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Peach Reo, LLC v. Rice

United States District Court, W.D. Tennessee, Western Division

July 11, 2017

PEACH REO, LLC, Plaintiff,
v.
RICHARD K. RICE, MALCOLM KYLE RICE, and THOMAS F. SCHAFFLER, Defendants.

          ORDER

          SAMUEL H. MAYS, JR. UNITED STATES DISTRICT JUDGE

         Before the Court are two motions. First, on September 15, 2016, Plaintiff Peach REO, LLC (“Peach REO”) filed a Motion to Reopen. (ECF No. 77 (“Second Mot. to Reopen”).) Defendants Richard K. Rice (“RKR”), Malcolm Kyle Rice (“MKR”), and Thomas F. Schaffler (“TFS”) -- collectively, “Defendants” -- have not filed a response to the Second Motion to Reopen, and the deadline for doing so has passed. L.R. 7.2(a)(2).

         Second, on September 15, 2016, Peach REO filed a Motion for Charging Order. (ECF No. 78 (“Charging-Order Mot.”).) On September 30, 2016, MKR filed a response to the Charging-Order Motion. (Resp. and Mem. in Opp'n to Pl.'s Mot. for Charging Order, ECF No. 80 (“Charging-Order Resp.”); see also Aff. of Malcolm Kyle Rice, ECF No. 79 (“MKR Aff.”).) RKR and TFS have not responded to the Charging-Order Motion, and the deadline for do- ing so has passed. L.R. 7.2(a)(2). On October 11, 2016, Peach REO filed a reply in support of the Charging-Order Motion. (Reply in Supp. of Mot. for Charging Order, ECF No. 81 (“Charging-Order Reply”).)

         For the following reasons, the Motion to Reopen is DENIED and the Charging-Order Motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         This history of this case was summarized in the March 2014 order granting Peach REO's summary-judgment motion and in the September 2016 order denying Peach REO's first motion to reopen. (Order Granting Pl.'s Mot. for Summ. J., ECF No. 72 (“March 2014 Order”); Order on Pl.'s Mot. to Reopen, ECF No. 76 (“September 2016 Order”).) Since the Court entered the September 2016 Order, Peach REO has filed the Second Motion to Reopen and the Charging-Order Motion, MKR has filed the Charging-Order Response, and Peach REO has filed the Charging-Order Reply.

         II. ANALYSIS

         A. Second Motion to Reopen

         The Second Motion to Reopen seeks the relief Peach REO requested in its June 2016 Motion to Reopen. (Compare Second Mot. to Reopen with Mot. to Reopen, ECF No. 74 (“First Mot. to Reopen”).) Both ask the Court to “reopen” this case “so that [Peach REO] may engage in post-judgment execution that requires orders from the Court.”[1] (Second Mot. to Reopen 1; see also First Mot. to Reopen 1 (similar request).) The First Motion to Reopen was denied. (September 2016 Order.) The Court construes the Second Motion to Reopen as a motion for reconsideration of the September 2016 Order.

         The standards governing the Second Motion to Reopen are unclear. Peach REO does not identify the Rule that applies. (See generally Second Mot. to Reopen.) The First Motion to Reopen shared this flaw. (See September 2016 Order 2 (“Peach REO does not cite any rule or statute as grounds for its Motion. It does not offer any relevant tests for the Court to apply.”).) The Second Motion to Reopen cites Rule 69(a)(1)[2] and section 48-249-509 of the Tennessee Code (Second Mot. to Reopen 1). Neither provides a standard for assessing the Second Motion to Reopen.

         Rule 54(b) governs revision of certain orders “before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” A judgment adjudicating all claims and the parties' rights and liabilities has been entered in this matter. (See note 1 supra.) Rule 54(b) does not apply. Rule 59 governs motions to alter or amend a judgment, and Rule 60(b) governs motions for relief from “a final judgment, order, or proceeding.” The relief sought in the Second Motion to Reopen does not correspond to either rule.

