Sunil Parikh

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re:
Case No.: 8- 07-72869-478
Sunil Parikh,
Chapter 7
Debtor.
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MEMORANDUM DECISION
Appearances:
Weinberg Gross & Pergament LLP
Attorneys for the Debtor Sunil Parikh
By: Marc A. Pergament, Esq.
400 Garden City Plaza
Garden City, New York 11530
Certilman Balin Adler & Hyman, LLP
Attorneys for the Creditor John Desiderio
By: Richard J. McCord, Esq. and Jaspreet S. Mayall, Esq.
90 Merrick Avenue
East Meadow, New York 11554
Hon. Dorothy Eisenberg, United States Bankruptcy Judge
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The matter before this Court is a motion for reconsideration brought by counsel for the
Debtor, Sunil Parikh, (the “Debtor”) & his wife Meena Parikh (collectively the “Parikhs”)
regarding this Court’s May 29, 2008 decision. The following constitutes this Court’s findings of
fact and conclusions of law as mandated by Fed. R. Bankr. P. 7052. This Court has jurisdiction
of this case pursuant to 28 U.S.C. §§ 157(b) and 1334(b), and venue is proper pursuant to 28
U.S.C. §1409(a). This is a core proceeding under 28 U.S.C. § 157(b)(1), and (2)(A).
Background
The Debtor filed a voluntary petition for Chapter 7 on July 30, 2007. On October 1, 2007
creditor John Desiderio (“Desiderio”) filed Claim No. 1 in the bankruptcy case for $281,311.45,
which represented 98.7% of the estate’s creditors. The claim is a combined total of several state
court judgment claims that Desiderio previously obtained against the Debtor. 	The history
between the Debtor and Desiderio is as follows.
In 2000 Desiderio was the owner of a business and the landlord of a building that housed
that business known as Mrs. D’s Natural Foods. 	The business was subsequently purchased by
Peter Devani (“Devani”). 	On December 16, 2002 the business and assets were transferred to
Health Heaven, Inc. (“Health Heaven”), which was wholly owned by Devani and another
minority shareholder. The lease with Desiderio was assigned to the corporation when the assets
were transferred. It was not until June of 2003 that the Debtor entered the picture.
In June 2003 Devani brought the Debtor into the business as an additional investor, and
the Debtor agreed to purchase a 45% interest in Health Heaven. The Debtor executed a personal
guarantee for $85,000 for the benefit of Desiderio. 	Later the Debtor’s brother purchased the
remaining 55% from the other shareholders in 2004, and the two operated the business.
However, as time went on they failed to make the payments on the rent or the note connected
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with the premises. 	As such, on July 16, 2004 Desiderio initiated an action against Devani and
the Debtor in state court for summary judgment, in lieu of a complaint, on the Note. 	The state
court granted a default judgment against the parties in October 2004 due to the non-payment of
the Note. Thereafter, Desiderio received several judgments in his favor awarding him attorney’s
fees and expenses related to the continuing litigation in the case.
Debtor’s papers state that he filed for Chapter 7 bankruptcy relief on July 30, 2007 due to
the collection action that was instituted by Desiderio to recover on his judgments against the
Debtor. 	His petition listed his ownership interest in Health Heaven, but states that the interest
had no value. At the Section 341(a) Meeting the Debtor testified that Health Heaven went out of
business and that he had discarded the entire store inventory. He also claimed that in December
2004 his wife and his brother opened up Dave’s Health Foods (“Dave’s”), which was located at
the same location that Health Heaven operated. 	According to Debtor, he was an employee of
Dave’s and worked for his wife and brother.
The Rule 2004 Motion
On October 10, 2007, Desiderio filed a Rule 2004 motion seeking to examine the Parikhs
in an attempt to determine whether he would commence an adversary proceeding under Section
523 or 727 of the Bankruptcy Code and seek to deny the Debtor a discharge. 	Desiderio
contended that the Debtor was lying about his ownership in Dave’s; that the Debtor was in fact
the owner of Dave’s, and that the inventory being used by Dave’s was in fact the same inventory
from Health Heaven. 	Desiderio sought documentation and an examination of the Parikhs
regarding their acquisition of Dave’s, their financial status, and the acquisition of a $300,000
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mortgage obtained from a Meera Management, LLC.1 Desiderio stated that the Debtor was
deliberately attempting to shield assets from his estate.
