Resolution Trust Corp. v. Ruggiero

• Decision Date: 20 May 1993
• Docket Number: Nos. 92-1154,92-1155,s. 92-1154
• Citation: 994 F.2d 1221
• Parties: RESOLUTION TRUST CORPORATION, as Receiver for Peoples Savings and Loan Associations, F.A., Plaintiff-Appellee, v. Angelo RUGGIERO and Gina Ruggiero, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1221

994 F.2d 1221

RESOLUTION TRUST CORPORATION, as Receiver for Peoples Savings and Loan Associations, F.A., Plaintiff-Appellee, v. Angelo RUGGIERO and Gina Ruggiero, Defendant-Appellant.

Nos. 92-1154, 92-1155.

United States Court of Appeals Seventh Circuit.

Argued Jan. 4, 1993.

Decided May 20, 1993.

David L. Hazan, Randolph E. Ruff, William J. Raleigh (argued), Dehaan & Richter, Chicago, IL, Constance M. Borek, Resolution Trust Corp., Elk Grove Village, IL, for Resolution Trust Corp.

Michael L. Tinaglia, Laser, Schostok, Kolman & Frank, Chicago, IL (argued), for Gina Ruggiero.

Angelo Ruggiero, pro se.

Before POSNER, FLAUM, and KANNE, Circuit Judges.

POSNER, Circuit Judge.

This appeal presents questions concerning the procedure for collecting a money judgment entered by a federal court. Angelo Ruggiero had borrowed money from a savings and loan association that went broke and was taken over by the Resolution Trust Corporation. He failed to repay the loan and the RTC, as receiver of the failed S & L, brought suit in federal district court and obtained judgments against him for some $300,000, which this court has now affirmed. Resolution Trust Corp. v. Ruggiero, 977 F.2d 309 (7th Cir.1992). Ruggiero not having posted an appeal bond, the RTC initiated a postjudgment proceeding in the district court to collect its judgments without waiting for this court to decide the appeal. Rule 69(a) of the Federal Rules of Civil Procedure provides that the procedure for enforcing federal court judgments "shall be in accordance with the practice and procedure of the state in which the district court is held," in this case Illinois, "except that any statute of the United States governs to the extent that it is applicable." The relevant provisions of Illinois law--section 2-1402 of the Code of Civil Procedure, Ill.Rev.Stat. ch. 110, p 2-1402, and Supreme Court Rule 277, Ill.Rev.Stat. ch. 110A, p 277--do various things: Entitle the judgment creditor to question the judgment debtor, or anyone else who might have relevant information, under oath regarding the existence and whereabouts of assets that might be used to satisfy the judgment; this inquiry is sometimes called a citation proceeding. Entitle any third party who claims an interest in those assets to appear and be heard on his claim. Empower the court to order the debtor to turn over property to the creditor to satisfy the judgment. The supplementary proceeding expires six months after the judgment debtor first appears for his citation examination, unless the time is extended by court order. The enactments we have cited do not further specify the procedural details of supplementary proceedings.

Angelo Ruggiero claimed that the extensive real estate which the RTC believed he owned, and which appears to have an equity value of almost ten times the judgments held by the RTC against Ruggiero, is actually owned by his wife, Gina. So the RTC conducted a citation examination of her. Angelo, a member of the Illinois bar, appeared as her lawyer (later he hired a different lawyer for her, but continued to represent himself) and instructed her to refuse to answer almost 300 questions--for which misconduct he was sanctioned by Judge Shadur by being ordered to pay the expenses incurred by RTC as a result of the misconduct. Gina's examination was later completed. After that the RTC filed in the district court a petition, supported by legal and factual memoranda, asking the court to impose a resulting trust in favor of Angelo on the real estate purportedly owned by Gina (or simply order Gina to turn over the real estate to the RTC), to require a full accounting from the Ruggieros of their receipt of income from and their other transactions concerning the properties, and to furnish certain relevant documents.

The petition and supporting memoranda were filed on October 28, 1991. The Ruggieros requested and received an extension of time to December 2 to respond. They filed nothing by the deadline but on December 5 filed a flurry of motions aptly described by Judge Shadur as "procedural nonsense." Included was a motion on behalf of Gina Ruggiero to intervene, although she was already a party to the postjudgment proceeding and had been from the outset. None of the motions contested the facts set forth by the RTC in support of its petition. On December 23, Judge Shadur granted the petition in its entirety, decreeing all the relief that the petition had requested--and more, because he also ordered Angelo and Gina to cooperate with the RTC in recording and otherwise perfecting the interests that the RTC would acquire as a consequence of the resulting trust, set aside as fraudulent certain conveyances that Angelo had made recently of some of the properties, and ordered the Ruggieros to turn over even more documents than the petition had requested. Angelo Ruggiero then tried to derail the proceeding before Judge Shadur by filing, four days later, a petition for bankruptcy, which automatically stays all pending litigation against the debtor. The bankruptcy court promptly annulled the automatic stay and later dismissed the bankruptcy petition on the ground that it had been filed in bad faith. Later Judge Shadur held Angelo Ruggiero in contempt. Angelo filed an appeal, but we dismissed it on the ground that the finding of contempt was not a final, appealable judgment. Resolution Trust Corp. v. Ruggiero, 987 F.2d 420 (7th Cir.1993) (per curiam).

