WOODWARD v. ALGIE et al

Filing 84

ORDER - Mr. Woodward's Petition for Pre-judgment Writ of Attachment [doc. 26 ] is DENIED. Mr. Woodward is ORDERED to file a notice with the Court, within seven days of the date of this Entry and Order, whether he intends to file a new petition for writ of attachment and when he can have it on file. If he does not so notify the Court or he intends not to file a renewed motion, then the ex parte restrictions on the Petition, this Entry and Order, and related filings will be lifted (Reissued for publication purposes). Signed by Magistrate Judge Denise K. LaRue on 4/14/2014.(CKM)

UNITED STATES DISTRICT COURT
for the SOUTHERN DISTRICT OF INDIANA,
INDIANAPOLIS DIVISION
LOYD WOODWARD,
Plaintiff,
vs.
DAVID ALGIE and LINDA ALGIE,
Defendants.

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) CAUSE NO. 1:13-cv-1435-RLY-DKL
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Ex parte ENTRY and ORDER*
Plaintiff’s Ex Parte Petition for Pre-judgment Writ of Attachment [doc. 26]

Plaintiff has filed, ex parte, the above-entitled motion (“Petition”), asking that a writ
of attachment be issued to the Marion County Sheriff to seize and hold property of the
Defendants to ensure its availability to satisfy any judgment in favor of Plaintiff.

In December 2009, plaintiff Loyd Woodward and defendants David Algie and Linda
Algie (David’s wife), executed the following agreement, quoted in full:
Contract Agreement
The purpose of the contract is to facilitate the completion of the David Algie’s
Light Plane 1 hence named the LP1. This will simply be referred to as the
Agreement.
Parties to this contract are David Algie, Linda Algie, and Loyd Woodward

*

This ruling was originally issued under seal on February 14, 2014 [doc. 56]. Pursuant to the
ORDER Unsealing ex parte filings, issued on March 24, 2014 [doc. 75], it and all related filings, were
unsealed. This ruling is being reissued at this time with the marginal and distribution ex-parte labels
removed for the purpose of publication only. No substantive changes are intended.

a single man.
David Algie will receive from Loyd Woodward the sum of $7000.00 per
month for one year. This will be used for support of David Algie so that he
can devote his efforts to complete the LP1 to the point of flight certification.
Loyd Woodward will receive from David Algie the right to exclusively
market the LP1 and its technology. It is understood that David Algie may
have sold up to 5 kits already and these will not be subject to this agreement.
For an additional sum of $40,000.00 Loyd Woodward will have purchasing
rights of an LP1 for his individual use.
Loyd Woodward will also receive the rights to commercially market all
improvements, inventions, and/or discoveries made during the development
of the LP1, whether patentable, copyrightable or not. Loyd Woodward
reserves the right to assign these rights to a business entity. These rights
shall be joint property of David Algie and Loyd Woodward. Should
unforeseen circumstances prevent David Algie from completing the project
within 24 months then Loyd Woodward has the obligation and right to
commercially market all properties regarding the LP1 now in custody of
David Algie.
Executed this 30th Day of December 2009
Contract Agreement [doc. 1-1] (“Agreement”) (signature lines omitted).

According to Mr. Woodward’s complaint, David Algie is a designer who has
primarily worked in the Indy-car industry as a designer and fabricator. Loyd Woodward
is in the business of selling aviation-related equipment. Mr. Algie resides and works in
Indiana; Mr. Woodward resides and works primarily in Texas. Mr. Algie became
interested in aircraft design, specifically developing and producing a kit airplane with
better component fit and finished detail work that the purchaser could assemble himself,
without requiring the assistance of third-party assembler with superior skill levels. The

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design also includes new technologies and/or materials. Eventually, Mr. Woodward
agreed to provide financial help to Mr. Algie and “ultimately an agreement was reached
that was memorialized into a Contract Agreement,” Plaintiff Loyd Woodward’s Original
Complaint [doc. 1] (“Complaint”) ¶ 7, which is quoted above.

Mr. Woodward eventually spent more on the LP1 project than the twelve monthly
payments of $7,000 to Mr. Algie that was provided in the Agreement.1 Ultimately, he
“incurred expense associated with the development, production, marketing and sale of the
LP1” in the total amount of $475,176, $259,500 of which was paid directly to Mr. Algie.
Complaint ¶ 8. Mr. Woodward continued paying $7,000 to Mr. Algie after the initial twelvemonth period. Mr. Woodward alleges that he entered into the Agreement and paid these
additional amounts based upon Mr. Algie’s representations about “the performance
possibilities of the LP1” and Mr. Algie’s “own abilities to finalize the LP1 and have same
ready for production and sale within twenty-four (24) months.” Id. As of the date of the
Complaint, Mr. Algie “has failed to finalize and produce a single LP1, let alone a packaged
kitplane product for sale to third parties.” Id. Mr. Woodward notified Mr. Algie in October
2012 that he was ceasing funding the LP1 project.

