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Wells Fargo Equipment Finance, Inc. v. Asterbadi

United States District Court, D. Maryland, Southern Division

March 2, 2017




         More than two decades after the United States District Court for the Eastern District of Virginia entered a judgment (“Judgment”) against Nabil J. Asterbadi, he seeks a permanent injunction to prohibit its enforcement, or alternatively an accounting to determine the current amount of the Judgment, as well as discovery to determine whether the Judgment was assigned to Plaintiff Wells Fargo Equipment Finance, Inc. (“Wells Fargo”) and, if so, how much is due under the Judgment. ECF No. 58. Wells Fargo opposes Dr. Asterbadi's motion and the discovery he seeks.[1] Dr. Asterbadi has not shown that he has suffered injury, and therefore he is not entitled to a permanent injunction. Additionally, this Court and the Fourth Circuit already determined that the Judgment was assigned to Wells Fargo. Yet, considering Dr. Asterbadi's request for an accounting and, in the interest of justice, construing Dr. Asterbadi's motion as a Rule 60(b)(5) motion for relief from a judgment that has been, at least in part, satisfied, I will grant the motion insofar as Dr. Asterbadi seeks discovery to determine the amount currently due on the Judgment before Wells Fargo executes on it.


         The United States District Court for the Eastern District of Virginia entered a judgment (“Judgment”) in favor of CIT Group/Equipment Finance Inc. (“CIT”) and against Nabil J. Dr. Asterbadi (the resident agent for and a stockholder of Zachair Ltd.) on October 4, 1993. See Wells Fargo Equip. Fin., Inc. v. Asterbadi (“Wells Fargo I”), No. PWG-15-1371, 2015 WL 5521797, at *1 & n.1 (D. Md. Sept. 16, 2015). CIT, formerly the plaintiff in this action, filed a Certification of Judgment for Registration in Another District, ECF No. 1, in this Court on August 27, 2003.[2] CIT also moved for a permanent injunction (i) to prevent Defendant Asterbadi from transferring his corporate stock certificates in Zachair Ltd. and (ii) to require Dr. Asterbadi to turn over these certificates to CIT in partial satisfaction of the Judgment. CIT's Mot., ECF No. 3. Dr. Asterbadi consented to the portion of the motion enjoining him from transferring the certificates but contested the portion of the motion requiring him to turn over the certificates to CIT. Def.'s Opp'n to CIT's Mot., ECF No. 4. The Court did not resolve the motion at that time.

         Over a year later, on November 23 and December 3, 2004, CIT filed two Notices of Partial Satisfaction of the Judgment. The first noted a credit of $1, 699, 327.96 from “sale of collateral” in 1993;[3] a voluntary $259, 740.20 reduction of attorneys' fees; and $81, 500 in “credits against accrued interest, ” leaving a “principal due of $586, 682.01 and attorneys' fees due of $88, 002.30.” ECF No. 6. The second noted the same amounts due, in addition to “accrued but unpaid interest of $1, 175, 009.98 as of December 3, 2004, for a total due as of December 3, 2004, of $1, 849, 694.20, ” with interest continuing to accrue “at the rate of $289.32 per day.” ECF No. 8.

         And there things stood (in this Court) for more than a decade. Then, on April 7, 2015, Counsel for CIT filed a notice with this Court that CIT had assigned its interest in the Judgment to Plaintiff Wells Fargo Equipment Finance, Inc. (“Wells Fargo”) and that Counsel would be representing Wells Fargo in this case. Notice of Assignment of Judgment, ECF No. 9. Wells Fargo then attempted to collect on the Judgment, and Dr. Asterbadi sought a protective order, asking the Court to “prohibit[] the taking of a post judgment deposition of Zachair, Ltd., by Wells Fargo Equipment Finance, Inc.” and to “declar[e] the judgment of the United States District Court for the Eastern District of Virginia . . . unenforceable and [to] permanently enjoin[] enforcement of the judgment in Maryland.” See Def.'s Mot. for Protective Order 1, ECF No. 11. On August 26, 2015, Wells Fargo filed a Request and Notice for Renewal of Judgment, ECF No. 25, asking “the Clerk [to] note the Court's records to reflect that the Judgment is renewed as of the date this Request was filed.”

