DocketNumber： 95-1270
Filed Date： 6/10/1997
Status： Precedential
Modified Date： 9/21/2015
United States Court of Appeals
For the First Circuit
____________________
No. 95-1270
AETNA CASUALTY & SURETY CO.
Plaintiff, Appellee,
v.
JACK MARKARIAN,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge] ___________________
____________________
Before
Stahl and Lynch, Circuit Judges, ______________
and O'Toole, District Judge.* ______________
____________________
Kenneth R. Berman, with whom Rhonda B. Parker and Sherin & Lodgen __________________ ________________ _______________
LLP were on brief, for appellant. ___
David S. Douglas, with whom Howard S. Veisz, Gregg Kanter and _________________ ________________ ____________
Kornstein, Veisz & Wexler LLP, and Glenda Ganem and McGovern, Hug, ______________________________ ____________ _______________
Welch & Ganem LLP were on brief, for appellee. _________________
____________________
June 4, 1997
____________________
____________________
*Of the District of Massachusetts, sitting by designation.
LYNCH, Circuit Judge. Jack Markarian, against whom LYNCH, Circuit Judge. _____________
appellee Aetna Casualty and Surety Company has a civil
judgment, appeals from the entry of a writ of ne exeat _________
against him. The writ, which is essentially a form of
equitable bail, was issued ex parte in the District of
Massachusetts in February 1995. It prohibits Markarian, an
American citizen who is employed and lives with his family in
Massachusetts, from leaving the state or removing any of his
assets from the state without the court's permission. The
writ required Markarian to surrender his passport to a United
States Marshal, and violation of its terms is punishable by
detention in a federal facility.
Markarian raises federal statutory and
constitutional objections to the issuance of the writ. We
vacate the writ without reaching the constitutional issues,
although they are not frivolous. The writ of ne exeat, ________
governed by Fed. R. Civ. P. 69 and Mass. R. Civ. P. 4.3(c),
is not available as a tool in an ordinary civil collection
action like this. It may only issue in furtherance of "a
judgment or order requiring the performance of an act, the
neglect or refusal to perform which would be punishable by
the court as a contempt." Mass. R. Civ. P. 4.3(c). The All
Writs Act, 28 U.S.C. 1651, does not negate this state
requirement for issuance of the writ.
I.
The facts of the underlying civil action brought by
Aetna against Markarian are of little importance to the
present appeal. Suffice it to say that Aetna was the victim
of a fraudulent autobody insurance claim scheme, and that
Markarian along with some relatives and the companies they
controlled were the perpetrators of the scheme. A e t n a
brought suit in federal district court in Massachusetts,
asserting claims under civil RICO, Massachusetts common law,
and the Massachusetts deceptive trade practices statute. A
jury found in Aetna's favor on most of the claims in the
complaint, and in November 1993 the district court entered
judgment holding Markarian and his 22 co-defendants jointly
and severally liable for over $6 million. Markarian and some
of the defendants were also found individually liable for
over $1.5 million under Mass. Gen. Laws Ch. 93A. This court
affirmed the judgment in December 1994. Aetna Cas. & Sur. __________________
Co. v. P & B Autobody, 43 F.3d 1546 (1st Cir. 1994). ___ ______________
Judgment in hand, Aetna sought to identify and
seize assets. It commenced a supplementary process
proceeding in federal court under Fed. R. Civ. P. 69 and
Mass. Gen. Laws Ch. 224, 14 seeking an order transferring
ownership of Markarian's non-exempt assets. Aetna also filed
an ex parte application for the writ of ne exeat and _________
supported it with an affidavit stating that Markarian and
-3- 3
his co-defendants were secreting assets to render them immune
to supplementary process.
The district court issued the writ of ne exeat in ________
February 1995, finding that Markarian and his co-defendants
had been moving assets out of the jurisdiction as part of an
effort to prevent enforcement of the judgment and that there
was a strong likelihood that they would continue to do so.
The district court also found that there was an immediate
likelihood that the co-defendants would depart the
jurisdiction or the United States.
In March 1995, Markarian appealed from the writ and
filed a suggestion of bankruptcy. The bankruptcy filing
resulted in an automatic stay of the supplementary process
proceedings, see 11 U.S.C. 362(a), and later in March, ___
Markarian moved this court to stay the appeal from the writ.1
This court issued an order holding the appeal in abeyance and
directing counsel to report back after the decision from the
bankruptcy court. Markarian then moved to vacate the writ
before the bankruptcy court, which denied the motion without
prejudice in November 1995 and referred Markarian back to the
district court. See In re Jack Markarian, No. 95-40961 ___ ______________________
(Bankr. D. Mass. Nov. 20, 1995).
