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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Wells Fargo Bank NA, 

Plaintiff, 

v. 

Wyo Tech Investment Group LLC, et al., 

Defendants.

No. CV-17-04140-PHX-DWL

ORDER 

INTRODUCTION 

 Pending before the Court are (1) Wyo Tech Investment Group LLC’s (“Wyo Tech”) 

“Motion To Dismiss/Motion For Judgment On The Pleadings” (Doc. 95); (2) Wyo Tech’s 

“Emergency Motion To Enjoin CWT Parties From Attempts To Utilize New York 

Restraining Notices To Restrain Funds Of Nondebtors And Nondebtor Assets Located 

Outside Of New York And Motion To Amend Complaint” (Doc. 98); and (3) a discovery 

dispute concerning a subpoena issued by CWT Canada II Limited Partnership, Resource 

Recovery Corporation, and Jean Noelting (collectively, the “Judgment Creditors”) on third 

party Wilenchik & Bartness, P.C. (“Wilenchik”), counsel for Wyo Tech (Doc. 101). 

The Court held a telephonic hearing on the discovery dispute on February 27, 2019 

(Doc. 103) and then requested supplemental briefing on three issues (Doc. 109), which the 

parties have provided (Docs. 113, 114). Afterward, on April 8, 2019, the Court held 

another round of oral argument. 

As explained below, the Court has now reached conclusions as to the three legal 
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issues addressed in the supplemental briefing. Specifically, the Court concludes that (1) 

the Judgment Creditors complied with New York law when they issued the restraining 

notice to Wells Fargo, (2) the validity of the restraining notice is irrelevant now that the 

restrained funds have been interpleaded, and (3) the Judgment Creditors are entitled to 

conduct discovery in this interpleader action. Based on these conclusions, the Court will 

deny Wyo Tech’s two pending motions and order Wilenchik and Beus Gilbert PLLC 

(“Beus Gilbert”) to comply with the subpoenas. 

BACKGROUND 

I. The Judgment Creditors Obtain A $7 Million Judgment Against Danzik, Then Utilize A “Restraining Notice” To Freeze Wyo Tech’s Bank Account 

In 2016, the Judgment Creditors obtained a $7,033,491.13 judgment against Dennis 

Danzik and one of Danzik’s companies, RDX Technologies Corporation (collectively, 

“Judgment Debtors”), in New York state court. During that litigation, the New York court 

also held Danzik in civil and criminal contempt, concluding that Danzik is the “epitome of 

a recalcitrant, contemptuous, and incorrigible litigant” who “lie[d],” “deliberately did not 

disclose” relevant records, “coerced” a witness into “submitting false affidavits,” and 

“perjured himself before a Canadian bankruptcy court.” (Doc. 89-3 at 9-10, 12, 13.) 

In October 2017, the Judgment Creditors’ attorneys attempted to collect on the 

outstanding judgment by freezing a particular bank account at Wells Fargo bank. Notably, 

this account wasn’t held in the name of either of the Judgment Debtors—it was held in the 

name of Wyo Tech, an LLC doing business in Arizona. 

To freeze this bank account, the Judgment Creditors’ attorneys utilized a procedural 

tool known as a “restraining notice,” which is governed by section 5222 of the New York 

Civil Practice Law and Rules (“CPLR”). That statute provides, in relevant part, that “[a] 

restraining notice may be issued by . . . the attorney for the judgment creditor as officer of 

the court” and that it is permissible to serve a restraining notice “upon a person other than 

the judgment debtor or obligor” so long as the issuing attorney “has stated in the notice that 

. . . the judgment debtor or obligor has an interest in specified property in the possession 

or custody of the person served.” Id. § 5222(a), (b). In other words, CPLR § 5222 allows 
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a judgment creditor to freeze a bank account held by a third party based solely on an 

assertion by the judgment creditor’s attorney that the judgment debtor holds an interest in 

the account—there is no requirement that the judgment creditor establish this interest to a 

judge before the restraining notice may issue. See generally Global Tech., Inc. v. Royal 

Bank of Canada, 2012 WL 89823, *12 n.9 (N.Y. Sup. Ct. 2012) (“[A] party that seeks a 

restraining notice need only engage an attorney, who is authorized to issue a restraining 

notice as an officer of the court. The Court has no involvement with the issue of whether 

service of the restraining notice upon the garnishee comports with due process until the 

garnishee challenges the restraining notice, or until the judgment debtor seeks an order of 

contempt or a money judgment against the garnishee.”) (citation omitted); Cruz v. TD 

Bank, N.A., 2 N.E.3d 221, 230 (N.Y. 2013) (“When a judgment creditor has properly 

imposed a restraint on a bank account, the bank has no choice but to freeze the assets. 

Whether issued by a court or an attorney acting as an officer of the court, a restraining 

notice is an injunction and ‘disobedience is punishable as a contempt of court.’”) (quoting 

CPLR § 5222(a)). 