On October 26, 2007 the Parikhs, via counsel, filed opposition to the Rule 2004 motion.
While they had no objection to producing information requested for the period of June 2003 to
July 2007, they argued that it was improper for Desiderio to seek information regarding assets or
affairs of the Debtor and his wife prior to 2003 because Desiderio’s relationship with the Debtor
did not begin until 2003. Furthermore, they argued that Desiderio sought to obtain discovery in
order to further its own state court actions against the Debtor, and that this was inconsistent with
the standards for a Rule 2004 examination. A hearing on the motion was held on November 28,
2007 before Judge Rosenthal.
After oral arguments, Judge Rosenthal overruled objections, and granted Desiderio’s
motion for the Rule 2004 subpoena. The November 29, 2007 Order authorized examinations of
both the Debtor and his wife, and directed them to provide all of the documents that were
requested. Desiderio served the 2004 subpoenas and requested the documents by December 10,
2007, and the Parikhs were to submit to examinations on December 19, 2007. 	No documents
were provided by the December 10 date. Counsel for Desiderio attempted to contact counsel for
the Parikhs several times, and, according to Desiderio, gave the Parikhs until January 14, 2008 to
provide the documentation. 	On January 23, 2008 the Parikhs produced a few documents, and
objected to the other document requests.
The Motion for Protective Order
1 The mortgage was the subject of litigation between Desiderio and the Parikhs. On June 13, 2007 a Nassau County
trial court determined that the Parikhs had caused the mortgage to be recorded against their home in order to shield
the house from Desiderio’s judgments against them. The court determined that the owner of Meera Management,
LLC was the brother and brother-in-law of the Parikhs, and the mortgage was a fraudulent conveyance done with the
intent to hinder, delay and defraud Desiderio.
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On February 19, 2008, counsel for the Parikhs brought a motion for protective order
seeking to preclude Desiderio from recovering documents that they had not yet turned over, as
well as documents that Desiderio had requested in a supplemental document request. 	The
requested documents pertained to assets or financial affairs of the Debtor and his wife prior to
June 2003. The Parikhs’ counsel argued that the request exceeded the scope of Rule 2004, was
unduly burdensome, and made with the purpose of harassing the Parikhs. The objections raised
by counsel appeared to be the same ones previously raised before Judge Rosenthal at the
November 28, 2008 Hearing, and were overruled by him in his November 29, 2008 Order.
Counsel for Desiderio interposed a cross motion to compel production of the documents,
as well as a motion for sanctions against the Parkihs’ counsel for certifying the original
documents provided as being complete, and a motion for contempt and a motion for sanctions
against the Parikhs that would impose a $100. 00 fine on them for every day they did not provide
the documents. A reply was filed by Parikhs’ counsel on March 25, 2008. On March 27, 2008
Desiderio filed an adversary proceeding against the Debtor seeking to deny his discharge. 	A
hearing on the motion for a protective order was held before this Court on May 29, 2008.
At the May 29, 2008 hearing this Court granted Desiderio’s cross-motion to compel and
for 	sanctions. 	This 	Court 	held 	that 	the Rule 	2004 	subpoena 	was 	issued 	prior 	to 	the
commencement of the adversary proceeding and did not meld into the adversary proceeding.
This Court found that the debtor provided no reason why the motion to quash should be granted
and that the partial compliance by the Debtor and Mrs. Parikh was inadequate. Additionally, this
Court held that under Rule 45(c)(2)(B) of the Federal Rules of Civil Procedures, as made
applicable by Bankruptcy Rule 9016, the party subject to the Rule 2004 subpoena must bring a
motion to quash within 14 days of service. As the subpoena was issued on November 30, 2007
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and the motion for protective order was not filed until February 19, 2008, it was not timely, and
therefore this Court could not consider the motion to quash. This Court directed that counsel for
Desiderio provide an accounting of the fees and expenses it incurred related to the motion, and
also granted sanctions against the Parikhs’ that would be imposed daily until the documents were
produced. 	A proposed order was settled, but was not signed due to the instant motion for
reconsideration filed by counsel for the Parikhs seeking to have this Court reconsider its May 29,
2008 decision.
