Bogosian v. Woloohojian

901 F. Supp. 68, 1995 U.S. Dist. LEXIS 18824, 1995 WL 606768
District Court, D. Rhode Island·Decided August 4, 1995·No. Civ. A. 88-0373B·Published·Cited by 6 cases

Opinion

OPINION

FRANCIS J. BOYLE, Senior District Judge.

Plaintiff has moved to vacate an order entered in this action on June 8, 1993 by a magistrate judge. The Court entered an order on July 13,1990 (the 1990 order) which provided for the payment to Plaintiff directly by Defendant corporation the sum of $10,000 monthly for the sustenance of Plaintiff during the pendency of thib action. The magistrate judge’s order redirected the monthly payments to an interest bearing escrow account in which Plaintiff has no current right to payment. Plaintiff contends that the magistrate judge’s order is invalid and that she is entitled to receive' prospective monthly payments from Defendant corporation together with the funds paid into the account which, in May, 1995, totaled $265,625.68.

Plaintiff, as the owner of one third of the stock of Woloohojian Realty Corporation, brought this action on June 23, 1988. Plaintiff sought a liquidation of the Corporation under the provisions of R.I.Gen.Laws § 7-1.1-90, et seq. (1992). As authorized by R.I.Gen.Laws § 7-1.1-91 (1992), on February 16, 1989, the corporation elected to purchase Plaintiffs stock at “fair value.” Thereupon a lengthy valuation effort was commenced. A Special Master was appointed by the Court on August 1,1990 under the provisions of Fed.R.Civ.P. 53. On July 13, 1990, in response to a motion filed by Plaintiff, based upon Plaintiffs then lack of financial resources and federal income tax liabilities, the Court granted Plaintiffs motion directing Defendant corporation to pay to Plaintiff a lump sum of $100,000 and a monthly payment of $10,000 pending a determination of the value of Plaintiffs stock. The order directed that payments should be credited against the amount ultimately determined to be due Plaintiff. Defendant took an appeal from this order. The Court of Appeals affirmed the order. See Bogosian v. Woloohojian Realty Corp., 923 F.2d 898 (1st Cir.1991). In that opinion, the Court of Appeals held that Defendants could take an immediate appeal because the order was a “mandatory injunction.” See id. at 903. Following this abortive effort to avoid making payments to Plaintiff, Defendant tendered two checks purporting to comply with the Court’s July 13, 1990 order but made payable to Plaintiff and one of Plaintiffs former law firms which claimed legal fees were due it. Plaintiff moved to have Defendants held in contempt. By order dated January 25, 1991 and after a hearing on the motion, the Court directed that two checks be issued payable solely to Plaintiff and directed specifically that, “[a]ll future interim monthly payments under the Court’s July 30, 1990 order are to be made payable solely to Elizabeth Y. Bogo-sian.”

On April 13, 1993, Plaintiff filed what was labeled a “Motion for a Protective Order.” However Plaintiff did not seek the usual protective order. Plaintiff had been represented in this and other litigation by a series of lawyers. Plaintiffs former lawyers as well as the Internal Revenue Service had notified *70 Defendant corporation that they had liens on Plaintiffs property for satisfaction of their claims. Plaintiff sought an order protecting her allowance under the 1990 order from those claims. The motion was referred to a magistrate judge by means of the Court’s usual form of order requesting a report and recommendation. The Order in it entirety provided, “[rjeferred to U.S. Magistrate Judge to hear the parties and to submit a Report and Recommendation to the Court under the provisions of 28 U.S.C. § 686(b)(1)(A).”

Instead of a report and recommendation, on June 8, 1993, the magistrate judge entered an order which authorized the creation of an escrow account in the name of Defendant’s law firm as escrow agent for the benefit of Plaintiff and directed further payment of the monthly allowance to the escrow account. The order further provided that “[t]he proceeds of such Escrow Account shall be distributed upon further order of the Court after resolution of Woloohojian’s Realty Corp.’s Motion For Interpleader.”

The motion for interpleader was ultimately denied on May 17, 1995. No effort was made to obtain a review of the magistrate judge’s order. No report and recommendation has ever been issued and no notice has ever been given Plaintiff as required by United States v. Valencia-Copete, 792 F.2d 4 (1st Cir.1986), and local rule 32(c)(3), D.R.I.R. 32(c)(3). The prevailing party has not submitted a form of order to this Court as required by Rule 32(c)(3), as they must in the absence of objection. Had the prevailing party submitted such a form of order it would have been rejected as in conflict with the 1990 order. The present form of rule 32(c)(3) was adopted on November 3, 1978. At that time, the existing rule provided that if there were no timely objection, “the finding or the report and recommendation of the magistrate shall constitute the order of the court.” This rule allowed a report to become a order of the court if a party failed to make a timely objection, whether or not the report was consistent with the then status of the action. It also allowed the entry of an order which did not have the approval of the Judge assigned to the action. Hence, the rule was modified to require the addition of the requirement that the Judge assigned to the action approve the report.

From the date of the order to the April 1995 payment, $10,000 was paid monthly to the account. Plaintiff received nothing. Es-crowed payments were deposited in two banks, Fleet Bank and State Street Bank. On May of 1995, the account consisted of $103,087.38 in the Fleet Bank account and $162,538.50 in the State Street Bank account.

Plaintiff, with new counsel, ultimately filed a motion to vacate the magistrate judge’s order of June 8, 1993. The motion was granted in part by order of May 16, 1995 insofar as the prospective application of the order was concerned. Immediate resumption of payments directly to plaintiff was ordered. Plaintiff agreed that half of the monthly allowance may be paid to the Internal Revenue Service, the remainder outright to Plaintiff. An order was entered accordingly.

One of the law firms, Flanders & Medei-ros, which had a claim for services rendered to Plaintiff secured by a U.C.C. Financing Statement, had obtained a judgment against Plaintiff in an action pending and assigned to another Judge of this court. A bank creditor of Plaintiff also obtained a judgment against Plaintiff in another action pending before a third Judge of this court. Both of the other Judges authorized execution of the respective judgments. The law firm of Flanders & Medeiros has served trustee process on State Street Bank to require the funds in the bank’s possession be delivered to it. Flanders & Medeiros had been Plaintiffs lawyer and it obtained the order of July 13, 1990, representing that Plaintiff was essentially destitute and in dire need of immediate and continuing funds.

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Bogosian v. Woloohojian, 901 F. Supp. 68, 1995 U.S. Dist. LEXIS 18824, 1995 WL 606768 (D.R.I. 1995).

901 F. Supp. 68 (Bogosian v. Woloohojian) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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