Long v. Levinson, Civ. No. 4-911-W.

Citation374 F. Supp. 615
Decision Date14 March 1974
Docket NumberCiv. No. 4-911-W.
PartiesFreddie LONG, Plaintiff, v. Stephen LEVINSON, Defendant.
CourtUnited States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa

Clayton H. Shrout of Shrout, Lindquist, Caporale, Brodkey & Nestle, Omaha, Neb., and David Richter, Council Bluffs, Iowa, for plaintiff.

David Grace and Eugene Davis, Des Moines, Iowa, for defendant.


HANSON, Chief Judge.

The Court issues this memorandum and order pursuant to the Motion to Quash Attachment and to Dismiss; and in Alternative to Transfer filed by the plaintiff in this cause of action.

This action was commenced in October of 1971 on the basis of quasi in rem jurisdiction obtaining from the attachment of certain of the plaintiff's properties located in Pottawattamie County, Iowa. The plaintiff is attempting to satisfy a judgment previously obtained against the California Marketing Co-op, Inc. by suing the individual Stephen Levinson. The plaintiff in essence is attempting to satisfy a judgment against the corporation by piercing the corporate veil in an action against this defendant. The defendant attacks the attachment of his property without prior hearing and the resulting jurisdiction of this Court.

The defendant relies upon Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L. Ed.2d 556 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) and other decisions of the United States Supreme Court that have dealt harshly with prehearing replevin, attachment, and garnishment to support his attack upon the Court's jurisdiction in this case.

The defendant contends that his "due process" rights were violated by allowing the plaintiff to seize his property through an attachment without a prior hearing to determine the validity of the plaintiff's attachment. As a result of the attachment, the defendant claims that he is being deprived of the right to use, enjoy, lease, mortgage, sell, transfer and convey this real property.

The United States Supreme Court has dealt a severe blow to pre-judgment remedies of creditors in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) where the Court struck down a statute allowing pre-judgment garnishment and Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) where the Court struck down a statute allowing pre-judgment replevin. These decisions have been followed by a multitude of state court decisions striking at the very heart of creditors remedies.

In Thorpe Credit, Inc. v. Barr, 200 N. W.2d 535 (1972), the Iowa Supreme Court held pre-judgment replevin to be unconstitutional as have many other states, Blair v. Pitchess, 5 Cal.3d 258, 96 Cal.Rptr. 42, 486 P.2d 1242 (1971); Sena v. Montoya, 346 F.Supp. 5 (D.N. M.1972); Finkenberg Furniture Corp. v. Vasquez, 67 Misc.2d 154, 324 N.Y.S. 2d 840 (Civ.Ct.N.Y.City 1971); Laprease v. Raymours Furniture Co., 315 F.Supp. 716 (N.D.N.Y.1970); Dorsey v. Community Stores Corp., 346 F.Supp. 103 (E. D.Wisc.1972); Hall v. Stone, 229 Ga. 96, 189 S.E.2d 403 (1972); Turner v. Colonial Finance Corp., 467 F.2d 202 (5th Cir. 1972 Miss.; Williams v. Berrey, 492 S.W.2d 731 (Mo.1973); Mitchell v. Tennessee, 351 F.Supp. 846 (Tenn.1972).

Pre-judgment garnishment without prior hearing has been struck down in the following cases. Aaron v. Clark, 342 F.Supp. 898 (N.D.Ga.1972); Arnold v. Knettle, 10 Ariz.App. 509, 460 P.2d 45 (1969); Brunswick Corp. v. Galaxy Cocktail Lounge, Inc., 513 P.2d 1390 (Haw.1973); Jones Press, Inc. v. Motor Travel Services, Inc., 286 Minn. 205, 176 N.W.2d 87 (1970); Larson v. Fetherston, 44 Wis.2d 712, 172 N.W.2d 20 (1969); McCallop v. Carberry, 1 Cal.3d 903, 83 Cal.Rptr. 666, 464 P.2d 122 (1970); McMeans v. Schwartz, 330 F. Supp. 1397 (S.D.Alas.1971); Mills v. Bartlett, 265 A.2d 39 (Del.Sup.Ct.1970); Reeves v. Motor Contract Co. of Ga., 324 F.Supp. 1011 (N.D.Ga.1971); Scott v. Danaher, 343 F.Supp. 1272 (N.D.Ill. 1972); Termplan, Inc. v. Superior Court of Maricopa County, 105 Ariz. 270, 463 P.2d 68 (1969).

