006 to an entity he believed to be Fidelity, 4 and failing to verify receipt. 5 Moreover, Campbell’s actions after the filing of the Notice of 6 Appearance do not constitute abetting Mr. Elazar in violating the 7 subpoena. 8 Campbell did file a response to Fidelity’s motion to compel 9 compliance with the October, 2006 subpoena. On behalf of Mr. Elazar and the Meshkatais, attorney See Pl. Exh. 8. Once 10 a party such as Fidelity files a motion, LR Civ 7.2(c) expressly 11 allows for the filing of a responsive memorandum. 12 no basis for finding that the filing of a response to a motion to 13 compel, in accordance with the Local Rules, constitutes abetting a 14 violation of a subpoena. 15 in contempt for abetting a violation of the subpoena, even if he 16 became legally identified with Elazar in December 2006. 17 18 b. There simply is Thus, attorney Campbell cannot be found Order to Compel Next the court must consider whether Fidelity has shown that 19 Mr. Campbell was legally identified with Elazar for purposes of the 20 order to compel, or, assuming a violation of that order by Elazar, 21 whether Campbell abetted him in that violation. 22 neither. 23 become aware of attorney Campbell’s purported representation of 24 Elazar. Fidelity has shown Again, not until his May 2008 deposition did Mr. Elazar Therefore, the court is hard pressed to find that for 25 26 27 28 11 Seemingly the filing of a notice of appearance would mean that that attorney and that client are “legally identified.” Mr. Elazar emphatically testified that he never hired or authorized attorney Campbell to respond or object to the subpoena, however. See, e.g., Tr. I (doc. 288) at 56-57; and 63. Under these circumstances, Campbell’s filing of a notice of appearance does not result in a finding that he was legally identified with Elazar at that time. - 27 - 1 contempt purposes Campbell was legally identified with Elazar in 2 terms of the order to compel. 3 evidence shows that attorney Campbell did not have any contact with 4 Mr. Elazar regarding the order to compel, he could not have abetted 5 Elazar in any violation thereof. 6 outlined below easily supports the reasonable inference that Mr. 7 Meshkatai and attorney Hyman were orchestrating the document 8 production in response to the order to compel. 9 Likewise, because cumulatively the Not only that, but the evidence After learning of the order to compel, attorney Campbell 10 advised Mr. Meshkatai and attorney Hyman. 11 266. 12 to compel and production of the documents by attorney Hyman, Mr. 13 Campbell testified that he and Ms. Hemann, an associate in his 14 office, had several communications with Mr. Meshkatai. 15 272. 16 through attorney Hyman, Mr. Meshkatai would be producing the 17 documents responsive to the order. 18 evidence, discussed below, demonstrates that the documents were 19 produced in accordance with Mr. Meshkatai’s direction. 20 simply no credible proof that attorney Campbell abetted Elazar in 21 violating the order to compel. In the approximately two weeks between issuance of the order Id. at 265- During that time, Mr. Meshkatai informed Campbell that, 22 23 Tr. II (doc. 305) at 4. Id. at 268. Other record There is Farid Meshkatai and Allen Hyman12 As the record demonstrates, Mr. Meshkatai and Mr. Hyman had 24 integral and closely intertwined roles in responding to the Elazar 25 subpoena and the resultant order to compel. Therefore, the court 26 12 27 28 For the sake of argument, the court assumes that it may properly exercise personal jurisdiction over Mr. Hyman, despite the lack of proper service, as discussed earlier. Also for the sake of argument, the court continues to assume that Mr. Elazar violated the order to compel. - 28 - 1 will jointly address the evidence as to them. 2 3 a. “Legally Identified” Undisputably, Messrs. Elazar and Meshkatai have a close 4 business relationship. 5 joint venture to which Mr. Elazar is a party. 6 40; 42-44; see also Pl. Exh. 11-257-259. 7 business relationship does not translate to a finding that Mr. 8 Meshkatai is legally identified with Mr. Elazar for contempt 9 purposes. Mr. Meshkatai is a manager of Eliani - a Tr. I (doc. 288) at Nevertheless, that There has been no showing by Fidelity, who has the 10 burden of proof on this issue, see 1st Technology, 2008 WL 4571057, 11 at *8, that Mr. Meshkatai is legally responsible for the affairs of 12 Mr. Elazar individually. 13 Mr. Meshkatai “had and continues to have the ability to act on 14 behalf” of Mr. Elazar so as to be legally identified with Elazar. 15 See Montgomery Global, 2006 WL 9501, at *2. 