Dexia Credit Local v. Rogan
2010 U.S. App. LEXIS 24240
7th Cir.2010Background
- Dexia obtained a $124 million judgment against Rogan and pursued supplementary proceedings to locate Rogan assets.
- Dexia sought turnover of assets held in Rogan Children’s trusts (Domestic and Belizean Trusts) and the district court froze those assets.
- Rogan Children intervened; the district court conducted a bench trial and ruled that the trusts’ assets belonged to Rogan, ordering turnover and terminating the Children’s interests (except $30,000 gifted by a third party).
- Trusts were funded by Rogan-controlled entities; trustee Cuppy initially administered the trusts and was later removed.
- Diversity issues arose when the district court dismissed Belizean-Illinois defendants for lack of complete diversity; Rule 21 retroactivity rendered the May 2007 judgment final as to remaining parties.
- Dexia argued the district court acted within the scope of supplemental proceedings; the Rogan Children challenged alter ego/constructive-trust theories and requested a jury trial; issues also concerned statutes of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject matter jurisdiction and diversity | Dexia (and LaSalle) are properly diverse; no unincorporated association defeats diversity | Dexia-LaSalle could form an unincorporated association destroying complete diversity | Dexia and LaSalle are not an unincorporated association; complete diversity exists |
| Finality of judgment in supplemental proceedings | Rule 21 dismissals retroactively finalize judgments against remaining parties | Finality should be determined anew after dismissal of nondiverse parties | Rule 21 retroactivity preserves finality as to remaining parties; turnover order remains enforceable |
| Authority of district court in supplemental proceedings | Dexia may reach third parties’ assets under equitable theories to satisfy judgment | Only possession of assets by third parties or direct liability should be reached | District court acted within scope of supplemental proceedings; constructive/alter-ego theories permissible to reach Rogan assets held by trusts |
| Right to jury trial in turnover proceeding | Relief sought is legal and warranting a jury | Relief is equitable (specific performance/constructive trust) | Remedy was equitable; bench trial proper; no jury trial right in turnover proceeding |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (determines when corporate status affects citizenship for diversity)
- United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942 (7th Cir.2003) (jurisdiction must be resolved before other actions; de novo review)
- Downey v. State Farm Fire & Cas. Co., 266 F.3d 675 (7th Cir.2001) (citizenship of real party in interest governs diversity when entity is corporate)
- Sapperstein v. Hager, 188 F.3d 852 (7th Cir.1999) (subject-matter jurisdiction standards and review)
- Society of Lloyd's v. Estate of McMurray, 274 F.3d 1133 (7th Cir.2001) (explanation of corporate-like entities and diversity analysis)
- Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989) (Rule 21 retroactivity and dismissal; avoiding remand)