The opinion of the court was delivered by: Richard Mills, District Judge:
Are collateral attacks interposed against a foreign contempt
judgment and resulting sanctions, registered for enforcement in
this district pursuant to 28 U.S.C. § 1962, properly considered
by this Court?
In this case, absolutely not!
On August 26, 1982, Manville Corporation and certain
affiliated entities ("Manville") filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the Southern
District of New York. On August 22, 1986, Manville proposed the
Second Amended and Restated Plan of Reorganization (the "Plan")
which created the Manville Personal Injury Settlement Trust
(the "Trust"). The Trust was created for the payment of all
asbestos related claims incurred by Manville.
Shortly after the Trust's establishment, it experienced
substantial asset shortages due to escalating litigation costs
including associated attorney's fees. On July 20, 1990, the
reference of the Manville bankruptcy to the Bankruptcy Court
for the Southern District of New York was partially withdrawn
pursuant to 28 U.S.C. § 157(d) and United States District Judge
Jack B. Weinstein, of the Eastern District of New York, was
granted supervisory responsibility over the Plan to protect the
Trust's assets and prevent further frustration of the Plan.
Soon thereafter, the district courts for the Eastern and
Southern Districts of New York, and the bankruptcy court for
the Southern District of New York (the "Courts"), entered a
temporary stay of payments from, and a stay on the
enforceability of, judgments and settlements against, the Trust
pending revision of its operations.
On November 19, 1990, certain claimants of the Trust filed in
the Courts a class action (the "Findley Class Action") against
the Trust's trustees to compel them to revise the Trust's
obligations and payment procedures. The Findley Class Action
was assigned to Judge Weinstein and was consolidated with the
bankruptcy proceedings before the Courts.
In an order issued on November 23, 1990, following a show
cause hearing, the Courts: (1) conditionally certified the
Findley Class Action and appointed representative counsel; and
(2) enjoined all pending litigation against the Trust to halt
further dissipation of the Trust's assets during the pendency
of the Findley Class Action. In subsequent contempt proceedings
against Attorney James Walker held before Judge Weinstein,
Walker was found to have received a copy of the Courts'
November 23, 1990 order enjoining actions against the Trust.
Attorney Walker does not contest this finding.
On June 14, 1990, the Illinois Circuit Court for McLean
County entered judgments
in favor of the Plaintiffs and against the Trust in Handley v.
Manville Corp. Asbestos Disease Compensation Fund, No. 80-L-93
(Ill.Cir.Ct., McLean Co.) and Betts v. Manville Corp. Asbestos
Disease Compensation Fund, No. 79-L-147 (Ill. Cir.Ct., McLean
Co.). Walker was the attorney for the claimants in both state
actions. On December 31, 1990, in violation of the Courts'
November 23 order enjoining all actions against the Trust,
Walker caused Citations to Discover Assets to be issued to
Bankers Trust Company ("Bankers Trust"), custodian of the
Trust's assets, in an effort to enforce the Betts and Handley
On February 13, 1991, the Courts entered an order and partial
judgment certifying a non-opt-out class pursuant to Federal
Rule of Civil Procedure 23(b)(1)(B) consisting of all trust
claimants. Pursuant to that order, the Courts stayed
"[e]xecution or other enforcement of judgments against the
Trust and/or its assets . . ." and "negotiating settlements or
from taking any action in connection with claims pending or
hereafter commenced against the Trust." In later contempt
proceedings against Walker, Judge Weinstein found that Walker
received notice of the Courts' order of February 13 and that he
knew it enjoined him from actions against the Trust. Again,
Walker does not contest that finding.
On February 25, 1991, in the Illinois Circuit Court for
McLean County, Walker obtained ex parte judgments against
Bankers Trust in the amount of $3,118,511.57. On March 27,
1991, Walker caused garnishment summons to issue to five
Chicago banks to enforce the Bankers Trust judgments.
On April 19, 1991, upon the Trust's and Bankers Trust's
application, the Courts entered an order directing Walker to
appear on April 23, 1991, and show cause why he should not be
held in contempt for his actions in violation of the Courts'
orders of November 23, 1990 and February 13, 1991. Walker was
served by both facsimile transmission and personal service on
April 19, 1991. Following Walker's failure to appear, Judge
Weinstein found Walker in civil contempt on April 24, 1991. In
its order of contempt, the Courts referred to United States
Magistrate Judge John L. Caden the issue of appropriate
On May 13, 1991, Magistrate Judge Caden awarded to the Trust
$52,085.30 in attorneys' fees and expenses associated with
Walker's contemptuous behavior. On June 10, 1991, Magistrate
Judge Caden assessed against Walker an additional $7,000 in
sanctions and $22,569.71 in attorneys' fees and expenses. Both
awards included the calculation of interest thereon at a rate
of 6.07 and 6.09 percent respectively.
On October 21, 1991, the judgment entered against Walker was
registered in this district pursuant to 28 U.S.C. § 1963. On
that same day, a Citation to Discover Assets issued against
Walker upon the application of the Trust. On November 18, 1991,
Walker filed with this Court a motion for an order quashing the
Citation to Discover Assets, for a dismissal of the
supplementary proceedings and for a determination that the
registered judgment is ...