Post-Judgment Proceedings & Collections

POST- JUDGMENT PROCEEDINGS &

COLLECTIONSPart of the NEWBIE LITIGATOR SCHOOL 2015 Series

Premier Date: November 11, 2015

POST- JUDGMENT PROCEEDINGS & COLLECTIONS

MEET THE FACULTY

PANELISTSCraig Barnett Greenberg TaurigJamie Burns Levenfeld PearlsteinZachary Newman Hahn & Hessen LLP


MODERATORJohn Martin,MartinSirott

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Practical and entertaining education for business owners and executives, Accredited Investors, and their legal and

financial advisors.

For more information, visit www.financialpoisewebinars.com

DISCLAIMER:

THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE WHAT

MAY BE BEST FOR YOUR INDIVIDUAL NEEDS


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ABOUT THIS EPISODE


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Congratulations! You have your judgment. Now how do you enforce it or collect on it? Our panel will take you through best practices in terms of post-judgment collections and proceedings.

ABOUT THIS SERIESPOST- JUDGMENT PROCEEDINGS & COLLECTIONS

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This series is targeted to attorneys who are just starting to get involved in civil litigation, or who could use a refresher on some litigation fundamentals. The purpose is to provide an introduction to various different components and parts of litigation – from the basic rules of civil procedure and evidence, to dispositive motions, through trial, and on to appeal and post-judgment collection work. The series is best viewed as a whole, building from one session to the next.

EPISODES IN THIS SERIES

EPISODE #1 Federal Civil Procedure Rule Refresher 8/18/15

EPISODE #2 Discovery Practice 8/26/15

EPISODE #3 Evidence Rule Refresher 9/3/15

EPISODE #4 Mediation Basics 9/10/15

EPISODE #5 Working with Experts 9/22/15

EPISODE #6 Motion Practice I- TROs and Preliminary Injunctions 10/6/15

EPISODE #7 Motion Practice II - Motions to Dismiss and Summary Judgment 10/20/15

EPISODE #8 Anatomy of a Trial 10/27/15

EPISODE #9 Appellate Practice – 101 11/3/15

EPISODE #10 Post-Judgment Proceedings & Collections 11/11/15 6


(Dates below are premier dates; all webinars also available on demand)


COURT ORDERS AND MONEY JUDGMENTS

MONEY JUDGMENTS• Judgment is worthless

unless party has assets to pay it

• Judgment creditor needs to locate assets and make claims on them until judgment is satisfied

POST-JUDGMENT CONCERNS

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COURT ORDERS• Court can direct parties

to act• Failure to act in

accordance with direction punishable as contempt


Voluntary Payment

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In many (if not most) cases, money judgments are simply paid by the judgment debtor, a practice that: Avoids collection proceedings (which

can be time-consuming) Avoids post-judgment interest (which

may involve above-market rates)


The Unpaid Judgment

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When judgments are not paid, judgment creditors need to be concerned that assets that could be used to pay the award are going elsewhere. Judgments should generally be pursued as quickly as possible.


When Can I Enforce?

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Judgments Must Be Final and Enforceable

Make Sure Judgment is Finalo Interim awards (i.e., on particular counts while others await trial) are not

usually enforceable absent special findings. See, e.g., Fed. R. Civ. P. 54(b). Seek appropriate findings

o While petitions for fees and costs do not generally delay entry of judgment, see Fed. R. Civ. P. 58(e), requests for other relief may prevent final judgment from being entered.

Enforceabilityo While injunctive relief is usually immediately effective, enforcement of

money judgments is often stayed for some period after entry. See, e.g., Fed. R. Civ. P. 62(a) (no enforcement proceedings may be commenced until 14 days after judgment is entered).


POST-JUDGMENT MOTIONS

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Filing a Post-Trial Motion May or May not Stay Enforcement:

Under Federal Rules, the court may stay enforcement proceedings pending resolution of motions for judgment as a matter of law, additional findings, or to alter, amend, or set aside the judgment “on appropriate terms for the opposing party’s security.” Fed. R. Civ. P. 62(b). A federal judgment creditor can request bond or similar security as a condition of stay.