After being served with the restraining notice, Wells Fargo froze Wyo Tech’s 

account, which held $546,282.55. When Wyo Tech learned its account had been frozen, 

it immediately complained to the Judgment Creditors and to Wells Fargo, disputed whether 

the Judgment Debtors held any interest in the account, and threatened to sue. In response, 

Wells Fargo filed an interpleader action in this Court. 

II. The Arguments And Rulings Concerning Whether The Judgment Creditors Should Be Allowed To Conduct Discovery In The Interpleader Action 

At the outset of this case, the Judgment Creditors and Wyo Tech presented sharply 

different views about how the litigation should proceed. In the parties’ initial Rule 26(f) 

report, which was filed in July 2018, the Judgment Creditors argued they should be allowed 

to conduct “discovery . . . to determine who has an interest in the funds at issue, who owns 

Wyo Tech, how Wyo Tech gets its money, why it paid hundreds of thousands of dollars to 

Danzik’s company, wife, daughter, and cronies, why Danzik’s wife and daughter had 

control of Wyo Tech’s funds, and why Wyo Tech has paid thousands of dollars of Danzik’s 
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legal fees, among other things.” (Doc. 62 at 11.) Wyo Tech, in contrast, argued that the 

Judgment Creditors shouldn’t be allowed to conduct any discovery and that the Court 

should immediately decide who was entitled to the interpleaded funds. (Doc. 62 at 13 

[“Wyo Tech . . . believes that discovery in this case should be deferred until such time as 

the Court rules on the motion for summary judgment Wyo Tech intends to file within 30 

days after the . . . Scheduling Conference. ”].) 

On July 24, 2018, the Court held a Rule 16 scheduling conference. (Doc. 63.) 

During this conference, the Court noted Wyo Tech’s preference to postpone discovery until 

the Court had decided certain motions but ordered the parties to provide proposed 

discovery dates in a new filing. 

On August 16, 2018, Wyo Tech filed a motion entitled “Motion for Immediate 

Release of Wrongly Restrained Funds.” (Doc. 72.) In this motion, Wyo Tech argued, 

among other things, that “Wyo Tech anticipates that Judgment Creditors and their Counsel 

will attempt to delay a ruling on this Motion by claiming that they need to conduct 

‘additional’ discovery. Any such request should be denied . . . [because] Judgment 

Creditors and their Counsel[’]s defense of their actions must be done based on the evidence 

they claim to have had in their possession at the time they issued the wrongful restraining 

notice . . . .” (Doc. 72 at 4 n.1, emphasis omitted.) 

On August 20, 2018, the parties filed a supplemental Rule 26(f) report. (Doc. 75.) 

It stated that the parties should have until August 9, 2019, to complete discovery and that 

dispositive motions shouldn’t be due until September 6, 2019. (Id. at 2-3.) 

On August 27, 2018, the Court issued its Rule 16 scheduling order. (Doc. 79.) In 

it, the Court approved the approach set forth in the parties’ supplemental Rule 26(f) report, 

adopting the parties’ proposed dates. (Id. at 2-4.) 

On October 9, 2018, the Judgment Creditors filed an opposition to Wyo Tech’s 

motion for immediate release of funds. (Doc. 88.) Among other things, the Judgment 

Creditors argued that (1) they “are entitled to take discovery, pursuant to the Court’s 

scheduling order, before the funds are summarily released” and (2) Wyo Tech’s request for 
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an immediate ruling was inconsistent with “its counsel[’s] previous[] stipulat[ion] to an 

extensive discovery schedule.” (Doc. 88 at 13-15 & n.3.) 

On October 31, 2018, this case was reassigned to the currently-assigned judge. 

(Doc. 93.) 

On December 19, 2018, the Court issued an order resolving several pending matters, 

including Wyo Tech’s motion for immediate release of funds. (Doc. 94.) The Court 

concluded the motion was “premature, because the discovery deadline is over eight months 

away,” and thus held that “Wyo Tech may refile a summary judgment motion in 

compliance with the Local Rules after the parties have had the opportunity to conduct 

discovery.” (Doc. 94 at 12-13.) 

ANALYSIS 

I. Issues from Supplemental Briefs 

A. Did The Judgment Creditors Comply With CPLR § 5222(b) When They Issued The Restraining Notice To Wells Fargo In October 2017? 

According to Wyo Tech, the restraining notice is invalid because there is a “clear 

rule of law” establishing “that a court must have previously determined that an entity is the 

‘alter ego’ of [a] judgment debtor prior to a restraining notice being validly issued.” (Doc. 

113 at 3.) However, Wyo Tech cites only one case—JSC Foreign Econ. Ass’n 

Technostroyexport v. Int’l Dev. & Trade Servs., Inc., 295 F. Supp. 2d 366 (S.D.N.Y. 

2003)—in support of its position. 

The Judgment Creditors, on the other hand, dispute that a prior finding of alter ego 

status is required before a restraining notice may be issued and cite several cases in support 

of their position. (Doc. 114 at 1-5.) 

