Post-Judgment Subpoenas for Bank Records of Nondebtor Permitted

On June 22, 2022, Justice Robert R. Reed of the New York County Commercial Division issued a decision in Dragons 516 Ltd. v. GDC 138 E 50 LLC, et al., 2022 N.Y. Slip Op. 50522(U), denying a motion to quash a post-judgment subpoena served on a bank for bank records of a nondebtor, explaining:

CPLR 3101 requires full disclosure of all matter material and necessary in the prosecution or defense of an action. "[A]n application to quash a subpoena should be granted 'only where the futility of the process to uncover anything legitimate is inevitable or obvious' or where the information sought is utterly irrelevant to any proper inquiry" (Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 520 N.E.2d 535, 525 N.Y.S.2d 816). The person seeking to quash the subpoena bears the burden of establishing that the requested documents and records are irrelevant [*4] (Ledonne v Orsid Realty Corp., 83 AD3d 598, 921 N.Y.S.2d 249 citing, Velez v Hunts Point Multi-Serv Ctr., Inc., 29 AD3d 104, 811 N.Y.S.2d 5).

SMI fails to establish that the TD Bank subpoena seeks irrelevant financial information or is otherwise improper. CPLR 5223 permits a judgment creditor to compel disclosure of all matter relevant to the satisfaction of a judgment. It is a generous standard that allows for a broad range of inquiry through either the judgment debtor or any third person with knowledge of the debtor's property (ICD Grp., Inc. v Israel Foreign Trade Co. (USA) Inc., 224 AD2d 293, 294, 638 N.Y.S.2d 430, (1st Dept 1996) citing generally, Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5223:2, at 214).

Plaintiff is entitled to full disclosure from TD Bank. The account, owned by nonparty 50 Lex Development LLC, was identified as the recipient for the investment made by plaintiff in the facility agreement with GDC. Thirty days after the transfer to GDC was made, the recipient account held by TD Bank was closed. Under these circumstances, a judgment debt subpoena is a proper mechanism to obtain information, especially whereas here, there are clear questions of fact as to whether the transfer of funds from the 50 Lex account was done with an intent to defraud (ICD Grp, 224 AD2d at 294).

The attorneys at Schlam Stone & Dolan regularly enforce judgments for clients and litigate issues concerning the propriety of post-judgment discovery. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning post-judgment subpoenas.