TONGE v. ARANTEE GROUP, LLC et al
ORDER denying 54 Motion for appointment of Receiver. Signed by Magistrate Judge Mark J. Dinsmore on 5/29/2014. (CBU)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
THE ARANTEE GROUP, LLC
ORDER ON MOTION FOR APPOINTMENT OF RECEIVER
This matter is before the Court on Plaintiff’s Motion for Appointment of Receiver. [Dkt.
54.] For the reasons set forth below, the Court DENIES Plaintiff’s motion.
On March 27, 2013, the Court entered final judgment in favor of Plaintiff Kia Tonge in a
Civil Rights action against her former employers, The Arantee Group, LLC (“Arantee”), and
Ravi Chopra (“Defendants”). [Dkt. 28.] The Defendants were found jointly and severally liable
to the Plaintiff for a total amount of $200,664.20. [Id.] Plaintiff sought to collect on the
judgment and initiated proceedings supplemental on January 15, 2014. [Dkt. 30.] On April 2,
2014, Defendant Chopra filed for personal bankruptcy. [Dkt. 47-1.] Within the bankruptcy
filing, Defendant Chopra indicated that he owns 51% of Arantee, which also does business as 6
Lounge, and that when 6 Lounge’s lease term ends in October 2014, it “will likely be closed
down and liquidated at that time.” [Id. at 13.] Plaintiff now seeks appointment of a receiver
based on statements made in the bankruptcy filing and alleged fraudulent conduct. [Dkt. 54.]
II. Legal Standard
Plaintiff relies on Ind. Code § 32-30-5-1 for its Motion for Appointment of Receiver,
however, the Seventh Circuit has held: “The appointment of … [a receiver in a judgment
creditor’s suit] is a branch of equity jurisdiction not dependent upon any statute. That right is
based primarily on the ground that equity will come to the aid of any one who has exhausted his
remedies at law.” Pittsburgh Equitable Meter Co. v. Paul C. Loeber & Co., 160 F.2d 721, 728
(7th Cir. 1947) (emphasis added). Accordingly, the Court cannot base its decision on Ind. Code
§ 32-30-5-1 and instead relies on precedent established in federal courts, as outlined below.
“Appointment of a receiver has long been considered a ‘drastic, harsh, and dangerous’
remedy to be applied only in the most extreme circumstances.” Roynat, Inc. v. Richmond
Transp. Corp., 772 F. Supp. 417, 420 (S.D. Ind. 1991) (citing Connolly v. Gishwiller, 162 F.2d
428, 435 (7th Cir. 1947)). It is a remedy that “should be resorted to only on a plain showing of
some threatened loss or injury to the property, which the receivership would avoid.” Gordon v.
Washington, 295 U.S. 30, 39 (1935).
In order to determine whether extreme circumstances exist to warrant this extraordinary
remedy, the Court looks at several factors:
These include fraudulent conduct on part of the debtor/defendant; imminent
danger that property will be lost or squandered; inadequacy of available legal
remedies; the probability that failure to appoint a receiver will harm the moving
creditor more than appointment would harm the debtor or non-moving creditors;
the moving creditor's probable success in the main action, and the possibility of
irreparable injury to his or her interests in the meantime; and the degree to which
receivership actually will serve the interests of those seeking protection.
Roynat, 772 F. Supp. at 420 n.3 (citing Consolidated Rail Corp. v. Fore River Ry. Co., 861 F.2d
322, 326-27 (1st Cir. 1988)); accord Canada Life Assurance Co. v. LaPeter, 563 F.3d 837, 844
(9th Cir. 2009).
Plaintiff raises only two of the factors identified by the Roynat Court: fraudulent
conduct of Defendant Chopra [Dkt. 59 at 1-2] and danger that the property will be lost or
squandered [Id. at 2].
First, the Court addresses the allegations of fraudulent conduct by Defendant
Chopra. Plaintiff alleges that Defendant Chopra made misrepresentations in his personal
bankruptcy filing regarding his place of residence and the value of his assets. [Dkt. 54 at
1; Dkt. 54-2 at 1; Dkt. 59 at 1.] Specifically, Plaintiff alleges that within his personal
bankruptcy filing Defendant Chopra claims to live in California but also lists a residence
in Indiana and values his home at an amount less than a secured claim against it.
