In this postjudgment collection action to enforce a foreign money judgment, defendant appeals by right the trial court’s civil contempt order. Because the trial court had jurisdiction over defendant’s property in Michigan and did not abuse its discretion by appointing a receiver over defendant’s Michigan property or by holding defendant in contempt for its failure to comply with a court order, we affirm.
Between 2001 and 2005, ClassicStar, LLC, which was owned by defendant during this period, engaged in a Ponzi scheme that involved the leasing of thoroughbred racehorses for breeding purposes. In 2006, plaintiffs, who are individuals and entities that had invested in this scheme, filed suit against defendant and others in the United States District Court for the Eastern District of Kentucky, asserting claims of breach of contract, fraud, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1961 et seq. Ultimately, plaintiffs prevailed on a motion for summary disposition, and, in November 2011, the federal district court entered an amended judgment against defendant in the amount of $65,042,084.61.
On May 17, 2012, plaintiffs began a postjudgment collection action against defendant in Michigan by filing a notice of entry of a foreign judgment in the Isabella
IT IS HEREBY ORDERED that:
A. GeoStar Corporation (“GeoStar”) is ordered to maintain the status quo and is hereby restrained from transferring, encumbering, distributing or otherwise disposing of any assets pursuant to MCL 600.6116, including, but not limited to exercising its rights as the sole shareholder of CBM Resources.
B. GeoStar is further ordered to hold any amounts, including but not limited to any distributions, due and owing to GeoStar from CBM Resources, in escrow for the benefit of Plaintiffs. This provision applies to amounts which are due and owing as of the date of this Order or which become due and owing during the time this Order remains in effect.
C. GeoStar is further ordered to provide, within thirty (30) days of the date of this Order, a complete accounting of all transfers, encumbrances, distributions and dispositions within six (6) years prior to entry of this Order.
On two occasions thereafter, defendant moved to set aside the restraining order, asserting in part that the
A week later, plaintiffs provided defendant notice of submission of an order modifying the court’s May 17, 2012 restraining order under the “seven-day rule,” see MCR 2.602(B)(3). Defendant objected to the proposed order, asserting that it inaccurately set forth the trial court’s November 2, 2012 ruling. Specifically, defendant argued that while the trial court limited its ruling to defendant’s Michigan assets, the proposed order referred to assets generally; and further, while the trial court’s ruling required defendant to “inventory” all of defendant’s Michigan assets generally, the proposed order required defendant to “produce” all records remaining in storage and in possession of defendant’s accountant. The trial court did not sign the proposed order and instead scheduled a hearing for January 25, 2013.
Three days before that hearing, on January 22, 2013, defendant filed an accounting, in which defendant
At the January 25, 2013 hearing on defendant’s objection to the proposed order, defendant again argued that the trial court lacked personal jurisdiction and also that plaintiffs sought to execute against business records which were not subject to execution and to impermissibly use a judgment to gain access to those records. Viewing defendant’s arguments as an attempt to relitigate the earlier motion to set aside the restraining order, the trial court declined to revisit the matter and noted that it would not tolerate defendant’s efforts at delay or its “papering the court and opposing party with a bunch of paperwork.” The hearing ended with the trial court concluding that defendant was in violation of the trial court’s November 2, 2012 ruling because the inventory of assets was due by December 3, 2012. Ultimately, the trial court signed plaintiffs’ proposed order modifying the May 17, 2012 restraining order.
In early February 2013, defendant moved for reconsideration, and thereafter plaintiffs moved to hold defendant and its counsel in contempt of court for failing to comply with the court’s orders regarding the business records. In response, defendant again asserted that the trial court lacked jurisdiction and that the business records were not subject to execution. Defen
On February 19, 2013, the trial court denied defendant’s motion for reconsideration and found defendant in contempt of court for failing to produce, within the allotted time, an inventory of assets and documents located in Michigan. To remedy defendant’s refusal to comply, the trial court appointed a receiver over defendant’s Michigan assets, including documents, explaining that “the receiver is to take control of the assets and documents located in Michigan and to prepare an inventory for the court that includes electronic documents as well as non-electronic documents.” In response to arguments from defense counsel that the restraining order mandated discovery of the storage locker contents, the trial court clarified that it was not ordering production of the records at that time, but simply preservation. To this effect, the trial court entered an order modifying the January 25, 2013 restraining order by omitting the reference to “production” of documents, and indicating that defendant must “preserve” all records located in storage facilities and in the possession of defendant’s accountant. That same day, the trial court entered an order holding defendant (but not defense counsel) in contempt of the court’s November 2, 2012 ruling and the January 25, 2013 order as amended. Defendant now appeals as of right.
