United States District Court, E.D. New York
THE SANDS HARBOR MARINA CORP., SANDS HARBOR MARINA LLC, THE SANDS HARBOR MARINA OPERATING CORP., SANDS HARBOR MARINA OPERATING LLC, GREG W. EAGLE, PINE CREEK RANCH, LLC and UNIVERSITY 1248, LLC, Plaintiffs,
WELLS FARGO INSURANCE SERVICES OF OREGON, INC., WELLS FARGO BANK, N.A., EVMC REAL ESTATE CONSULTANTS, INC., LARRY ESACOVE, THE ESTATE OF AIDA ESACOVE, DAVID P. GUILOT, ANTHONY B. CHOPRA, TISDALE & NICHOLSON, LLP, JEFFREY A. TISDALE, GUY C. NICHOLSON and MICHAEL D. REIS, Defendants.
MEMORANDUM AND ORDER
Y. SHIELDS, UNITED STATES MAGISTRATE JUDGE.
nearly ten year old matter, the recipient of a Rule 45
subpoena, non-party Dogali Law Group (“DLG”),
formerly known as Forzis & Dogali, P.A, has moved to
recover costs and fees from defendant Wells Fargo Insurance
Services of Oregon, Inc. (“WFIS”). DLG claims
that it incurred $39, 709 in costs and attorneys' fees,
complying with WFIS' subpoena. WFIS argues that DLG's
claimed expenses are exaggerated, unnecessary, or incurred as
a result of its own efforts to resist complying with the
carefully examining the documentation submitted by DLG, I
conclude that DLG's reasonable costs of compliance totals
plaintiffs are individuals and entities in the business of
real estate acquisition and development. Third Amended
Complaint (“TAC”), ¶¶ 4-5, Docket Entry
(“DE”) . Defendant WFIS is an insurance
broker licensed to sell insurance as part of the Wells Fargo
group of companies, and as relevant to this matter, is the
successor in interest to Accordia, the brokerage that
employed defendant Michael Reis (“Reis”).
Plaintiffs allege that the various defendants were involved
in fraudulent conspiracy to obtain advance loan commitment
fees from Plaintiffs under the pretense that the fees were to
be used for the acquisition of third-party real estate
financing. Id. ¶¶ 1-2.
to the instant motion, Plaintiffs are real estate developers
who allegedly sought financing from the defendant EVMC Real
Estate Consultants, Inc. (“EVMC”) for development
projects in Florida from 2005-2008. TAC ¶¶ 4-5, 13.
Plaintiffs alleges that there was never any financing
available, and that the representations made with regard
thereto were just a ruse designed to deceive Plaintiffs into
paying commitment fees. Id. ¶¶ 1, 13, 15.
Plaintiffs alleges that defendants Tisdale & Nicholson,
LLP (“T&N”), who served as counsel to EVMC,
reis (acting in his capacity as an employee of WFIS) and the
other defendants engaged in a scheme
“mastermind[ed]” by defendants Aida and Larry
Esacove (the “Esacoves”) (via their “alter
ego” EVMC) to fraudulently induce them to wire funds to
defendant T&N, which then disbursed the funds to all of
the other alleged conspirators. Id. ¶¶ 1,
4-5, 13-14, 24, 40, 89, 103, 121, 141, 259.
The 2010 Subpoena
21, 2010, WFIS issued a subpoena concerning EVMC and its
principals on Forzis & Dogali (“FD”), the
Florida law firm that represented EVMC in connection with the
loan transactions that are at issue in this case.
See Declaration of Andy Dogali in Suport of Dogali
Law Group's Motion for Award of Expenses Pursuant to Rule
45 (“Dogali Decl.”), Ex. 1 (“2010
Subpoena”), DE [290-3]. In September 2010, FD
representatives produced documents and withheld 56 documents
on the basis of privilege. Dogali Decl., Ex. 4, DE [290-3] FD
billed EVMC $3, 958.83 for the work done to respond to the
2010 subpoena, see Dogali Decl., Ex. 5 (“2010
Invoice”), DE [290-3], but later sought reimbursement
for the same from counsel for WFIS. Dogali Decl., Ex. 7, DE
WFIS and Plaintiffs' Motion to Compel T&N to
Produce Privileged Documents
years later, the T&N defendants, in response to WFIS'
document requests, withheld documents based upon
attorney-client privilege between the Tisdale firm and their
client EVMC (the “T&N Withheld Documents”).
WFIS and Plaintiffs' objected to the privilege assertion
for a number of reasons, among them, that the California
Secretary of State website reflected that EVMC was suspended
from doing business by the California Secretary of State
Franchise and tax Board, and because defendant Larry Esacove
has previously waived the attorney-client privilege on behalf
of EVMC in a previous action. On July 15, 2016, WFIS and
Plaintiffs moved this Court to compel production of the
T&N Withheld Documents. See DE , .
