Reyes-Fuentes et al v. Shannon Produce Farms, Inc. et al

Filing 15

ORDER denying 6 Motion to Dismiss. The Clerk is directed to open a new case containing Documents 59-72 and this Order. Plaintiffs' are Ordered to pay the filing fee. Signed by Judge B. Avant Edenfield on 8/13/12. (wwp)

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,
Defendants,
V.

GLENDA GASPAR,
Third-Party Defendant.
ORDER
I.

INTRODUCTION

On March 8, 2012, Glenda Gaspar filed
a motion to dismiss. See Doc. 64. After
disposing of several of her arguments, the
Court requested supplemental briefing on
two remaining issues. See Doc. 70. The
parties have submitted their briefs. See
Docs. 71; 72. Now again before the Court is
Glenda Gaspar's motion to dismiss. See
Doc. 64.
II.

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.
Plaintiffs later added Shannon Vineyards,
Inc. as a defendant. See Doc. 46.
On February 2, 2011, the parties jointly
moved for entry of their consent agreement
and for a FLSA fairness determination. See
Doc. 55. This Court approved the
agreement, entered judgment on March 8,
2011 in favor of Plaintiffs in the sum of
$358,977.20, and stated that the Court
would "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 Doc. 57 at 8. The Clerk's
Office issued a writ of execution on January
9, 2012. See Doc. 58.
On February 7, 2012, Plaintiffs filed a
post-judgment complaint to void an
allegedly fraudulent transfer from Defendant
Ricardo Gaspar to his wife, Glenda Gaspar.
See Doc. 59. Plaintiffs obtained an entry of
default against Ricardo Gaspar. See Docs.
67; 69. Glenda Gaspar filed a motion to
dismiss. See Doc. 64.
III.

ANALYSIS

This Court ordered the parties to brief
two issues: (1) whether the Consent Order's
December 31, 2011 language limits this
Court's subject matter jurisdiction; and (2)
whether Plaintiffs' post-judgment complaint
in the same action is the appropriate
procedural mechanism pursuant to Rule 69
and Georgia law. See Doc. 70 at 6.
A. Subject Matter Jurisdiction
This Court has already determined that,
in the absence of potentially limiting

jurisdictional language in the consent order,
it has subject matter jurisdiction over a postjudgment claim against a third party to avoid
a fraudulent transfer. See Doc. 70 at 4.
Therefore, the only remaining issue as to
subject matter jurisdiction is whether the
December 31, 2011 language precludes the
Court's exercise of jurisdiction.

permanent injunction embodied in the
decree. See 653 F.2d 166, 172 (5th Cir.
Aug. 1981). Likewise, in United States v.
District Council of New York City, the court
concluded that a durational provision in one
paragraph of a consent decree clearly
applied to specific provisions with limited
application and did not cause other
provisions to expire.
See 2007 WL
*8 (S.D.N.Y. Aug. 6, 2007); see
2265584, at
also Consumer Advisory Board v. Glover,
989 F.2d 65, 66-68 (1st Cir. 1993)
(concluding that ambiguous judicial order
did not terminate an earlier consent order,
which had no express termination date)
(emphasis added).

Plaintiffs argue that this Court has
ancillary enforcement jurisdiction because
they are seeking to enforce the monetary
judgment, not a term of the consent order.
See Doc. 71 at 2. Moreover, they contend
the Court could not premise the exercise of
jurisdiction against Glenda Gaspar on the
Court's retention of jurisdiction in the
consent order because she was not a party to
the consent judgment. See id. Alternatively,
Plaintiffs argue that even if they were
enforcing a term of the consent judgment,
expiration of the jurisdictional term would
not make the order unenforceable. See id. at
4.

These cases, however, do not stand for
the broad implication that jurisdictional
clauses in consent orders or decrees do not
ever affect the Court's jurisdiction; instead,
these cases hold that jurisdictional clauses
may not necessarily restrain all of the terms
of the parties' agreement. Plaintiffs make
no effort to apply these cases to the
particular terms of the underlying consent
judgment.