Discussion
Motion for Reconsideration
"A motion for reconsideration, which is treated as a motion to alter or amend a judgment,
is governed by [Federal Rules of Civil Procedure ("FRCP")] 59(e). A motion for reconsideration
should be granted sparingly and in limited circumstances. In re Nosker, 267 B.R. 555, 564
(Bankr. S.D. Oh. 2001); In re Kellogg, 197 F.3d 1116 (11th Cir. 1999); In re Tarrer, 273 B.R.
724 (Bankr. N.D. Ga. 2002).
Case law has shown that there are three reasons for a court to grant a motion for
reconsideration: (1) an intervening change of controlling law has occurred; (2) evidence not
previously available has become available; or (3) it is necessary to correct a clear error of law or
prevent manifest injustice." 	In re Christie, 222 B.R. 64, 67 (Bankr. D. N.J. 1998); see Nosker,
267 B.R. at 564-65. 	It is not however a chance for the parties to relitigate previously-decided
matters or present the case under new theories. Nosker, 267 B.R. at 564; Kellogg, 197 F.3d at
1120 (stating that a party "may not use a Rule 59(e) motion to raise arguments available but not
advanced at the hearing.").
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As counsel for the Parikhs has failed to provide a citation to rules, statutory authority, or
legal authorities in support of its motion for reconsideration, this Court will attempt to classify its
arguments. 	There has been no suggestion by the Parikhs’ counsel that controlling law has
changed that would require this Court to reconsider its prior decision. 	Nor has there been a
suggestion that new evidence has come to light that would change or alter this Court’s earlier
decision. 	Rather counsel for the Parikhs appears to rest its argument to reconsider on the third
prong for reconsideration, which is that this Court reconsider its decision in order to correct a
clear error of law or prevent manifest injustice.
“A motion based on manifest error of law or fact will not be granted except on a showing
of some substantial reason. The burden is on the movant to demonstrate these manifest errors.”
See In re Crozier Bros., Inc., 60 B.R. 683, 687 (Bankr. .D.N.Y. 1986; see also Hager v. Paul
Revere Life Ins. Co., 489 F. Supp. 317, 321 (E.D. Tenn.1977) aff’d without opinion 615 F.2d
1360 (6th Cir. 1980). 	It has been stated that a manifest error “is not demonstrated by the
disappointment of the losing party. 	It is the ‘wholesale disregard, misapplication, or failure to
recognize controlling precedent.’” Yoshio Oto v. Metropolitan Life Ins. Co., 224 F.3d 601, 606
(7th Cir. 2000) (internal citations omitted).
The Parikhs use two arguments to show that there was manifest error. To the extent that
this Court determined at the earlier hearing that (1) the Parikhs were not entitled to bring a
motion for protective order based on Judge Rosenthal’s earlier opinion, and (2) that the Parikhs
failed to timely bring a motion for protective order, the Parikhs argue that this Court was wrong,
and that these were erroneous conclusions, and as such are manifest errors. Thus, this Court will
address these arguments separately.
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Upon a review of the transcript of the November hearing before Judge Rosenthal it is
clear that Judge Rosenthal never precluded the Parikhs from bringing a motion for a protective
order. In fact, Judge Rosenthal appeared to implicitly acknowledge that such a request might be
made, stating: “The [2004 Examination] motion is granted subject to the strict requirements of
what 2004 permit[s], and I expect Mr. Pergament or counsel for Mrs. Parikh will represent her
vigorously, and if the debtor – if the creditor seeks discovery beyond that, I assume that it will be
back before me or some other judge in the Eastern District.” Rosenthal, J., November 28, 2007.
Furthermore, the order signed by Judge Rosenthal does not appear to preclude the Parikhs
from requesting a protective order. Therefore the issue of whether or not the Parikhs could have
requested such a protective order is answered in the affirmative. 	Had there been confusion or
uncertainty regarding Judge Rosenthal’s order on the matter, the burden fell to the Parikhs to
seek to have the court reconsider its order or to appeal the order. This did not occur. Rather, the
Parikhs waited until February to file the motion for protective order, several months after Judge
Rosenthal had reached a decision on the matter. Any arguments regarding what Judge Rosenthal
did or did not say at the hearing are immaterial as his order, dated November 29, 2008, clearly
sets forth his determination on the matter, and requires the Parikhs to turn over the requested
documentation.
