27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

STATE OF MINNESOTA

DISTRICT COURT

COUNTY OF HENNEPIN

FOURTH JUDICIAL DISTRICT

Guava LLC,

CASE TYPE:, Civil Other/ Misc. Court File No. 27-CV-12-20976 The Hon. Tanya M. Bransford

Plaintiff, v. Spencer Merkel, Defendant.

AF Holdings, LLC, CASE TYPE: Civil Other/Misc. Court File NO. 27-CV-14-15391 The Hon. Tanya M. Bransford

PlaintifT,

Sandipan Chowdhury,

POST JUDGMENT DISCOVERY ORDER

Defendant.

The above-entitled action came on for a hearing before the Honorable Tanya M. Bransford on. April 10, 2015, on Judgment Creditor's Motion for Partial Reconsideration and Partial Enforcement of March 5, 2015 Order and judgment Debtor's Motion for Protective Order. Edward Sheu, Attorney at Law, appeared on behalf of John Doe 173.19.225.244, Judgment Creditor. Paul Hansmeier, Attorney at Law, appeared pro se, as Judgment Debtor. Now therefore, the Court, based upon all of the files, records. proceedings and arguments of counsel herein makes the following: FINDINGS For a comprehensive listing of the procedural case history prior to February 24, 2015, see the Order on Motion for Post-Judgment Remedies and Motions for Sanctions filed with the Court on January 20, 2015. 1

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

2. On February 24, 2015, Mr. Edward Sheu, representing Judgment Creditors ("Sheu") met and conferred with Mr. Paul Hansmeier, representing Judgment Debtors, including himself ("Hansmeier") to discuss outstanding and pending post judgment discovery with regard to the above referenced matters. Hansmeier requested an extension to respond to discovery because he indicated that he needed additional time to gather responsive information and documents, which was otherwise due on March 11,2015. Hansmeier requested a protective order before he would produce any of the requested discovery, including, but not limited to, tax returns. In reliance on Hansmeier's representation that he would provide responses and documents to those non-objected to requests upon entry of a protective order, Sheu granted Hanmeier's request for an extension to March 20, 2015. 3. On March 4, 2015. a Stipulated Protective Order, agreed to by both parties, was filed by the Court. The order stated that confidential materials "shall be limited to the parties, their counsel, and their agents and employees." 4. On March 5, 2015, in its Post Judgment Discovery Order ("March 5.2015 Order"), the Court ordered Hansmeier to "respond to all Interrogatories and Requests for Documents no later than March 20, 2015." 5. On March 18, 2015, Sheu filed a two-page letter (with additional attachments to corroborate statements made in the letter) to Judge Bransford asking the Court for reconsideration of a portion of the March 5, 2015 Order on this matter. In the letter, Sheu set forth three reasons for reconsideration: (1) Hansmeier testified during the June 30, 2014 debtor's examination that he knew hardly anything about an entity known as Monyet, LLC to which_ he had transferred over $500,000 from both his personal account

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

and his Alpha Law Firm LLC account. When asked whether his wife would know about it, Hanstneier stated, "I don't know — you'd have to ask her." Thus, according to Hansmeier. his wife may have information about Monyet, an entity with assets that may be subject to execution.' (2) Hansmeier provided financial disclosures, where he has joint accounts at two banks, including Associated Bank. The jointbank accounts Hansmeier claimed had no funds or nominal funds left in the accounts. If flansmeier's wife's accounts are jointly held with Hansmeier, then the assets could be attached for payment of the judgments, (3) Sheu has attempted to collect on this judgment with the discovery Hansmeier has submitted thus far without success. Accordingly, Mr. Sheu has little choice but to look to third parties, including Hansmeier's wife and her banking institutions, to conduct post-judgment discovery. 6. On March 19, 2015, Hansmeier objected to Sheu's request for reconsideration stating it did not comply with MinneSota Rules,of General Practice §115.11, thatit did not address "compelling circumstances," and that it was a thinly veiled attempt to harass Hansmeier's wife. 7. On March 24, 2015, Hansmeier's responses to the March 5, 2015 Order were received by Sheu postmarked March 21, 2015. .Hansmeier's responses were incomplete and evasive, and also stated "that documents responsive to these Requests are available for inspection In addition to these statements of Hansmeier, a June 5, 2015 court decision attached in a document filed with the Court on June 22, 2015, Lightspeed Media Corp. v. Anthony Smith, et al_ District Judge Herndon of the United States District Court for the Southern District of Illinois ordered sanctions and found Mr. Hansmeier in-contempt. In the Memorandum, the Court stated that "in the years leading up to the judgment against him, Hansmeier had transferred nearly half a million dollars to a company called Monyet LLC, of which Hansmeier was the sole member, manager, and signatory for its accounts. In a debtor's exam of a related proceeding in June 2014 (Minnesota District Court), Hansmeier admitted that Monyet LLC was set up as a trust for his son for purposes of estate planning. However, documents from Scottrade, Inc. reveal that Monyet LLC was not solely associated with estate planning, as the bulk of its assets went towards.expenses such as payments of appellate bonds and attorney's fees, investments in Livewire Holdings LLC, and loans to his Class Justice LLC law firm. Said expenditures occurred throughout the 2013 year and up to May 2014, demonstrating that Hansmeier had access to the Monyet funds both before and alter he pled insolvency to the court."

