
USCA1 Opinion

	




                            United States Court of Appeals                                For the First Circuit                                 ____________________        No. 95-1270                             AETNA CASUALTY & SURETY CO.                                 Plaintiff, Appellee,                                          v.                                   JACK MARKARIAN,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. William G. Young, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                           Stahl and Lynch, Circuit Judges,                                            ______________                            and O'Toole, District Judge.*                                         ______________                                 ____________________            Kenneth  R. Berman, with whom Rhonda B. Parker and Sherin & Lodgen            __________________            ________________     _______________        LLP were on brief, for appellant.        ___            David S.  Douglas, with  whom Howard  S. Veisz,  Gregg Kanter  and            _________________             ________________   ____________        Kornstein, Veisz &  Wexler LLP,  and Glenda Ganem  and McGovern,  Hug,        ______________________________       ____________      _______________        Welch & Ganem LLP were on brief, for appellee.        _________________                                 ____________________                                     June 4, 1997                                 ____________________                                    ____________________        *Of the District of Massachusetts, sitting by designation.                      LYNCH, Circuit Judge.  Jack Markarian, against whom                      LYNCH, Circuit Judge.                             _____________            appellee  Aetna  Casualty  and  Surety Company  has  a  civil            judgment,  appeals from  the  entry of  a  writ of  ne  exeat                                                                _________            against  him.   The  writ, which  is  essentially a  form  of            equitable  bail,  was issued  ex  parte  in the  District  of            Massachusetts in  February 1995.  It  prohibits Markarian, an            American citizen who is employed and lives with his family in            Massachusetts, from leaving the state or removing  any of his            assets from  the state without  the court's permission.   The            writ required Markarian to surrender his passport to a United            States Marshal, and  violation of its terms is  punishable by            detention in a federal facility.                      Markarian    raises     federal    statutory    and            constitutional objections  to the issuance  of the writ.   We            vacate the writ  without reaching the constitutional  issues,            although  they  are not  frivolous.   The  writ of  ne exeat,                                                                ________            governed by Fed. R. Civ.  P. 69 and Mass. R. Civ.  P. 4.3(c),            is  not available as a  tool in an  ordinary civil collection            action like this.   It  may only issue  in furtherance of  "a            judgment  or order requiring  the performance of  an act, the            neglect or  refusal to perform  which would be  punishable by            the court as a contempt."  Mass. R. Civ. P. 4.3(c).   The All            Writs  Act, 28  U.S.C.    1651, does  not  negate this  state            requirement for issuance of the writ.                                          I.                      The facts of the underlying civil action brought by            Aetna  against  Markarian are  of  little  importance to  the            present appeal.  Suffice it to  say that Aetna was the victim            of  a fraudulent  autobody insurance  claim scheme,  and that            Markarian along  with some  relatives and the  companies they            controlled were the perpetrators of the scheme.  A e t n a            brought  suit in  federal  district  court in  Massachusetts,            asserting claims under civil RICO,  Massachusetts common law,            and the  Massachusetts deceptive trade practices  statute.  A            jury  found in  Aetna's favor  on most of  the claims  in the            complaint, and  in November  1993 the district  court entered            judgment holding Markarian and  his 22 co-defendants  jointly            and severally liable for over $6 million.  Markarian and some            of  the defendants  were also  found individually  liable for            over $1.5 million under Mass. Gen. Laws Ch. 93A.   This court            affirmed  the judgment in December  1994.  Aetna  Cas. & Sur.                                                       __________________            Co. v. P & B Autobody, 43 F.3d 1546 (1st Cir. 1994).            ___    ______________                      Judgment  in  hand, Aetna  sought  to identify  and            seize  assets.     It   commenced  a  supplementary   process            proceeding  in federal  court under  Fed. R.  Civ. P.  69 and            Mass. Gen. Laws Ch.  224,   14 seeking an  order transferring            ownership of Markarian's non-exempt assets.  Aetna also filed            an  ex parte  application  for  the  writ  of  ne  exeat  and                                                           _________            supported it  with an   affidavit stating that  Markarian and                                         -3-                                          3            his co-defendants were secreting assets to render them immune            to supplementary process.                      The district court  issued the writ of  ne exeat in                                                              ________            February 1995, finding  that Markarian and  his co-defendants            had been moving  assets out of the jurisdiction as part of an            effort to prevent enforcement of the judgment and  that there            was  a strong likelihood that  they would continue  to do so.            The  district court also  found that  there was  an immediate            likelihood   that   the   co-defendants  would   depart   the            jurisdiction or the United States.                      In March 1995, Markarian appealed from the writ and            filed  a suggestion  of  bankruptcy.   The bankruptcy  filing            resulted in  an automatic  stay of the  supplementary process            proceedings,  see 11  U.S.C.    362(a), and  later in  March,                          ___            Markarian moved this court to stay the appeal from the writ.1            This court issued an order holding the appeal in abeyance and            directing counsel to report back after the  decision from the            bankruptcy court.   