16 have been different if Fidelity had served Mr. Elazar with a 17 subpoena directed to Eliani, but it did not. 18 the record as presently constituted 19 is “legally identified” with Mr. Elazar with respect to this 20 court’s orders. 21 that basis. 22 Fidelity also has not demonstrated that The result may well There is no basis on for finding that Mr. Meshkatai Thus, Mr. Meshkatai cannot be found in contempt on Although for a different reason, attorney Hyman also cannot be 23 found in contempt for being “legally identified” with Mr. Elazar. 24 As with attorney Campbell, based upon Mr. Elazar’s credible 25 testimony that he never authorized attorney Hyman to represent him 26 or in any way act on his behalf, there is no basis for finding that 27 Hyman is “legally identified” with Mr. Elazar. 28 Hyman cannot be found in contempt on that basis. - 29 - Consequently, Mr. 1 2 b. Abetting The evidence paints a troubling picture, though, as to Mr. 3 Meshkatai’s and attorney Hyman’s conduct surrounding the subpoena 4 and the order to compel. 5 or consent, attorney Hyman and Mr. Meshkatai took it upon 6 themselves to orchestrate how to respond to the Elazar subpoena. 7 Also wholly without Elazar’s knowledge or consent, attorney Hyman 8 and Mr. Meshkatai 9 to compel. 10 produced the documents in response to the order They failed to produce the Deed Release which is at the center of this contempt proceeding, however. 11 12 Basically, without Mr. Elazar’s knowledge I. Subpoena Since 2006, attorney Hyman had been defending the Meshkatais 13 in two parallel California federal court actions also commenced by 14 Fidelity. 15 attorney Hyman managed the receipt and production of countless 16 documents. 17 he had produced between 5,000 - 10,000 pages of Meshkatai documents 18 and had received 16 banker’s boxes of documents from Fidelity. 19 at 232-233. 20 described it, the “center of [document] production” for all 21 Fidelity-related document requests, and Hyman “was in charge of all 22 the subpoenas[.]” Id. at 245; and 258; see also Tr. II (doc. 305) 23 at 108. 24 role in the document production in the two parallel California 25 actions. 26 and the volumes of documents provided to Hyman significantly 27 undermines Hyman’s testimony on this point. 28 Tr. I (doc. 288) at 243-44. Id. at 215-16. As part of that defense, By February 2007, Hyman estimates that Id. Attorney Hyman’s office was, as Mr. Meshkatai Attorney Hyman unconvincingly attempted to diminish his Testimony pertaining to the scope of Fidelity’s requests Given attorney Hyman’s heavy involvement in the California - 30 - 1 document requests, the court finds credible the testimony that 2 after Elazar told Mr. Meshkatai about the subpoena in this action, 3 Mr. Meshkatai asked Elazar for the subpoena and then immediately 4 contacted Hyman. 5 attorney Hyman requested that Mr. Meshkatai fax the subpoena to him 6 so Hyman could discuss it with Elazar. 7 their phone conversation, Elazar told Hyman that he had already 8 faxed documents to Fidelity; and he identified those documents. 9 Id. 10 See id. at 85; 107; 245; and 267-68. Id. at 267-269. In turn, During at 87. Knowing that Elazar had already produced documents responsive 11 to the subpoena, on October 19, 2006, unbeknownst to Mr. Elazar, 12 Mr. Hyman wrote Fidelity informing it that his “office represents 13 Variv [sic] Elazar[,]” and outlining Hyman’s objections to the 14 subpoena. 15 Fidelity also pertaining to the subpoena, Hyman reiterated that he 16 “represent[s] Variv [sic] Elazar[.]” Pl. Exh. 3-1. 17 Meshkatai denied “hir[ing] [Mr.] Hyman to do any work for [Mr.] 18 Elazar[,]” it strains credulity to believe that Mr. Hyman would 19 have written those letters on his own volition. 20 288) at 244-45. 21 inference that Mr. Hyman wrote those letters at Mr. Meshkatai’s 22 behest. 23 Pl. Exh. at 2-1-2. In a November 7, 2006, letter to Although Mr. See Tr. I (doc. The evidence as whole supports the reasonable Moreover, there is no reason to believe that Mr. Elazar hired 24 Hyman or otherwise authorized him to act on his behalf with respect 25 to the subpoena. 26 Hyman, it would have been illogical for him to have done so when he 27 did not object to producing, and in fact did produce, the documents 28 in his possession responsive to the subpoena. Not only did Elazar credibly deny having hired - 31 - Id. at 57. The only 1 reasonable inference on this record is that at Mr. Meshkatai’s 2 behest attorney Hyman undertook Mr. Elazar’s representation as to 3 the subpoena. 4 relationship between Mr. Elazar and Mr. Meshkatai. 