Wells Fargo Bank, N.A. v. Raymond & Associates, LLC et al

Filing 76

ORDER denying 45 Motion to Appoint Receiver; denying as moot the alternative motion for issuance of a pre-judgment writ of seizure". The government's motion for extension of time to file its final response (doc. 56) is denied as moot. Signed by Chief Judge William H. Steele on 4/27/2015. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
WELLS FARGO BANK, etc.,

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) CIVIL ACTION 14-372-WS-C
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Plaintiff,
v.
RAYMOND & ASSOCIATES, LLC,
et al.,
Defendants.

ORDER
This matter is before the Court on the plaintiff’s motion under Rule 66 for
appointment of a receiver or, in the alternative, for a pre-judgment writ of seizure.
(Doc. 45). Interested parties and non-parties have filed briefs and evidentiary
materials in support of their respective positions, (Docs. 45, 51-54, 56, 61, 67-70,
72, 75), and the motion is ripe for resolution.
BACKGROUND
The plaintiff made two sizable loans to defendant Raymond & Associates,
LLC (“R&A”), both guaranteed by defendants R&A Marine, LLC (“Marine”) and
Raymond LaForce. When the defendants defaulted, the plaintiff brought this
action against them. Counts One and Two assert breach of contract against R&A,
Count Three asserts breach of guaranty against the other two defendants, and
Count Four asserts statutory and common-law detinue against all three. (Doc. 7).
LaForce filed for bankruptcy, and the plaintiff dismissed without prejudice
all claims against him. (Docs. 28, 34). The plaintiff moved for summary
judgment, to which the entity defendants declined to respond. The Court granted
summary judgment as to Counts One, Two and Three but, for want of adequate

discussion and support by the plaintiff, denied summary judgment as to Count
Four. (Doc. 35). Judgment was recently entered in the amount of $1,398,965.74.
(Doc. 64).
R&A operates a shipyard. The loan documents at issue provide the
plaintiff a broad security interest in R&A’s tangible and intangible personal
property. The plaintiff says it has recently developed information indicating that
the value of its collateral is declining, that equipment and funds subject to its
security interest are missing, and that R&A has no work lined up after it completes
the five vessels now in the yard.
The plaintiff’s motion identifies seventeen additional creditors of R&A.
(Doc. 45 at 6-7). The plaintiff gave notice of its motion to each of them, and the
Court afforded them, as well as the defendants, an opportunity to be heard. One
group of three creditors (collectively, “PNC”), another group of two creditors
(collectively, “SCF”), and two individual creditors filed responses to the motion,
as did R&A. Only R&A and SCF oppose appointment of a receiver.
DISCUSSION
“[F]ederal law governs the appointment of a receiver by a federal court
exercising diversity jurisdiction.” National Partnership Investment Corp. v.
National Housing Development Corp., 153 F.3d 1289, 1292 (11th Cir. 1998). “A
district court’s appointment of a receiver … is an extraordinary equitable remedy.”
United States v. Bradley, 644 F.3d 1213, 1310 (11th Cir. 2011) (internal quotes
omitted).
“[T]here is no precise formula for determining when a receiver may be
considered.” Canada Life Assurance Co. v. LaPeter, 563 F.3d 837, 844 (9th Cir.
2009). The plaintiff asks the Court to consider the following factors identified in
Canada Life, viz.:
(1) whether the party seeking the appointment has a valid claim;
(2) whether there is fraudulent conduct or the probability of

2

fraudulent conduct, by the defendant; (3) whether the property is
in imminent danger of being lost, concealed, injured, diminished in
value, or squandered; (4) whether legal remedies are inadequate;
(5) whether the harm to plaintiff by denial of the appointment would
outweigh injury to the party opposing appointment; [and] (6) the
plaintiff’s probable success in the action and the possibility of
irreparable injury to plaintiff’s interest in the property ….
Id. (internal quotes omitted). (Doc. 45 at 13-14). R&A proposes that “the
availability of [a] less severe equitable remedy” also be considered, (Doc. 52 at 3
(internal quotes omitted)), and SNF asks the Court to consider as well “whether
the plaintiff’s interests sought to be protected will in fact be well-served by
receivership.” (Doc. 54 at 6 (internal quotes omitted)). As all these factors find
support in the case law, and as the Court has previously identified each of them as
proper,1 it accepts them as appropriate factors.
Some factors, however, are more central than others. In particular, “equity
intervenes only when there is no remedy at law or the remedy is inadequate.”
Bradley, 644 F.3d at 1310.2 In Bradley, a criminal case, the trial court appointed a
receiver to marshal the defendants’ assets and make them available to pay to the
government the money judgments (representing restitution) and fines imposed
against the defendants. Id. at 1307-09. The Eleventh Circuit held this was an
abuse of discretion, since the Federal Debt Collection Procedure Act “provided the
Government with all the tools necessary to obtain payment of the fines and money
judgments.” Id. at 1310. In particular, the government could “seize the property
via writs of attachment (for tangible property) and garnishment (for intangible
property, like a bank account).” Id. “Because federal and state law provide the
United States with ample means of obtaining satisfaction of the judgments at hand

