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Zurich American Insurance Co. v. Walker Hardin

United States District Court, M.D. Florida, Tampa Division

July 15, 2019

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,
v.
JOHN EDWARD WALKER HARDIN, LEASING RESOURCES OF AMERICA 4, INC., and COHESIVE NETWORKS, INC., Defendants.

          ORDER

          AMANDA ARNOLD SANSONE, UNITED STATES MAGISTRATE JUDGE

         John Edward Walker Hardin, Leasing Resources of America 4, Inc. (Leasing Resources), and Cohesive Networks, Inc. (Cohesive) (collectively, the defendants) move to quash subpoenas served on Bank of America, N.A., Wells Fargo, N.A., Cohen & Grieb, P.A., and Morgenstern, Phifer & Messina, P.A. (Docs. 331, 332). In the alternative, the defendants request a protective order preventing the subpoenaed discovery. (Id.). Zurich American Insurance Company (Zurich) moves to compel the defendants to produce Hardin's financial records. (Doc. 335).

         I. BACKGROUND

         Zurich obtained judgments against Leasing Resources for over $4.7 million following a jury trial and verdict in Zurich's favor. (Docs. 162, 173, 178). Zurich alleges it collected only a small fraction on the judgments because Hardin, the sole owner of Leasing Resources, depleted Leasing Resources' assets and transferred Leasing Resources' business to Cohesive, another entity owned by Hardin. (Doc. 306). Zurich initiated these supplementary proceedings seeking to hold John Hardin and Cohesive responsible for Leasing Resources' debt based on the doctrines of alter ego and successor liability. (Docs. 298, 305).

         Zurich served subpoenas requesting Hardin's bank account statements and related records from Bank of America and Wells Fargo. (Doc. 331, Exs. 2, 3). Zurich also served subpoenas seeking Mr. Hardin's accounting records from two separate accounting firms. (Doc. 332, Exs. 2, 3). The defendants moved to quash the subpoenas or for a protective order preventing disclosure of the requested financial records. (Docs. 331, 332). Zurich opposes the defendants' motions to quash subpoenas or for a protective order. (Docs. 333, 334). According to the defendants' supplemental statement, after a partial resolution of the two motions to quash or for a protective order, the only issue remaining in dispute is whether these banks and accounting firms must produce Hardin's financial statements, tax returns, bank records, and credit card statements to Zurich. (Doc. 336, p. 2).

         By separate motion, Zurich moves to compel production of Hardin's financial records in response to Zurich's document request nos. 11, 17, 37, and 41. (Doc. 335). The defendants oppose Zurich's motion to compel. (Docs. 337, 341, 346).

         II. ANALYSIS

         A. The Defendants' Motions to Quash Subpoenas or for a Protective Order (Docs. 331, 332)

         The defendants move to quash the subpoenas under Federal Rule of Civil Procedure 45 or for a protective order under Federal Rule of Civil Procedure 26(c). (Docs. 331, 332). Zurich argues the defendants lack standing to quash the third-party subpoenas and failed to establish good cause for a protective order. (Docs. 333, 334).

         1. Standing

         Under Rule 45, the “court for the district where compliance is required must quash or modify a subpoena that: (i) fails to allow a reasonable time to comply; (ii) requires a person to comply beyond the geographical limits specified in Rule 45(c); (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden.” Fed.R.Civ.P. 45(d)(3)(A). Ordinarily a party lacks standing to quash a subpoena served on a third party unless the party seeks to quash based on a “personal right or privilege with respect to the materials subpoenaed.” Brown v. Braddick, 595 F.2d 961, 967 (5th Cir. 1979)[1]; see also Maxwell v. Health Ctr. of Lake City, Inc., No. 3:05-CV-1056-J-32MCR, 2006 WL 1627020, at *2 (M.D. Fla. June 6, 2006) (same).

         A party challenging a subpoena seeking the party's financial records from another source lacks standing to move to quash the subpoena under Rule 45. See Popoli v. Ft. Myers Lodge #1899 Loyal Order of Moose, Inc., No. 2:15-cv-311-FtM-29CM, 2015 WL 9031929, at *2 (M.D. Fla. Dec. 16, 2015) (collecting cases). In Auto-Owners Ins. Co. v. Southeast Floating Docs, Inc., the defendants moved to quash third-party subpoenas requesting the defendants' financial records. 231 F.R.D. 426, 428 (M.D. Fla. Sep. 28, 2005). The court concluded the

financial records sought are business records of non-parties. Defendants have not established any expectation of privacy in their business transactions with other corporations and have not made any factual showing that the records are confidential or proprietary. Therefore Defendants fail to establish a “personal right” regarding the records . . . Therefore, Defendants do not have standing under rule 45 to quash the subpoenas regarding financial records.

Id. at 429.

         To the court's knowledge, third-parties Bank of America, N.A., Wells Fargo, N.A., Cohen & Grieb, P.A., and Morgenstern, Phifer & Messina, P.A. have not objected to or otherwise opposed production of the Hardin's financial records. Like the defendants in Auto-Owners Ins. Co., the defendants have not proven a personal right or privilege in the documents sought and lack standing to challenge the third-party subpoenas. Thus, the defendants' motion to quash the subpoenas at issue is denied.

         2. Good Cause for a Protective Order

         Although the defendants lack standing to challenge the subpoenas under Rule 45, they have standing to move for a protective order under Rule 26 if the subpoenas seek irrelevant information. Auto-Owners, 231 F.R.D. at 429. Under Rule 26(c), “the court where the action is pending . . . may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed.R.Civ.P. 26(c)(1). When evaluating whether a movant has satisfied his burden of establishing good cause for a protective order, a court should balance the non-moving party's interest in ...


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