UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

Case No. 93-6489-CIV-KING POMPANO-WINDY CITY PARTNERS, LTD, EAST WINDY ASSOCIATES, LTD., and STEPHAN J. LAWRENCE,

Plaintiffs,

vs. REPORT AND RECOMMENDATIO

and WILLIAM GANGI,

Defendants, = r,..

NJ CD

Pa co .(21 1.71 un '

This cause has been referred to the undersigned by- t)*

Honorable James L. King, United States District Judge, in

accordance with 28 U.S.C. §636(b). Under consideration is

Defendant/Counter-Plaintiff Bear Stearns & Co., Inc.'s ("Bear

Stearns") Motion to Set Aside Transfer of Certain Assets and

Appointment of Receiver (D.E. 42).

BACKGROUND

On March 14, 1992, an arbitration award was entered in favor

of Bear Stearns in the amount of $20,412,115.00 against Stephan

Lawrence, Pompano-Windy City Partners, Ltd. and East Wind

Associates, Ltd. for trading losses sustained as a result of the

October 1987 stock market crash. Final Judgment was entered by the

United States Court for the Southern District of New York,

confirming the award on February 17, 1993. On or about June 11,

1993, the Judgment was registered in the Southern District of

Florida.

To date, Lawrence has paid nothing toward satisfying the

judgment and claims he is insolvent. Bear Stearns asserts that

BEAR STEARNS & CO., INC., JERRY CANNING, RICHARD HARRITON 7-)

Scanned Image - 0:93CV6489 Document 101 page 1 Sun May 23 11:14:34 1999

Lawrence has engaged in several fraudulent transfers designed to

place his assets beyond Bear Stearns' reach and has failed to

disclose the value and location of other various assets, to wit:11,

an offshore trust established in 1991

with Lawrence's contribution

Bear Stearns now moves to set aside

such transfers. In addition, Bear Stearns requests that the said

assets be transferred to a Receiver to be used to provide for the

orderly payment of the judgment.

ANALYSIS

Fed.R.Civ.P. 69 governs efforts to enforce a money judgment.

Rule 69 provides that the procedure in aid of judgment, and in

proceeding on and in aid of execution shall be in accordance with

the practice and procedure of the state in which the district court

is held, unless there are federal statutes to the contrary. Thus,

this Court turns to Florida law for guidance on how to enforce the

outstanding judgment.

Under Florida law, supplementary proceedings to enforce a

judgment are governed by Florida Statute §56.29. Such proceedings

are commenced by the filing of an affidavit in which the judgment

creditor shows that the sheriff holds an unsatisfied writ of

execution against the judgment debtor which is valid and

outstanding. § 56.29(1); Regent Bank v. Woodcox, 636 So.2d 885,

886 (Fla. 4th DCA 1994). Bear Stearns has filed such an affidavit.

2

Scanned Image - 0:93CV6499 Document 101 page 2 Sun May 23 11:14:34 1999

Under section 56.29, "a judgment creditor may treat an

attempted fraudulent transfer of property to which his debtor had

legal title as a nullity and sell said property under execution as

though no transfer had been made." Regent Bank, 636 So.2d at 886

(quoting Richard v. McNair, 164 So. 836 (1935)). However, should

the judgment creditor seek to affect the rights of any third

parties not a party to the original action, those third parties

must be impleaded into the proceedings. Manor Grove Land Corp. v.

Salkay, 390 So.2d 121 (Fla. 4th DCA 1980) (holding that it was error

for the trial court to order that execution could be had against

assets of trust to which corporate assets had been transferred to

satisfy judgment against corporation). It is well settled that the

court has no power to take property transferred to a third party

unless the parties have been impleaded into the action, provided

with notice, and given an opportunity to answer the judgment

creditors' allegations. Machado v. Foreign Trade, Inc., 544 So.2d

1061, 1062 (Fla. 3rd DCA 1989); Juno by the Sea Condominium

Apartments, Inc. v. Juno by the Sea North Condominium Ass'n, 419

So.2d 399 (1982); Mission Bay Campland, Inc.. v. Summer Financial

Corp., 72 F.R.D. 464 (1976).

