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For Your Ease Only, Inc. v. Calgon Carbon Corp.

November 13, 2007

FOR YOUR EASE ONLY, INC., PLAINTIFF,
v.
CALGON CARBON CORPORATION, ET AL., DEFENDANTS



The opinion of the court was delivered by: Wayne R. Andersen District Judge

MEMORANDUM ORDER AND OPINION

This matter comes before the court on plaintiff's motion for a turnover order regarding Home Shopping Network ("HSN") payments following an order of default judgment against defendants Mark Schneider and Product Concepts Company ("PCC"). For the following reasons, the motion is denied.

BACKGROUND

Plaintiff For Your Ease Only ("FYEO") brought suit against defendants Schneider, PCC and Calgon Carbon Corporation ("Calgon") alleging patent infringement and other claims related to the sale of anti-tarnish jewelry boxes. On June 27, 2007, the court entered a default judgment in the amount of $2.1 million against Schneider and PCC who had not opposed the motion for default or appeared in court. An order of final judgment was entered on February 22, 2007. FYEO brought this motion for a turnover order of payments by HSN for the sale of the anti-tarnish jewelry boxes due to debtors Schneider and PCC. The only remaining defendant Calgon in this case opposed the turnover motion, as did Anewco, Inc. ("Anewco"), which is a company wholly-owned by Schneider's brother-in-law, Douglas Fournier. Anewco now holds the rights to the anti-tarnish jewelry boxes sold on HSN. At some point while this motion was pending before the court, HSN made payments to Anewco for the purchase of anti-tarnish jewelry boxes. FYEO seeks turnover of the payments made to Anewco, as well as any subsequent or future payments from HSN for the sales of anti-tarnish jewelry boxes.

In addition to the pleadings, the court held a motion hearing in this matter to determine whether the HSN payments made and owed to Anewco were, in fact, attributable to judgment debtors Schneider and PCC.

DISCUSSION

I. Jurisdiction

As a preliminary matter, the court must determine whether this court has jurisdiction over third parties, such as HSN and Anewco. Rule 69(a) of the Federal Rules of Civil Procedure provides in part that:

Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. 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. . .

Rule 69(a), however, does not confer jurisdiction, but is a procedural mechanism for a federal court's "exercise of its inherent jurisdiction to enforce its judgment in a supplemental proceeding." Argento v. Melrose Park, 838 F.2d 1483, 1487 (7th Cir. 1988). Using that inherent power, the court may exercise ancillary jurisdiction over subsequent proceedings involving third parties to assist in the protection and enforcement of federal judgment. Peacock v. Thomas, 516 U.S. 349, 356 (1996); see Yang v. City of Chicago, 137 F.3d 522-526 (7th Cir. 1998).

II. Citation to Discover Assets

Having found that the court has the jurisdiction necessary to decide FYEO's turnover motion, we now consider the information presented to the court by the pleadings and motion hearing. FYEO served HSN with a citation to discover assets in accordance with Illinois law.

735 ILCS 5/2-1402. Service of the citation creates a lien on upon "all personal property belonging to the judgment debtor in the possession or control of the third party or which thereafter may be acquired or come due the judgment debtor and comes into the possession or control of the third party to the time of the disposition of the citation." 735 ILCS 5/2-1402(m).

HSN made payments for anti-tarnish jewelry boxes to Anewco after it was served with a citation to discover assets. If a recipient violates the restraining provision of a citation and transfers the asset, the court "may enter judgment against him or her in the amount of the unpaid portion of the judgment and costs allowable under this section, or in the amount of the value of the property transferred, whichever is lesser." 735 ILCS 5/2-1402(f)(1). Thus, if the court finds that ...


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