United States District Court, D. Minnesota
Michael S. Dietz, Trustee, Plaintiff,
Erich L. Spangenberg, Audrey E. Spangenberg, Stephen Peary, FPX, LLC, FP Tech Holdings, LLC, TechDev Holdings, LLC, Acclaim Financial Group, LLC, and NMPP, Inc., Defendants.
Michael S. Dietz, Esq., Scott J. Hoss, Esq., John C. Beatty, Esq., and Christopher D. Nelson, Esq., Dunlap & Seeger, P.A., Rochester, MN, on behalf of Plaintiff.
Timothy R. Thornton, Esq., Kevin M. Decker, Esq., and Leah Ceee O. Boomsma, Esq., Briggs & Morgan, P.A., Minneapolis, MN, on behalf of Defendants Audrey E. Spangenberg; TechDev Holdings, LLC; and Acclaim Financial Group, LLC.
Michelle Kriedler Dove, Esq., and Lewis A. Remele, Esq., Bassford Remele, Minneapolis, MN, on behalf of Defendants Erich L. Spangenberg and NMPP, Inc.
Elizabeth Wiley, Esq., The Wiley Law Firm PC, Austin, TX, on behalf of Defendant Stephen Peary.
Peter J. Schwingler, Esq., and Todd A. Noteboom, Esq., Stinson Leonard Street, LLP, Minneapolis, MN, on behalf of Defendants Audrey E. Spangenberg; Erich Spangenberg; FPX, LLC; FP Tech Holdings, LLC; TechDev Holdings, LLC; Acclaim Financial Group, LLC; NMPP, Inc.; and Stephen Peary.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
This matter is before the undersigned United States District Judge on the Defendants' Motion in Limine [Docket No. 76] and Defendants Audrey and Erich Spangenberg's (collectively, the "Spangenbergs") Motion to Quash [Docket No. 79]. For the reasons below, the Motion in Limine is denied, and the Motion to Quash is granted. Additionally, the Plaintiff will be ordered to appear for a deposition prior to trial in this case.
This bankruptcy adversary proceeding arises out of a series of transactions in which Defendant FP Tech Holdings, LLC ("FP Tech") acquired all of the first-priority secured debt of Firepond, Inc. ("Firepond") from third-party note holders, declared a default and foreclosed on the debt, acquired all of Firepond's assets at the foreclosure sale, and transferred the assets to a newly formed company, Defendant FPX, LLC ("FPX"), which now operates as "FPX fired by Firepond." At the time of the transactions, the chair of Firepond's board of directors, Audrey Spangenberg, was also the CEO of FP Tech and FPX.
Approximately nine weeks after the foreclosure sale, Firepond filed for Chapter 7 bankruptcy protection. See In re Firepond, Inc., Case No. 09-bk-32103 (Bankr. D. Minn. 2009). Michael Dietz (the "Trustee") was appointed as the Chapter 7 Trustee of Firepond's bankruptcy estate. In this role, the Trustee was required under § 704(a)(4) of the Bankruptcy Code to "investigate the financial affairs of the debtor." 11 U.S.C. § 704(a)(4). The Trustee sought and obtained the Bankruptcy Court's authorization to act as attorney for the Firepond bankruptcy estate pursuant to § 327(d) of the Bankruptcy Code. See Order Approving Employment, June 25, 2009 [Firepond Bankruptcy Docket No. 8].
In March 2011, the Trustee filed this adversary proceeding in Bankruptcy Court alleging claims for fraudulent transfer, equitable subordination, breach of fiduciary duty, and alter ego liability based on events leading up to and including the foreclosure sale. See Dietz v. Spangenberg, Case No. 11-bk-3074 (Bankr. D. Minn 2011), Am. Compl. [Bankruptcy Adversary Proceeding Docket No. 172]. The Bankruptcy Court, again pursuant to § 327(d) of the Bankruptcy Code, authorized the Trustee and his law firm to serve as counsel for the Trustee in the adversary proceeding. Order Approving Employment, March 8, 2011 [Firepond Bankruptcy Docket No. 16].
All Defendants originally demanded a jury trial on the claims alleged in the adversary proceeding, but the parties have recently stipulated that only the claim of fraudulent transfer will be tried by a jury with the remaining equitable claims to be tried to the Court. The trial is scheduled to begin in this Court on March 27, 2014. In anticipation of trial, Defendants have filed a motion in limine seeking to exclude the Trustee's testimony. Defendants argue: (1) the Trustee should be barred from testifying based on his failure to appear at a deposition; (2) the Trustee may not act as both attorney and witness; (3) the Trustee lacks personal knowledge of the matters to which he will be testifying; and (4) the Trustee may not testify as an expert.
Additionally, the Trustee served trial subpoenas on the Spangenbergs in Minnesota on December 12, 2013 following a court-ordered settlement conference. The Spangenbergs move to quash the subpoenas, arguing they exceed the geographic scope allowed by the ...