In some states, filing of timely post-trial motions automatically stays enforcement. See 735 ILCS 5/2-1202(d); 735 ILCS 5/2-1203(b).


Appeals Do Not Halt Collection

What if there’s an appeal?

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Filing a notice of appeal normally does not prevent collection unless bond is posted and approved by the Court. See, e.g., Fed. R. Civ. P. 62(d).

Appellate Court can enter a stay (though collection stays are rare). See Fed. R. Civ. P. 62(e).


BOND PENDING APPEAL

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Posting a supersedeas or appeal bond typically stays all collection efforts, because it eliminates the risk of assets being dissipated. See Fed. R. Civ. P. 62(d). While the form of bond needs to be approved by the court, many courts have approved bond forms.

Appeal bonds typically require a deposit of the judgment amount (plus some allowance for interest and bond costs) or property of equivalent value – they are not a way of avoiding payment entirely.

A judgment creditor should review any proposed bond to make sure it provides adequate security since it will be the principal source of future payment.

Bonds typically simplify collection – if appeal is denied, motion can be brought against the bonding surety and the court can order it to tender the bond amount. See, e.g., Fed. R. Civ. P. 65.1.


IF A JUDGMENT ISN’T PAID

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If a final and enforceable judgment isn’t paid (or secured by bond), the judgment creditor should promptly:• Identify debtor assets that can be applied to

satisfy the judgment• Take steps to collect the judgment from

available sources• Impose liens against other assets to secure

rights

PRE-JUDGMENTDocuments produced in the course of discovery may identify bank and other accounts maintained by debtor

POST-JUDGMENTJudgment creditor can usually seek

additional information

concerning assets, including money

owed debtor


Identifying Sources of Payment

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Speed is important -- while pursuing post-judgment discovery, do not ignore the information you already have.


Learning About Assets

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• Federal Rule of Civil Procedure 62(a)(2) allows a judgment creditor to obtain discovery in aid of the judgment from the judgment debtor – or any other person – as provided in the Federal Rules of Civil Procedure or by the procedure of the state in which the court is located.

• State procedures may have added benefits. Illinois, for example, allows a court to issue citations to discover assets – a form of discovery request that not only permits the discovery of relevant documents and examination of witnesses but also immediately imposes a lien on debtor assets in the recipient’s possession that prevents further dissipation. See 735 ILCS v/2-1402; Ill. Sup. Ct. R. 277.


What Are You Looking For?

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In General, the Judgment Creditor Wants to Locate:

1. Funds that can be used to satisfy the judgment

Bank accounts

Payments due from others

2. Property that can be sold to generate such funds

Real and Personal Property

Securities

Rights in Intellectual Property


What Do You Do Once You Find Assets?

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Once Assets Have Been Located, Move the Court to Apply Them to the Judgment. Remedies Include:

1. Garnishment – The Court directs that money belonging to or owed by a debtor be turned over to the judgment creditor or a court officer.

Attachment – Requires funds (including money in bank accounts) owed to the judgment debtor to be applied to the debt.

Wage garnishment – applying some portion of the debtor’s earnings to the judgment.

2. Writs of Execution and Imposition of Judgment Liens – the Court seizes or places liens on property that can be sold, with sales proceeds applied to the judgment amount.


Limitations on the Power of the Court

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o Courts can ordinarily only order the disposition of property within their jurisdiction, so the court entering the original judgment may not be able to take action against assets located in another state.

o Most states have adopted the Uniform Enforcement of Foreign Judgments Act, which permits a foreign state’s judgment to be registered and enforced in the jurisdiction where property is located.

o Federal court judgments may be registered in Federal District Court pursuant to 28 U.S.C.§1963


Other Limitations on Asset Seizure

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1. Not all assets can be applied to your judgment Certain types of income (including social security income and

unemployment income) and some types of property (including retirement funds and personal residences or property under certain monetary thresholds) may be exempted by law.

Wage garnishments are usually limited to a specified percentage of income

2. Your client’s claims may be subject to prior claims of other creditors, which may need to be paid first upon the sale of any property.


A GUIDING PRINCIPLE

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While sorting out which creditors will have claims on which assets can get very complicated, and state laws on particular exemptions and limits will vary dramatically, a creditor who first makes a recognizable claim (and files an appropriate lien) will usually have a better claim to an asset than one who asserts a claim later. So:

MOVE QUICKLY. IT IS GOOD TO BE FIRST.


