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Andrews v. Holloway

September 29, 2003

JOHN R. ANDREWS, ET AL., PLAINTIFFS,
v.
GREGORY HOLLOWAY A/K/A GREG HOLLOWAY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge

OPINION

This motion concerns the appropriate scope of post-judgment discovery from the current spouse and business partner of the judgment debtor upon a six-million dollar consent judgment entered in June of 1997. Presently before the Court is the request of the spouse, non-party witness Laura Andre, for the Court to reconsider the scope of permissible discovery in this matter. Andre, who was a co-defendant in this case, settled all claims against her in June 1997, and then married defendant Gregory Holloway. Holloway, who consented in June 1997 to a $6,097,015.00 judgment to satisfy all claims against him, has not paid the judgment and plaintiffs allege that he, with Andre's assistance, has fraudulently transferred or concealed assets to avoid payment.

The Court has granted plaintiffs' request for post-judgment discovery about these allegations and had ordered that Holloway and Andre appear for deposition. Defendant Holloway was deposed over the course of three days in March, 2003. Andre appeared for deposition on August 6, 2003, but refused to answer any question about her own assets, citing her status as a party who has settled all claims in this suit.

After 1 1/2 hours of deposition filled with such objections, the parties contacted the Court which immediately heard their arguments by telephone and ruled orally. Ms. Andre was unhappy with the Court's ruling made during the August 6, 2003 telephone hearing, which required her deposition to proceed, and unilaterally refused to appear on August 7, 2003. She now asks for the Court to again consider the scope of discovery permissible from her. Plaintiffs counter with a request for sanctions, asserting that her objection is just another means of avoiding, or delaying, the Court's ordered deposition.

This Court has considered the positions of the parties, including their oral arguments on September 8, 2003, and has found, for the following reasons, that the scope of permissible discovery from Andre should be articulated explicitly to encompass all matters relevant to the plaintiffs' right of execution upon the Judgment entered by this Court on June 27, 1997 against defendant Gregory Holloway in the amount of $6,097,015, and all matters relevant to the sources and extent of Ms. Andre's apparent wealth (including her income, expenses, assets and liabilities), for the entirety of the period that she has been associated with Mr. Holloway, personally or professionally. The Court further finds that Ms. Andre's unilateral refusal to continue her deposition was in direct violation of this Court's order and should be sanctioned by shifting to her the plaintiffs' fees and costs associated with their appearance at deposition on August 7, 2003 and with the present motion.

I. BACKGROUND

Laura Andre is presently a non-party in this fraud case, though she was a co-defendant in the case from its filing in March 1995 through her settlement of the claims against her in June 1997. Plaintiffs have been granted leave to take post-judgment discovery from her about the financial situation of her husband, defendant Gregory Holloway because defendant Holloway (and his entities Continental Rare Coin Funds, Inc., Continental Rare Coin Fund I, Ltd., and Continental Investment Group, Inc.) consented to entry of a $6,097,015.00 judgment in June 1997 to satisfy all plaintiffs' claims, except for those of Louis Larsen, but has paid nothing.

Since at least January 16, 2002, plaintiffs have sought the deposition of Laura Andre because they suspect that when Holloway agreed to the 1997 consent judgment, or soon thereafter, he transferred his assets to Ms. Andre, his then-fiancé, and now-wife. (See [Docket Item 423-1.]) On February 6, 2002, the Court found that plaintiffs' allegations could form the basis for "new post-Judgment claims arising after June, 1997" which warranted "post-judgment discovery from defendant Gregory Holloway and from Laura Andre and from others having knowledge of issues relevant to the plaintiffs' rights to enforce the Judgment in this case." (2/6/02 Order.) *fn1 The Court ordered that Laura Andre, both personally and as an officer or director of various corporations named by the plaintiffs, appear, testify, and respond to reasonable document production requests upon "all matters relevant to the plaintiffs' right of execution upon the Judgment entered by this Court on June 27, 1997 against defendant Gregory Holloway in the amount of $6,097,015." (Id.) The Court provided two examples of relevant matters included "within the scope of permitted discovery," namely:

testimony, records, documents and other things related to Holloway's income, assets, and transfers of property owned by him or in which he may have had an interest, or may presently have an interest, from June, 1997 through the present time, and:

[t]ransactions between Holloway and entities in which Holloway has an interest as an owner or officer, on the one hand, and Laura Andre, and entities in which Laura Andre has an ownership interest or serves an officer, on the other hand, from June 27, 1997 until the present.