____________________
1. The writ does not appear to fall within the terms of the
Automatic Stay provision of the Bankruptcy Code, see 11 ___
U.S.C. 362, and thus the writ and the appeal from the writ
were not stayed automatically by the bankruptcy filing.
-4- 4
The district court in March 1996 denied Markarian's
motion to vacate the writ, stating that it lacked
jurisdiction over the matter. Markarian moved for
clarification of this ruling. While that motion was pending,
in July 1996, the bankruptcy court ruled that Markarian's
debts to Aetna were not dischargeable because they arose out
of fraud. See In re Jack Markarian, No. 95-40961 (Bankr. D. ___ ____________________
Mass. Jul. 31, 1996). However, the bankruptcy court deemed
the issue close enough to stay the order of non-
dischargeability and certify the case to the First Circuit
Bankruptcy Appellate Panel, where it is now pending. In
October 1996, the district court, ruling on Markarian's
motion for clarification of the refusal to vacate the writ of
ne exeat, denied the motion "on the merits" without opinion ________
or findings. This appeal followed.
II.
Aetna argues that there is no appellate
jurisdiction, saying the writ is no more than an
interlocutory order to preserve assets until its separate
supplementary process proceedings against Markarian are
completed.2 We disagree. At issue is not a supplementary
process order but a writ of ne exeat: Aetna's motion papers ________
and the order issuing the writ make no reference to
____________________
2. The supplementary process proceedings cannot resume until
the conclusion of the bankruptcy proceedings unless the stay
is lifted.
-5- 5
supplementary process, and the writ, by its terms, does not
expire with the termination of the supplementary process
proceedings. The writ is effectively an injunction over
which this court has jurisdiction pursuant to 28 U.S.C.
1292(a). See United States v. Shaheen, 445 F.2d 6, 7 (7th ___ _____________ _______
Cir. 1971). We also note Markarian's argument that issuance
of the writ was an error of law, and thus the writ may well
be an appealable collateral order. See id. at 7 n.2. ___ ___
III.
Where a money judgment has been entered in federal
court, enforcement of the judgment is governed by Fed. R.
Civ. P. 69, which provides that the procedures to be used are
those of the state in which the district court sits, unless
there is an applicable federal statute. Aetna availed itself
of state process, seeking a writ of ne exeat. ________
Massachusetts procedure permits issuance of the
writ only in support of an order punishable by the court as a
contempt. See Mass. R. Civ. P. 4.3(c). A money judgment is ___
not such an order.3 "[T]he writ of ne exeat has never been ________
issued in aid of legal, as distinguished from equitable,
process, or for the purpose of obtaining security from a
____________________
3. The Massachusetts supplementary process statute, however,
provides that violation of a supplementary process order may
be punishable as a contempt. See Mass. Gen. Laws Ch. 224, ___
16. We do not reach the question of whether the writ may be
used after a supplementary process order has been issued and
there has been a violation. That is not the case here.
-6- 6
defendant in at action of law." Moore v. Valda, 23 N.E. _____ _____
1102, 1103 (Mass. 1890) (per curiam). "[W]hen a party fails
to satisfy a court-imposed money judgment the appropriate
remedy is a writ of execution, not a finding of contempt."
Combs v. Ryan's Coal Co., 785 F.2d 970, 980 (11th Cir. 1996); _____ _______________
see also Shuffler v. Heritage Bank, 720 F.2d 1141, 1147-48 ________ ________ ______________
(9th Cir. 1983). It follows that the issuance of the writ
was error. See Gabovitch v. Lundy, 584 F.2d 559, 560 (1st ___ _________ _____
Cir. 1978) (failure to comply with state procedure
invalidated writ of execution).
These are not mere formalisms. The writ of ne __
exeat is an ancient writ. It hearkens back to the days when _____
debtors were imprisoned for failure to pay their debts. The
writ is itself a form of civil arrest. Caselaw on the writ
has narrowed its use to situations resulting from equitable
debt rather than debts recoverable at law. See 65 C.J.S. Ne ___ __
Exeat 4, at 396 (1966). The Massachusetts rule is _____
similarly circumscribed.
Indeed, the Reporter's Notes to the Massachusetts
rule providing for the writ of ne exeat express concern about ________
the constitutionality of the writ, even circumscribed as it
is. The Massachusetts courts, recognizing that the writ
operates in restraint of personal liberties, have held that
the writ "is to be granted with caution" and "is to be
-7- 7
continued in force with caution." Cohen v. Cohen, 64 N.E.2d _____ _____
689, 693 (Mass. 1946).