Markarian then  moved to vacate  the writ            before the bankruptcy court,  which denied the motion without            prejudice in November 1995 and referred Markarian back to the            district  court.   See  In re  Jack  Markarian, No.  95-40961                               ___  ______________________            (Bankr. D. Mass. Nov. 20, 1995).                                            ____________________            1.  The writ does not appear to fall within  the terms of the            Automatic  Stay  provision of  the  Bankruptcy  Code, see  11                                                                  ___            U.S.C.    362, and thus the writ and the appeal from the writ            were not stayed automatically by the bankruptcy filing.                                         -4-                                          4                      The district court in March 1996 denied Markarian's            motion   to  vacate   the  writ,   stating  that   it  lacked            jurisdiction   over  the   matter.     Markarian   moved  for            clarification of this ruling.  While that motion was pending,            in  July 1996,  the bankruptcy  court ruled  that Markarian's            debts to Aetna were not dischargeable because they  arose out            of fraud.  See In re Jack Markarian, No. 95-40961 (Bankr.  D.                       ___ ____________________            Mass. Jul. 31, 1996).   However, the bankruptcy court  deemed            the   issue  close   enough  to   stay  the  order   of  non-            dischargeability and  certify the  case to the  First Circuit            Bankruptcy  Appellate Panel,  where it  is  now pending.   In            October  1996, the  district  court,  ruling  on  Markarian's            motion for clarification of the refusal to vacate the writ of            ne exeat, denied  the motion "on the  merits" without opinion            ________            or findings.  This appeal followed.                                         II.                      Aetna   argues   that   there   is   no   appellate            jurisdiction,   saying  the   writ   is  no   more  than   an            interlocutory  order to  preserve assets  until  its separate            supplementary  process  proceedings  against   Markarian  are            completed.2   We disagree.   At issue is  not a supplementary            process order but a writ of  ne exeat:  Aetna's motion papers                                         ________            and  the  order  issuing  the   writ  make  no  reference  to                                            ____________________            2.  The supplementary process proceedings cannot resume until            the conclusion of the  bankruptcy proceedings unless the stay            is lifted.                                         -5-                                          5            supplementary process, and the  writ, by its terms,  does not            expire with  the  termination of  the  supplementary  process            proceedings.   The  writ  is effectively  an injunction  over            which  this  court has  jurisdiction  pursuant  to 28  U.S.C.              1292(a).  See  United States v. Shaheen, 445 F.2d 6, 7 (7th                        ___  _____________    _______            Cir. 1971).  We also note Markarian's argument  that issuance            of the  writ was an error of law,  and thus the writ may well            be an appealable collateral order.  See id. at 7 n.2.                                                ___ ___                                         III.                      Where a money judgment  has been entered in federal            court, enforcement  of the  judgment is governed  by Fed.  R.            Civ. P. 69, which provides that the procedures to be used are            those of the state  in which the district court  sits, unless            there is an applicable federal statute.  Aetna availed itself            of state process, seeking a writ of ne exeat.                                                ________                      Massachusetts  procedure  permits  issuance of  the            writ only in support of an order punishable by the court as a            contempt.  See Mass. R. Civ.  P. 4.3(c).  A money judgment is                       ___            not  such an order.3  "[T]he writ  of ne exeat has never been                                                  ________            issued  in aid  of  legal, as  distinguished from  equitable,            process,  or for  the purpose  of obtaining  security from  a                                            ____________________            3.  The Massachusetts supplementary process statute, however,            provides that violation of  a supplementary process order may            be punishable as a contempt.  See Mass. Gen. Laws  Ch. 224,                                            ___            16.   We do not reach the question of whether the writ may be            used  after a supplementary process order has been issued and            there has been a violation.  That is not the case here.                                         -6-                                          6            defendant in  at action of  law."   Moore v.  Valda, 23  N.E.                                                _____     _____            1102,  1103 (Mass. 1890) (per curiam).  "[W]hen a party fails            to  satisfy a  court-imposed  money judgment  the appropriate            remedy  is a writ of  execution, not a  finding of contempt."            Combs v. Ryan's Coal Co., 785 F.2d 970, 980 (11th Cir. 1996);            _____    _______________            see also  Shuffler v. Heritage  Bank, 720 F.2d  1141, 1147-48            ________  ________    ______________            (9th Cir. 1983).   It follows that  the issuance of the  writ            was error.  See  Gabovitch v. Lundy, 584  F.2d 559, 560  (1st                        ___  _________    _____            Cir.  1978)   (failure   to  comply   with  state   procedure            invalidated writ of execution).                      These  are not  mere formalisms.    The writ  of ne                                                                       __            exeat is an ancient writ.   It hearkens back to the days when            _____            debtors  were imprisoned for failure to pay their debts.  The            writ is itself a form  of civil arrest.  Caselaw on  the writ            has narrowed  its use to situations  resulting from equitable            debt rather than  debts recoverable at law.  See 65 C.J.S. Ne                                                         ___           __            Exeat    4,  at  396  (1966).    