Reyes-Fuentes et al v. Shannon Produce Farms, Inc. et al
Filing
70
Plaintiffs are Ordered to file a brief within ten days of this Order. Signed by Judge B. Avant Edenfield on 5/2/2012. (loh) Modified on 5/2/2012 (loh).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
STATESBORO DIVISION
JOSE MARCIAL REYES-FUENTES, et
al.,
Plaintiffs,
v.
6:08-cv-59
SHANNON PRODUCE FARM, INC.,
SHANNON VINEYARDS, INC., JAMES
G. SHANNON, JR., JAMES G.
SHANNON, SR., CYNTHIA SHANNON,
and RICARDO GASPAR,
On February 2, 2011, the parties jointly
moved for entry of their consent agreement
and for a fairness determination. See Doc.
55. This Court approved the agreement and
entered the consent judgment on March 8,
2011, in favor of Plaintiffs in the sum of
$358,977.20. See Doc. 57. The Court
concluded that “this Court will retain
jurisdiction for the sole purpose of enforcing
this Consent Order, all terms and conditions
of which are adopted by the Court and
hereby made the Order of this Court.” See
id. at 8.
Before the Court is Third Party
Defendant Glenda Gaspar’s Motion to
Dismiss. See Doc. 64.
On February 7, 2012, Plaintiffs filed a
complaint to avoid an allegedly fraudulent
transfer from Defendant Ricardo Gaspar to
his wife Glenda Gaspar. See Doc. 59.
Plaintiffs allege that in order to avoid a
judgment lien resulting from the consent
judgment, Ricardo Gaspar quitclaimed his
interest in his residence to his wife five days
prior the parties’ joint motion to enter the
consent judgment. See id. at 3-4. Plaintiffs
obtained an entry of default against Ricardo
Gaspar. See Docs. 67; 69. On March 8,
2012, Glenda Gaspar filed the present
motion to dismiss. See Doc. 64.
II.
III.
Defendants,
v.
GLENDA GASPAR,
Third-Party Defendant.
ORDER
I.
INTRODUCTION
BACKGROUND
On July 17, 2008, Plaintiffs filed a
complaint against Defendants Shannon
Produce Farm, Inc., James G. Shannon Jr.,
Ricardo Gaspar, James G. Shannon Sr., and
Cynthia Shannon, alleging violations of the
anti-retaliation provision of the Fair Labor
Standards Act (“FLSA”). See Doc. 1. On
May 18, 2010, Plaintiffs added Shannon
Vineyards, Inc. as a defendant. See Doc.
46.
ANALYSIS
Glenda Gaspar moves to dismiss
Plaintiffs’ complaint, arguing that this Court
lacks subject matter jurisdiction, Plaintiffs
cannot comply with Federal Rule of Civil
Procedure 14, and that Plaintiffs have failed
to state a claim upon which relief can be
granted. See Doc. 64 at 1.
A. Subject Matter Jurisdiction
Glenda Gaspar argues that the Court
lacks supplemental jurisdiction because the
fraudulent transfer claim raises separate and
jurisdiction,’
which
governed by case law.
distinct allegations from the original FLSA
claim. See Doc. 64 at 6-7. Moreover, she
contends that because she was not a party to
the consent judgment, the Court cannot
enforce the judgment against her. See id. at
7. Finally, she avers that the Court lacks
federal question or diversity jurisdiction.
See id. at 7-8.
remains
Robb Evans & Assocs., LLC v. Holibaugh,
609 F.3d 359, 363 (4th Cir. 2010) (quoting
13 C HARLES ALAN WRIGHT, ARTHUR R.
MILLER & EDWARD H. C OOPER, F EDERAL
PRACTICE & P ROCEDURE § 3523.2 (3d ed.
2010)).
A court must dismiss a complaint where
it lacks jurisdiction over the subject matter
of the dispute. See F ED. R. C IV. P. 12(b)(1);
Bochese v. Town of Ponce Inlet, 405 F.3d
964, 974-75 (11th Cir. 2005). Plaintiffs bear
the burden of establishing subject matter
jurisdiction. See Sweet Pea Marine, Ltd. v.
APJ Marine, Inc., 411 F.3d 1242, 1248 n.2
(11th Cir. 2005).
