Preview
FILED: NEW YORK COUNTY CLERK 02/13/2014 INDEX NO. 151302/2014
NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 02/13/2014
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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KE KAILANI PARTNERS, LLC, : Index No. _________
:
Petitioner, :
:
v. :
:
:
MICHAEL J. FUCHS, :
:
Respondent, :
:
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MEMORANDUM OF LAW
IN SUPPORT OF PETITIONER’S MOTION
TO COMPEL PURSUANT TO CPLR 3119 AND 3124
DECHERT LLP
Dennis H. Hranitzky
Gordon Sung
1095 Avenue of Americas
New York, NY 10036
Tel.: (212) 698-3500
STARN O'TOOLE MARCUS & FISHER
Sharon V. Lovejoy
Andrew J. Lautenbach
Pacific Guardian Center, Makai Tower
733 Bishop Street, Suite 1900
Honolulu, HI 96813
Tel.: (808) 537-6100
Attorneys for Petitioner
Ke Kailani Partners, LLC
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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ......................................................................................................... ii
PRELIMINARY STATEMENT ................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................ 2
i. History of the Hawaii Action and New York Enforcement ....................... 4
ii. The New York Stay Order ......................................................................... 5
iii. The Hawaii Discovery Order ..................................................................... 6
LEGAL STANDARDS ................................................................................................................. 8
ARGUMENT ................................................................................................................................. 9
I. THIS COURT SHOULD COMPEL FUCHS‟ COMPLIANCE WITH THE CPLR
3119 SUBPOENA BECAUSE IT SEEKS INFORMATION MATERIAL TO
THE HAWAII ACTION AND HAS BEEN JUDICIALLY REVIEWED BY
HAWAII ............................................................................................................................ 9
II. THE NEW YORK STAY DOES NOT APPLY TO THIS SUBPOENA ....................... 12
CONCLUSION ............................................................................................................................ 13
-i-
TABLE OF AUTHORITIES
CASES
Fidelity Standard Life Ins. Co. v First Nat’l Bank & Trust Co.,
510 F2d 272 (5th Cir. 1975). ...................................................................................................12
Hyatt v. Cal. Franchise Tax Bd.,
105 A.D.3d 186 (N.Y. App. Div. 2d Dep‟t 2013) .....................................................2, 9, 10, 11
In re. Aerco Int’l, Inc.,
964 N.Y.S.2d 900 (N.Y. Sup. Ct. Westchester Cty. 2013) ........................................2, 8, 11, 12
Ipswich Bay Glass Co., Inc. v. Champion Aluminum Corp.,
No. 114234/11, 2012 N.Y. Misc. LEXIS 4666 (N.Y. Sup. Ct. Sept. 26, 2012) .....................10
Kapon v. Koch,
105 A.D.3d 650 (N.Y. App. Div. 1st Dep‟t 2013) .............................................................2, 8, 9
Peng v. Hsieh,
918 N.Y.S.2d 285 (Sup. Ct., N.Y. Cty. 2011) .........................................................................12
STATUTES
CPLR 3119............................................................................................................................. passim
CPLR 3119 (a) .............................................................................................................................8, 9
CPLR 3119 (b) .............................................................................................................................8, 9
CPLR 3119 (b)(2) ............................................................................................................................8
CPLR 3119(b)(4) .........................................................................................................................2, 8
CPLR 3119 (d) .............................................................................................................................8, 9
CPLR 3119 (e) ...............................................................................................................................12
CPLR 3119 (f)..................................................................................................................................8
-ii-
Petitioner Ke Kailani Partners, LLC (“Petitioner”) submits this memorandum of law in
support of its motion to compel compliance by Respondent Michael J. Fuchs (“Fuchs”) with a
subpoena (the “Subpoena”) issued by the Circuit Court of the First Circuit of the State of Hawaii
(the “Hawaii Court”), captioned Ke Kailani Partners, LLC v. Ke Kailani Development, LLC,
Michael J. Fuchs, et al., No. 09-1-2523-10 (the “Hawaii Action”), and served upon Fuchs in
New York pursuant to Section 3119 of the New York Civil Practice Law and Rules (“CPLR”).
Petitioner requests an order directing Fuchs to comply with the Subpoena by producing all
responsive documents and appearing for the deposition commanded.1
PRELIMINARY STATEMENT
CPLR 3119 allows for the service in New York of an out-of-state subpoena issued by a
sister-state court without the need for a court order. The Subpoena in this case was issued by the
Hawaii Court pursuant to its determination that judgment debtor discovery of Fuchs must go
forward in connection with the Hawaii Action.2 The Subpoena has no bearing on the separately
filed New York Enforcement Action pending in this Court before Justice Shlomo S. Hagler.
Nevertheless, despite Petitioner validly serving the Subpoena upon Fuchs in New York pursuant
to CPLR 3119, Fuchs has “rejected” the Subpoena on the sole basis that it violates a stay order
entered by Justice Hagler in the New York Enforcement Action, which stayed enforcement and
discovery sought in connection with that action. Fuchs ignores the fact that Justice Hagler
1
A true and correct copy of the Subpoena and the affidavit of service upon Fuchs by
means of personal service is attached to the Affirmation of Gordon Sung, dated February 12,
2014 (“Sung Aff.”), as Ex. 1.
2
See the Affidavit of Andrew J. Lautenbach, dated February 12, 2014 (“Lautenbach
Aff.”) ¶7.
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explicitly stated that his order has no bearing whatsoever on what the Hawaii Court may order in
connection with judgment enforcement in the Hawaii Action. See Sung Aff. ¶ 13.
This Court‟s obligation to enforce a validly issued out-of-state subpoena is completely
independent of any pending action in New York. Indeed, a validly served subpoena under CPLR
3119 requires no pending action in New York to be effective. See CPLR 3119 (b)(4). The
Appellate Division has held that where the information sought by a CPLR 3119 subpoena is
“material and necessary to the prosecution or defense” of the out-of-state action, this Court must
order its disclosure. See Kapon v. Koch, 105 A.D.3d 650, 651 (N.Y. App. Div. 1st Dep‟t 2013).
Further, where a subpoena has been judicially review by the sister-state court, this Court must
afford that court‟s determination “the widest possible latitude.” See Hyatt v. Cal. Franchise Tax
Bd., 105 A.D.3d 186 (N.Y. App. Div. 2d Dep‟t 2013).
The Subpoena in this case unquestionably meets both criteria. It seeks “material and
necessary” information, and the exact list of documents called for was reviewed and approved by
the Hawaii Court. Furthermore, Hawaii Court is in a far better position to determine the
appropriate scope of discovery, since it is much more familiar with the underlying litigation and
parties. Thus, its determination should be respected in keeping with the legislative intent of
CPLR 3119 to “promote uniformity of the law among the states.” CPLR 3119 (f). For these
reasons, Petitioner requests this Court to order Fuchs‟ compliance with the Subpoena.
STATEMENT OF FACTS
Petitioner is the judgment creditor on a $21,594,668.55 judgment issued in the Hawaii
Action against Respondent and judgment debtor Fuchs (the “Judgment”). Lautenbach Aff. ¶4.