October 5, 2016, this Court granted WFIS' motion to
compel the T&N Withheld Documents. See DE .
Inter alia, with respect to T&N's assertion
of the attorney-client privilege, this Court ordered that the
“privilege can only be asserted by persons authorized
to act on the dissolved corporation's behalf during the
windup process [by] its outgoing management personnel.”
Declaration of Louis A. Russo in opposition to Non-Party
Dogali Law Group's Motion for Award of Expenses pursuant
to Rule 45 (“Russo Decl.”), Ex. A Transcript of
October 5, 2016 Hearing (“Tr.”), 5:17-19, DE
[291-3]. Tis Court held that the privilege was not being
asserted in connection with EVMC's defense or prosecution
of actions during its winding up phase because “EVMC is
not defending the action” and “the same is true
for the parties who might qualify as its outgoing management
and personnel who might have asserted a privilege.” Tr.
5:22-23. Therefore, “[a]s a defunct corporation,
there's no one who can speak for EVMC to assert the
privilege.” Tr. 5:25-6:1. This Court ordered that the
privilege could no longer be asserted since Larry Esacove had
previously waived it in a prior action. Tr. 6:3-9.
The 2017 Subpoena
this Court's privilege ruling, counsel for WFIS requested
that DLG produce the 2010 Privileged Documents. Counsel
conferred and efforts were made for the parties to reach an
amicable resolution regarding the production of the withheld
documents. During these communications, it was disclosed that
DLG's files were almost all electronically kept and that
production would be time consuming. Dogali Decl., Ex. 13 at
DE [290-4]. Counsel for WFIS offered to have their
e-discovery venders assess the situation and propose a less
costly solution, in an effort to reduce the time and costs in
substantial correspondence, on January 23, 2017, WFIS issued
a broader subpoena to DLG. Dogali Decl., Ex. 14 (the
“2017 Subpoena”), DE [290-4]. The 2017 Subpoena
provided DLG with this Court's Privilege Ruling and the
Larry Esacove waiver, and made clear that no privilege could
be asserted on behalf of EVMC.
the issuance of the 2017 Subpoena, WFIS counsel and Andy
Dogali (“Dogali”), President and sole shareholder
of DLG, continued communications regarding an agreement of
fees. Dogali Decl. ¶ 2.On January 30, 2017, Dogali
requested $6, 400 for fees associated with the production and
provided WFIS counsel support for his request. Dogali Decl.
¶ 24. WFIS counsel disagreed with the $6, 400 request
arguing through email, that there was no longer a need to
review for privilege and as far as conducting an electronic
search, WFIS had offered to provide outside staff to assist
with production. Dogali Decl. Ex. 15 at 81-82, DE [290-4].
WFIS' counsel then invited Dogali to join a conference
with this Court on the following day to discuss the issue.
Id. Dogali declined the invitation. Dogali Decl.
February 23, 2017, DLG submitted its Objections and Responses
to Subpoena Duces Tecum, and provided a chart detailing what
was in each of DLG's eight files for EVMC. Dogali Decl.
¶¶ 30. Dogali also submitted an updated fee
proposal of $8, 750 for the work done for 2017 Subpoena,
after Dogali reduced the actual costs by more than 40%.
Dogali Decl. ¶ 32. Dogali also included the 2010 invoice
which created a total fee request of $12, 708.83.
March 6, 2017, WFIS' counsel advised Dogali that they
believed his request to be unreasonable and proposed a $4,
500 payment. Dogali Decl. ¶ 34. On March 15, 2017,
WFIS' counsel requested an update and response to their
proposed payment. Id. ¶ 35. On March 17, 2017,
WFIS submitted a letter to this Court requesting it compel
DLG to produce the 2010 Privileged Documents. See DE
. A courtesy copy of the letter was emailed to Dogali on
the same day. Id.
March 23, 2017, Dogali communicated to WFIS' counsel that
he intended to file opposition to the letter motion. Dogali
Decl. ¶ 37. Dogali also communicated that he would
accept $8, 400 in resolution of all the Rule 45 costs for the
2010 and 2017 Subpoenas. Id. ¶ 38. This amount
included the 2010 invoice and over a 70% reduction in the
2017 fees. Id.
March 29, 2017, with WFIS' letter still unopposed, this
Court ordered that the 2010 Privileged Documents be produced
by no later than April 10, 2017. See DE . On
April 10, 2017, WFIS' counsel received an email from
Dogali with an attachment containing a “Dogali Law
Group, P.A.'s Motion for Reconsideration, and/or for
Modification of Order dated March 29, 2017, and for
Protective Order” (“Reconsideration
Application”). Russo Decl., Ex. B, DE [291-3]. All
counsel conferred and sought a phone conference with this
following two separate phone conferences, this Court ordered
DLG to produce all documents responsive to the subpoena,
encouraged all parties to see is a resolution could be worked
out, and after it became apparent that it could ...