“[A] federal court may exercise ancillary
jurisdiction ‘(1) to permit disposition by a
single court of claims that are, in varying
respects and degrees, factually
interdependent; and (2) to enable a court to
function successfully, that is, to manage its
proceedings, vindicate its authority, and
effectuate its decrees.’” Peacock, 516 U.S.
at 354 (quoting Kokkonen v. Guardian Life
Ins. Co., 511 U.S. 375, 379-80 (1994)).
Plaintiffs contend this Court’s jurisdiction
over their complaint rests on the second
category, called ancillary enforcement
jurisdiction. See Doc. 68 at 2.
Plaintiffs argue that the Court has
ancillary jurisdiction over their complaint.
See Doc. 68 at 2.
“Congress codified much of the
common-law doctrine of ancillary
jurisdiction as part of ‘supplemental
jurisdiction’ in 28 U.S.C. § 1367.” Peacock
v. Thomas, 516 U.S. 349, 354 n.5 (1996)
(emphasis added).
Yet, common law
ancillary jurisdiction survived the
codification of supplemental jurisdiction.
Nat’l City Mortg. Co. v. Stephen, 647 F.3d
78, 85 (3d Cir. 2011).
The Supreme Court has “reserved the
use of ancillary jurisdiction in subsequent
proceedings for the exercise of a federal
court’s inherent power to enforce its
judgments.” Id. at 356. The Supreme Court
has also “approved the exercise of ancillary
jurisdiction over a broad range of
supplementary proceedings involving third
parties to assist in the protection and
enforcement of federal judgments—
including attachment, mandamus,
garnishment, and the prejudgment avoidance
of fraudulent conveyances.” Id. Ancillary
jurisdiction, however, does not extend to
“subsequent lawsuit[s] to impose an
obligation to pay an existing federal
judgment on a person not already liable for
Although § 1367 governs ancillary
jurisdiction over claims asserted in a
case over which the district court has
federal subject matter jurisdiction, it
does not affect common law
ancillary jurisdiction ‘over related
proceedings that are technically
separate from the initial case that
invoked federal subject matter
2
that judgment.” Id. at 357 (emphasis
added).
judgments, including suits to set aside a
fraudulent conveyance, do “not require an
independent jurisdictional basis and may
proceed even if the parties are nondiverse”); 13 F ED. P RAC. & P ROC. JURIS. §
3523.2 (3d ed.) (“[I]f a federal court had
jurisdiction of the principal action, it may
hear an ancillary proceeding, regardless of
the citizenship, the amount in controversy,
or any other factor that normally would
determine subject matter jurisdiction.”).
Although the Eleventh Circuit has yet to
rule on this particular issue, the majority of
the circuits to address it have concluded that
post-judgment actions to avoid fraudulent
conveyances fall within the court’s ancillary
enforcement jurisdiction. See Epperson v.
Entm’t Express, Inc., 242 F.3d 100, 106 (2d
Cir. 2001) (“Where the post-judgment
proceeding is an effort to collect a federal
court judgment, the courts have permitted
judgment creditors to pursue, under the
ancillary enforcement jurisdiction of the
court, the assets of the judgment debtor even
though the assets are found in the hands of a
third party.”); Thomas, Head & Greisen
Emps. Trust v. Buster, 95 F.3d 1449, 145455 (9th Cir. 1996); see also Gambone v. Lite
Rock Drywall, 288 F. App’x 9, 12-13 (3d
Cir. 2008) (concluding that district court had
ancillary jurisdiction over fraudulent transfer
claim against third-party transferee); U.S.I.
Props. Corp. v. M.D. Constr. Co., 230 F.3d
489, 498 (1st Cir. 2000) (“Where a
postjudgment proceeding presents an
attempt simply to collect a judgment duly
rendered by a federal court, even if chasing
after the assets of the judgment debtor now
in the hands of a third party, the residual
jurisdiction stemming from the court’s
authority to render that judgment is
sufficient to provide for federal jurisdiction
over the postjudgment claim.”).
Glenda Gaspar’s case citations are
irrelevant to the inquiry of whether the
Court has ancillary enforcement jurisdiction.
See Doc. 64 at 6-8.
First, the Court’s incorporation of the
terms of the consent agreement into its
Order and express retention of jurisdiction
granted the Court jurisdiction to enforce the
consent judgment. See Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375,
381 (1994) (stating that the court has
ancillary jurisdiction to enforce a settlement
agreement where “the parties’ obligation to
comply with the terms of the settlement
agreement had been made part of the order
of dismissal”). The Order makes the general
proclamation that this Court “retain[s]
jurisdiction for the sole purpose of enforcing
this Consent Order.” See Doc. 57 at 8. Yet,
the agreement also states that “[t]his Court
retains jurisdiction through December 31,
2011.” See id. at 1 (emphasis added).