Petitioner initiated an enforcement action in New York County Supreme Court on October 16,
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2012 (the “New York Enforcement Action”).3 Sung Aff. ¶9. On May 13, 2013, Justice Hagler,
the presiding judge in the New York Enforcement Action, ordered a stay of enforcement activity
in New York, pending the outcome of an appeal filed by Fuchs in the Hawaii Action (the “New
York Stay”). Sung Aff. ¶11. Importantly, Justice Hagler clarified in open court that the New
York Stay in no way affects the Hawaii Court‟s authority to oversee Judgment enforcement or
related discovery sought through the Hawaii proceedings. Sung Aff. ¶13.
On November 8, 2013, Petitioner, as Plaintiff in the Hawaii Action, moved the Hawaii
Court for an order directing Respondent Fuchs, the judgment debtor in the Hawaii Action, to
submit to a deposition and provide document discovery (the “Hawaii Discovery Motion”).4
Petitioner specifically apprised the Hawaii Court of the New York Stay and that the requested
discovery would take place in New York. 5 On January 21, 2014, Judge Bert I. Ayabe, the
presiding judge in the Hawaii Action, granted Petitioner‟s motion and ordered judgment debtor
discovery of Fuchs may go forward (the “Hawaii Discovery Order” or “Discovery Order”).6
3
See Ke Kailani Partners, LLC v. Ke Kailani Dvelopment, LLC, No. 104025/2012 (Sup.
Ct. N.Y. County) (Hagler, J.)
4
A true and correct copy of Petitioner‟s Hawaii Discovery Motion is attached to the
Lautenbach Aff. as Ex. 1.
5
See Transcript of Oral Argument of Dec. 24, 2013 hearing in the Hawaii Action
(“Hawaii 12/24/13 Tr.”) at 5:20-6:11 (Petitioner: “[Judge Hagler] specifically said, anything the
Hawaii court wants to do to enforce the Hawaii court order, he‟s not trying to stop. We believe
that includes an order from this Court for discovery that needs to take place in New York.”)
(emphasis added). A true and correct copy of the Hawaii 12/24/13 Tr. is attached to the
Lautenbach Aff. as Ex. 2.
6
A true and correct copy of the Hawaii Discovery Order, dated January 21, 2014, is
attached to the Lautenbach Aff. as Ex. 3.
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That same day, the Hawaii Court issued Rule 45 subpoenas requiring Fuchs to submit
document and testimonial discovery. See Sung Aff. Ex. 1. Petitioner served the Rule 45
subpoenas on Fuchs‟ attorneys in the Hawaii Action in compliance with Hawaii law.7
Petitioner‟s New York counsel thereafter caused the Subpoena to be served upon Fuchs in New
York on January 25, 2014 pursuant to CPLR 3119. See Sung Aff. ¶4. On February 4, 2014,
Fuchs‟s New York counsel informed Petitioner that they “reject[]” the Subpoena.8
The litigation between Petitioner and Fuchs has a long protracted history. The following
additional facts are relevant to the instant motion. 9
i. History of the Hawaii Action and New York Enforcement
The Hawaii Acton began in October 27, 2009 as a foreclosure action which the original
lenders sought to collect on two overdue commercial loans related to the development of resort
property in Hawaii. Sung Aff. Ex. 3 (Colon 3/28/13 Aff.) ¶6-8. Fuchs was a defendant to the
Hawaii Action as a personal guarantor to those loans. Id. ¶7. Fuchs‟ defense strategy in the
Hawaii Action has centered on using the courts to deliberately delay Petitioner‟s ability to obtain
7
True and correct copies of Petitioners notice of Rule 45 subpoenas and notice of
deposition are attached to the Lautenbach Aff. as Ex. 4.
8
A true and correct copy of the letter dated February 4, 2014 from Fuchs‟ New York
counsel, “rejecting” the Subpoena, is attached as Ex.2 to the Sung Aff.
9
Many of the facts described herein were affirmed to in two documents filed in the
separate New York Enforcement Action. First, an affidavit by Steven W. Colon, Vice-President
of the Hawaii Renaissance Builders, LLC, the managing member of Petitioner, filed on March
28, 2013, in support of Petitioners‟ Response to a motion brought by Fuchs (Motion Sequence
002) (the “Colon 3/28/13 Aff.”). A true and correct copy of the Colon 3/28/13 Aff. is attached to
the Sung Aff. as Ex. 3. Second, an affidavit filed by Sharon V. Lovejoy, counsel in the Hawaii
Action, filed May 1, 2013 in support of Petitioner‟s Motion (Motion Sequence 004) (the
“Lovejoy 5/1/13 Aff.”), which sets forth in more detail the long procedural history of this action.
A true and correct copy of the Lovejoy 5/1/13 Aff. is attached to the Sung Aff. as Ex. 4.
15153816 4
relief, such as by filing frivolous Chapter 11 proceedings, filing separate actions to collaterally
attack the foreclosure proceedings, filing unwarranted motions for reconsideration on nearly
every order entered in Hawaii, filing multiple motions to disqualify the presiding judge, and
repeatedly delaying mandatory filings in the appeal. Sung Aff. Ex. 4 (“Lovejoy 5/1/13 Aff.”) ¶4.
On September 1, 2010, the trial court in Hawaii granted summary judgment in favor of
Petitioner‟s predecessor in interest, entered a decree of foreclosure, and further determined that
Fuchs owed additional amounts on the loans. Id. ¶6. On April 23, 2012, the Hawaii Court
entered the Judgment. Id. ¶19.
On August 31, 2012, Fuchs filed a notice of appeal of the Judgment. See Lautenbach
Aff. ¶10. Petitioner initiated the New York Enforcement action by domesticating the Judgment
in New York County pursuant to Article 54 of the CPLR on October 16, 2012. Sung Aff. ¶9.
On February 15, 2013, Fuchs moved in the Hawaii Action for a stay of enforcement pending the
outcome of the appeal in Hawaii, and on February 19, 2013 filed a parallel motion for a stay in
the New York Enforcement Action.
ii. The New York Stay Order
On May 13, 2013, Justice Hagler held oral argument on three separate motions filed by
Fuchs at various times, including Fuchs‟ motion for a stay of all judgment enforcement and
related discovery sought through the New York Enforcement Action. Sung Aff. ¶10.10 That
10
The three motions filed by Fuchs (Motion Sequences 001, 002 and 003 in the New
York Enforcement Action) sought essentially identical relief, but under different legal theories.
Sung Aff. ¶10.
15153816 5
day, Justice Hagler granted Fuchs‟ motion in part and entered the New York Stay, contingent on
Fuchs posting a bond in the amount of 10% of the Hawaii Judgment.11
The next day, on May 14, 2013, the Hawaii Court ruled on the parallel motion to stay
filed in the Hawaii Action, and granted a stay contingent upon posting a bond in the full amount
of the Judgment. Lautenbach Aff. ¶11. In light of the Hawaii Court‟s ruling, on May 24, 2013,
Petitioner moved in the New York Enforcement Action for a renewal of the New York Stay,
requesting that the stay be contingent upon proof that Fuchs satisfied the requirements set forth
by the Hawaii Court, i.e., posting of a bond in the full amount of the judgment. Sung Aff. ¶12.
On July 15, 2013, Justice Hagler held oral argument on Petitioner‟s motion for renewal of
the New York Stay. Justice Hagler declined to change his prior ruling but clarified that:
“[T]his Court is not stopping the enforcement of the Hawaii
judgment in Hawaii. Anything that the Hawaiian Court wants to
do, it‟s free to do. This Court is not, in any way, reaching out
beyond the borders of New York and taking its long reach to
Hawaii and requiring that you don‟t enforce.”
