Opinion ID: 179830
Heading Depth: 2
Heading Rank: 4

Heading: Supplemental Proceedings

Text: To collect its May 2007 judgment, Dexia served Peter Rogan and Judith Rogan with citations to discover assets. See Fed. R.Civ.P. 69; 735 ILCS § 5/2-1402. On September 26, 2007, Dexia initiated supplementary proceedings against the Rogan Children Trusts by serving a citation on Cuppy, the trustee of those Trusts. In February 2009, Dexia served citations upon the individual children. As part of the proceedings, the district court granted various temporary restraining orders (TROs) to freeze assets. Before the court converted the TROs into preliminary injunctions, the Rogan Children moved to intervene for the purpose of protecting their claimed beneficial interests in the Trusts. The parties engaged in discovery related to the turnover proceedings, and the Rogan Children lodged various procedural and jurisdictional objections, none of which successfully ended the proceedings or removed the Trust assets from consideration. During the course of ruling on the various challenges lodged by the Rogan Children, the district court judge discovered that two of the Defendants in Dexia's underlying lawsuit, Bainbridge Management, L.P. (Bainbridge LP) and Braddock Management, L.P. (Braddock LP), were citizens of both Illinois and Belize. This dual citizenship destroyed diversity jurisdiction, which does not exist where the party on one side of a case is foreignDexia is a French companyand the party on the other side is both domestic and foreign. See Salton, Inc. v. Philips Domestic Appliances & Pers. Care B.V., 391 F.3d 871, 875 (7th Cir.2004). The district court dismissed Bainbridge LP and Braddock LP pursuant to Federal Rule of Civil Procedure 21 as nondiverse, dispensable parties. The district court also discovered that the May 2007 default judgment, which had been issued as a final judgment, was not actually final because it did not dispose of claims against Bainbridge LP (which was in bankruptcy and subject to an automatic stay), and the district court had not otherwise made any findings pursuant to Federal Rule of Civil Procedure 54(b). The court then ruled that the effect of dismissing the dispensable parties, including the one that had been in bankruptcy, was to make the May 2007 default judgment against the remaining defendants, Rogan and Bainbridge Management, Inc. (distinct from Bainbridge LP), retroactively final as of May 2007. The district court conducted a bench trial on Dexia's motion for turnover. On July 7, 2009, the court issued a 48-page opinion granting Dexia's motion for turnover of assets, including those in the Rogan Children's Trusts, with the exception of $30,000 ($10,000 from each Trust) that was gifted to the Trusts by an individual named Scott Gross. This relief was predicated upon the court's finding that the Trust assets actually belonged to Rogan. As alternative relief, the court imposed a constructive trust on the property held by the Trusts. Again, the court excluded the $30,000 that Dexia did not establish was the result of Rogan's fraudulent activities. This appeal followed.