Mr. Woodward claims that “David Algie has failed to do what he agreed to and said
he would do[:] finalize the LP1 for production, marketing and sale” within twenty-four

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The Complaint’s language and the itemization included in the Petition [doc. 26, p. 4] suggest that
Mr. Woodward paid some of the money directly to two other individuals who worked on the project and
directly paid some expenses associated with the LP1 project.

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months. Complaint ¶ 9. He pleads four causes of action, all under Texas law: (1) breach
of contract, for Algies’ “failure and unwillingness to honor and abide by the terms and
conditions of the Contract Agreement” by not “producing and/or otherwise finalizing the
LP1,” Complaint ¶ 11; (2) fraud, for the Algies’ making “false promises and representations”
to Mr. Woodward regarding the “performance possibilities” of the LP1 and Mr. Algie’s
“own abilities to finalize the LP1 and have same ready for production and sale within
twenty-four (24) months,” id. ¶ 13; (3) unjust enrichment, for the Algies’ unjustly receiving
a substantial economic benefit from Mr. Woodward through manipulation and
misrepresentations, id. ¶ 15; and (4) promissory estoppel, for the Algies’ same
misrepresentations above upon which Mr. Woodward foreseeably relied in funding and
financing the LP1 project, id. ¶ 17. In addition to an award of unspecified damages,
attorneys fees, and costs, Mr. Woodward seeks an injunction prohibiting the Algies from
“secreting, removing, destroying, damaging or otherwise causing damage to the LP1, and
any documents, materials, components, parts and/or accessories of the LP1.” Id. ¶ 18.

Mr. Woodward now moves the Court, ex parte, to issue a writ of attachment under
Ind. Code § 34-25-2-1(b)(4), (5), and (6) to the Sheriff of Marion County to seize specific
property associated with the LP1 project (the “Subject Property”):
A writ of attachment (this “Writ”) is hereby issued against the Subject
Property, which is identified as any and all items, parts, plans, equipment
and other items, tangible or intangible, used and/or otherwise associated
with the development, fabrication and building of that certain aircraft and/or
aircrafts referred to as the LP1, the ACA3 and/or otherwise known by any
other designation, in the possession and/or control of the Algies, and/or any
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agent thereof, located anywhere within the State of Indiana . . . .
Proposed Order of Attachment [doc. 26-34] (“Proposed Order”) ¶ 1. The Proposed Order also
includes an order to the Algies:
The Algies are hereby prohibited from secreting, removing,
destroying, damaging or otherwise causing damage to the Subject Property,
and any documents, materials, components, parts and/or accessories related
to the Subject Property.
Id., ¶ 5.
Law
“At the commencement of and throughout an action, every remedy is available that,
under the law of the state where the court is located, provides for seizing a person or
property to secure satisfaction of the potential judgment. But a federal statute governs to
the extent it applies.” Fed. R. Civ. P. 64(a). Available remedies include attachment,
garnishment, replevin, and sequestration. Fed. R. Civ. P. 64(b). Indiana law includes two
authorizations for pre-judgment attachment: Rule 64 of the Indiana Rules of Trial
Procedure and Indiana Code § 34-25-2-1.2 Because Mr. Woodward does not cite or mention
the Trial Rule, but relies solely on the provisions of the statute, it is only the statutory terms
that the Court will examine. Ind. Code § 34-25-2-1 provides that pre-judgment attachment
is available “when the action is for the recovery of money,” Ind. Code § 34-25-2-1(b), and
at least one of six circumstances is present, id. § 34-25-2-1(b)(1) - (6). Mr. Woodward

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There is no common-law writ or remedy of pre-judgment attachment in Indiana. Rodde v.
Hollweg, 19 Ind.App. 222, 49 N.E. 282, 283 (Ind. App. 1898).

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contends that attachment is available in this case under paragraphs (4), (5), and (6):
(b) The plaintiff may attach property when the action is for the
recovery of money and the defendant:
*
*
*
(4) is removing or about to remove the defendant’s property subject
to execution, or a material part of the property, outside Indiana, not
leaving enough behind to satisfy the plaintiff’s claim;
(5) has sold, conveyed, or otherwise disposed of the defendant’s
property subject to execution, or permitted the property to be sold
with the fraudulent intent to cheat, hinder, or delay:
(A) the defendant’s creditors;
(B) the state;
(C) a municipal corporation;
(D) a political subdivision; or
(E) a school corporation . . . ; or
(6) is about to sell, convey, or otherwise dispose of the defendant’s
property subject to execution with the fraudulent intent to cheat,
hinder, or delay:
(A) the defendant’s creditors;
(B) the state;
(C) a municipal corporation;
(D) a political subdivision; or
(E) a school corporation . . . .

