IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-40043

JP MORGAN CHASE BANK, N.A., 

 Plaintiff - Appellant

v.

DATATREASURY CORPORATION, 

 Defendant - Appellee

Appeal from the United States District Court

for the Eastern District of Texas

Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges.

JAMES E. GRAVES, JR., Circuit Judge:

Plaintiff-Appellant JP Morgan Chase Bank (“JMPC”) appeals the 

district court’s denial of its motion to compel certain post-judgment discovery.

Finding no reversible error, we affirm.

I. BACKGROUND

A. The Underlying Case

The merits of the underlying case were resolved in a previous appeal

which resulted in a published decision. See JP Morgan Chase Bank, N.A. v. 

DataTreasury Corp., 823 F.3d 1006 (5th Cir. 2016) (hereinafter JPMC). 

Accordingly, we provide a summary of the merits only as necessary to 

understand the instant post-judgment dispute. 

United States Court of Appeals

Fifth Circuit

FILED

August 23, 2019

Lyle W. Cayce

Clerk

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Defendant-Appellee DataTreasury Corporation (“DTC”) used to hold

several patents relating to electronic check-processing systems. JPMC, 823 

F.3d at 1008. To enforce its patents, DTC sued several banks, including JPMC, 

for alleged willful infringement. Id. In 2005, JPMC was the first bank to settle 

with DTC. Id. As part of the settlement, JPMC entered a license agreement 

with DTC wherein JPMC was allowed unlimited use of DTC’s patented checkprocessing systems for a total consideration of $70 million. Id. The agreement 

included a most-favored licensee (“MFL”) provision which entitled JMPC “to 

the benefit of any and all more favorable terms with respect to” subsequent 

licenses granted by DTC to any other persons. Id. at 1009. The MFL clause 

also outlined notice requirements concerning how DTC was to notify JPMC 

each time DTC entered a new license agreement with more favorable terms. 

Id.

Over the course of several years, DTC entered numerous subsequent

licensing agreements. JPMC, 823 F.3d at 1009. In November of 2012, JPMC 

filed suit against DTC, alleging DTC breached the MFL clause by failing to 

notify JPMC of the subsequent licenses, many of which “were granted on terms 

substantially more favorable than those afforded to JPMC.” Id. Prior to trial, 

JPMC filed a motion for summary judgment specifically seeking the benefit of 

the more favorable terms granted to Cathay General Bancorp (“Cathay”) on 

October 1, 2012, as well as the “other Subsequent Licenses.” See id. Most 

notably, the Cathay agreement granted Cathay a license for a total 

consideration of $250,000. Id. DTC responded with its own motions for

summary judgment, requesting summary judgment in its favor on its 

affirmative defenses and the applicability of the MFL clause, and requesting a 

finding of no breach as to certain claims. Id.

Because JPMC designated the Cathay license as the most favorable, the 

district court only considered the parties’ claims with respect to that particular

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license, granting JPMC’s motion in part and denying DTC’s motions. See id. at 

1010. The district court determined that DTC breached the contract by failing 

to notify JPMC of the Cathay license in accordance with the MFL clause and 

that the broadly worded MFL clause gave JPMC the right to incorporate

retroactively the more favorable terms of the Cathay license agreement.1 Id.

The district court also found DTC’s affirmative defenses meritless, but again 

only considered them as they applied to the Cathay license. Id. On appeal, this 

court affirmed the district court’s interpretation of the MFL agreement and the 

dismissal of DTC’s affirmative defenses. Id. at 1008.

In the end, DTC was on the hook to JPMC for $69 million in damages. 

Id. at 1010.

