United States District Court, D. New Jersey
McNulty United States District Judge.
February 25, 2014, plaintiff Churchill Downs, Inc.
("CDI") filed suit against defendants NLR
Entertainment, LLC ("Entertainment LLC) and Nicholas
Ribis, Entertainment LLC's purported principal. CDI
alleged (1) a breach of contract claim against Entertainment
LLC that arose from an agreement that was executed in 2013;
and (2) a fraud claim against Ribis for making various
representations to CDI regarding the status of negotiations
with a third party.
March 6, 2017, this Court entered an order granting CDI's
motion for summary judgment as to its breach of contract
claim against Entertainment LLC. CDI's fraud claim
against Ribis was dismissed. A final judgment in the amount
of $2, 676, 763.70 was entered against Entertainment LLC on
April 4, 2017.
turns out that Entertainment LLC, the judgment debtor, does
not exist and never did. Before the court is CDI's motion
to modify the Judgment under Federal Rule of Civil Procedure
60(b) to impose liability against NLR Ventures
("Ventures LLC") and Ribis individually.
relate the facts that are pertinent to resolving this motion
only. On August 3, 2013, CDI and Ribis executed a
"Binding Term Sheet" ("Term Sheet"). (ECF
no. 90-3). Ribis executed the agreement on behalf of NLR
Acquisitions, LLC ("Acquisitions LLC"), a
"wholly owned subsidiary of NLR Entertainment,
to the term sheet, CDI was to provide online gambling
services to Showboat Atlantic City Hotel and Casino
("Showboat"), once Acquisitions/Entertainment LLC
had purchased Showboat. (Id.) CDI was to make an
initial payment of $2.5 million dollars, which eventually was
supposed to be credited towards a $10 million dollars rights
fee. (Id.). In the event that
Acquisitions/Entertainment LLC failed to purchase Showboat,
then it would be required to "repay the $2.5 million
on September 4, 2013, Acquisitions LLC and CDI entered into a
License and Operating Agreement ("License
Agreement"). (ECF no. 90-4). In contrast to the Term
Sheet, the only party on Ribis's side of the License
Agreement was Acquisitions LLC (which had been identified
earlier as a subsidiary of Entertainment LLC). The terms of
the License Agreement were substantially similar to the Term
August 5, 2013, two days after the Term Sheet but before the
execution of the License Agreement, CDI wired $2.5 million
dollars to a TD bank account. The bank account was in
Ribis's name, which would have been evident from the
wiring instructions provided to CDI. (ECF no. 92-7).
Post-judgment discovery revealed that in August 2013, after
CDI had wired the money to Ribis's personal bank account,
Ribis made a series of transfers to his wife, various country
clubs, and utility services. (ECF nos. 90-3, 90-14, 90-15).
He further transferred approximately $1.35 million to
Ventures LLC, another entity controlled by him. (ECF nos.
90-16, 90-17, 90-18).
brought this against Ribis and Entertainment LLC as
defendants, when Acquisitions/Entertainment LLC failed to
acquire Showboat and did not return the $2.5 million dollars.
(ECF no. 1-1). In 2015, defendants produced documents in
discovery related to Acquisitions LLC's formation,
including Acquisitions LLC's certificate of formation,
its LLC agreement, and certificate of good standing. (ECF
nos. 92-2, 92-3, 92-5). Those documents revealed that
Acquisitions LLC was not formed until December 12, 2013,
months after the parties had executed the Term Sheet and
License Agreement. (Id.). When asked during his
deposition on May 26, 2016 when Entertainment LLC and
Acquisitions LLC were formed, Ribis said that he did not
know. (ECF no. 90-7, at 41:14-12). He further testified that
he did not know whether Entertainment LLC or Acquisitions LLC
still existed at the time of the deposition. [Id. at
March 6, 2017, summary judgment was granted to CDI on its
breach of contract claim. Entertainment LLC breached the
contract, I found, when it failed to return CDI's $2.5
million dollars. (ECF nos. 69, 71 (corrected opinion)). A
final judgment in the amount of $2, 676, 763.70 was entered
on April 4, 2017. (ECF no. 76).
CDI sought post-judgment discovery in aid of execution. On
April 19, 2017, CDI served subpoenas on various NLR entities
controlled by Ribis, including Ventures LLC (ECF no. 78-5);
Acquisitions LLC (ECF no. 78-6); NLR Resort Management Co.,
LLC (ECF no. 78-7); and NLR Resorts International, LLC (ECF
no. 78-8). CDI also served subpoenas on TD Bank (ECF no.
78-10) and on The Bancorp Bank (ECF no. 78-9), where, Ribis
testified, the NLR entities maintain their accounts. Last,
CDI served interrogatories on Ribis, seeking information
about Ribis's own assets. It was during this
post-judgment discovery that the Department of State for the
State of Delaware advised CDI's counsel that it had no
record of any entity named "NLR Entertainment LLC"
ever being formed under the laws of the State. (ECF no.
3, 2017, defendants moved to quash the subpoenas served on
the four "non-party" NLR entities. Defendants also
sought a protective order to strike the interrogatories
served on Ribis, a non-judgment debtor. TD Bank apparently
produced some responsive records anyway, which rendered part
of the motion moot.
December 20, 2017, the Magistrate Judge issued a decision on
the motion to quash, which was granted in part and denied in
part. (ECF no. 89). Noting that there was no evidence that
the 2013 transfers were made for the purpose of evading a
judgment (which was not entered until 2017), the court
granted the motion to quash the subpoenas on the ...