Now this Court must turn to whether the Parikhs’ motion for a protective order was
timely made.
Motion for Protective Order
Rule 45 allows the subject of a Rule 2004 examination “[o]n timely motion” to move to
have the subpoena quashed if it does not allow a reasonable time to comply, requires a non-party
to travel excessively, requires the disclosure of privileged material, or subject someone to undue
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burden. Fed. R. Civ. P. 45(c)(3)(A). “Whether a subpoena imposes an undue burden depends on
such factors as relevance, the need of the party for the documents, the breadth of the document
request, the time period covered by it, the particularly with which the document are described
and the burden imposed.” 	Travelers Indem. Co. vMetro. Life Ins. Co., 228 F.R.D. 111, 113
(D.Conn. 2005) (internal quotations omitted). The burden of persuasion is on the movant. In re
Corso, 328 B.R. 376, 383 (Bankr. E.D.N.Y 2005).
The party subject to the subpoena may bring such a motion within fourteen days of
service. Fed. R. Civ. P. 45(c)(2)(B). While a failure to object within the fourteen-day time limit
usually constitutes a waiver of objection, a late objection is not automatically a bar to
consideration. 	See In re Corso, 328 B.R. at 384; In re DG Acquisition Corp., 151 F.3d 75, 81
(2d Cir. 1998) (explaining that failure to assert a Fifth Amendment privilege is not automatically
a waiver of those rights); Concord Boat Corp. v. Brunswick Corp., 169 F.R.D. 44, 48-49
(S.D.N.Y. 1996). A late objection may be allowed for good cause where the subpoena is
overbroad so that it goes beyond the boundaries of fair discovery, the recipient is a non-party
acting in good faith, and the counsel for both the recipient and the issuing party were in contact
concerning the recipient’s compliance before the ultimate challenge to the subpoena. See Moon
v. SCP Pool Corp., 232 F.R.D. 633 , 636 (D. Cal. 2005) American Electric Power Co., 191
F.R.D. 132, 136-37 (S.D. Oh. 1999); In re Corso, 328 B.R. at 384. 	In Corso, the court found
that the recipient party did not act in good faith where it ignored the subpoena, the repeated
attempts of the trustee to enforce it, a contempt motion brought against the party, and the court’s
order holding it in contempt. See In re Corso, 328 B.R. at 385.
As this Court held at the May 28, 2008 hearing, the motion for the protective order was
untimely, having been made more than sixty (60) days after the fourteen (14) day statutory
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period which runs from the day the subpoenas were served. 	United States v. International
Business Machines Corp., 70 F.R.D. 700, 701-02 (S.D.N.Y. 1976) (holding that a 68 day delay
to respond to a subpoena was deemed to be untimely and was a waiver of the right of the party to
object to the subpoena).
No justifiable excuse for failing to timely move for such a protective order was raised by
the Parikhs. The law is clear on the mechanisms and time constraints on which a party can move
for a protective order. If an extension was granted to allow the Parikhs to produce the requested
documentation by January 14, 2008 and comply with depositions, it does not change the fact that
the motion for a protective order was not timely filed because it was not submitted until February
19, 2008, which was nearly a month after the January 14, 2008 date. 	While counsel for the
Parikhs argued that extensions were given, and that oral communications between the parties
agreed to delay the production of discovery further, counsel fails to provide written proof of such
an extension, and the content of these communications was disputed at the hearing by counsel for
Desiderio. The supplemental request made by Desiderio on February 14, 2008 is not the subject
of this opinion as this opinion pertains to the failure of the Parikhs to comply with the November
29, 2007 Order.