B. Post-Judgment Activity

Shortly after the district court entered the $69 million judgment in June 

2015, JPMC issued discovery requests and a subpoena to DTC and its law firm 

Nix, Patterson & Roach, LLP (“NPR”) regarding the location of DTC’s assets.2

JPMC’s initial interrogatories and subpoena did not include a timeframe, and 

DTC objected that such extensive discovery requests were unduly burdensome 

and overbroad because they were not related to the period after execution of 

the Cathay license agreement. DTC explained it would respond, but it would 

limit its answers to information dating back to June 9, 2011, as that was the 

earliest date it could have had “notice of a potential claim by or obligation to 

JPMC” because that was the date DTC received a letter from JPMC “raising a 

 

1 DTC had argued the MFL clause applied only prospectively (JPMC would not be 

entitled to a refund of payments already made to DTC at the time of a subsequent, more 

favorable license) rather than retroactively (JPMC would be entitled to a refund of any 

payment already made to DTC over and above the more favorable price).

2 While there was some discussion before the district court about the relationship 

between NPR and DTC for purposes of discovery, the parties’ legal arguments on appeal do

not distinguish between discovery requests issued to NPR and DTC. Because the distinction 

is immaterial for purposes of this appeal, we simply refer to them both as “DTC.”

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potential issue about the license between DTC and [JPMC].” DTC filed motions 

to quash and for protective orders, and JPMC filed a motion to compel. 

The district court held a status conference on the motions in March 2017. 

JPMC explained at the hearing that it sought all of DTC’s financial records 

because DTC had paid nothing on the judgment and was showing bank 

statements reflecting insolvency, despite having received nearly $600 million

in revenue from various license agreements. The district court declined to rule 

on the issues at the hearing and directed the parties to meet and confer and 

file updated status reports. The parties met and conferred but could not resolve 

the issues. JPMC continued to want discovery dating back to January 2006—

DTC’s first alleged breach of the MFL clause—to help it uncover any 

fraudulent transfers or improper payments to shareholders. Negotiations 

stalled, and JPMC renewed its motion to compel, requesting an order 

overruling DTC’s objections. 

The district court ultimately sided with DTC. While the district court did 

not provide a detailed explanation for its ruling, the discovery order mentions 

June 2011 as the date DTC first had notice of JPMC’s claim. It also asserts

that JPMC relied on the 2012 Cathay agreement in its summary judgment 

motion and the judgment was based on that agreement. In light of these dates 

and the totality of the circumstances, the district court determined JPMC 

sought discovery into matters “well-before the appropriate time period and 

that [were] not relevant to the Judgment in this case.” JPMC appealed.

II. LEGAL STANDARD 

A. Standard of Review

We review a district court’s denial of a discovery request for abuse of 

discretion. Pustejovsky v. Pliva, Inc., 623 F.3d 271, 278 (5th Cir. 2010). “A trial 

court enjoys wide discretion in determining the scope and effect of discovery, 

and it is therefore unusual to find an abuse of discretion in discovery matters.”

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Equal Emp’t Opportunity Comm’n v. BDO USA, L.L.P., 876 F.3d 690, 698 (5th 

Cir. 2017) (quoting Sanders v. Shell Oil Co., 678 F.2d 614, 618 (5th Cir. 1982) 

(internal quotation marks omitted)). There is no difference between the 

standard of review of a pre-trial discovery order and that of a post-judgment 

discovery order. See Mitchell v. Sizemore, 536 F. App’x 443, 444 (5th Cir. 2013) 

(applying abuse of discretion standard to district court’s denial of postjudgment discovery request); United States v. McWhirter, 376 F.2d 102, 106 

(5th Cir. 1967) (finding the philosophy underlying the discovery provisions of 

the Federal Rules to apply “with equal force whether the information is sought 

in a pre-trial or in a post-judgment discovery proceeding”). A court abuses its

discretion “when its decision is based on an erroneous view of the law.” Crosby 

v. La. Health Serv. & Indem. Co., 647 F.3d 258, 261 (5th Cir. 2011). 