         This Court's Previous Orders

         In a September 16, 2015 Memorandum Opinion and Order, ECF No. 26, I found that “CIT . . . assigned its interest in the 1993 Judgment to Plaintiff Wells Fargo”; the assignment was filed in this Court, albeit by Dr. Asterbadi, not by the judgment creditor; Wells Fargo, now Plaintiff in this action, has standing to enforce the Judgment;[4] and the Judgment is enforceable because the time during which it can be enforced started to run on the date the Judgment was certified in this Court, i.e., August 27, 2003. Wells Fargo I, 2015 WL 5521797, at *1-2 (citing Assignment Agr.). Yet I also found that Plaintiff had failed to meet the burden necessary to grant its decade-old motion for permanent injunctive relief on the contested portion of the motion. Id. As a result, I granted in part and denied in part Plaintiff's Motion for Permanent Injunction, without ruling on Defendant's Motion for Protective Order. Id. at *4.

         Dr. Asterbadi appealed, and I denied his Motion for Protective Order without prejudice pending the appeal. ECF Nos. 27, 30. I approved the parties' Stipulation and Consent Order for Preservation of Assets, Interim Stay of Discovery and Execution on Judgment, Tolling of Limitations and for Other Relief, ECF No. 43, which restrained Dr. Asterbadi from “selling, removing, dissipating, alienating, transferring, assigning, pledging[, ] encumbering, [or] granting any interest [in] or similarly dealing with any [of his] Assets” or asking or helping anyone else to do so. ECF No. 44. It also stayed discovery in aid of execution and execution upon the Judgment, and it stayed any limitations periods “that may be applicable to claims setting aside or avoiding voidable transactions or transfers by Defendants for Purposes of Plaintiff's collection on the underlying judgment.” Id. I also issued a Memorandum Opinion and Order on May 26, 2016, granting Dr. Asterbadi's motion to stay and extending the stipulated agreement to protect Wells Fargo's interests until the Fourth Circuit ruled on the appeal. ECF No. 47.

         The Fourth Circuit's Ruling

         The Fourth Circuit affirmed the September 16, 2015 Memorandum Opinion and Order regarding standing. Wells Fargo Equip. Fin., Inc. v. Asterbadi (“Wells Fargo II”), 841 F.3d 237, 239-40 (4th Cir. 2016) (on docket as ECF No. 49). Noting that Md. Rule 2-624 (applicable under Fed.R.Civ.P. 69(a)(1)) “provides that the assignee of a judgment may enforce the judgment in its own name when it files ‘the assignment . . . in the court where the judgment was entered, '” the Fourth Circuit concluded that Wells Fargo had standing to enforce the Judgment in this Court, despite having filed only a notice of assignment rather than the actual assignment, because “Asterbadi filed the actual assignment, . . . so that the district court had before it both the notice of assignment and the assignment itself.” Id. at 243 (quoting Md. Rule 2-624) (emphasis in Wells Fargo II). It also agreed with me that the registration was not, as Dr. Asterbadi argued, “merely a ‘ministerial act.'” Id. at 245. In reaching its conclusion, it construed 28 U.S.C.§ 1963, governing registration of judgments in other districts,

to elevate a registered money judgment such that it functions in every way as a new judgment. It follows that with the registered judgment functioning as a new judgment, the limitations period for enforcement runs from the date of registration. This is the conclusion that every court of appeals that has construed § 1963 has reached.

Id. at 245-46. The Fourth Circuit observed that, under Maryland law, “a money judgment expires 12 years from the date of entry or from the date of renewal, if it is renewed before its expiration.” Id. at 243 (citing Md. Rule 2-625). Thus, given that CIT registered it on August 27, 2003 and “Wells Fargo renewed the judgment for another 12 years on August 26, 2015, the registered judgment remains enforceable in Maryland to August 26, 2027.” Id. at 245. The Fourth Circuit held:

[T]he registration of the Virginia district court judgment in the District of Maryland at a time when the judgment was not time-barred by Virginia law functions as a new judgment in the District of Maryland, and Maryland's 12-year limitations period for enforcement on the judgment begins running from the date of registration.

Id. at 246. Thus, its holding was limited to the time bar issue. See Id. But, significantly, in reaching its holding, the Fourth Circuit observed that “[e]ffective June 29, 2007, CIT sold and assigned its judgment against Asterbadi to Wells Fargo as part of an asset purchase agreement.” Id. at 240-41.