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

and copying at the offices of Class Justice PLLC, 100 5 th St. S. Ste. 1900, MinneapOlis, MN 55402, at a mutually agreeable date and time." Hansmeier offered to make documents. available to review on April 3, 2015, but he stated he will not make some of the documents available for copying because.they are "attorney's eyes only." This nondisclosure is not justified by the Stipulated Protective Order. 8. On March 27, 2015. Sheu filed a Motion for Partial Reconsideration and Partial Enforcement of March 5, 2015 Order. In the Motion, Sheu asked the Court for an order to show cause why Hansmeier should not be held in contempt of the March 5, 2015 Order for failure to respond to all requests for documents by March 20, 2015. Sheu also asked for an order modifying the March 5, 2015 Order to permit the issuance of subpoenas to Hansmeier's wife, employer and banks, based on Hansmeier's noncompliance with the March 5, 2015 Order, Hansmeicr's financial disclosure identifying joint accounts with Hansmeier's wife as possible assets for collection, coupled with. garnishment returns identifying "no funds" or nominal funds'in those accounts, and based on Hansmeicr's sworn testimony that his wife would have more relevant information about the location and identity of certain potential assets for collection than he would. Sheu also asked for reasonable attorney fees and costs associated with this motion. 9. On March 27, 2015, less than an hour after Shell filed his motion, Hansmeier filed a Motion for an order granting a protective order requiring Sheu to conform to his prior representations to [Hansmeier] and the Court and his obligations under Minn. R. Civ. P. § 7)6.0").

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

10. On April 3, 2015, Judge Ronald Abrams issued an Order Granting Companioning o Cases 27-CV-12-20976 and 27-CV-14-15391, and assigning them to Judge Tanya Bransford. CONCLUSIONS OF LAW The Minnesota Rules of Civil Procedure define the scope of allowable discovery in civil cases. Generally, a party may obtain discovery of any matter "relevant to a claim or defense." Minn. R. Civ. P. 26.02 (a). The rule provides that the "frequency . and. extent" of discovery otherwise permissible" shall be limited "based on a variety of practical considerations. Minn. R. Civ. P. 26.02(b)(3). These limitations arise, for example, when "the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive." Minn. R. Civ. P. 26.02(b)(3)(1). The court shall limit discovery when "the importance of the proposed discovery in resolving the issues" is outweighed by its burden or expense. Minn. R. Civ. P. 26.02(b)(3)(iii). See also, Abbott v. Commissioner of Public S'afety, 760 N.W.2d 920, 924 (Minn. App. 2009). In the Memorandum of Law in Support of Motion. for Protective Order, Hansmeier asked for a protective order for Sheu to turn over to Bansmeier an email with the attachments of the discovery Sheu has obtained to date. According to Sheu, this information is widely available on various websites which Hansmeier has full access to. In addition, if Hansmeier has sent the discovery to Sheu in the past, there is no reason that he cannot access his records and not duplicate his efforts. Hansmeier has not been forthcoming with post-judgment discovery and his responses have been incomplete and evasive, stating "that documents responsive to these Requests are available for inspection and copying at the offices of Class Justice PLLC, 100 5th St.

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

S. Ste. 1900, Minneapolis, MN 55402, at a mutually agreeable date and time." Hansmeier offered to make documents available to review back on April 3, 2015, but he stated he will not make some of the documents available for copying because they are "attorney's eyes only." This nondisclosure is not justified by the Stipulated Protective Order, which stated that confidential materials "shall be limited to the parties, their counsel, and their agents and employees." (emphasis added) The Court finds that Hansmeier had ample opportunity to determine which documents he has submitted thus far to Sheu in reference to post-judgment discovery by simply looking back on his documents he haS submitted or looking at various websites; as Sheu suggested, Sheu is not required to send Hansmeier this information, and although there may be some duplication for Hansmeier, the Court finds that this will be minimal because of the importance of the proposed discovery in resolving the issues and the fact that Hansmeier has sent so little discovery in the past. 2. Minnesota Statute § 588.02 grants the Court power to punish parties, through fine or imprisonment, or both, for contempt. Constructive contempt includes "disobedience of any lawful judgment, order, or process of the court." Minn. Stat. § 588.12 (2014). "When the contempt consists in the omission to perform an act which is yet in the powerof the person to perform, the person may be imprisoned until the person performs it, and in such case the act shall be specified in the warrant of commitment." Minn. Stat. § 588.12 (2014). The March 5, 2015 Order mandated that Hansmeier respond to all Interrogatories and Requests for Documents no later than March 20, 2015. There was nothing in the. March 5, 2015 Order stating that Sheu turn over an email with the attachments of the discovery he had obtained to date prior to Hansmeier turning over his