Glenda Gaspar counters that the Court
retained jurisdiction over the consent
judgment only through December 31, 2011,
and the Court now cannot enforce the
payment terms of the consent judgment. See
Doc. 72 at 2.

Many of the other cases cited by
Plaintiffs are not directly relevant to
whether the jurisdictional language in the
consent judgment limits this Court's subject
matter jurisdiction. See Gam bone v. Lite
Rock Drywall, 288 F. App'x 9 (3d Cir.
2008); U.S.I. Props. Corp. v. M.D. Constr.
Co., 230 F.3d 489 (1st Cir. 2000); In re
Enron Corp. Sec., Derivative & "ERISA"
Litig., 2008 WL 4166172 (S.D. Tex. Aug.
29, 2008).2 The Court has already agreed

The Court will first address Plaintiffs'
alternative argument. In Roberts v. St. Regis
Paper Co., the old Fifth Circuit' concluded
that the five-year limitation on jurisdiction
in the consent decree did not broadly apply
to all of the terms of the decree and did not
conflict with the enforcement of a
1

All decisions of the former Fifth Circuit handed
down before October 1, 1981 are binding precedent.
See Bonner v. City of Prichard, 661 F. 2d 1206, 1209
(llthCir. 1981) (en bane).

2

Plaintiffs also cite Cygnus Telecomms. Tech. v.
Totalaxcess.com, Inc. See 345 F.3d 1372 (Fed. Cir.
2003); Doc. 71 at 3. Yet, the Federal Circuit

2

that this Court would generally have
ancillary enforcement jurisdiction over a
fraudulent transfer claim raised postjudgment. See Doc. 70 at 4.

"The injunctive qualities of consent decrees
compels the court to . . . retain jurisdiction
over the decree during the terms of its
existence ... . See id. The federal court
may lose jurisdiction over enforcement of a
consent decree's terms once the decree
expires. See EEOC v. Local 40, Int'l Ass 'n

"A consent judgment has the same force
and effect as any other judgment until set
aside in the manner provided by law."
United States v. Kellum, 523 F.2d 1284,
1287 (5th Cir. 1975); see also United States
v. City of Miami, Fla., 664 F.2d 435, 439
(5th Cir. 1981) ("A consent decree, although
founded on the agreement of the parties, is a
judgment."). "A consent judgment making
an award of money is a money judgment."

of Bridge, Structural & Ornamental Iron
Workers, 76 F.3d 76, 80 (2d Cir. 1996)
(concluding that the court could not hold a
party in contempt for violating injunctive
provisions of an expired consent decree).
Here, however, Plaintiffs are seeking to
collect on the monetary judgment agreed to
and entered by the Court on March 8, 2011.
See Doc. 57 at 1 (stating that the Court
"directs the Clerk to enter judgment against
Defendants and in favor of Plaintiffs in the
sum of $358,977.20"); 46 AM. JUR. 2D
JUDGMENTS § 1 (2012) ("The act of the
court or judge, in pronouncing judgment,
accompanied by the making of the notation
on the trial docket, constitutes the rendition
of the judgment or decree.").

Team Logistics, Inc. v. Order-Pro Logistics,
Inc., 2008 WL 974410, at *6 (D. Kan. Apr.
8, 2008); see also Combs v. Ryan's Coal
Co., 785 F.2d 970, 980 (11th Cir. 1986).
But see Usery v. Fisher, 565 F.2d 137, 139
(10th Cir. 1977) (concluding that consent
judgment was equitable in nature, not a
money judgment).3
Consent judgments or orders often
require parties to undertake subsequent,
affirmative actions, requiring the Court's
continued supervision. "Once approved, the
prospective provisions of the consent decree
operate as an injunction." See Williams v.
Vukovich, 720 F.2d 909, 920 (6th Cir. 1983).

