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United States District Court, Southern District of New York

January 29, 2003


The opinion of the court was delivered by: Whitman Knapp, Senior United States District Judge



On July 25, 2002, Petitioner Peter Kruse ("Petitioner" or "Kruse") moved, pursuant to Section 9 of the Federal Arbitration Act (the "FAA"), 9 U.S.C. § 9, for an order confirming a securities industry award (the "Award") issued on June 18, 2002. The Award was entered by three arbitrators of the National Association of Securities Dealers ("NASD") and directed Respondents, Sands Brothers & Co. ("Sands") and Peter Pak ("Pak") jointly and severally, to pay Kruse the amount of $300,960.08. The NASD requires that "all monetary awards shall be paid within thirty (30) days of receipt unless a motion to vacate has been filed with a court of competent jurisdiction." NASD Manual Rule 10330. Kruse filed his Petition to Confirm the Award on July 25, 2002. On August 9, 2002, Respondents filed an Answer to Kruse's Petition to Confirm and a Counter-Petition to Vacate. On October 3, 2002, we granted Kruse's Petition to Confirm the Award. See Kruse v. Sands Brothers & Co. and Peter Pak (S.D.N.Y. 2002), 2002 WL 31234684.

Respondents then requested a conference with the Court. (Letter from Roth to the Court of October 15, 2002). Since we had already confirmed the award, we construed Respondents' letter as a request for reconsideration.*fn1 In our order filed on October 18, 2002, we denied this request. On November 20, 2002, Kruse moved this Court for an order penalizing Respondents Sands and Pak for contempt of court for non-compliance with information subpoenas served by Kruse on each respondent on October 28, 2002. On December 19, 2002, this motion was withdrawn without prejudice as against Pak only, following Pak's response to the information subpoena. On December 16, 2002, following an extension we granted for filing, Sands filed its opposition to Kruse's motion for an order for contempt of court: it opposed Kruse's motion for contempt and filed a cross-motion to quash Kruse's information subpoena and to stay the execution of the judgment. Kruse replied on December 24. W e address these motions today.


Kruse's Motion for Contempt and Sands' Cross-Motion to Quash Petitioner's Information Subpoena
Pursuant to Rule 69 of the Federal Rules of Civil Procedure, a judgment creditor may obtain discovery from any person in an effort to enforce a judgment. Fed.R.Civ.P. 69(a). Under Rule 69(a) the procedure for the execution of a judgment is governed by the practice and procedure of the state in which the district court resides. Id. An information subpoena is an appropriate means of effectuating such discovery under the laws of New York State. N.Y. C.P.L.R. § 5524. A person's failure to comply with a subpoena is punishable by contempt. N.Y. C.P.L.R. § 5251. Sands does not contest that it has failed to comply with the information subpoena. Nor has Sands offered any reason whatsoever to excuse its failure to respond to the subpoena.

Sands' sole attack on the propriety of the information subpoena is that service by certified mail was improper and that, instead, "actual personal service" of an information subpoena is required. (See Resp't's Mem. of L. in Opp'n to Pet'r's Mot. for a Contempt Order and in Supp. of Rep't's Cross-mot. to Quash Pet'r's Information Subpoena and Stay Execution of the J. at 5) (hereinafter Resp't's Opp'n). This claim is wholly without merit. In fact, service of an information subpoena by certified mail is explicitly contemplated and authorized by N.Y. C.P.L.R. 5224(a)(3). We also note for the record that this Court's granting of Sands' request for an extension of time to oppose Kruse's motion for contempt (or the Respondents' decision to make a substitution of counsel) does not excuse or explain, in any way, Sands' failure timely to respond to the information subpoena.

Sands moves to quash the information subpoena. However, it has failed to offer any reason why we should grant this request. Indeed, it presents no grounds for quashing the information subpoena at all, nor does it allege any facts that would allow us to conceive of a reason to do so. (See Resp't's Opp'n at 7). Moreover, were there some basis for quashing the information subpoena, we could not grant the request, as it is untimely. A motion to quash a subpoena must be "made promptly." N.Y. C.P.L.R. § 2304. This is generally understood by courts to require a party to move prior to the subpoena's return date. See, e.g., Santagello v. People (N.Y. 1976) 38 N.Y.2d 536, 538. In this case, Sands was required to return the information subpoena by November 4, 2002, seven days after its receipt of the subpoena. Sands filed its cross-motion to quash on December 16, 2002, more than two months after the information subpoena's return date. This untimeliness alone justifes our denial of Sands' motion to quash. Given Sands' failure to state any ground whatsoever on which their requested relief ought to be granted and its untimeliness, the motion is DENIED.

Though we have the power to impose contempt on the basis of Sands' failure to comply with the Subpoenas alone, we will instead order Sands to respond to the judgment creditor's discovery demands and thus permit it a final opportunity to avoid being held in contempt of court.

Sands' Cross-Motion to Stay Execution of the Judgment

Sands has moved the Court to stay the execution of a judgment we issued on October 3, 2002 and thereafter denied Sands' request for reconsideration of on October 18, 2002. The requirements to stay the execution of a judgment issued in federal court are set forth in Rule 62 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 62. Sands does not articulate the ground set forth in Rule 62 on which it bases this motion, nor can we divine such a ground from its brief. Only two of the conditions set forth in Rule 62 are potentially applicable; in reality, neither applies. See Fed.R.Civ.P. 62(b) ("the court may stay the execution of or any proceedings to enforce a judgment pending the disposition of . . . a motion for relief from judgment or order made pursuant to Rule 60 . . .); Fed.R.Civ.P. 62(d) ("When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay subject to the exceptions contained in subdivision (a) of this rule.")

Rule 60(b) sets forth six grounds for relief: "(1) mistake, inadvertence, surpirse, or excusable neglect; (2) newly discovered evidence which by due diligence counld not have been discovered . . .; (3) fraud . . . misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged . . .; or (6) any other reason justifying relief from the operation of the judgment." Fed R.Civ.P. 60(b). Sands has not moved for relief from a judgment pursuant to Rule 60, and after due consideration of the arguments presented in Sands' memoranda and affidavits, we find no ground on which such a motion would be proper. Accordingly, Rule 62(b) is inapplicable. Fed R.Civ.P. 62. Rule 62(d) is similarly inapplicable, as Sands did not appeal from our original judgment, nor did it appeal from our denial of its motion for reconsideration. The time to do both has long since passed. Fed.R. A pp. P. 4(a)(1)(A). Accordingly, Sands' cross-motion to stay execution of the judgment is DENIED.


For the reasons set forth above, it is hereby

ORDERED that Sands Brothers & Co., Ltd. respond to the information subpoena dated October 21, 2002 within seven days of the entry of this Order. If Sands fails to comply fully with this Court's Order, the Court will hold a contempt hearing on February 11, 2003 at 10:30 a.m., at which time we will decide the judgment creditor's contempt motion and, if contempt is found, will determine the appropriate sanction, which may include imprisonment and/or fines in an amount to be determined by the Court.

Accordingly, unless the motion for contempt is withdrawn, Sands is hereby ORDERED to appear for a contempt hearing before this Court on February 13, 2003 at 11:00 a.m., 40 Foley Square, Courtroom 619.

Sands' cross-motion to quash the information is DENIED.

Sands' cross-motion to stay the execution of the judgment is DENIED.


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