Michigan Court of Appeals Case Summaries: June 7, 2014.

Byline: Michigan Lawyers Weekly Staff Report

(May 30, 2014) Civil Procedure Property in state provides jurisdiction to enforce judgment A judgment debtor's ownership of property in Michigan provides jurisdiction to conduct post-judgment enforcement proceedings without the necessity of showing personal jurisdiction over the debtor.

Overview Plaintiffs invested in what proved to be a racehorse-breeding Ponzi scheme that defendant operated. A Kentucky federal court entered a $65 million judgment against defendant. Plaintiffs filed this action in Isabella County Circuit Court to enforce the judgment. The court issued a restraining order freezing defendant's assets and ordered "a complete accounting of all transfers, encumbrances, distributions and dispositions within six (6) years prior to entry of this Order. Defendant argued that the court lacked personal jurisdiction over defendant. Plaintiffs argued that defendant had subsidiaries in Michigan and even if the court lacked personal jurisdiction, "jurisdiction was proper over defendant's assets located in Michigan, including extensive business records located in two storage lockers in Mt. Pleasant, Michigan." The court refused to set aside the restraining order, but modified it to include Michigan records only and ordered defendant to create an inventory and privilege log of the documents. Defendant resisted the order in a series of motions and did not produce the records "within the allotted time." The trial court found defendant in contempt, and appointed a receiver to take charge of, and preserve, the records at issue.

Jurisdiction "(P]laintiffs maintain that, in the context of this postjudgment collection action, personal jurisdiction was not required because defendant owned property in Michigan. We agree(.] ... "(C]onsistent with Electrolines, Inc v Prudential Assurance Co, 260 Mich App 144; 677 NW2d 874 (2003), we conclude that, where a judgment debtor owns property in Michigan, jurisdiction is proper in postjudgment enforcement proceedings without the necessity of demonstrating personal jurisdiction over the debtor. ... "(H]aving chosen to store business records in Michigan, defendant has rendered that property subject to Michigan's jurisdiction in this postjudgment collection action, including discovery efforts and equitable relief, without regard for the trial court's personal jurisdiction over defendant."

Contempt order Defendant was held in contempt for not complying with the trial court's verbal order to create "an inventory and privilege log related to defendant's Michigan assets within 30 days." The trial court issued the order orally from the bench. "(I]t is generally a settled maxim that courts speak through their judgments and decrees, and not their oral statements or written opinions. ... "When assessing whether an oral ruling has equal effect to that of a written order, we consider whether the oral ruling contains indicia of formality and finality comparable to that of a written order. ... "We conclude that such indicia are present in this case. ... (T]he 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 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 ... "Given the formality of the court's oral ruling and defendant's own recognition of its applicability, defendant's contention that the order was not final until January 25, 2013 appears unpersuasive and disingenuous. Instead, the order at issue came into being on November 2, 2013, allowing defendant 30 days to comply with its directives."

Compliance "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 of 2013, defense counsel conceded that, despite knowing full well that the trial court had ordered the creation of an inventory and privilege log, defendant had taken no action to comply with this order based on the belief that compliance was impossible due to the voluminous number of records. "The cost or difficulty of inventorying these records, however, did not make compliance truly impossible and does not excuse defendant's unequivocal disregard of the order." Affirmed. Arbor Farms, et al. v. Geostar Corp. (MiLW No. 07-85349 - 10 pages) (Michigan Court of Appeals) (Hoekstra, J., joined by Stephens and Meter, JJ.) On appeal from the Isabella County Circuit Court; Chamberlain, J.

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