In JSC, a court in the Southern District of New York held that third parties’ “assets 

may not be restrained pursuant to § 5222 until their alleged alter ego status has been 

adjudicated and their liability for the previous judgment determined.” 295 F. Supp. 2d at 

393. The court held that New York state cases “support the proposition that a judgment 

creditor may restrain the assets of a judgment debtor wherever those assets may be” but 

“do not support the proposition that the assets of third parties may be restrained in 
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anticipation of a finding that those third parties are alter egos or hold assets of alleged alter 

egos of the judgment debtor.” Id. at 392-93. 

The Court respectfully disagrees with the JSC court’s interpretation of New York 

state law. The parties have not identified any New York state-court cases in which a 

restraining notice was vacated due to the absence of a prior judicial finding of alter ego 

status, and there are multiple New York state-court cases in which courts declined to order 

vacatur under analogous circumstances. 

For example, in Plaza Hotel Assocs. v. Wellington Assocs., Inc., 84 Misc. 2d 777, 

781 (N.Y. Sup. Ct. 1975), the court refused to vacate a restraining notice issued on an 

alleged alter ego where the plaintiff had made only a “prima facie” showing that the 

judgment debtor and the third party on which the restraining notice was issued were “in 

fact one and the same, with the sole difference being one of form.” The court found that 

the “plaintiff ha[d] demonstrated that the assets held by Chase Manhattan Bank are the 

assets of the judgment debtor, sufficient to warrant the continued restraint of disposition of 

those assets pending additional enforcement proceedings.” Id. The court did not, in other 

words, vacate the restraining notice simply because the third party’s alter ego status had 

not yet been established in a judicial proceeding. 

Similarly, in Thompson v. Pollack, 59 A.D.3d 525 (N.Y. App. Div. 2009), the New 

York Supreme Court, Appellate Division overturned the lower court’s vacatur of a 

restraining notice. The judgment creditor had issued the restraining notice on the account 

of a corporation in which it “believed” the judgment debtor had an interest based on 

evidence that the judgment debtor had “continued to use the corporate account to write 

checks for his own personal expenses.” Id. at 525-26. The court remanded to the lower 

court “for a hearing to determine whether the defendant ha[d] an ‘interest’” in the account. 

Id. at 526. In other words, the court declined to order vacatur even though the alter ego 

status had not yet been determined in a judicial proceeding. 

And again, in 1420 Assocs., Inc. v. Modern Landfill & Recycling, a Waste Mgmt. 

Co., 256 A.D.2d 538, 539 (N.Y. App. Div. 1998), after the lower court vacated a restraining 
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notice based on a third-party corporation’s argument that it was an “entity separate and 

distinct from the judgment debtor,” the Supreme Court, Appellate Division reversed. The 

court “remitted for a hearing to determine whether [the individual judgment debtor] ha[d] 

an ‘interest’ in the account” because, even though the third-party corporation had 

apparently been dissolved, the individual judgment debtor “continued to use the corporate 

name and continued to use the subject account to pay, inter alia, admitted personal 

expenses.” Id. 

The Court also notes that, contrary to the JSC court’s assertion, Bingham v. Zolt, 

231 A.D.2d 479 (N.Y. App. Div. 1996), and ERA Mgmt., Inc. v. Morrison Cohen Singer 

& Weinstein, 199 A.D.2d 179 (N.Y. App. Div. 1993), simply do not address at what time 

the alter ego status of the third party must be adjudicated in relation to the issuance of the 

restraining notice; they certainly do not stand for the proposition that this adjudication must 

happen before restraining notices are issued. 

Given this backdrop, the Court agrees with the observation, in a recent law review 

article on this topic, that “[a]lter ego cases routinely uphold the restraint of the bank account 

merely on the allegation that the corporate veil between the third party and the judgment 

debtor ought to be pierced.” David Gray Carlson, Critique of Money Judgment Part Three: 

Restraining Notices, 77 Alb. L. Rev. 1489, 1554 (2014). The Court further agrees with the 

article’s conclusion that JSC’s contrary interpretation of New York law appears to be 

incorrect. Id. at 1553 (characterizing JSC as “a feeble Erie guess of New York law”).1

 

Furthermore, the Court is persuaded by the Judgment Creditors’ argument that 

“requiring a judgment creditor to get a prior adjudication of alter ego liability against a 

 

1

 Since 2012, a handful of federal courts have issued unpublished decisions adopting 

JSC’s views on this issue. Capitol Records, LLC v. Defries, 2014 WL 5608137, *1 

(S.D.N.Y. 2014) (citing JSC for the proposition that, because “[t]here has been no finding by this Court or any other court that IOTA is the alter ego of Defries, . . . plaintiffs have not established their right to serve a second restraining notice on Sony or seek turnover of 

certain funds in Sony’s possession”); AXGINC Corp. v. Plaza Automall, Ltd., 2018 WL 

4771886, *6 (E.D.N.Y. 2018) (citing JSC for the proposition that “a judgment creditor may not restrain the bank account of a third party unless and until it shows that the account actually contains funds that belong to the judgment creditor”). Those courts, however, did not perform their own analyses of why they believed JSC was correctly decided. 
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nondebtor before restraining that nondebtor’s assets is inconsistent with the purpose of a 

restraining notice—which is to ‘maintain the status quo’ while the judgment creditor seeks 

turnover of the disputed funds.” (Doc. 114 at 4, quoting United States v. Ceparano, 2009 

WL 8690129, *3 (E.D.N.Y. 2009).) A judgment creditor issues “a restraining notice 

against a judgment debtor’s bank account to secure funds for later transfer to the judgment 

creditor through a sheriff’s execution or turnover proceeding.” Cruz, 2 N.E.3d at 223; see 

also Interpool Ltd. v. Patterson, 1995 WL 105284, *1 (S.D.N.Y. 1995) (purpose of 

restraining notice is “to preserve the status quo pending further proceedings in which the 

creditor’s ability to reach specific property to satisfy the judgment may be determined”). 