Sung Aff. Ex. 7 (NY 7/15/13 Tr.) at 7:10-16. 12
On July 30, 2013, Fuchs deposited the bond required by Justice Hagler for a stay with the
New York County Clerk. Sung Aff. ¶14.
iii. The Hawaii Discovery Order
After the New York Stay was entered, Fuchs continued to use legal process to frustrate
Petitioner‟s attempts to obtain relief on the Judgment. After the Hawaii Court revised its prior
11
True and correct copies of the short-form Orders entered by Justice Hagler on Motion
Sequences 001-003 are attached to the Sung Aff. as Ex. 6.
12
A true and correct copy of the transcript of the July 15, 2013 hearing in the New York
Enforcement Action (“NY 7/15/13 Tr.”) is attached to the Sung Aff. as Ex. 7.
15153816 6
ruling on July 10, 2013, reaffirming that Fuchs must post a bond in the Hawaii Court to stay
enforcement of the Judgment (but revising the amount required to $25,000,000), Fuchs removed
the Hawaii Action to federal court on July 15, 2013. See Lautenbach Aff. ¶12, ¶13. On October
24, 2013, the federal court found no basis for the removal and remanded the Hawaii Action to
the Hawaii Court. Lautenbach Aff. ¶14.
Petitioner then filed the Hawaii Discovery Motion on November 8, 2013. See
Lautenbach Aff. Ex. 1. at 3, ¶1, 3-6, ¶ 2. Petitioner requested documents and an order to compel
Fuchs to appear in Hawaii for a judgment debtor deposition, or, in the alternative, where the
court deemed appropriate. Id. ¶5. Fuchs filed his opposition on December 18, 2013 (the
“Hawaii Discovery Opposition.”).13 In his opposition, Fuchs informed the Hawaii Court of his
view that the New York Stay prohibits the discovery that Petitioner requested. 14 On December
24, 2013, the Hawaii Court heard argument on the motion. Id. ¶6.
On January 21, 2014, Judge Ayabe declined to order Fuchs to appear in Hawaii, but
granted Petitioners request to conduct the deposition elsewhere, and Petitioner‟s request for
documents. See Lautenbach Aff. (Hawaii 12/24/13 Tr.) Ex. 2 at 11:2-4 (“[b]ut as far as if you
can depose [Fuchs] elsewhere, I don‟t have a problem with that. You have to find him in New
York, wherever he might be.”). That same day, the Hawaii Court issued the Subpoena requiring
Fuchs to appear for a deposition and provide documents responsive to the list contained in
Exhibit “A” to the Subpoena. See Sung Aff. Ex. 1. Critically, the documents called for in the
13
A true and correct copy of the Hawaii Discovery Opposition is attached to the
Lautenbach Aff. as Ex. 5.
14
See Lautenbach Aff. as Ex. 5 (Hawaii Discovery Opposition) at 6, ¶7.
15153816 7
Subpoena were identical to the documents that Petitioner specifically requested, in its motion
papers, for an order from the Hawaii Court to direct Fuchs to produce that was reviewed by the
Hawaii Court before it granted the Hawaii Discovery Order. Compare Lautenbach Aff. Ex. 2
(Hawaii Discovery Motion) at 3-6, ¶2 with Sung Aff. Ex. 1 (Subpoena), “Exhibit A.”
Thus, in ordering that Petitioner may obtain the discovery sought through the Subpoena,
the Hawaii Court dismissed the very argument Fuchs now relies on to “reject” the Subpoena.
Petitioner filed the instant motion to compel Fuchs‟ compliance with the Subpoena.
LEGAL STANDARDS
CPLR 3119 creates a mechanism for the service in New York of a subpoena issued by a
sister-state court in connection with a legal proceeding pending in that sister-state “without the
need for a court order.” In re. Aerco Int’l, Inc., 964 N.Y.S.2d 900, 903 (N.Y. Sup. Ct.
Westchester Cty. 2013) (citing Supplementary Practice Commentaries, McKinney‟s Cons. Laws
of NY CPLR 3119). Under CPLR 3119, the subpoena issued by the sister-state court may be
“presented to … an attorney licensed in New York … [who] may [then] issue the subpoena in
New York.” Id. (citing CPLR 3119 (b)(2)), CPLR 3119(b)(4)). The subpoena must comply with
New York rules. Id. (citations omitted). When a court reviews a CPLR 3119 subpoena,
“consideration shall be given to the need to promote uniformity of the law.” See CPLR 3119 (f).
Information sought pursuant to an out-of-state subpoena under CPLR 3119 (b) “shall be
disclosed … so long as the information sought is „material and necessary‟ to the prosecution or
defense of an action.” Kapon v. Koch, 105 A.D.3d 650, 651 (N.Y. App. Div. 1st Dep‟t 2013)
(citing CPLR 3101(a) and 31119 (b) & (d)). Under CPLR 3119, New York courts should
“afford the widest possible latitude in out-of-state disclosure … when a court of another state has
15153816 8
already reviewed the subpoena.” Hyatt v. Cal. Franchise Tax Bd., 105 A.D.3d 186 (N.Y. App.
Div. 2d Dep‟t 2013). A New York court‟s obligation to enforce a CPLR 3119 subpoena does not
depend on an existing litigation pending in New York. See CPLR 3119 (e).
ARGUMENT
Fuchs has no basis to “reject” the subpoenas and this Court should compel Fuchs‟
compliance because: (i) the Subpoena demands information “material and necessary” to the
Hawaii Action, and (ii) the Subpoena has been judicially reviewed and approved by Hawaii.
Fuchs‟ position that the New York Stay relieves his obligation to comply is baseless.
I. This Court Should Compel Fuchs’ Compliance With The CPLR 3119
Subpoena Because It Seeks Information Material To The Hawaii Action
And Has Been Judicially Reviewed By Hawaii
According to the First Department, information sought pursuant to an out-of-state
subpoena under CPLR 3119 (b) “shall be disclosed … so long as the information sought is
„material and necessary‟ to the prosecution or defense of an action.” Kapon, 105 A.D.3d at 651
(citing CPLR 3101(a) and 31119 (b) & (d)) (emphasis added). In Kapon, the First Department
affirmed the trial court‟s denial of a motion to quash a CPLR 3119 subpoena because the
petitioners “failed to show that the requested deposition testimony is irrelevant to the prosecution
of the California action.” Id.
Here, the Subpoena at issue commands Fuchs to appear for a judgment debtor deposition
and commands the production of financial documents related to asset holdings and potential
asset transfers. See Sung Aff. Ex. 1 (Subpoena). These documents are undisputedly “material
and necessary” to the enforcement of the Hawaii Judgment. E.g., Ipswich Bay Glass Co., Inc. v.
15153816 9
Champion Aluminum Corp., No. 114234/11, 2012 N.Y. Misc. LEXIS 4666, 15-16 (N.Y. Sup. Ct.
Sept. 26, 2012) (reasonable to seek, e.g., records of assets and transactions in enforcement).
Further, the Subpoena has been judicially reviewed by the Hawaii Court and Fuchs
should be ordered to comply based on that fact alone. According to binding Appellate Division
precedent, when reviewing CPLR 3119 subpoenas, New York courts must “afford the widest
possible latitude in out-of-state disclosure … when a court of another state has already
reviewed the subpoena.” Hyatt, 105 A.D.3d at 202 (emphasis added). Here, the Subpoena has
unquestionably been subjected to judicial review. Judge Ayabe reviewed the identical list of
documents called for in the Subpoena when it reviewed Petitioner‟s Hawaii Discovery Motion.
