Lobster 207 LLC v. Pettegrow
| Docket Number | 1:19-cv-00552-LEW |
| Decision Date | 30 August 2023 |
| Parties | LOBSTER 207, LLC, Plaintiff v. WARREN B. PETTEGROW, et al., Defendants |
| Court | U.S. District Court — District of Maine |
ORDER ON MOTION TO SUPPLEMENT THE RECORD, ORDER ON REQUEST TO HOLD AND ANSWER, AND RECOMMENDED DECISION AFTER DISCLOSURE HEARING [1]
Plaintiff a lobster wholesaler, alleges Defendants, who consist of Warren Pettegrow, his parents, and two affiliated business entities, diverted Plaintiff's profits through several self-dealing schemes. (Amended Complaint, ECF No. 184.) After confirming an arbitration award in favor of Plaintiff and against Defendant Warren Pettegrow (hereinafter “Defendant”), the Court entered judgment in the amount of $1,020,000 on Plaintiff's breach of fiduciary duty and breach of contract claims. (Judgment, ECF No. 278.) As part of Plaintiff's effort to enforce the judgment Plaintiff initiated a disclosure hearing in accordance with Maine law, which is incorporated into this proceeding through Federal Rule of Civil Procedure 69.
Following a multi-day evidentiary hearing, Plaintiff moved to introduce additional evidence. (Motion to Supplement the Record, ECF No. 443). Plaintiff also seeks: (1) authorization to command third parties to hold and answer as to the assets of Defendant that are reasonably likely to be in their possession or control, and (2) an order requiring Defendant to turn over certain assets in satisfaction of the judgment and turn over other assets for sale. (Motion for Relief, ECF No. 450.)
After consideration of the record and the parties' arguments, I grant the motion to supplement the record, I authorize Plaintiff to serve several third parties with a command to hold and answer, and I recommend the Court order Defendant to turn over certain funds to Plaintiff and to turn over other assets for sale.
As part of his response to Plaintiff's complaint, Defendant asked the Court to order the parties to litigate Plaintiff's contract and fiduciary duty claims in arbitration pursuant to the terms of the Defendant's employment agreement with Plaintiff; the Court granted the motion. (Motion to Compel Arbitration, ECF No. 44; Order, ECF No. 72.) An arbitrator found in favor of Plaintiff and against Defendant and awarded $1,021,000 in damages. (Arbitration Decision, ECF No. 242-4.) The Court confirmed the arbitration award and entered judgment on the two relevant claims. (Order Concerning Arbitration Award, ECF No. 269; Judgment, ECF No. 278.) During the pendency of this case, the Court has dismissed some of Plaintiff's other claims and resolved certain issues at summary judgment; other claims await trial.
Plaintiff subsequently obtained from the court a writ of execution on the judgment. (Writ of Execution, ECF No. 290.) A writ of execution is the traditional and standard method of enforcing a money judgment. See Fed.R.Civ.P. 69(a)(1). It “is the formal document issued by a court that authorizes a [law enforcement] officer to levy upon the property of a judgment debtor and sell such property to satisfy a judgment debtor's debt.” 30 Am. Jur. 2d Executions § 61; see also, 14 M.R.S.A. §§ 4651 et seq (). “The levy of a writ of execution . is the process whereby a [law enforcement] official seizes or brings within his or her control a judgment debtor's property for the purposes of satisfying a judgment.” Id. § 167; see also Equity Portfolio, LLC, Ltd. v. Schriever, 2002 ME 104, ¶ 2, 799 A.2d 1236, 1237 (); 14 M.R.S.A. §§ 4751 ().
Pursuant to Federal Rule of Civil Procedure 69, “[t]he procedure on execution- and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.” Fed.R.Civ.P. 69(a)(1); see also, Whitfield v. Municipality Of Fajardo, 564 F.3d 40, 43 (1st Cir. 2009) (). The rule also allows for discovery in aid of the judgment or execution using either the federal discovery rules or according to “the procedure of the state where the court is located.” Fed.R.Civ.P. 69(a)(2).
In addition to the traditional collection method of execution and levy, many states have enacted statutes providing for additional postjudgment procedures with various titles, including “supplementary proceedings,” “special proceedings,” “turnover proceedings,” and “citation proceedings.” 30 Am. Jur. 2d Executions § 463. The state statutes are generally designed to provide an inquiry into the judgment debtor's ability to pay and to provide a means of reaching certain assets or property which may be “beyond the reach of ordinary execution.” Id. § 469; see also, 14 M.R.S.A § 3120 ( ).
