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Ferrell v. Turner

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

March 13, 2019

WAYNE E. FERRELL, JR.; JAMES W. NOBELS, JR.; and ANGELO DORIZAS PLAINTIFFS
v.
TAB TURNER; and TURNER & ASSOCIATES, P.A. DEFENDANTS

          ORDER

          HENRY T. WINGATE UNITED STATES DISTRICT COURT JUDGE.

         BEFORE THIS COURT is a Motion to Strike filed by Wayne E. Ferrell, Jr.. [Docket no. 252]. The target of this Motion to Strike is the Motion for Contempt filed by Tab Turner [Docket no. 251]. This motion for civil contempt directed at Wayne E. Ferrell, Jr. (hereinafter referred to as “Ferrell”), and his attorney, Chuck McRae (hereinafter referred to as “McRae”) accuses Ferrell and McRae of removing funds from McRae's trust account, in direct contravention of a court order forbidding removal of those funds without a court order and without notifying “all necessary parties” of such intention. See [Docket no. 251-2]. Neither of these pre-conditions was performed by Ferrell and McRae.

         Ferrell and McRae have responded with their Motion to Strike which relies upon Federal Rule of Evidence 408. This rule forbids at trial evidence of compromise offered and negotiations. As argued by Ferrell and McRae, since the revelation of the trust fund disbursement was revealed at a court-ordered, mandatory settlement conference, the trust fund disbursement revelation is inadmissible and cannot be the subject of a Motion for Contempt.

         This court, at present, does not agree. Rule 408's reach does not appear to be broad enough to embrace the Ferrell-McRae legal theory. Ferrell and McRae who filed the instant Motion to Strike, instead of a response to the Motion for Contempt (asking for thirty days to file a response if the court denies their motion to strike), shall file their response to the Motion for Contempt by March 19, 2019, by 8:00 o'clock a.m.. They have had ample time to gauge their defense, and their response to the motion for contempt. Moreover, they have presented a defense in their Motion to Strike and back at the Settlement Conference of August 4, 2018. Nevertheless, this court will hear all matters received in opposition to the Motion for Contempt.

         I. BACKGROUND

         This case was originally filed in Hinds County, Mississippi Circuit Court on April 22, 2015. That action was removed to this Court by the Turner Parties when they filed their Notice of Removal on September 8, 2015, and the case was assigned Civil Action No. 3:15cv657-HTW-LRA (sometimes referred to as the “Mississippi Case”). Shortly after the Notice of Removal in this case was filed, a second suit, styled Turner & Associates, P.A. v. Wayne E. Ferrell, Jr., which was filed in the Circuit Court of Pulaski County, Arkansas, was also removed and eventually assigned Civil Action No. 3:15cv903-TSL-RHW (the “Arkansas Case”). The Arkansas Case was transferred to this Court and the two cases were eventually consolidated on June 2, 2016.

         After the action was commenced in Hinds County Circuit Court, but before the case was removed to this Court, Ferrell had sought to transfer certain funds being held in the trust account of his former counsel, Hunter Lundy (“Lundy”), to the trust account of his current counsel, McRae. Those funds, as well as other funds, were being held in Lundy's trust account pursuant to the Order Directing Payment entered on June 8, 2011 by the Jasper County, Mississippi Chancery Court in previous litigation between the parties hereto.

         The Order Directing Payment ordered in part: “15. Payment to Lundy, Lundy, Soileau & South, LLP trust account the sum of $x, xxx, xxx.” See Ex. A. On September 1, 2015, the Hinds County Circuit Court ordered that the amount of $540, 000.00 be transferred from Lundy's trust account to McRae's trust account (the “Hinds County Order”).

         The Hinds County Order ordered that “upon deposit of said monies, the funds will not be withdrawn until further Order of the Court advising and notifying all necessary parties”. The funds were actually transferred to McRae's trust account on September 3, 2015, as evidenced by a check from Lundy's trust account to McRae's trust account.

         On July 23, 2018, this Court entered an Order [Docket no. 249] compelling all parties and counsel in the case to attend a mandatory settlement conference on August 4, 2018 (the “Settlement Conference”). At the Settlement Conference, it was revealed by Ferrell and McRae that Ferrell and McRae had removed all of the $540, 000.00 held in McRae's trust account without an order from this Court, or any other Court allowing them to do so and without advising and notifying the Court or the Turner Parties that they were doing so. It was also revealed that Ferrell allegedly had returned a portion of the funds (i.e. the funds received by him) to McRae's trust account. It was also revealed that McRae had not returned the funds received by him to his trust account. The excuse for taking the funds from McRae's trust account, according to Ferrell and McRae, was that when this Court dismissed the Turner Parties' claims in the Arkansas Case, they believed that all of the Turner Parties' claims in both cases were dismissed. That was not true, but notwithstanding the same, neither Ferrell nor McRae sought an order from this Court or any other Court releasing the funds with notice to the Turner Parties as required by the Hinds County Order, which is a valid and enforceable order.

         Based on these statements made by Ferrell and McRae at the Settlement Conference, the Turner Parties assert that Ferrell and McRae should be held in civil contempt for violating the Hinds County Order.

         II. STATUS OF THE TRUST FUND

         As stated above, the Hinds County Order ordered that “upon deposit of said monies, the funds will not be withdrawn until further Order of the Court advising and notifying all necessary parties.” Though this case was removed from the Hinds County Circuit Court on September 8, 2015, the Hinds County Order remains a valid and enforceable order binding on the parties in this case.

         Pursuant to Title 28 U.S.C. §1450, “[a]ll injunctions, orders, and other proceedings had in [an] action prior to its removal shall remain in full force and effect until dissolved or modified by the district court.” This statute has been interpreted and affirmed by the United States Supreme Court in Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, etc., 415 U.S. 423 (1974). In Granny Goose, the United States Supreme Court stated that: “Judicial economy is promoted by providing that proceedings had in state court shall have force and effect in federal court, so that pleadings filed in state court, for example, need not be duplicated in federal court.” Granny Goose, 415 U.S. at 435-36 (emphasis added). “After removal, the federal court ‘takes the case up where the State court left it off.'” Id. at 436 (quoting Duncan v. Gegan, 101 U.S. 810, 812, 25 L.Ed. 875 (1880)). “Thus attachments, sequestrations, bonds, undertakings, securities, injunctions, and other orders obtained in state court all remain effective after the case is removed to federal court.” Id. (emphasis added). Though Granny Goose specifically dealt with the effect of removal on a preliminary injunction issued in the case while it was pending in state court, the Supreme Court affirmed that the Congress clearly intended to “preserve the effectiveness of state court orders after removal . . .” with the adoption of 28 U.S.C. ...


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