(CONSENT) Sacramento E.D.M., Inc. v. Hynes Aviation Industries, Inc. ( 2020 )

1 TBh Ao Rm Ta Hs WDA. B LYar t Lh L, PS BN 154075 2 2810 Fifth Street Davis, California 95618 3 Telephone: (916) 440-8600 Facsimile: (916) 440-9610 4 Email: tbarth@barth-daly.com 5 Attorneys for HYNES AVIATION INDUSTRIES, INC., HYNES CHILDREN TF 6 LIMITED and MICHAEL HYNES 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 SACRAMENTO E.D.M., INC., a California No. 2:13-CV-00288-KJN corporation; DAN FOLK, an individual, 12 ORDER FOR APPEARANCE AND Plaintiffs, EXAMINATION OF DANIEL M. FOLK ON 13 BEHALF OF JUDGMENT v. DEBTOR SACRAMENTO E.D.M., INC. 14 HYNES AVIATION INDUSTRIES, 15 INC., dba HYNES AVIATION SERVICES, HYNES CHILDREN TF 16 LIMITED; MICHAEL K. HYNES, 17 Defendants. 18 HYNES AVIATION INDUSTRIES, 19 INC., an Oklahoma corporation; MICHAEL K. HYNES, an individual, 20 Counter-Claimants, 21 v. 22 SACRAMENTO E.D.M., INC., a California 23 corporation; DAN FOLK, an individual, 24 Counter-Defendants. 25 26 I. INTRODUCTION 27 On April 18, 2017, judgment was entered in favor of Judgment Creditor, Hynes Aviation 28 Industries, Inc. ("Judgment Creditor" or "Hynes Aviation"), and against counter-defendant, 1 Sacramento E.D.M., Inc. (Judgment Debtor), in the United States District Court for the Eastern 2 District of California [ECF No. 150]. On March 27, 2019, the Court filed its Amended Judgment 3 [ECF No. 160]. The Judgment and Amended Judgment awarded net relief in favor of Hynes 4 Aviation and against Judgment Debtor in the total amount of $795,750.36. 5 II. DISCUSSION 6 Judgment Creditor has filed an application for a debtor examination and production of 7 documents. Pursuant to Federal Rule of Civil Procedure 69(a)(1), "The procedure on execution– 8 and in proceedings supplementary to and in aid of judgment or execution–must accord with the 9 procedure of the state where the court is located, but a federal statute governs to the extent it 10 applies." "[T]he procedure on execution is to be in accordance with the procedure of the state in 11 which the district court is located at the time the remedy is sought." In re Estate of Ferdinand 12 Marcos Human Rights Litigation, 536 F.3d 980, 987-988 (9th Cir. 2008). In turn, California 13 Code of Civil Procedure Section 708.110 provides, in relevant part: 14 (a) The judgment creditor may apply to the proper court for an order requiring the judgment debtor to appear before the 15 court, or before a referee appointed by the court, at a time and place specified in the order, to furnish information to aid in enforcement 16 of the money judgment. 17 (b) If the judgment creditor has not caused the judgment debtor to be examined under this section during the preceding 120 18 days, the court shall make the order upon ex parte application of the judgment creditor. 19 (c) If the judgment creditor has caused the judgment 20 debtor to be examined under this section during the preceding 120 days, the court shall make the order if the judgment creditor by 21 affidavit or otherwise shows good cause for the order. The application shall be made on noticed motion if the court so directs 22 or a court rule so requires. Otherwise, it may be made ex parte. 23 (d) The judgment creditor shall personally serve a copy of the order on the judgment debtor not less than 10 days before the 24 date set for the examination. Service shall be made in the manner specified in Section 415.10. Service of the order creates a lien on 25 the personal property of the judgment debtor for a period of one year from the date of the order unless extended or sooner 26 terminated by the court. 27 (e) The order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: 28 "NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the 1 time and place specified in this order, you may be subject to arrest and punishment for contempt of court and the court may make an 2 order requiring you to pay the reasonable attorney's fees incurred by the judgment creditor in this proceeding." 