Compare Lautenbach Aff. Ex. 1 at 3-6, ¶ 2 with Sung Aff. Ex. 1 (Subpoena) at Exhibit “A.”.
The Hawaii Discovery Order explicitly notes that the Court has reviewed the Hawaii Discovery
Motion, as well as Fuchs‟ opposition. See Lautenbach Aff. Ex. 2 (Hawaii Discovery Order) at 3
(noting that the Court has “reviewed the subject motion, memoranda, responses and materials
submitted in support of and in opposition to the motion.”). Therefore, the Subpoena has
unquestionably been judicially reviewed and Fuchs‟ should be compelled to comply.
Two recent New York decisions are instructive on this point. First, in Hyatt the Second
Department affirmed the Supreme Court‟s order to narrow the scope of a CPLR 3119 subpoena
issued by New York counsel for the California Tax Board. 105 A.D. at 199-201. In Hyatt, the
out-of-state subpoena was issued by the clerk of the California Superior Court solely upon
petition by the Tax Board. 105 A.D. at 199-200 (“where the Tax Board seeks a commission to
serve a subpoena out of state, there is no statutory procedure for judicial review of objections.”)
Thus, when the California Superior Court clerk issued subpoenas to the Tax Board, “although
15153816 10
properly issued—[they] were never subject to any judicial review.” Id. at 200. Here,
Petitioner‟s Subpoena has, in fact, been subjected to judicial review for the reasons already
mentioned. Thus, under Hyatt, Judge Ayabe‟s ruling undisputedly requires this Court to find
that the Subpoena has been subjected to judicial review, and thus, be “afford[ed] the widest
possible latitude.” Id. at 202.
In the second instructive case, Aerco, the Supreme Court denied a petitioner‟s motion to
quash a CPLR 3119 subpoena. 967 N.Y.S. 2d at 902. There, the petitioner was a party to a
litigation pending in New Jersey, who moved the New York court to quash a CPLR 3119
subpoena served by his adversary on a third-party in New York. Id. Separately, the petitioner in
Aerco also moved the New Jersey court to quash a nearly identical subpoena served on a
different third-party in New Jersey. Id. Before the New York court in Aerco ruled, New Jersey
denied the petitioner‟s motion, finding the “subpoena was not overly broad or unreasonably
burdensome.” Id. at 903. The Aerco court cited Hyatt, and denied Petitioner‟s motion to quash
the CPLR 3119 subpoena, since the New Jersey judge who denied petitioner‟s motion to quash
was also the presiding judge “over the underlying matter, is fully familiar with the parties‟ claims
and defenses,” and had already made multiple rulings in that case, and thus, the Aerco court
would “afford [New Jersey‟s] determination the widest possible latitude.” Id. at 903-04 (citing
962 N.Y.S.2d at 293-94) (“ruling in this way consistently with the New Jersey Court furthers the
legislative intent of the statute by promoting uniformity of the law among the states.”).
The Subpoena at issue here presents the identical situation. Judge Ayabe is the presiding
judge in the underlying Hawaii Action. He is familiar with the protracted litigation history
between Petitioner and Fuchs. He has made multiple rulings and is fully familiar with Fuchs‟
15153816 11
litigation tactics. Further, he was fully apprised of New York Stay before he made the Hawaii
Discovery Motion. Thus, this Court should compel Fuchs‟ compliance with the Subpoena
thereby “promot[ing] uniformity of the law among the states.” 967 N.Y.S. 2d at 904.
II. The New York Stay Does Not Apply To This Subpoena
Fuchs has rejected the Subpoena on the grounds that the New York Stay relieves him of
his legal obligation to comply. However, a New York court‟s obligation to enforce a CPLR
3119 subpoena does not depend on an existing litigation pending in New York. See CPLR 3119
(e). Fuchs‟ position is baseless because the Subpoena‟s sole purpose is to facilitate the discovery
ordered by the Hawaii Court for use in the Hawaii Action. The Subpoena has nothing to do with
the New York Enforcement Action. Fuchs further ignores the explicit ruling made by Justice
Hagler that the New York Stay does not affect the Hawaii Action:
“[T]his Court is not stopping the enforcement of the
Hawaii judgment in Hawaii. Anything that the Hawaiian
Court wants to do, it’s free to do. This Court is not, in any
way, reaching out beyond the borders of New York and
taking its long reach to Hawaii and requiring that you don‟t
enforce.”
Sung Aff. Ex. 7 (NY 7/15/13 Tr.) at 7:10-16 (emphasis added). Thus, it was Justice Hagler‟s
plain intent for his stay not to impinge on the Hawaii Court‟s ability to oversee enforcement of
the Judgment.15
15
Justice Hagler‟s ruling is therefore fully consistent with the established principle that a
“case pending appeal is res judicata and entitled to full faith and credit unless and until reversed
on appeal.” E.g., Fidelity Standard Life Ins. Co. v First Nat’l Bank & Trust Co. 510 F2d 272,
273 (5th Cir. 1975) cert denied 423 US 864 (1975), (citations omitted); see also Peng v. Hsieh,
918 N.Y.S.2d 285 (Sup. Ct., N.Y. Cty. 2011) (pending appeal of California decision did not limit
the court‟s ability to enforce the California judgment). His ruling recognizes that the pending
appeal of the Judgment does not diminish its force under full faith and credit, and thus does not
15153816 12
As mentioned before, the Hawaii Court was well aware of the New York Stay and knew
that Fuchs believed the New York Stay barred the discovery sought by Petitioner which would
take place in New York. See Lautenbach Aff. Ex. 1 (Hawaii Discovery Motion) at 8;
Lautenbach Aff. Ex. 2 (Hawaii 12/24/13 Tr.) at 5:20-6:11 (Petitioner request is for discovery that
would take place in New York). Nevertheless, Hawaii ordered judgment debtor discovery to go
forward. See Lautenbach Aff. Ex. 3 (Hawaii Discovery Order) at 3. Therefore, it is apparent
that the Hawaii Court had no intention of abrogating the New York Stay. In fact, the Discovery
Order requires Petitioner to validly served Fuchs in New York, which is exactly what Petitioner
has done under CPLR 3119. See Lautenbach Aff. Ex. 2 (Hawaii 12/24/13 Tr.) at 11:2-5 (“You
have to find him in New York, wherever he might be.”).
The Discovery Order reflects the Hawaii Court‟s view that discovery should go forward
in the event Petitioner prevails on appeal and to explore whether Fuchs has assets outside the
reach of the New York Stay. Judge Ayabe is most familiar with the parties, the underlying
litigation, Fuchs‟ litigation tactics, and his repeated attempts to delay Petitioner from obtaining
relief on the Judgment. Hawaii‟s determination should thus be respected.
CONCLUSION
For the foregoing reasons, this Court should grant Petitioners Motion to Compel and
issue an order: (i) directing Fuchs to produce all responsive documents demanded by the
Subpoena; and (ii) appear for the deposition commanded by the Subpoena.
diminish the Hawaii Court‟s powers to oversee its enforcement.
