Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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Guttilla Murphy Anderson, P.C.

Guttilla Murphy Anderson, P.C.
Ariz. Firm No. 00133300

Patrick M. Murphy (Ariz. No. 002964) Alisan M. B. Pattern (Ariz. No. 009795)
4150 West Northern Avenue Phoenix, Arizona 85051 Email: [email protected] Phone: (623) 937-2795 Fax: (623) 937-6897

Attorneys for the Receiver

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Lawrence J. Warfield, Receiver, Plaintiff, v. Michael Alaniz, et al. Defendants. ) ) Cause No. CV 03-2390 PHX JAT ) ) ) RECEIVER'S MOTION FOR AN ) ORDER CERTIFYING THE AMENDED ) JUDGMENT FOR REGISTRATION IN ) FOREIGN DISTRICTS ) )

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The Receiver seeks an Order certifying the Amended Judgment entered in this case 14 on July 16, 2007 (Doc. #624) (hereafter the "Judgment") for registration in certain 15 foreign districts so that the Judgment can be enforced against Defendants Carroll, Davis, 16 Richard and Wehrly (referred to hereafter collectively as the "Out-of-State Defendants") 17 18 19 20 21 22 23
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in the foreign districts where they reside and own property.1 This relief is appropriate so

The Seventh Circuit held that filing a notice of appeal does not deprive the District Court of jurisdiction to make findings required by 28 USC §1963, as follows: The notice of appeal blocks the district court from taking any action affecting the questions presented by the appeal, (citations omitted), but does not prevent the court from handling collateral matters such as the award of costs and the posting of a supersedeas bond. Findings under §1963, like the decision to require or excuse the filing of a bond pending appeal, affect only the collection of a judgment. A court with jurisdiction to authorize

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that the Receiver may enforce the Judgment against the Out-of-State Defendants' assets located in those foreign districts before the Out-of-State Defendants can dissipate the assets during the pendency of their appeal of the Judgment to the Ninth Circuit.2 (This motion does not apply to Defendants Bestgen and Crosswell who reside in Arizona and are not known at this time to hold any property in a foreign district.3) Pursuant to 28 U.S.C. §1963, the District Court may enter an order "for good cause shown" certifying the Judgment for registration in districts other than the District of Arizona.4 The Ninth Circuit Court of Appeals in Columbia Pictures Television, Inc. v.

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execution if the appellant does not post a bond--power a district court possesses during an appeal--also may make the findings that under §1963 authorize execution in another district. Trustees of the Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund, et al., v. Central Transport, Inc., 935 F.2d 114, 119-120 (7th Cr. 1991).
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The Defendants have not posted a supersedeas bond which would entitle them to a stay of efforts to enforce the Judgment pursuant to Rule 62(d), Fed.R.Civ.P. Pursuant to Rule 62(a), Fed.R.Civ.P., the Judgment will become final and enforceable, in the District of Arizona, ten days after its entry. Additionally, pursuant to Rule 69(a), Fed.R.Civ.P., the procedure on execution, and in aid of execution, of judgments, "shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought, except that any statute of the United States governs to the extent that it is applicable." In Arizona, execution upon a judgment may be immediately made upon entry of the judgment. (See, A.R.S. §12-1551(a)). Accordingly, upon the expiration of ten days, the Judgment will be fully enforceable as to assets of all the Defendants located within Arizona. The Receiver intends to pursue such enforcement to the extent possible.

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28 U.S.C. §1963 provides as follows:

A judgment in an action for the recovery of money or property entered in any . . . district court . . . may be registered by filing a certified copy of the judgment in any other district . . . when the judgment has become final by 23 appeal or expiration of the time for appeal or when ordered by the court Case 2:03-cv-02390-JAT Document 630 2 Filed 08/13/2007 Page 2 of 7