After a restraining notice is issued, the issuing party separately “may litigate, in [a turnover 

proceeding], its claims that transfers were made without fair consideration, that the [third 

parties] are the alter egos of the various corporate respondents, and that the corporate veil 

may be pierced.” WBP Cent. Assocs., LLC v. DeCola, 50 A.D.3d 693, 694 (N.Y. App. 

Div. 2008). Because the restraining notice itself does not require turnover of the funds and 

simply requires maintenance of the status quo until a contested turnover proceeding, it 

would not make sense to require a conclusive finding of alter ego status before the 

restraining notice may issue. Moreover, CPLR § 5222 reflects a policy judgment by the 

New York legislature—which this Court is not free to second-guess—that an attorney’s 

status as “officer of the court” when issuing a restraining notice should prevent abuse. Save 

Way Oil Co. v. 284 E. Parkway Corp., 115 Misc. 2d 141, 144 (N.Y. Civ. Ct. 1982). 

Accordingly, the Court concludes that (a) a judicial finding of the alter ego status of 

the third party is not required before a restraining notice may be issued on that third party’s 

bank account and (b) the Judgment Creditors’ issuance of the restraining notice to Wells 

Fargo was therefore permissible. 

... 

... 

... 

... 
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B. Does It Matter Whether The Restraining Notice Was Valid Under New York Law, Given That The Funds Have Now Been Interpleaded?

In an interpleader action, the court is tasked with determining the ownership of the 

disputed funds. See, e.g., United California Bank v. Fadel, 482 F.2d 274, 275 (9th Cir. 

1973) (interpleader action brought “to determine the ownership of funds in a savings 

account”) (emphasis added); Trustees of Directors Guild of Am.-Producer Pension 

Benefits Plans v. Tise, 234 F.3d 415, 426 (9th Cir. 2000), opinion amended on denial of 

reh’g, 255 F.3d 661 (9th Cir. 2000) (“[B]y bringing the action, the plaintiff benefits all 

parties ‘by promoting early litigation on the ownership of the fund, thus preventing 

dissipation.’”) (citation omitted and emphasis added); NLT Computer Servs. Corp. v. 

Capital Computer Sys., Inc., 755 F.2d 1253, 1263 (6th Cir. 1985) (“The only purpose of 

the interpleader action was to determine the ownership of the funds . . . .”) (emphasis 

added). This suggests that Wyo Tech may have forfeited any ability to dispute the propriety 

of the restraining notice by consenting to Wells Fargo’s motion to interplead the funds (i.e.,

remove the contested funds from Wyo Tech’s bank account and place them in the Court’s 

bank account). (Doc. 13 at 3 [“WYO TECH does not object to interpleader of its funds as 

a first step toward restoring its rightful access to its own funds.”].) 

This conclusion is bolstered by the fact that, in general, the proper court in which to 

dispute the validity of a restraining notice is the “court out of which the restraining notice 

issued.” CSX Transportation, Inc. v. Island Rail Terminal, Inc., 879 F.3d 462, 471 (2d Cir. 

2018); see also Hillwick Inc. v. Advanced Ready Mix Supply Corp., 2017 N.Y. Misc. 

LEXIS 3908, *8-9 (N.Y. Sup. Ct. 2017) (“If the restraining notice is defective in some 

way, . . . or for any other reason that undermines it, it can be vacated on motion. The motion 

should of course be made to the court out of which the restraining notice issued (i.e., was 

captioned) . . . .”) (citation omitted). 

Accordingly, the Court concludes that the sole issue to be resolved in this case is 

the ownership of the interpleaded funds, not the validity of the restraining notice. 

... 

 
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C. On The Merits, Are The Judgment Creditors Limited To The 

Information Known To Them At The Time They Issued The Restraining Notice, Or Are They Entitled To Conduct Post-Issuance Discovery To Support Their Claim?

As an initial matter, because the issue in this action is ownership of the interpleaded 

funds, not the validity of the restraining notice, there would be no reason to limit discovery 

to what the Judgment Creditors knew at the time they issued the restraining notice. 

Even if the validity of the restraining notice were still at issue, however, the Court 

is not persuaded that discovery should be so limited. Wyo Tech cites only the same case 

it cites throughout its motion—JSC—in support of its position. But the Court has already 

noted its disagreement with the JSC court’s reasoning. 