1

PNC Bank, N.A. v. Presbyterian Retirement Corporation, 2014 WL 6065778 at
*5 & n.11 (S.D. Ala. 2014).
2

Accord Mitsubishi International Corp. v. Cardinal Textile Sales, Inc., 14 F.3d
1507, 1518 (11th Cir. 1994) (“It is axiomatic that equitable relief is only available where
there is no adequate remedy at law ….”).
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– all of them far more efficient than the means the court fashioned – the court
abused its discretion in appointing a receiver to perform the Government’s work.”
Id. at 1311.
Since ordinary post-judgment collection procedures constitute an adequate
legal remedy for the government, it is difficult to see why they are not an adequate
legal remedy for the plaintiff. The plaintiff’s response is the technical one that,
“as of today [April 17], [it] does not have a final judgment it can enforce.” (Doc.
68 at 5). But the only reason the plaintiff had no judgment before April 15 is that
it presented an incomplete motion for summary judgment, one that did not prove
up its demand for interest and attorney’s fees, which deficiency necessitated the
filing of a supplemental motion for summary judgment; otherwise, the plaintiff
would have had a judgment in February. (Doc. 35 at 5-6). And the only reason
the April 15 judgment is not a final judgment is that the plaintiff did not ask that it
be made final pursuant to Rule 54(b). The plaintiff cannot obtain a receiver by the
simple expedient of electing not to utilize the ordinary collection tools available to
it.
The plaintiff says that, even if it had a final judgment, R&A has not turned
over its collateral voluntarily, so that the plaintiff “would still have to resort to
judicial remedies to seize its collateral.” (Doc. 68 at 5-6). But it is precisely the
availability of those remedies, not shown to be inadequate, that precludes
appointment of a receiver.
Finally, the plaintiff notes that other creditors have claims to its collateral –
in some cases, superior claims – and concludes that a receiver could “review and
safeguard the legitimate claims of other creditors … without a chaotic race to the
courthouse that would result if [the plaintiff] were to attempt to seize and liquidate
the [collateral] itself or through the execution process.” (Doc. 45 at 16). As SCF
notes, legal remedies “must be inadequate, not merely inconvenient,” for
appointment of a receiver to be warranted. (Doc. 54 at 7). The plaintiff has made
no showing – indeed, has attempted none – that the commonplace situation of
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competing claims to a judgment debtor’s property renders the law’s ordinary
collection tools so inadequate as to support the “drastic” step of appointing a
receiver. Netsphere, Inc. v. Baron, 703 F.3d 296, 305 (5th Cir. 2012).
CONCLUSION
The lack of an adequate remedy at law is the sine qua non of equitable
relief, including the appointment of a receiver. The plaintiff’s failure on this point
is dispositive, and the motion for appointment of receiver is denied. However, the
Court will, by separate order and pursuant to Rule 54(b), designate the April 15
judgment as a final judgment, triggering the plaintiff’s access to the full panoply
of post-judgment enforcement procedures.3 Because the Court has entered
judgment and is by separate order rendering that judgment final, the plaintiff’s
alternative motion for issuance of a “pre-judgment writ of seizure,” (Doc. 45 at 1,
20), is denied as moot.4
DONE and ORDERED this 27th day of April, 2015.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

3

See Intergraph Corp. v. Intel Corp., 253 F.3d 695, 699 (11th Cir. 2001) (a trial
court has “authority sua sponte to enter judgment under Rule 54(b)”).
4

The government’s motion for an extension of time to file its “final response” to
the plaintiff’s motion, (Doc. 56), is denied as moot.
5