The Court is not persuaded that the
consent judgment's jurisdiction language
applies to or limits this Court's inherent
power to protect the monetary judgment
entered by the Court on March 8, 2011. Cf
Peacock v. Thomas, 516 U.S. 349, 356
(1996) ("Without jurisdiction to enforce a
judgment entered by a federal court, the
judicial power would be incomplete and
entirely inadequate to the purposes for
which it was conferred by the Constitution."
(quotation omitted)); Riggs v. Johnson
Cnty., 73 U.S. 166, 187 (1867) ("[T]he
jurisdiction of a court is not exhausted by
the rendition of the judgment, but continues
until that judgment shall be satisfied.").

arguably erred in concluding that the court's ancillary
jurisdiction extended to a post-judgment complaint
attempting to hold a new, successor party liable for
the judgment. See 345 F.3d at 1374. "[W]here that
postjudgment proceeding presents a new substantive
theory to establish liability directly on the part of a
new party, some independent ground is necessary to
assume federal jurisdiction over the claim." U.S.I.
Props. Corp., 230 F.3d at 498.
Georgia law likewise provides that consent
judgments providing for a certain sum of money are
equivalent to money judgments. See Hill v. Paluzzi,
261 Ga. App. 123, 126 (2003).
3

This Court has already issued a writ of
execution. See Doc. 58. In the absence of
illuminating case law and in light of the
Court's inherent power to protect and
enforce its own judgments, 4 the Court
concludes that it has subject matter
jurisdiction over Plaintiffs' complaint.
Glenda Gaspar's motion to dismiss for lack
of subject matter jurisdiction is DENIED.

statute governs to the extent it
applies.
FED. R. CIV. P. 69(a)(1).

Rule 69 "creates a procedural
mechanism for exercising postjudgment
enforcement when ancillary jurisdiction
exists, but cannot extend the scope of that
jurisdiction." 11 KARL OAKES, FED. PROC.,
L. ED. § 31:54 (2012). "The [Court will
look to the state statutes and to state-court
decisions construing them. The statutes to
be consulted are those that deal specifically
with enforcement of judgments rather than
general state procedural provisions." 12

B. Rule 69

Despite the Court's conclusion that it has
subject matter jurisdiction over Plaintiffs'
fraudulent transfer complaint, the Court
continues to have concerns over the
procedural propriety of a post-judgment
complaint in the same action.

WRIGHT, ET AL., FED. PRAC. & PROC. CIV. §

3012. Accordingly, Georgia law applies.

Plaintiffs filed this complaint as "a
supplementary action in aid of execution of
judgment." See Doc. 59 at 2. Accordingly,
Plaintiffs assert that this action is "made
pursuant to Fed. R. Civ. P. 69." See Doc. 68
at 1, 3-5. Rule 69 applies only to money
judgments. See 12 CHARLES ALAN WRIGHT
ET AL., FED. PRAC. & PROC. CIV. § 3011 (2d
ed. 2012).

Plaintiffs argue that C-Staff Inc. v.
Liberty Mut. Ins. Co. is inapplicable. See
Doc. 71 at 5; 275 Ga. 624 (2002). They
make the following arguments. First, the CStaff court did not decide whether a
supplementary proceeding could be brought
within an existing action. See Doc. 71 at 5.
Second, the court was interpreting O.C.G.A.
§ 9-11-69, but Plaintiffs are proceeding
under O.C.G.A. § 18-2-77. See Ed at 5-6.
Moreover, Plaintiffs are proceeding pursuant
to a new, properly served complaint, not
impleader. See Ed. at 6.

A money judgment is enforced by a
writ of execution, unless the court
directs otherwise. The 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

This Court has already noted that C-Staff
is distinguishable from the present facts.
See Doc. 70 at 5. Yet, the case is notable
given the dearth of Georgia case law on
supplementary proceedings, particularly on
how they relate to fraudulent transfer claims.

Although raised in this Court's prior Order, see
Doc. 70 at 3, neither party addresses whether the
general language concluding the Consent Order
conflicts with the December 31, 2011 language. See
Doc. 57 at 8 (stating that "this Court will retain
jurisdiction for the sole purpose of enforcing this
Consent Order").

To enforce a judgment against
persons who are not parties to a
judgment, a judgment-creditor in
Georgia must initiate a civil action
4

against those it seeks to hold
responsible for satisfying the debt by
following the procedures set forth in
the Civil Practice Act, which
requires a complaint to be filed and
the defendants to be served with
process.