Furthermore, Wyo Tech has not convinced the Court of the inapplicability of 

Palestine Monetary Authority v. Strachman, 62 A.D.3d 213 (N.Y. App. Div. 2009), which 

the Court cited in its March 5, 2019 order. (Doc. 109 at 9-10.) There, the Ungars obtained 

a $116 million judgment against the Palestinian Liberation Organization (“PLO”) and the 

Palestinian Authority (“PA”) and then took various steps to collect on the judgment. Id. at 

216. One of those steps was to issue a restraining notice under CPLR § 5222 to freeze a 

$30 million bank account held by a different entity, the Palestinian Monetary Authority 

(“PMA”). Id. The Ungars’ theory, when issuing the restraining notice, was that “the PMA 

is the alter ego . . . of the PA or the PLO” and/or may “hold[] any funds of the PA or the 

PLO.” Id. at 218. During subsequent litigation in state court, in which the PMA sought to 

vacate the restraining notice, the Ungars “requested discovery” in an attempt to obtain 

evidentiary support for their position. Id. The trial court largely rejected these requests 

and ruled against the Ungars, even though it “acknowledged that discovery was limited 

and that upon full discovery the evidence might show the PMA does hold funds of the PA 

or the PLO.” Id. at 220. The appellate court reversed, holding that the Ungars should have 

been allowed to conduct more discovery. Id. at 231. 

Thus, the Judgment Creditors may seek discovery regarding ownership of the funds 

and are not limited to information known when the restraining notice was issued. 
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II. Discovery Dispute 

Having determined that discovery is available to the Judgment Creditors, the Court 

rules on the merits of the discovery dispute. The dispute concerns a subpoena issued by 

the Judgment Creditors on Wilenchik on February 11, 2019. (Doc. 101.) The subpoena 

seeks documents sufficient to show all payments made to Wilenchik by Wyo Tech and by 

third party Inductance Energy Corporation (“Inductance”) and the client(s) on whose 

behalf and the matter for which the payments were made. (Id. at 16.)2

 

A. Parties’ Arguments

The Judgment Creditors contend the subpoenaed documents are relevant to whether 

Danzik has an interest in the interpleaded funds. They argue that “the more money Wyo 

Tech paid for Danzik’s and his cronies’ legal fees—especially in matters in which Wyo 

Tech has no interest—the more probable it is that Danzik has an interest in the disputed 

funds.” (Id. at 2.) They further claim that, because “just weeks before [the Judgment 

Creditors’ counsel] restrained the disputed funds, Danzik’s daughter wrote a $25,000 check 

from Wyo Tech’s account for the ‘opening’ of an Inductance account,” “if Inductance is 

paying Danzik’s or his cronies’ legal fees using money derived in part from Wyo Tech, it 

makes it more probable that Danzik has an interest in the disputed Wyo Tech funds—and 

merely diverted those funds (and future funds he acquired) to Inductance to continue 

paying his expenses after the CWT Parties restrained Wyo Tech’s account.” (Id.) 

Wilenchik objects on the sole ground that the documents sought by the subpoena 

are irrelevant. Wilenchik provides three main arguments in support of this objection: (1) 

“[Inductance] is not a party to this litigation”; (2) “a Restraining Notice’s validity rises or 

falls on the information known at the time of issuance”; and (3) “evidence of payment for 

the benefit of another is not sufficient to issue a Restraining Notice.” (Id. at 3-5.) 

 

2

 In the discovery dispute filing, the Judgment Creditors noted that they served an identical subpoena on Wyo Tech’s other counsel, Beus Gilbert, and argued that “for the same reasons Wilenchik should be ordered to produce documents in accordance with the subpoena, Beus Gilbert should as well.” (Doc. 101 at 2.) 
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B. Legal Standard

The test for “relevance,” in the context of a Rule 45 subpoena to a non-party, is no 

different than the test under Rules 26 and 34. See, e.g., Transcor, Inc. v. Furney Charters, 

Inc., 212 F.R.D. 588, 591 (D. Kan. 2003) (“It is well settled . . . that the scope of discovery 

under a subpoena is the same as the scope of discovery under Rule 26(b) and Rule 34. 

Thus, the court must examine whether a request contained in a subpoena duces tecum is 

overly broad or seeking irrelevant information under the same standards set forth in Rule 

26(b) and as applied to Rule 34 requests for production.”); Fed. R. Civ. P. 45, advisory 

committee notes to 1970 amendment (“[T]he scope of discovery is the same as that 

applicable to Rule 34 and the other discovery rules.”); S. Gensler, 1 Federal Rules of Civil 

Procedure, Rules and Commentary (hereinafter “Gensler”), Rule 45, at 1189 (2018) (“The 

scope of information that may be sought via subpoena is the same as the scope of discovery 

generally under Rule 26(b).”). 

Under Rule 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged 

matter that is relevant to any party’s claim or defense and proportional to the needs of the 

case.” Fed. R. Civ. P. 26(b)(1). Relevance “has been construed broadly to encompass any 

matter that bears on, or that reasonably could lead to other matter that could bear on, any 

issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 

(1978).3

C. Analysis

The Court finds that the documents sought through the subpoena are relevant and 

proportional under Rule 26(b)(1). 

