United States District Court, S.D. Florida
IN RE APPLICATION OF HORNBEAM CORPORATION, Request for Discovery Pursuant to 28U.S.C. § 1782
ORDER VACATING MAGISTRATE JUDGE'S ORDER GRANTING
INTERVENOR SHULMAN'S APPLICATION FOR DISCOVERY PURSUANT
TO 28 U.S.C. § 1782
PATRICIA A. SEITZ UNITED STATES DISTRICT JUDGE.
CAUSE is before the Court on the Order of the Magistrate
Judge [DE 153] granting Intervenor Shulman's Application
for Discovery pursuant to 28 U.S.C. § 1782. Shulman
seeks discovery for use in a claim against Intervenors
Kolomoisky and Bogolyubov in England ("English
action"). Kolomoisky filed objections [DE 156] and
Shulman filed a response [DE 162], to which Kolomoisky
replied [DE 181]. Additionally, Kolomoisky filed a Notice [DE
179] regarding developments in the underlying English action.
Because of the changed factual circumstances, the Court
reviewed the record de novo. The Court finds that
the English action is no longer pending or reasonably
contemplated, and thus Shulman fails to meet the requirements
for a § 1782 application. See Intel Corp. v.
Advanced Micro Devices Inc., 542 U.S. 241 (2004).
Therefore, the Court vacates Magistrate Judge Turnoff s Order
granting Shulman's Application, and denies Shulman's
dispute arises from the purchase of a steel mill in Warren,
Ohio by three Ukranian businessmen: Shulman, Kolomoisky, and
Bogolyubov. [DE 122 at 3]. Ownership of the mill was then
transferred to Warren Steel Holdings, LLC, who transferred
ownership to Halliwel, a British Virgin Islands (BVI)
company. Id. Halliwel's shareholders are: (1)
Hornbeam, a Panamanian entity whose beneficiary is Bracha
Foundation, a Lichtenstein trust, whose beneficiary is
Shulman; (2) Symeou, a Cyprus attorney, who represents
Kolomoisky; and (3) Marigold Trust Asset Management, on
behalf of Bogolyubov. [DE 156 at 3].
2006, a Kolomoisky-controlled entity opened a $90 million
line of credit for Warren Steel, and in 2008, companies
associated with Kolomoisky, Bogolybov, and Korf (an
individual appointed president of Warren Steel) provided over
$106 million to Warren Steel. [DE 157 at 3] Still, due to
deteriorating finances, Warren Steel closed in March 2014.
Id. Again, companies related to Kolomoisky,
Bogolybov and Korf provided new financing to reopen the
facility. Id. Halliwel's shareholders approved
this financing at an extraordinary general meeting.
in August 2014, Hornbeam, one of the shareholders, filed an
ex parte application seeking to enjoin the
extraordinary general meeting and subsequently filed a claim
for unfair prejudice under BVI law. [DE 157 at 4]. Hornbeam
asked the BVI court to liquidate Halliwel which the court
denied. Id. On December 10, 2014, the BVI court
assessed $846, 526 in costs and attorneys' fees against
Hornbeam in favor of Halliwel, Symeou, and Marigold.
Id. : On December 29, 2014, Hornbeam filed an
application for discovery in this Court under 28 U.S.C.
§ 1782 for use in the BVI proceedings against Symeou and
Halliwel. Id. In November 2016, Hornbeam paid the
$1.8 million judgment and has not filed any new action in the
filed its § 1782 discovery application on December 29,
2014 which Magistrate Judge Turnoff approved on February 11,
2015 ("2015 Order"). The 2015 Order made no
findings or conclusions that Hornbeam satisfied the
requirements for a § 1782 application. [DE 12]. After
subpoenas were served, a stay was entered due to an appeal
pending before the Eleventh Circuit Court of Appeals on a
related § 1782 application in Alabama. [DE 157 at 5].
After that appeal was resolved in 2016, Hornbeam requested an
extension of the stay, which the Court granted, because it
planned to litigate in the BVI. [DE7l;DE74]. As the stay was
set to expire, Hornbeam moved to lift the stay because, while
it had not filed any claims in the BVI, Shulman, on his own
behalf, had filed claims in England on the same allegations
for the same damages. [DE 75]. Shulman also moved to
intervene in Hornbeam's § 1782 application granted
by the 2015 Order. [DE79].
August 2017, Magistrate Judge Turnoff lifted the stay,
granted Shulman's motion to intervene, and also required
Shulman to file his own § 1782 application. [DE 108].
Interveners Symeou and Halliwel moved to vacate the 2015
Order and to deny Hornbeam's application [DE 128] and
Kolomoisky opposed Shulman's application. [DE 129].
Shulman's English Action
12, 2017, Shulman sued Kolomoisky and Bogolybov in England
regarding Warren Steel. In compliance with Magistrate Judge
Turnoff s Order [DE 108], Shulman filed his own § 1782
application in September 2017 to obtain the discovery that
the 2015 Order authorized for Hornbeam and to "use that
discovery in the recently filed English [a]ction." [DE
122 at 2]. Shulman claimed to satisfy the § 1782
requirements because the discovery is for "use in the
English [a]ction, which is indisputably a proceeding in a
foreign or international tribunal." [DE 122 at 13].
opposed Shulman's application arguing that the Court
should stay this matter until the English court decided
jurisdiction. On January 22, 2018, Magistrate Judge Turnoff
issued an Order: (1) denying the motion to vacate the 2015
Order granting Hornbeam's application; and (2) granting
Shulman's application because he "initiated legal
proceedings in the British courts and it is clear he is
seeking evidence for use in said proceedings." [DE 153
on February 2, 2018, after Magistrate Judge Turnoff entered
his Order, the English court determined it had no
jurisdiction to try the underlying claims and dismissed
Shulman's claim. [DE 156]. On February 21, 2018, the
English court orally denied permission to Shulman to appeal.
[DE 181 at 3]. On March 2, 2018, the English court entered a
written order on the February 2018 decision, stating that
Shulman could appeal this latest decision by filing a notice
of appeal by March 15, 2018. [DE 179-1]. Shulman has not
provided any notice to this Court indicating he filed a