Hill v. Duscio et al

Filing 32

OPINION AND ORDER. Plaintiff Al B. Hill's Motion to Freeze the Life Settlement Policy in the Name of Cecil Lovell 24 is GRANTED. Defendant Antonio Duscio and American General are ENJOINED from selling, transferring, or otherwise disposing or making unavailable the Cecil Lovell policy, policy number ending -7090L, until further order of the Court. Signed by Judge William S. Duffey, Jr on 3/31/2017. (bgt)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
AL B. HILL, as receiver for Credit
Nation Capital, LLC, Credit Nation
Acceptance, LLC, Credit Nation
Auto Sales, LLC, American Motor
Credit LLC, and Spaghetti Junction,
LLC,
Plaintiff,
v.

1:16-cv-4767-WSD

ANTONIO DUSCIO, WILLIAM
CLOW, NEAL JONES, BEVERLY
LEVERTON, LYNN LEVERTON,
TERRY LUCK, and WALTER
PADON,
Defendants.

OPINION AND ORDER
This matter is before the Court on Plaintiff Al B. Hill’s (“Receiver” or
“Plaintiff”) Motion to Freeze the Life Settlement Policy in the Name of Cecil
Lovell [24] (“Motion”).
I.

BACKGROUND
Plaintiff is the receiver of multiple entities in the matter SEC v. Torchia, et

al., No. 1:15-cv-3904. These entities include Credit Nation Capital, LLC (“CN
Capital”), National Viatical, Inc., and National Viatical Trust (“NVT”).

CN Capital manages, on behalf of NVT, the life settlement policy (the “Policy”)
for the insured Cecil Lovell. American General is the insurance company on the
Policy. The Policy has a death benefit of $1.2 million, and the Receiver represents
the current market value of the Policy is $642,000. According to American
General’s records, Defendant Antonio Duscio (“Duscio”) is the owner of the
policy.
In this action, the Receiver contends that Duscio obtained the Policy without
providing consideration for the purchase. The Receiver argues that the Policy was
pledged to Duscio to secure repayment of a debt of CN Capital to Duscio. The
Receiver explains: “To formalize the security pledge, CN Capital listed Duscio as
the owner of the policy with American General. However, the debt was repaid in
full, and the security should be released and the policy returned to the receivership
estate.” (Mot. at 2). The Receiver ultimately seeks the Policy to be transferred
back to the receivership.
On February 24, 2017, the Receiver filed his Motion. The Receiver seeks a
freeze or stay of the sale of the Policy until the Court rules on the merits of the
Receiver’s claims. He argues that, until the Court determines ownership of the
Policy, the Policy is at risk of being put out of reach of the Receiver. No party
responded to the Motion, and it is deemed unopposed. See LR 7.1(B), NDGa.

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II.

DISCUSSION
In managing a receivership, a court sits in equity. In shaping equity decrees,

the court has broad powers and wide discretion. See SEC v. Elliott, 953 F.2d
1560, 1566 (11th Cir. 1992) (the district court has broad powers and wide
discretion to determine relief in an equity receivership); see also SEC v. Drucker,
318 F. Supp. 2d 1205, 1206 (N.D. Ga. 2004).
The Court’s broad equitable powers include the inherent equitable authority
to issue a variety of ancillary relief to protect the receivership, and the scope of
possible relief is not limited to parties before the court. See Ritchie Capital Mgmt.,
L.L.C. v. Jeffries, 653 F.3d 755, 762 (8th Cir. 2011) (citing SEC v. Wencke, 622
F.2d 1363, 1369–71 (9th Cir.1980)). “Permissible ancillary relief includes
issuance of orders imposing blanket stays of litigation, in order to give the receiver
‘a chance to do the important job of marshaling and untangling a company’s assets
without being forced into court by every investor or claimant.’” Id. (citing United
States v. Acorn Tech. Fund, LP, 429 F.3d 438, 443 (3d Cir.2005)). The court’s
equitable powers are limited to cases that concern the assets of the receivership.
Id. (citing SEC v. Cherif, 933 F.2d 403, 413-14 (7th Cir. 1991)).
“In this respect, equitable powers of the receivership court are similar to
powers of the bankruptcy court to impose an automatic stay pursuant to 11 U.S.C.

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§ 362(a).” Id. “The goal in both securities-fraud receiverships and liquidation
bankruptcy is identical—the fair distribution of the liquidated assets.” Id. (quoting
SEC v. Wealth Mgmt. LLC, 628 F.3d 323, 334 (7th Cir.2010)). The bankruptcy
court can stay actions against any party, even a non-debtor, whenever the objective
of the action is to obtain possession or exercise control over the debtor’s property.
Id. (citing 11 U.S.C. § 362(a)(3)).
Under these principles, an order enjoining the sale of the Policy is warranted
here. The Receiver seeks an injunction on the sale of the Policy until the Court
determines whether the Policy should be transferred back to the receivership. He
maintains that the Policy was fraudulently transferred, and that it should be part of
the receivership estate that will be liquidated and distributed to investors. In
essence, the Receiver seeks to preserve the status quo. No party objects to the
Receiver’s Motion, and the Court, exercising its broad equitable powers, enjoins
the sale of the Policy until it determines the ownership of the Policy.
III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Plaintiff Al B. Hill’s Motion to Freeze the

Life Settlement Policy in the Name of Cecil Lovell [24] is GRANTED.
Defendant Antonio Duscio and American General are ENJOINED from selling,

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transferring, or otherwise disposing or making unavailable the Cecil Lovell policy,
policy number ending -7090L, until further order of the Court.

SO ORDERED this 31st day of March, 2017.

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