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Peskoff v. Faber

July 22, 2005

JONATHAN E. PESKOFF, PLAINTIFF,
v.
MICHAEL A. FABER, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola U.S. Magistrate Judge

MEMORANDUM OPINION

This case was referred to me for resolution of eight discovery motions, the first five of which are Motions for a Protective Order. Upon consideration of the motions, oppositions, and replies and for the reasons stated herein, Defendant's Motion for Protective Order Concerning Plaintiff's Subpeona to United Bank for Defendant's Personal Bank Records [#15] is denied in part and granted in part; Defendant's Motion for a Protective Order and Supporting Memorandum Concerning Plaintiff's Subpeona to Non-Party Mark Levine [#27] is denied in part and granted in part; Defendant's Motion and Supporting Memorandum Requesting Entry of a Protective Order Governing the Confidentiality of Discovery Materials [#31] is denied in part and granted in part; Plaintiff's Motion for Protective Order Concerning Defendant's Subpeona Duces Tecum to Joseph Estabrook [#24] is granted nunc pro tunc; Plaintiff's Motion for Protective Order Concerning Defendant's Subpeona Duces Tecum and Ad Testificandum to Joel Lesch [#25] is granted nunc pro tunc; Plaintiff's Motion for Extension of Discovery Period and Corresponding Modification of Scheduling Order [#16] is granted; Plaintiff's Motion for Additional Depositions [#20] is granted; and Plaintiff's Consent Motion for Telephonic Conference Prior to Filing Motions to Compel Discovery [#21] is denied as moot.

BACKGROUND

I. Plaintiff's Claims

Plaintiff Jonathan E. Peskoff ("Peskoff") brings this action to recover damages for financial injury he suffered as a result of alleged conduct by defendant Michael A. Faber ("Faber") in connection with the operation of the NextPoint venture capital fund and its related entities ("the NextPoint entities"). Complaint at 1. The plaintiff's specific allegations are: fraud in the inducement; breach of fiduciary duty; breach of contract; conversion; common law fraud and deceit; unjust enrichment; and violations of 18 U.S.C. §§ 1962(c) and 1964(c) (Civil RICO). Id. at 15-22.

II. The NextPoint Entities

NextPoint GP, LLC ("the General Partner") is the general partner of a venture capital fund called NextPoint Partners, LP ("the Fund"). Id. at 1. At all relevant times, both the plaintiff and defendant were managing members of the General Partner, though whether they were ever the sole managing members is disputed. Id. at 3; Answer at 15. Although the plaintiff is no longer a managing member as of February 13, 2004, he claims the retention of a membership interest. Complaint at 3. No LLC agreement governing the operation and composition of the General Partner was ever signed. Id. at 3; Answer at 19-20.

The NextPoint Management Company, Inc. ("the Management Company") was organized by the defendant as a vehicle for receiving the management fees due from the Fund to the General Partner and for paying salaries and other expenses. Its purpose was to enable the General Partner to fulfill its management responsibilities to the Fund under the LP agreement. Complaint at 8; Answer at 26. The defendant believes that he was and is the sole owner of the Management Company. Complaint at 14; Answer at 26. The plaintiff contends that he and the defendant were co-owners of the Management Company in equal share. Complaint at 14.

Plaza Street Holdings, Inc. ("Plaza Street Holdings") is a corporation that was paid by the Management Company for consulting services. Id. at 10. Plaza Street Holdings was and is controlled solely by the defendant. Complaint at 10; Answer at 29.

DISCUSSION

I. Motions for Protective Order

A. Legal Standards

Federal Rule of Civil Procedure ("Rule") 26(c) provides:

Upon motion by a party or by the person from whom discovery is sought, accompanied by a certification that the movant has in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action, and for good cause shown, the court . . . may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense . . . .

"'Although the Rule contains no specific reference to privacy or to other rights or interests that may be implicated, such matters are implicit in the broad purpose and language of the Rule.'" Tavoulareas v. Washington Post, 111 F.R.D. 653, 661 (D.D.C. 1986) (quoting Seattle Times Co. v. Rhinehart, 467 U.S. 20, 35 n.21 (1984)).

To show good cause for entry of a protective order, "the movant must articulate specific facts to support its request and cannot rely on speculative or conclusory statements . . . ." Low v. Whitman, 207 F.R.D. 9, 10-11 (D.D.C. 2002) (citing Jennings v. Family Mgmt., 201 F.R.D. 272, 275 (D.D.C. 2001) (citations omitted)). In addition, "district courts assessing the existence of good cause must exercise their discretion in light of the relevant facts and circumstances of a particular case." Tavoulareas, 111 F.R.D. at 658 (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 599 (1978)).

It bears emphasis that a party is only entitled to discovery of information relevant to the claims or defenses asserted in the case. Fed. R. Civ. P. 26(b)(1). When fraud or mistake is alleged, relevance must be assessed in light of the requirements of Rule 9(b), which states: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b). See also United States ex rel. Fisher v. Network Software Assocs., 227 F.R.D. 4, 9-10 (D.D.C. 2005). In addition to ensuring that a defendant has notice of the claim, Fisher, 227 F.R.D. at 9 (citing Anderson v. USAA Cas. Ins. Co., 221 F.R.D. 250, 252-53 (D.D.C. 2004)), Rule 9(b) aims to "prevent a claim from being filed as a 'pretext for the discovery of unknown wrongs.'" Id. (quoting Kowal v. MCI Communications Corp., 16 F.3d 1271, 1279 n.3 (D.C. Cir. 1994)).

B. Analysis

1. Defendant's Motion for Protective Order Concerning Plaintiff's Subpeona to United Bank for Defendant's Personal Bank Records

On October 20, 2004, the plaintiff served a subpeona duces tecum on non-party United Bank, requesting all bank records relating to any NextPoint entity and all bank records relating to the defendant. Plaintiff's Opposition to Defendant's Motion for Protective Order ("Pl.'s Opp'n #18") at 2. In response, the defendant filed a motion for a protective order to prevent the execution of the subpeona. Defendant's Motion for a Protective Order Concerning Plaintiff's Subpeona to United Bank for Defendant's Personal Bank Records ("Def.'s Mot. #15") at 1. Specifically, the defendant claims that:

1. The personal bank records are irrelevant;

2. The sole purpose of the subpeona is to harass and ...


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