Opinion
1:02CV00195
August 15, 2002
ORDER OF ATTACHMENT
Plaintiff, Sara Lee Corporation, has filed a motion for an Order of Attachment. It seeks a money judgment against defendant William M. Gregg in an amount in excess of $4 million. Plaintiff relies on Fed.R.Civ.P. 64, which provides:
At the commencement of and during the course of an action, all remedies providing for seizure of person or property for the purpose of securing satisfaction of the judgment ultimately to be entered in the action are available under the circumstances and in the manner provided law of the state in which the district court is held, existing at the time the remedy is sought, subject to the following qualifications: (1) any existing statute of the United States governs to the extent to which it is applicable; (2) the action in which any of the foregoing remedies is used shall be commenced and prosecuted or, if removed from a state court, shall be prosecuted after removal, pursuant to these rules. The remedies thus available include arrest, attachment, garnishment, replevin, sequestration, and other corresponding or equivalent remedies, however designated and regardless of whether by state procedure the remedy is ancillary to an action or must be obtained by an independent action. (emphasis added)
Because federal law does not provide for pre-judgment attachment in this case, plaintiff relies on remedies provided by North Carolina state law in N.C.G.S. § 1-440.1, et seq. Sections 1-440.2 and 1-440.3 together provide for attachment in the case where a money judgment is sought and the defendant is a nonresident. Plaintiff provided an affidavit required by Section 1-440.11 indicating that plaintiff seeks a money judgment against defendant in excess of $4 million and that the grounds for attachment are that defendant is a non-resident and that the liquidation of his business in bankruptcy raises serious questions as to whether plaintiff could make payment.
There does not appear to be a question about whether plaintiff is entitled to a Writ of Attachment under North Carolina law. However, the Court sua sponte raises a question concerning the scope of the attachment order. Plaintiff apparently wants the attachment to run against all of defendant's property throughout North Carolina. This, apparently, could be obtained had plaintiff proceeded in state court. however, this case was removed by defendant from state court to federal court and the question now is whether this Court has the authority or should exercise authority to attempt to control defendant's property outside of this Court's boundaries.
For the following reasons, it is concluded that the Writ of Attachment should only issue as to defendant's property existing within this district. The Court has not found any indication that Rule 64 was intended to expand the jurisdiction of federal courts. The reference to state law merely provides the basis for the Court to determine when and how the provisional remedy is obtained. 11A Charles Alan Wright, et al., Federal Practice and Procedure § 2932, at 7 (1995); Federal Deposit Ins. Corp. v. Greenberg, 487 F.2d 9, 13 (3d Cir. 1973) (federal court only borrows state procedures, does not adopt them). Actions brought in this Court, including ancillary actions such as attachment, are still subject to this Court's jurisdiction and venue limitations. See Hearst v. Hearst, 15 F.R.D. 258 (N.D. Cal. 1954).
It has been said with respect to Fed.R.Civ.P. 70, which allows post-judgment attachment, that the rule may not be construed so as to broaden jurisdiction of 28 U.S.C. § 1655 which restricts the district court's power to enforce liens on property within the district. 12 Wright, et al., supra § 3022, at 167 (1997). Similarly, Rule 64 should not be construed as expanding a district court's authority.
In a multi-district state, such as North Carolina, a district court acts subject to venue restrictions as determined by Congress. Venue in diversity cases is determined by the defendant's residence, events occurring in the district, or a defendant's minimum contacts with a district. 28 U.S.C. § 1391. Quasi in rem jurisdiction over a defendant's property is limited to the property located in that district. Fed.R.Civ.P. 4(n). Likewise, a district court's subpoena power is restricted to service to places within the district or within 100 miles of a deposition hearing or trial, unless a statute orders otherwise. Fed.R.Civ.P. 45(b)(2). These limitations emphasize that jurisdictional and venue limitations are important factors to be kept in mind.
In this case, plaintiff requests this Court to issue an Order of Attachment which would command not just the Marshals of this district, but the Marshals in both the Eastern and Western Districts, to go out and seize property. It also would purportedly require third parties, such as garnishees, to make reports to this Court and attend hearings in this Court. The Court is reluctant to order that result without some more explicit authority for doing so.
Out-of-district garnishees have no connection with this lawsuit and compelling them to litigate in this court may raise some due process-minimum contact issues, see 4B Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 1121, at 215-216 (2002), at least in the realm of venue.
It has been stated that no matter what state law may authorize, the Federal Civil Rules of Procedure continue to govern an action in which attachment is sought. As noted above, those rules do not support extra-district attachment. Even if the Court has jurisdiction to attach assets in other districts, the above concerns seem to counsel against such. The Court has inherent power to limit the scope of pre-judgment remedies provided under state law. 11A Wright, et al., supra § 2932, at 7 8. This appears to be an appropriate time to utilize that power. Consequently, the Court will authorize the Writ of Attachment, but only for execution and service within the Middle District of North Carolina.
To rule otherwise would present the anomaly that a federal district court would have a greater ability to seize a defendant's property prior to judgment being rendered against him than after judgment.
Next, the Court turns to the issue of the amount of bond. Under state law, bond may be fixed by the Court to afford reasonable protection to the defendant, but may not be less than $200.00. N.C.G.S. § 1-440.10. Plaintiff wants to attach property in excess of $4 million. The Court has not been given any information concerning the amount or extent of defendant's assets or whether defendant has property of that amount in this State or this district. Clearly, the amount of property which will be attached will have a bearing on the amount of bond which should be required. The Court does take judicial notice of the pleadings in this case. In this action, plaintiff wants to recover on a guarantee signed by defendant. Defendant signed the guarantee in order that his corporation could receive advances from plaintiff. There appears to be a fair probability that plaintiff will be able to recover on this cause of action. Considering these factors and uncertainties, the Court will initially set the bond at $200,000.00. If, however, the property which will actually be attached will greatly exceed that amount, defendant may file a motion to increase the amount of the bond.
Finally, plaintiff has not pointed the Court to any specific property which it wants attached or even shown that defendant has property within this State or this district subject to attachment. Therefore, the Order of Attachment must necessarily be general.
IT IS THEREFORE ORDERED that plaintiff's Application for Attachment (docket no. 11) is granted against defendant William M. Gregg as to his property located within this district, and the United States Marshal is directed to attach property of this defendant of which he becomes aware. The amount of attachment is limited to $4 million.
IT IS FURTHER ORDERED that as a condition of this Order that plaintiff furnish a bond in the amount of $200,000.00 pursuant to and in accordance with the requirements of N.C.G.S. § 1-440.10.
IT IS FURTHER ORDERED that upon compliance with the remaining conditions of this Order, the Clerk will sign a Writ of Attachment directing the United States Marshal to attach property within this district sufficient to satisfy plaintiff's demand of $4 million.
IT IS FURTHER ORDERED that defendant may proceed to dissolve, modify, or otherwise maintain his rights in accordance with N.C.G.S. § 1-440.36 through 1.440.46.
IT IS FURTHER ORDERED that should the Marshal attach any property, the Marshal shall leave a copy of this Order, along with a copy of the Writ of Attachment, at that place or with the person from whom the property is taken pursuant to this Order and the Writ of Attachment.