Alternatively, had the motion for a protective order been timely made, it would have been
denied. A Rule 2004 examination has been likened to a “fishing expedition,” the scope of which
is broad. See e.g., In re Corso, 328 B.R. 375, 383 (Bankr. E.D.N.Y. 2005). The primary purpose
of allowing broad discovery in Rule 2004 examinations is to expedite the locating of assets of the
estate. 	See 10 Collier on Bankruptcy 7026.01 (15th ed. Rev.). 	However, a 2004 subpoena can
be limited. 	Rule 45 allows the recipient “[o]n timely motion” to move to have the subpoena
quashed if it does not allow a reasonable time to comply, requires a non-party to travel
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excessively, requires the disclosure of privileged material, or subjects someone to undue burden.
Fed. R. Civ. P. 45(c)(3)(A); see In re Commercial Fin. Servs., 247 B.R. 828, 842 (Bankr. N.D.
Okla. 2000).
Here the Parikhs have failed to demonstrate why the prior order regarding the Rule 2004
examinations and the production of documents should not be enforced by this Court. The
arguments raised in the Parikhs’ papers supporting their motion for protective order were already
previously raised to Judge Rosenthal at the November 28, 2007 hearing, and were rejected. They
again claim that Desiderio’s request for documents prior to 2003 should be quashed. The record
shows that Judge Rosenthal’s November 29, 2007 Order clearly granted the 2004 examinations
of the Parikhs and the turning over of the requested documents. 	The order was never appealed
by the Parikhs, and is thus a valid and final order. 	Due to the broadness of a Rule 2004
examination it is appropriate for Desiderio to look back at the Parikhs’ financial history. Thus,
this Court overrules the Parikhs’ argument seeking to deny Desiderio’s right to inquire into
matters arising prior to 2003. 	Here the 2004 Subpoena was issued, what was provided to
Desiderio was insufficient, and no cause has been provided as to why the protective order should
be granted. 	The representations made to Desiderio by the Debtor, Debtor’s wife, and their
counsel that the documents produced were complete were incorrect and, as noted, the documents
provided were insufficient.
Conclusion
A motion for reconsideration, as discussed above, is a rare tool for a court to wield. 	Its
standards are such that the movant must meet a significant burden for a court to alter a prior
judgment. 	Here, counsel for the Parikhs fails to meet this burden. 	The arguments raised by
counsel could have been raised and vigorously argued at the May 29, 2007 hearing. 	The
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standards are quite clear: a motion for reconsideration is not appropriate where counsel is simply
rearguing its case with facts, law, and issues that were available at the earlier hearing. The fact
that some of the arguments raised by counsel now were not raised at all or were lightly touched
upon at the May 29, 2007 hearing does not give this Court the grounds necessary for it to
reconsider its earlier decision.
In furtherance of this Court’s May 29, 2008 decision, counsel for Desiderio is awarded
expenses and costs related to defending against the Parikh’s motion for protective order, and for
bringing its cross-motion to compel in the amount of $6,758.10. As for the expenses and costs
relating to the motion for reconsideration, this Court awards counsel for Desiderio $2,470.00. In
calculating the total award this Court did not include times spent by counsel on the phone,
reviewing and responding to e-mails, or communicating with their client. 	Rather this Court
focused on the times utilized by counsel for research, writing, revising, and drafting of
documents related to the motions, and for counsels’ appearance before this Court at the relevant
hearings.
Federal Rule of Civil Procedure 45 allows a court to hold a recipient of a subpoena in
contempt if he or she fails to obey the subpoena without an adequate excuse. The prerequisites
of a finding of contempt are that the subpoena was clear and unambiguous, there is clear and
convincing proof of non-compliance, the recipient did not attempt to comply with reasonable
diligence, and that the recipient is given the notice and opportunity to be heard. See In re Corso,
328 B.R. 375, 385 (Bankr. E.D.N.Y. 2005). 	Based on the discussion and facts noted above,
these factors have been met. As a result, the request for fines against the Parikhs in the amount
of $100.00 per day is hereby granted as of this date until they produce the requested documents
and subsequently appear for the 2004 examinations.
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Thus, the Parikhs’ motion for reconsideration of this Court’s May 29, 2008 decision and
request for a protective order are denied.
Dated: November 4, 2008
Central Islip, New York
s/ Dorothy Eisenberg
Judge Dorothy Eisenberg
United States Bankruptcy Judge
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