Opinion
CIVIL ACTION 03-0095, SECTION "T"(1)
October 2, 2003
ORDER
This cause came for hearing on August 13, 2003, on a motion by the plaintiff for this Court to reconsider its decision dissolving the Writs of Attachment and Sequestration and granting the defense attorney's fees. The Court has reviewed said motion and finds no legal grounds for changing its original decision because the petitioner has merely reasserted the claims previously made and denied by this Court.
BACKGROUND:
On July 8, 2003, this Court ordered that the Writs of Attachment and Sequestration that were previously granted by another Section of this Court be dissolved and that the defendants be awarded attorney's fees and costs for the wrongful issuance of said Writs. On July 22, 2003, the plaintiff filed a Motion to Reconsider along with a Motion to Stay the Effect of the Order dissolving the Writs. On September 22, 2003 this Court granted the plaintiffs motion staying the effect of the dissolution of the above Writ until the Court rendered a decision on the Motion to Reconsider.
LAW AND ANALYSIS:
In the plaintiffs Motion, counsel assigns six errors to this Court's previous order in this matter, none of which this Court believes are correct or effect the decision to dissolve the Writs. Before the Court addresses the plaintiff's assignments of error, it must be clear in discussing the evidence and the validity of the Writs, the only facts that are relevant are those facts known at the time the Writ was issued. Sarpy Properties v. Diamond Shoe Stores, 761 So.2d 769, 774. Therefore, this Court will not consider in this Motion for Reconsideration any actions or judgements rendered by the District Court for the Southern District of Alabama since the Writs were originally granted.
First, the plaintiff incorrectly asserts that this Court erred in finding that C C Marine("C C") lacked creditor status. Counsel for C C argues that he pled all of the necessary elements for a cause of action under breach of maritime contract and the fact that liability issues were unresolved doesn't make the writ improper. Counsel bases his claim on Article 3542 of the Louisiana Code of Civil Procedure which reads:
A writ of attachment may be obtained in any action for a money judgement, whether against a resident or a non-resident, regardless of the nature, character, or origin of the claim, whether it is for a certain or uncertain amount, and whether it is liquidated or unliquidated.
Article 3542, however, can not be read alone, it must be read in conjunction with Article 3541, which provides:
A writ of attachment may be obtained when the defendant:
(1)Has concealed himself to avoid service of citation;
(2)Has granted a security interest under Chapter 9 of the Louisiana Commercial Laws (R.S. 10:9-101, et seq.), or has mortgaged, assigned, or disposed of his property or some part thereof, or is about to do any of these acts, with intent to defraud his creditors or give an unfair preference to one or more of them;
(3)Has converted or is about to convert his property into money or evidences of debt, with intent to place it beyond the reach of his creditors;
(4)Has left the state permanently, or is about to do so before a judgment can be obtained and executed against him; or
(5)Is a nonresident who has no duly appointed agent for service of process within the state.
Article 3541(3) lays out the specific parameters under which a writ of attachment can be granted. As Article 3542 states, "A writ of attachment may be obtained," that conditional may is based on the writ meeting the aforementioned parameters. One such part of the requirements for a valid writ is that the person seeking the writ must be a creditor.
This Court made a factual determination in the original hearing on this matter that the plaintiff was not a creditor. Nothing is presented in this motion that makes the Court believe otherwise. At the time this writ was granted there had been no determination of entitlement. The plaintiff quotes language out of Article 3542 dealing with the uncertainty of the amount or the fact that the amount is liquidated or unliquidated. The Court agrees with the plaintiff that writs can be valid for uncertain amounts, but such is not the case here. In the instant case there had been no determination of liability at all. For all of the above mentioned reasons the Court finds no validity to the plaintiffs first assignment of error.
Second, the plaintiff asserts that the Court erred in refusing to maintain a conservatory writ pending resolution of liability and damage issues when such a role is mandated by FRCP Rule 64. Rule 64 states:
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 by the 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.
It has been held in numerous court rulings that Rule 64 holds that all remedies providing for seizure of property for the purposes of securing a judgement ultimately sought in the action must be carried out in a manner provided by the law of the state where the district court sits. Kinder/nil Select Blood Stock, Inc. v. U.S., 835 F. Supp. 699 (N.D. N.Y. 1993). In interpreting Rule 64 consistent with the various cases, it is evident that Louisiana Code of Civil Procedure Article 3541 is the applicable article which should govern the seizure of property in this district.
Article 3541, as stated above, lays out very specific instances when a writ may be granted. For various reasons, the instant case does not satisfy all of the requirements necessary under this article to issue the writ. Since the requirements of article 3541 are not met, this Court can not act as a "holding retention cell" for the funds, therefore plaintiffs second assignment of error is also with out merit.