         Enforcement of the Judgment, and Post-Judgment Discovery

         Dr. Asterbadi filed a pre-motion conference request letter, ECF No. 53, and I held a conference call on December 15, 2016. I permitted Dr. Asterbadi to file a motion regarding the enforceability of the Judgment and other issues raised in his letter. ECF No. 57. Dr. Asterbadi filed a Motion to Permanently Enjoin Enforcement of Judgment or in the Alternative for Accounting to Determine Unpaid Balance on the Federal Judgment and Accrued Interest (“Perm. Inj. Mot.”). ECF No. 58. The Permanent Injunction Motion now is ripe. ECF Nos. 61, 63.

         During the December 15, 2016 call, I also lifted the stay on discovery. I did not lift the Consent Order as it pertained to preservation of assets, prohibiting Dr. Asterbadi from “selling, removing, dissipating, alienating, assigning, pledging[, ] encumbering, granting any interest or similarly dealing with any assets of the Defendant” or asking or helping anyone else to do so. Jan. 21, 2016 Consent Order, ECF No. 44. I directed the parties to file a proposed discovery plan and schedule by January 16, 2017 and to read Rule 26(g) and certify to me that they have done so by January 16, 2017. They have done neither.

         Instead, Dr. Asterbadi filed a letter stating that the parties do not agree on the scope of discovery, ECF No. 65 (and Wells Fargo filed a response, ECF No. 69, and Dr. Asterbadi filed a reply, ECF No. 70, both in violation of the Case Management Order ¶ B(3), ECF No. 17).[5] Dr. Asterbadi argues in his letter that enforcement of the Judgment should be barred because CIT and Wells Fargo took no action for a decade, and he wants discovery to find out why. Dr. Asterbadi also seeks discovery to determine what CIT assigned to Wells Fargo, and specifically whether it intended to assign the Judgment to Wells Fargo. Additionally, he wants to determine what payments CIT received toward the Judgment and how it treated the payments it received. And, he raises the question of whether the amount due is governed by the Judgment or the Forbearance Agreement that the parties later signed.

         Wells Fargo responded to say that it questions whether Dr. Asterbadi is entitled to any post-judgment discovery beyond what Wells Fargo already agreed to produce. Wells Fargo notes that the discovery rules provide for the judgment creditor, not the judgment debtor, to engage in post-judgment discovery. Wells Fargo contends that Dr. Asterbadi is indirectly challenging the order already entered against him (and affirmed by the Fourth Circuit) and no discovery is necessary, relevant, or allowed.

         These discovery disputes raise the same issues addressed in the Permanent Injunction Motion briefing. Therefore, I will resolve the Permanent Injunction Motion and then define the scope of discovery in this case.

         Permanent Injunction Motion

         To obtain a permanent injunction, “a plaintiff must show (1) irreparable injury, (2) remedies at law are inadequate to compensate for that injury, (3) the balance of hardships between the plaintiff and defendant warrants a remedy, and (4) an injunction would not disserve the public interest.” Raub v. Campbell, 785 F.3d 876, 885 (4th Cir. 2015) (quoting Monsanto Co. v. Geerston Seed Farms, 561 U.S. 139, 156-57 (2010)). “An injunction is a matter of equitable discretion; it does not follow from success on the merits as a matter of course.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 32 (2008). Curiously, neither party addresses the standard in their briefs.[6]

         Insofar as it is, indeed, injunctive relief that Dr. Asterbadi seeks, he cannot, as the judgment debtor (not the plaintiff), show irreparable injury at this juncture. The Judgment is based on the judgment creditor's injury. And, while Dr. Asterbadi argues that Wells Fargo is not entitled to his assets, he has failed to provide sufficient evidence in support of this argument.[7]Indeed, he seeks discovery to obtain that evidence, should it exist. Certainly, Wells Fargo could locate Dr. Asterbadi's assets, execute on the Judgment, obtain more than Dr. Asterbadi contends it is entitled to, and entangle what (according to Dr. Asterbadi) is rightfully Dr. Asterbadi's in a Gordian knot. But, even if that were likely-which I cannot determine on the record before me-, this is not a motion for a preliminary injunction, where Dr. Asterbadi only would need to show a likelihood of success on the merits. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). And, that possible injury is not injury that Dr. Asterbadi “has suffered.” See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (“A plaintiff [seeking a permanent injunction] must demonstrate: (1) that it has suffered an irreparable injury . . . .” (emphasis added)); see Dominion Transmission, Inc. v. Town of Myersville Town Council, 982 F.Supp.2d 570, 580 (D. Md. 2013) (same). Thus, Dr. Asterbadi is not entitled to a permanent injunction. See eBay, 547 U.S. at 391.

