Opinion
Case No. 09-C-506.
April 27, 2011
DECISION AND ORDER
The court-appointed receiver, Faye Feinstein, moves for reconsideration of my order denying her motion to compel discovery of documents she requested in a subpoena. The subpoena was contested on the basis of personal jurisdiction, and I found that ground dispositive in denying the motion to compel. The receiver statutes allow a receiver nationwide service of process for "property, real, personal, or mixed, situated in different districts . . . in any such district as if the property lay wholly within one district." 28 U.S.C. § 1692. Section 1692 also requires compliance with § 754, however. That section provides: "Such receiver shall, within ten days after the entry of his order of appointment, file copies of the complaint and such order of appointment in the district court for each district in which property is located. The failure to file such copies in any district shall divest the receiver of jurisdiction and control over all such property in that district." Although the receiver had filed these documents in Delaware, where property of the receivership estate is found, she did not file such documents in California, where the documents now sought are apparently located and where Joseph Aaron, one of the recipients of the subpoena, is domiciled. Accordingly, I found no jurisdiction over the parties that would allow me to compel their compliance with the subpoena.
I. Jurisdiction
II. The Documents Sought
Haile v. Henderson National Bank,657 F.2d 816823not See Dexia Credit Local v. Rogan,231 F.R.D. 538541 i.e.,
WHS and Aaron argue that Feinstein is on a fishing expedition that exceeds her authority as a court-appointed receiver. They also argue it would be burdensome, as a non-party, to comply with her requests. The receiver has responded by noting that the WM Funds were the sole limited partners in Baetis, and nearly the sole partners in Brown. They invested more than $60 million in those two funds, and as such it could hardly be viewed as "burdensome" if the general partner is asked to provide annual audited financial statements and the like to its principal investors. Moreover, the court order appointing the receiver authorized her to track down WM Funds' assets and to prevent their dissipation, and this is merely an effort within the penumbra of that authority to ensure that the $1 million in "commissions" was properly credited to the Brown and Baetis funds. It is true that these funds are non-parties to this action, but the information now sought is on behalf of their principal investors, not strangers. Moreover, the receiver is tasked with representing investors and the Court in pursuing funds. As such, there is little reason to believe that she has a personal or financial interest in harassing other entities or pursuing dead ends. In other words, because a receiver is not a financial competitor or a traditional oppositional litigant, she is afforded a certain amount of deference in her decisions. In light of the above, I am satisfied that the subpoena was within the authority of the receiver and WHS's compliance with it will not be overly burdensome.
WHS and Aaron also argue that a full accounting under Delaware corporate law must be ordered in Delaware courts. My order granting the motion to compel does not order a specific accounting procedure, as provided for by Delaware law, but merely compliance with the subpoena.
The motion for reconsideration is GRANTED. The motion to compel [315] is GRANTED. SO ORDERED this 26th day of April, 2011.