Weekes-Walker v. Macon Cnty. Greyhound Park, Inc.

• Decision Date: 02 September 2015
• Docket Number: Case No. 3:10-cv-895-WKW-WC
• Parties: JUDY WEEKES-WALKER, et al., Plaintiffs, v. MACON COUNTY GREYHOUND PARK, INC. (a/k/a Victory Land), Defendant.
• Court: U.S. District Court — Middle District of Alabama

JUDY WEEKES-WALKER, et al., Plaintiffs, v. MACON COUNTY GREYHOUND PARK, INC. (a/k/a Victory Land), Defendant.

Case No. 3:10-cv-895-WKW-WC

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA EASTERN DIVISION

September 2, 2015

RECOMMENDATION OF THE MAGISTRATE JUDGE

Before the court are several post-judgment motions and briefs filed by the Plaintiff Class, Defendant, and a non-party. On December 9, 2014, the District Judge entered an Order (Doc. 190) referring several matters to United States Magistrate Judge Charles S. Coody, including the following: (1) Defendant's Motion to Quash or, in the Alternative, to Stay Writ of Garnishment (Doc. 177); (2) Plaintiffs' Amended Motion to Join Patricia McGregor as Party Defendant (Doc. 183); (3) Defendant's Motion to Stay Motion to Join Patricia McGregor as a Party Defendant and Motion for Writ of Execution on Fraudulently Conveyed Assets (Doc. 186); and (4) Plaintiffs' Verified Application for Writ of Execution (Doc. 189). Subsequently, Judge Coody entered an Order (Doc. 194) instructing the parties to file any further responses in support or opposition to those matters pending before him. Plaintiffs filed an additional brief in support of their various filings. See Pl.'s Br. (Doc. 195). On March 23, 2015, this matter was reassigned to the undersigned Magistrate Judge. On July 14, 2015, the undersigned conducted a status hearing with counsel for all parties and non-party Patricia McGregor in attendance. Pursuant to the undersigned's direction at the hearing, counsel for Patricia McGregor filed a brief (Doc. 203) on behalf of Mrs. McGregor in which she joined in Defendant's request that this court stayPlaintiffs' writ of garnishment, motion for writ of execution, and motion to add her as a party defendant. Plaintiffs then filed a response (Doc. 205) in opposition to Mrs. McGregor's brief. All of these matters are before the undersigned and are ripe for decision or recommendation to the District Judge. For the reasons that follow, the undersigned RECOMMENDS that Defendant's Motion to Stay (Doc. 186) be granted, and that this court abstain from adjudicating Plaintiffs' claim that certain assets of Defendant were fraudulent transferred to Mrs. McGregor.

I. BACKGROUND

This case was filed nearly five years ago, and a final judgment (Doc. 168) was entered more than one year ago. The particulars of the claims brought by Plaintiffs and the outcome of same are not necessarily germane to the matters presently before the court. It is sufficed for present purposes to note that Plaintiffs are a class of former employees of Defendant who brought suit pursuant to the Worker's Adjustment and Retraining ("WARN") Act, 29 U.S.C. § 2101, et seq., after a series of "mass layoffs" or "plant closings" at Defendant's electronic gaming facility, Victoryland, in 2010. Final Judgment was entered in favor of Plaintiffs on July 22, 2014, in the amount of two million seven hundred thirty-four thousand eight hundred fifty-one dollars and 63/100 ($2,734,851.63), with said amount to include Plaintiffs' monetary judgment, attorneys' fees, costs, and interest. Final Judg. (Doc. 168) at 1.

On October 23, 2014, Plaintiffs filed with the Clerk of Court a Verified Application for Writ of Garnishment (Doc. 169) seeking to have garnished from the garnishee, Lower Tallapoosa Timber, any debt or effects owed or possessed by the garnishee for Defendant. On October 27, 2014, the Writ of Garnishment (Doc. 170) was issued by the Clerk and it was served on Lower Tallapoosa Timber on November 5, 2015. See Return of Service of Writ of Garnishment (Doc. 173). On November 12, 2014, Lower Tallapoosa Timber filed its Answer(Doc. 175) to the writ of garnishment, disclosing that it has in its possession non-exempt property belonging to the Defendant and consisting of "timber stumpage."¹

