Aly v. Hanzada for Import & Export Company, LTD
Filing
253
ORDER denying 234 motion for summary judgment. Signed on March 8, 2019, by District Judge Greg Kays. (Law Clerk) (Main Document 253 replaced on 3/8/2019) (Boesch, Nathaniel).
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
ST. JOSEPH DIVISION
HASSANIN ALY
Plaintiff/Judgment Creditor,
v.
HANZADA for IMPORT & EXPORT
COMPANY, LTD.
Defendant/Judgment Debtor,
v.
NATIONAL BEEF PACKING COMPANY,
LLC,
Garnishee.
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No. 5:12-cv-06069-DGK
ORDER DENYING MOTION FOR SUMMARY JUDGMENT
This garnishment action arises from a $1.6 million dollar jury verdict against Hanzada for
Import & Export Company, Ltd. for breach of contract. Plaintiff Hassanin Aly seeks to partially
satisfy this judgment through a writ of garnishment filed against National Beef Packing Company,
LLC. Now before the Court is Aly’s motion for summary judgment (Doc. 233). Because there is
a genuine dispute of material fact as to whether National Beef held money or credits belonging
and due absolutely to Hanzada, the Court DENIES Aly’s motion.
Background and Material Facts
The Court entered a $1,591,286.60 judgment against Hanzada in April 2016. Aly seeks to
satisfy a portion of the judgment through garnishing two payments Hanzada made to National Beef
later that year. The payments arose in connection with National Beef distributing beef product to
Egypt. National Beef initially sold its product directly to Hanzada, an Egyptian import and export
company. In October 2015, National Beef transitioned to selling to ESCO International Trading
LLC instead. ESCO is a third-party distributor that resells and exports National Beef’s product to
other purchasers, including Hanzada. National Beef states that it did not fully transition to selling
only to ESCO until April 2016, due to communication issues and the time required to develop new
shipping labels. National Beef claims that that was the last month it did business directly with
Hanzada.
Yet, Hanzada transferred $310,000 to National Beef on August 5, 2016, and $370,000 on
August 11. Because National Beef no longer sold directly to Hanzada, the company was not
expecting the payments and was unsure why Hanzada made them. National Beef credited both
payments to Hanzada’s standing but inactive account. Hence, on August 12 Aly’s account showed
a balance of $680,046.50, comprising the two August payments and a leftover credit of
approximately $47. Later that day, National Beef debited the $680,046.50 from Hanzada’s
account and credited it to ESCO’s. ESCO had pending orders with National Beef and had
informed the Missouri company to soon expect payment. National Beef applied Hanzada’s
payments to ESCO’s orders and shipped ESCO’s product in mid-to-late August.
Aly served National Beef with a writ of garnishment on August 10, two days before
National Beef debited Hanzada’s account.
National Beef answered that it possessed no
garnishable property, and Aly took exception to this answer on the basis of the August payments.
National Beef responded that Hanzada made the payments on ESCO’s behalf for product sold and
shipped to ESCO. Aly moved for judgment on the pleadings,1 asking the Court to find the August
1
The garnishor’s exception(s) to the garnishee’s answers to interrogatories is treated as a complaint and the garnishee’s
response to those exceptions is treated as an answer. See Monroe v. Roedder, 253 F.R.D. 466, 468 (E.D. Mo. 2008);
see also Mo. Sup. Ct. R. 90.07(c)-(d), 90.10(b); Mo. Rev. Stat. § 525.190.
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payments garnishable. The Court denied Aly’s motion (Doc. 227). Now, having conducted
discovery, Aly moves for summary judgment in his favor in the amount of $680,046.50.
Standard
Summary judgment is appropriate when the movant shows that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); Bedford v. Doe, 880 F.3d 993, 996 (8th Cir. 2018). “A dispute is genuine if the evidence is
such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its
resolution affects the outcome of the case.” Rakes v. Life Invs. Ins. Co. of Am., 585 F.3d 886, 893
(8th Cir. 2009) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A court views
the evidence in the light most favorable to the nonmoving party and draws all reasonable inferences
in that party’s favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588-89
(1986). To survive a motion for summary judgment, the nonmovant must “substantiate his
allegations with sufficient probative evidence [that] would permit a finding in [his] favor based on
more than mere speculation, conjecture, or fantasy.” Mann v. Yarnell, 497 F.3d 822, 825 (8th Cir.
2007) (internal quotations and citation omitted).
Discussion
Proceedings in aid of execution of a judgment “must accord with the procedure of the state
where the court is located.” Fed. R. Civ. P. 69. Missouri’s garnishment laws thus apply.
Garnishment “enables a judgment creditor (the garnishor) to collect the amount of the judgment
by seizing the judgment debtor’s property when it is in the hands of a third party (the garnishee).”