Most of Wilenchik’s arguments rest on his (and Wyo Tech’s) position that the issue 

in this case is the validity of the restraining notice. But the Court has now rejected that 

 

3

 During the telephonic hearing on February 27, 2019, Wilenchik stated that it is 

objecting to the subpoena only on relevance grounds, not on privilege or burden grounds. (Doc. 106 at 14.) Accordingly, even though non-parties are generally entitled to special consideration when it comes to Rule 45 subpoenas—which is afforded by “weigh[ing] the burden to the subpoenaed party against the value of the information to the serving party,” Soto v. Castlerock Farming & Transport, Inc., 282 F.R.D. 492, 504 (E.D. Cal. 2012) 

(citations and internal quotation marks omitted)—no such weighing is required here. 
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argument and further determined the restraining notice was properly issued. 

To be sure, the Court agrees with Wilenchik that whether Wyo Tech paid Danzik’s 

attorneys’ fees does not conclusively establish Danzik has an interest in the interpleaded 

funds. But the standard for relevance does not require that the evidence sought 

conclusively prove any issue in the case. If Wyo Tech paid Danzik’s attorneys’ fees, that 

at least makes it more likely Danzik had an interest in Wyo Tech’s funds. Bingham, 231 

A.D.2d at 479 (finding that “evidence demonstrat[ing] that a judgment debtor regularly has 

used another’s bank account . . . as a source for payment of the debtor’s expenses” was 

relevant to whether debtor has an interest in the bank account); Thompson, 59 A.D.3d at 

525-26 (finding that evidence showing judgment debtor “use[d] the corporate account to 

write checks for his own personal expenses” was relevant to whether the judgment debtor 

had an interest in the account). Additionally, because some of Wyo Tech’s funds were 

transferred to Inductance for the “opening” of an Inductance account immediately before 

the restraining notice was issued on the Wyo Tech account, whether Inductance paid 

Danzik’s legal bills also bears on whether Danzik has an interest in the interpleaded funds. 

Accordingly, the Court orders Wilenchik and Beus Gilbert to produce the 

documents requested by the subpoenas. 

III. Emergency Motion 

A. Background 

On February 8, 2019, the Judgment Creditors served a new set of restraining notices 

on Wilenchik, Beus Gilbert, Wyo Tech, Danzik’s wife and daughters, and a Bank of the 

West account held in the name of Inductance. (Doc. 98-2–7; Doc. 108 ¶ 3.) 

B. Parties’ Arguments 

In Wyo Tech’s “Emergency Motion To Enjoin CWT Parties From Attempts To 

Utilize New York Restraining Notices To Restrain Funds Of Nondebtors And Nondebtor 

Assets Located Outside Of New York,” Wyo Tech made three requests: (1) to “declare that 

the New York Restraining Notices and Information Subpoenas are invalid and 

unenforceable and enjoin the CWT Parties from further attempts to utilize NY CPLR § 
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5222 Restraining Notices and Information Subpoenas in their attempts to collect on the 

already domesticated Judgment against Dennis Danzik and RDX Technologies”; (2) to 

grant Wyo Tech leave to amend its counterclaims; and (3) to “reconsider [the Court’s] prior 

ruling that it lacked personal jurisdiction over the lawyer and law firm defendants.” (Doc. 

98.) However, in its reply, Wyo Tech withdrew the first two requests and retained only its 

request for reconsideration. (Doc. 110 at 1 [“Wyo Tech withdraws the portions of its 

motion (Doc. 98) that do not relate to its request that this Court reconsider its ruling 

regarding personal jurisdiction.”].) Wyo Tech contends the Court now has general 

personal jurisdiction over the Judgment Creditors and their attorneys given their recent 

efforts to send restraining notices to at least seven individuals and entities located within 

Arizona. (Id. at 2-4.)4

The Judgment Creditors argue that (1) Wyo Tech has not satisfied the standard for 

a motion for reconsideration and (2) the additional contacts identified by Wyo Tech are 

insufficient for the Court to exercise general jurisdiction. (Doc. 107 at 15-17.) 

C. Analysis 

As an initial matter, although Wyo Tech’s request is styled as a motion for 

reconsideration, Wyo Tech is functionally trying to amend the personal jurisdiction 

allegations underlying its counterclaims. The Local Rules provide a separate procedure 

for seeking leave to amend a complaint, LRCiv. 15.1, which Wyo Tech did not follow here. 

Nonetheless, even if Wyo Tech had properly moved to amend its personal 

jurisdiction allegations, such a request would fail on the merits. As Wyo Tech 

acknowledges (Doc. 110 at 2), a court’s “specific jurisdiction inquiry is limited to ‘the 

defendant’s suit-related conduct.’” Picot v. Weston, 780 F.3d 1206, 1215 n.3 (9th Cir. 

