Full title: KIRK AND AMY HENRY, Plaintiffs, v. FREDRICK RIZZOLO, aka RICK RIZZOLO, et…
Court: United States District Court, D. Nevada
Date published: Aug 10, 2010
Facts
In this action, Plaintiffs allege that Defendants Rick and Lisa Rizzolo engaged in fraudulent transfers of their community assets in an attempt to shield them from Plaintiffs’ claim. Plaintiffs allege that shortly after the Henrys filed the underlying suit in October 2001, Rick and Lisa Rizzolo formed a “so-called `family trust'” to which they transferred their assets. Complaint (#1), ¶ 13. Plaintiffs further allege that the Rizzolos entered into a sham 2005 divorce decree which awarded Lisa Rizzolo “nearly every listed community asset” except for the Crazy Horse Too which Defendants knew would be subject to forfeiture to the Government. Id., ¶ 15. Rick Rizzolo also agreed to pay Lisa Rizzolo $5 million in alimony, secured by his interest in Crazy Horse Too, with the knowledge that he would default on this obligation and thereby further diminish the assets that would be available to pay damages to the Henrys. Id., ¶ 17. Plaintiffs also allege that Rick Rizzolo “engaged in numerous cash transactions involving millions of dollars in the form of `loans’, gambling `debts’ and other third party transactions, all of which were designed to further obscure and conceal the nature, extent, and location of his assets.” Id., ¶ 18. Defendants deny these allegations and assert that at the time of Rizzolo’s 2005 divorce, the Crazy Horse Too business was worth substantially more than the property received by Lisa Rizzolo. Defendants also argue that proceeds from the forfeiture sale of the Crazy Horse Too would have been sufficient to pay the Henrys’ settlement but for the Government’s failure to preserve its business licenses.
Plaintiffs served interrogatories and requests for the production of documents on Defendant Rick Rizzolo on October 1, 2008. Mr. Rizzolo, who was represented at that time by the law firm of Patti, Sgro Lewis, objected to most of the Plaintiffs’ discovery requests because they were irrelevant and not calculated to lead to the discovery of admissible evidence. Mr. Rizzolo served a supplemental response to the requests for the production of documents on December 8, 2008, in which he restated his objections, but also produced some of his federal income tax returns in response to Request No. 1. He also apparently produced some documents relating to investment accounts in response to Request No. 7 and some documents relating to bank accounts in response to Request No. 23.
On December 9, 2008, the Plaintiffs filed a motion to compel Mr. Rizzolo to respond to the discovery requests.
Issue
Decision
IT IS HEREBY ORDERED that the Plaintiffs’ Motion for Rule 37(b) Sanctions for Defendant Rick Rizzolo’s Failure to Comply With Order (#371) is denied, in part, and granted, in part, as follows:
1. Plaintiffs’ request that a default judgment be entered against Defendant Rick Rizzolo under Fed.R.Civ.Pro. 37(b) is denied, without prejudice.
2. Defendant Rick Rizzolo shall produce to the Plaintiffs complete bank statements for the RLR Trust Account at the Capital Security Bank in the Cook Islands, or any other financial institution account for that trust, from the date of the inception of such account(s) up to the present or through the date that the bank account(s) was closed. Defendant is further directed to take immediate action to request and/or direct the trustees of the the RLR Trust to produce the account statements. Unless extended by stipulation of the parties or court order, such statements shall be produced to Plaintiffs on or before August 25, 2010.
3. Defendant Rick Rizzolo is ordered to pay $1,000.00 to Plaintiffs, as and for reasonable attorneys fees on the motion for sanctions, based on his failure to comply with the Court’s order requiring him to produce a complete copy of the RLR Trust’s bank account statements. Continued failure to comply with this portion of the Court’s order will result in the imposition of more severe sanctions, which could include granting the Plaintiffs’ request for entry of a default judgment.
IT IS FURTHER ORDERED that the discovery deadline in this case is extended until October 8, 2010, for purposes of permitting Plaintiffs to take Mr. Rizzolo’s deposition.