Judy L. Forster, et al v. Nations Funding Source, Inc., et al

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 15-14316
Non-Argument Calendar
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D.C. Docket No. 0:11-cv-61073-WJZ
JUDY L. FORSTER,
PATRICK LACY,
BRUCE HIRSCHFELD,
Plaintiffs-Appellants,
versus
NATIONS FUNDING SOURCE, INC.,
a Florida dissolved corporation,
NATIONS GROUP USA, INC.,
a Florida corporation and successor to
Nations Funding Source, Inc.,
SOOKRANI NARAIN,
Defendants-Appellees.
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Appeal from the United States District Court
for the Southern District of Florida
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(April 19, 2016)
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Before HULL, MARCUS and WILLIAM PRYOR, Circuit Judges.
PER CURIAM:
Judy L. Forster, Patrick Lacy, and Bruce Hirschfeld appeal the denial of
their motion to initiate a supplementary proceeding against their former employer,
Nations Funding Source, Inc., its successor entity, Nations Group USA, Inc.
(collectively “Nations Group”), and its owner, Sookrani Narain. See Fed. R. Civ. P.
69; Fla. Stat. § 56.29. Forster, Lacy, and Hirschfeld obtained a default judgment
against Nations Group and Narain for wrongful termination, in violation of the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et seq., but the district court
dismissed the complaint against Narain without prejudice because the former
employees failed to comply with a post-judgment filing deadline. Later, Narain
refused to comply with discovery and allegedly depleted his companies’ bank
accounts. The former employees moved for proceedings supplementary and for
impleader of Narain to collect the unsatisfied judgment and to hold Narain liable
based on the corporate alter ego doctrine, but the district court denied the motion as
an endeavor to “circumvent the sanction” against the former employees. Because
the former employees are entitled to proceedings supplementary, we vacate the
order denying the motion and remand for the district court to commence a
supplementary proceeding and implead Narain so the former employees can
execute the unsatisfied judgment against Nations Group and for the district court to
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determine whether it has subject matter jurisdiction to entertain the complaint
against Narain.
We review de novo questions of law, including issues involving subject-
matter jurisdiction. Nat’l Mar. Servs., Inc. v. Straub, 776 F.3d 783, 786 (11th Cir.
2015).
Under Florida law, a party “is entitled to . . . proceedings supplementary to
execution” if he “file[s] a motion and an affidavit” that (1) states he holds an
unsatisfied judgment or judgment lien; (2) identifies the issuing court and case
number; (3) states the unsatisfied amount of the judgment; and (4) confirms that
execution is valid and outstanding. Fla. Stat. § 56.29(1). The trial court has
authority “to order any property of the judgment debtor, not exempt from
execution, in the hands of any person, . . . to be applied toward the satisfaction of
the judgment debt.” Id. § 56.29(5). The trial court can “enter any order or
judgment, including a money judgment against any . . . transferee,” id., or “any
impleaded defendant irrespective of whether [he] has retained the property,” id.
§ 56.29(9). If the party satisfies the statutory requirements and alleges that the
judgment debtor has transferred property “to delay, hinder, or defraud creditors,”
id. § 56.29(6)(b), “[n]o other showing is necessary in order to implead the third
party,” NTS Fort Lauderdale Office Joint Venture v. Serchay, 710 So. 2d 1027,
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1028 (Fla. Dist. Ct. App. 1998) (quoting Regent Bank v. Woodcox, 636 So. 2d 885,
886 (Fla. Dist. Ct. App. 1994)).
The district court erred by denying the former employees’ motion to initiate
proceedings supplementary and to implead Narain. The former employees were
entitled to prosecute the supplementary proceeding after filing their motion and
supporting affidavits alleging that they had an unsatisfied judgment against
Nations Group; they had been thwarted in obtaining post-judgment discovery
because Narain refused to complete fact information sheets, see Fla. R. Civ. P.
Form 1.977, or to appear at a deposition duces tecum; and Narain had depleted the
companies’ two bank accounts to prevent execution of the judgment. See Fla. Stat.
§ 56.29(5), (6)(b), (9). The motion did not operate to “circumvent the sanction”
against the former employees because they did not seek to relitigate whether
Narain violated the Age Discrimination Act. The former employees sought, as they
are permitted to do in proceedings supplementary, “to ferret out what assets
[Nations Group] may have or what property . . . others may be holding for [it], or
may have received from [it] to defeat the collection of the lien or claim, that might
be subject to the execution.” Young v. McKenzie, 46 So. 2d 184, 185 (Fla. 1950).
Because the district court had ancillary jurisdiction to entertain the proceedings
supplementary, see Nat’l Mar. Servs., 776 F.3d at 786–88, and the former
employees “made the required statutory showing [under section 56.29], the
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[district] court had no discretion to deny” the motion, see Serchay, 710 So. 2d at
1028. We vacate the order that denied the former employees’ motion and remand
for the district court to commence the supplementary proceedings, to implead
Narain, and to determine whether Nations Group transferred funds to Narain that
he must disgorge to satisfy the judgment in favor of the former employees.
The district court also must determine whether it has subject matter
jurisdiction to entertain the former employees’ complaint that Narain is
individually liable for using Nations Group as an alter ego. Under Florida law, the
owner of a corporation may be held liable for its actions if the plaintiff proves (1)
the owner dominated and controlled the corporation to such an extent that the
owner was an alter ego of the corporation; (2) the corporate form was used
fraudulently or for an improper purpose; and (3) the fraudulent or improper use of
the corporate form injured the plaintiff. Molinos Valle del Cibao v. Lama-Seliman,
633 F.3d 1330, 1349 (11th Cir. 2011). For the district court to exercise its ancillary
jurisdiction, the former employees must prove that their complaint is intended “(1)
to permit disposition by a single court of claims that are, in varying respects and
degrees, factually interdependent; and (2) to enable [the district] court to function
successfully, that is, to manage its proceedings, vindicate its authority, and
effectuate its decrees.” Peacock v. Thomas, 516 U.S. 349, 354 (1996) (quoting
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 379–80 (1994)); see Eagerton
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v. Valuations, Inc., 698 F.2d 1115, 1119 & n.9 (11th Cir. 1983). The district court
must determine whether the complaint against Narain is a permissible “attempt[] to
execute, or to guarantee eventual executability of, a federal judgment,” or an
impermissible endeavor “to impose an obligation to pay an existing federal
judgment on a person not already liable for that judgment.” Peacock, 516 U.S. at
357. Even if the complaint falls within the latter category, the former employees
may sue Narain if they can prove the district court has original jurisdiction over the
action. The burden rests with the former employees to establish that there is
complete diversity among the parties and that the matter in controversy exceeds
$75,000. See 28 U.S.C. § 1332; Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411
F.3d 1242, 1247 (11th Cir. 2005).
We VACATE the order denying the former employees’ motion. We
REMAND for the district court to commence supplementary proceedings and to
implead Narain in executing the unsatisfied judgment against Nations Group and
for the district court to determine if it has jurisdiction to entertain the former
employees’ complaint that Narain is liable under the alter ego doctrine.
VACATED AND REMANDED.
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