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La Suisse, Societe D'Assurances Sur La Vie v. Kraus

United States District Court, S.D. New York

December 1, 2014

LA SUISSE, SOCIETE D'ASSURANCES SUR LA VIE, n/k/a SWISS LIFE AG, Third-party plaintiff,
v.
MOSES KRAUS and CARUSO AG, Third-party defendants

Page 359

Malka Reizy Moskovitz, Plaintiff, Pro se.

For Sarah Feuerweger, Jacob Moskovitz, Victor Frankel, Plaintiffs: Ira S. Lipsius, LEAD ATTORNEY, Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY.

Berl Frankel, Plaintiff, Pro se.

Moshe Eckstein, Plaintiff, Pro se.

Yisruel Goldstein, Plaintiff, Pro se.

Israel Fried, Plaintiff, Pro se.

For La Suisse, Societe D' Assurances Sur La Vie, now known by merger as Swiss Life, Defendant: Michael Zeb Landsman, LEAD ATTORNEY, Richard Niles Chassin, Becker, Glynn, Muffly, Chassin & Hosinski LLP, New York, NY.

Page 360

OPINION AND ORDER

GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE

Plaintiffs' former counsel, Richard M. Mahon, II, has moved to quash a subpoena issued by third-party plaintiff La Suisse, Societe d'Assurances Sur La Vie, now known as Swiss Life AG (" Swiss Life" ).[1] The subpoena seeks communications between Mahon and Moses Kraus, a third-party defendant who, before he was sued by Swiss Life, began communicating with Mahon on a regular basis about this litigation. Mahon objects to divulging the communications on the ground that they are protected by the attorney-client privilege. For the reasons that follow, Mahon's motion to quash the subpoena is denied because we find that Kraus was not authorized to act as the plaintiffs' agent when he communicated with Mahon.

I. BACKGROUND

This action was brought by holders of insurance policies -- sometimes referred to as " marriage policies," see Mahon Letter at 2 -- against Swiss Life to recover benefits under those policies. See Class Action Complaint, filed June 2, 2005, transferred to the S.D.N.Y. June 12, 2006 (Docket #1). Mahon was the attorney for the plaintiffs in this action. See Mahon Letter at 1; Notice of Appearance, filed Feb. 27, 2006, transferred to the S.D.N.Y. June 12, 2006 (annexed as Attach. 11 to Class Action Complaint). Mahon represented the plaintiffs until July 25, 2012, when his firm withdrew as counsel. See Mahon Letter at 1; Decision and Order, dated July 25, 2012 (Docket # 148). The complaint was dismissed with prejudice on February 3, 2014. See Order Dismissing Action with Prejudice and Directing Return of Funds Posted with the Court (Docket # 196).

In the meantime, on March 17, 2008, Swiss Life filed a third-party complaint against Kraus and a brokerage company, Caruso AG (" Caruso" ), both of whom had marketed and sold the insurance policies in question. See Third-Party Complaint, filed Mar. 17, 2008 (Docket # 22). Swiss Life sought damages against Kraus and Caruso for violations of the Racketeer Influenced and Corrupt Organizations Act (" RICO Act" ), 18 U.S.C. § 1961 et seq., and indemnification based on breach of fiduciary duty. See id. ¶ ¶ 4-6. On December 17, 2013, Swiss Life obtained a

Page 361

default judgment against Kraus and Caruso, jointly and severally, for attorney's fees and costs in the amount of $1,571,603.11. See Default Judgment, dated Dec. 17, 2013 (Docket # 193). On August 6, 2014, after an inquest, Swiss Life obtained a default judgment against Kraus and Caruso for an additional $157,921,020.29 in damages. See Judgment, dated Aug. 6, 2014 (Docket # 218).

In the subpoena that is the subject of the current motion, Swiss Life seeks documents relating to the payment of Mahon's legal fees in this action and communications between Mahon and Kraus. See Swiss Life Mem. at 1-3. Mahon argues that the communications are protected by the attorney-client privilege and has moved to quash the subpoena on that basis. See Mahon Letter. Before addressing the merits of those objections, we address the legal basis for the subpoena.

II. LEGAL BASIS FOR THE SUBPOENA

Swiss Life seeks to obtain the communications between Mahon and Kraus for use in a proceeding it has brought in the United Kingdom to enforce its default judgment in this case against Kraus. See Goldstone Decl. ¶ 4; Swiss Life Mem. at 1, 3. One of Swiss Life's attorneys in the United Kingdom states that " [w]hen the U.K. court considers the issue of the enforceability of the Judgment in England, an important factor will be whether or not Kraus had control over [the instant litigation]." Goldstone Decl. ¶ 5. Swiss Life thus seeks to obtain discovery as to " communications between Kraus and class counsel, which bear on whether it was Kraus or the named plaintiffs . . . who controlled the putative class action against Swiss Life." Swiss Life Mem. at 5 (footnote omitted).

Swiss Life relies on both Fed.R.Civ.P. 69 and 28 U.S.C. § 1782 as bases for the subpoena. See Swiss Life Mem. at 3-6. " The scope of discovery under Rule 69(a)(2) is constrained principally in that it must be calculated to assist in collecting on a judgment." EM Ltd. v. Republic of Arg.,695 F.3d 201, 207 (2d Cir. 2012) (citations omitted), aff'd sub nom Republic of Arg. v. NML Capital, Ltd., 134 S.Ct. 2250, 189 L.Ed.2d 234 (2014). As one court has noted, " under Rule 69(a) and existing case law, the general rule is that non-party discovery is limited to a search for the defendant's hidden assets." Costamar Shipping Co., Ltd. v. Kim-Sail, Ltd., 1995 WL 736907, at ...


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