         But, Dr. Asterbadi also seeks an accounting, and it appears that what he wants to do is challenge both Wells Fargo's ability to enforce the Judgment against him and the scope of the unpaid balance of that Judgment, if enforceable by Wells Fargo. In the interest of justice, I will construe his motion as one for relief from the Judgment under Fed.R.Civ.P. 60(b)(5) or (6). See Fed. R. Civ. P. 1. Rule 60(b) provides that, “within a reasonable time, ” a judgment debtor may file a motion asking for relief from a judgment on the grounds that “the judgment has been satisfied, ” or for “any other reason that justifies relief.” Fed.R.Civ.P. 60(b)(5)-(6).

         Whether CIT Assigned the Judgment to Wells Fargo

         Dr. Asterbadi continues to insist that Wells Fargo cannot enforce the Judgment because “the assignment and assumption agreement [between CIT and Wells Fargo] was ineffective to assign the federal judgment against Asterbadi.” Def.'s Perm. Inj. Mot. 14. If this were the case, it would be a “reason that justifies relief” from the Judgment under Fed.R.Civ.P. 60(b)(6). Wells Fargo counters that the law of the case, the mandate rule, and the Rooker-Feldman doctrine bar consideration of this issue. Pl.'s Opp'n 3, 14.

         1. Rooker-Feldman

         Wells Fargo argues that Rooker-Feldman bars this Court's consideration of whether the Judgment was properly assigned to Wells Fargo. Pl.'s Opp'n 14. But Rooker-Feldman, a jurisdictional doctrine, see Friedman's, Inc. v. Dunlap, 290 F.3d 191, 196 (4th Cir. 2002), is inapplicable. The Rooker-Feldman doctrine “holds that ‘lower federal courts are precluded from exercising appellate jurisdiction over final state-court judgments.'” Thana v. Bd. of License Comm'rs for Charles Cnty., Md., 827 F.3d 314, 319 (4th Cir. 2016) (quoting Lance v. Dennis, 546 U.S. 459, 463 (2006) (per curiam)). Thus, by invoking the doctrine, Wells Fargo essentially is asking this Court to find that it does not have jurisdiction over the very suit that Wells Fargo brought. See Id. The doctrine “assesses only whether the process for appealing a state court judgment to the Supreme Court under 28 U.S.C. § 1257(a) has been sidetracked by an action filed in a district court specifically to review that state court judgment.” Id. at 320. It is “confined to . . . cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005)) (emphasis in Thana). To emphasize the narrow scope of the doctrine, “the Supreme Court has noted repeatedly that, since the decisions in Rooker and Feldman, it has never applied the doctrine to deprive a district court of subject matter jurisdiction, ” and, “since Exxon, [the Fourth Circuit has] never, in a published opinion, held that a district court lacked subject matter jurisdiction under the Rooker-Feldman doctrine.” Id.

         Here, the judgment creditor, which prevailed under the “state-court judgment rendered before the district court proceedings commenced, ” brought this litigation, not Dr. Asterbadi, the “state-court loser” at the time CIT filed this case. Id. Moreover, the Rooker-Feldman doctrine does not apply because of the procedural posture of the state court litigation, in which the Maryland Court of Special Appeals recently reversed the orders of the state trial courts and remanded the cases in an unreported opinion, Asterbadi v. Wells Fargo (“Asterbadi”), Nos. 1590 and 2174, slip op. at 1 (Md. Ct. Spec. App. Feb. 21, 2017). See Thana, 827 F.3d 314 at 321. Dr. Asterbadi is not asking this Court “to exercise appellate jurisdiction over a final judgment from ‘the highest court of a State in which a decision could be had'”; he did not file this suit or remove it to this Court. Id. (quoting 28 U.S.C. § 1257(a) (emphasis added)). And, given that the state court litigation is still “on track for potential review by the U.S. Supreme Court, ” and this suit would not “bypass the Supreme Court's appellate jurisdiction under 28 U.S.C. § 1257(a) over any relevant state court judgment, ” the suit in this Court does not implicate the purpose behind ...

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