United States District Court, N.D. Mississippi, Greenville Division
ORDER ON MOTIONS FOR WRITS OF GARNISHMENT
JANE
M. VIRDEN, UNITED STATES MAGISTRATE JUDGE.
This
matter is before the court, sua sponte, to determine
whether this case is properly before this court. For the
reasons stated below, the court finds that the procedural
posture of the case is improper and subject matter
jurisdiction over the purported garnishments is lacking. In
short, the holding of Berry v. McLemore, 795 F.2d
452 (5th Cir. 1986) requires that this court
conclude: 1) plaintiff must initiate a new, separate, action
for any writs of garnishment, and 2) if that action is to be
filed in the United States District Court for the Northern
District of Mississippi, plaintiff must establish an
independent basis for federal subject matter jurisdiction
over the garnishment proceeding- which is based on state law.
Facts
Defendant
Double Y and Young defaulted under the terms of a credit
sales agreement with Helena. Similarly, R&E Farms and
Young defaulted under the terms of another credit sales
agreement with Helena. Helena then sued in this court to
enforce the agreements and recover its losses- asserting
subject matter jurisdiction pursuant to 28 U.S.C. § 1332
as the basis for jurisdiction in each action. Following a
motion, the cases were consolidated. Ultimately, the cases
were resolved by Helena's successful motions for summary
judgment, and on April 27, 2017, the court entered judgment
against Double Y and Young- in the total amount of $432,
335.99 plus post-judgment interest at the federal rate- and
R&E Farms and Young- in the total amount of $280, 767.11
plus post-judgment interest at the federal rate. The
consolidated cases were then closed.
On
October 9, 2017, Helena filed twelve motions for issuance of
writs of garnishment [53]-[58] and [54]-[59], respectively-
six in each closed consolidated action- against a number of
banks or other companies believed to have accounts with or
owe money to the defendants. No independent basis for
jurisdiction was alleged to support the garnishment actions.
Law
and Analysis
Because
this court has an independent duty to examine its own
jurisdiction, see, generally, Ruhrgas
Ag v. Marathon Oil Co., 526 U.S. 574 (1999), the court
invited briefs on the issue of whether the motions for writs
of garnishment were properly filed in this closed action- and
in particular, whether this court had subject matter
jurisdiction over them. Specifically, the court called to the
plaintiff's attention the decisions in Berry v.
McLemore, 795 F.2d 452 (5th Cir. 1986) and
Bass v. Denney (In re Bass), 171 F.3d 1016
(5th Cir. 1999).
In
Berry v. McLemore, the United States Court of
Appeals for the Fifth Circuit held that a garnishment action
seeking enforcement against third parties who were strangers
to the underlying judgment requires the institution of a new
proceeding- separate from the primary action that established
the judgment debt. Id. at 455. The Fifth Circuit
further held that the Court did not have ancillary
jurisdiction over garnishment proceedings, even if the
garnishment is sought to satisfy the earlier judgment entered
in the same case. Id. In short, an independent basis
of federal jurisdiction must exist to vest the federal court
with jurisdiction over the new and independent garnishment
action in order for it to proceed thereon in federal court.
The
Court of Appeals reiterated the holding in Berry in
the later case, In re Bass, stating:
Perhaps even more to the point is the recognition that the
particular “supplemental jurisdiction” action we
review today is a new and independent action. As
noted earlier, the Denneys instituted this case against the
Trustees as a combined garnishment and injunction proceeding
. . . . Even though the Denneys voluntarily non-suited the
garnishment, it and the mandatory injunction for advance
notice are analytically indistinguishable for purposes of
classification as new and independent actions.
In this we are bound by our holding in Berry v.
McLemore and the reasoning behind it. If anything,
Berry was a closer case: It dealt with a money
judgment previously rendered by the same court in which the
judgment creditor was seeking to garnish the judgment
debtor's former employer. Moreover, the court in question
was a federal district court and thus a court of broader
jurisdiction than a bankruptcy court. As in the instant case,
the judicial proceeding in which the money judgment was
rendered had been completed and was inactive, and the third
party against whom the garnishment was sought in the second
proceeding had not been a party to the first. The
Berry court recognized the general principle that
prior termination of a proceeding does not ordinarily prevent
the court from aiding in collection, but determined that the
general rule gives way to the more specific exception when
the subsequent action is new and independent from the first.
Relying on our pronouncement in Butler v. Polk that
garnishment actions against those who were not parties to the
original action “are generally construed as independent
suits, at least in relation to the primary action” in
which the judgment was rendered, we held in Berry
that the district court lacked jurisdiction to entertain the
garnishment.
The Butler/Berry analysis is clearly applicable to
the action brought by the Denneys in the Bankruptcy Court in
Texas and stymies their effort to support jurisdiction of
that court under the rules of supplemental jurisdiction. As
we stated in Berry, “we can find no case where
a court held that it had ancillary jurisdiction to consider
claims in a new and independent action merely
because the second action sought to satisfy or give
additional meaning to an earlier judgment.” The
bankruptcy court has no inherent jurisdiction to hear this
case.
In re Bass, 171 F.3d 1016, 1024-25 (5th Cir. 1999).
Despite
this authority, Helena argues, first, that the United States
Supreme Court's decision in Peacock v. Thomas,
516 U.S. 349 (1996) “overruled (or in the very least
limited) [Berry]”, and, second, that In re
Bass- decided three years after Peacock-
“turned on the limits of a bankruptcy court's
jurisdiction as ...