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

responses to all Interrogatories and Requests for Documents. The March 5, 2015 Order explicitly stated that "Judgment Debtor shall respond to all Interrogatories and Requests for Documents no later than March 20, 2015." The Court finds that . Hansmeier has 'violated the March 20, 2015 Order. In addition, the Court finds that Hansmeier's responses were incomplete and evasive, and his response stating "that documents responsive to these Requests are available for inspection and copying at the offices of Class Justice PLLC, 100 5th St. S. Ste. 1900, Minneapolis, MN 55402, at a mutually agreeable date and time," although a response-to the Order, was incomplete and not justified. The Court finds Hansmeier in contempt of its March 5, 2015 Order. 3. On March 18, 2015, Sheu filed a two-page letter (with additional attachments to corroborate statements made.in the letter) to judge Bransford asking the Court for reconsideration of a portion of the March 5, 2015 Order on this matter. "Motions to reconsider are prohibited except by express permission of the court, which will be granted only upon a showing of compelling circumstances. Requests to make such a motion, and any responses to such requests, shall be made only by letter to the court of no more than two pages in length, a copy of which must be sent to opposing counsel." Minn. R. Gen. Prac. § 115.11. See Baker v. Amtrak Nat? R.R. Passenger Corp., 588 N.W.2d 749, 754 (Minn. App. 1999). Although flansmeier objected to Sheu's request for reconsideration, the Court found no need for a hearing on the matter because Sheu's twopage letter requesting reconsideration of the March 5, 2015 Order, which was sent to cocounsel, showing compelling circumstances, fulfilled the requirements of Minn. R. Gen. Prac. § 115.11. Sheu request for reconsideration showed compelling .eircumStanees in light of the fact that Hansmeier testified that Monyet, LLC was set up as a trust for his

7

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

son for purposes of estate planning. The Lig/zispeed court, however, found information that revealed Hansmeier had used Monyet, LLC to fund payments for appellate bonds and attorney's fees, investments and loans to his Class Justice LLC law firm. In addition, Hansmeier testified that his wife seemed to have more information with regard to Monyet, .LLC, And the information with regard to the joint bank accounts Hansmeier claimed had no funds or nominal funds left in the accounts when Sheu pursued garnishment. 4. Minnesota Rules of Civil Procedure allows sanctions for failing to comply with the Court's Order. Minn. R. Civ. P. 37(c) and (d). The Court finds that Sheu has made good faith efforts to obtain discovery without court action, even granting extensions when Hansmeier asked for more time to comply. The Court also finds that Hansmder's nondisclosure was not justified. Minn. R. Civ. P. § 37.01.(d)(1). ORDER 1. Hansmeier's Motion for Protective Order is DENIED. Hansmeier shall turn over all of the documents referenced in the March 5, 2015 Order by 4:30 p.m. on July 7, 2015 to Best & Flanagan LLP, 225 South Sixth Street, Suite 4000, Minneapolis, Minnesota 55402. 2. Sheu's Motion for Partial Enforcement of March 5, 2015 Order is GRANTED. The Court finds that Hansmeier has violated the March 5, 2015 Order and Hansmeier has until July 14,.2015 to show cause why he shoUld not he held in contempt of the Order. Hansmeier must deliver complete and responsive documents referenced by the March 5, 2015 Order to Best & Flanagan LLP, 225 South Sixth Street, Suite 4000, Minneapolis,

27-CV-12-20976

Filed in Fourth Judicial District Court 6/29/2015 3:03:19 PM Hennepin County, MN

Minnesota 55402 by July 7.2015 at 4:30 p.m. Sheu shall contact the Court no later than July 17, 2015 to request that the order to show cause hearing be canceled. 3. Sheu's Motion for Partial Reconsideration is GRANTED. The Court ordered Hanmeier's response on March 20, 2015. Hansmeier did not comply. The Court.finciS that. the information he has submitted to Sheu thus far has been incompidte and evasive. In addition, the Lightspeed court found that Monyet, LLC has been used by Hansmeier for business related expenses since 2013. Therefore, the Court's March 5, 2015 Order is modified to permit Sheu to pursue subpoena third parties, including without limitation Mr. Hansmeier'S wife and wife's employer, as well as any financial institutions or entities associated with Mr. Hansmeier's family, including trusts and estateplanning professionals and firms, including, but not limited to Monyet. LLC. 4. Sheu's Request for Attorney's fees is GRANTED. The Court.finds that Sheu has made good faith efforts to obtain discovery without court action, even granting extensions when Hansmeier asked for more time to comply. The Court also finds that Hansmeier's nondisclosure was not justified. Minn. R. Civ. P. § 37.01(d)(1). Therefore, Hansmeier shall pay $3,500 to Sheu for reasonable attorneys' fees and costs incurred in bringing this Motion before the Court. The award shall be reduced to judgment if not paid- with five days of this Order. Sheu may submit a sworn affidavit and proposed order for judgment if the $3,500 is not paid within five days. BY THE COURT:

The Honer le Tanya M. Brans Judge of the District Court FourthJudicial District

June 29, 2015 Post Judgment Discovery Order.pdf

estate planning. However, documents from Scottrade, Inc. reveal that Monyet LLC was not solely associated with. estate planning, as the bulk of its assets went ...

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