Baisch & Skinner, Inc. v. Bair, 507 S.W.3d 627, 629 (Mo. Ct. App. 2016) (citing State ex rel.
Eagle Bank & Trust v. Corcoran, 659 S.W.2d 775, 777 (Mo. 1983)). Garnishment “freezes the
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mutual debts and credits of the garnishee and the judgment debtor at a point in time.” Wenneker
v. Phys. Multispecialty Grp., Inc., 814 S.W.2d 294, 296 (Mo. 1991).
Garnishable property includes all money, rights, and credits belonging to the judgment
debtor that the garnishee possesses or controls between service of the writ of garnishment and the
garnishee’s answer. Mo. Rev. Stat. § 525.040. To be subject to garnishment, money must be due
to the judgment debtor absolutely, “unaffected by liens, prior incumbrances, or conditions of
contract.” Heege v. Fruin, 18 Mo. App. 139, 142 (1885). The garnishor bears the burden of
establishing that the garnishee holds money or credits belonging to the judgment debtor. Bunker
v. Hibler, 49 Mo. App. 536, 545-46 (1892); see also Cusick v. Cusick, 201 S.W.2d 437, 440 (Mo.
Ct. App. 1947). Critically, the garnishor “can claim no right where the debtor himself could not
maintain an action against the garnishee.” State ex rel. Kennedy v. Harris, 69 S.W.2d 307, 310
(Mo. Ct. App. 1934).
Viewing the evidence in the light most favorable to National Beef, the Court cannot
conclude as a matter of law that Hanzada—and therefore Aly—had an absolute right to the
$680,046.50 account balance. The parties agree that National Beef received the August 2016
payments from Hanzada and credited them, at least initially, to Hanzada’s account. But National
Beef disputes that the funds belonged and were owed to Hanzada. It argues instead that Hanzada
loaned ESCO the money and made the payments on ESCO’s behalf for product prepared and
shipped to ESCO.2 Per this argument, National Beef’s obligations never ran to Hanzada. National
Beef states that it should have earlier closed Hanzada’s account, and that it credited the payments
thereto in error.
2
National Beef speculates that ESCO had difficulty obtaining a line of credit, and that Hanzada, as the ultimate
customer, paid for the beef product to avoid a belated delivery to Egypt.
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The parties offer no law pertaining to the garnishment of money paid or held on another’s
behalf. The Court questions whether Hanzada could have recovered the funds if, as National Beef
claims, they immediately became tied up in preexisting contractual obligations running between
National Beef and ESCO, as well as between ESCO and Hanzada. See Balt. & O.R. Co. v.
Wheeler, 18 Md. 372, 379 (1862) (“[G]arnishment cannot have the effect of changing the nature
of a contract between the garnishee and the defendant, or of preventing the garnishee from
performing a contract with a third person.”); Wheeler v. Thomas, 31 F. Supp. 702, 702-03 (D.D.C.
1940) (holding that earnest money paid by the debtor under a contract was ungarnishable). Aly
does briefly assert that the August payments created a bailment, but he has not shown how. See
May v. Williams, 531 S.W.3d 576, 582 n.5 (Mo. Ct. App. 2017) (defining and discussing
bailments); see also Fred Harvey, Inc. v. Crooks, 39 F.2d 466, 467-68 (W.D. Mo. 1930).
If the payments did constitute an express or implied loan3 to ESCO, they would not be
subject to Aly’s writ. See In re Southwestern Glass Co., 332 F.3d 513, 518 (8th Cir. 2003) (“[The
loan proceeds] became money or credits belonging to [the lendee].); United States v. Kristofic, 847
F.2d 1295, 1296 (7th Cir. 1988) (“As a matter of basic principles, loan proceeds do not remain the
property of the lender.”); see also Bunker, 49 Mo. App. at 539 (involving the garnishment of
money loaned to the judgment debtor). The circumstantial evidence of a loan here lifts, however
slightly, National Beef’s argument above mere speculation. Thus, the Court rejects Aly’s motion
for the same reason it rejected his motion for judgment on the pleadings: he failed to establish as
a matter of law that National Beef held funds belonging and due absolutely to Hanzada.
The Missouri Supreme Court defines a loan as “the delivery of a sum of money to another under a contract to return
at some future time an equivalent amount with or without an additional sum agreed upon for its use; and if such be
the intent of the parties the transaction will be deemed a loan regardless of its form.” Murphy v. Carron, 536 S.W.2d
30, 32 (Mo. 1976) (internal quotations and citation omitted).
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Conclusion
Accordingly, Aly’s motion for summary judgment (Doc. 233) is DENIED.
IT IS SO ORDERED.
Date: March 8, 2019
/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT
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