This statute also requires the plaintiff to “make an affidavit showing” (1) the nature
of his claim, (2) that the claim is just, (3) the amount that he ought to recover, and (4) that
one of the grounds for attachment in Ind. Code § 34-25-2-1(b) applies. Ind. Code § 34-25-24. It also requires the plaintiff to execute an undertaking, with sufficient surety payable to
the defendant, that the plaintiff will duly prosecute the attachment proceeding and pay all
damages suffered by the defendant if the attachment proceedings are both wrongful and
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oppressive. Ind. Code § 34-25-2-5. Mr. Woodward asks the Court to prescribe a bond in
the amount of no more than $2,500. Petition at 12.

Because statutory attachment operates in derogation of the common law, Indiana
strictly construes its provisions in determining its applicability. Instead v. Canc., 241 Ind.
440, 449, 172 N.E.2d 859, 864 (Ind. 1961). However, once it is determined that attachment
is available in a particular case, the statute should be liberally construed to effect its
remedial nature. Schwedland v. Bachman, 512 N.E.2d 445, 451 (Ind. Ct. App. 1987).
Discussion
Executing officer. Mr. Woodward requests that the writ be issued to the Sheriff of
Marion County for execution, but the Court’s writs are executed by the United States
marshal for the southern district of Indiana, not a state sheriff.
It is the primary role and mission of the United States Marshals Service to
provide for the security and to obey, execute, and enforce all orders of the
United States District Courts . . . .
28 U.S.C. § 566(a).
Except as otherwise provided by law or Rule of Procedure, the United States
Marshals Service shall execute all lawful writs, process, and orders issued
under the authority of the United States, and shall command all necessary
assistance to execute its duties.
28 U.S.C. § 566(c). The marshal, “in executing the laws of the United States within a State,
may exercise the same powers which a sheriff of the State may exercise in executing the
laws thereof.” 28 U.S.C. § 564. When an available state pre-judgment remedy is employed

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in federal court under Fed. R. Civ. P. 64, the state procedure must be adapted to federal
practice, in part by providing for execution by a United States marshal, not a state sheriff.
See Yazoo & M. V. R. Co. v. City of Clarksdale, 257 U.S. 10, 24, 42 S.Ct. 27, 31 (1921). The
Court will not issue a writ of attachment to the Marion County Sheriff.

Advance deposit for expenses. The law requires the United States marshal to
collect an advance deposit for the expenses of taking and keeping custody of attached
property, and allows the marshal to require an advance deposit for the expenses and costs
of serving the writ:
(a)(1) The United States Marshals or deputy marshals shall routinely
collect, and a court may tax as costs, fees for the following:
*
*
*
(A) Serving a writ of . . . attachment in rem, . . .
attachment . . . or any other writ, order or process in any case
or proceeding.
*
*
*
(E) The keeping of attached property (including boats,
vessels, or other property attached or libeled), actual expenses
incurred, such a storage, moving, boat hire, or other special
transportation, watchmen’s or keepers’ fees, insurance, and an
hourly rate, including overtime, for each deputy marshal
required for special services, such as guarding, inventorying,
and moving.
*
*
*
(G) Necessary travel in serving or endeavoring to serve
any process, writ, or order, except in the District of Columbia,
with mileage to be computed from the place where service is
returnable to the place of service or endeavor.
(H) Overtime expenses incurred by deputy marshals in
the course of serving or executing civil process.
(2) The marshals shall collect, in advance, a deposit to cover the initial
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expenses for special services required under paragraph (1)(E), and
periodically thereafter such amounts as may be necessary to pay such
expenses until the litigation is concluded. This paragraph applies to all
private litigants . . . .
*
*
*
(d) The United States marshals may require a deposit to cover the fees
and expenses prescribed under this section.
28 U.S.C. § 1921.

The Court will not issue the requested writ of attachment without showings that (1)
Mr. Woodward has made arrangements with the United States marshal to pay a deposit
for the estimated initial expenses and costs of, inter alia, seizing, transporting, storing, and
keeping the attached property, and (2) Mr. Woodward has the financial ability to
periodically pay in advance the future estimated expenses of maintaining custody of the
property until the conclusion of this litigation. The Court will require a showing of actual
dollar amounts of the estimated expenses and costs and Mr. Woodward’s ability to pay.
The marshal shall determine the services and the items of costs and expenses that are
appropriate for executing the writ and maintaining custody of the attached property.