On appeal, defendant first argues that the trial court lacked personal jurisdiction over defendant and, for this reason, could not order discovery or injunctive relief. In response, plaintiffs maintain that, in the context of this postjudgment collection action, personal jurisdiction
Our review of jurisdictional questions is de novo. Electrolines, Inc v Prudential Assurance Co,
When a party seeks enforcement of a foreign judgment in Michigan, there exists a foundational jurisdictional requirement that must be satisfied with regard to the judgment debtor’s person or property. Electrolines,
Whereas “a state has jurisdiction to adjudicate a claim on the basis of presence of property in the forum only where the property is reasonably connected with the claim, an action to enforce a judgment may usually be brought wherever property of the defendant is found, without any necessary connection between the underlying action and the property, or between the defendant and the forum.” [Id. at 161, quoting 1 Restatement Foreign Relations Law of the United States, 3d, part rV¡ ch 8, subch A, § 481, comment h, p 597 (1986).]
The reason for this wider jurisdiction can be found in Shaffer v Heitner,
Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.
Stated differently, it would be inequitable and irrational to propose that a debtor could avoid enforcement of a judgment merely “by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him.” Id. at 210. See also Lenchyshyn v Pelko Electric, Inc,
In the present case, defendant concedes ownership of personal property in Michigan in the form of extensive business records located within the state. Given the presence of defendant’s property in Michigan, plaintiffs were not required to demonstrate the existence of the trial court’s personal jurisdiction over defendant. Rather, the presence of defendant’s property within the state was, on its own, sufficient to establish jurisdiction in this postjudgment collection proceeding. Cf. id. (concluding that a showing of personal jurisdiction was required because the plaintiff failed to identify any property in Michigan owned by the defendants).
Despite its ownership of property in Michigan, defendant nonetheless maintains that personal jurisdiction was required because the trial court essentially ordered discovery of the business records in question as well as equitable relief in the form of an injunction. More broadly, defendant’s argument involves the assertion that the jurisdictional requirements in postjudgment enforcement proceedings must vary depending on the
Recognizing the wider jurisdiction applicable in enforcement actions, and cognizant of the rationale for this broad jurisdiction, we reject defendant’s contention that jurisdictional requirements must differ in post-judgment proceedings based on the nature of the enforcement sought. Indeed, to follow defendant’s rationale would, contrary to the rationale espoused in Shaffer,
Next, defendant challenges the trial court’s contempt order, arguing that there was no proof that defendant willfully disregarded or disobeyed the order.
This Court reviews a trial court’s contempt order for an abuse of discretion, while the underlying factual findings are reviewed for clear error. Davis v Detroit Fin Review Team,
Contempt of court is defined as a “wilful act, omission, or statement that tends to impair the authority or impede the functioning of a court.” In re Contempt of Robertson,
In this case, on November 2, 2012, the trial court verbally ordered the creation of an inventory and a privilege log related to defendant’s Michigan assets within 30 days. The trial court order in this regard was a verbal one, and it is a settled maxim that courts generally speak through their judgments and decrees, and not their oral statements or written opinions.
We conclude that such indicia are present in this case. At the November 2, 2012 hearing, before ruling, the trial court unequivocally indicated that “this is the ruling of the Court.” It then stated that it was modifying the May 17, 2012 restraining order “to simply restrain transfer or destruction and require preservation of all assets in Michigan that belong to the Defendant.” It stated that an inventory of assets in Michigan was to be created, as well as a privilege log, and that defendant had 30 days to do so. These statements reflect a formal resolution, not a tentative conclusion or merely loose impressions of the matter. Indeed, although it is not for a party to determine the validity of a court’s order, Davis,
Further, we discern no clear error in the trial court’s determination that it was not impossible for defendant to comply with the November 2, 2012 order. At the contempt hearing in February 2013, defense counsel conceded that, despite knowing full well that the trial court had ordered the creation of an inventory and a privilege log, defendant had taken no action to comply with this order because defendant believed that compliance was impossible given the voluminous number of records. The cost or difficulty of inventorying these records, however, did not make compliance truly impossible and did not excuse defendant’s unequivocal disregard of the order. Cf. Kirby v Mich High Sch Athletic Ass’n,
Lastly, defendant contends that the trial court’s appointment of a receiver was an abuse of discretion. In particular, defendant asserts that appointment of a receiver was not warranted under MCL 600.2926, and that, by appointing a receiver, the trial court: (1) interfered with the jurisdiction of the Kentucky district
This Court reviews for an abuse of discretion the trial court’s decision to appoint a receiver. Ypsilanti Fire Marshal v Kircher (On Reconsideration),
MCL 600.2926 permits “[c]ircuit court judges in the exercise of their equitable powers, [to] appoint receivers in all cases pending where appointment is allowed by law.” Under this provision, a circuit court has “broad jurisdiction” to appoint a receiver in appropriate cases. Reed v Reed,
[MCL 600.2926] has been interpreted as authorizing a circuit court to appoint a receiver when specifically allowed by statute and also when no specific statute applies but the facts and circumstances render the appointment of a receiver an appropriate exercise of the trial court’s equitable jurisdiction. The purpose of appointing a receiver is to preserve property and to dispose of it under the order of the court. In general, a receiver should only be appointed in*391 extreme cases. But a party’s past unimpressive performance may justify the trial court in appointing a receiver. [Reed,265 Mich App at 161-162 (quotation marks and citations omitted).]