Aetna's motion for a writ of ne exeat finds no _________
ground on which to rest. Rule 69 does not provide that
ground independently, because it directs that "[p]rocess to
enforce a judgment for the payment of money shall be a writ
of execution, unless the court directs otherwise. The
procedure on execution . . . shall be in accordance with the
practice and procedure of the state in which the district
court is held . . . ." The "otherwise" clause is narrowly
construed. See Combs, 785 F.2d at 980. It does not ___ _____
authorize enforcement of a civil money judgment by methods
other than a writ of execution, except where "well
established principles [so] warrant." 13 J. Moore, Moore's
Federal Practice 69.02, at 69-5 to -7 (3d ed. 1997); see ___
also Hilao v. Estate of Marcos, 95 F.3d 848, 854 (9th Cir. ____ _____ ________________
1996).4
____________________
4. One such situation is where an action for contempt has
been instituted for failure to pay an obligation imposed by
statute in order to enforce the public policies embodied in
the statutory scheme. See, e.g., McComb v. Jacksonville _________ ______ ____________
Paper Co., 336 U.S. 187, 193-95 (1949). Another is where _________
there has been a congressional determination to provide the
government with the ability to seek a writ of ne exeat in _________
furtherance of enforcing tax obligations. See, e.g., 26 _________
U.S.C. 7402(a). A third is where the judgment is against a
state which refuses to appropriate funds through the normal
process provided by state law. See, e.g., Spain v. __________ _____
Mountanos, 690 F.2d 742, 744-45 (9th Cir. 1982); Gary W. v. _________ ________
Louisiana, 622 F.2d 804, 806 (5th Cir. 1980). In contrast, _________
the size of the award and the difficulties in enforcing the
judgment due to the location of the assets and the
-8- 8
This court has held that "the legislative history
and judicial application of Rule 69(a) make clear that the
first sentence of the Rule expresses a limitation on the
means of enforcement of money judgments and does not create a
general power to issue writs of execution in disregard of the
state law incorporated by the rest of the Rule." Gabovitch, _________
584 F.2d at 560-61. The state remedy is the exclusive route
here. See id. at 561. ___ ___
Aetna also points to the All Writs Act, 28 U.S.C.
1651, but does not develop its argument. The point is not
well taken. The All Writs Act "does not authorize [federal
courts] to issue ad hoc writs whenever compliance with
statutory procedures appears inconvenient or less
appropriate." Pennsylvania Bureau of Correction v. United __________________________________ ______
States Marshals Serv., 474 U.S. 34, 43 (1985). Where, as _____________________
here, there is a statutory procedure which "specifically
addresses the particular issue at hand, it is that authority,
and not the All Writs Act, that is controlling." Id. ___
Indeed, there is every reason not to reach to find the All
Writs Act applicable where "the courts have consistently read
Rule 69(a) as limiting all federal process on money judgments
____________________
uncooperativeness of the judgment debtor are not the types of
extraordinary circumstances which warrant departure from the
general rule that money judgments are enforced by means of
writs of execution rather than by resort to the contempt
power of the courts. See Hilao, 95 F.3d at 855. ___ _____
-9- 9
to the type of process available under state law."
Gabovitch, 584 F.2d at 561. _________
This opinion does not condone Markarian's failure
to pay his judgment debt, nor does it fail to appreciate
Aetna's frustration. It simply holds that the legal
predicate for issuance of the extraordinary writ of ne exeat ________
is lacking and so issuance of the writ was error.
The order granting the writ is reversed and the ________
writ is vacated. No costs. _______
-10- 10
McComb v. Jacksonville Paper Co. , 69 S. Ct. 497 ( 1949 )
Pennsylvania Bureau of Correction v. United States Marshals ... , 106 S. Ct. 355 ( 1985 )
William Gabovitch v. Maurice A. Lundy , 584 F.2d 559 ( 1978 )
United States v. Thomas A. Shaheen , 445 F.2d 6 ( 1971 )
Gary W., Etc. v. State of Louisiana, Etc., Dr. William ... , 622 F.2d 804 ( 1980 )
aetna-casualty-surety-company-v-p-b-autobody-arsenal-auto-repairs , 43 F.3d 1546 ( 1994 )
Johnny L. Spain v. Louis Mountanos, and Kenneth Cory, ... , 690 F.2d 742 ( 1982 )
Rex L. Shuffler and Betty L. Shuffler v. Heritage Bank, a ... , 720 F.2d 1141 ( 1983 )
Celsa Hilao v. Estate of Ferdinand E. Marcos, and Swiss ... , 95 F.3d 848 ( 1996 )