On November 12, 2014, Plaintiffs filed, under seal, their initial "Motion to Join Patricia McGregor as Party Defendant and Motion for Writ of Execution on Fraudulently Conveyed Assets" (Doc. 174-1). In the motion, Plaintiffs allege that Defendant "made conveyances involving real and personal property in anticipation" of the judgment obtained by Plaintiffs, that such "conveyances are in violation of Alabama's Fraudulent Transfer Act[,]" and that this court "may levy execution on the asset transferred or its proceeds" pursuant to Alabama law. Id. Plaintiffs' Verified Application for Writ of Execution further (Doc. 174-2) sought execution on several items of personal and real property said to be in the possession of Defendant. The following day, on November 13, 2014, Mrs. McGregor filed a Complaint for Declaratory Judgment (Doc. 177-1) in the Circuit Court of Macon County, Alabama, in which she describes a number of loan transactions she made to benefit Defendant in return for a promissory note which was secured by a mortgage executed by Defendant in her favor on September 27, 2012, and recorded in Macon County Probate records on February 5, 2013. In her state court action, Mrs. McGregor requests that the state court declare that her mortgage is a valid, enforceable lien on the subject property owned by Defendant, and that, under Alabama law, her mortgage primes the judgment obtained by Plaintiffs in this action because the Certificate of Judgment was not filed by Plaintiffs in Macon County until October 30, 2014.

Subsequently, on November 18, 2014, Defendant filed its Motion to Quash, or in the Alternative, to Stay, Writ of Garnishment (Doc. 177), contending that the Writ of Garnishment toLower Tallapoosa Timber should be quashed because the prior recording of Mrs. McGregor's mortgage vis a vis Plaintiffs' judgment gives her priority under Alabama law. In the alternative, Defendant contends that, in light of Mrs. McGregor's pending state court action, this court should stay the Writ of Garnishment and abstain from deciding any issues surrounding the validity or priority of Mrs. McGregor's mortgage pursuant to the principles articulated by the Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). The various briefs and procedural developments already described above followed.²

II. DISCUSSION

As a preliminary matter, the court addresses its jurisdiction to consider this matter. Neither Defendant nor Mrs. McGregor appear to argue that the court lacks jurisdiction to consider the various post-judgment enforcement measures brought by Plaintiffs, including their claim that Mrs. McGregor was the recipient of one or more fraudulent transfers by Defendant. Thus, as Plaintiff argues, and as the undersigned acknowledged at the status hearing in this matter, subject to some conditions, the court maintains such ancillary jurisdiction as is necessary to enforce its judgment, including the authority to consider in a supplementary proceeding whether a fraudulent transfer should be avoided. See, e.g., Peacock v. Thomas, 516 U.S. 349, 356-58 (1996) ("[W]e have approved the exercise of ancillary jurisdiction over a broad range of supplementary proceedings involving third parties to assist in the protection and enforcement offederal judgments—including . . . the prejudgment avoidance of fraudulent conveyances."). Of course, this ancillary jurisdiction is not without limits. The court is not free to entertain a supplementary proceeding with the intended effect of bringing "a new lawsuit to impose liability for a judgment on a third party" that was not a party of the lawsuit resulting in the judgment already entered by the court. Id. at 359. See also Nat'l Maritime Servs., Inc. v. Straub, 776 F.3d 783, 786-87 (11th Cir. 2015) ("[T]he district court had ancillary jurisdiction over this supplementary proceeding because National Maritime sought to disgorge Straub of a fraudulently transferred asset, not to impose liability for a judgment on a third party."). Thus, any supplementary proceeding instituted by Plaintiffs with the aim of imposing liability on Mrs. McGregor is limited to the value of any interest which was fraudulently transferred to her by Defendant, and may not result in personal liability for Mrs. McGregor for any unsatisfied amount of the judgment in excess of any purported fraudulent transfer for her benefit. Id. at 787. Plaintiffs acknowledge this reality and maintain they "are not seeking to impose personal liability on Mrs. McGregor," but are instead only seeking to "obtain satisfaction of their judgment from assets that belong to the defendant." Pls.' Resp. (Doc. 181) at 4.

An additional limitation on the court's ancillary jurisdiction in enforcing its judgment by way of execution is that the "procedure of 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[.]" Fed. R. Civ. P. 69(a)(1). Thus, any supplementary proceeding brought by Plaintiffs and adjudicated by this court must comport with the procedures applicable to same under Alabama law. Although courts have opined that Rule 69 is not meant to "put the judge into a procedural straightjacket whether of state or federal origin[,]" Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1226 (7th Cir. 1993), this court must generally observe and follow theprocedures established under Alabama law, including particularly the Alabama Fraudulent Transfer Act, Ala. Code § 8-9A-1, et seq., in any supplementary proceeding brought by Plaintiffs for the purpose of avoiding supposedly fraudulent transfers by Defendant in anticipation of the judgment entered in this case.

"Straightjacketed" or not, Circuit precedent makes clear that state law pertaining to ancillary proceedings to enforce a judgment is vital to determining how this court may proceed in this area. For example, Florida law plainly permits a judgment creditor to initiate a supplementary proceeding and implead a supplemental defendant for purposes of challenging a supposedly fraudulent transfer to...