Johnson v. Jimenez

• Decision Date: 14 December 2021
• Docket Number: 21-60987-MC-RUIZ/STRAUSS
• Court: U.S. District Court — Southern District of Florida
• Parties: SUSAN JOHNSON and STEVEN JOHNSON, Plaintiffs, v. FRANCISCO M. JIMENEZ, Defendant.

SUSAN JOHNSON and STEVEN JOHNSON, Plaintiffs, v. FRANCISCO M. JIMENEZ, Defendant.

No. 21-60987-MC-RUIZ/STRAUSS

United States District Court, S.D. Florida

December 14, 2021

REPORT AND RECOMMENDATION

Jared M. Strauss United States Magistrate Judge

THIS CAUSE is before me upon Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction or Alternatively for Dismissal Pursuant to 28 USC § 1367 (“Motion”). (DE 21). This case has been referred to me by the District Court for rulings on all pre-trial non-dispositive matters and for issuance of a Report and Recommendation on any dispositive matters. (DE 30). I have reviewed the Motion, Plaintiffs' response (DE 25), and Defendant's reply (DE 33). Being otherwise duly advised I respectfully RECOMMEND that the Motion (DE 21) be DENIED for the reasons stated herein.

FACTUAL BACKGROUND

Plaintiffs who reside in Hartford, Connecticut, first commenced an action against Defendant, Ericka Lovato and Cingaro Freshworks, LLC on August 20, 2015 in the Circuit Court for Martin County. (DE 21-1). Cingaro was a company that Defendant, Lovato, and one of the Plaintiffs created with financial help from Plaintiffs. Id. at 2. In the state court complaint, Plaintiffs brought counts seeking judicial dissolution of Cingaro (Count I) and a judgment of fraud against Defendant and Lovato (Count II). Id. at 4-7. With respect to the fraud count, Plaintiffs contended that Defendant and Lovato mis-utilized funds that Plaintiffs provided, upon Defendant and Lovato's requests, solely for Cingaro. Id. at 6. On August 29, 2017, two days before a hearing on Plaintiffs' motion for summary judgment, Defendant filed for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division. (DE 25-3 at 3). Thus, the Martin County matter was automatically stayed as to Defendant. (DE 25 at 1). The case proceeded against Lovato, and Plaintiffs obtained a final judgment against her. (DE 25-3 at 7).

On January 9, 2018, Plaintiffs filed a claim in Defendant's Bankruptcy proceedings. (DE 21-3 at 2). Several weeks later, on January 28, 2018, Plaintiffs filed a formal Complaint Objecting to Dischargeability of Debt (“Dischargeability Complaint”) pursuant to 11 U.S.C. § 523; Plaintiffs alleged that the Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. §§ 157 and 1334(b). Id. Plaintiffs' Dischargeability Complaint sought a judgment denying dischargeability of Defendant's debt to them based on: false pretenses, false representations, and fraud (11 U.S.C. § 523(a)(2)(A)); embezzlement (11 U.S.C. § 523(a)(4)); and willful and malicious injury (11 U.S.C. § 523(a)(6)). Id. at 7-9. On March 1, 2019, the Bankruptcy Court entered an order granting summary judgment for Plaintiffs on all claims in the total amount of $1, 119, 593.14. (DE 25-3). The Bankruptcy Court also entered a Final Summary Judgment memorializing this order. (DE 1 at 3). Defendant's appeal of the Bankruptcy Court's Final Summary Judgment was dismissed on May 24, 2019. Id. at 1).

On April 21, 2021, the Bankruptcy Court entered an order finding that it lacked jurisdiction to further enforce^[1] the final judgment it entered in March 2019 because Defendant's Chapter 7 Bankruptcy case had been closed. (DE 25-4 at 13-14). However, the order also noted that Plaintiffs had “the right to pursue enforcement of their Final Summary Judgment in any other forum of appropriate jurisdiction.” See Id. On May 11, 2021, Plaintiffs registered their Bankruptcy Court judgment in this Court pursuant to 28 U.S.C. § 1963. (DE 1). In their civil cover sheet, Plaintiffs averred that the basis of jurisdiction was diversity of citizenship (as the Plaintiffs reside in Connecticut and the Defendant resides in Florida) and that the action sought $1, 119, 593.14 in damages. (DE 1-1). Defendant filed the instant Motion arguing that this court lacks subject matter jurisdiction over Plaintiffs' claim. (DE 21).

