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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

FORT LAUDERDALE DIVISION

In re:

Case No. 21-12188-PDR

No Rust Rebar, Inc.,

Chapter 7

Debtor.

/

ORDER GRANTING MOTION TO QUASH SUBPOENA 

AND FOR PROTECTIVE ORDER

On September 22, 2022, non-debtors Don Smith, Global Energy Sciences, LLC, 

Raw Energy Materials Corp, and Yellow Turtle Design LLC (the “Smith Parties”), 

filed a Notice of Taking Rule 2004 Examination Duces Tecum of Green Tech 

Development, LLC.

1 Green Tech is a creditor of the bankruptcy estate of No Rust 

Rebar, Inc. The Smith Parties seek information and documents regarding the probate 

estate of Joan Saperstein, a third party and former principal of Green Tech not 

1 (Doc. 288).

Peter D. Russin, Judge

United States Bankruptcy Court

_____________________________________________________________________________

ORDERED in the Southern District of Florida on November 30, 2022.

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otherwise associated with the Debtor or the bankruptcy estate.

2 In response, Green 

Tech filed a Motion to Quash Subpoena, in addition to Motion for Protective 

Order Regarding Notice of Rule 2004 Examination of Green Tech Development, LLC

(the “Motion”),3 arguing that the discovery sought goes beyond the scope allowed by 

Rule 2004. The Court held a hearing on the matter on November 3, 2022. 

Background4

In January 2015, Don Smith founded No Rust Rebar, Inc. to, ostensibly, 

manufacture structural reinforcement products that do not rust. No Rust contracted 

to purchase industrial real estate in Pompano Beach, Florida, but after placing a 

nonrefundable deposit, did not have the funds necessary to close on the Property. In 

an attempt to salvage the deal, No Rust agreed to assign its right to purchase the 

Property to Green Tech. In January 2016, Green Tech bought the Property and No 

Rust remained in possession. Litigation between the parties ensued with respect to 

the Debtor’s assertion that it had an oral option to purchase the property from Green 

Tech (the “State Court Litigation”). Years later, on March 5, 2021, No Rust filed a 

2 Joan Saperstein formerly held an interest in Green Tech, and following her death, that 

interest was assigned to Marshall Ives. Don Smith has litigated the issue of whether the assignment 

was valid in Ms. Saperstein’s probate state court case (Saperstein Probate case). (Doc. 308).

3 (Doc. 308).

4 The Court has detailed the background of this case on numerous occasions and adopts its

previous findings for purposes of this ruling. See (Doc. 193); In re No Rust Rebar, Inc., 641 B.R. 412

(Bankr. S.D. Fla. 2022); No Rust Rebar, Inc. v. Green Tech Development, LLC (In re No Rust Rebar,

Inc.), No. 21-01111-PDR (Doc. 72), 2021 WL 4314221 (Bankr. S.D. Fla. Sept. 22, 2021).

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voluntary Chapter 11 bankruptcy petition in this Court, and No Rust removed the 

State Court Litigation to this Court.5 Green Tech also filed a proof of claim.

In May 2022, the bankruptcy case was converted to Chapter 7, and 

subsequently, the Trustee sought approval by the Court of a settlement with Green 

Tech which would resolve all issues between them. In response, the Smith Parties

filed their Objection3 to the Trustee’s Settlement Motion. The Court held a hearing 

on August 17, 2022 and found that the Settlement complied with Rule 9019 and 

approved it.

6 The Smith Parties filed an appeal of the Court’s order approving the 

Settlement but did not seek a stay pending the appeal.7

Discussion

I. Scope of Rule 2004 Examinations.

Rule 2004 limits the scope of examination “to the acts, conduct, or property or 

to the liabilities and financial condition of the debtor, or to any matter which may 

affect the administration of the debtor’s estate, or to the debtor’s right to a discharge.” 

Fed. R. Bankr. P. 2004(b). Generally, Rule 2004 examinations are very broad. In re 

Pan American Hosp. Corp., Nos. 04-11819, 04-11820, 2005 WL 2445907, at *2 (Bankr. 

S.D. Fla. Feb. 25, 2005). “The purpose of a Rule 2004 examination is to discover the 

nature and extent of the bankruptcy estate in order to distribute debtor’s assets for 

the benefit of its creditors,” so “[l]egitimate goals of Rule 2004 examinations include 

5 Green Tech is party to two adversary proceedings related to this bankruptcy, Case Nos. 21-

01111-PDR and 21-01112-PDR.