In the instant case, the property rights of the Lawrence

Family Trust and Rivers Edge, Inc. cannot be adjudicated by this

Court unless the Trust and the corporation are impleaded as

parties and given an opportunity to defend their assets. Bear

Stearns has not yet moved to implead such third parties. Thus

this Court may not set aside the transfers to such third parties at

3

Scanned Image - 0:93CV6489 Document 101 page 3 Sun May 23 11:14:34 1999

this point in the proceedings.

Bear

Stearns has produced insufficient evidence concerning the

conveyance of these assets. Although the Court acknowledges that

Bear Stearns has undoubtedly been delayed and hindered by

Lawrence's failure to disclose and remember the location of various

assets, it cannot find from the limited evidence presented that the

conveyances were necessarily fraudulent. The Court is hopeful that

the presence of the Special Master will aid the parties in fully

establishing the record and recommends that Bear Stearns be allowed

to refile the instant motion should more evidence in support of its

position become available.

RECOMMENDATION

Based on the foregoing, it is hereby RECOMMENDED that Bear

Stearns' Motion to Set Aside Transfer of Certain Assets and

Appointment of Receiver (D.E. 42) be DENIED WITHOUT PREJUDICE.

Pursuant to 28 U.S.C. §636(b)(1)(B) and (C), the parties may

serve and file written objections with the Honorable James Lawrence

King, United States District Judge, within ten (10) days after

being served with a copy of this Report and Recommendation. See

nettles v. Wainwright, 677 F.2d 404 (5th Cir. Unit B 1982).

RESPECTFULLY RECOMMENDED, in Chambers, at Miami, Florida, this

APIP day of ()OA- , 1996.

4

Scanned Image - 0:93CV6489 Document 101 page 4 Sun May 23 11:14:34 1999

CJ, c_ - -r, WILLIAM C. TURNOFF Chief United States Magistrate Judge

cc : Honorable James Lawrence King counsel of record

5

Scanned Image - 0:93CV6489 Document 101 page 5 Sun May 23 11:14:34 1999

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO. 93-6489-CIV-KING

POMPANO-WINDY CITY PARTNERS, LTD., EAST-WINDY ASSOCIATES, LTD. and STEPHEN J. LAWRENCE,

Plaintiffs,

n12-6177-k-777577 SIP I i 1996

V . C L E. Re. v.s. CUa S.D. or LA. • tA.44;

BEAR STEARNS & CO., INC., JERRY CANNING, RICHARD HARRITON and WILLIAM GANGI,

Defendants.

ORDER AFFIRMING MAGISTRATE'S REPORT & RECOMMENDATION

THIS CAUSE comes before the Court on the Report &

Recommendation of United States Magistrate Judge William C. Turnoff

filed August 16, 1996. No objections have been filed.

The Report recommends that Bear Stearn's Motion to Set Aside

Transfer of Certain Assets and Appointment of Receiver be denied

without prejudice. The Court concludes that the Report is a

thorough and well reasoned recommendation which the Court adopts

herein as grounds for denial of Bear Stern's Motion.

Accordingly, after a careful review of the record, and the

Court being otherwise fully advised, it is

ORDERED and ADJUDGED that Defendant Bear Stearn's Motion to

Set Aside Transfer of Certain Assets and Appointment of Receiver

be,

Scanned Image - 0:93CV6489 Document 111 page 1 Sun May 23 11:14:36 1999

and the same is hereby, DENIED WITHOUT PREJUDICE.

DONE and ORDERED in Chambers at the United States District

Courthouse, Federal Justice Building, Miami, Florida, this 10th day

of September, 1996.

2

James Lawrenc King sited States Dis ict Court Southern District of Florida

cc: Howard N. Kahn, Esq. Robert A. Stok, Esq.

Scanned Image - 0:93CV6489 Document 111 page 2 Sun May 23 11:14:36 1999