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Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 28, 1995 Decided January 26, 1996

No. 94-5262

SECURITIES AND EXCHANGE COMMISSION,

APPELLEE 

v.

VISION COMMUNICATIONS, INC., ET AL.,

(BY FRED F. FIELDING AS RECEIVER FOR VISION

COMMUNICATIONS, INC.,

AND WILKES-BARRE-SCRANTON, L.C.),

APPELLEES 

VISTA VISION, INC.,

APPELLANT 

-

Consolidated with

95-5089

-

Appeals from the United States District Court

for the District of Columbia

(94cv00615)

Deborah H. Bornstein argued the cause for appellant. With her on the briefs was Thomas J.

Dougherty, Jr. Rodney H. Glover entered an appearance for appellant.

James H. Wallace, Jr. argued the cause for appellees Receiver for Vision Communications, Inc., and

Wilkes-Barre-Scranton, L.C. With him on the brief was Fred F. Fielding.

Eric Summergrad, PrincipalAssistant GeneralCounsel, argued the cause for appellee Securities and

Exchange Commission. With him on the brief were Simon M. Lorne, General Counsel, Leslie E.

Smith, Senior Litigation Counsel, and Susan K. Straus, Attorney. Jacob H. Stillman, Associate

General Counsel, entered an appearance.

Before: EDWARDS, Chief Judge, WALD and RANDOLPH, Circuit Judges.

Opinion for the court filed by Circuit Judge RANDOLPH.

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RANDOLPH, Circuit Judge: We have before us the remnants of a civil enforcement action

brought by the Securities and Exchange Commission in the United States District Court for the

District of Columbia. The SEC's complaint, filed in March 1994, alleged that a Texas company and

a California company and two individuals from California had illegally solicited investments in a

scheme to build a "wireless cable" communications system in the Wilkes-Barre/Scranton area of

Pennsylvania. Without admitting or denying the allegations, the defendants consented to a decree

enjoining themfromviolating the securitieslaws, directing the two individualsto disgorge $550,000,

and appointing a receiver to liquidate the assets of the companies.

Odd though it might seem, part of this oxymoronic "wireless cable" scheme turned out to be

a fairly good investment. Several months before the SEC brought its suit, the California corporate

defendantVision Communications, Inc. ("VCI")signed an installment contract to purchase

equipment and what we shall call "transmission rights" from Vista Vision, Inc., a Pennsylvania

corporation not otherwise involved in the SEC action. Since then, the value of the transmission rights

has greatly appreciated. Today the rights are worth substantially more than the total of the

installment payments VCI was to make under the contract. Naturally, the court-appointed receiver

is anxiousto make the remaining installment paymentsso that he can acquire the transmission rights,

sell them at a profit, and distribute the proceedsto the investorsin the aborted scheme, asthe consent

decree contemplates. Not surprisingly, Vista Vision would like to find a way out of its contract with

VCI so that it can resell the transmission rights, this time at a much higher price. To that end, Vista

Vision has contended that VCI defaulted on the contract, thereby terminating it.

In order to preserve his claim to the rights under the contract, the receiver endeavored to

make VCI's payments to Vista Vision while he tried to negotiate a settlement. On June 13, 1994,

with negotiations at an impasse, Vista Vision's counsel sent a letter to the receiver, stating, "I think

it is in everyone's best interest to take this matter to [the district judge] for a decision on the simple

contract issue.... Therefore, we would request that you contact the judge's law clerk to get the next

available hearing date which would permit us to brief the issue."

At the receiver'srequest, the court held the hearing in June 1994. Several days later the court

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issued an order authorizing the receiver "to assert jurisdiction over VCI's assets" and enjoining Vista

Vision "from interfering with the Receiver's sale or transfer" of the assets. SEC v. Vision

Communications, Inc., No. 94-0615(CRR), 1994 WL 855061, at *5 (D.D.C. June 28, 1994). Vista

Vision's appeal is partly on the ground that because the district court lacked personal jurisdiction over

the company and lacked in rem jurisdiction over the property, the court was powerless to enter the

injunction.

Vista Vision had argued these pointsinits opposition to the receiver'smotion for a declaration

of VCI's property rights and for an injunction. The opposition stated that Vista Vision was appearing

"specially," a qualification its counsel repeated at the hearing. The receiver nevertheless insists that

Vista Vision, through its letter of June 13, 1994, consented to the district court's exercise of

jurisdiction. The district court did not credit this argument and neither do we. It is of course possible

to waive, in advance of any judicial proceedings, an objection to a court's in personam jurisdiction,

as when parties agree by contract to submit their disputes to a particular court. See National Equip.

Rental Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964); Insurance Corp. of Ireland, Ltd. v.

Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982). But that is far from what happened

here. Rather than a contractual commitment, Vista Vision's letter was sent in the midst of settlement

negotiations. Cf. FED. R. EVID. 408. The letter followed earlier correspondence in which Vista

Vision's counsel objected to the receiver's exercising authority over the contract rights. A party may

exclaim, during the heat of negotiations, "So sue me!" That is no more a consent to a court's personal

jurisdiction if an action is brought than was the statement in the company's letter of June 13. The

letter did not addressthe subject ofjurisdiction, and any doubt about Vista Vision's position vanished

prior to the hearingand during itwhen the company vigorously contested the court's power to

adjudicate the receiver's motion and to issue the injunction.

If the district court had such power, it therefore must have derived it from something other

than Vista Vision's acquiescence. In the memorandum opinion accompanying its order, the district

court apparently concluded that itsin personam jurisdiction over Vista Vision flowed either from its

in rem jurisdiction over the transmission rights or from itsinitial jurisdiction over the underlying SEC

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1

28 U.S.C. § 754 provides:

enforcement action. We find neither source adequate.

In nondiversity cases, the requirement that a court have personal jurisdiction stems from the

Due Process Clause. Omni Capital Int'l v. Rudolf Wolff &Co., 484 U.S. 97, 104 (1987). It may be,

therefore, that the familiar "minimum contacts" doctrine, see Insurance Corp. of Ireland, Ltd., 456

U.S. at 703 n.10, is measured in terms of a defendant's contacts with the United States rather than

with the particular forum state. See Omni Capital, 484 U.S. at 102 n.5; 4 CHARLES A. WRIGHT &

ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1067.1, at 82 (2d ed. Supp. 1995). But

even if we assume, arguendo, this to be so, there still must be some basis for Vista Vision's

"amenability to service of summons." Omni Capital, 484 U.S. at 104. Absent Vista Vision's

consentwhich it did not givethis means that there must be "authorization for service of

summons" on Vista Vision. See id.

Vista Vision was never a party in the SEC enforcement action. Both it and the transmission

rights at issue in this case are located in Pennsylvania. Thus, to establish personal jurisdiction over

Vista Vision, the receiver would have needed "authorization" to have Vista Vision served in

Pennsylvania, indisputably outside the territorial boundaries ofthe U.S. District Court for the District

of Columbia. The interplay between Rule 4(k)(1)(D) of the Federal Rules of Civil Procedure and 28

U.S.C. § 1692 could have provided that authorization. Under Rule 4(k)(1)(D), the service of a

summons may establish personal jurisdiction "when authorized by a statute of the United States."

FED. R. CIV. P. 4(k)(1)(D). Section 1692 provides:

In proceedings in a district court where a receiver is appointed for property,

real, personal, or mixed, situated in different districts, process may issue and be

executed in any such district as if the property lay wholly within one district, but

orders affecting the property shall be entered of record in each of such districts.

But to invoke § 1692, a receiver first must comply with 28 U.S.C. § 754. See Haile v.

Henderson Nat'l Bank, 657 F.2d 816, 823 (6th Cir. 1981), cert. denied, 455 U.S. 949 (1982); 7

JAMES W. MOORE, MOORE'S FEDERAL PRACTICE ¶ 66.08[2], at 66-51 (2d ed. 1995). Under § 754,

which is quoted in the margin,1a receiver appointed in one district may obtain jurisdiction over

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A receiver appointed in any civil action or proceeding involving property,

real, personal or mixed, situated in different districts shall, upon giving bond as

required by the court, be vested with complete jurisdiction and control of such

property with the right to take possession thereof.

He shall have capacity to sue in any district without ancillary appointment,

and may be sued with respect thereto as provided in section 959 of this title.

Such receiver shall, within ten days after the entry of his order of

appointment, file copies of the complaint and such order of appointment in the

district court for each district in which property is located. The failure to file such

copies in any district shall divest the receiver of jurisdiction and control over all

such property in that district. 

property located in another district by filing in the district court of that district, within ten days after

the entry of his order of appointment, a copy of the complaint and his order of appointment. The

receiver in this case filed the required documents in Pennsylvania, but not untilJuly 5, 1994almost

two months after the court appointed him and one week after the court issued its injunction. In light

of the following language in § 754, this was fatal: "The failure to file such copies in any district shall

divest the receiver ofjurisdiction and control over allsuch property in that district." 28 U.S.C. § 754.

As the parties here understand, the court's jurisdiction to reach Vista Vision and the Pennsylvania

property had to be through the court's agent, the receiver. Haile, 657 F.2d at 823, explains that a

receiver's compliance with § 754 in a particular district extends the territorial jurisdiction of the

appointing court into that district. By not complying with § 754, the receiver failed to establish

control over the property. His failure precluded the district court from using § 754 as a stepping

stone on its way to exercising in personam jurisdiction over Vista Vision. See American Freedom

Train Found. v. Spurney, 747 F.2d 1069, 1073-74 (1st Cir. 1984).

