Ace Investors v. Rubin

Filing 180

MEMORANDUM DECISION Overruling 168 Objection to Magistrate Judge Decision and 169 Objection to Magistrate Judge Decision. Signed by Judge Ted Stewart on 08/09/2011. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

ACE INVESTORS, LLC,
Plaintiff,

MEMORANDUM DECISION AND
ORDER OVERRULING
OBJECTIONS TO MAGISTRATE
JUDGE’S ORDER

vs.

MARGERY RUBIN, AS TRUSTEE OF THE
RUBIN FAMILY IRREVOCABLE STOCK
TRUST,

Case No. 2:08-CV-289 TS

Defendant.

This matter is before the Court on two Objections to the Magistrate Judge’s July 19, 2011
Order filed by Defendant and Garnishees.1 For the reasons discussed below, the Court will
overrule the Objections.
I. BACKGROUND
Plaintiff ACE Investors, LLC brought this action against Margery Rubin as trustee of the
Rubin Family Irrevocable Stock Trust (the “Stock Trust”) to recover on a Promissory Note in the

1

See Docket Nos. 168 & 169. Defendant joins in Garnishees’ arguments. For the sake of
clarity, the Court will refer to Garnishees and Defendants collectively as Garnishees.
1

original amount of $1 million. On May 17, 2010, Judgment was entered in favor of ACE and
against Margery Rubin as trustee of the Stock Trust in the amount of $1,731,651.37, plus
continuing interest at a rate of 12% and attorney fees incurred in collecting the Judgment.
The present dispute arises out of attempts by Plaintiff to collect on the Judgment.
Plaintiff asserts that assets of the Stock Trust have been or will be transferred to two other trusts:
the Rubin Family Irrevocable Marital Trust (“Marital Trust”) and the Rubin Family Irrevocable
Real Estate Trust (“Real Estate Trust”) (collectively “Garnishees”). Plaintiff applied to the Clerk
of the Court to issue Writs of Garnishment against the Marital Trust and Real Estate Trust.
Plaintiff then submitted Garnishees Interrogatories on Margery Rubin.
Garnishees objected to the Writs of Garnishment and the parties engaged in substantial
litigation before the Magistrate Judge. At issue here is the Magistrate Judge’s Order of July 19,
2011,2 which held that the Court had jurisdiction over Margery Rubin and the trusts of which she
is a trustee and granted further relief in reference to the garnishment proceedings. Garnishees
now object to that Order.
II. DISCUSSION
28 U.S.C. § 636(b)(1)(A) and Rule 72(a) of the Federal Rules of Civil Procedure permit
a district court to review a Magistrate Judge’s orders on nondispositive matters under a clearly
erroneous or contrary to law standard.3 The clearly erroneous standard applies to factual findings

2

Docket No. 160.

3

28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); Sprint Commc’ns Co. L.P. v.
Vonage Holdings Corp., 500 F. Supp. 2d 1290, 1346 (D. Kan. 2007) (citing First Union Mortg.
Corp. v. Smith, 229 F.3d 992, 995 (10th Cir. 2000)); Smith v. MCI Telecomms. Corp.,
2

and requires an affirmation of the Magistrate Judge’s decision unless “on the entire evidence [the
court] is left with the definite and firm conviction that a mistake has been committed.”4 The
contrary to law standard, however, permits the district court to conduct a plenary review of the
magistrate judge’s purely legal determinations and may set aside an order if the wrong legal
standard was applied.5
Garnishees raise two objections to the Magistrate Judge’s Order. First, Garnishees argue
that the restraint provisions of the Magistrate Judge’s Order constitute an extraordinary remedy.
Second, Garnishees argue that the Magistrate Judge’s conclusion that the Court has personal
jurisdiction over the Garnishees is contrary to law.
As to the first argument, the Court finds that it has entered its own Order for Restraint.6
Therefore, any objections to restraint provisions of the Magistrate Judge’s Order are now moot.
Considering the merits of that claim, Garnishees’ primary contention appears to be that the Court
lacks authority to restrain property held by Margery Rubin as trustee of the Marital Trust and
Real Estate Trust. The Court disagrees.
The Court’s Order for Restraint is premised on Utah Rule of Civil Procedure 64(c)(3).
That rule permits a court to “forbid any person from transferring, disposing or interfering with
137 F.R.D. 25, 27 (D. Kan. 1991).
4

Smith, 137 F.R.D. at 27 (quoting United States v. United States Gypsum Co., 333 U.S.
364, 395 (1948) (internal quotations omitted)); Sprint, 500 F.Supp. 2d at 1346.
5

Williams v. Vail Resorts Dev. Co., 2003 WL 25768656, at *2 (D. Wyo. Nov.
14, 2003); Sprint, 500 F. Supp. 2d at 1346; see also Computer Econ., Inc. v. Gartner Group, Inc.,
50 F.Supp. 2d 980, 983 (S.D. Cal. 1999).
6

Docket No. 167.
3

the property.”7 Property is defined as “the defendant’s property of any type not exempt from
seizure.”8 Thus, by the terms of the Utah Rules of Civil Procedure, the Court’s Order for
Restraint is limited to the property of the Stock Trust being held by the Marital Trust and Real
Estate Trust. Further, the Court has specifically stated that a motion for release of funds may be
made to the Magistrate Judge.9 Therefore, the concerns raised by Garnishees in their Objection
are not present. Garnishees citation to Brigham Young University v. Tremco Consultants, Inc.,10
is similarly unavailing as that case is easily distinguishable from the facts presented here.
Therefore, the Court will overrule Garnishees’ Objection on this ground.
Garnishees’ second argument is based on the Magistrate Judge’s finding that the Court
has “personal jurisdiction over Margery Rubin and therefore the trusts of which she is trustee.”11
Garnishees argue that the Magistrate Judge’s decision in this regard was incorrect. Having
reviewed the parties’ memoranda and the relevant law, the Court finds that the Magistrate
Judge’s finding of jurisdiction was not contrary to law. Further, even if the Court accepted
Garnishees’ arguments, the Court clearly has jurisdiction over Margery Rubin as Trustee of the
Stock Trust. Thus, the Magistrate Judge’s conclusion that the Court “is able to order Margery

7

Utah R.Civ.P. 64(c)(3).

8

Utah R.Civ.P. 64(a)(9).

9

Docket No. 167.

10

156 P.3d 782 (Utah 2007).

11

Docket No. 160.
4

Rubin, as trustee, to disclose, account for and return assets transferred from the Stock Trust”12
would not be overturned. Therefore, this objection too will be overruled.
III. CONCLUSION
It is therefore
ORDERED that the Objections to the Magistrate Judge’s July 19, 2011 Order (Docket
Nos. 168 & 169) are OVERRULED.
DATED August 9, 2011.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

12

Docket No. 160.
5