Plaintiffs filed this complaint on February 7,
2012. Neither party addresses the December
31, 2011 language.
It matters not to the Court’s ancillary
enforcement jurisdiction that Glenda Gaspar
is non-diverse from Plaintiffs. See Buster,
95 F.3d at 1453-55; see also Epperson, 242
F.3d at 104 (stating that actions to collect
Plaintiffs’ fraudulent conveyance claim
does not seek to impose personal liability for
the consent judgment on Glenda Gaspar.
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Rather, Plaintiffs are seeking to collect on
their judgment obtained in this Court by
avoiding the transfer of an asset belonging
to a judgment debtor, Ricardo Gaspar.
Assuming the December 31, 2011 language
of the Consent Order does not affect this
Court’s enforcement jurisdiction, this Court
would have ancillary enforcement
jurisdiction over Plaintiffs’ claims against
Glenda Gaspar seeking to avoid the
allegedly fraudulent transfer. Nevertheless,
the Court must sua sponte raise issues
affecting subject matter jurisdiction. See
Univ. of S. Ala. v. Am. Tobacco Co., 168
F.3d 405, 410 (11th Cir. 1999). Because
neither party addresses the issue, the parties
are ORDERED to brief the effect of the
December 31, 2011 language on this Court’s
jurisdiction. Cf. EEOC v. Local 40, Int’l
Ass ’n of Bridge, Structural & Ornamental
Iron Workers, 76 F.3d 76, 80 (2d Cir. 1996)
(noting that a “district court does not have
inherent power to enforce an order that has
expired” and that “the court’s enforcement
authority expire[s] when the decree
expire[s]”).
be dismissed so long as it contains factual
allegations sufficient “to raise a right to
relief above the speculative level.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555
(2007); see Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009) (claim must have “facial
plausibility”); Edwards v. Prime, Inc., 602
F.3d 1276, 1291 (11th Cir. 2010).
Glenda Gaspar, in effect, recharacterizes her lack of subject matter
jurisdiction claim as a 12(b)(6) claim.
Nevertheless, the Court’s review of the
complaint indicates that Plaintiffs have
alleged sufficient facts to state a plausible
fraudulent transfer claim under Georgia law
against Glenda Gaspar. See Kipperman v.
Onex Corp., 411 B.R. 805, 834 (N.D. Ga.
2009) (setting forth the elements of a
fraudulent conveyance claim under Georgia
law); see also O.C.G.A. §§ 18-2-74 to 75.
Glenda Gaspar’s argument that Plaintiffs
have failed to state claim is DENIED.
C. Rule 14
Glenda Gaspar also contends that she is
not a proper third-party defendant under
Rule 14 because no claim has been asserted
against Plaintiffs, she bears no responsibility
for the FLSA violations, bears no liability to
any of the other Defendants, the Court’s
approval to add her as a party has not been
obtained, and the current fraudulent transfer
claim is separate and distinct from Plaintiffs’
FLSA claims. See Doc. 64 at 2-6. Plaintiffs
respond that Rule 14 is inapplicable because
the rule does not apply to post-judgment
proceedings or to claims raised by a plaintiff
who is not also a defendant. See Doc. 68 at
4-6.
B. Failure to State a Claim
Glenda Gaspar briefly argues that the
complaint fails to state a claim because the
appropriate forum for Plaintiffs’ fraudulent
transfer claim is a state court. See Doc. 64
at 8.
In considering a Federal Rule of Civil
Procedure 12(b)(6) motion, all facts in the
plaintiff’s complaint “are to be accepted as
true and the court limits its consideration to
the pleadings and exhibits attached thereto.”
GSW, Inc. v. Long Cnty., 999 F.2d 1508,
1510 (11th Cir. 1993). A complaint will not
4
“Rule 14(b) is restricted to situations
where a counterclaim is asserted against the
plaintiff, and the plaintiff cannot implead a
third party where no counterclaim has been
filed against him or her.”
