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Select Medical Rehabilitation Services, Inc. v. Morris Healthcare & Rehabilitation Services, Inc.

United States District Court, Seventh Circuit

January 15, 2014

Select Medical Rehabilitation Services, Inc., a Delaware corporation, Plaintiff,
v.
Morris Healthcare & Rehabilitation Services, Inc., an Illinois corporation, and Morris Healthcare & Rehabilitation Center, LLC, an Illinois limited liability company. Defendants.

Segal McCambridge Singer & Mahoney, Ltd., Chad J. Layton, Attorneys for Plaintiff, Select Medical Rehabilitation Services, Inc.

PLAINTIFF'S MOTION FOR ENTRY OF AGREED CONSENT JUDGMENT AND RULE 69 MOTION FOR DISCOVERY IN AID OF EXECUTION AND COLLECTION OF THE CONSENT JUDGMENT

Plaintiff Select Medical Rehabilitation Services, Inc. (referred to herein as "Select Medical"), through counsel Segal McCambridge Singer & Mahoney, Ltd., states as follows for its Motion For Entry of an Agreed Consent Judgment and Federal Rule 69 Motion for Discovery In Aid of Execution and Collection of the Consent Judgment against Defendant Morris Healthcare & Rehabilitation Center, LLC (referred to herein as "Morris Healthcare Center")

INTRODUCTION

Plaintiff filed a Complaint seeking recovery for breach of contract when Defendant Morris Healthcare Center failed to compensate Plaintiff for therapy services rendered pursuant to a written contract between the parties. Defendant Morris Healthcare Center has agreed to the entry of a consent judgment, but indicates that it is unable to pay the judgment. Accordingly, Plaintiff seeks entry of the consent judgment, and leave of court to pursue discovery in aid of the execution and collection of that judgment.

ARGUMENT

I. DEFENDANT AGREES TO ENTRY OF A CONSENT JUDGMENT.

Defendant Morris Healthcare Center has consented to the entry of a judgment against it in the amount of $473, 156.26. A copy of the consent judgment agreed to by the parties is attached hereto as "Exhibit A." A copy of the written correspondence confirming Defendant's consent to this judgment is attached as "Exhibit B." Given that the parties are in agreement that a consent judgment should be entered, both Plaintiff and Defendant request that this Court enter the order attached as Exhibit A.

II. FEDERAL RULE 69(A) AUTHORIZES PLAINTIFF TO CONDUCT DISCOVERY IN ORDER TO AID ITS COLLECTION AND ENFORCEMENT OF THE CONSENT JUDGMENT.

Defendant Morris Healthcare Center has indicated that it is unable to satisfy the consent judgment once entered. Accordingly, in order to aid its execution and collection of the consent judgment, Plaintiff is requesting leave of court to conduct discovery into this narrow issue.

The federal rules of civil procedure provide as follows:

(2) Obtaining Discovery. In aid of the judgment or execution, the judgment creditor or a successor in interest whose interest appears of record may obtain discovery from any person-including the judgment debtor-as provided in these rules or by the procedure of the state where the court is located.

FED. R. CIV. PROC. 69(a)(2). Federal law authorizes a judgment creditor, such as Plaintiff, here, to pursue discovery in order to aid its ability to enforce and collect on a judgment. In Evans v. Chicago Football Franchise Limited Partnership, 127 F.R.D. 492, 493 (N.D. Ill. 1989), the Northern District confirmed that the federal rules allow for a party to conduct discovery in aid of its efforts to enforce or collect a judgment, and that such discovery can be conducted following the entry of the judgment. The court relied on Rule 69(a) to support its finding that "[i]t is clear from the plain language of the rule that plaintiff may indeed use the federal discovery rules" in order to discover, post-judgment, information concerning defendant's assets, or to otherwise enforce or collect on that judgment. Id. The Northern District highlighted the fact that the federal rules authorize a judgment creditor to use the federal discovery rules, or to proceed in a manner that is authorized by state law and practice, and the court rejected the debtor's argument that it was too late to proceed with such discovery following the entry of judgment. Id. Finally, the court noted that a judgment creditor can obtain discovery from a judgment debtor or even third parties without the need to file a separate lawsuit or proceeding. Id.

The law further provides that, under Rule 69(a), "[t]he presumption is in favor of full discovery of any matters arguably related to the creditor's efforts to trace the debtor's assets and otherwise to enforce its judgment...." ClearOne Communications, Inc. v. Chiang, 276 F.R.D. 402, 404 (D. Mass. 2011) (citation and internal quotations omitted). Under the prevailing legal standard, a judgment creditor "is entitle to full discovery" of a debtor's "current financial situation, including any assets, income or jointly held property that bear on his ability to satisfy the pending judgment against him." Id. See also Caisson Corp. v. County West Bldg. Corp., 62 F.R.D. 331 (E.D. Pa. 1974) (explaining that under Rule 69, "discovery may be had of the judgment debtor or third persons without separate suit and, if discovery is pursued under the federal rules, as in this case, all the discovery devices of the Rules may be used as in the progress of the action. All agree that the judgment creditor must be given the freedom to make a broad inquiry to discover hidden or concealed assets of the judgment debtor.")

Importantly, federal law recognizes that it is not appropriate to obtain discovery relating to a defendant's assets or ability to satisfy a judgment until after a ...


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