Nevertheless, the district court’s decision should be reversed only in “unusual 

and exceptional” cases, O’Malley v. U.S. Fid. & Guar. Co., 776 F.2d 494, 499 

(5th Cir. 1985) (internal quotation marks omitted), such as where the decision 

is “arbitrary or clearly unreasonable.” Wiwa v. Royal Dutch Petroleum Co., 392 

F.3d 812, 818 (5th Cir. 2004) (quoting Moore v. Willis Indep. Sch. Dist., 233 

F.3d 871, 876 (5th Cir. 2000)). Even if a district court abuses its discretion, the 

reviewing court will not overturn its ruling unless it substantially affects the 

rights of the appellant. N. Cypress Med. Ctr. Operating Co., Ltd. v. Aetna Life 

Ins. Co., 898 F.3d 461, 481 (5th Cir. 2018).

B. Standard for Post-Judgment Discovery

Federal Rule of Civil Procedure 69(a)(2) allows a judgment creditor to 

“obtain discovery from any person—including the judgment debtor—as 

provided in these rules or by the procedure of the state where the court is 

located.” “Rule 69 was intended to establish an effective and efficient means of 

securing the execution of judgments.” McWhirter, 376 F.2d at 106. “The scope 

of postjudgment discovery is very broad to permit a judgment creditor to 

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discover assets upon which execution may be made.” FDIC v. LeGrand, 43 F.3d 

163, 172 (5th Cir. 1995). To effectuate that purpose, the discovery rules are to 

be liberally construed. McWhirter, 376 F.2d at 106. 

Nevertheless, “[t]he Federal Rules of Civil Procedure . . . permit the 

district court to limit discovery.” Mitchell, 536 F. App’x at 444 (citing Fed. R. 

Civ. P. 26(b)(1) and (b)(2)(A), (C)). For instance, the discovery must be relevant 

to the purpose of obtaining information on hidden or concealed assets, 

including assets that may have been fraudulently transferred. See 13 James 

Wm. Moore et al., Moore’s Federal Practice - Civil § 69.04 (2018) (citing Caisson 

Corp. v. Cty. W. Bldg. Corp., 62 F.R.D. 331, 334 (E.D. Pa. 1974)); 12 Charles 

Alan Wright et al., Federal Practice and Procedure Civil § 3014 (2d ed.) 

(updated 2018).

III. DISCUSSION

JPMC alleges the district court abused its discretion by denying its 

request for discovery prior to June 2011. JPMC argues DTC accrued most of 

its patent-related revenue from 2006 to 2011, but has since dissipated the 

income, leaving JPMC with an “as yet” uncollectable judgment. According to 

JPMC, it was a creditor of DTC dating back to the first subsequent license

agreement and breach in 2006, and therefore it should be entitled to financial 

discovery back to that date so it can determine if DTC made fraudulent 

transfers to avoid financial obligations to JPMC. DTC’s counter-argument is 

simple—JPMC’s judgment is based on the 2012 Cathay license agreement, and 

therefore discovery should be limited to that particular breach.

A. DTC’s Prior Breaches

1. Notice of JPMC’s Potential Claims

One of JPMC’s main arguments is that the district court abused its 

discretion by erroneously finding DTC had no notice of any potential claim by 

JPMC until June 2011. JPMC argues, and it is essentially undisputed, that 

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DTC entered subsequent license agreements with more favorable price terms 

as early as January 2006. See JPMC, 823 F.3d at 1019. It is also undisputed 

that DTC did not give JPMC the benefit of any more favorable price terms, nor 

did it notify JPMC of the subsequent licenses as required by the MFL clause.

Therefore, according to JPMC, the district court clearly erred when it found 

June 9, 2011 to be relevant to DTC’s awareness of its breach and corresponding 

financial obligations to JPMC; DTC was aware of its own actions that 

constituted the breach, and it was these actions that prohibited JPMC from 

knowing of any breach and notifying DTC of a dispute earlier. 