ANALYSIS

“The jurisdiction of a court over the subject matter of a claim involves the court's competency to consider a given type of case.” Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999). “Federal courts exercise limited subject matter jurisdiction empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution or otherwise authorized by Congress.” See Salvors, Inc. v. Unidentified Wrecked & Abandoned Vessel, 861 F.3d 1278, 1285 (11th Cir. 2017) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)); see also PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299, 1304 (11th Cir. 2016) (same). “In a given case, a federal district court must have at least one of the three types of subject matter jurisdiction: (1) jurisdiction under a specific statutory grant; (2) federal question jurisdiction pursuant to 28 U.S.C. § 1331; or (3) diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).” Baltin v. Alaron Trading Corp., 128 F.3d 1466, 1469 (11th Cir. 1997). “[T]he party invoking the court's jurisdiction bears the burden of proving it exists.” Orchid Quay, LLC v. Suncor Bristol Bay, LLC, 178 F.Supp.3d 1300, 1302 (S.D. Fla. 2016).

Section 1963 of Title 28 of the United States Code (regarding “Registration of judgments for enforcement in other districts”) provides the following:

A judgment in an action for the recovery of money or property entered in any court of appeals, district court, bankruptcy court, or in the Court of International Trade may be registered by filing a certified copy of the 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.

28 U.S.C. § 1963 (emphases added). The purpose of this statute was to “simplify and facilitate the enforcement of federal judgments, at least those for money, to eliminate the necessity and expense of a second lawsuit, and to avoid the impediments, such as diversity of citizenship, which new and distinct federal litigation might otherwise encounter.” Stanford v. Utley, 341 F.2d 265, 270 (8th Cir. 1965); see also Hanes Supply Co. v. Valley Evaporating Co., 261 F.2d 29, 30 (5^th Cir. 1958) (“The legislative history of this section clearly indicates that the registration statute is intended to provide all the benefits deriving from a local judgment on a ‘foreign' judgment without subjecting either plaintiff or defendant to the expense of a second lawsuit.”). Thus, the statute spares the judgment creditor from having to institute a distinct new suit to obtain a judgment on a previous federal judgment. See Wells Fargo Equip. Fin., Inc. v. Asterbadi, 841 F.3d 237, 244-45 (4th Cir. 2016).

In light of section 1963's purpose and the language utilized therein, various federal courts of appeal have opined that a registration pursuant to that statute provides a new judgment in the court where the judgment has been registered. See Stanford v. Utley, 341 F.2d at 270; Asterbadi, 841 F.3d at 244 (collecting cases). This new judgment is enforceable according to the laws of the state where it is registered. See Asterbadi, 841 F.3d at 244; Gullet v. Gullet, 188 F.2d 719, 720 (5th Cir. 1951).^[2] Accordingly, pursuant to section 1963, many federal courts have accepted the registration of (and subsequently enforced) judgments from other district courts or bankruptcy courts. See Fid. Nat'l Fin., Inc. v. Friedman, 935 F.3d 696, 702 (9th Cir. 2019) (finding that a judgment may be registered under section 1963 even though the court of registration does not have personal jurisdiction over the judgment debtor); Courshon v. Berkett, 16 Fed.Appx. 57, 63 (2d Cir. 2001) (dismissing judgment debtor's arguments and finding that a judgment in the Southern District of Florida was properly registered in the Southern District of New York pursuant to section 1963); Gullet, 188 F.2d at 720 (dismissing judgment debtor's motion to quash the registration of a District of Columbia judgment in the Southern District of Florida under section 1963); In re Mead, 374 B.R. 296, 304 (Bankr. M.D. Fla. 2007) (finding that a judgment from a District Court in Texas was properly registered in a Bankruptcy Court in Florida); Hassett v. Goetzmann, 217 B.R. 9, 14 (N.D.N.Y. 1998) (exercising jurisdiction to enforce a bankruptcy judgment registered pursuant to section 1963).

I find that Plaintiffs have sufficiently shown that this Court has jurisdiction over these proceedings pursuant to 28 U.S.C. § 1963. Plaintiffs obtained a valid final judgment against Defendant for a total of $1, 119, 593.14 in damages from the United States Bankruptcy Court for the Southern District of Florida. Defendant's appeal of that judgment has been dismissed and he can no longer contest its validity. Now, Plaintiffs seek to have that bankruptcy court judgment, one of the judgments explicitly permitted in section 1963, registered in this Court. Therefore, I find that this enforcement action may proceed in this Court.

Defendant contends that this Court does not have subject matter jurisdiction because neither diversity jurisdiction nor federal question jurisdiction are present. (DE 21 at 8). However, Defendant fails to realize that section 1963 specifically authorized Plaintiffs to register ^[3] and this Court to enforce, Plaintiffs' bankruptcy judgment. See Baltin, 128 F.3d at 1469 (stating that a federal district court may have jurisdiction under a specific statutory grant). Defendant also contends that this Court lacks jurisdiction because these collection proceedings do...