5 though Mr. Meshkatai was requesting that attorney Hyman represent 6 the interests of a complete stranger. 7 Mr. Meshkatai gave him a check, drawn on an Eliani account, to pay 8 the sanctions for Mr. Elazar because Elazar was a “good friend” and 9 Mr. Meshkatai believed he was somewhat responsible for the order to 10 11 compel. Bolstering this conclusion is the business It is not as According to attorney Hyman, Id. at 180. Partly because of Mr. Hyman’s evasiveness, it is less clear 12 whether he or Mr. Meshkatai, or perhaps both, sought to have 13 attorney Campbell represent Mr. Elazar in responding to the motion 14 to compel. 15 at no time did Mr. Elazar hire attorney Campbell or otherwise 16 authorize Campbell to act on his behalf. 17 that Mr. Meshkatai never informed him that Fidelity had filed a 18 motion to compel with respect to the Elazar subpoena. 19 Instead, at Mr. Meshkatai’s request, attorney Hyman provided 20 Campbell with materials to prepare a response to the motion to 21 compel. 22 and 212. 23 motion substantially mirrors attorney Hyman’s initial objections to 24 Fidelity. 25 See id. What is clear is that as with attorney Hyman, In fact, Elazar testified Id. at 131. See Hyman exh. 36; see also Tr. I (doc. 288) at 166; 168 Consequently, attorney Campbell’s response to Fidelity’s The court does not condone the involvement of Messrs. Hyman 26 and Meshkatai in the Elazar subpoena. 27 perilously close to abetting contempt as to that subpoena. 28 the most significant reason why Mr. Meshkatai’s conduct borders on - 32 - Their conduct comes Perhaps 1 abetting is that, unbeknownst to Mr. Elazar, he facilitated 2 attorney Hyman’s representation of Elazar. 3 turn, set off a chain of events ultimately resulting in the order 4 to compel and sanctions against Mr. Elazar. 5 complicit in Mr. Meshkatai’s action, although perhaps unwittingly. 6 At the end of the day, however, the court is forced to conclude 7 that Fidelity has not met its burden of proving by clear and 8 convincing evidence that either Mr. Hyman or Mr. Meshkatai abetted 9 Elazar in violating the subpoena. 10 ii. 11 That representation, in Attorney Hyman was Order to Compel In granting Fidelity’s motion to compel on February 7, 2008, 12 this court ordered Mr. Elazar to produce documents responsive to 13 the subpoena, and to pay Fidelity $1,170.00 in sanctions. 14 9-9. 15 but not by Mr. Elazar. 16 Mr. Elazar. 17 consent, attorney Hyman and Mr. Meshkatai produced those documents 18 and paid the sanctions. 19 did not become aware of that order until well after its issuance. 20 See, e.g., Tr. I (doc. 288) at 67-68; 132; and 141. 21 his May 2008 deposition, Mr. Elazar first learned that the 22 sanctions against him had been paid by Eliani. Pl. Exh. Many documents were produced in accordance with that order, The sanctions were also paid, but not by Instead, again without Mr. Elazar’s knowledge or They did so without informing Elazar, who Likewise, at Id. at 73-74. 23 Rather than consulting with Mr. Elazar about the order to 24 compel, on February 21, 2007, attorney Hyman directly provided 25 Fidelity with roughly 400 pages of documents. 26 Hyman advised Fidelity that he was “provid[ing]” those “documents 27 . . . in response to the subpoena of documents to Yariv Elazar.” 28 Id. at 11-1. Pl. exh. 11. Mr. Hyman further requested that Fidelity review those - 33 - 1 documents and that “if any concerns remain,” Fidelity should 2 “contact this [Hyman’s] office.” 3 sent without Mr. Elazar’s authorization, and Elazar did not provide 4 those documents. 5 after receiving the documents, attorney Hyman candidly admitted 6 that he did not review them. 7 simply “[b]ate[s] stamped the[] [documents] and sent them on[]” to 8 Fidelity. 9 Id. Critically, this letter was Tr. I (doc. 288) at 71; and 72. Id. at 228. What is more, In his words, Hyman Id. Attorney Hyman did equivocate in terms of who was the source 10 of those documents – Mr. Meshkatai, Mr. Elazar and/or attorney 11 Campbell. 12 a whole and the demeanor of the witnesses, although Mr. Meshkatai 13 flatly denies it, id. at 250, the court finds that he was the 14 source of those documents. 15 for several reasons. 16 of document production in this and the two California actions, see, 17 e.g., id. at 246; and at 252-53, the court is hard pressed to 18 believe that Mr. Meshkatai suddenly decided to relinquish all 19 control to Mr. Hyman. 20 had been involved with the Elazar subpoena almost from the outset, 21 would take a back seat and wholly defer to attorney Hyman. 