In Gagan v. SBC Cablevision, 2012 U.S. Dist. LEXIS 167815 (N.D. Ind. 2012) (.pdf), an Indiana federal court held that an Arizona resident must appear in person to answer questions regarding assets available to satisfy a fifteen-year-old, $1.71MM judgment against him. (Incidentally, the collection efforts were not time barred because judgments can be pursued in Indiana for twenty years.)
Defendant’s objection. The defendant/judgment debtor objected to the plaintiff/judgment creditor’s motion for proceedings supplemental on the basis that he did not reside in Indiana. His objection appeared to be valid based upon Ind. Code § 34-55-8-2(a)(1), which governs proceedings supplemental and suggests that the judgment debtor must be “residing in the territorial jurisdiction of the court . . . to appear.”
Trial rule trumps statute. The judgment creditor pointed to Ind. Trial Rule 69(E)(3) that, like I.C. § 34-55-8-2, deals with proceedings supplemental. Unlike the statute, however, the trial rule contains no “territorial jurisdiction” qualification to a judgment debtor exam. The Court in Gagan ultimately relied upon the trial rule, which was adopted after the statute.
Explanation. The Court’s conclusion made sense. Proceedings supplemental may only be filed in the trial court that issued the underlying judgment. Indiana regards the process as a continuation of the trial court’s jurisdiction. Also, the Indiana Civil Code Study Commission’s comments stated that Rule 69(E) “retains the basic statutes upon [proceedings supplemental] but introduces simpler pleadings and procedure” intended to ease the burden on judgment creditors. Gagan provided: “the commentary explained that Rule 69(E) intended to broaden the proper venue beyond that of the judgment debtor’s county of residence and to permit proceedings supplemental to be filed in the court where the judgment was entered.” Because the Court in Gagan already had jurisdiction, and because proceedings supplemental are an outgrowth of the original proceedings, the Court did not need to re-establish jurisdiction over the judgment debtor.
Teeth? The Court overruled the judgment debtor’s objections to the motion for proceedings supplemental and the request for a debtor examination. The Court retained jurisdiction under Rule 69(E) “to carry out the proceedings to determine what non-exempt assets [defendant] has available that may partially satisfy the judgment.” While the Gagan holding is creditor friendly, the victory may have been a hollow one. (I’m speculating.) If the Arizona judgment debtor refused to hop on a plane and come to court in Indiana, what recourse would the judgment creditor have? While the defendant may be subject to contempt-related sanctions for refusing to appear, I’m not sure that would matter much to someone already saddled with a $1.71MM judgment. Having said that, at least one practical benefit to the Court’s decision was to enable the judgment creditor to compel the judgment debtor to be deposed in Arizona, without the need for domesticating the judgment and initiating proceedings supplemental there.