Washington, In re
| Decision Date | 08 July 1980 |
| Docket Number | No. 78-3113,78-3113 |
| Parties | In re Reginald WASHINGTON, Bankrupt. Myron E. WASSERMAN, Trustee, Plaintiff-Appellee, v. Diane Margaret WASHINGTON a/k/a Joann Washington, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Edwin H. Jacobs, Finneran, Hayek, Jacobs & Lorenzen, Cleveland, Janice S. Evans Chardon, Ohio, for defendant-appellant.
Richard Ginley, Cleveland, Ohio, for plaintiff-appellee.
Before EDWARDS, Chief Judge, and PHILLIPS and PECK, Senior Circuit Judges.
The issue presented in this appeal is whether jurisdiction over certain property lies in an Ohio domestic relations court or a federal bankruptcy court. The district court affirmed the bankruptcy court's decision holding that the state court had not assumed jurisdiction over the property involved in this litigation. We reverse.
In August, 1976, Mr. and Mrs. Washington sold their jointly owned home and received a check in both of their names for $5,977.07, evidencing their equity in the premises. Attached to the bank draft was a statement noting that the instrument represented proceeds from the sale of property located at 20715 Amherst Road, Warrensville Heights, Ohio.
Mrs. Washington filed suit for divorce in an Ohio court five days after the house was sold. In her state court complaint, Mrs. Washington alleged that she and Mr. Washington were joint owners of the Amherst property, and, in her prayer for relief, she asked to be granted the "entire equity" in said property as alimony. She further alleged that she and her husband had acquired "two automobiles," and demanded that she be granted "the 1972 Hornet Automobile" in her prayer. Mr. Washington was served with the complaint on September 4, 1976.
On October 8, 1976, a little more than a month after the commencement of the divorce proceedings, Mr. Washington filed a petition in bankruptcy, listing the proceeds from the sale of the Amherst property and the 1972 Hornet automobile as assets. The bankruptcy trustee became aware that the check, which had been placed in the hands of Mr. Washington's attorney, represented proceeds from the sale of the Amherst property at the first meeting of creditors.
The following month, the trustee in bankruptcy filed a complaint to recover funds from Mr. Washington in which Mrs. Washington was named as a defendant because of her ostensible interest in the bank draft. Mrs. Washington moved to dismiss the complaint for lack of jurisdiction over the '72 Hornet and the funds represented by the bank draft. She contended that the Ohio divorce court had exclusive jurisdiction over this property since the divorce complaint had been filed prior to the bankruptcy petition and the property had been specifically identified in her state court pleadings.
The bankruptcy judge overruled Mrs. Washington's motion, holding that the Ohio court had not acquired jurisdiction over the property in question. A short time later, the Ohio domestic relations court awarded Mrs. Washington her husband's "interest" in both the proceeds of the sale of the Amherst property and the Hornet automobile. Mrs. Washington then appealed the bankruptcy judge's decision to the district court relying as before upon Ohio's lis pendens statute. 1 The district court affirmed on the grounds that (1) the doctrine of lis pendens had no application to the proceeds of the sale of the real estate because the complaint described property that had been sold prior to the commencement of the divorce proceedings, and (2) lis pendens did not apply to the '72 Hornet since the court doubted that the doctrine applied to automobiles in Ohio. The court further held that the automobile in question was not sufficiently described in the divorce complaint. This appeal followed.
It is a well settled rule that where property is claimed by a bankruptcy trustee after the commencement of an in rem action in state court, the state court retains jurisdiction of the property for completion of the proceedings relating to it. Straton v. New, 283 U.S. 318, 51 S.Ct. 465, 75 L.Ed. 1060 (1931); Eyster v. Gaff, 91 U.S. 521, 23 L.Ed. 403 (1876); Carney v. Sanders, 381 F.2d 300 (5th Cir. 1967). While subject to some important exceptions not relevant here, 2 this rule is merely a specific application of the general rule that where two in rem or quasi in rem actions are brought, one in state court, the other in federal court, the first court to assume jurisdiction over the property which is the subject of the two suits may maintain and exercise jurisdiction to the exclusion of the other. Donovan v. Dallas, 377 U.S. 408, 84 S.Ct. 1579, 12 L.Ed.2d 409, rehearing denied, 379 U.S. 871, 85 S.Ct. 14, 13 L.Ed.2d 77 (1964); Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939); Farmers' Loan and Trust Co. v. Lake Street Elevated R. Co., 177 U.S. 51, 20 S.Ct. 564, 44 L.Ed. 667 (1900). The Supreme Court has deemed this rule "essential to the orderly administration of justice, and to prevent unseemly conflicts between courts . . .." Farmers' Loan, supra at 61, 20 S.Ct. at 568.
The controversy in the present case has focused upon the application of Ohio's lis pendens statute. Deeply rooted in the common law doctrine of lis pendens, the Ohio statute operates to protect litigants from the pendente lite transfer to third persons of property that is the subject of litigation. Historically, this protection has been conditioned upon some form of notice sufficient to safeguard the interests of prospective purchasers. While some states require, by statute, formal notice to be filed in the public records, Ohio continues to follow the traditional rule that requires only that a description of the property appear in the pleadings. Cook v. Mozer, 108 Ohio St. 30, 140 N.E. 590 (1923); Parker v. Parker, 28 Ohio L.Abs. 49, 56 N.E.2d 527 (Ct.App.1938).
The district court assumed that lis pendens principles control the resolution of this case. It expressed its belief that the doctrine is inapplicable to personal property in Ohio, and stated further that the property was not sufficiently described in the divorce complaint, even if the doctrine is applicable to personalty. Apparently, in so ruling, the district court relied, as does the appellee, on the oftstated rule that the prayer for relief constitutes no part of the pleading. See, e. g., Manney v. Manney, 42 Ohio L.Abs. 153, 59 N.E.2d 755, 758 (Ct.App.1944).
We note first that Ohio's lis pendens statute does apply to personal property. See Sweigart v. Piqua Milling Co., 40 Ohio L.Abs. 398, 57 N.E.2d 327 (Ct.App.1943). We need not decide, however, whether the rule that averments contained in the prayer be disregarded when determining whether a cause of action has been stated, Tiffin Glass Co. v. Stoehr, 54 Ohio St. 157, 163, 43 N.E. 279 (1896), likewise applies to a determination of whether there is a valid lis pendens, but see Rule 8(A), Ohio R.Civ.P. ("A pleading . . . shall contain . . . a demand for judgment . . .."); Culver v. Rodgers, 33 Ohio St. 537, 546 (1878) (); accord, Porter v. Norris, 30 Ohio St.2d 255, 285 N.E.2d 14 (1972) (Corrigan, J., dissenting); and 6 Moore's Federal Practice P 54.62, at 1262 (2d ed. 1976) ("(T)he prayer for relief is an essential part of a pleading . . ., (though) it constitutes no part of the pleader's cause of action."); Parker v. Parker, 28 Ohio L.Abs. 49, 56 N.E.2d 527, 532 (Ct.App.1938) (), for we do not believe the resolution of this case turns upon Ohio's application of its lis pendens statute.
The cases do not suggest that the conflict between the jurisdiction of a federal bankruptcy court and a state court is to be resolved by looking to the state law of lis pendens. See, e. g., Straton v. New, 283 U.S. 318, 51 S.Ct. 465, 75 L.Ed. 1060 (1931); and Eyster v. Gaff, 91 U.S. 521, 23 L.Ed. 403 (1875). The reason is that in cases such as this, the rights in property between a litigant and a stranger to the litigation, both of whom claim an interest in...
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