United States District Court, Central District of Illinois, Springfield Division
August 26, 1992
IN RE JOINT EASTERN & SOUTHERN DISTRICTS ASBESTOS LITIGATION. IN RE JOHNS-MANVILLE CORPORATION, ET AL., DEBTORS. BERNADINE K. FINDLEY, AS EXECUTRIX OF THE ESTATE OF HILLIARD FINDLEY, ET AL., PLAINTIFFS,
DONALD M. BLINKEN, ET AL., DEFENDANTS.
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!
I. Factual Background
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for the Southern District of New York was partially withdrawn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 void pursuant to Federal Rules of Civil
Procedure 12(b), 60(b)(4) and 69. That motion is currently
before the Court.
II. Arguments Advanced by Walker
In support of his motion, Walker advances the following five
I. As to both Walker and the Plaintiffs in the
Handley and Betts state actions, the Courts' orders
of November 23, 1990, and February 13, 1991 are
void for lack of subject matter jurisdiction.
II. That those same orders are void for lack of
III. That those same orders violate 28 U.S.C. § 2283
(the "Anti-Injunction Act").
IV. That the September 3, 1991, Judgment upon
Decision of Court is invalid due to Walker's
failure to consent to those proceedings before
Magistrate Judge Caden pursuant to 28 U.S.C. § 636(c).
V. That the Citation to Discover Assets is invalid
due to its failure to conform to the requirements
of Illinois Supreme Court Rule 277(e).
A. Arguments I, II, III, and IV
Before this Court is Walker's motion in opposition to the
enforcement of a foreign judgment registered in this district
pursuant to 28 U.S.C. § 1963. The propriety of this Court's
review of that motion — an issue addressed by neither party —
is first examined.
Title 28 U.S.C. § 1963 provides in relevant part:
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
such judgment in any other district . . . when the
judgment has become final by appeal or expiration
of the time for appeal or when ordered by the
court 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.
Usually, it is more convenient for motions for relief from a
judgment to be addressed to the rendering court.
[T]he rendering court ordinarily will be far more
familiar with the case and with the circumstances
that are said to provide grounds for relief from
the judgment. Accordingly it is appropriate for
the court in the district of registration to
decline to pass on the motion for relief and to
require the moving party to proceed in the court
that gave the judgment.
11 Wright and Miller, Federal Practice and Procedure: Civil §
2865 (1973) (footnote omitted).
The court in United States v. Fluor Corp., 436 F.2d 383 (2nd
Cir. 1970), while noting that the powers of a district court to
grant relief against a judgment registered pursuant to
28 U.S.C. § 1963 were not clearly established, observed that there
could be little viable support for the notion that "the court
of registration lacks discretion in appropriate circumstances
to refer the parties to the court which rendered judgment." Id.
Relying on Fluor, the court in Fuhrman v. Livaditis,
611 F.2d 203 (7th Cir. 1979), identified the principles controlling a
registering court's decision to review the judgment of a
rendering court. The Fuhrman court held that:
In discussions of this issue [the review of
judgments by the registering court], two major
policy considerations are often voiced: (1) comity
among the federal district courts is furthered if
the registering court refers the question of
relief from judgment to the court which ordinarily
entered the judgment; (2) efficient judicial
administration is furthered if the registering
court defers to the original court, which is
likely to be more familiar with the issues raised
by the motion for relief from judgment.
Id. at 205. Here, both judicial comity and the pursuit of
efficient judicial administration dictate that Walker's
opposition to the enforcement of judgment based on subject
matter jurisdiction, personal jurisdiction, the restrictions of
the Anti-Injunction Act and the actions of Magistrate Judge
Caden be referred to the rendering Courts for review.
"In general, [the] principle of 'comity' is that courts of
one state or jurisdiction will give effect to [the] laws and
judicial decisions of another state or jurisdiction, not as a
matter of obligation but out of deference and mutual respect."
Black's Law Dictionary 242 (5th ed. 1979). "Comity among the
district courts would obviously be furthered if these issues
[issues raised in opposition to the judgment of the rendering
court] were referred back to the court which originally
considered them." Fluor, 436 F.2d at 385.
Contempt of court is "[a]ny act which is calculated to
embarrass, hinder, or obstruct [the] court in [its]
administration of justice, or which is calculated to lessen its
authority or its dignity." Black's Law Dictionary 288 (5th ed.
1979). In the instant case, Walker seeks to oppose, in a
foreign jurisdiction, the consequences of behavior which the
rendering Courts found sufficient to warrant a finding of
contempt and the imposition of significant sanctions. This
Court finds that in the absence of glaring irregularities,
comity demands that it respect such a decision.
Equally compelling is the readily apparent fact that the
rendering Courts have previously and thoroughly addressed the
issues raised by Walker. In both In re Joint Eastern and
Southern Districts Asbestos Litig. 120 B.R. 648 (E. & S.D.N Y
1990) ("Manville I") and In re Joint Eastern and Southern
Districts Asbestos Litig. 129 B.R. 710 (E. & S.D.N.Y. 1991)
("Manville II") the rendering Courts painstakingly reviewed the
effect of the Anti-Injunction Act on the enjoining of state
court actions (Manville I at 655), whether the Courts had
subject matter jurisdiction to resolve the controversy
(Manville II at 778) and "the court's jurisdiction over
non-resident class members. . . ." Manville II at 796. In
addition, since July 20, 1990, the rendering Courts have
striven to protect the interests of current and potential
asbestos litigation claimants, to oversee the restructuring of
the Trust and to handle the certification of the Findley class
action. The above cited exhaustive opinions and the duration of
the Courts' extensive involvement with this matter demonstrate
an expertise with the issues raised by Walker which this Court
would by loath to squander.
B. Argument V
Federal Rule of Civil Procedure 69(a) provides in relevant
The procedure on execution, in proceedings
supplementary to and in aid of a judgment, and in
proceedings on and in aid of execution 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. . . .
Illinois Supreme Court Rule 277(e) states that:
The examination of the judgment debtor, third
party, or other witnesses shall be before the
court, or, if the court so orders, before an
officer authorized to administer oaths designated
by the court, unless the judgment creditor elects,
by so indicating in the citation or subpoena
served or by requesting the court to so order, to
conduct all or a part of the hearing by deposition
as provided by the rules of this court for
Walker argues that because the Citation to Discover Assets
served on him fails to expressly indicate that the hearing
would be conducted as provided by the rules governing
depositions that it fails to conform to Rule 277(e) and is
therefore void. Walker's argument is without merit.
Walker fails to cite, and this Court is unaware of, any
authority in support of his position. It is clear from the face
of the citation that the hearing would occur in accordance with
the rules governing depositions and accordingly the Court
rejects Walker's position.
Ergo, for the reasons noted above, Walker's motion to quash
the Citation to Discover Assets, for the dismissal of the
supplementary proceedings and for a determination that the
registered judgment is void is DENIED WITHOUT PREJUDICE WITH
LEAVE TO REFILE as to arguments I, II, III and IV before the
rendering Courts, and DENIED WITH PREJUDICE as to argument V.
The enforcement of the judgment with the interest thereon
will henceforth proceed expeditiously. See Pacific Reinsurance
Management Corp. v. Fabe 929 F.2d 1215 (7th Cir. 1991). The
examination of Walker pursuant to the Citation to Discover
Assets, issued upon the application of the Trust, will occur on
September 24, 1992, at 9:00 a.m. before United States
Magistrate Judge Charles Evans of this Court.
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