6 (Docs. 257, 262). 

7 (Doc. 268).

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discovering assets, examining transactions, and determining whether wrongdoing 

has occurred.” In re Millennium Lab Holdings II, LLC, 562 B.R. 614, 626 (Bankr. D. 

Del. 2016) (citations omitted). “Numerous courts have acknowledged the rule’s broad 

scope, holding that a Rule 2004 examination can be legitimately in the nature of a 

‘fishing expedition.’” In re Pan American, 2005 WL 2445907, at *2 (citations omitted).

However, examinations under Rule 2004 do have limits. They may not be used 

for purposes of harassment and cannot stray into matters which are not relevant to 

the basic inquiry. Id. Additionally, “Rule 2004 discovery should not be permitted 

when it is being used to gain an advantage in private litigation.” In re Defoor Centre, 

LLC, 634 B.R. 630, 640 (Bankr. M.D. Fla. 2021); see also In re Millennium, 562 B.R. 

at 626 (“Rule 2004 is not available to creditors seeking to use this section to deal with 

their special problems.”).

Therefore, “the granting of a Rule 2004 examination is dependent on the 

discretion of the court” which requires a balancing of the competing interests of the 

parties, weighing the relevance and necessity of the information sought. In re 

Millennium, 562 B.R. at 626 (citations omitted). The party seeking the 2004 discovery 

bears the burden of proving good cause for it. In re Defoor Centre, 634 B.R. at 638; see 

also In re Wilcher, 56 B.R. 428, 434 (Bankr. N.D. Ill. 1985). Good cause can be 

established by showing that the “discovery is needed to establish a claim or that 

denial of the Rule 2004 discovery would cause undue hardship or injustice.” In re 

Defoor Centre, 634 B.R. at 638. 

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II. The discovery sought is beyond the scope of the rule and the Smith 

Parties did not show that good cause exists for the discovery. 

The Smith Parties’ Notice states that the examination relates to matters 

affecting the administration of Debtor’s estate “because there is presented for 

discovery the issue of who should control (and be authorized to make decisions on 

behalf of) GTD [(Green Tech)], because, (i) after the death of the late Joan Saperstein, 

GTD had no remaining membership interests and two equal economic interests (one 

held by Don Smith and one held by Joan Saperstein’s Estate, which may, or may not, 

properly be held now by Marshall Ives), and (ii) in such circumstances, the governing 

statutes contemplate the possible appointment of a receiver to control GTD.”8

Green Tech argues that the discovery sought is not permissible under Rule 

2004 because it is not relevant to the administration of the estate since all contested 

matters involving Green Tech that are relevant to the administration of the estate 

have been resolved. The adversary proceedings involving Green Tech and any other 

matter pending in the main bankruptcy case were resolved under the Settlement. 

Thus, Green Tech argues, “there are no matters in controversy involving Green Tech 

to be administered by the Trustee for the benefit of the bankruptcy estate.”9

Green Tech also objects to the discovery on grounds that the notice is harassing 

and burdensome, because it “is a reminder of the trauma and harassment endured 

by the grieving family of Joan Saperstein and is clearly a fishing expedition to pursue 

8 (Doc. 288).

9 (Doc. 308).

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the Insiders’ individual, self-serving search for the next alternative theory of recovery 

to pursue” in the ongoing Saperstein Probate case.10

The Smith Parties did not file a response to the Motion,

11 but argued at the 

November 3 hearing that the discovery sought is related to the administration of the 

estate because it would shine light on the issue of Green Tech’s corporate governance 

which could then affect the validity of Green Tech’s participation in the Settlement. 

Essentially, the Smith Parties would potentially seek to unwind the Settlement that 

they are now appealing, by arguing Green Tech lacked authority to enter into it. 

The Court disagrees with the Smith Parties. The discovery sought is 

inapposite to a potential collateral attack on the Settlement. Even if the Smith 

Parties were to uncover from the requested discovery useful information regarding

the corporate governance issue, that would only lead to a state court action, not even 

marginally involving the Debtor or the bankruptcy estate, to determine the corporate 

governance issue including the rightful interest holders of Green Tech. This Court 

would not have subject matter jurisdiction over an internal corporate governance 

dispute of a non-debtor.12 Then, only if the Smith Parties are successful in that state 

10 (Doc. 308).