Although most statutes that did not provide for a prior hearing before replevin or garnishment ensued, have gone by the wayside, the Courts have taken a much more cautious approach to the problem of pre-judgment attachments based upon the language of Fuentes v. Shevin, supra which intimates that there may be emergency situations where prejudgment attachments are warranted without allowing a prior hearing.

"There are `extraordinary situations' that justify postponing notice and opportunity for a hearing. Boddie v. Connecticut, 401 U.S., at 379 , 91 S. Ct. 780, 28 L.Ed.2d 113. These situations, however, must be truly unusual. Only in a few limited situations has this Court allowed outright seizure without opportunity for a prior hearing. First, in each case, the seizure has been directly necessary to secure an important governmental or general public interest. Second, there has been a special need for very prompt action. Third, the State has kept strict control over its monopoly of legitimate force: the person initiating the seizure has been a government official responsible for determining, under the standards of a narrowly drawn statute, that it was necessary and justified in the particular instance."
Fuentes v. Shevin, 407 U.S. at 90-91.

Thus while many attachment statutes have been invalidated as it relates to attachment solely to secure property to satisfy a judgment, Bay State Harness v. PPG, 365 F.Supp. 1299 (D.Mass. 1973); Clement v. Four North State Street Corp., 360 F.Supp. 933 (D.N.H. 1973); Etheredge v. Bradley, 502 P.2d 146 (Alas.Sup.Ct.1972); Gunter v. Merchants Warren National Bank, 360 F. Supp. 1085 (D.Me.1973); McClellan v. Commercial Credit Corp., 350 F.Supp. 1013 (D.R.I.1972); Richman v. Richman, 72 Misc.2d 803, 339 N.Y.S.2d 589 (Sup.Ct. Albany, 1973); Seattle Credit Bureau v. Hibbitt, 7 Wash.App. 219, 499 P.2d 92 (1972); Trapper Brown Construction Co., Inc. v. Electromech, Inc., 358 F.Supp. 105 (D.N.H.1973), the Courts have looked carefully to determine according to Fuentes standards as to what public interests are served by the attachment and to the need for attachment prior to a hearing, Lebowitz v. Forbes Leasing and Finance Corp., 456 F.2d 979 (3rd Cir. 1972 Penn.); (Resident plaintiff's interest in access to state forum in action against non-residents); U. S. Industries, Inc. v. Gregg, 348 F.Supp. 1004 (D.Del.1972) (quasi in rem proceeding).

The United States Supreme Court in Fuentes recognized the important state interest in allowing a Court to acquire jurisdiction in a quasi in rem proceeding through attachment. The Court specifically did not overrule Ownbey v. Morgan, 256 U.S. 94, 41 S.Ct. 433, 65 L.Ed. 837.

"Another case involved attachment necessary to secure jurisdiction in state court—clearly a most basic and important public interest. Ownbey v. Morgan, 256 U.S. 94 , 41 S.Ct. 433, 65 L.Ed. 837." Fuentes v. Shevin, 407 U.S. at 91.

In evaluating the three factors in Fuentes which may justify an attachment without prior hearing, the Court first notes the importance of the attachment as it relates to securing jurisdiction in this Court. This is a quasi in rem proceeding and this Court has no jurisdiction to proceed in any manner with this lawsuit absent the attachment of this property upon which the Court's jurisdiction is based. The Court has strict control over the proceedings in this cause and the attachment itself. Finally, this Court cannot act without the jurisdiction conferred upon it by the attachment itself. Accordingly, this Court finds that the pre-hearing attachment in this quasi in rem proceeding did not violate defendant's right to "due process" because of the extraordinary situation justifying said procedure.

This Court makes no judgment as to whether the Iowa attachment statutes 639.1, 639.3 et seq. are valid except under the factual situation presented by this case.

A second issue presented to the Court relates to whether the California Marketing Co-op, Inc. should have been joined in this suit or must be joined in this suit in order to go forward with the lawsuit pursuant to Rule 19 of the Federal Rules of Civil Procedure. Rule 19 presents several situations in which a party should be joined in an action:

"if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest."

In this case complete relief can be accorded to the parties without the presence of California Marketing Co-op, Inc. The plaintiff is seeking to obtain personal liability of the individual defendant for the debts of the corporation. If such liability is established the Court can find no adverse financial impact upon California Marketing Co-op, Inc. by the determination that another is responsible for one of its debts. There is no further relief that could be granted without the presence of the corporation than with its...

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    ...relief may be afforded to the parties to the instant action without the joinder of said Municipality. See e.g., Long v. Levinson, 374 F.Supp. 615 (S.D.Iowa III. The next issue which must be resolved is whether or not the debtor has met his burden of proof by offering adequate assurances pur......

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