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Perez v. Bruister

United States District Court, S.D. Mississippi, Northern Division

May 14, 2015

THOMAS E. PEREZ, Secretary of the United States Department of Labor, Plaintiff,
v.
HERBERT C. BRUISTER, et al., Defendants, JOEL D. RADER and VINCENT SEALY, Plaintiffs,
v.
HERBERT C. BRUISTER, et al., Defendants. Consolidated with Civil Action No. 3:13cv1081-DPJ-FKB

ORDER

DANIEL P. JORDAN, III, District Judge.

These consolidated cases are before the Court on Plaintiffs' Urgent and Necessitous Joint Motion to Temporarily Extend the Preliminary Injunction Until After a Hearing on the Merits [732]. For the reasons that follow, the motion is granted, and the Temporary Restraining Order [668] as modified and extended by the Consent Order [682] is extended through July 15, 2015.

I. Facts and Procedural History

Following a 19-day bench trial, on October 16, 2014, the Court entered judgments in favor of Plaintiffs and against Defendants Herbert Bruister, Amy Smith, Jonda Henry, and the Bruister Family LLC ("BFLLC"), in the amount of $6, 492, 513.97. Defendants timely filed a Notice of Appeal [621] but were unable to post a supersedeas bond and obtain a stay of proceedings pending appeal pursuant to Federal Rule of Civil Procedure 62(d). Bruister has since moved to stay enforcement of the judgments pending appeal [722], but in the meantime, Plaintiffs have attempted to execute on the judgment. Plaintiffs allege that Bruister has intentionally frustrated their collection efforts, and there is record evidence supporting that position.

At issue in the instant motion are certain life-insurance portfolios ("the viaticals") in which Defendant BFLLC had an interest. All parties agree that the viaticals are a promising-if not the most promising-asset that could be used to help satisfy the Court's judgments. By virtue of their nature as life-insurance policies, the viaticals require an ongoing funding stream to pay premiums and costs associated with maintaining them until maturity. At some point in late 2014, Premium Funding, LLC ("PF"), an entity controlled by Bruister's friend and business associate Nathan I. Prager, entered into a financing arrangement with BFLLC whereby PF would pay the premiums and costs of the viaticals in exchange for certain distributions and a security interest in the viaticals.

The Credit Agreement purports to have been executed on October 15, 2014-one day before the Court entered its judgments in these cases-but Plaintiffs have presented evidence that PF did not even exist until October 22, 2014, and that the financing arrangement may not have been finalized until as late as November or December 2014. This evidence suggests that the documents were backdated in an effort to frustrate execution on the October 16 judgments or to fabricate a lien in the viaticals senior to any liens created by the judgments.

In addition, the Credit Agreement indicates that BFLLC was the 100% owner of Bruister & Associates Investments LLC (BI) and that BI is "the owner and beneficiary" of certain viatical portfolios. Credit Agreement [736] at 2. Plaintiffs have presented evidence indicating that BFLLC transferred its 100% ownership interest in BI to Linda Brusiter in October 2014 and that she notified Prager of the change. Pls.' Resp. [737] Ex. 8 at 5. This occurred after judgment but before the Credit Agreement apparently closed.

In January 2015, it appeared to Plaintiffs that the financing provided by PF could be in jeopardy, and Plaintiffs filed an ex parte motion seeking a temporary restraining order. On January 16, 2015, the Court granted the ex parte motion and essentially ordered that the parties, including Prager and PF, maintain the status quo. Order [668]. The Order froze assets owned or controlled by Bruister and BFLLC, enjoined Bruister and BFLLC from dissipating assets, and required Bruister and BFLLC to maintain the viaticals. Pursuant to Federal Rule of Civil Procedure 65(d)(2)(C), the Order extended to persons other than Defendants "who are in active concert or participation with" Defendants, including Prager and PF. Id. at 6. The Order concluded that "[n]othing herein should be construed as limiting any Defendant from providing for his or her or his or her family's normal activities of daily living." Id. at 7.

On January 22, 2015, the Court held a motion hearing on garnishment issues, during and after which the parties and Prager conferred about the possibility of extending the TRO to keep the financing for the viaticals in place. The parties were able to reach an agreement, and on January 23, 2015, the Court entered a Consent Order to Convert TRO to Preliminary Injunction [682] signed by Prager and counsel for the parties. The Consent Order required PF to "pay the premiums and any necessary costs... necessary to maintain the [viaticals]" through April 30, 2015. Consent Order [682] ¶ 1. The Consent Order allowed PF to continue to collect interest at the rate specified in its agreement with BFLLC and to distribute that interest to investors and affirmed PF's entitlement to principal payments during the pendency of the injunction. Finally, the Consent Order indicated that PF and Prager "submit to the jurisdiction of this court solely for the purpose of this Injunction." Id. ¶ 8.

As the Consent Order's April 30, 2015 expiration date approached, the parties attempted to reach an agreement about extending the injunction through the date of a scheduled July 14, 2015 evidentiary hearing on Bruister's motion to stay enforcement of the judgments pending appeal and the United States' motion for contempt. When it became apparent that those discussions would not be fruitful, Plaintiffs filed the instant motion. Following a truncated briefing schedule, the Court conducted a telephonic hearing, after which the Court entered its Order [738] extending the Temporary Restraining Order as extended by the Consent Order for fourteen days to give the Court additional time to consider the parties' arguments. The Court is now prepared to rule.

II. Analysis

A. Personal Jurisdiction

Prager first challenges the Court's ability to exercise personal jurisdiction over him. The

Court's April 30, 2015 Order [738] concluded that Prager has not demonstrated a lack of personal jurisdiction. Since then, additional evidence regarding Prager's involvement with Defendants bolsters that holding. See, e.g., Pls.' Supp. Mem. [741] Ex. A at 1. The Court therefore concludes that personal jurisdiction exists. But as stated ...


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