The Ruggieros appeal from the orders issued by Judge Shadur in granting the RTC's petition. They challenge with particular fervor the imposition of the resulting trust, the effect of which is to vest the extensive real estate nominally owned by Gina in her husband, where it is available to be executed upon by the RTC. There is a threshold question of our appellate jurisdiction, often tricky in post-judgment proceedings. The final-decision rule (28 U.S.C. § 1291) postpones appeal to the final judgment--but what about orders issued after the final judgment? There is no problem when the postjudgment order concludes a discrete, collateral proceeding, such as a proceeding to award attorney's fees for services rendered before the entry of the final judgment. The fee award is the final order in the collateral proceeding and is therefore appealable. But what of a proceeding to execute or otherwise enforce a judgment? That proceeding ends when the defendant's assets are seized and sold to pay the judgment--when in short the judgment is finally executed. But the execution is not an order. If execution is resisted, a series of orders may have to be issued before it is finally accomplished. Which of those orders are appealable?

A helpful way of approaching this question is to pretend that the supplementary proceeding to enforce the judgment is a free-standing lawsuit, the orders in which are appealable or not to the same extent as in a regular lawsuit. Central States, Southeast & Southwest Areas Pension Fund v. Express Freight Lines, Inc., 971 F.2d 5 (7th Cir.1992); King v. Ionization International, Inc., 825 F.2d 1180, 1184-85 (7th Cir.1987); SEC v. Suter, 832 F.2d 988, 990 (7th Cir.1987); Transportation Cybernetics Inc. v. Forest Transit Commission, 950 F.2d 350, 352 (7th Cir.1992) (dictum). It is the same approach used to determine the appealability of orders issued in adversary proceedings in bankruptcy. In re James Wilson Associates, 965 F.2d 160, 166 (7th Cir.1992); In re Lybrook, 951 F.2d 136, 137 (7th Cir.1991); Belisle v. Plunkett, 877 F.2d 512, 513 (7th Cir.1989). Like any use of analogy in law it must be applied with caution--in particular with due regard for the objective of the particular proceeding. We may have written too broadly when we said in Central States, Southeast & Southwest Areas Pension Fund v. Express Freight Lines, Inc., supra, 971 F.2d at 6, that a discovery order issued in a supplemental proceeding is nonfinal, as of course it would be in an ordinary proceeding. Often the sole object of such a proceeding is discovery of the judgment debtor's assets, since once they are discovered the judgment creditor may levy on them without obtaining a further court order. Ill.Rev.Stat. ch. 110, p 2-1501. And an order that is the terminus of the case in the district court is final for purposes of appeal even if it is not a conventional judgment--even if it commences a proceeding in another forum. University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 848 (7th Cir.1983). The analogy to a free-standing lawsuit is thus closer in the bankruptcy setting than in the postjudgment setting, because an adversary proceeding in bankruptcy is in most respects just like the free-standing lawsuit that would have been brought had not one of the parties been in bankruptcy.

The imposition of a resulting trust on the property nominally owned by Gina Ruggiero was the equivalent of an injunction. It closely resembled an order of specific performance. The standard remedy in the case of a seller's breach of a contract to convey land, an order of specific performance in such a case would direct the defendant to transfer title to the plaintiff, which is essentially what Judge Shadur ordered here. In form, it is true, all he did was declare that property the title to which was in A (Gina) in fact belonged to B (Angelo), so that C, B's judgment creditor (i.e., Resolution Trust Corporation), could levy on it to satisfy its judgment. But the effect of that declaration was to transfer so much of the property as necessary to satisfy the judgment from A to C, making it functionally equivalent to an order that A pursuant to contract convey property owned by him to C--an order of specific performance, hence an injunction, Walgreen Co. v. Sara Creek Property Co., 966 F.2d 273, 276 (7th Cir.1992), hence appealable regardless of finality. 28 U.S.C. § 1292(a)(1). Uehlein v. Jackson National Life Ins. Co., 794 F.2d 300 (7th Cir.1986), is readily distinguishable. The...