UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

Wells Fargo Bank, NA,

Plaintiff, Civil Action No. 09-11249

vs. District Judge David M. Lawson

MPC Investors, LLC, et al, Magistrate Judge Mona K. Majzoub

Defendants.

_____________________________/

REPORT AND RECOMMENDATION

Two related motions are before the Court. The first motion is Defendants Salvatore J.

Palazzolo and Sebastian D. Palazzolo’s amended motion to quash subpoenas for taking creditor’s

examinations and entry of satisfaction of judgment. (Dkt. 513.) The second motion is Plaintiff

Wells Fargo Bank’s motion to compel the Palazzolo Defendants to appear for creditor’s

examinations and for contempt and sanctions. (Dkt. 553.) The Court has been referred these matters

for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). (Dkt. 515, 555.) The Court

has reviewed the pleadings, dispenses with a hearing, and now issues this report and

recommendation.1

I. Recommendation

Because the Palazzolo Defendants have provided no basis from which the Court could deem

the judgment against them satisfied and they have not carried their burden to quash the subpoenas

and Wells Fargo is entitled to creditor’s examinations, the Court recommends denying the Palazzolo

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The Court dispenses with a hearing pursuant to Eastern District of Michigan Local Rule

7.1(f)(2). 

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Defendants’ motion, granting Wells Fargo’s motion, and awarding $4,000.00 in fees and for

contempt to Wells Fargo against the Palazzolo Defendants. 

II. Report

A. Background facts

On April 9, 2010 the court entered judgment for $1,431,666.67, jointly and severally, against

the defendants, including Defendants Salvatore J. Palazzolo and Sebastian D. Palazzolo. (Dkt. 68,

Judgment.) The court entered an amended judgment to include the Palazzolo Defendants’ trusts on

May 19, 2010.2 (Dkt. 192, Am. Judgment.) On May 3, 2011 the court entered an award of

$71,281.97 for attorneys’ fees and costs against the same defendants. (Dkt. 365.) On May 23, 2011

the court amended its order and increased the award amount to $79,716.97. (Dkt. 383.) 

B. The Palazzolo Defendants’ motion

The Palazzolo Defendants argue that the judgment has been satisfied by the other defendants

in the case, through “secret settlements,” and that they are discharged from having to pay anything

to satisfy the judgment. They therefore argue that the Court should quash the subpoenas requiring

them to appear for a creditor’s examination and deem the judgment satisfied as to them. The 

Palazzolo Defendants state that, on July 20, 2010, June 24, 2011, and October 14, 2011, Wells Fargo

entered into secret settlements with various defendants, leading to various satisfactions of judgment

against certain defendants. (Palazzolo Defs.’ Mot. at 3-4; Dkt. 318, 399, 504 (Judgment Satisfaction

Orders).)

After the October 14, 2011 satisfaction of judgment order, the Palazzolo Defendants state

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The Court uses “Palazzolo Defendants” to refer to the individuals as well as their

respective trusts and trust capacities. 

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that they requested information about the secret settlements from Wells Fargo “so that [they] could

determine if anything was due [on the judgment.]” (Palazzolo Defs.’ Mot. at 4.) The Palazzolo

Defendants state that Wells Fargo “indicated that it would let [them] know how much was applied

to the Judgment under the Secret Settlements, but steadfastly refused to provide copies of the Secret

Settlements or indicate the other consideration in the Secret Settlements.” (Id. at 5.) (emphasis in

motion.) The Palazzolo Defendants argue that they do not know what other “consideration was

provided that was not applied to the Judgment.” (Id.) (emphasis removed.) The Palazzolo

Defendants then state that Wells Fargo re-noticed their examinations. (Palazzolo Defs.’ Mot. at 5-

6.)

The Palazzolo Defendants argue that the judgment should be deemed satisfied as to them. 

(Palazzolo Defs.’ Mot. at 6.) They argue that the Court should not allow Wells Fargo to collect

more than the entire judgment, which they argue Wells Fargo is attempting because it has entered

into the secret settlements. (Id.) The Palazzolo Defendants state that they should not have to take

Wells Fargo’s word for what is owed. (Id.) They additionally argue that Wells Fargo can show them

the secret settlements so that they can determine what they should owe on the judgment. (Id.) The

Palazzolo Defendants finally argue that “this Court should presume that the consideration in the

Secret Settlements is equal to or greater than the amount originally due on the judgment.” (Id. at

7.) They conclude therefore that the Court “should enter a satisfaction of judgment as to the

Palazzolo Defendants.” (Id.) 