Thus, in cases where a money judgment has entered, a circuit court has the statutory authority to appoint a receiver of any property the judgment debtor has or may thereafter acquire, MCL 600.6104(4), and the equitable authority to make such an appointment when other approaches have failed to bring about compliance with the court’s orders, see Shouneyia v Shouneyia,
In this case, the trial court did not abuse its discretion by appointing a receiver over defendant’s property located in Michigan. The original restraining order was entered in May 2012 and more than nine months later, in February 2013, defendant still had not made any effort to comply with the trial court’s orders, instead continuing to argue that the records were too voluminous to inventory. Given defendant’s complete failure to comply with the court’s orders, and plaintiffs’ concern that defendant’s accountant had already liquidated some of defendant’s Michigan assets, the appointment of a receiver to preserve defendant’s records and to create an inventory and a privilege log of those records was a proper exercise of the court’s equitable and statutory power to appoint a receiver. MCL 600.6104(4). See also Reed,
In protesting the appointment of a receiver, defendant further argues that the appointment of a receiver
Defendant’s remaining arguments regarding the receiver misconstrue the receiver’s role, as well as what plaintiffs are asking for in this postjudgment collection action. First, defendant protests that it will suffer prejudice because the receivership will deprive it of its ability to defend against other creditors in a related federal criminal investigation, and would also destroy its privilege over certain documents. The receiver, however, is an arm of the court and is not intended to benefit either of the parties but “to protect and benefit both parties equally.” Ypsilanti Fire Marshal,
Second, defendant asserts that appointment of a receiver violates its right to be free from unreasonable searches and seizures. US Const, Am IV; Const 1963, art 1, § 11. In support, defendant cites Rosenthal v Muskegon Circuit Judge,
Finally, defendant also contends that the receivership is tantamount to an execution on its business records contrary to the principle that property must have some monetary value to merit execution on that property. See Berar Enterprises, Inc v Harmon,
Affirmed. Plaintiff, being the prevailing party, may tax costs pursuant to MCR 7.219.
Notes
MCL 600.6116(1) provides as follows:
An order for examination of a judgment debtor may contain a provision restraining the judgment debtor from making or suffering any transfer or other disposition of, or interference with any of his property then held or thereafter acquired by or becoming due to him not exempt by law from application to the satisfaction of the judgment, until further direction in the premises, and such other provisions as the court may deem proper.
Plaintiffs also argue that the trial court in fact had personal jurisdiction over defendant. Because we conclude that the trial court’s jurisdiction over defendant’s property sufficed in this postjudgment collection action, we need not reach the question of the trial court’s personal jurisdiction over defendant.
Defendant provides no authority, nor are we aware of any, for the proposition that, despite a debtor’s ownership of property in the state, a court may not enforce a foreign judgment because personal jurisdiction over the debtor is lacking. On the contrary, multiple jurisdictions rely on footnote 36 of Shaffer to hold that personal jurisdiction is not required to enforce a foreign judgment against a nonresident defendant. See, e.g., Lenchyshyn,
As noted, MCL 691.1173 indicates that a foreign judgment filed in a Michigan court “has the same effect... as a judgment of [a Michigan
To the extent defendant contends no valid order existed because the trial court lacked personal jurisdiction, these jurisdictional contentions are without merit for the reasons already explained in this opinion.