JPMC further urges that DTC cannot hide behind its interpretation of 

the MFL clause to allege it had no notice of potential claims by JPMC. Even 

under DTC’s interpretation of the contract,3 DTC would have known it 

breached the agreement each time it failed to notify JPMC of subsequent, more 

favorable licenses and to pass on the more favorable terms. Because DTC 

would have known of its potential financial obligations every time it accepted

a new payment from JPMC, transfers made after 2006 could in theory have 

been a way to hide assets from a future claim by JPMC. 

DTC repeats multiple times that it had no notice of JPMC’s potential 

claims until 2011; however, it does not make any real argument on this point. 

We agree that the district court’s reliance on the June 2011 date as relevant to 

DTC’s knowledge of any potential claims by JPMC is clearly erroneous. 

Nevertheless, the district court also based its denial on the judgment itself and 

the “totality of the circumstances,” so we find any weight the district court 

accorded the June 2011 date to be harmless. 

 

3 As a reminder, DTC argued the MFL clause only applied prospectively, meaning 

JPMC would not be entitled to reimbursement of any amount it had already paid DTC in 

excess of the value of the new license agreement.

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2. The Judgment Itself

The next main point of contention between the parties is whether the 

judgment relates to all DTC’s alleged breaches, or simply the 2012 Cathay 

agreement. DTC contends that the judgment, and JPMC’s summary judgment 

motion upon which the judgment is based, only considered the 2012 Cathay 

agreement and breach. Therefore, post-judgment discovery should revolve 

around that agreement. In this regard, DTC notes that while the district court 

found DTC breached the MFL clause by not notifying JPMC of the 2012 Cathay 

license agreement, no court found DTC to have breached the MFL clause at 

any other point in time, and JPMC, a sophisticated party with sophisticated 

counsel, made a deliberate decision to narrow its summary judgment motion 

to the Cathay agreement. According to DTC, any other alleged breaches are 

irrelevant to JPMC’s judgment, and JPMC should be barred from seeking relief 

based on additional breaches of the MFL clause by the doctrine of res judicata. 

While we agree with DTC that the judgment only pertains to the 2012 

agreement, DTC’s characterization of JPMC’s motion is not completely 

accurate. JPMC’s summary judgment motion did in fact seek relief on the other 

licenses/breaches in addition to the Cathay license; however, JPMC noted that 

as to particular terms, it could only seek the benefit of one license. It therefore 

chose to focus on the Cathay license, although it mentioned the analysis in its 

motion applied equally to each more favorable term in the additional licenses. 

The district court acknowledged JPMC’s admission and emphasized in its 

order that it was specifically limiting its consideration of JPMC’s claims to the 

Cathay license. 

In this vein, DTC points out that even if it had breached the MFL clause 

prior to the 2012 Cathay agreement, it raised affirmative defenses to those 

breaches which the district court did not consider. In fact, DTC contends 

JPMC’s reason for limiting its summary judgment motion to the 2012 Cathay 

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agreement was “strategically” to avoid DTC’s affirmative defenses. While the 

implied strength of DTC’s affirmative defenses is probably overstated, JPMC 

did make a conscious choice to seek the benefit of the Cathay license agreement

over other subsequent licenses. For instance, one of the licenses JPMC

submitted in its summary judgment motion had a price term of $39,500, an 

even more favorable price term than the Cathay license. The license was 

entered into around the same time as the Cathay license, so it is unclear why 

JPMC chose not to seek the benefit of that license. It could easily have been 

because the license contained other less favorable terms, but perhaps it was 

because an affirmative defense applied to it. Even if it is unlikely DTC’s 

affirmative defenses would have succeeded, we will never know for sure 

because DTC’s affirmative defenses were only reviewed by the district court as 

to the 2012 breach.