15153816 13
Dated: New York, New York
February 12, 2014
Respectfully submitted,
DECHERT LLP
By: /S/Gordon Sung
Dennis H. Hranitzky
Gordon Sung
1095 Avenue of Americas
New York, New York 10036
Tel.: (212) 698-3500
STARN O'TOOLE MARCUS & FISHER
Sharon V. Lovejoy
Andrew J. Lautenbach
Pacific Guardian Center, Makai Tower
733 Bishop Street, Suite 1900
Honolulu, HI 96813
Tel.: (808) 537-6100
Attorneys for Petitioner
Ke Kailani Partners, LLC
15153816 14
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FILED: NEW YORK COUNTY CLERK 02/13/2014 INDEX NO. 151302/2014 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 02/13/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ----------------------------------------------------------------------- X KE KAILANI PARTNERS, LLC, : Index No. _________ : Petitioner, : : v. : : : MICHAEL J. FUCHS, : : Respondent, : : ----------------------------------------------------------------------- X MEMORANDUM OF LAW IN SUPPORT OF PETITIONER’S MOTION TO COMPEL PURSUANT TO CPLR 3119 AND 3124 DECHERT LLP Dennis H. Hranitzky Gordon Sung 1095 Avenue of Americas New York, NY 10036 Tel.: (212) 698-3500 STARN O'TOOLE MARCUS & FISHER Sharon V. Lovejoy Andrew J. Lautenbach Pacific Guardian Center, Makai Tower 733 Bishop Street, Suite 1900 Honolulu, HI 96813 Tel.: (808) 537-6100 Attorneys for Petitioner Ke Kailani Partners, LLC 15153816 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... ii PRELIMINARY STATEMENT ................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................ 2 i. History of the Hawaii Action and New York Enforcement ....................... 4 ii. The New York Stay Order ......................................................................... 5 iii. The Hawaii Discovery Order ..................................................................... 6 LEGAL STANDARDS ................................................................................................................. 8 ARGUMENT ................................................................................................................................. 9 I. THIS COURT SHOULD COMPEL FUCHS‟ COMPLIANCE WITH THE CPLR 3119 SUBPOENA BECAUSE IT SEEKS INFORMATION MATERIAL TO THE HAWAII ACTION AND HAS BEEN JUDICIALLY REVIEWED BY HAWAII ............................................................................................................................ 9 II. THE NEW YORK STAY DOES NOT APPLY TO THIS SUBPOENA ....................... 12 CONCLUSION ............................................................................................................................ 13 -i- TABLE OF AUTHORITIES CASES Fidelity Standard Life Ins. Co. v First Nat’l Bank & Trust Co., 510 F2d 272 (5th Cir. 1975). ...................................................................................................12 Hyatt v. Cal. Franchise Tax Bd., 105 A.D.3d 186 (N.Y. App. Div. 2d Dep‟t 2013) .....................................................2, 9, 10, 11 In re. Aerco Int’l, Inc., 964 N.Y.S.2d 900 (N.Y. Sup. Ct. Westchester Cty. 2013) ........................................2, 8, 11, 12 Ipswich Bay Glass Co., Inc. v. Champion Aluminum Corp., No. 114234/11, 2012 N.Y. Misc. LEXIS 4666 (N.Y. Sup. Ct. Sept. 26, 2012) .....................10 Kapon v. Koch, 105 A.D.3d 650 (N.Y. App. Div. 1st Dep‟t 2013) .............................................................2, 8, 9 Peng v. Hsieh, 918 N.Y.S.2d 285 (Sup. Ct., N.Y. Cty. 2011) .........................................................................12 STATUTES CPLR 3119............................................................................................................................. passim CPLR 3119 (a) .............................................................................................................................8, 9 CPLR 3119 (b) .............................................................................................................................8, 9 CPLR 3119 (b)(2) ............................................................................................................................8 CPLR 3119(b)(4) .........................................................................................................................2, 8 CPLR 3119 (d) .............................................................................................................................8, 9 CPLR 3119 (e) ...............................................................................................................................12 CPLR 3119 (f)..................................................................................................................................8 -ii- Petitioner Ke Kailani Partners, LLC (“Petitioner”) submits this memorandum of law in support of its motion to compel compliance by Respondent Michael J. Fuchs (“Fuchs”) with a subpoena (the “Subpoena”) issued by the Circuit Court of the First Circuit of the State of Hawaii (the “Hawaii Court”), captioned Ke Kailani Partners, LLC v. Ke Kailani Development, LLC, Michael J. Fuchs, et al., No. 09-1-2523-10 (the “Hawaii Action”), and served upon Fuchs in New York pursuant to Section 3119 of the New York Civil Practice Law and Rules (“CPLR”). Petitioner requests an order directing Fuchs to comply with the Subpoena by producing all responsive documents and appearing for the deposition commanded.1 PRELIMINARY STATEMENT CPLR 3119 allows for the service in New York of an out-of-state subpoena issued by a sister-state court without the need for a court order. The Subpoena in this case was issued by the Hawaii Court pursuant to its determination that judgment debtor discovery of Fuchs must go forward in connection with the Hawaii Action.2 The Subpoena has no bearing on the separately filed New York Enforcement Action pending in this Court before Justice Shlomo S. Hagler. Nevertheless, despite Petitioner validly serving the Subpoena upon Fuchs in New York pursuant to CPLR 3119, Fuchs has “rejected” the Subpoena on the sole basis that it violates a stay order entered by Justice Hagler in the New York Enforcement Action, which stayed enforcement and discovery sought in connection with that action. Fuchs ignores the fact that Justice Hagler 1 A true and correct copy of the Subpoena and the affidavit of service upon Fuchs by means of personal service is attached to the Affirmation of Gordon Sung, dated February 12, 2014 (“Sung Aff.”), as Ex. 1. 2 See the Affidavit of Andrew J. Lautenbach, dated February 12, 2014 (“Lautenbach Aff.”) ¶7. 