         The Court need not resolve this question. Under the Federal Rules and this district's Local Rules, movants seeking reconsideration or revision must generally show special circumstances that compel revisiting a prior order or judgment (e.g., new material facts, court mistake, etc.). See, e.g., Fed.R.Civ.P. 60(b) (setting requirements for motions for relief from judgments); L.R. 7.3(b) (setting district requirements for Rule 54(b) motions). Determining which rule applies is unnecessary if the Court considers the motion on its merits.

         The Second Motion to Reopen is without merit for the same reasons that the First Motion to Reopen was without merit. As the September 2016 Order explained:

After entering a judgment, a district court retains ancillary jurisdiction to ensure the judgment's execution. The Federal Rules of Civil Procedure provide for this . . . . The Sixth Circuit has observed that “‘[t]he scope of postjudgment discovery is very broad.'” After entry of judgment, Peach REO is a judgment creditor and Defendants are judgment debtors. Plaintiff may obtain discovery from Defendants to the extent [Rule] 69(a)(2) allows, and the Court need not “reopen” the case for Peach REO to do so.

         (September 2016 Order 3 (citations and footnote omitted).)

         Nothing in the Second Motion to Reopen supports a different analysis. Peach REO states that it has filed a motion for a charging order, and that “[a] charging order . . . requires action by this Court, as a court of competent jurisdiction.” (Second Mot. to Reopen ¶ 5.) Peach REO also states that it “anticipates filing additional motions for execution that require orders from the Court and/or writs to be issued by the Clerk.” (Id. ¶ 6.) Peach REO cites no authority for the proposition that this Court must reopen the case to be a “court of competent jurisdiction” and does not explain why the orders or writs it contemplates require reopening the case. This Court has ancillary jurisdiction to ensure that its previously entered judgment is executed. It will exercise that jurisdiction as appropriate based on the parties' requests. Reopening the case is unnecessary.

         The Second Motion to Reopen is DENIED.

         B. Charging-Order Motion

         1. Charging-Order Relief

         The Charging-Order Motion prays for relief in four paragraphs. (Charging-Order Mot. 2-3.) Paragraph 1 seeks a charging order “against the interests of [MKR]” in eight limited-liability companies (“LLCs”): (1) Cash Depot of Mississippi, LLC (“CDM”); (2) Cash Depot of Tennessee, LLC (“CDT”); (3) Cash Depot Title Loans of MS, LLC (“CDTLM”); (4) Palladian Partners IV, LLC (“PPIV”); (5) Palladian Partners 2001 LLC (“PP2001”); (6) Financial Management Services, LLC (“FMS”); (7) Palladian Partners V, LLC (“PPV”); and (8) M. Kyle Rice Properties, LLC (“MKRP”). (Id. at 2.) Paragraph 2 asks that the charging order “direct that [Peach REO] has the rights, to the full extent of the Judgment entered in favor of [Peach REO] against [MKR], as a transferee of the financial rights of [MKR]” in the eight LLCs. (Id. at 2-3.)

         Peach REO alleges that MKR is a member of PPIV and MKRP. (Charging-Order Mot. 2.) MKR denies this. (Charging-Order Resp. ¶ 2; MKR Aff. ¶ 9.) The Charging-Order Reply does not address MKR's denial. (See generally Charging-Order Reply.) The charging-order remedy applies when a judgment debtor is a member of an LLC. See, e.g., Larry E. Ribstein & Robert R. Keatinge, Ribstein and Keatinge on Limited Liability Companies § 7:8 (2017). When a judgment debtor is not a member of an LLC, the charging-order remedy is inappropriate as to that LLC. On this record, the Court cannot determine whether MKR is a member of PPIV or MKRP. The request for a charging order as to PPIV and MKRP is DENIED. In what follows, the remaining six LLCs -- CDT, FMS, CDM, CDTLM, PP2001, and PPV -- will be referred to as the “Relevant LLCs.”

         The Charging-Order Motion invokes Rule 69(a)(1). (Charg-ing-Order Mot. ¶ 3.) Under Rule 69(a)(1),

A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution -- and in proceedings supplementary to and in aid of judgment or execution -- must accord with the procedure of the state where the court is ...

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