Ultimately, while JPMC did ask the district court to make a finding of 

breach as to the other licenses, the district court declined, limiting its analysis 

to the Cathay license which then formed the basis for JPMC’s judgment. In 

addition, even assuming the district court’s order assumed or found other 

breaches of the MFL clause, the amount of the judgment is specifically tied to 

the Cathay license. While JPMC argues limiting the discovery to this 

agreement gives DTC the benefit of its other breaches, it is not clearly entitled 

to damages on those other breaches. It therefore would be reasonable for the 

district court to tie discovery to a time period associated with the Cathay 

agreement. Because that is what the district court chose to do, it did not abuse 

its discretion.

B. Fraudulent Transfers

JPMC contends it deserves discovery dating back to 2006 so it can

discover and understand the present location of DTC’s funds, DTC’s transfer 

of any monies, and whether any of the transfers are subject to avoidance 

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claims. DTC asserts that even if JPMC’s allegations of fraudulent transfers 

had merit, Texas law would govern such a dispute, and Texas law defines a 

fraudulent transfer only as one where “the creditor’s claim arose before or 

within a reasonable time after the transfer was made or the obligation was 

incurred.” DTC argues 2006 is not a reasonable time before JPMC’s claim arose 

in 2012, while 2011 is. JPMC does not concede that Texas law applies,4 but it 

does not dispute that a fraudulent transfer must occur within a reasonable 

time, either before or after, a creditor’s claim arose. The real issue between the 

two parties here is when JPMC’s claim arose. 

“Creditor” under Texas law is defined as one who has a claim. Tex. Bus. 

& Com. Code § 24.002(4). “Claim” is defined as a right to payment, “whether 

or not the right is reduced to judgment, liquidated, unliquidated, fixed, 

contingent, matured, unmatured, disputed, legal, equitable, secured, or 

unsecured.” Tex. Bus. & Com. Code § 24.002(3). JPMC cites to cases showing 

that under Texas law, a claim for breach of contract accrues as soon as the 

contract is breached. See Dell Comput. Corp. v. Rodriguez, 390 F.3d 377, 391 

(5th Cir. 2004)). It argues that, based on the district court’s interpretation of 

the MFL clause, JPMC became a creditor of DTC each time DTC entered into 

a more favorable license and failed to give JPMC the benefit of the more 

favorable terms. While DTC may have had affirmative defenses to the 

breaches, at a minimum JPMC would have had a disputed claim of breach, 

making it a creditor prior to 2011.

DTC concedes discovery dating back to a year before or after a claim 

arises is reasonable and appropriate, but disputes that the earlier alleged 

breaches are the proper reference point for enforcing a judgment that is not 

 

4 JPMC briefly argues Delaware law might apply, as that is where DTC is 

incorporated; however, JPMC focuses its briefing on Texas law. Accordingly, we will limit our 

discussion to the fraudulent transfer laws of Texas.

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based on those breaches, regardless of whether JPMC was a possible creditor 

of DTC prior to 2011. Even if the underlying lawsuit was based on those 

breaches, DTC argues JPMC chose to abandon those breaches in its motion for 

summary judgment and therefore the judgment, irrespective of the underlying 

lawsuit, is based solely on the 2012 agreement. As we noted above, JPMC did 

not exactly abandon its claims as to the other breaches in its motion for 

summary judgment; however, the district court limited its order to the 2012 

breach and the amount of the judgment is specifically tied to that one breach. 

While post-judgment discovery is broad, it is not without limits. See 

Mitchell, 536 F. App’x at 444. Even assuming DTC breached prior to 2012 and 

JPMC was a creditor within a year of those prior breaches, limiting the postjudgment discovery to the breach on which the judgment is based is reasonable, 

as Rule 69(a) refers to a judgment creditor, not the expansive definition of 

creditor under the Texas Business and Commerce Code. See Fed. R. Civ. P. 

69(a)(2) (“In aid of the judgment or execution, the judgment creditor or a 

successor in interest whose interest appears of record may obtain discovery 

from any person—including the judgment debtor—as provided in these rules 

or by the procedure of the state where the court is located.” (emphasis added)). 