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Krypton Broadcasting of Birmingham, Inc., 259 F.3d 1186 (9th Cir. 2001), cert. denied, Feltner v. Columbia Pictures Television, Inc., 534 U.S. 1127, 122 S.Ct. 1063 (2002), held that "good cause," as used in 28 U.S.C. §1963, is established where there is a showing of an absence of assets in the forum district sufficient to satisfy the judgment and there is a presence of substantial assets in the foreign district in which registration is sought: Under Federal Rule of Civil Procedure 62(a), a judgment of the United States District Court becomes final and enforceable ten days after judgment is entered. Fed.R.Civ.P. 62(a). At that time, a prevailing plaintiff is entitled to execute upon a judgment. (Footnote omitted) Pending appeal, however, the judgment is only enforceable in the district in which it was rendered, unless the judgment is "registered" in another district by court order. 28 U.S.C. §1963 (2001). . . . Section 1963 thus permits a district court to issue an order certifying a judgment for registration during the pendency of an appeal upon a finding of `good cause.' (Citation omitted.) Although there is no Ninth Circuit law defining "good cause," "the courts that have found good cause have generally based their decisions on an absence of assets in the judgment forum, coupled with the presence of substantial assets in the registration forum." Dyll v. Adams, 1998 WL 60541 at 1 (N.D. Tex. 1998); Johns v. Rozet, 143 F.R.D. 11, (D.D.C. 1992); Chicago Downs Association, Inc. v. Chase, 944 F.2d [366] at 372 [(7th Cir. 1991)]; Graco Children's Prods. Inc. v. Century Prods. Co., 1996 WL 421966 at 36 (E.D. Pa. 1996); Bingham v. Zolt, 823 F.Supp. 1126, 1136 (S.D.N.Y. 1993), aff'd., 66 F.3d 553 (2d. Cir. 1995).. Here, the district court's order granting Columbia's motion simply states that good cause has been shown. Although a more detailed explanation of the district court's reasoning is generally desirable, in the instant action, there is ample evidence to support the district court's finding. Feltner does not dispute that he lacks assets in California. He also does not dispute that he owns substantial property in Florida. This evidence is sufficient to support a finding of good cause. (Citations omitted.) Columbia Pictures Television, Inc. v. Krypton Broadcasting of Birmingham, Inc., supra,

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259 F.3d at 1197-1198. 21 that entered the judgment for good cause shown. . . . A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner. 23 (Emphasis added.) Case 2:03-cv-02390-JAT Document 630 3 Filed 08/13/2007 Page 3 of 7 22

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Because the opinion in Columbia Pictures Television, Inc., supra, dealt with a case where there was a complete absence of assets owned by a defendant in the judgment forum, it did not specifically address whether "good cause" is shown where a defendant owns some assets in the judgment forum but not in an amount sufficient to satisfy the judgment. Fortunately, other Courts have resolved the issued by holding that registration of a judgment in a foreign district is appropriate where the defendant has substantial property in the foreign district and insufficient property in the rendering district to satisfy the judgment. See, Brae Asset Funding, L.P. v Applied Financial, LLC, 2006 WL 3497876 (N.D. Cal. 2006); Pereira v. Cogan, 2003 WL 22510410, 1-2 (S.D. N.Y. 2003); Karaha Bodas Co., LLC v. Perusahaan Pertambangan Minay Dan Gas Bumi Negara, 2002 WL 32107930 (S.D. Tex. 2002); Garden State Tanning Inc. v. Mitchell Mfg. Group, Inc., 2000 WL 1201372, 2-3 (E.D. Pa. 2000); Graco Children's Products, Inc. v. Century Products Co., Inc., 1996 WL 421966, 35-36 (E.D. Pa. 1996) (relied upon by the Ninth Circuit in Columbia Pictures Television, Inc., supra ); Schreiber v. Kellogg, 839 F.Supp. 1157, 1162 (E.D. Pa. 1993); Bingham v. Zolt, 823 F.Supp. 1126, 1136 (S.D.N.Y. 1993), aff'd., Bingham v. Zolt, 66 F.3d 553 (2nd Cir. 1994) cert. denied, Steinberg v. Bingham, 517 U.S. 1134, 116 S.Ct. 1418 (1996) (relied upon by the Ninth Circuit in Columbia Pictures Television, Inc., supra); Whitney Nat. Bank v. J. E. Stack, Jr., 1002 WL 236920 (E.D. La. 1992); In re Southern Industrial Banking Corporation, 121 B.R. 229 (Bk. E.D. Pa. 1990 (an expectancy interest in real property that is insufficient to satisfy the judgment in issue meets the "good cause" requirement under 28 USC §1962). Last, permitting registration of a judgment in an appropriate foreign district where there are some, though insufficient, assets in the rendering district, makes eminent sense
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in that the obvious purpose of 28 USC §1963 is to permit a plaintiff to fully enforce a judgment, pending appeal, even if he must go to another district to do so, unless the defendant files a supersedeas bond to prevent such enforcement. Insufficient Assets Exist in the District of Arizona to Satisfy the Judgment A search of property records in Arizona does not disclose the existence of any real property within this district titled in the name of any of the Out-of-State Defendants, except for Defendant Carroll. The Receiver's investigation discloses that Defendant Carroll holds title to 1.02 acres of vacant land in Santa Cruz County, Arizona. According to the Santa Cruz County Assessor's office, the property in Santa Cruz County has a full cash value of $5,100.00, which is wholly insufficient to satisfy the Receiver's judgment against Defendant Carroll.5 (See, attached Declaration of Christine A. Schmidt.) Although it is conceivable that the Out-of-State Defendants own personal property in the District of Arizona, such as the right to insurance commissions from insurers licensed to do business in Arizona, at this stage of the case the existence or extent of such interests is unknown and the relief requested herein should not be delayed due to such uncertainty. Substantial Assets Exist in the Foreign Districts Where Registration is Sought The Receiver's preliminary investigation shows that all of the Out-of-State Defendants own property in the foreign districts in which they reside. Specifically, the Receiver has learned that:

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The award under the Judgment against Defendant Carroll is for $37,000, plus taxable 22 costs of $22,283 and prejudgment interest of $12,360. In addition, the Judgment awards the Receiver post judgment interest at the applicable federal rate, which is 5.05% per 23 annum. Accordingly, the total owed by Carroll presently under the Judgment is in excess of $72,000. Case 2:03-cv-02390-JAT Document 630 5 Filed 08/13/2007 Page 5 of 7

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Defendant Davis resides in and owns real property in Danvers

Massachusetts, and has a license to sell insurance in the state of Massachusetts. Danvers Massachusetts is located in the District of Massachusetts, which is the only federal judicial district in the state. 2. Defendant Richard resides in and owns real property in Augusta Maine, and

has a license to sell insurance in the state of Maine. Augusta Maine is located in the District of Maine, which is the only federal judicial district in the state. 3. Defendants Andrea and Patrick Wehrly reside in and own real property in

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Spring Texas. In addition Andrea Linn, believed to be Defendant Andrea Wehrly, owns an additional parcel of property in Spring Texas. Defendant Patrick Wehrly is licensed to sell insurance in Arizona and Texas. Spring Texas is located in the Southern District of Texas, which is one of four federal districts in the State of Texas. 4. Defendant Carroll resides in and owns real property in Hemet California

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and until just recently held a license to sell insurance in the State of California. Hemet California is located in the Central District of California, which is one of four federal districts in California. (See, attached Declaration of Christine A. Schmidt.) Accordingly, the Receiver has met the two-prong test of demonstrating that there is insufficient property owned by the Out-of-State Defendants within the District of Arizona to satisfy the Receiver's Judgment and that all Out-of-State Defendants have substantial property in the foreign districts in which registration is sought. Therefore, in order to protect the Receiver's substantial interest arising under the Judgment, the Receiver requests that this Court enter an Order certifying the Judgment for registration
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in the District of Massachusetts, the District of Maine, the Southern District of Texas, and the Central District of California. Such registration will enable the Receiver to fully enforce the Judgment against the Out-of-State Defendants just as he intends to fully enforce the judgment against the Arizona Defendants. Respectfully submitted this 13th day of August, 2007. GUTTILLA MURPHY ANDERSON, P.C.

s/Patrick M. Murphy Patrick M. Murphy Attorneys for the Receiver

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0758-011(65220)

PROOF OF SERVICE This is to certify that on this 13th day of August, 2007, I electronically transmitted the foregoing document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the CM/ECF registrants listed below; and that the persons listed below who are not registered participants of the CM/ECF System have been served with a copy of the foregoing document by first class mail this date. s/Patrick M. Murphy Patrick M. Murphy Burton M. Bentley ECF Registered [email protected] Attorney for Defendants Leonard and Elizabeth Bestgen, Robert Carroll, Rudy and Mary Crosswell, Charles Davis, Richard Derk, Paul Richards, and Patrick and Andrea Wehrly

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