15153816 explicitly stated that his order has no bearing whatsoever on what the Hawaii Court may order in connection with judgment enforcement in the Hawaii Action. See Sung Aff. ¶ 13. This Court‟s obligation to enforce a validly issued out-of-state subpoena is completely independent of any pending action in New York. Indeed, a validly served subpoena under CPLR 3119 requires no pending action in New York to be effective. See CPLR 3119 (b)(4). The Appellate Division has held that where the information sought by a CPLR 3119 subpoena is “material and necessary to the prosecution or defense” of the out-of-state action, this Court must order its disclosure. See Kapon v. Koch, 105 A.D.3d 650, 651 (N.Y. App. Div. 1st Dep‟t 2013). Further, where a subpoena has been judicially review by the sister-state court, this Court must afford that court‟s determination “the widest possible latitude.” See Hyatt v. Cal. Franchise Tax Bd., 105 A.D.3d 186 (N.Y. App. Div. 2d Dep‟t 2013). The Subpoena in this case unquestionably meets both criteria. It seeks “material and necessary” information, and the exact list of documents called for was reviewed and approved by the Hawaii Court. Furthermore, Hawaii Court is in a far better position to determine the appropriate scope of discovery, since it is much more familiar with the underlying litigation and parties. Thus, its determination should be respected in keeping with the legislative intent of CPLR 3119 to “promote uniformity of the law among the states.” CPLR 3119 (f). For these reasons, Petitioner requests this Court to order Fuchs‟ compliance with the Subpoena. STATEMENT OF FACTS Petitioner is the judgment creditor on a $21,594,668.55 judgment issued in the Hawaii Action against Respondent and judgment debtor Fuchs (the “Judgment”). Lautenbach Aff. ¶4. Petitioner initiated an enforcement action in New York County Supreme Court on October 16, 15153816 2 2012 (the “New York Enforcement Action”).3 Sung Aff. ¶9. On May 13, 2013, Justice Hagler, the presiding judge in the New York Enforcement Action, ordered a stay of enforcement activity in New York, pending the outcome of an appeal filed by Fuchs in the Hawaii Action (the “New York Stay”). Sung Aff. ¶11. Importantly, Justice Hagler clarified in open court that the New York Stay in no way affects the Hawaii Court‟s authority to oversee Judgment enforcement or related discovery sought through the Hawaii proceedings. Sung Aff. ¶13. On November 8, 2013, Petitioner, as Plaintiff in the Hawaii Action, moved the Hawaii Court for an order directing Respondent Fuchs, the judgment debtor in the Hawaii Action, to submit to a deposition and provide document discovery (the “Hawaii Discovery Motion”).4 Petitioner specifically apprised the Hawaii Court of the New York Stay and that the requested discovery would take place in New York. 5 On January 21, 2014, Judge Bert I. Ayabe, the presiding judge in the Hawaii Action, granted Petitioner‟s motion and ordered judgment debtor discovery of Fuchs may go forward (the “Hawaii Discovery Order” or “Discovery Order”).6 3 See Ke Kailani Partners, LLC v. Ke Kailani Dvelopment, LLC, No. 104025/2012 (Sup. Ct. N.Y. County) (Hagler, J.) 4 A true and correct copy of Petitioner‟s Hawaii Discovery Motion is attached to the Lautenbach Aff. as Ex. 1. 5 See Transcript of Oral Argument of Dec. 24, 2013 hearing in the Hawaii Action (“Hawaii 12/24/13 Tr.”) at 5:20-6:11 (Petitioner: “[Judge Hagler] specifically said, anything the Hawaii court wants to do to enforce the Hawaii court order, he‟s not trying to stop. We believe that includes an order from this Court for discovery that needs to take place in New York.”) (emphasis added). A true and correct copy of the Hawaii 12/24/13 Tr. is attached to the Lautenbach Aff. as Ex. 2. 6 A true and correct copy of the Hawaii Discovery Order, dated January 21, 2014, is attached to the Lautenbach Aff. as Ex. 3. 15153816 3 That same day, the Hawaii Court issued Rule 45 subpoenas requiring Fuchs to submit document and testimonial discovery. See Sung Aff. Ex. 1. Petitioner served the Rule 45 subpoenas on Fuchs‟ attorneys in the Hawaii Action in compliance with Hawaii law.7 Petitioner‟s New York counsel thereafter caused the Subpoena to be served upon Fuchs in New York on January 25, 2014 pursuant to CPLR 3119. See Sung Aff. ¶4. On February 4, 2014, Fuchs‟s New York counsel informed Petitioner that they “reject[]” the Subpoena.8 The litigation between Petitioner and Fuchs has a long protracted history. The following additional facts are relevant to the instant motion. 9 i. History of the Hawaii Action and New York Enforcement The Hawaii Acton began in October 27, 2009 as a foreclosure action which the original lenders sought to collect on two overdue commercial loans related to the development of resort property in Hawaii. Sung Aff. Ex. 3 (Colon 3/28/13 Aff.) ¶6-8. Fuchs was a defendant to the Hawaii Action as a personal guarantor to those loans. Id. ¶7. Fuchs‟ defense strategy in the Hawaii Action has centered on using the courts to deliberately delay Petitioner‟s ability to obtain 7 True and correct copies of Petitioners notice of Rule 45 subpoenas and notice of deposition are attached to the Lautenbach Aff. as Ex. 4. 8 A true and correct copy of the letter dated February 4, 2014 from Fuchs‟ New York counsel, “rejecting” the Subpoena, is attached as Ex.2 to the Sung Aff. 9 Many of the facts described herein were affirmed to in two documents filed in the separate New York Enforcement Action. First, an affidavit by Steven W. Colon, Vice-President of the Hawaii Renaissance Builders, LLC, the managing member of Petitioner, filed on March 28, 2013, in support of Petitioners‟ Response to a motion brought by Fuchs (Motion Sequence 002) (the “Colon 3/28/13 Aff.”). A true and correct copy of the Colon 3/28/13 Aff. is attached to the Sung Aff. as Ex. 3. Second, an affidavit filed by Sharon V. Lovejoy, counsel in the Hawaii Action, filed May 1, 2013 in support of Petitioner‟s Motion (Motion Sequence 004) (the “Lovejoy 5/1/13 Aff.”), which sets forth in more detail the long procedural history of this action. A true and correct copy of the Lovejoy 5/1/13 Aff. is attached to the Sung Aff. as Ex. 4. 15153816 4 relief, such as by filing frivolous Chapter 11 proceedings, filing separate actions to collaterally attack the foreclosure proceedings, filing unwarranted motions for reconsideration on nearly every order entered in Hawaii, filing multiple motions to disqualify the presiding judge, and repeatedly delaying mandatory filings in the appeal. Sung Aff. Ex. 4 (“Lovejoy 5/1/13 Aff.”) ¶4. On September 1, 2010, the trial court in Hawaii granted summary judgment in favor of Petitioner‟s predecessor in interest, entered a decree of foreclosure, and further determined that Fuchs owed additional amounts on the loans. Id. ¶6. On April 23, 2012, the Hawaii Court entered the Judgment. Id. ¶19. On August 31, 2012, Fuchs filed a notice of appeal of the Judgment. See Lautenbach Aff. ¶10. Petitioner initiated the New York Enforcement action by domesticating the Judgment in New York County pursuant to Article 54 of the CPLR on October 16, 2012. Sung Aff. ¶9. On February 15, 2013, Fuchs moved in the Hawaii Action for a stay of enforcement pending the outcome of the appeal in Hawaii, and on February 19, 2013 filed a parallel motion for a stay in the New York Enforcement Action. ii. The New York Stay Order On May 13, 2013, Justice Hagler held oral argument on three separate motions filed by Fuchs at various times, including Fuchs‟ motion for a stay of all judgment enforcement and related discovery sought through the New York Enforcement Action. Sung Aff. ¶10.10 That 10 The three motions filed by Fuchs (Motion Sequences 001, 002 and 003 in the New York Enforcement Action) sought essentially identical relief, but under different legal theories. Sung Aff. ¶10. 