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Randall Manufacturing, LLC v. Pier Components, LLC

United States District Court, M.D. Pennsylvania

April 27, 2017

RANDALL MANUFACTURING, LLC, Plaintiff,
v.
PIER COMPONENTS, LLC, Defendant.

          MEMORANDUM

          MALACHY E. MANNION United States District Judge

         Before the court is plaintiff Randall Manufacturing, Inc's (“Randall's”) motion to compel discovery responses to its request for production of documents in this post-judgment, enforcement action. (Doc. 17). The plaintiff seeks information to show that the defendant, Pier Components, LLC (“Pier”), and its owner, non-party Fred Piermattei, operated a scheme or artifice to defraud creditors whereby Pier is the mere alter-ego of Mr. Piermattei. Although discovery in aid of execution of a judgment is quite broad, the discovery the plaintiff seeks goes beyond the parameters of supplemental proceedings under Pennsylvania law. Thus, the plaintiff's request will be DENIED.

         I. BACKGROUND

         On January 16, 2014, a consent judgment in the amount of $300, 000.00 was entered in favor of Randall and against Pier in the Northern District of Illinois pursuant to the terms of a settlement agreement between the parties. (See Doc. 2). Pier is a limited liability company organized under the laws of Pennsylvania. It is owned and managed by Mr. Piermattei. However, Mr. Piermattei was not a party to the action in the Northern District of Illinois and was not a party to the consent judgment and is not named in this action.

         On June 10, 2014, the plaintiff's consent judgment was filed and registered in this court pursuant to 28 U.S.C. §1963 for purposes of executing on the judgment. The plaintiff was able to recover $33, 256.66 against garnishee Susquehanna Bank. (See Doc. 14). On August 16, 2016, the court issued a turnover order against garnishee Santander Bank in the amount of $2, 450.05. (Doc. 16). As of the date of the plaintiff's motion, the plaintiff believed it could recover that amount without issue. Thus, to date the amount alleged to be due and owing under the consent judgment is $264, 293.29.

         On September 14, 2016, the plaintiff filed the current motion to compel. (Doc. 17). On October 28, 2016, the plaintiff filed a brief in support of its motion. (Doc. 19). On November 14, 2016, the defendant filed a brief in opposition. (Doc. 21). The plaintiff requests that this court compel the defendant to release “all state and federal tax returns for the last seven (7) years for the individual, [sic] Fred Piermattei.” (Doc. 17 ¶5). The plaintiff also requests “all financial statements, loan applications, memoranda, or other records reflecting [the] [d]efendant's financial status prepared or compiled within the last seven (7) years whether prepared by [the] [d]efendant or others.” (Id. ¶6). The plaintiff seeks this information for the purpose of proving that Pier, the judgment debtor, is the alter-ego of Mr. Piermattei. (Id. ¶7). The plaintiff asserts that the relationship between Pier and Mr. Piermattei “warrant[s] a motion to pierce the corporate veil of Pier.” (Id.).

         On April 10, 2017, the court issued an order directing the parties to file supplemental briefs addressing whether the Pennsylvania rule governing relief in supplemental proceedings, Pennsylvania Rule of Civil Procedure 3118, allows for veil-piercing. (Doc. 24). On April 24, 2017, in accordance with the court's order, both parties filed supplemental briefs. (Docs. 25-27). The plaintiff believes that the court can pierce the corporate veil in supplementary proceedings used to enforce a judgment or, in the alternative, even if not allowed, the court should compel discovery responses from Mr. Piermattei so that the plaintiff may determine whether a separate action should be commenced. The defendant maintains that the plaintiff's attempt to pierce the corporate veil goes beyond the scope of Rule 3118 and that the plaintiff must file a separate action in equity. The court agrees with the defendant that the plaintiff cannot pierce the corporate veil in this proceeding, rendering the plaintiff's discovery request improper in this action.

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 69 governs the execution process in federal court, including discovery in aid of execution. With respect to procedure, Rule 69 provides as follows:

The procedure on execution-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent if applies.

Fed. R. Civ. P. 69(a)(1). Rule 69 also, specifically, allows for discovery in aid of execution.

In aid of the judgment or execution, the judgment creditor or a successor in interest whose interest appears of record may obtain discovery from any person-including the judgment debtor-as provided in these rules or by procedure of the state where the court is located.

Fed. R. Civ. P. 69(a)(1). Thus, with respect to the procedure of supplementary proceedings, the federal rule directs the court's attention to the procedures of the state where the court sits-here, Pennsylvania. With respect to discovery, the federal rule directs compliance with other federal rules on the subject, in addition to the procedural rules of the state where the court sits. Pennsylvania law also, explicitly, allows for discovery in aid of execution. See Pa. R. Civ. P. 3117.

         A district court has discretion when granting or denying discovery in aid of execution. See Ohntrup v. Makina Ve Kimya Endustrisi Kurumu,760 F.3d 290, 296 (3d Cir. 2014). The scope of discovery in civil proceedings is, generally, quite broad. “Parties may obtain discovery regarding nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). Similarly, Pennsylvania Rule of Civil Procedure 3117 is broad and allows a judgment creditor to obtain information necessary to locate any assets of the judgment debtor and begin the process of execution or attachment of that property. PaineWebber, Inc. v. Devin,658 A.2d 409, 412 (Pa. Super Ct. 1995). “[P]laintiffs are not restricted to ...


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