Labertew v. Langemeier

Plaintiffs Marcus Labertew, his wife, and John and Jennifer McDermott filed suit against Fred R. Auzenne and Loral Langemeier in state court, claiming that Auzenne and Langemeier defrauded Marcus Labertew and John McDermott. The parties settled the case with a Damron agreement. Plaintiffs dismissed their case pursuant to the agreement, and Langemeier stipulated to a $1.5 million judgment against her, a covenant not to execute against her personally and an assignment by her to plaintiffs of her rights against her liability insurers Chartis and 21st Century. Plaintiffs then applied in state court for writs of garnishment against the insurers, and the insurers removed to federal district court. The district court concluded that it had jurisdiction, and that pursuant to Federal Rule of Civil Procedure 69, Arizona garnishment law applied. In this case, because the Labertews and the McDermotts had missed their ten day window for objecting, the garnishment failed, and under Arizona law the garnishees were discharged. The court concluded that, under Swanson v. Liberty National Insurance Co., the district court had jurisdiction over the garnishment proceeding because it is a separate and independent civil action from the suit by the Labertews and McDermotts against Langemeier. The court also concluded that not only is there no federal judgment in this case upon which to execute, but there is also no state judgment against the insurance companies that could be registered and enforced in federal court. The court explained that this is a civil action in which plaintiffs are seeking to obtain, for the first time, a judgment establishing the liability of the insurance companies. Finally, the court concluded that the district court has discretion under Rule 81(c)(2) to order repleading. Accordingly, the court reversed, vacated, and remanded. View "Labertew v. Langemeier" on Justia Law