15153816 5 day, Justice Hagler granted Fuchs‟ motion in part and entered the New York Stay, contingent on Fuchs posting a bond in the amount of 10% of the Hawaii Judgment.11 The next day, on May 14, 2013, the Hawaii Court ruled on the parallel motion to stay filed in the Hawaii Action, and granted a stay contingent upon posting a bond in the full amount of the Judgment. Lautenbach Aff. ¶11. In light of the Hawaii Court‟s ruling, on May 24, 2013, Petitioner moved in the New York Enforcement Action for a renewal of the New York Stay, requesting that the stay be contingent upon proof that Fuchs satisfied the requirements set forth by the Hawaii Court, i.e., posting of a bond in the full amount of the judgment. Sung Aff. ¶12. On July 15, 2013, Justice Hagler held oral argument on Petitioner‟s motion for renewal of the New York Stay. Justice Hagler declined to change his prior ruling but clarified that: “[T]his Court is not stopping the enforcement of the Hawaii judgment in Hawaii. Anything that the Hawaiian Court wants to do, it‟s free to do. This Court is not, in any way, reaching out beyond the borders of New York and taking its long reach to Hawaii and requiring that you don‟t enforce.” Sung Aff. Ex. 7 (NY 7/15/13 Tr.) at 7:10-16. 12 On July 30, 2013, Fuchs deposited the bond required by Justice Hagler for a stay with the New York County Clerk. Sung Aff. ¶14. iii. The Hawaii Discovery Order After the New York Stay was entered, Fuchs continued to use legal process to frustrate Petitioner‟s attempts to obtain relief on the Judgment. After the Hawaii Court revised its prior 11 True and correct copies of the short-form Orders entered by Justice Hagler on Motion Sequences 001-003 are attached to the Sung Aff. as Ex. 6. 12 A true and correct copy of the transcript of the July 15, 2013 hearing in the New York Enforcement Action (“NY 7/15/13 Tr.”) is attached to the Sung Aff. as Ex. 7. 15153816 6 ruling on July 10, 2013, reaffirming that Fuchs must post a bond in the Hawaii Court to stay enforcement of the Judgment (but revising the amount required to $25,000,000), Fuchs removed the Hawaii Action to federal court on July 15, 2013. See Lautenbach Aff. ¶12, ¶13. On October 24, 2013, the federal court found no basis for the removal and remanded the Hawaii Action to the Hawaii Court. Lautenbach Aff. ¶14. Petitioner then filed the Hawaii Discovery Motion on November 8, 2013. See Lautenbach Aff. Ex. 1. at 3, ¶1, 3-6, ¶ 2. Petitioner requested documents and an order to compel Fuchs to appear in Hawaii for a judgment debtor deposition, or, in the alternative, where the court deemed appropriate. Id. ¶5. Fuchs filed his opposition on December 18, 2013 (the “Hawaii Discovery Opposition.”).13 In his opposition, Fuchs informed the Hawaii Court of his view that the New York Stay prohibits the discovery that Petitioner requested. 14 On December 24, 2013, the Hawaii Court heard argument on the motion. Id. ¶6. On January 21, 2014, Judge Ayabe declined to order Fuchs to appear in Hawaii, but granted Petitioners request to conduct the deposition elsewhere, and Petitioner‟s request for documents. See Lautenbach Aff. (Hawaii 12/24/13 Tr.) Ex. 2 at 11:2-4 (“[b]ut as far as if you can depose [Fuchs] elsewhere, I don‟t have a problem with that. You have to find him in New York, wherever he might be.”). That same day, the Hawaii Court issued the Subpoena requiring Fuchs to appear for a deposition and provide documents responsive to the list contained in Exhibit “A” to the Subpoena. See Sung Aff. Ex. 1. Critically, the documents called for in the 13 A true and correct copy of the Hawaii Discovery Opposition is attached to the Lautenbach Aff. as Ex. 5. 14 See Lautenbach Aff. as Ex. 5 (Hawaii Discovery Opposition) at 6, ¶7. 15153816 7 Subpoena were identical to the documents that Petitioner specifically requested, in its motion papers, for an order from the Hawaii Court to direct Fuchs to produce that was reviewed by the Hawaii Court before it granted the Hawaii Discovery Order. Compare Lautenbach Aff. Ex. 2 (Hawaii Discovery Motion) at 3-6, ¶2 with Sung Aff. Ex. 1 (Subpoena), “Exhibit A.” Thus, in ordering that Petitioner may obtain the discovery sought through the Subpoena, the Hawaii Court dismissed the very argument Fuchs now relies on to “reject” the Subpoena. Petitioner filed the instant motion to compel Fuchs‟ compliance with the Subpoena. LEGAL STANDARDS CPLR 3119 creates a mechanism for the service in New York of a subpoena issued by a sister-state court in connection with a legal proceeding pending in that sister-state “without the need for a court order.” In re. Aerco Int’l, Inc., 964 N.Y.S.2d 900, 903 (N.Y. Sup. Ct. Westchester Cty. 2013) (citing Supplementary Practice Commentaries, McKinney‟s Cons. Laws of NY CPLR 3119). Under CPLR 3119, the subpoena issued by the sister-state court may be “presented to … an attorney licensed in New York … [who] may [then] issue the subpoena in New York.” Id. (citing CPLR 3119 (b)(2)), CPLR 3119(b)(4)). The subpoena must comply with New York rules. Id. (citations omitted). When a court reviews a CPLR 3119 subpoena, “consideration shall be given to the need to promote uniformity of the law.” See CPLR 3119 (f). Information sought pursuant to an out-of-state subpoena under CPLR 3119 (b) “shall be disclosed … so long as the information sought is „material and necessary‟ to the prosecution or defense of an action.” Kapon v. Koch, 105 A.D.3d 650, 651 (N.Y. App. Div. 1st Dep‟t 2013) (citing CPLR 3101(a) and 31119 (b) & (d)). Under CPLR 3119, New York courts should “afford the widest possible latitude in out-of-state disclosure … when a court of another state has 15153816 8 already reviewed the subpoena.” Hyatt v. Cal. Franchise Tax Bd., 105 A.D.3d 186 (N.Y. App. Div. 2d Dep‟t 2013). A New York court‟s obligation to enforce a CPLR 3119 subpoena does not depend on an existing litigation pending in New York. See CPLR 3119 (e). ARGUMENT Fuchs has no basis to “reject” the subpoenas and this Court should compel Fuchs‟ compliance because: (i) the Subpoena demands information “material and necessary” to the Hawaii Action, and (ii) the Subpoena has been judicially reviewed and approved by Hawaii. Fuchs‟ position that the New York Stay relieves his obligation to comply is baseless. I. This Court Should Compel Fuchs’ Compliance With The CPLR 3119 Subpoena Because It Seeks Information Material To The Hawaii Action And Has Been Judicially Reviewed By Hawaii According to the First Department, information sought pursuant to an out-of-state subpoena under CPLR 3119 (b) “shall be disclosed … so long as the information sought is „material and necessary‟ to the prosecution or defense of an action.” Kapon, 105 A.D.3d at 651 (citing CPLR 3101(a) and 31119 (b) & (d)) (emphasis added). In Kapon, the First Department affirmed the trial court‟s denial of a motion to quash a CPLR 3119 subpoena because the petitioners “failed to show that the requested deposition testimony is irrelevant to the prosecution of the California action.” Id. Here, the Subpoena at issue commands Fuchs to appear for a judgment debtor deposition and commands the production of financial documents related to asset holdings and potential asset transfers. See Sung Aff. Ex. 1 (Subpoena). These documents are undisputedly “material and necessary” to the enforcement of the Hawaii Judgment. E.g., Ipswich Bay Glass Co., Inc. v. 15153816 9 Champion Aluminum Corp., No. 114234/11, 2012 N.Y. Misc. LEXIS 4666, 15-16 (N.Y. Sup. Ct. Sept. 26, 2012) (reasonable to seek, e.g., records of assets and transactions in enforcement). Further, the Subpoena has been judicially reviewed by the Hawaii Court and Fuchs should be ordered to comply based on that fact alone. According to binding Appellate Division precedent, when reviewing CPLR 3119 subpoenas, New York courts must “afford the widest possible latitude in out-of-state disclosure … when a court of another state has already reviewed the subpoena.” Hyatt, 105 A.D.3d at 202 (emphasis added). Here, the Subpoena has unquestionably been subjected to judicial review. Judge Ayabe reviewed the identical list of documents called for in the Subpoena when it reviewed Petitioner‟s Hawaii Discovery Motion. Compare Lautenbach Aff. Ex. 1 at 3-6, ¶ 2 with Sung Aff. Ex. 1 (Subpoena) at Exhibit “A.”