22 See id. at 173; 202; and 227. Based upon the record as Mr. Meshkatai’s denial is incredulous First, given his active role in all aspects It makes no sense that Mr. Meshkatai, who Another reason for disbelieving Mr. Meshkatai when he denies 23 providing documents to attorney Hyman is that at that time, in 24 February 2007, Mr. Meshkatai explained that he was providing 25 documents to Hyman in both California actions. 26 Given the sheer volume 27 turning over to attorney Hyman then, and his ongoing involvement in 28 discovery in those parallel actions, it is easy to see how Mr. Id. at 252-253. of documents which Mr. Meshkatai was - 34 - 1 Meshkatai might be confused as to exactly what documents he 2 provided to attorney Hyman with respect to the Elazar subpoena. 3 Viewing the record as a whole, however, the court finds that 4 even assuming (1) contempt by Elazar, and (2) personal jurisdiction 5 over Hyman, Fidelity has not met its stringent burden of showing 6 that attorney Hyman or Mr. Meshkatai abetted a violation of the 7 order to compel. 8 contempt of that order, but Fidelity was unable to show that Mr. 9 Meshkatai or attorney Hyman crossed that fine line. Both treaded dangerously close to abetting At best, 10 Fidelity’s proof may have satisfied the preponderance of the 11 evidence standard, but that is not enough. 12 890471, at *7 (citations omitted). 13 higher, clear and convincing evidence standard; it has not done 14 that. 15 See Fidelity I, 2009 WL Fidelity must satisfy the See id. at *7 (citations omitted). Mr. Meshkatai has taken a no-holds-barred approach in 16 attempting to thwart Fidelity’s collection efforts, including 17 engaging in contemptuous conduct in the related California actions. 18 Indeed, neither he nor attorney Hyman are strangers to contempt 19 proceedings. 20 contempt for failing to produce document and ordering payment to 21 Fidelity of $8,175.00 in sanctions); and Pl. Exh. 58 (footnote 22 omitted) (finding Messrs. Meshkatai and Hyman “jointly and 23 severally liable for . . . contempt sanctions” and awarding 24 Fidelity “$39,717.50 in sanctions[]”); and RJN (doc. 268), exh. 18 25 thereto at 140 (listing contempt findings as to Mr. Meshkatai); and 26 RJN (doc. 268), exh. 15 thereto (RICO court finding Mr. Meshkatai, 27 among others, in contempt for violating an asset freeze preliminary 28 injunction order). See, e.g., Pl. Exh. 57 (Mr. Meshkatai found in civil Consequently, it is understandable that in this - 35 - 1 action Fidelity would view the conduct of Messrs. Hyman and 2 Meshkatai through that prism. 3 substitute for clear and convincing proof of abetting contempt. 4 earlier noted, it was incumbent upon Fidelity in the first instance 5 to make out a prima facie showing of contempt. 6 that. 7 Skepticism and innuendo are no As Fidelity did not do To summarize, at nearly every step of the way there are 8 deficiencies in Fidelity’s proof. 9 this court has personal jurisdiction over the Trust or attorney First, it did not establish that 10 Hyman. 11 contempt for violating this court’s orders 12 to a finding of contempt by any of the five respondents. 13 Fidelity has not shown that any of the respondents were legally 14 identified with Mr. Elazar, or that they abetted him, such that any 15 contempt by him should be imputed to respondents. 16 foregoing, there is no legal or factual basis for finding that any 17 of the five respondents should be held in contempt for violating 18 the October 2006 subpoena or the subsequent order to compel. 19 IV. 20 21 Second, it did not show that Mr. Elazar should be held in - a necessary predicate Third, In light of the Remedy Having found that none of the respondents can be held in contempt, the issue of remedies is moot. 22 Conclusion 23 For the reasons set forth above, the court hereby ORDERS that: 24 (1) the Request for “Motion for Discharge of the O.S.C.” by 25 26 27 28 Allen Hyman (doc. 264) is GRANTED; (2) Request to Take Judicial Notice by Allen Hyman is GRANTED (doc. 268); and (3) Fidelity’s Order to Show Cause seeking to hold in contempt - 36 - 1 defendants, The Anna and Noach Kramer Irrevocable Insurance Trust; 2 Anita Meshkatai, individually and as trustee of the Anita Kramer 3 Living Trust, dated July 23, 1987; and Farid Meshkatai; and non- 4 parties, Daniel Campbell and Allen Hyman is in all respects DENIED. 5 DATED this 12th day of March, 2010. 6 7 8 9 10 11 12 13 Copies to counsel of record; attorneys Daniel Campbell; Allen Hyman 14 and Denise O’Rourke 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 37 -
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