AFTER THE JUDGMENT IS PAID

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Once a Judgment is Paid in Full (Including Interest), the Judgment Creditor Should Acknowledge that Fact:

Judgment liens on property must be released

A satisfaction of judgment should be filed with the court

Failure to Take Action May Result in Penalties:

Many states allow an action for damages resulting from failure to file satisfaction (i.e. denials of credit)

Some jurisdictions impose statutory penalties for wrongful failures to file satisfactions or release liens

MORE ABOUT THE FACULTYJOHN MARTIN


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[email protected]

John Martin is a member of MartinSirott LLC, a firm he founded in 2009. He has over twenty years of experience in representing clients in both trial and appellate courts, and has obtained successful results in all stages of the litigation process from initial motion practice through appeal. His practice is devoted to complex commercial disputes, with principal emphasis in fiduciary and financial litigation. He has substantial experience in defending against class, shareholder, and derivative actions, including defending claims against individual corporate officers and condominium association board members sued in derivate claims. John is also a frequent author and speaker on issues relating to professional ethics, including ethical issues associated with attorney marketing and attorney fee arrangements. He currently serves as chair of the Chicago Bar Association’s Professional Fees committee, in which capacity he arbitrates and mediates attorney fee disputes, and has previously served as chair of the American Bar Association Section of Litigation’s Ethics and Professionalism Committee.

Before founding MartinSirott LLC, John was an associate and partner at Schiff Hardin LLP in Chicago and a law clerk for a federal district court judge.

MORE ABOUT THE FACULTYJAMIE BURNS


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[email protected]

Jamie Burns is an associate in the Litigation Group at Levenfeld Pearlstein. She concentrates her practice on representing lenders as well as borrowers in commercial banking disputes, commercial foreclosures and post-judgment collection proceedings.

Prior to joining Levenfeld Pearlstein, Jamie was an associate at another Chicago firm where she served as outside counsel to a large national bank on cases involving breach of promissory note and guaranty, commercial foreclosures, settlement agreements, and post-judgment proceedings.

MORE ABOUT THE FACULTYCRAIG BARNETT


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[email protected]

Craig Barnett concentrates his practice on commercial litigation in state and federal court. He is a member of Greenberg Traurig’s National Financial Institutions and Real Estate Operations practice groups and is a Certified E-Discovery Specialist by the Association of Certified E-Discovery Specialists (ACEDS). Mr. Barnett serves on the Task Force on Proceedings Supplementary of the Business Law Section of the Florida Bar, which is tasked with reviewing and making recommendations for revisions to Florida law relating to post-judgment remedies afforded to judgment creditors. He was also lead counsel in Biel REO, LLC v. Barefoot Cottages Development Company, LLC, et al., 156 So. 3d 506 (Fla. 1st DCA 2014), review denied, 171 So. 3d 116 (Fla. 2015), a leading case in Florida relating to judgment creditors’ rights against transfers of assets by judgment debtors..

MORE ABOUT THE FACULTYZACHARY NEWMAN


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[email protected]

Zachary is a partner in the Litigation Group at Hahn and Hessen. He represents public and private companies, national banking associations, commercial lenders, leasing companies, and hedge funds in business litigation throughout the United States. His practice focuses on Banking Litigation (enforcing multi-million dollar credit facilities on behalf of national and regional banks and institutional and specialty lenders, securing provisional remedies, and defending lender liability litigation); Commercial Litigation (litigating contract disputes, commercial insurance claims, aircraft lease disputes, unfair competition and restrictive covenants, bankruptcy disputes, and judgment enforcement); Fiduciary Litigation (contested accountings, Prudent Investor Act claims, and breach of fiduciary duty claims); and Art and Antique Litigation (national and international reacquisition of lost or stolen art, repossessions and liquidations, and disputes regarding valuations, fraudulent auctions, consignor-lender issues, and lien priority).

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IMPORTANT NOTE:

THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY.

IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.

YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS. 32

Post-Judgment Proceedings & Collections

Education

Transcript of Post-Judgment Proceedings & Collections