(Id.) The deposition of Laura Andre was ordered to occur within thirty days of the February 6, 2002 Order. (Id.) It did not begin until August 6, 2003. *fn2

In the meantime, the Court had considered two discovery disputes pertinent to the scope of discovery from Ms. Andre. First, in March, 2002, the Court considered Andre's objections to plaintiffs' document requests in light of the Court's February 6, 2002 Order. Generally, the Court sustained the objections for requests which sought information concerning Ms. Andre's personal assets, and overruled objections which sought information about joint assets of Andre and Holloway. (3/26/02 Order.) Second, in June, 2003, the Court considered a motion by Andre to quash certain subpoenaed witnesses and, in so doing, reaffirmed that "the scope of such discovery regarding Laura Andre and her related corporations" whether the information was sought from Andre or from a third-party witness, "shall be the same scope as set forth in . . . this Court's Order filed February 6, 2002." (6/3/03 Order.)

By June, 2003, though, plaintiffs had begun seeking broader discovery because they had "a suspicion that what Mr. Holloway is telling us about how Miss Andre became this wealthy in 1999 is untrue." (Pls.' Ex. G at 19:10-17.) They had taken the deposition of Holloway in March, 2003 and had learned that Andre had "three and a half million dollars in her bank in 1999," but had not learned the "origin of that wealth." (Pls.' Ex. G at 20:7-12.) As a result, the Court provided in the June 3, 2003 Order that the scope of permissible discovery from other third party subpoenaed witnesses about Ms. Andre "may be enlarged as reasonably necessary" to:

(1) establish a baseline for Laura Andre's income, assets, and liabilities as of June, 1997 and continuing to date; and

(2) to track particular transactions which may tend to be probative of plaintiffs' allegations of post-judgment co-mingling or concealment of assets owned or controlled by defendant Gregory Holloway.

(6/3/03 Order at 3-4.)

The deposition of Laura Andre began on August 6, 2003 at 10:55 a.m. in Voorhees, New Jersey with Michael Zindler, Esquire and David Fitzsimons, Esquire appearing on behalf of plaintiffs, and David Lipshutz appearing on behalf of Andre. (Pls.' Ex. J.) After Mr. Lipshutz continuously objected questions on the basis that they exceeded the permissible scope of discovery, and instructed Ms. Andre to not answer them, (see Pls.' Ex. J at 5:23, 13:19-20, 14:20-21, 15:17-18, 16:5-6, 20:5-7, 26:3-9, 34:12-13, 36:3-4, 39:1-8, 50:5-7, 52:3-4, 65:4-5), the parties called the Court for clarification at 12:20 p.m., (see id. at 72:25-73:8).

The Court immediately heard the arguments of the parties via telephone, and then ruled as follows:

. . . [T]he impasse between the parties this morning has to do with whether the witness Miss Andre can be questioned about her financial dealings whereas the predicate she says that her husband had no financial stake in those dealings. And we're only talking about dealings since June of 1997. It seems that there are more questions here than answers about the blending of assets between husband and wife. . . .

And so I am going to permit discovery about the nature of Miss Andre's financial activities from June of `97 until the present time because from what I'm hearing there's no explanation that's apparent that would put her assets out of bounds from being deemed joint assets or at least partially joint assets and therefore subject to execution. I'm not making any finding that she actually has anything that's subject to execution in this case, but I am saying that there are many more questions in my mind and I think they're reasonable questions in plaintiffs' counsels' mind about whose assets these are and if they're Gregory Holloway's assets in part then they may be subject to execution in satisfaction of the $6 million judgment. And I don't know any way to really carve out which aspects of Miss Andre's financial dealings are within the purview of discovery and which ones are outside of it because the whole thing just seems so mysterious. And I really don't think that I could accurately say well, transactions A, B and C are suspicious enough that the plaintiffs have a reasonable basis for taking discovery, while transactions D, E and F don't seem to rise to that level. I don't think I would be doing the parties a favor by trying to make that kind of a guess.

And so I do think that the discovery deposition should go forward and that it should be reasonably far reaching with regard to Miss Andre's financial dealings after June of `97 and that will either put to rest once and for all the suspicion that the plaintiffs entertain or it will further it, but that's the purpose of discovery. If it could be done in a way that really gets to the heart of the matter and it gets Miss Andre under oath about whether her husband did or did not have a ...


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