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FDIC As Receiver for Amtrust Bank v. Lewis

United States District Court, D. Nevada

October 1, 2014

FDIC as Receiver for AMTRUST BANK, f/k/a Ohio Savings Bank, a federal savings bank, et al., Plaintiff(s),
v.
REX H. LEWIS, et al., Defendant(s)

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is defendant/judgment debtor Rex H. Lewis's ("Lewis") motion to dissolve the court's order enjoining Lewis from transferring assets, or, alternatively, for permission to withdraw funds to pay legal fees and living expenses. (Doc. # 71). Plaintiffs/counter-defendants Iota Cinnamon, LLC, Iota Coral, LLC, Iota Red, LLC, Iota Royal, LLC, and Iota Violet, LLC, ("IOTA entities") filed a response in opposition, (doc. # 72), and Lewis filed a reply. (Doc. # 75).

I. Background

This is a real property foreclosure case. The court's November 28, 2012 order granted summary judgment in favor of IOTA entities on their claims against Lewis and entities controlled by Lewis. (Doc. # 41). On April 25, 2014, the court entered an amended judgment in favor of IOTA entities and against Lewis for approximately $55, 000, 000. (Doc. # 59).

On July 3, 2014, the court granted IOTA entities' ex parte motion enjoining Lewis from transferring assets worth $5, 000 or more. (Doc. # 65). Pursuant to the order, Lewis must move the court for leave before engaging in any such transfers. Further, the injunction is to remain in effect until it is dissolved or the amended judgment against Lewis is satisfied. The judgment against Lewis has not been satisfied. On August 15, 2014, Lewis filed the instant motion. (Doc. #71).

II. Legal Standard

The procedure for executing a money judgment in federal court "must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Fed.R.Civ.P. 69(a)(1). Under Nevada law, a court may enter an injunction to prevent a defendant from taking any act in violation of the plaintiff's rights respecting the subject of the action, and tending to render the judgment ineffectual." NRS 33.010(3).

II. Analysis

a. Motion to dissolve order enjoining transfer of assets

Lewis argues the order enjoining him from transferring assets should be dissolved. He argues that dissolution is proper because the order is essentially a temporary restraining order that should have expired 15 days after entry or, alternatively, because the order is an injunction which was issued without a bond.

The order enjoining Lewis from transferring assets is clearly authorized under NRS 33.010(3) as an injunction to protect the enforceability of the judgment against Lewis. The court found that Lewis had transferred significant assets during this case and that any further transfers could violate the rights of IOTA entities and render the judgment against Lewis ineffectual. (Doc # 65). Based on this finding, the court entered the order enjoining Lewis from transferring assets. Since the order was entered after judgment had been entered against Lewis, the order is not "essentially a temporary restraining order", as argued by Lewis. Rather, the order is a permanent injunction. The court rejects Lewis's argument that the order should have expired 15 days after entry as a temporary restraining order.

Lewis's argument that the order should be dissolved because it was issued without a bond is likewise unpersuasive. Federal Rule of Civil Procedure 65(c) explicitly refers to posting of bond only in connection with temporary restraining orders and preliminary injunctions. The rule does not require an applicant to post bond in connection with entry of a permanent injunction. See G.C. and K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1108 n.8 (9th Cir. 2003). Because the order was entered post-judgment it is a permanent injunction and no bond is required.

Moreover, even if the order enjoining Lewis from transferring assets was a preliminary injunction, the mere absence of a bond would not render it invalid. Rule 65(c) does not require the posting of security in connection with a preliminary injunction in every instance. Rather, Rule 65(c) "invests the district court with discretion as to the amount of security required, if any. '" Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003) (italics in original; quoting Barahona-Gomez v. Reno, 167 F.3d 1228, 1237 (9th Cir. 1999)).[1]

Accordingly, the court rejects Lewis's claim that the injunction should be dissolved because it was issued without a bond. Accordingly, Lewis's motion to dissolve the order ...


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