11 The Motion was filed on October 11, 2022, and the hearing was held almost a month later, 

which provided the Smith Parties ample time to file a response to the Motion or further briefing on 

the matter, if desired. (Doc. 309).

12 The Smith Parties would likely be unable to file an adversary proceeding against Green Tech 

here related to the corporate governance issue at the core of their discovery. Such an adversary 

proceeding only involving non-debtor parties would, in any event, be so attenuated from the matters 

related to this bankruptcy case that it would not only be improper for the Court to exercise jurisdiction 

over it, doing so would likely run afoul of certain abstention doctrines considering the pending 

Saperstein Probate case.

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court case, however long that may take, could they perhaps pursue remedies

involving the validity of Green Tech’s authority to sign the Settlement. Even then, 

the ‘new’ Green Tech and/or the Trustee would need to choose to seek to unwind the 

Settlement. The Smith Parties did not seek and there is no stay pending the appeal 

of the order approving the Settlement. To unwind it years from now would be difficult 

and likely impossible. 

To further emphasize the point, the Smith Parties, non-debtors, are merely at 

the stage of 2004 discovery of Green Tech, a non-debtor, hoping to uncover evidence 

to support their potential dispute with Green Tech, in which the Debtor would not be 

a party, the result of which may or may not lead to a potential effort to assert Green 

Tech lacked authority to enter into the Settlement. The discovery simply has no 

connection to the administration of the estate and fails to meet even the broad 

standard of Rule 2004.

13

Additionally, the 2004 discovery would arguably provide Don Smith

individually, or the Smith Parties collectively, an unfair strategic advantage in the 

Saperstein Probate case which the parties acknowledged involved the very corporate 

governance issue for which the Smith parties now seek such discovery. See In re 

Defoor Centre, 634 B.R. at 640 (denying debtor’s request for Rule 2004 discovery of a 

third party because the discovery appeared “to be an attempt by the Debtor to gain a 

strategic advantage in private litigation, as opposed to an attempt to discover the 

13 The Court finds it odd that the Smith Parties are seeking discovery on this issue now when 

they failed to raise it long ago in the context of the numerous positions Green Tech has taken in this 

bankruptcy case, not the least of which was seeking conversion. 

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preliminary information needed to file an adversary complaint against [the third 

party]”).

Moreover, the Smith Parties failed to make any showing or argument, by 

response to the Motion or at the November 3 hearing, that good cause exists to allow 

the discovery, either because it is needed to establish a claim or that denial of it would 

cause undue hardship or injustice. First, the discovery is clearly not being sought to 

establish a claim against Green Tech for the benefit of the estate–the only potential

destination for the discovery is a state court action by the Smith Parties for their own 

benefit in contesting Green Tech’s governance. To be clear, no arguments were made 

that any of the discovery sought would uncover any information on Debtor’s affairs. 

See In re Millennium, 562 B.R. at 626 (“Potential examinees include third parties 

that possess knowledge of the debtor’s acts, conduct, liabilities or financial condition 

which relate to the administration of the bankruptcy estate.”). 

Second, the Smith Parties would not suffer a hardship or be prejudiced by 

denial of the discovery because they are and for years have been able to pursue such 

discovery in state court. They can arguably do so in the Saperstein Probate case to 

the extent that the rules of that forum allow since what they seek to discover here 

seems to be at the core of Don Smith’s litigation there. The Smith Parties, or Don 

Smith individually, should not be allowed to circumvent the discovery rules of the 

state court by seeking information in this bankruptcy case apparently related to the 

Saperstein Probate case through the otherwise broad scope of Rule 2004. In the case 

that the information sought, and potential resulting claim, is not in fact related to 

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that already in the purview of the Saperstein Probate case, then the Smith Parties

can file an action in the appropriate forum to determine the Green Tech’s governance 

issue and seek appropriate discovery there. 

Accordingly, the Court ORDERS:

1. The Motion (Doc. 308) is GRANTED.

2. The subject subpoena is quashed, and Green Tech is not required to 

comply with the Notice of Taking Rule 2004 Examination Duces Tecum of Green Tech 

Development, LLC (Doc. 288). 

# # #

Copies To:

All parties in interest.

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