The Palazzolo Defendants next request that the Court quash Wells Fargo’s notice to take 

creditor’s examinations of them. (Palazzolo Defs.’ Mot. at 7.) They argue that Wells Fargo

unilaterally noticed the examinations. (Id.) The Palazzolo Defendants argue that the examinations

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would be an “undue burden” and that the Court should quash the subpoenas pursuant to Federal Rule

of Civil Procedure 45(c)(3)(A)(iv). (Id. at 8.) They alternatively request a protective order. (Id.) 

Wells Fargo has filed a response. (Dkt. 514.) Wells Fargo states that it has contacted the

Palazzolo Defendants and told them that $1,305,051.42 has been collected on the judgment and no

amount has been collected on the attorneys’ fees award. (Wells Fargo’s Resp. at 1.) Wells Fargo

states that the Palazzolo Defendants have refused to file a motion seeking how much of the judgment

the secret settlement satisfied. (Id.) Wells Fargo argues that the Palazzolo Defendants “improperly

seek to accuse Wells Fargo of trying to double-collect, have refused to turn over additional

documents about their assets as called for by the subpoenas, and have refused to appear for their rescheduled creditor’s examinations[.]” (Id. at 1-2.) Wells Fargo additionally states that it is just

trying to “pursue the remaining amounts on the Judgment and bring closure to this ligation.” (Id.

at 2.) 

Wells Fargo has provided an affidavit stating that the Palazzolo Defendants owe $126,615.25

plus interest, on the judgment, plus $79,716.97 in attorneys’ fees. (Wells Fargo’s Resp., Ex. B,

Chapman Aff.)

C. Wells Fargo’s motion to compel

Wells Fargo has filed a separate motion to compel the Palazzolo Defendants to appear for

creditor’s examinations and for contempt and sanctions. (Dkt. 553, Wells Fargo’s Mot.) Wells

Fargo argues that the Palazzolo Defendants have not provided any basis on which they would be

entitled to the secret settlement agreements. (Id. at 1.) Wells Fargo additionally argues that the

Palazzolo Defendants could have filed a motion to seek the information in the settlement

agreements, but that they have failed to do so. (Id.) Wells Fargo states that it cannot violate the

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confidentiality provisions of the settlement agreements. (Id. at 2.) Wells Fargo also argues that the

Palazzolo Defendants have failed to carry their burden to demonstrate that the subpoenas requiring

them to appear for creditor’s examinations would be an “undue burden” under Rule 45(c). (Wells

Fargo’s Mot. at 2.) 

D. Analysis

As to the Palazzolo Defendants’ request that the Court deem the judgment satisfied as to

them, the Court recommends rejecting this request. The Palazzolo Defendants have provided no

basis from which the Court could credit their argument. As Wells Fargo points out, the Palazzolo

Defendants have not challenged the amount owing on the judgment. They have not sought relief

from the Court for any information about the secret settlements. Nor have the Palazzolo Defendants

filed a reply to Wells Fargo’s response–a response that includes an affidavit of how much is owing

on the judgment. Because the Palazzolo Defendants have not provided any basis from which the

Court could deem the judgment satisfied as to them, the Court recommends denying the Palazzolo

Defendants’ request.

The Palazzolo Defendants next request that the Court quash the subpoenas requiring them

to appear at creditor’s examinations because the subpoenas would cause them an undue burden and

expense. (Palazzolo Defs.’ Mot. at 7.) Federal Rule of Civil Procedure 45(c) allows a movant to

request that a court quash or modify a subpoena if the subpoena causes an “undue burden” on the

movant. 

Whether a subpoena subjects a witness to undue burden usually raises a question of

the reasonableness of the subpoena. Reasonableness, in turn, is assessed by

balancing the interests served by demanding compliance with the subpoena against

the interests served further by quashing it; this process of weighing a subpoena’s

benefits and burdens calls upon the trial court to consider whether the information

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is necessary and whether it is available from any other source.