Undertaking. The Court will not issue the requested writ of attachment with an
undertaking in the amount of only $2,500. No explanation of the calculation of this
proposed amount was provided, specifically no showing of how it meets the likely or
possible damages that the Algies might sustain if these proceedings are found to be
wrongful and oppressive. Ind. Code § 34-25-2-5. The Court would set the amount of the
undertaking to cover at least (1) the potential losses and damages, direct and consequential,
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suffered by the Algies if their property is seized and (2) the costs and expenses that the
marshal would incur to return the property to the Algies. Mr. Woodward must show
estimates for both components and his method of estimation. Mr. Woodward must confer
with the marshal regarding the costs and expenses to return seized property to the Algies
and the marshal will determine those costs and expenses.

Grounds. Mr. Woodward has not shown grounds for attachment under Ind. Code
§ 34-25-2-1. Ind. Code § 34-25-2-4(4). As noted above, he argues that attachment is justified
under § 34-25-2-1(b)(4), (5), and (6).

a. Paragraph (b)(4). This paragraph requires a showing that the Algies are
removing or about to remove executable property outside of Indiana and not leaving
enough in Indiana to satisfy Mr. Woodward’s claim.

Mr. Woodward or a person representing him was required to make an affidavit
showing “the amount that the plaintiff ought to recover.” Ind. Code § 34-25-2-4(3). Neither
Mr. Woodward’s affidavit, his Petition, nor his Complaint identifies a total amount that he
claims he should recover in this action. All state that Mr. Woodward paid $475,176.00
toward the LP1project. But the Petition also states that the Algies’ conduct has caused
damages to Mr. Woodward, “including a substantial economic loss in an amount not less
than $475,176.00 plus any and all lost future profits from both the LP1 Pre-Sales and all
future sales of the LP1 and Rebranded LP1, including, without limitation, revenue

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generated in relation to the LP1 Project and its progeny.” Petition at 14. No amount of lost
profits and sales is identified or suggested. Because the only specific amount of possible
damages identified is the $475,176.00 total of Mr. Woodward’s payments, the Court can
consider only this figure as the total amount that Mr. Woodward ought to recover.

Mr. Woodward has made no showing that the Algies have removed or are about
remove any of their property subject to execution outside of Indiana or that there is, or will
be, an insufficient amount of their property, that is now subject to execution in Indiana, to
satisfy a judgment in the amount of $475,176.00. Mr. Woodward alleges that the Algies are
soliciting pre-sales for future LP1 kits and have successfully lobbied all of Mr. Woodward’s
pre-sale customers to demand refunds of their deposits in favor of entering pre-sale
agreements with the Algies.

Mr. Woodward has identified no pre-sales actually

accomplished by the Algies, no deposits that they have received, and he has identified no
currently executable property that has been transported out of Indiana as a result of any
pre-sales, let alone the value of any executable property that has been transported out of
the state. There is not even evidence that Mr. Algie has completed the LP1 prototype, has
obtained flight certification for it, or has begun production of any finished, saleable kits.

Mr. Woodward’s only argument in support of his assertion that the Algies’
remaining executable property might not satisfy a judgment is the fact that they claim to
not have resources to pay for counsel and have solicited donations to a legal defense fund.
But this does not show that they do not, in fact, have enough property subject to execution,
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but only that their property is not readily liquid or that they do not choose to liquidate
property to pay for a defense in this case. Mr. Woodward presents no evidence or
allegation of the value of the Algies’ real or personal property or, specifically, the value of
the assets (e.g., machines, equipment, buildings, supplies, materials) related to the LP1
project that he wants attached. Mr. Woodward makes no showing or suggestion that the
Algies are selling any of their personal assets or LP1-related assets or have removed them
outside the state. There is no basis for the Court to find that the Algies have or will have
insufficient assets to satisfy a $475,000.00 judgment. Furthermore, there is no showing that
attachment of the property identified in the Proposed Order would either prevent pre-sales
of future LP1 kits by the Algies or assure the availability of executable property sufficient
to satisfy a $475,176.00 judgment.

b. Paragraphs (b)(5) and (6). To qualify under these paragraphs, Mr. Woodward
must show that the Algies have sold, conveyed, or otherwise disposed of, or are about to
sell, convey, or otherwise dispose of, their executable property with the fraudulent intent
to cheat, hinder, or delay Mr. Woodward — without regard to the sufficiency of their
remaining executable property. Mr. Woodward’s only argument in support is that, if the
Algies do convey the property identified in the Proposed Order it “would be with the
fraudulent intent to cheat, hinder or delay . . . Woodward’s recovery of its claims in this
matter.” Petition at 13. The Court cannot simply assume fraud on the part of the Algies.
In addition, fraud must be shown on both the Algies’ and their purchasers’ parts, Johnston

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v. Field, 62 N.E. 377 (Ind. 1878), and Mr. Woodward has not shown a shared fraudulent
intent to cheat, hinder, or delay on the part of any purchaser or potential purchaser from
the Algies.

