Effective and Creative Use of Information Subpoenas
New York provides judgment creditors with an array of judgment enforcement devices. A judgment creditor decides which to use and in what order—there is no prescribed sequence, so they can and often are used simultaneously— subject only to the court’s power to limit or regulate judgment enforcement to prevent abuse or harassment under CPLR 5240.
Among the devices is the Information Subpoena, a unique post-judgment discovery device (CPLR 5224(3). An Information Subpoena contains written questions, similar to interrogatories, drafted by the judgment creditor, which must be answered in writing and under oath by the recipient. An Information Subpoena may be served on the judgment debtor or any other person who may have knowledge of the judgment debtor’s assets, income, or financial affairs. A broad scope of inquiry is allowed—the same as for any other post-judgment discovery device. See CPLR 5226.
One of the attractive features of the Information Subpoena is its low cost and convenience. There is no need to pay for a court reporter for a post-judgment deposition, which is sought by a Subpoena Duces Tecum. Nor is there the need for a process server because an Information Subpoena may be served by Certified Mail/Return Receipt Requested. Another benefit is that a response is due within just seven days.
Information Subpoenas are most often used in connection with CPLR 5222 Restraining Notices served on banks or other financial institutions, usually containing “standard questions” in a short-form format seeking basic information about any funds of the debtor on deposit. But it is possible to draft customized questions seeking other relevant information.
The Information Subpoena can be a powerful tool in judgment enforcement in certain situations. It is particularly well-suited to seeking basic information from third-parties who might have relevant information. Unlike judgment debtors, who routinely ignore and/or delay responses to post-judgment subpoenas, third-parties usually have no incentive to hide or delay and will be forthcoming. Judgment creditors should consider serving Information Subpoenas on accountants, former spouses and business partners, finance companies, insurance agents, and others.
Lawyers and law firms also can be a source of good information. They too are proper subjects of post-judgment discovery. How is the debtor paying his lawyer? Where did the funds come from; i.e., from which bank and party’s account were they drawn? How much has he paid? What are the cases and other legal matters in which the lawyer has represented the debtor? What property, business, and other remunerative activities of the debtor does the lawyer have knowledge? This information generally is not privileged or otherwise exempt from post-judgment discovery.
We use Information Subpoenas routinely and creatively in our judgment enforcement cases. Recently, we served a series of Information Subpoena in a long-running judgment enforcement matter on a group of lawyers and law firms connected with the judgment debtors. The information we requested was not privileged and was sought as part efforts to gather evidence for veil piercing, alter ego, and aiding-and-abetting fraudulent transfer claims.
The target defendant objected and moved to quash. The trial court denied his motion and, we are pleased to now report, this ruling recently was unanimously affirmed by the Appellate Division. See Berisha v. Tosca Café Inc., ___A.D.3d___, 2022 NY Slip Op 00966 (1st Dep’t March 10, 2022). The First Department held that the subpoenas were “narrowly tailored to solicit information that is directly relevant to plaintiffs proposed amendment to add alter ego/veil-piercing allegations to his fraudulent conveyance claims” and were properly “targeted at the individuals and entities that are likely to have this information, and there is no indication that the information would be unduly burdensome to collect.”
Exactly. We couldn’t have said it better ourselves.