Crews v. Sun Solutions AZ LLC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Jason Crews, No. CV-23-01589-PHX-DWL 10 Plaintiff, ORDER 11 v. 12 Sun Solutions AZ LLC, et al., 13 Defendants. [14] 15 Pending before the Court is Plaintiff’s motion for Rule 69 discovery. (Doc. 39.) 16 For the following reasons, the motion is granted in part and denied in part. 17 BACKGROUND 18 On August 7, 2023, Plaintiff initiated this action by filing the complaint. (Doc. 1.) 19 The complaint alleged that between July 10, 2023 and July 28, 2023, representatives of 20 Defendant Sun Solutions AZ LLC (“Sun Solutions”) used an automatic telephone dialing 21 system (“ATDS”) to send eight illegal telemarketing calls to Plaintiff’s cell phone, which 22 is not associated with a business and is registered on the Do-Not-Call registry. (Id. ¶¶ 2, 23 14-42.) Some of the calls were placed by Defendant Justin Villalobos (“Villalobos”), the 24 owner and manager of Sun Solutions. (Id. ¶¶ 6, 30-38.) The complaint asserted two claims 25 for violations of the Telephone Consumer Protection Act (“TCPA”): (1) a claim for 26 violating the TCPA’s prohibition against “sending calls, except for emergency purposes, 27 to . . . a cellular telephone service using an ATDS,” and (2) a claim for “call[ing] Plaintiff’s 28 private residential number which was registered on the National Do-Not-Call Registry 1 more than thirty-one (31) days prior to the calls, in violation of 47 U.S.C. § 227 (c)(3)(F) 2 and 47 C.F.R. § 64.1200 (c)(2).” (Id. ¶¶ 68-78.) The complaint alleged that Villalobos 3 should be held individually liable because he “personally participated in the complained4 of actions by personally directing and authorizing the scripting and selecting of calls to be 5 made, selecting, and orchestrating the calling strategy, including by choosing to use pre6 recorded calls.” (Id. ¶¶ 6, 11.) 7 Both Defendants were served after Plaintiff obtained leave to serve via alternative 8 means. (Docs. 17, 20, 30, 31.) Both Defendants failed to respond to the complaint, and 9 default was entered against them. (Docs. 24, 33.) 10 On April 28, 2024, Plaintiff filed a motion for default judgment. (Doc. 34.) Neither 11 Defendant responded. 12 On June 10, 2024, the Court granted in part and denied in part Plaintiff’s motion for 13 default judgment. (Doc. 35.) Specifically, the Court determined that the complaint failed 14 to state a claim as to Count I because the conclusory assertion that Defendants used an 15 ATDS was “not supported by the remaining factual allegations in the complaint.” (Id. at 16 6.) Regarding Count II, the Court determined that only two of the eight calls at issue were 17 made in violation of the pertinent regulations. (Id. at 8-11.) Furthermore, the Court 18 concluded that those two calls were “actionable only as to Sun Solutions, not as to 19 Villalobos.” (Id. at 11.) Thus, default judgment in the amount of $1,402 ($1,000 in 20 damages and $402 in costs for the filing fee) was entered as to Sun Solutions but not as to 21 Villalobos. (Id. at 13; Doc. 36.) The Court retained jurisdiction “for the limited purpose 22 of imposing service-related expenses pursuant to Rule 4(d)(2).” (Doc. 35 at 14.) 23 On June 14, 2024, Plaintiff submitted proof regarding service-related expenditures. 24 (Doc. 37.) On June 18, 2024, the Court ordered Sun Solutions to pay service expenses in 25 the amount of $530.29 and ordered Villalobos to pay service expenses in the amount of 26 $707.29, pursuant to Rule 4(d)(2) of the Federal Rules of Civil Procedure. (Doc. 38.) 