The  Massachusetts  rule  is            _____            similarly circumscribed.                      Indeed, the Reporter's  Notes to the  Massachusetts            rule providing for the writ of ne exeat express concern about                                           ________            the constitutionality  of the writ, even  circumscribed as it            is.   The  Massachusetts  courts, recognizing  that the  writ            operates in  restraint of personal liberties,  have held that            the writ  "is to  be  granted with  caution"  and "is  to  be                                         -7-                                          7            continued  in force with caution."  Cohen v. Cohen, 64 N.E.2d                                                _____    _____            689, 693 (Mass. 1946).                      Aetna's  motion for  a writ  of ne  exeat finds  no                                                      _________            ground on  which to  rest.   Rule  69 does  not provide  that            ground independently, because it  directs that "[p]rocess  to            enforce a judgment for  the payment of money shall be  a writ            of  execution,  unless  the  court directs  otherwise.    The            procedure on execution .  . . shall be in accordance with the            practice  and procedure  of the  state in which  the district            court is  held . . .  ."  The "otherwise"  clause is narrowly            construed.    See Combs,  785  F.2d  at  980.   It  does  not                          ___ _____            authorize enforcement  of a  civil money judgment  by methods            other  than   a  writ   of  execution,  except   where  "well            established principles  [so] warrant."  13 J.  Moore, Moore's            Federal  Practice   69.02, at 69-5  to -7 (3d  ed. 1997); see                                                                      ___            also Hilao v.  Estate of Marcos, 95  F.3d 848, 854  (9th Cir.            ____ _____     ________________            1996).4                                            ____________________            4.   One such  situation is where an  action for contempt has            been instituted for  failure to pay an  obligation imposed by            statute in order to  enforce the public policies  embodied in            the  statutory scheme.    See, e.g.,  McComb v.  Jacksonville                                      _________   ______     ____________            Paper Co., 336  U.S. 187,  193-95 (1949).   Another is  where            _________            there has  been a congressional determination  to provide the            government with  the ability to  seek a writ  of ne  exeat in                                                             _________            furtherance  of enforcing  tax  obligations.   See, e.g.,  26                                                           _________            U.S.C.   7402(a).  A third is where the judgment is against a            state which  refuses to appropriate funds  through the normal            process  provided  by  state  law.     See,  e.g.,  Spain  v.                                                   __________   _____            Mountanos, 690 F.2d 742,  744-45 (9th Cir. 1982); Gary  W. v.            _________                                         ________            Louisiana, 622 F.2d 804,  806 (5th Cir. 1980).   In contrast,            _________            the size of the  award and the difficulties in  enforcing the            judgment   due  to  the  location   of  the  assets  and  the                                         -8-                                          8                      This court has  held that "the legislative  history            and  judicial application of  Rule 69(a) make  clear that the            first  sentence of  the Rule  expresses a  limitation on  the            means of enforcement of money judgments and does not create a            general power to issue writs of execution in disregard of the            state  law incorporated by the rest of the Rule."  Gabovitch,                                                               _________            584 F.2d at 560-61.  The state remedy is the exclusive  route            here.  See id. at 561.                   ___ ___                      Aetna also points to the All Writs Act, 28 U.S.C.              1651,  but does not develop  its argument.   The point is not            well taken.  The  All Writs Act "does not  authorize [federal            courts]  to  issue  ad  hoc writs  whenever  compliance  with            statutory   procedures   appears    inconvenient   or    less            appropriate."   Pennsylvania Bureau  of Correction  v. United                            __________________________________     ______            States Marshals Serv.,  474 U.S.  34, 43 (1985).   Where,  as            _____________________            here, there  is  a statutory  procedure  which  "specifically            addresses the particular issue at hand, it is that authority,            and  not  the  All Writs  Act,  that  is  controlling."   Id.                                                                      ___            Indeed, there is every  reason not to reach  to find the  All            Writs Act applicable where "the courts have consistently read            Rule 69(a) as limiting all federal process on money judgments                                            ____________________            uncooperativeness of the judgment debtor are not the types of            extraordinary  circumstances which warrant departure from the            general rule  that money judgments  are enforced by  means of            writs  of execution  rather than  by  resort to  the contempt            power of the courts.  See Hilao, 95 F.3d at 855.                                  ___ _____                                         -9-                                          9            to  the   type  of   process  available  under   state  law."            Gabovitch, 584 F.2d at 561.            _________                      This opinion  does not condone  Markarian's failure            to  pay his  judgment debt,  nor does  it fail  to appreciate            Aetna's  frustration.    It   simply  holds  that  the  legal            predicate for issuance of the extraordinary writ of  ne exeat                                                                 ________            is lacking and so issuance of the writ was error.                      The  order granting  the writ  is reversed  and the                                                        ________            writ is vacated.  No costs.                    _______                                         -10-                                          10