Mr. Woodward has not shown grounds under Ind. Code § 34-25-2-1(b)(4), (5), or (5)
for a writ of attachment against the property of the Algies.

Property to be attached. The Proposed Order directs the sheriff to attach “any and
all items, parts, plans, equipment and other items, tangible or intangible, used and/or
otherwise associated with the development, fabrication and building of that certain aircraft
and/or aircrafts referred to as the LP1, the ACA3 and/or otherwise known by any other
designation, in the possession and/or control of the Algies, and/or any agent thereof,
located anywhere within the State of Indiana . . . (the “Subject Property”).” Proposed Order
¶ 1. This is an order for replevin of specific property, not attachment. An attachment is
available in an action for the recovery of money. Ind. Code § 34-25-2-1(b). The plaintiff
must aver the amount of damages that he ought to recover, id. § 34-25-2-4(3), and the
sheriff (or marshal) seizes only the amount of property, by value, to satisfy the plaintiff’s
averred claim, beginning with personal property, see id. § 34-25-2-11(b); § 34-25-2-9(2). A
plaintiff petitioning for attachment does not identify specific goods to be seized and taken
by the sheriff because the purpose of attachment is only to ensure that property, any
property, will be available to satisfy a money judgment; it is not to preserve the availability
of specific items of property for recovery by the plaintiff. In addition, although the Proposed
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Order also includes an order to the Algies to not secret, remove, destroy, or damage the
identified Subject Property or any documents, materials, components, parts, and/or
accessories related to the Subject Property, Proposed Order ¶ 5, such an order would not
assure satisfaction of a money judgment without a showing of the expected value of the
identified property, which Mr. Woodward does not supply.

It is apparent that the purpose of the Petition is not to ensure that enough property
of the Algies is available for execution to satisfy a money judgment in Mr. Woodward’s
favor, but to ensure that the LP1 project — the prototype, technology, plans, equipment,
materials, intellectual property, etc. — is preserved and available for recovery by him. In
fact, Mr. Woodward asserts that, in addition to his marketing rights under the Agreement,
he is the owner of the LP1, Affidavit of Loyd Woodward (October 24, 2013) [doc. 26-30]
(“Second Woodward Affidavit”) ¶ 23; the Algies are attempting to sell the LP1, “which is
property that belongs to Woodward,” Petition at 10, ¶ 23; and, without the writ of
attachment, there is a threat that the Algies’ possible transactions “will deny Woodward
the ability to recover the Subject Property,” Petition at 13. But this suit is not about
recovering any property from the Algies; it is about recovering money damages and a writ
of attachment serves only that interest. Mr. Woodward has made no claim for replevin and
no request for a declaratory judgment declaring ownership of the LP1-related property.

Therefore, if a writ of attachment were to issue, it would direct only that the U. S.
marshal seize and take custody of enough property owned by the Algies that would satisfy
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a judgment of $475,176.00, regardless of its relationship to the LP1 project. The marshal
would use his discretion to determine which property to seize and, in making that
determination, he may consider factors such as the ease and expense of seizure,
transportation, storage, risk of damage during storage and execution, and proceeds on
execution. In light of these factors, the seizure and storage of a prototype aircraft
incorporating novel technology, for example, might not rank high on the marshal’s
preferences.
Conclusion
Mr. Woodward’s Ex Parte Petition for Pre-judgment Writ of Attachment [doc. 26] is
DENIED. Mr. Woodward is ORDERED to file a notice with the Court, within seven days
of the date of this Entry and Order, whether he intends to file a new petition for writ of
attachment and when he can have it on file. If he does not so notify the Court or he
intends not to file a renewed motion, then the ex parte restrictions on the Petition, this
Entry and Order, and related filings will be lifted.

SO ORDERED this date: February 14, 2014.
Reissued for publication this date: 04/14/2014

_______________________________
Denise K. LaRue
United States Magistrate Judge
Southern District of Indiana

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Distribution:
Plaintiff’s counsel.
United States Marshal (special direction)

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