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Tibble v. Daniels

United States District Court, W.D. Missouri, Southwestern Division

July 26, 2016

THOMAS R. TIBBLE, Trustee,
v.
DAWN ANGEL DANIELS d/b/a AD CONSULTING SERVICES, Defendant.

          ORDER REGARDING MOTION TO COMPEL

          GREG KAYS, CHIEF JUDGE

         This matter arises from a bankruptcy trustee’s attempt to locate assets and satisfy a default judgment against Defendant Dawn Daniels. After Defendant and her husband, Tony Daniels (collectively “the Daniels’”), failed to provide certain documents and declined to answer questions during a Rule 69 examination by making a suspect invocation of their right against self-incrimination, the bankruptcy trustee moved to hold the Daniels in contempt (Doc. 12). This Court subsequently ordered the Daniels to provide all the requested documents and to file a brief explaining the factual basis for their invocation of their right to remain silent for each question they refused to answer (Doc. 18).

         Now before the Court is the Daniels’ response (Doc. 20). After careful review, the Court finds the Daniels have not established reasonable cause to apprehend danger from directly answering any of the Trustee’s questions. Accordingly, the Court orders the Daniels to sit for another Rule 69 examination and provide full responses to the questions posed during the initial Rule 69 examination, as well as to answer any reasonable follow-up questions. If they fail to appear or fail to do so, they will be placed in contempt of court.

         Background

         The Bankruptcy Court for the Western District of Michigan appointed Plaintiff Thomas R. Tibble the Chapter 7 Bankruptcy Trustee (“the Trustee”) for Michigan Biodiesel, LLC in In re Michigan Biodiesel, LLC, Case No. 10-05786-SWD. On October 9, 2013, the Trustee filed suit against Defendant in the Western District of Michigan for receiving money that her brother-in-law, Tracy Daniels, had improperly transferred to her in 2011 from Michigan Biodiesel’s operating account. On January 8, 2014, the Trustee obtained a default judgment for $328, 221.64 (“the Judgment”) against Defendant which was certified and registered in this district on January 22, 2014.

         To determine Defendant’s ability and means to satisfy the Judgment and to locate her non-exempt assets, the Trustee sought to conduct a Rule 69 post-judgment examination[1] of the Daniels. The Court referred the matter to a magistrate judge.[2] On April 3, 2015, the magistrate issued an order (Doc. 4) (“the Magistrate’s Order”) directing the Daniels to produce twenty-two types of documents, including: deeds, contracts and other papers identifying any real estate in which Defendant had an interest; earnings statements and employment contracts; income tax returns; bank statements from all banks or other financial institutions in which Defendant had an account of any kind; and other documents or accounts tending to show Defendant’s net worth. Order at 1-3. The Rule 69 examination was rescheduled to July 21, 2015, at Defendant’s request to provide the Daniels additional time to gather the documents.

         Prior to and on the day of the examination, the Daniels produced some, but not all, of the requested documents, but did not produce those most helpful in discerning Defendant’s ability and means to pay the default Judgment. They did not produce any bank or financial statements for personal accounts held by them either individually or jointly, even though they provided bank records from business accounts showing regular transfers in excess of $250, 000 in a three-month period to checking accounts which they apparently controlled. They also produced documents indicating that they had three mortgages, but declined to provide any documents that a bank would presumably require them to provide before giving them a loan, such as W-2 forms, 1099 forms, paycheck stubs, current/prior real estate holdings, salary information, earnings statements, and statements of debts and assets. The Daniels never invoked their right against self-incrimination with respect to any act of production.

         During the debtor examination, the Daniels refused to answer any substantive questions. Through their attorney, Dee Wampler, they stated that they were invoking their right against self-incrimination under the Fifth Amendment to the United States Constitution and its state analog under Article 1, Section 9 of the Missouri Constitution, and they would refuse to answer any question other than their name, address, Social Security number, and date of birth. July 21, 2015, Hr’g Tr. at 8-9 (Doc. 13-2). The Daniels claimed they were going to be prosecuted in the Western District of Michigan “for false tax returns and false claims and mail fraud and wire fraud under the applicable statutes and they may also conceivably be prosecuted in state court there, as well as state court here.” Id. at 9. They did not provide any factual basis for the invocation, despite being cautioned by the magistrate that they needed to provide some factual basis for their invocation. Id. at 7-57.

         In fact, although a federal criminal case had been brought in the Western District of Michigan against Tony Daniels’s brother and one other individual, the Daniels had already made an agreement in that case to receive limited immunity in exchange for their testimony. While they could theoretically be prosecuted in some other jurisdiction for the subject of their testimony, they are not currently or prospectively the targets of any criminal investigations.

         The Trustee subsequently moved to hold the Daniels in contempt or to compel discovery (Doc. 12), and the Court partially granted the motion. The Court ordered the Daniels to provide all of the requested documents, and warned them that if they failed to do so, they would be held in contempt. The Court also ordered them to file individual briefs explaining “the detailed factual and legal basis for their belief that they have ‘reasonable cause to apprehend danger from’ directly answering each of the questions they refused to answer during the first examination and that they still refuse to answer.” Order at 9 (Doc. 18) (emphasis added).[3]

         In response, the Daniels filed a short brief claiming that they had produced all the requested documents. Defense counsel wrote, “They have what they have and if any documents are allegedly omitted or have not been produced, Defendants are willing to sign the necessary consent forms for the production of such additionally required documents that the court might direct.” Resp. at 2. With respect to explaining the factual and legal basis for the invocation of their right against self-incrimination, Defense counsel wrote:

It is true that they refused to answer almost every question by making “blanket invocation” of the Fifth Amendment Privileges since current state and federal law, in counsel’s opinion, would hold that if they answered some questions, then they potentially would waive their Fifth Amendment Rights and cannot pick and choose which answers to give so therefore a blanket invocation complies with the current status of Fifth Amendment law.

         Resp. at 4 (Doc. 20). This response did not cite any caselaw ...


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