Diversified Funding Group, LLC v. Daniel Hendon ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 3 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DIVERSIFIED FUNDING GROUP, LLC, No. 17-56242
Plaintiff-Appellant, D.C. No.
2:17-cv-00189-VAP-AFM
v.
DANIEL L. HENDON, MEMORANDUM*
Defendant-Appellee,
v.
PEGGY JACKSON, as Trustee of the W &
N Hendon Revocable Trust,
Movant-Appellee.
DIVERSIFIED FUNDING GROUP, LLC, No. 18-55159
Plaintiff-Appellant, D.C. No.
2:17-cv-00189-VAP-AFM
v.
DANIEL L. HENDON,
Defendant,
v.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
PEGGY JACKSON, as Trustee of the W &
N Hendon Revocable Trust,
Movant-Appellee.
Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, Chief Judge, Presiding
Argued and Submitted March 5, 2019
Pasadena, California
Before: COLE, Chief Circuit Judge,** and FISHER and NGUYEN, Circuit Judges.
Diversified Funding Group, LLC (“DFG”) appeals the district court’s orders
quashing a levy against funds held in the W & N Hendon Revocable Trust
(“Trust”), releasing the funds, denying DFG’s requests for a turnover order, asset
freeze, and seizure of property, and imposing sanctions on DFG for issuing a
facially invalid subpoena duces tecum. We have jurisdiction under 28 U.S.C.
§ 1291, and we affirm.
1. The Arizona bankruptcy court had subject matter jurisdiction pursuant to
28 U.S.C. §§ 1334 and 157(b)(2)(I).1 Because DFG registered the bankruptcy
**
The Honorable Ransey Guy Cole, Jr., Chief Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation.
1
The parties’ requests for judicial notice (docket entry nos. 12, 21) are
GRANTED.
2
court’s judgment in California, the district court here had jurisdiction to enforce it
pursuant to 28 U.S.C. § 1963.
The district court correctly rejected DFG’s request to enforce the judgment
against Daniel Hendon by proceeding against Trust assets held by trustee Peggy
Jackson. See Richards v. Jefferson County, 517 U.S. 793, 798 (1996) (explaining
that “one is not bound by a judgment in personam in a litigation in which he is not
designated as a party” except in certain situations not applicable here); Peterson v.
Highland Music, Inc., 140 F.3d 1313, 1323 (9th Cir. 1998) (noting that judgments
may be enforced against non-parties only under “limited circumstances”); cf. In re
Girardi, 611 F.3d 1027, 1036 (9th Cir. 2010) (sanctioning counsel for attempting
to enforce foreign money judgment that “named the wrong defendant” despite
knowing that “the discrepancy could doom any enforcement action”).
To the extent DFG sought to hold the Trust accountable for the judgment
against Hendon on an alter ego or related theory, the district court lacked ancillary
jurisdiction to consider such a claim, which requires a separate action with an
independent jurisdictional basis.2 See Peacock v. Thomas, 516 U.S. 349, 356–59
(1996).
2
At oral argument, counsel for DFG asserted that the district court’s lack of
ancillary jurisdiction to evaluate DFG’s claim against Trust assets meant that the
court lacked jurisdiction to quash the levy and release the funds, but DFG cites no
authority that the district court lacked inherent jurisdiction to dispose of funds
within its possession or quash invalid levies issued under its auspices.
3
2. DFG failed to raise in the district court its argument on appeal regarding
the imposition of Rule 45 sanctions. Therefore, this argument is forfeited. See
Dodd v. Hood River County, 59 F.3d 852, 863 (9th Cir. 1995) (“As a general rule,
‘a federal appellate court does not consider an issue not passed upon below.’”
(quoting Singleton v. Wulff, 428 U.S. 106, 120 (1976))).
AFFIRMED.
4