. The Hawaii Discovery Order explicitly notes that the Court has reviewed the Hawaii Discovery Motion, as well as Fuchs‟ opposition. See Lautenbach Aff. Ex. 2 (Hawaii Discovery Order) at 3 (noting that the Court has “reviewed the subject motion, memoranda, responses and materials submitted in support of and in opposition to the motion.”). Therefore, the Subpoena has unquestionably been judicially reviewed and Fuchs‟ should be compelled to comply. Two recent New York decisions are instructive on this point. First, in Hyatt the Second Department affirmed the Supreme Court‟s order to narrow the scope of a CPLR 3119 subpoena issued by New York counsel for the California Tax Board. 105 A.D. at 199-201. In Hyatt, the out-of-state subpoena was issued by the clerk of the California Superior Court solely upon petition by the Tax Board. 105 A.D. at 199-200 (“where the Tax Board seeks a commission to serve a subpoena out of state, there is no statutory procedure for judicial review of objections.”) Thus, when the California Superior Court clerk issued subpoenas to the Tax Board, “although 15153816 10 properly issued—[they] were never subject to any judicial review.” Id. at 200. Here, Petitioner‟s Subpoena has, in fact, been subjected to judicial review for the reasons already mentioned. Thus, under Hyatt, Judge Ayabe‟s ruling undisputedly requires this Court to find that the Subpoena has been subjected to judicial review, and thus, be “afford[ed] the widest possible latitude.” Id. at 202. In the second instructive case, Aerco, the Supreme Court denied a petitioner‟s motion to quash a CPLR 3119 subpoena. 967 N.Y.S. 2d at 902. There, the petitioner was a party to a litigation pending in New Jersey, who moved the New York court to quash a CPLR 3119 subpoena served by his adversary on a third-party in New York. Id. Separately, the petitioner in Aerco also moved the New Jersey court to quash a nearly identical subpoena served on a different third-party in New Jersey. Id. Before the New York court in Aerco ruled, New Jersey denied the petitioner‟s motion, finding the “subpoena was not overly broad or unreasonably burdensome.” Id. at 903. The Aerco court cited Hyatt, and denied Petitioner‟s motion to quash the CPLR 3119 subpoena, since the New Jersey judge who denied petitioner‟s motion to quash was also the presiding judge “over the underlying matter, is fully familiar with the parties‟ claims and defenses,” and had already made multiple rulings in that case, and thus, the Aerco court would “afford [New Jersey‟s] determination the widest possible latitude.” Id. at 903-04 (citing 962 N.Y.S.2d at 293-94) (“ruling in this way consistently with the New Jersey Court furthers the legislative intent of the statute by promoting uniformity of the law among the states.”). The Subpoena at issue here presents the identical situation. Judge Ayabe is the presiding judge in the underlying Hawaii Action. He is familiar with the protracted litigation history between Petitioner and Fuchs. He has made multiple rulings and is fully familiar with Fuchs‟ 15153816 11 litigation tactics. Further, he was fully apprised of New York Stay before he made the Hawaii Discovery Motion. Thus, this Court should compel Fuchs‟ compliance with the Subpoena thereby “promot[ing] uniformity of the law among the states.” 967 N.Y.S. 2d at 904. II. The New York Stay Does Not Apply To This Subpoena Fuchs has rejected the Subpoena on the grounds that the New York Stay relieves him of his legal obligation to comply. However, a New York court‟s obligation to enforce a CPLR 3119 subpoena does not depend on an existing litigation pending in New York. See CPLR 3119 (e). Fuchs‟ position is baseless because the Subpoena‟s sole purpose is to facilitate the discovery ordered by the Hawaii Court for use in the Hawaii Action. The Subpoena has nothing to do with the New York Enforcement Action. Fuchs further ignores the explicit ruling made by Justice Hagler that the New York Stay does not affect the Hawaii Action: “[T]his Court is not stopping the enforcement of the Hawaii judgment in Hawaii. Anything that the Hawaiian Court wants to do, it’s free to do. This Court is not, in any way, reaching out beyond the borders of New York and taking its long reach to Hawaii and requiring that you don‟t enforce.” Sung Aff. Ex. 7 (NY 7/15/13 Tr.) at 7:10-16 (emphasis added). Thus, it was Justice Hagler‟s plain intent for his stay not to impinge on the Hawaii Court‟s ability to oversee enforcement of the Judgment.15 15 Justice Hagler‟s ruling is therefore fully consistent with the established principle that a “case pending appeal is res judicata and entitled to full faith and credit unless and until reversed on appeal.” E.g., Fidelity Standard Life Ins. Co. v First Nat’l Bank & Trust Co. 510 F2d 272, 273 (5th Cir. 1975) cert denied 423 US 864 (1975), (citations omitted); see also Peng v. Hsieh, 918 N.Y.S.2d 285 (Sup. Ct., N.Y. Cty. 2011) (pending appeal of California decision did not limit the court‟s ability to enforce the California judgment). His ruling recognizes that the pending appeal of the Judgment does not diminish its force under full faith and credit, and thus does not 15153816 12 As mentioned before, the Hawaii Court was well aware of the New York Stay and knew that Fuchs believed the New York Stay barred the discovery sought by Petitioner which would take place in New York. See Lautenbach Aff. Ex. 1 (Hawaii Discovery Motion) at 8; Lautenbach Aff. Ex. 2 (Hawaii 12/24/13 Tr.) at 5:20-6:11 (Petitioner request is for discovery that would take place in New York). Nevertheless, Hawaii ordered judgment debtor discovery to go forward. See Lautenbach Aff. Ex. 3 (Hawaii Discovery Order) at 3. Therefore, it is apparent that the Hawaii Court had no intention of abrogating the New York Stay. In fact, the Discovery Order requires Petitioner to validly served Fuchs in New York, which is exactly what Petitioner has done under CPLR 3119. See Lautenbach Aff. Ex. 2 (Hawaii 12/24/13 Tr.) at 11:2-5 (“You have to find him in New York, wherever he might be.”). The Discovery Order reflects the Hawaii Court‟s view that discovery should go forward in the event Petitioner prevails on appeal and to explore whether Fuchs has assets outside the reach of the New York Stay. Judge Ayabe is most familiar with the parties, the underlying litigation, Fuchs‟ litigation tactics, and his repeated attempts to delay Petitioner from obtaining relief on the Judgment. Hawaii‟s determination should thus be respected. CONCLUSION For the foregoing reasons, this Court should grant Petitioners Motion to Compel and issue an order: (i) directing Fuchs to produce all responsive documents demanded by the Subpoena; and (ii) appear for the deposition commanded by the Subpoena. diminish the Hawaii Court‟s powers to oversee its enforcement. 15153816 13 Dated: New York, New York February 12, 2014 Respectfully submitted, DECHERT LLP By: /S/Gordon Sung Dennis H. Hranitzky Gordon Sung 1095 Avenue of Americas New York, New York 10036 Tel.: (212) 698-3500 STARN O'TOOLE MARCUS & FISHER Sharon V. Lovejoy Andrew J. Lautenbach Pacific Guardian Center, Makai Tower 733 Bishop Street, Suite 1900 Honolulu, HI 96813 Tel.: (808) 537-6100 Attorneys for Petitioner Ke Kailani Partners, LLC 15153816 14