Aslani v. Sparrow Health Sys., 08-298, 2010 WL 623673, at *4 (W.D.Mich. Feb. 18, 2010)

(Maloney, C.J.) (quotation marks and citations omitted). The “movant bears the burden of

establishing that the issued subpoenas violate Rule 45[.]” Cleveland Clinic Health System-Easter

Region v. Innovative Placements, Inc., 11-2074, 2012 WL 187979, at *2 (N.D.Ohio Jan. 23, 2012)

(Gwin, J.) (citation omitted). But, the movant “cannot rely on a mere assertion that compliance

would be burdensome and onerous without showing the manner and extent of the burden and the

injurious consequences of insisting upon compliance with the subpoena.” Great Lakes Anesthesia,

PLLC v. State Farm Mut. Auto. Ins. Co., 11-10685, 11-11003, 11-11855, 2011 WL 4507417, at *4

(E.D.Mich. Sept. 29, 2011) (Lawson, J.) (quoting 9A Wright & Miller, Federal Practice and

Procedure § 2463.1, p. 507.).

Here, the Palazzolo Defendants have only merely asserted that creditor’s examinations would

be an undue burden and expense. They state that “[t]here is no reason for the parties to go through

the time and expense of a creditor’s exam when there is likely nothing due on the Judgment.” 

(Palazzolo Defs.’ Mot. at 8.) But, because the Court has recommended not finding the judgment

satisfied, due to the Palazzolo Defendants’ failure to present any basis for such a finding, the Court

recommends denying the Palazzolo Defendants’ request to quash the subpoenas. 

Because the Court has recommending finding no reason to deem the judgment satisfied or

quash the subpoena, the Court recommends granting Wells Fargo’s motion to compel the Palazzolo

Defendants’ to appear for creditor’s examinations. 

As to Wells Fargo’s request for contempt and sanctions, the Court recommends granting that

request. Here, the Palazzolo Defendants’ motion to deem the judgment satisfied and motion to

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quash is devoid of legal merit and argument. They have offered no basis from which the Court

could recommend grating relief. Federal Rule of Civil Procedure 37(a)(5)(A) provides for payment

of expenses if a motion to compel is granted. Federal Rule of Civil Procedure 45(e) provides that

the Court may hold a party in contempt if the party has failed to obey a subpoena “without adequate

excuse.” Both of these Rules come in to play here. The Palazzolo Defendants have failed to appear

at the creditor’s examinations, despite having been ordered to (see dkt. 288, Order granting in part

and denying in part motion to enforce judgment), and they have failed to provide an adequate excuse

as to why they failed to appear. The Court therefore recommends award $4,000.00 to Wells Fargo

for having to bring the motion to compel and the Palazzolo Defendants’ failure to provide an

adequate excuse as to why they did not appear.

E. Conclusion

For the above-stated reasons, the Court recommends denying the Palazzolo Defendants’

motion and granting Wells Fargo’s motion to compel. The Court recommends ordering the

Palazzolo Defendants to appear for a creditor’s examinations within thirty days of the district court’s

ruling upon this report and recommendation. The Court further recommends awarding $4,000.00

pursuant to Rules 37 and 45.

III. Notice to Parties Regarding Objections

The parties to this action may object to and seek review of this Report and Recommendation,

but are required to act within fourteen (14) days of service of a copy hereof as provided for in 28

U.S.C. § 636(b)(1) and E.D. Mich. LR 72.1(d)(2). Failure to file specific objections constitutes a

waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 (1985); Howard v. Sec’y of

Health & Human Servs., 932 F.2d 505 (6th Cir. 1991); United States v. Walters, 638 F.2d 947 (6th

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Cir. 1981). Filing of objections which raise some issues but fail to raise others with specificity, will

not preserve all the objections a party might have to this Report and Recommendation. Willis v.

Sec’y of Health & Human Servs., 931 F.2d 390, 401 (6th Cir. 1991); Smith v. Detroit Fed’n Of

Teachers Local 231, 829 F.2d 1370, 1373 (6th Cir. 1987). Pursuant to E.D. Mich. LR 72.1(d)(2),

a copy of any objections is to be served upon this Magistrate Judge.

Any objections must be labeled as “Objection #1,” “Objection #2,” etc. Any objection must

recite precisely the provision of this Report and Recommendation to which it pertains. Not later

than ten days after service of an objection, the opposing party must file a concise response

proportionate to the objections in length and complexity. The response must specifically address

each issue raised in the objections, in the same order and labeled as “Response to Objection #1,”

“Response to Objection #2,” etc.

Dated: March 5, 2012 s/ Mona K. Majzoub 

MONA K. MAJZOUB

UNITED STATES MAGISTRATE JUDGE

PROOF OF SERVICE

I hereby certify that a copy of this Report and Recommendation was served upon Counsel

of Record on this date.

Dated: March 5, 2012 s/ Lisa C. Bartlett 

Case Manager

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