27 On June 19, 2024, Plaintiff filed the pending ex parte motion for Rule 69 discovery, 28 which seeks leave to serve subpoenas duces tecum on non-parties PayPal, Inc. (“PayPal”) 1 and Early Warning Systems, LLC, dba Zelle (“Zelle”), two payment service companies 2 which, Plaintiff asserts, Villalobos uses or “may” use. (Doc. 39-1.) The subpoenas would 3 require PayPal and Zelle to provide a “Consumer Profile and Transaction Search” for two 4 email addresses (Justin@SunSolutions.com and zeradiamond@yahoo.com), to provide a 5 list of all transactions associated with those email addresses from December 9, 2022 to the 6 present, and to “provide all unredacted bank account and customer information . . . to 7 include, but not limited to, the account holder name, address, SSN, and linked financial 8 institution, bank account number, and routing number.” (Id.) 9 DISCUSSION 10 I. Legal Standard 11 Rule 69(a) provides as follows: 12 (1) Money Judgment; Applicable Procedure. A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on 13 execution—and in proceedings supplementary to and in aid of judgment or execution—must accord with the procedure of the state where the court is 14 located, but a federal statute governs to the extent it applies. 15 (2) Obtaining Discovery. In aid of the judgment or execution, the judgment creditor or a successor in interest whose interest appears of record may obtain 16 discovery from any person—including the judgment debtor—as provided in these rules or by the procedure of the state where the court is located. [17] “Rule 69 applies only to money judgments of the federal court.” Labertew v. [18] Langemeier, 846 F.3d 1028 , 1033 n.26 (9th Cir. 2017). “The discovery contemplated by [19] rule 69(a) is a distinct phase of the litigation with a narrow focus. It is solely to enforce the [20] judgment by way of the supplemental proceedings.” Danning v. Lavine, 572 F.2d 1386 , [21] 1390 (9th Cir. 1978). [22] “The rules governing discovery in postjudgment execution proceedings are quite [23] permissive.” Republic of Argentina v. NML Cap., Ltd., 573 U.S. 134 , 138 (2014). Under [24] Rule 69(a), a judgment creditor may “properly seek to discover assets that might be [25] available to satisfy the judgments and to discover concealed or fraudulently transferred [26] assets.” SEC v. Premier Holding Corp., 2021 WL 6104308 , *2 (C.D. Cal. 2021). “The [27] scope of post-judgment discovery is broad; the judgment creditor must be given the [28] freedom to make a broad inquiry to discover hidden or concealed assets of the judgment 1 debtor.” 1ST Tech., LLC v. Rational Enterprises Ltda, 2007 WL 5596692 , *4 (D. Nev. 2 2007) (cleaned up). “A judgment creditor is therefore ordinarily entitled to a very thorough 3 examination of a judgment debtor with respect to its assets, including discovery of the 4 identity and location of any of the judgment debtor’s assets, wherever located.” Ryan Inv. 5 Corp. v. Pedregal de Cabo San Lucas, 2009 WL 5114077 , *1 (N.D. Cal. 2009). “Even 6 though Rule 69 discovery may resemble the proverbial fishing expedition, a judgment 7 creditor is entitled to fish for assets of the judgment debtor.” Premier Holding, 2021 WL 8 6104308 at *1. “Once judgment has been entered against a defendant, the desire for 9 confidentiality must necessarily yield to a plaintiff’s legitimate need to acquire any and all 10 information reasonably available to locate the defendant’s assets. Furthermore, any 11 legitimate confidentiality concerns can be remedied with a protective order.” Id. at *3 . 12 II. Analysis 13 As a preliminary matter, Plaintiff’s motion asserts that discovery is sought “for the 14 purposes of judgment enforcement against Judgment Debtors” and then more specifically 15 asserts that Plaintiff conducted user searches on accounts owned by “Judgment Debtor, 16 Justin Villalobos.” (Doc. 39-1 at 1-2.) But Villalobos is not a “judgment debtor” in this 17 action. To be sure, he was ordered to pay Rule 4(d)(2) service expenses, but this was not 18 part of the judgment—indeed, these expenses could have been sought and ordered at any 19 time after Villalobos failed to waive service without good cause, including before entry of 20 judgment. See, e.g., Hulet v. Cnty. of Tuolumne, 2024 WL 200871 (E.D. Cal. 2024) 21 (granting Rule 4(d)(2) motion early in litigation when motion to dismiss remained 22 pending). The judgment entered only as to Sun Solutions (Doc. 35), and therefore Sun 23 Solutions is the only judgment debtor here. 24 Moreover, Rule 69 is not available to Plaintiff to assist in recovering Rule 4(d)(2) 25 service expenses. “Rule 69 applies only to money judgments of the federal court.” 26 Labertew, 846 F.3d at 1033 n.26 (emphasis added). Thus, Plaintiff cannot rely on Rule 69 27 to discover information to assist him in obtaining money from Villalobos to cover his 28 service expenses. 