Finally, Plaintiffs argue that because
Georgia's fraudulent transfer statute is a
model statute adopted by other states, other
court decisions are persuasive. See Doc. 71
at 7. For instance, Plaintiffs contend that
Illinois's statute is similar to Georgia's and
that Illinois permits fraudulent transfer
actions in post-judgment supplemental
proceedings. See Ed at 7-8; Brandon v.
Anesthesia & Pain Mgnit. Assocs., 419 F.3d
594, 596 (7th Cir. 2005).

C-Staff Inc., 275 Ga. at 626. Yet, this
Court would not have ancillary jurisdiction
in such a factual scenario. Ancillary
enforcement jurisdiction may not extend
"beyond attempts to execute, or to guarantee
eventual executability of, a federal
judgment." Peacock, 516 U.S. at 357. The
Court may not exercise ancillary jurisdiction
over attempts to impose personal liability for
an existing judgment on anew party. See id
at 357-58.
But that is not the factual
scenario here.

Illinois law, however, statutorily
provides for supplementary proceedings for
judgment creditors, in which fraudulent
conveyance claims may be raised. See 735
ILCS § 5/2-1402; Kennedy v. Four Boys
Labor Serv., Inc., 279 Ill. App. 3d 361, 36869 (1996) (stating that a party may raise a
fraudulent transfer claim in a supplementary
proceeding).

Plaintiffs contend that the pertinent issue
is whether Georgia courts would permit a
post-judgment supplemental proceeding
under O.C.G.A. § 18-2-77. See Doc. 68 at
6-7. They contend that O.C.G.A. § 18-277(a) does not state that the action must be a
new one and provides that it may be brought
"Fun an action for relief against a transfer."
See id. Moreover, Plaintiffs point out that
contempt actions in Georgia are ancillary
proceedings. See Brown v. King, 266 Ga.
890, 890 (1996). Likewise, Plaintiffs argue
that Georgia law allows related proceedings,
such as attachment, to be joined and
equitable relief obtained "at any time." See
O.C.G.A. § 18-3-4, 23-3-2 to 35

Other states also statutorily provide for
post-judgment proceedings where judgmentcreditors may challenge alleged fraudulent
conveyances. See, e.g., FLA. STAT. § 56.29;
N.Y. C.P.L.R. § 5225(b) (providing for a
special proceeding under New York law);
PNC Bank v. Broadbent, 2011 WL3902794,
at *1 (S.D. Ind. Aug. 2, 2011) (raising a
fraudulent transfer claim via a
supplementary proceeding under Indiana
Trial Rule 69); ABM Fin. Servs., Inc. v.
Express Consolidation, Inc., 2011 WL
915669, at *1 (S.D. Fla. March 16, 2011)
(stating that Florida's supplementary
proceedings "are designed to avoid the
necessity of a judgment creditor having to
initiate an entirely separate action in order to
reach assets of ajudgment debtor").

Yet, contempt, attachment, and equitable relief are
remedies, not causes of action as are fraudulent
transfer complaints.
5

In contrast, Glenda Gaspar argues that
this fraudulent transfer action violates Rule
69, may deprive her of her state
constitutional right to a jury trial , 6 and is an
impermissible attempt to enforce the consent
judgment against her. See Doc. 72 at 2-5.
As previously determined by this Court,
however, Plaintiffs are not seeking to hold
her personally liable for the underlying
consent judgment. See also O.C.G.A. § 182-77 (discussing remedies available in
fraudulent transfer actions).

(ED. Va. June 8, 1998) ("[Flederal courts
generally hold that while the limitations of
the state remedies are controlling, the details
and distinctions of state procedures need not
be necessarily followed.").
Accordingly, in the context of postjudgment fraudulent transfer claims, several
courts have concluded that a district court
does not have to strictly follow state
procedure. See Mitchell v. Lyons Prof'l
Servs., Inc., 727 F. Supp. 2d 120, 123-25
(E.D.N.Y. 2010) (concluding that although
New York law provided for a separate,
"special proceeding," the court would allow
the fraudulent transfer claims to be raised by
motion in the underlying action); see also
Thomas, Head & Greisen Emps. Trust v.
Buster, 95 F.3d 1449, 1452 (9th Cir. 1996)
(concluding that although Alaskan law did
not "expressly authorize postjudgment
fraudulent conveyance actions," Alaskan
case law indicated that fraudulent
conveyance claims could be raised in a
supplementary proceeding); Jones v. N. W.
Telemarketing, Inc., 136 F. Supp. 2d 1166,
1167-69 (D. Or. 2001).