3 4 Cal. Code Civ. Proc. § 708.110(a)-(e). California Code of Civil Procedure Section 708.160(b) 5 also provides that "[a] person sought to be examined may not be required to attend an 6 examination before a court located outside the county in which the person resides or has a place 7 of business unless the distance from the person's place of residence or place of business to the 8 place of examination is less than 150 miles." Cal. Code Civ. Proc. § 708.160(b). 9 Plaintiff's application sets forth the showing required by Federal Rule of Civil Procedure 10 69(a)(2) and the applicable provisions of the California Code of Civil Procedure Sections 708.110 11 and 708.160. 12 Plaintiff also seeks to require the judgment debtor to produce documents prior to the 13 examination. Under California law, judgment debtor proceedings "permit the judgment creditor 14 to examine the judgment debtor, or third persons who have property of or are indebted to the 15 judgment debtor, in order to discover property and apply it toward the satisfaction of the money 16 judgment." United States v. Feldman, 324 F.Supp.2d 1112, 1116 (C.D. Cal. 2004) (quoting 17 Imperial Bank v. Pim Elec., Inc., 33 Cal.App.4th 540 (1995)). Debtor examination is intended "to 18 allow the judgment creditor a wide scope of inquiry concerning property and business affairs of 19 the judgment debtor, and to leave no stone unturned in the search for assets which might be used 20 to satisfy the judgment." Alcalde v. NAC Real Estate Investments & Assignments, Inc., 580 21 F.Supp.2d 969, 970 (C.D. Cal. 2008) (citations and internal punctuation omitted). 22 Federal Rule of Civil Procedure 34 authorizes a party to seek production of documents. 23 Further, California Code of Civil Procedure Section 708.030(a) provides that a "judgment creditor 24 may demand that any judgment debtor produce and permit the party making the demand, or 25 someone acting on that party's behalf, to inspect and to copy a document that is in the possession, 26 custody, or control of the party on whom the demand is made...." Cal. Code Civ. 27 /// 28 /// 1 Proc. § 708.030. Accordingly, the judgment debtor shall produce the following documents for 2 inspection as directed by this order: 3 (1) Any and all information and documentation identifying real property, 4 personal property, computers, intellectual property, vehicles, boats, brokerage accounts, 5 retirement accounts, life insurance policies, bank deposits, securities, cash and all other assets 6 owned by Sacramento E.D.M., Inc., including, but not limited to, information relating to financial 7 accounts and monies owed to Sacramento E.D.M., Inc. by others. Such information and 8 documents shall include, without limitation, the location of any and all property and assets of 9 Sacramento E.D.M., Inc. 10 (2) All tax returns filed by Sacramento E.D.M., Inc. with any governmental 11 body for the years 2015 through the present. 12 (3) All of Sacramento E.D.M., Inc.'s accounting records, computerized, 13 electronic and/or in printed or paper format for the years 2016 through the present. 14 (4) All of Sacramento E.D.M., Inc.'s statements, cancelled checks and related 15 banking documents for any bank, brokerage or financial account at least partially controlled by 16 Sacramento E.D.M., Inc., or recorded in the name of Sacramento E.D.M., Inc. for the years 2016 17 through the present. 18 (5) All of Sacramento E.D.M., Inc.'s checkbooks, checkbook stubs and 19 checkbook entries for the years 2016 through the present. 20 (6) All settlement agreements, promissory notes, and any other writings by 21 which another party has agreed to pay money to Sacramento E.D.M., Inc. 22 (7) All settlement agreements, promissory notes, and any other writings by 23 which Sacramento E.D.M., Inc. has agreed to pay money to another party. 24 (8) All of Sacramento E.D.M., Inc.'s records of accounts payable and 25 receivables, payroll check stubs, passbooks, financial statements, deeds, promissory notes and 26 stock registers. 27 (9) All credit or debit card statements of Sacramento E.D.M., Inc. for the years 28 2016 through the present. 1 (10) All credit or debit card statements of any other person or entity, pertaining 2 to financial accounts used for costs or expenses relating to the business of Sacramento E.D.M, 3 Inc., for each month for the years 2016 through the present. 