2015) (quoting Walden v. Fiore, 571 U.S. 277, 284 (2014)). Thus, “[a] plaintiff may not 

create personal jurisdiction over one claim by arguing that jurisdiction might be proper 

 

4

 Although Wyo Tech seemed, in its motion, to be seeking reconsideration of the Court’s personal jurisdiction ruling only as to “the lawyer and law firm defendants” (Doc. 98 at 8), Wyo Tech contended in its reply that the “Court should reconsider its previous decision . . . and find that there is personal jurisdiction over the [Judgment Creditors] and their attorneys” (Doc. 110 at 4). 
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over a different, hypothetical claim not before the court.” Id. Accordingly, the Judgment 

Creditors’ and their attorneys’ conduct in issuing of new set of restraining notices in 

February 2019, which are unrelated to the narrow issue before this Court (i.e., who has a 

superior claim to the interpleaded funds that were secured via a different restraining notice 

issued in October 2017), is irrelevant to the Court’s specific personal jurisdiction analysis 

and does not affect the Court’s prior conclusion. 

Wyo Tech is also incorrect in contending the Court now has general personal 

jurisdiction over the Judgment Creditors and their attorneys with respect to the crossclaims/third-party claims. “For general jurisdiction to exist over a nonresident defendant . 

. . , the defendant must engage in ‘continuous and systematic general business contacts,’ 

that ‘approximate physical presence’ in the forum state.” Schwarzenegger v. Fred Martin 

Motor Co., 374 F.3d 797, 801 (9th Cir. 2004) (citations omitted). As the Ninth Circuit has 

noted, “[t]his is an exacting standard, as it should be, because a finding of general 

jurisdiction permits a defendant to be haled into court in the forum state to answer for any 

of its activities anywhere in the world.” Id. “For an individual, the paradigm forum for 

the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an 

equivalent place, one in which the corporation is fairly regarded as at home.” Goodyear 

Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). Importantly, “ties 

serving to bolster the exercise of specific jurisdiction do not warrant a determination that, 

based on those ties, the forum has general jurisdiction over a defendant.” Id. at 927. 

Contrary to Wyo Tech’s assertions, then, the question is not simply whether the 

“defendant engages in substantial, continuous or systematic activities within the forum” 

(Doc. 110 at 3), but instead is whether the defendant “engage[s] in ‘continuous and 

systematic general business contacts,’ that ‘approximate physical presence’ in the forum 

state.” Schwarzenegger, 374 F.3d at 801 (citations omitted) (emphasis added); see also 

Daimler AG v. Bauman, 571 U.S. 117, 138-39 (2014) (“[T]he inquiry under Goodyear is 

not whether a foreign corporation’s in-forum contacts can be said to be in some sense 

‘continuous and systematic,’ it is whether that corporation’s ‘affiliations with the State are 
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so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.’”). 

Serving a handful of restraining notices on parties within Arizona, engaging in separate 

litigation within Arizona, and conducting business meetings within Arizona, even if taken 

together, cannot be said to approximate physical presence in Arizona. Moreover, the 

individual Judgment Creditor, Jean Noelting, and the individual attorneys are not domiciled 

in Arizona, and the entity Judgment Creditors and the law firm cannot be said to be “at 

home” in Arizona. 

IV. Motion to Dismiss 

 A. Background

In December 2017, Danzik filed for Chapter 11 bankruptcy in the United States 

Bankruptcy Court for the District of Wyoming (Case No. 17-20934). In April 2018, the 

bankruptcy court issued an order lifting the automatic stay in part so that Wyo Tech and 

the Judgment Creditors could continue litigating this interpleader action. (Doc. 99 at 5; 

see also Doc. 95-1 at 2 [“[T]he [bankruptcy] court entered its order terminating the 

automatic stay allowing the interpleader action to proceed.”].) 

Later, two of the Judgment Creditors, CWT Canada II Limited Partnership and 

Resource Recovery Corporation, asked the bankruptcy court to grant them “derivative 

standing” to assert additional claims—specifically, “fraudulent transfer and conspiracy to 

commit fraudulent transfer claims”—in the interpleader action on behalf of Danzik’s 

estate. (Doc. 95-1 at 2.) In July 2018, the bankruptcy court issued a five-page order 

denying this request. (Doc. 95-1.) After summarizing the law concerning the “implied 

right for a creditor . . . to be granted permission to pursue avoidance actions on behalf of 

the bankruptcy estate when the trustee or debtor-in-possession refuses to do so” (id. at 2), 

the court concluded the Judgment Creditors’ request should be denied because (1) they 

hadn’t asked Danzik’s estate for permission to assert the fraudulent transfer claims, (2) 

they hadn’t provided any “specific factual allegations” to support their accusation that 

Danzik had fraudulently transferred any property to Wyo Tech, and (3) they hadn’t proved 

that the Danzik estate’s failure to assert claims in the interpleader action was unjustified or 
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unreasonable. (Id. at 2-5.) 

Finally, in February 2019, the bankruptcy court dismissed the case. (Doc. 100-4.) 