However, the Plaintiff offers no facts other than the bankruptcy filing itself to support
these allegations. Defendant Chopra’s personal bankruptcy is not a matter before this
court and accordingly no opinion as to the truthfulness of his statements related to his
bankruptcy will be rendered. Plaintiff indicates that she intends to move for dismissal of
the bankruptcy filing. [Dkt. 54-2 at 2.] As such, the Court is confident that its colleagues
in the U.S. Bankruptcy Court for the Central District of California will determine the
veracity of these statements related to Defendant Chopra’s residence and the value of his
property as it proceeds with his bankruptcy. Mere allegations that the defendant is lying
in the Plaintiff’s motion are wholly insufficient to support a finding by the Court of
fraudulent behavior on Defendant Chopra’s part. Plaintiff would need to produce actual
evidence to support such an allegation.
The Plaintiff further alleges that Defendant Chopra committed fraud by
continuing, “at the last moment,” a meeting of creditors related to his personal
bankruptcy that Plaintiff planned to attend. [Dkt. 59 at 1-2.] The original meeting of
creditors was scheduled for May 5, 2014 and Defendant Chopra failed to appear, so the
assigned bankruptcy trustee rescheduled the meeting of creditors to May 27, 2014.
Notice of Continued Meeting of Creditors and Appearance of Debtor, In re Chopra, No.
9:14-BK-10652-DS (Bankr. C.D. Cal. May 6, 2014), ECF No. 9. Defendant Chopra
appeared at the rescheduled meeting, however the trustee once again continued the
meeting because additional documentation was necessary. Notice of Continued Meeting
of Creditors and Appearance of Debtor, In re Chopra, No. 9:14-BK-10652-DS (Bankr.
C.D. Cal. May 27, 2014), ECF No. 12. Plaintiff presents no evidence that Defendant
Chopra had intent to deceive the Plaintiff or to deny her of her judgment award by failing
to appear at the initial meeting of creditors, and accordingly there is no basis to find fraud
in Defendant Chopra’s failure to appear.1
Finally, the Plaintiff alleges that there is great danger that the property will be lost
because Defendant Chopra indicates in his bankruptcy filing that when 6 Lounge’s lease
term ends in October 2014, it “will likely be closed down and liquidated at that time.”
[Dkt. 47-1 at 13]. However, at a hearing held April 16, 2014, Defendant Chopra testified
under oath that the closing of the business is dependent upon renegotiating the lease for
its space in downtown Indianapolis. Defendant Chopra asserted that if the lease can be
renegotiated with the landlord, he intends to keep the business open; if no agreement with
the landlord is made, the business will be liquidated. Defendant Chopra testified that it is
his desire to renew the lease and continue to run the business, but as of the date of the
hearing he had not received confirmation from the landlord. Given that Defendant
Plaintiff also attempts to impute fraudulent conduct on the actions of an alleged employee of Defendant Chopra
that resulted in a physical altercation. However, Plaintiff fails to explain how an altercation with an alleged
employee is indicative of fraudulent conduct committed by Defendant Chopra.
Chopra has testified under oath that it is his intent to keep the business open if possible,
the Court finds that there is no great danger that the property will be lost at this time.
Because the Court has determined that Plaintiff failed to prove that Defendant
Chopra committed fraud, and Plaintiff also failed to prove that there is great danger of
Defendant Chopra’s business being lost, the Plaintiff has not met her burden to
demonstrate “extreme circumstances” that would warrant a receivership. Roynat, 772 F.
Supp. at 420 (citations and quotations omitted).
For the reasons set forth above, Plaintiff Tonge’s Motion for Appointment of
Receiver [Dkt. 54] is DENIED.
Mark J. Dinsmore
United States Magistrate Judge
Southern District of Indiana
Fred Anthony Paganelli
ROBERTS & BISHOP
Kenneth T. Roberts
ROBERTS & BISHOP
Yang Kyoung Nam
ROBERTS & BISHOP
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