Atlantic Purchasers, Inc. v. Aircraft Sales, Inc.

101 F.R.D. 779, 1984 U.S. Dist. LEXIS 15979
CourtDistrict Court, W.D. North Carolina
DecidedJune 12, 1984
DocketNo. C-C-79-204-M
StatusPublished
Cited by7 cases

This text of 101 F.R.D. 779 (Atlantic Purchasers, Inc. v. Aircraft Sales, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Atlantic Purchasers, Inc. v. Aircraft Sales, Inc., 101 F.R.D. 779, 1984 U.S. Dist. LEXIS 15979 (W.D.N.C. 1984).

Opinion

ORDER

McMILLAN, District Judge.

This case was tried before a jury on September 9 through September 14, 1981; the jury returned a verdict in favor of plaintiffs. On January 26, 1982, the court entered judgment on the jury’s verdict in [781]*781the amount of $46,000.00 plus costs of the action.

On March 10, 1982, an execution issued by the Clerk of the Mecklenburg County, North Carolina, District Court was returned by the Sheriff, who had found no property of the defendants on which to levy. Since that time, plaintiffs have been continuously frustrated in their efforts to collect on the judgment. On December 20, 1983, this court appointed a receiver of the defendants’ property. On April 9, 1984, the court entered a temporary restraining order, enjoining defendant Donald J. Ank-lin and his wife, Jane M. Anklin, Donald S. Anklin and his wife, Karen, World War II Rebuilders, Inc., World War II Holding Company, Carolina First National Bank, and William S. Neel, Trustee, from disposing of or removing or encumbering certain property alleged to be available to satisfy the judgment. On the date of entry of the restraining order, only defendant Donald J. Anklin was a party to the suit before the court. [Aircraft Sales, Inc., the other defendant in the suit, is apparently now defunct.] All the parties named in the order, with the possible exception of World War II Holding Company, allegedly a New York corporation, are domiciled in the State of North Carolina.

The case was heard on April 24, 1984, for the purpose of determining whether defendant Donald J. Anklin had made fraudulent transfers of his property to the parties named in the restraining order in order to avoid paying the judgment.

At the hearing the question developed whether the court had jurisdiction to consider the allegations of fraudulent conveyance. Further, the evidence offered at the hearing was insufficient to enable the court to determine whether defendant Donald J. Anklin retains sufficient funds at present from which the judgment can be satisfied, or whether, at the time of the alleged transfers, Donald J. Anklin retained sufficient funds to satisfy his then-existing obligations. Accordingly, the hearing was adjourned and the parties and the receiver were directed (1) to advise the court concerning its authority to determine title to the property in question; and (2) to inform the court whether any audit had been conducted with respect to the assets of the defendants.

Since the date of the hearing, the court has received several memoranda from the receiver and the parties which (1) do not definitively answer the question of the court’s jurisdiction to determine whether the conveyances were fraudulent; and (2) reveal that no independent audit of defendant’s financial status has been conducted. In addition to the papers filed in response to the court’s request, the file also contains several motions addressed to discovery and execution of the judgment.

The court has reviewed all of these outstanding matters, and concludes the following:

1. Jurisdiction.

The court is satisfied that it has both personal and subject matter jurisdiction to determine title to property located within this state or fraudulently conveyed by defendants and others who have had minimum contacts with this state to entities located outside this jurisdiction.

Federal Rule of Civil Procedure 69(a) provides for the application of state law “in proceedings on and in aid of a judgment, and in proceedings on and in aid of execution.” Thus the rules provide that “[i]n the absence of controlling federal statutes, the district court has the same authority to aid judgment creditors as that provided to state courts under local law. Duchek v. Jacobi, 646 F.2d 415, 417 (9th Cir.1981), quoting United States ex rel. Goldman v. Meredith, 596 F.2d 1353, 1357 (8th Cir.1979), cert. denied, 444 U.S. 838, 100 S.Ct. 76, 62 L.Ed.2d 50 (1980). Moreover, Rule 69(a) is a procedural, and not a substantive, rule, and it must be read in light of the provision of Fed.R.Civ.P. 82 that the Federal Rules of Civil Procedure “shall not be construed to extend or limit the jurisdiction of the United States district courts” (emphasis supplied). To the extent [782]*782permitted by due process, federal courts have the inherent authority to enforce their own judgments; this precept provides the basis for the application of state law to the facts before the court.

The restraining order entered by the court on April 9, 1984, was authorized by N.C.Gen.Stat. § 1-366, which provides that the court may forbid the transfer of property in the hands of third persons that is alleged to belong to a judgment debtor “till a sufficient opportunity is given to the receiver to commence and prosecute [an] action to judgment and execution.” The court has been informed that, since the date of entry of the restraining order, the receiver has commenced two actions in the courts of North Carolina against several of the parties named in this court’s April 9, 1984, order. Therefore, it would seem appropriate for this court to dissolve its restraining order.

Nevertheless, despite the commencement of proceedings in the North Carolina courts, plaintiffs are attempting diligently to proceed toward execution of the judgment in this court. This is entirely appropriate, since a pending state court action to enforce a federal court judgment does not preclude supplemental proceedings in aid of execution of the judgment in federal court. Meridian Investing and Development Corp. v. Suncoast Highland Corp., 628 F.2d 370, 372 (5th Cir., Unit B, 1980); 12 Wright & Miller, Federal Practice and Procedure § 3013 (1973). It appears to the court that several such supplemental proceedings are possible.

First, the court is authorized, pursuant to N.C.Gen.Stat. § 1-352 et seq. to order discovery of defendants’ assets, and to order sale by execution of defendants’ property to the extent necessary to satisfy the judgment. Second, both plaintiffs and the receiver are entitled under North Carolina law to institute actions based on fraudulent conveyance of defendants’ property. N.C.Gen.Stat. § 39-15. Federal Rule of Civil Procedure 18(b) expressly contemplates the joinder of claims based on fraudulent conveyance to lawsuits instituted in federal courts. The court is satisfied that it may exercise ancillary subject matter jurisdiction over such claims, without regard to diversity of citizenship or amount in controversy. Super Value Stores, Inc. v. Parker’s Food Town, Inc., 525 F.Supp. 730 (N.C.Ga.1981); Tcherepnin v. Franz, 439 F.Supp. 1340 (N.D.Ill.1977); Empire Lighting Fixture Company v. Practical Lighting Fixture Company,

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Cite This Page — Counsel Stack

Bluebook (online)
101 F.R.D. 779, 1984 U.S. Dist. LEXIS 15979, Counsel Stack Legal Research, https://law.counselstack.com/opinion/atlantic-purchasers-inc-v-aircraft-sales-inc-ncwd-1984.