B. Parties’ Arguments

Wyo Tech moves to dismiss, or, alternatively, for judgment on the pleadings, asking 

the Court to release the interpleaded funds to Wyo Tech on the ground that the Judgment 

Creditors are barred from making a claim on the interpleaded funds because their main 

contention here is that Danzik has an interest in the funds, yet “the Bankruptcy Court has 

already, unequivocally and specifically, ordered that the CWT Parties are not authorized 

to pursue such a claim in this action.” (Doc. 95 at 1.) 

In response, the Judgment Creditors argue the Court should deny this motion for 

four reasons: (1) Wyo Tech is barred by the law-of-the-case doctrine from seeking the same 

relief it sought in its unsuccessful August 16, 2018 motion (Doc. 72); (2) this is a disguised 

motion for reconsideration of the Court’s August 1, 2018 order (Doc. 69), and Wyo Tech 

has no basis for reconsideration here; (3) this motion is premature because its asks the 

Court to decide the merits of the parties’ claims before discovery closes; and (4) the 

bankruptcy court order on which Wyo Tech relies cannot have preclusive effect and is not 

preclusive here. (Doc. 99.) 

C. Analysis 

Wyo Tech’s motion will be denied for several reasons. First, the Court is not 

persuaded that the bankruptcy court’s July 2018 order should be construed as a 

determination, on the merits, that the Judgment Creditors lack any legitimate claim to the 

$546,282.55 in interpleaded funds. Notably, in April 2018, the bankruptcy court agreed to 

lift the automatic stay so the Judgment Creditors could pursue claims in this interpleader 

action. The July 2018 ruling, in contrast, addressed a technical, bankruptcy-specific issue 

as to whether the Judgment Creditors had “derivative standing” to assert particular claims 

on behalf of the bankruptcy estate. It would be anomalous to interpret the July 2018 ruling 

as implicitly overruling the April 2018 ruling. 

Second, the July 2018 ruling merely noted that the Judgment Creditors hadn’t 
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attempted to offer any specific allegations in support of their claim that Danzik had 

fraudulent transferred certain assets to Wyo Tech. In other words, the court was identifying 

a pleading deficiency. This is different from a determination, on the merits, that no 

fraudulent transfer occurred. 

Third, it appears the primary reason why the bankruptcy court denied the Judgment 

Creditors’ request for derivative standing was because they didn’t make a request to the 

trustee of Danzik’s estate before filing their motion, which is a procedural prerequisite 

under the relevant bankruptcy laws. This is, again, much different from a determination, 

on the merits, that no fraudulent transfer occurred. 

Finally, it is also worth noting that, in February 2019, the bankruptcy court 

dismissed Danzik’s bankruptcy case. This raises questions about whether any earlier 

orders issued by the bankruptcy court may be said to have a collateral estoppel effect. After 

all, under 11 U.S.C. § 349(b)(3), the dismissal of a debtor’s bankruptcy case “revests the 

property of the estate in the entity in which such property was vested immediately before 

the commencement of the case.” “The basic purpose of [§ 349(b)] is to undo the 

bankruptcy case, as far as practicable, and to restore all property rights to the position in 

which they were found at the commencement of the case.” In re Lawson, 156 B.R. 43, 45 

(B.A.P. 9th Cir. 1993) (citation omitted). Thus, because “dismissal of the bankruptcy case 

revests the property of the estate in the party that owned it prior to the filing of the petition, 

there is no bankruptcy estate after the dismissal has been entered.” In re Steenstra, 307 

B.R. 732, 738 (B.A.P. 1st Cir. 2004) (citing 11 U.S.C. § 349(b)(3)). 

Because the parties haven’t briefed this issue in any depth, and because there are 

alternative reasons for denying Wyo Tech’s motion to dismiss, the Court declines to 

resolve whether the dismissal of Danzik’s bankruptcy case eliminates any collateral 

estoppel effect that might have otherwise flowed from the July 2018 order. Nevertheless, 

the Court notes that the July 2018 order addressed the narrow issue of whether the 

Judgment Creditors had derivative standing to assert certain claims on behalf of Danzik’s 

estate. Yet a party wouldn’t need the bankruptcy court’s permission to assert claims on 
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behalf of a bankruptcy estate that no longer exists. Accordingly, any orders addressing a 

party’s standing to assert claims on behalf of that nonexistent bankruptcy estate have 

arguably been are rendered moot by the dismissal of Danzik’s case. 

Accordingly, IT IS ORDERED that: 

(1) Wyo Tech’s “Motion To Dismiss/Motion For Judgment On The Pleadings” 

(Doc. 95) is denied; 

(2) Wyo Tech’s “Emergency Motion To Enjoin CWT Parties From Attempts To 

Utilize New York Restraining Notices To Restrain Funds of Nondebtors And Nondebtor 

Assets Located Outside of New York And Motion To Amend Complaint” (Doc. 98) is 

denied; 

(3) To the extent the parties’ joint notice of summary dispute (Doc. 101) may be 

construed as a motion to compel filed by the Judgment Creditors, that motion is granted; 

and 

(4) Wilenchik and Beus Gilbert must produce the documents requested by the 

subpoenas by April 26, 2019. 

 Dated this 9th day of April, 2019.