Under Maine's alternative judgment enforcement statute, a judgment creditor is authorized to serve a disclosure subpoena, 14 M.R.S.A. §§ 3122, 3123, for a disclosure hearing to determine the judgment debtor's ability to pay, id. § 3125(1). Following the hearing, a court can issue an order or a combination of orders requiring the judgment debtor to pay installments, id. § 3126, turn over nonexempt property, id. § 3131(1), turn over nonexempt property for sale, id. § 3131(2), or create a lien on certain nonexempt property, id. § 3132. A court can also order a third-party to garnish the judgment debtor's wages, id. § 3127-B, or turn over and sell property in the third party's control in which property the judgment debtor has an interest, id. § 3127-A.
Plaintiff requested a disclosure hearing pursuant to Maine law, (Letter, ECF No. 323; Disclosure Subpoenas, ECF Nos. 325), and Plaintiff filed a motion for an order requiring a bank to turn over certain funds. (Motion to Enforce Writ of Execution, ECF No. 330.) Defendant argued that the Court must hold a disclosure hearing before issuing a turnover order under Maine law and that Florida's law governed which property is exempt from execution because Defendant was now a resident of Florida. (Response to Motion to Enforce Writ of Execution, ECF No. 348.)
In connection with the disclosure hearing and in accordance with the governing statute, Plaintiff served witness subpoenas on Defendants Anthony and Josette Pettegrow to testify at the hearing. Anthony and Josette Pettegrow sought to quash the subpoenas. (Motion to Quash, ECF No. 351.) Because Plaintiff had not yet served Defendant with a disclosure subpoena, Plaintiff withdrew the witness subpoenas and requested a continuance of the disclosure hearing. (Response to Motion to Quash, ECF No. 356; Order, ECF No. 360.) Plaintiff made numerous unsuccessful attempts to serve a disclosure subpoena on Defendant at his Maine address and at a suspected Florida address. Plaintiff then filed a motion to serve the disclosure subpoena by means other than in-hand. (Motion for Leave to Serve Disclosure Subpoena by Alternate Means, ECF No. 373.) Plaintiff later served Defendant's spouse, Monica Pettegrow, at the Florida address and the motion for alternative service became moot. (Disclosure Subpoena, ECF No. 386; Order, ECF No. 406.)
Defendant filed a motion to quash the disclosure subpoena, arguing that because the subpoena commanded him to appear at a hearing in Bangor, Maine, it did not comply with the geographical limitations of Federal Rule of Civil Procedure 45, the rule that governs the issuance of subpoenas. (Motion to Quash, ECF No. 375.) Defendant asserted that “[as] a result of non-compete clauses in my prior employment contract with L207 and the commencement of this litigation, I was unable to work in the lobster industry in the State of Maine, and I therefore relocated to Florida in or about August of 2021.” (Affidavit ¶ 2, ECF No. 375-1.) Defendant claimed to be “currently a resident of Florida and work in Florida,” and “[a]lthough I continue to own passive interests in real estate in Maine, I do not regularly conduct business in the State of Maine,” and “have not visited the State of Maine since August of 2021.” (Id. ¶¶ 3, 6.)
Defendant subsequently moved to appear for the disclosure hearing remotely by videoconference or for the Court to transfer the proceeding to the Southern District of Florida. (Motion to Appear Specially or to Transfer Proceeding, ECF No. 399.) Defendant argued that “[i]t is a hardship . . . to appear in person in Maine, as it requires him to take time off work, arrange for childcare, and fly to Maine,” and that the enforcement proceedings belonged in Florida, as reflected by the fact that Plaintiff had initiated a proceeding there to obtain writs of garnishment against banks in Florida. (Id. at 1, 3, 8.) Plaintiff opposed the motion. Plaintiff was concerned that if Defendant were to appear remotely, Plaintiff would be unable to review and use effectively the documents Defendant was required to produce at the disclosure hearing. (Response to Motion to Appear Specially or Transfer Proceeding, ECF No. 400.)
At a hearing on the motions, the parties agreed (1) to use postjudgment discovery to alleviate some of the concerns about document production and use during the hearing and (2) that Defendant could appear for the disclosure hearing by videoconference. (See Motion Hearing, ECF No. 405; Procedural Order, ECF No. 406.) Defendant agreed to...
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