1 Although it might be permissible for Plaintiff to seek to discover information about 2 Villalobos’s personal finances if that information could be useful to him in uncovering 3 information about Sun Solutions’ finances, see generally British Int’l Ins. Co., Ltd. v. 4 Seguros La Republica, S.A., 200 F.R.D. 586, 589 (W.D. Tex. 2000) (“Rule 69 expressly 5 authorizes discovery from ‘any person,’ not merely the judgement debtor.”), Plaintiff has 6 made no effort to explain why the requested information would be useful for that purpose. 7 Generally, “third persons can only be examined about assets of the judgment debtor and 8 cannot be required to disclose their own assets.” Caisson Corp. v. Cnty. W. Bldg. Corp., [9] 62 F.R.D. 331, 334 (E.D. Pa. 1974). Here, Plaintiff seeks discovery from certain third 10 parties (PayPal and Zelle) regarding the assets of a yet another third party to the judgment 11 (Villalobos). A record of payment transfers from and to Villalobos’s personal accounts 12 could be relevant to Sun Solutions’ assets if a showing of fraudulent collusion between 13 Villalobos and Sun Solutions for purposes of evading the judgment were made here. Cf. 14 Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 562 (S.D.N.Y. 1977) (“It is 15 alleged that the payments to Feist were made collusively, in an attempt to strip defendants 16 of any assets (which might) satisfy the judgment. These allegations are sufficient to permit 17 discovery on the narrow issue of the consideration received by Feist in connection with the 18 transfer of the Mall properties. Plaintiff’s showing raises doubts about the propriety of the 19 transfers, and plaintiff should be permitted further exploration.”). But Plaintiff has not 20 attempted to make such a showing, so payment transfers from and to Villalobos’s personal 21 accounts are not relevant.1 Nor is it obvious how Plaintiff could make such a showing, 22 given that the docket reflects no indication that Villalobos and Sun Solutions were ever 23 even notified that the judgment against Sun Solutions entered. Although Rule 69 24 “permit[s] broad post-judgment discovery in the search for executable assets . . . it is not 25 unlimited; courts may limit post-judgment discovery on grounds of relevance, privilege, 26 and proportionality.” 2 Gensler, Federal Rules of Civil Procedure, Rules and Commentary, [27] 1 Even if Plaintiff had made such a showing, it is not clear that Plaintiff would be 28 entitled to discover Villalobos’s social security number, bank account number, routing number, and “Consumer Profile.” 1|| Rule 69 (2022). 2 However, one of the two accounts at issue, Justin@SunSolutions.com, contains the domain “SunSolutions.com.” Although Plaintiff’s motion seems to indicate that this email address belongs to Villalobos, it is reasonable to infer from the domain that it is a business || email account, and it follows that the associated payment transfer accounts may be for Sun || Solutions’ transactions, not for Villalobos’s personal transactions. The Court concludes 7\| that Plaintiff is entitled to discover the linked financial institution for those accounts, as 8 || this information could enable Plaintiff to seek additional discovery from those institutions || regarding Sun Solutions’ assets. 10 Accordingly, 11 IT IS ORDERED that Plaintiff's motion for Rule 69 discovery (Doc. 39) is granted in part and denied in part. 13 IT IS FURTHER ORDERED that the subpoenas as to PayPal and Zelle may seek 14]| only the financial institutions associated only with the accounts with the associated email address Justin@SunSolutions.com. The subpoenas may not seek any information in 16 || connection with the zeradiamond@ yahoo.com account. Additionally, the subpoenas may □□ not seek transaction histories or bank account/routing numbers and may not seek any || personal information about Villalobos, including his “Consumer Profile,” his account || holder name, or social security number. 20 Dated this 9th day of September, 2024. [21] 22 im a 23 } CC —— Dominic W. Lanza 94 United States District Judge [28] -6-