Strict compliance with state procedures
in aid of execution of monetary judgments is
not required. "[T]he draftsmen of Rule 69
[did not mean] to put the judge into a
procedural straitjacket." See Resolution
Trust Corp. v. Ruggiero, 994 F.2d 1221,
1226 (7th Cir. 1993).
"Substantial
compliance with the procedural provisions
12
of the state statutes is sufficient."
WRIGHT, ET AL., FED. PRAC. & PROC. CIV. §

3012; cf Hankins v. Finnel, 964 F.2d 853,
860 (8th Cir. 1992) ("Where state law fails
to supply the necessary procedure . . . the
district court may take the necessary steps to
ensure compliance with its judgment.");
Merrell v. Miller, 1998 WL 329264, at *3

Georgia law allows a party to join
claims for money and to set aside a
fraudulent conveyance in the same action.
See STUART FINESTONE, GA. POSTJUDGMENT COLLECTION § 12-5 (4th ed.
2011) (citing O.C.G.A. § 9-11-18(b) and
stating that "[flt is not necessary to first
obtain judgment against the debtor before
proceeding to set aside a fraudulent
conveyance. Georgia law permits the
joinder of these two claims ... ... ). Yet,
Plaintiffs here have already obtained the
money judgment.

6

An alleged transferee of a fraudulent conveyance,
such as Glenda Gaspar, does have a right to a jury
trial under the Georgia constitution. See Gillespie v.
Sand-Rock Transit Inc., 292 Ga. App. 661, 661
(2008). Whether Gaspar has a right to a jury under
the Seventh Amendment likely depends on the
remedy sought by Plaintiffs. See In re Smith, 2008
WL 4527772, at *1.2 (Bankr. M.D. Ga. 2008); see
also Granfinanciera, S.A. v. Nordberg, 492 U.S. 33,
36(1989) (concluding that Seventh Amendment right
existed in suit to recover fraudulent conveyance of
money); United States v. Porath, 764 F. Supp. 2d
883, 891 (ED. Mich. 2011) (collecting cases).
Because the Court orders a new case opened, Glenda
Gaspar's jury trial argument is premature at this point
in the proceedings. See infra.

6

I

Plaintiffs point to no Georgia statutory
or case law expressly providing for a postjudgment fraudulent transfer complaint in
the same action. After an exhaustive search,
the Court has likewise found none. Georgia
law does not statutorily provide for
supplementary proceedings in which
motions and complaints challenging
fraudulent conveyances may be raised. The
proper procedure appears to be the filing of
a new complaint seeking the avoidance of
the fraudulent conveyance along with other
remedies.

This 13th day of August 2012.

UL

B AVANT EDENFIEL$ JIJIJGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF

It would, however, be inefficient to order
Plaintiffs to re-file their fraudulent transfer
complaint. Accordingly, the Court
DIRECTS the Clerk's Office to open a new
case for the adjudication of Plaintiffs'
complaint. 7 Cf Betty K Agencies, Ltd.
M/VMonada, 432 F.3d 1333, 1337 (11th
Cir. 2005) (noting that the district court has
the "inherent power to manage its docket").
This Court still has subject matter
jurisdiction over the complaint. See
Epperson v. Entm 't Express, Inc., 242 F.3d
100, 103, 107 (2d Cir. 2001) (concluding
that district court had ancillary enforcement
jurisdiction over a second, new action
alleging fraudulent conveyance claims).
IV. CONCLUSION
Glenda Gaspar's motion to dismiss is
DENIED. See Doc. 64.
The Clerk is DIRECTED to OPEN a
new case containing Documents 59 through
72 and this Order. Plaintiffs are ORDERED
to pay the requisite filing fee.

Plaintiffs may amend the heading of their
complaint.
7