4 (11) Documents sufficient to show Sacramento E.D.M., Inc.'s balance sheet for 5 each month for the years 2016 through the present. 6 (12) Documents sufficient to show Sacramento E.D.M., Inc.'s gross revenues 7 for each month for the years 2016 through the present. 8 (13) Documents sufficient to show any and all payments made to or for the 9 benefit of Daniel M. Folk by any other person or entity as a result of, or relating to revenues 10 generated by the business of Sacramento E.D.M, Inc. for each month during the years 2016 to the 11 present. 12 (14) Documents sufficient to show Sacramento E.D.M., Inc.'s expenditures of 13 funds for any purpose for each month for the years 2016 through the present. 14 (15) Any and all leases pertaining to any real or personal property, effective at 15 any time from January 1, 2016 to the date of the examination, to which Sacramento E.D.M., Inc. 16 is a party, whether as lessor or lessee, including all exhibits and amendments of such leases. 17 (16) Any and all leases pertaining to any real or personal property, effective at 18 any time from January 1, 2016 to the date of the examination, to which Summit Leasing Partners 19 LP is a party, whether as lessor or lessee, including all exhibits and amendments of such leases. 20 (17) Documents sufficient to show agreements by Sacramento E.D.M., Inc., 21 with Summit Leasing Partners LP regarding business of any kind or financial arrangements of 22 any kind between the two entities, at any time between January 1, 2016 and the date of the 23 examination. 24 (18) Documents sufficient to show agreements by Sacramento E.D.M., Inc. with 25 any other person or entity regarding business of any kind to be performed by Sacramento E.D.M., 26 Inc. for such person or entity at any time after the date of this Order, whether on a recurring basis 27 or otherwise. 28 /// 1 (19) Any and all documents sufficient to show the name and address of each 2 business in which each of Sacramento E.D.M., Inc.'s current or former officers, shareholders, 3 and/or directors now has an interest and the nature of each such person's interest in each such 4 business. 5 (20) Any and all documents sufficient to show any and all assets owned by any 6 entities that currently are or previously were a subsidiary or affiliate of Sacramento EDM, Inc. 7 during the years 2016 through the present. 8 (21) Any and all documents sufficient to show bank, brokerage, and/or financial 9 records of any entities that currently are or previously were a subsidiary or affiliate of Sacramento 10 EDM, Inc., during the years 2016 through the present. 11 (22) Any and all documents sufficient to show bank, brokerage, and/or financial 12 records of any entities that currently are or previously were wholly owned by the shareholder(s) 13 of Sacramento E.D.M., during the years 2016 through the present. 14 III. CONCLUSION 15 Based on the foregoing, IT IS HEREBY ORDERED that: 16 1. Daniel M. Folk, the registered agent of the Judgment Debtor shall appear 17 personally on May 11, 2020, at 10:00 a.m. in Courtroom 25 of the United States District Court, 18 located at 501 I Street, Sacramento, California, 95814, to furnish information to aid in 19 enforcement of a money judgment by answering questions about the Judgment Debtor's real and 20 personal property and assets; 21 2. Judgment Debtor shall produce documents responsive to this order to 22 Thomas W. Barth of Barth Daly LLP, 2810 Fifth Street, Davis, California 95618 on or before 23 April 13, 2020; and 24 3. Judgment Creditor must serve this order upon Daniel Folk the agent for 25 service of process of the Judgment Debtor personally not less than ten (10) days before the date 26 set for the examination and must file a certificate of such service with the Court. 27 //// 28 //// 1 NOTICE TO JUDGMENT DEBTOR. IF YOU FAIL TO APPEAR AT THE 2 | TIME AND PLACE SPECIFIED IN THIS ORDER, YOU MAY BE SUBJECT TO 3 | ARREST AND PUNISHMENT FOR CONTEMPT OF COURT AND THE COURT MAY 4 | MAKE AN ORDER REQUIRING YOU TO PAY THE REASONABLE ATTORNEYS' 5 | FEES INCURRED BY THE JUDGMENT CREDITOR IN THIS PROCEEDING. 6 7 | ITIS SO ORDERED. 8 | Dated: March 13, 2020 Fesll Arn 10 988 exam KENDALL UNITED STATES MAGISTRATE JUDGE 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28