25 J OHN
B OURDEAU ET AL., F ED. PROC., L. ED . §
59:240. Furthermore, “Rule 14 pertains to
persons brought in as parties to the original
proceeding, not to persons brought in as
parties to postjudgment proceedings under
Fed. R. Civ. P. 69.” Id. § 59:227 (citing
Rodd v. Region Const. Co., 783 F.2d 89 (7th
Cir. 1986)).
In C-Staff, Inc. v. Liberty Mut. Ins. Co.,
the Georgia Supreme Court held that
O.C.G.A. § 9-11-69 does not authorize a
judgment creditor to implead and hold liable
persons who were not parties to the
underlying judgment; instead, the judgmentcreditor must initiate a separate civil action
against persons it claims are liable for a
judgment to which they were not parties.
See 275 Ga. 624, 624 (2002). Unlike the
factual scenario in C-Staff, however,
Plaintiffs do not seek to hold Glenda Gaspar
liable for the consent judgment, only avoid
an allegedly fraudulent transfer. Cf.
O.C.G.A. § 18-2-77 (discussing relief that a
creditor may obtain regarding a fraudulent
transfer).
Plaintiffs bring this complaint as a
“supplementary action in aid of execution of
judgment” pursuant to Federal Rule of Civil
Procedure 69. See Doc. 59 at 2. Therefore,
Glenda Gaspar’s Rule 14 arguments are
inapplicable to the current proceeding. She
has also failed to provide case law
analogous to the present procedural and
factual posture of this action where Plaintiffs
have filed a post-judgment complaint
attempting to avoid an alleged fraudulent
transfer in order to collect the judgment
owed and entered by this Court. See Doc.
64 at 4-6. Her Rule 14 arguments fail.
A supplemental proceeding may be the
appropriate procedural mechanism in certain
jurisdictions to seek the avoidance of a
fraudulent transfer preventing a plaintiff’s
collection of the court’s judgment. See
Turner v. Hallberg, 2011 WL 3501858 (D.
Or. Aug. 10, 2011); PNC Bank v.
Broadbent, 2011 WL 3902794 (S.D. Ind.
Aug. 2, 2011); Fudali v. Pivotal Corp., 2011
WL 1576611 (D.D.C. Apr. 26, 2011); ABM
Fin. Servs., Inc. v. Express Consolidation,
Inc., 2011 WL 915669 (S.D. Fla. Mar. 16,
2011); Lorillard Tobacco Co. v. Montrose
Wholesale Candies & Sundries, Inc., 2011
WL 65963, at *5 n.8 (N.D. Ill. Jan. 10,
2011); Rodriquez v. Lawns of Distinction,
2008 WL 4941000 (E.D. Mo. 2008);
Clarinda Color LLC v. BW Acquisition
Corp., 2004 WL 2862298, at * 3, *9 (D.
Minn. June 14, 2004); cf. IFC Interconsult,
AG v. Safeguard Int’l Partners, LLC, 438
F.3d 298, 314 (3d Cir. 2006) (“A Rule 69
action, by its very nature, piggybacks on an
Plaintiffs assert that this complaint is
brought pursuant to Federal Rule of Civil
Procedure 69. Rule 69 provides that “[t]he
procedure on 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, but a
federal statute governs to the extent is
applies.” Georgia law recognizes the ability
of a judgment creditor to enforce its
judgment through a writ of execution and
also to engage in post-judgment discovery.
See O.C.G.A. § 9-11-69.
5
action establishing liability and has a
derivative status.”).
Plaintiffs are ORDERED to file a brief
justifying whether the filing of this postjudgment complaint in the same action is the
appropriate post-judgment procedural
mechanism under the governing law for
adjudicating the allegedly fraudulent
transfer. Cf. Mitchell v. Lyons Prof’l Servs.,
Inc., 727 F. Supp. 2d 120, 122-25 (E.D.N.Y.
2010) (examining Rule 69(a) and how
closely party must comply with state
procedure in context of post-judgment
motion to avoid a fraudulent transfer).
IV. CONCLUSION
Plaintiffs are ORDERED to file a brief
within ten (10) days of this Order explaining
whether the Consent Order’s December 31,
2011 language limits this Court’s
jurisdiction and justifying the filing of a
post-judgment complaint as the appropriate
procedural mechanism pursuant to Rule 69.
Glenda Gaspar will have ten (10) days from
the filing of Plaintiffs’ brief to file a
response. The Court will not accept replies.
This 2nd day of May 2012.
R AVANT EDFNFIELO, JIJDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
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