Next, the plaintiff alleges that this Court erred in not finding that the Building Construction Company defendants ("BCC") intended to place the funds beyond C C's reach. Again, this Court made a factual determination at the original hearing that the plaintiff didn't meet his burden of proof in order to have this Court believe that BCC was going to make the funds available. Plaintiff does not allege any new facts here, so the Court finds no reason to change its original decision. Therefore, plaintiffs third contention of error is also without merit.
Fourth, the plaintiff alleges that this Court erred in reading fraud into the intent element of Article 3541(3). On this point, the Court agrees with the plaintiffs contention that intent as stated in the article is not synonymous with fraudulent intent. However, there is still an intent element, which the Court still believes to be lacking. Plaintiff failed to prove in the original hearing, or now in its Motion for Reconsideration, that BCC had any intent, fraudulent or otherwise, to put the funds out of C C's reach. The lack of evidence combined with BCC's good faith in already paying out close to one-third of the possible claim prevents C C again from reaching the burden of proof necessary to uphold the writ as valid.
Next, plaintiff alleges that this Court erred in dismissing the sequestration because equitable subrogation is not recognized under Louisiana law. As stated above Rule 64 has been interpreted by the Courts very strictly. The United States Supreme Court went as far in the Granny Goose Foods, Inc. v. Brotherhood of Teamsters and Auto Truck Drivers Local No. 70 of Alemeda County, 415 U.S. 423, 94 S.Ct. 1113(1974) at footnote 10 to explain that in all cases in federal court, state law is incorporated to determine the availability of pre-judgement remedies. Accordingly, state law remedies are what must be examined. Under Louisiana law, Article 3571 governs sequestration. Article 3571 of the Louisiana Code of Civil Procedure states:
When one claims the ownership or right to possession of property, or a mortgage, security interest, lien, or privilege thereon, he may have the property seized under a writ of sequestration, if it is within the power of the defendant to conceal, dispose of, or waste the property or the revenues therefrom, or remove the property from the parish, during the pendency of the action.
This Court found in the original proceedings that the plaintiff does not possess any of the enumerated interests, therefore the Court could not validly issue a Writ of Sequestration. Again no new material facts or law are alleged by the plaintiff, therefore the Writ of Sequestration can not remain in place.
The final assignment of error the plaintiff alleges is that the Court erred in finding C C liable for BCC's attorney's fees. C.C.P. art. 3506 allows the Court discretion to award damages for the wrongful issuance of either of the writs in question. The costs and attorney fees that are available to be awarded under the article are limited to the costs and defense of pursuing the dissolution of the writ of attachment and the writ of sequestration and do not extend to the costs and fees of the defense of the entire suit. The Court previously determined that the defendants were entitled to payment under C.C.P art. 3506 and the Court will again confirm this decision as being within its discretion.
CONCLUSION:
As was discussed in the original order, once the Defendants have filed a Motion to Dissolve a Writ of Attachment, the burden of proof shifts to the Plaintiff to establish the facts constituting grounds for issuance of the Writ of Attachment. Stranco, Inc., v. Greater New Orleans Landfill, Inc., 02-0213 (La.App. 5 Cir. 06/26/02), 822 So.2d 791, 794. Under Article 3541(3) the plaintiff must prove that the defendant has converted or is about to convert his property into money or evidences of debt, with intent to place it beyond the reach of his creditors. In the instant case on both the original motion and the motion for reconsideration, the Court has determined that C C did not have creditor status at the time the writ was granted, nor did they effectively prove that BCC had any intent of putting the funds outside of C C's reach. In essence, C C could not prove the creditor aspect or the intent aspect necessary under Article 3541 for there to be a valid Writ. Since there can be no valid writ, this Court can not act as a retention cell for the disputed funds.
Under a Writ of Sequestration, once the defendants have filed a Motion to Dissolve the burden of proof is also shifted to the Plaintiff to establish facts constituting grounds for the issuance of writ, thus putting the Plaintiff to his proof for a second time. Sarpy Properties, Inc. v. Diamond Shoe Stores of LA, Inc., 761 So.2d 769, 99-1304 (La.App. 5 Cir. 5/17/00), writ denied 768 So.2d 604, 2000-1760 (La. 9/22/00). In the instant case, the plaintiff fails to prove that he has any of the requisite interests necessary in order for this Court to allow the Writ of Sequestration to remain in place.
Finally, it is within this Court's sole discretion to order attorney's fees to be paid by C C pursuant to CCP art. 3506 if there was a wrongful issuance of a writ.
Accordingly,
IT IS ORDERED that the Motion to Reconsider is hereby DENIED.
IT IS FURTHER ORDERED that the Order of July 7, 2003 Dissolving the Writs of Attachment and Sequestration and awarding attorney's fees and costs to the defendants is now made FINAL.
IT IS FURTHER ORDERED that the Order of September 22, 2003 Staying the Effect of the Court's decision pending reconsideration is hereby RESCINDED.