Because it is reasonable, it was not an abuse of discretion to limit discovery as 

the district court did.

C. Proportionality

Lastly, JPMC takes issue with the district court’s ruling that discovery 

as far back as 2006 is not proportional to JPMC’s $69 million judgment. DTC 

argues that the district court correctly limited discovery to post-June 2011 

because such limitations are “proportional to the needs of the case.” 

Proportionality is determined by “considering the importance of the 

issues at stake in the action, the amount in controversy, the parties’ relative 

access to relevant information, the parties’ resources, the importance of the 

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discovery in resolving the issues, and whether the burden or expense of the 

proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). DTC 

asserts pre-2011 discovery has no relevance to the satisfaction of the judgment 

and would place a significant and undue burden and expense on a company 

that has few remaining resources. Because it has archived many of its 

documents, it would cost DTC approximately $110,000 to reload and host the 

documents, plus an additional $6,500 per month to maintain them. These costs 

are in addition to attorney time spent on reviewing 15 years’ worth of litigation 

files, which DTC claims are unlikely to contain relevant financial documents. 

This is exceedingly burdensome to DTC in large part because DTC lost its 

principal source of revenue—enforcing its patents—when legislation passed (at 

the behest of banks like JPMC) that eventually led to the invalidation of DTC’s 

patents in 2015. 

JPMC responds that its requests were tailored to fund transfers, 

issuances of dividends, and revenue, and could be aided by search terms—

meaning DTC would not need to peruse 15 years’ worth of litigation files. While 

JPMC’s requests are slightly broader than it intimates, JPMC points out that 

DTC voluntarily disclosed, in a one-page summary chart, dividend issuances 

of over $117 million to its chairman, CEO, and general counsel prior to 2011.5

Lastly, JPMC claims DTC did not properly prove and verify6 its alleged 

 

5 JPMC states only briefly that this shows DTC is not burdened by the pre-2011 

discovery and that this disclosure may have waived DTC’s right to object to pre-2011 

discovery and demonstrates bad faith in DTC’s objections. Because JPMC does not provide 

arguments on these points, they are waived. See United States v. Scroggins, 599 F.3d 433, 

446–47 (5th Cir. 2010).

6 DTC did submit an email quote explaining the cost of having its files “reloaded,” and 

JPMC cites no case saying the district court could not have relied on such “unverified”

evidence. The district court case JPMC did cite mentions affidavits, but it also allows a 

district court to consider other “evidence revealing the nature of the burden” on the party 

resisting discovery. Heller v. City of Dallas, 303 F.R.D. 466, 490 (N.D. Tex. 2014).

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expense of reloading DTC’s document database or how such discovery is 

burdensome to it. Even if it had, JPMC asserts, the cost to DTC “represents 

barely more than one-tenth of one percent of the $69 million (excluding 

interest) DTC owes JPMC” and represents even less of DTC’s total revenue. 

JPMC argues this weighs heavily in its favor, although it does not offer to 

defray any of the cost of the discovery outside of reviewing the documents itself. 

JPMC contends the likelihood of it gaining financial information showing “a 

pattern of siphoning money to insiders and payments of unlawful dividends for 

which JPMC can recover from the transferees and DTC’s directors” shows the 

likely benefit of discovery to JPMC “far outweighs” the cost to DTC. 

Weighing the costs of discovery to DTC with the benefit to JPMC is the 

type of judgment call generally best left to the discretion of the district court.

Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984) (“The trial court is in 

the best position to weigh fairly the competing needs and interests of parties 

affected by discovery.”). The district court’s reference to proportionality was in 

the context of considering the judgment as based solely on the 2012 breach;

considered in that light, pre-2011 discovery could reasonably be considered not 

proportional to the needs of the case.

CONCLUSION

We conclude that the district court did not exceed its wide discretion. We 

therefore AFFIRM.

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