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In re Kimball Hill, Inc.

United States District Court, M.D. Florida, Tampa Division

February 20, 2018

In re KIMBALL HILL, INC. Debtor.
v.
CAST-CRETE CORPORATION, Defendant. KHI LIQUIDATION TRUST, Plaintiff,

          ORDER

          JULIE S. SNEED JUDGE

         THIS MATTER is before the Court on the Motion for Proceedings Supplementary to Execution, to Implead Third Parties, and for Issuance of Statutory “Notice to Appear” (“Motion”) (Dkt. 2), filed by SMS Financial J, LLC (“SMS”), the assignee of a judgment entered in favor of KHI Liquidation Trust (“KHI”) against Cast-Crete Corporation. For the reasons that follow, the Motion is granted in part and denied in part, without prejudice.

         BACKGROUND

         In November 2010, the United States Bankruptcy Court for the Northern District of Illinois (“Bankruptcy Court”) entered judgment in favor of KHI against Cast-Crete Corporation (“Judgment”) in the bankruptcy case of Kimball Hill, Inc. (Dkt. 1.) KHI assigned its rights, title, and interest in the Judgment to SMS, and the Bankruptcy Court entered an Assignment of Judgment on January 8, 2018. (Id.) On February 5, 2018, KHI registered the Judgment with this Court (Dkt. 1), and SMS filed a judgment lien certificate with Florida's Secretary of State on February 12, 2018 (“Judgment Lien Certificate”). (Dkt. 2, Ex. A.)

         SMS's manager avers that Cast-Crete Corporation has failed to satisfy the Judgment. (Dkt. 2, Ex. B ¶ 7.) SMS contends that Cast-Crete Corporation was administratively dissolved in September 2015 and is no longer in business. (Dkt. 2 ¶ 6; Dkt. 2, Ex. C.) Two entities, Cast-Crete USA, LLC and Cast-Crete USA, Inc., were registered in May 2013. (Dkt. 2, Exs. D-E.) These entities share Cast-Crete Corporation's principal address, and Shea Hughes, Cast-Crete Corporation's registered agent and CEO, is Cast-Crete USA, Inc.'s President and Cast-Crete USA, LLC's Manager. (Id., Exs. C-E.) Further, Cast-Crete USA, Inc. owns the fictitious names of “Cast-Crete Corporation, ” “Cast-Crete, ” and “Cast-Crete USA.” (Id., Ex. F.) SMS asserts that Cast-Crete USA, LLC and Cast-Crete USA, Inc. are “a continuation or alter ego” of Cast-Crete Corporation and that Cast-Crete Corporation transferred its assets to Cast-Crete USA, LLC and Cast-Crete USA, Inc. in an effort to hinder and delay SMS's ability to recover on the Judgment. (Dkt. 2 ¶¶ 10, 15-19.)

         SMS seeks an order initiating proceedings supplementary to execution, impleading Cast-Crete USA, LLC and Cast-Crete USA, Inc. as supplemental defendants in execution of the Judgment, and issuing a Notice to Appear to Cast-Crete USA, LLC and Cast-Crete USA, Inc. (Dkt. 2 at 7-8.) It further seeks that Cast-Crete USA, LLC and Cast-Crete USA, Inc. be added to the Judgment so that their assets may be used to satisfy the Judgment. (Id. ¶ 20.)

         ANALYSIS

         As an initial matter, the Court has jurisdiction to enforce the Judgment pursuant to 28 U.S.C. § 1963. Under that statute, “[a] judgment in an action for the recovery of money or property entered in any court of appeals, district court, [or] bankruptcy court . . . may be registered by filing a certified copy of the judgment in any other district . . . when the judgment has become final by appeal or expiration of the time for appeal . . . .” 28 U.S.C. § 1963. Here, KHI registered a certified copy of the Judgment entered by the Bankruptcy Court with this Court. (Dkt. 1.) Specifically, the Bankruptcy Court's Clerk certified that the filing was a true and correct copy of the Judgment and that no appeal of the Judgment was filed with the Bankruptcy Court. (Id.) With this registration, the Judgment has “the same effect as a judgment of the district court of the district where registered and may be enforced in like manner, ” and this procedure “is in addition to other procedures provided by law for the enforcement of judgments.” 28 U.S.C. § 1963.

         Under Federal Rule of Civil Procedure 69, the procedure for executing a money judgment and in proceedings supplementary to and in aid of execution “must accord with the procedure of the state where the court is located, ” unless a federal statute applies. Fed.R.Civ.P. 69(a)(1). Here, SMS argues that Florida law governing proceedings supplementary, Section 56.29 of the Florida Statutes, entitles it to the relief it requests in the Motion. (Dkt. 2.)

         I. Entitlement to Proceedings Supplementary

         Under Florida law, judgment creditors who file a motion and an affidavit stating that they hold an unsatisfied judgment or judgment lien are entitled to proceedings supplementary to execution. § 56.29(1), Fla. Stat. (2016). Therefore, all that is required to initiate proceedings supplementary is that “the judgment creditor have an unsatisfied judgment and file an affidavit averring that the judgment is valid and outstanding.” Fundamental Long Term Care Holdings, LLC v. Estate of Jackson ex rel. Jackson-Platts, 110 So.3d 6, 8 (Fla. 2d DCA 2012); Longo v. Associated Limousine Servs., Inc., No. 4D17-516, 2018 WL 527016, at *3 (Fla. 4th DCA Jan. 24, 2018) (“[B]ecause the judgment creditor submitted a motion and affidavit in compliance with section 56.29(1), the trial court erred in denying proceedings supplementary altogether.”).

         Here, SMS's manager avers that Cast-Crete Corporation has failed to satisfy the Judgment, and that the Judgment and Judgment Lien Certificate “remain valid, outstanding, and unsatisfied.” (Dkt. 2, Ex. B ¶¶ 7-8.) Accordingly, SMS is entitled to proceedings supplementary to execution, and the Motion is granted as to this request.

         II. Entitlement to Court's Issuing Notices to Appear

         Section 56.29(2) of the Florida Statutes “governs the process for bringing third parties into proceedings supplementary.” Longo, 2018 WL 527016, at *3, *4; see Kennedy v. RES-GA Lake Shadow, LLC, 224 So.3d 931, 933 (Fla. 1st DCA 2017) (citations omitted) (“After a party initiates proceedings supplementary, a creditor may pursue assets held by the debtor, assets of the debtor held by another, or assets that have been fraudulently transferred to another. But the rights of any third ...


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