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Ubs International Inc., and Ubs Financial Services Inc v. Itete Brasil Instalacoes Telefonicas Ltd.

April 11, 2011

UBS INTERNATIONAL INC., AND UBS FINANCIAL SERVICES INC.,
PLAINTIFFS,
v.
ITETE BRASIL INSTALACOES TELEFONICAS LTD., INSTALACIONES DE TELEFONOS, S.A., MARCELINO ALBUQUERQUE GALINDO AND MUSP SERVICOS DE LOCACAO, LTDA., DEFENDANTS.



The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

and consolidated case

MEMORANDUM AND ORDER

These two consolidated cases comprise an interpleader action in which, in relevant part, Instalaciones de Tendidos Telefonicos, S.A. ("Itete Spain") on one hand and Marcelino Albuquerque Galindo and MUSP Servicios de Locacao, Ltda. ("MUSP" and, collectively, the "MUSP Defendants") on the other each claims ownership of certain funds previously in the possession of UBS International Inc. and UBS Financial Services Inc.*fn1 Itete Spain now moves pursuant to Rule 37(b)(2)(A)(v) of the Federal Rules of Civil Procedure to dismiss the claims and defenses of the MUSP Defendants on the basis of their failure to comply with the Court's prior discovery orders. For the reasons that follow, the motion is granted to the extent that the MUSP Defendants are precluded from advancing certain arguments and Itete Spain is awarded its attorneys' fees on this motion.*fn2 Background*fn3

The MUSP Defendants claim that approximately $1 million of Itete Brasil funds found in Mr. Albuquerque's personal UBS account and MUSP's UBS account belong to the MUSP Defendants because it was "a refund of monies advanced by MUSP on Itete Brasil's behalf." (Affidavit of Juan Salvador Guerschanik Gauze dated Feb. 19, 2010, attached as part of Exh. A. to Declaration of Michael A. Turschmann dated Feb. 18, 2011 ("Turschmann Decl."), ¶ 5; see also Deposition of Juan Salvador Guerschanik Gauze dated April 1, 2010, excerpts attached as Exh. B to Turschmann Decl., at 132). In order to test the allegations of the MUSP Defendants, Itete Spain propounded document requests on March 9, 2010. (Itete Spain's First Request for Production of Documents as to MUSP and Albuquerque ("1st Doc. Req."), attached as Exh. D to Turschmann Decl.). These requests encompass documents relevant to the MUSP Defendants' assertion that MUSP advanced funds on behalf of Itete Brasil. (1st Doc. Req. Nos. 1-4 (records concerning the contested UBS accounts), Nos. 5-6 (transfers in and out of the UBS accounts), Nos. 9, 41-42 (transfers in or out of Mr. Albuquerque's and MUSP's UBS accounts), Nos. 71-72 (communications concerning Mr. Albuquerque's and MUSP's UBS accounts), Nos. 49, 75 (MUSP's financial statements, balance sheets, and profit and loss statements), Nos. 16, 74 (business dealings between MUSP and Itete Brasil), Nos. 52, 77 (business dealings between Mr. Albuquerque and MUSP).

During his deposition, Mr. Albuquerque confirmed the existence of documents that would be responsive to these requests and relevant to the MUSP Defendants' claims:

Q. You say that you spent $1,200,000 of your own money to pay debts of Itete Brasil?

A. Yes, mine and from MUSP, the company, less of my own money, more so the company's, MUSP. . . .

Q. . . . Do you have any documents which establish that you or your company made payments of debts owed by Itete Brasil?

A. Everything is in the accounting department of the companies in Brazil, yes.

(Deposition of Marcelino Albuquerque dated May 13, 2010 ("Albuquerque Dep."), excerpts attached as Exh. A to Declaration of John Dellaportas dated March 14, 2011, at 68-69). Indeed, Mr. Albuquerque specified the types of documents the company maintained:

Q. Now, does your company, MUSP -- MUSP? -- does it maintain business records?

A. It is active, the company is.

Q. What kinds of business records does ...


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