At the June 1994 hearing, the receiver arguedand the district court agreedthat the

language of § 754 is not as rigid as it appears. The argument is repeated on appeal. Yet no matter

what one may say about § 754's rigidity, no other court of appeals has ever stretched § 754 as far as

this receiver needs it to go, and we will not be the first. The receiver cites three cases in which

appellate courts allowed a receiver to obtain jurisdiction despite hisfailure to comply with § 754. In

two of the cases, SEC v. Equity Service Corp., 632 F.2d 1092 (3d Cir. 1980), and Kilsheimer v. Rose

& Moskowitz, 257 F.2d 242 (2d Cir. 1958), the courts forgave tardy compliance with § 754 when

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compelling reasons were offered for the delaysthe death of a receiver in one case, impossibility in

the otherand when the receivers nonetheless did complywith § 754 months before the actionsthere

arose. In the third case, United States v. Arizona Fuels Corp., 739 F.2d 455, 460 (9th Cir. 1984),

the court held that the receiver'sfailure to satisfy§ 754 did not "preemptively" divest the district court

of the in personam jurisdiction it already had over the party claiming an interest in the property.

Compliance with § 754, the court held, is necessary "[w]hen there is no other basis of jurisdiction,"

id. 

In all three cases, then, the district courts had personal jurisdiction over the partieseither

through belated compliance with § 754 or otherwisebefore hearing the cases. In this case, the

district court had no source of personal jurisdiction outside § 754, cf. Omni Capital, 484 U.S. at 104,

and the receiver had not complied with § 754 at the time the district court entered its injunction.

While the receiver finally filed the documentsrequired by § 754 a week afterthe district court issued

its order, that late filing cannot establish jurisdiction retroactively. At the time the district court

entered its order authorizing the receiverto "assert jurisdiction over VCI's assets" and enjoining Vista

Vision "from interfering with the Receiver'ssale or transfer" ofthe assets, § 754 had already divested

the receiver of jurisdiction and the district court could not supersede that statutory preclusion.

Of course, a receiver's failure to comply with § 754 cannot deprive a court of personal

jurisdiction it already has. See Arizona Fuels Corp., 739 F.2d at 460. The district court apparently

concludedand the SECand the receiver argue on appealthat the court had jurisdiction over Vista

Vision entirely independent of § 754. We disagree for two reasons. First, while a district court has

broad power to issue ancillary relief in SEC actions and receiverships, that power exists precisely

because the court has taken control over the property placed in receivership. See SEC v. Wencke,

622 F.2d 1363, 1369 (9th Cir. 1990). In an ancillary action by the receiver, such as the one before

us, the district court's jurisdiction then extends to any district in which receivership property may be

found "provided that the proper documents have been filed as required by § 754." 7 MOORE'S

FEDERAL PRACTICE, supra, ¶ 66.08[2], at 66-52. By not filing the § 754 papers in time, the receiver

here deprived the court of that power.

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Second, while the All Writs Act, 28 U.S.C. § 1651(a), empowers a district court to issue

injunctionsto protect itsjurisdiction, the injunction in this case protectsjurisdiction the district court

did not have. Had the receiver complied with § 754 and taken control of VCI's contract rights in

Pennsylvania, the court might then have been able to enjoin non-parties such as Vista Vision from

interfering with the court's receiver's control. "[B]ut this exercise of the authority of the court to

protect its own possession is not to be confounded with the exercise of jurisdiction over persons

claiming adverse rights in property which has never been in the custody of the court." Wheaton v.

Daily Telegraph Co., 124 F. 61 (2d Cir. 1903). Because the receiver failed to comply with § 754,

the Pennsylvania property was never under the control of the receiver and was therefore not the

court's to protect. Rather, the transmission rights remained with Vista Vision, which was neither an

original party nor an intervenor in the SECenforcement action before the court. See American Brake

Shoe & Foundry Co. v. New York Railways Co., 10 F.2d 920, 921 (2d Cir. 1926) (L. Hand, J.).

Because the transmission rights were not brought within the court's jurisdiction, the court could not

have been protecting itsjurisdiction when it enjoined Vista Vision frominterfering with the receiver's

sale of them.

That is not to say that the district court remains powerless to protect the investors. On

remand, the court may re-appoint the receiver and start the ten-day clock of § 754 ticking once again.

Presumably, the receiver willtake advantage of hissecond chance to complywith § 754 and promptly

file the necessary papers in Pennsylvania. Once he does so, the receiver will have jurisdiction over

the Pennsylvania property and may seek to have Vista Vision served in Pennsylvania under 28 U.S.C.

§ 1692.

* * *

The case is hereby remanded to the district court. However, our judgment vacating the district

court's decree is stayed until ten days after the issuance of the mandate in this case.

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