Hughes v. Abell, Civil No. 09-220 (JDB) (JMF)

GEORGE R. HUGHES, Plaintiff, v. VINCENT L. ABELL, et al., Defendants.

Civil No. 09-220 (JDB) (JMF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Dated: April 30, 2014

MEMORANDUM OPINION

This case arises out of a lengthy dispute about the conveyance of a Washington, D.C., property. Extensive litigation resulted in a settlement agreement, which this Court approved. See Settlement & Dismissal Order [ECF No. 157]. That approval left open one issue: who is entitled to the settlement proceeds? The Court referred that question to a magistrate judge, who issued an order requiring anyone claiming an interest in those proceeds to file a statement of claim. See Jan. 18, 2013 Minute Order. The magistrate judge's commendable efforts in assessing those statements left two parties standing: Maria-Theresa Wilson ("Wilson") and Asset Lending Corporation ("Asset"). Wilson filed a motion for summary judgment and, after a round of briefing, the magistrate judge issued a Report and Recommendation granting the motion and finding that she is entitled to the funds. See Report & Recommendation [ECF No. 176] ("R&R"). Asset objected, and Jackson & Campbell, P.C. ("J&C") filed a motion to intervene in order to object. See Asset Objections [ECF No. 177]; J&C Mot. to Intervene [ECF No. 178]. After referring that motion to the magistrate judge, and following even more briefing, this Court adopted the magistrate judge's recommendation that J&C not be allowed to intervene—but the Court permitted J&C to file an amicus brief. See Mem. Op. [ECF No. 186]. Now before theCourt are [177] Asset's objections to the magistrate judge's recommendation that summary judgment be granted in favor of Wilson, and [188] [191] J&C's amicus briefs supporting Asset. For the reasons described below, the Court will accept the magistrate judge's recommendation and enter judgment in favor of Wilson.

BACKGROUND

The long history of this case is extensively detailed in several prior opinions of this Court and in the magistrate judge's thorough R&Rs. See, e.g., Mem. Op. [ECF No. 186] 1-4. The details salient to the resolution of Wilson's summary judgment motion are as follows. Under the terms of the settlement agreement reached by the parties and approved by this Court, Wells Fargo deposited $42,000 into the Court's Registry "for the benefit of the Abell Creditors." Settlement & Dismissal Order [ECF No. 157] at 2. When the magistrate judge called for statements from claimants, Wilson moved to intervene. See Wilson's Mot. to Intervene [ECF No. 155]. She did so because, back in 2007, she obtained a $2,060,000 judgment against Abell and others in D.C. Superior Court. R&R at 3. On July 24, 2007, she recorded that judgment with the D.C. Recorder of Deeds, placing a lien on Abell's properties in D.C. Id. Abell sought to stay the execution of that judgment pending appeal, and on June 3, 2008, after the D.C. Court of Appeals conditionally granted Abell's motion, a D.C. Superior Court judge set bond for the stay. Id. at 4. Wilson did not take any steps to alter the notice of judgment she filed with the D.C. Recorder of Deeds. Id. at 5.

While Abell's appeal was pending, Sophia Williams—not a party here—also obtained a judgment against Abell in unrelated litigation. Id. at 9. That judgment was recorded on June 2, 2010, and Asset maintains that it was then validly assigned the judgment, meaning that it has a lien against Abell as well. Id. at 9-10.

The D.C. Court of Appeals decided the appeal in Wilson's case on June 3, 2011. Id. at 5. Wilson recorded an amended judgment with the D.C. Recorder of Deeds on November 4, 2011. Id. Later that month, a Superior Court judge ordered that the "stay on execution and enforcement of the Judgment" was dissolved, and that Wilson could immediately proceed to collect on the judgment: hence her claim to the funds in the Court's Registry here. Id.

Wilson and Asset disagree about two things: (1) whether Williams properly assigned her judgment to Asset, and (2) the effect of the Superior Court's June 3, 2008 Order on Wilson's lien priority date. For Asset to be entitled to the funds, it must have been validly assigned the Williams judgment, and Wilson's lien priority date must be later than June 2, 2010 (in other words, it must be November 4, 2011, not July 24, 2007).

STANDARD OF REVIEW

Under Fed. R. Civ. P. 72(b), once a magistrate judge has entered his recommended disposition of a dispositive matter—such as Wilson's motion for summary judgment—a party may file specific written objections. Fed. R. Civ. P. 72(b)(2). The district court then "must determine de novo any part of the magistrate judge's disposition that has been properly objected to" and may "accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed. R. Civ. P. 72(b)(3).

Summary judgment is appropriate when the pleadings and the evidence demonstrate that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

DISCUSSION

Objectors¹ find two faults with the magistrate judge's R&R. First, they argue that Asset was validly assigned the Williams judgment in 2010. Second, they argue that Wilson's lien priority date is November 4, 2011, because of the June 3, 2008 Superior Court order. Objectors must be right on both counts for Asset to be entitled to the funds. The Court addresses objectors' arguments in turn.

I. ASSIGNMENT OF THE WILLIAMS JUDGMENT

Asset claims that it has priority because it purchased a judgment against Abell that was originally awarded to Sophia Williams in an unrelated matter before the D.C. Superior Court. R&R at 9. Williams recorded that judgment on June 2, 2010. Id. After realizing the difficulty of collecting from Abell, Williams decided to settle that case. She, Abell, another party called Modern Management Co.,² Asset, and JMW Settlements, Inc. (the "settlement servicer") signed a settlement agreement on May 3, 2011. Id. Asset, controlled by Abell's father, was involved in the settlement because Abell was already indebted to Asset, and Williams' judgment was purportedly preventing Abell from selling some property in order to pay back Asset. See Settlement Agreement [ECF No. 172-12] at 1 ("Williams Settlement"). Because the settlement involved a minor (Williams), it required court approval, see D.C. Code § 21-120(a); until the court approved the settlement, it was not fully effective. See Williams Settlement at 1-2. In summary, pursuant to the settlement agreement, Asset agreed to purchase the judgment from Williams; Asset would pay $100,000 to a settlement servicer, assigning Asset's obligation to pay Williams in the process; and Williams would assign the judgment to Asset. All of this was tohappen after the court approved the settlement. The agreement did not impose any payment obligations on Abell. Id.

The court approved the settlement on July 8, 2011. R&R at 11. Asset paid the new settlement servicer, Metlife Tower Resources Group, Inc. ("Metlife").³ Id. at 13. Then, on November 21, 2011, Williams assigned the judgment to Asset. Id. at 11. Asset thus believes it was validly assigned the judgment against Abell, June 2, 2010 lien priority date and all.

The magistrate judge thought otherwise because of one of the assignments contemplated in the settlement agreement itself. On June 27, 2011, before the parties moved to approve the settlement,⁴ Abell,⁵ Modern Management, Metlife, and Williams executed a "qualified assignment," which referenced the original settlement agreement. See Qualified Assignment [ECF No. 172-15].⁶ Strangely, Asset was not a party to the qualified assignment, even though the settlement envisioned Asset paying a settlement servicer, who would then pay Williams. Id. at 1. The qualified assignment stated that Abell "has liability to make certain periodic payments to or for the benefit of" Williams. Id. This statement, however, did not accurately describe the settlement agreement, which provided that Asset, not Abell, was the only party with an obligation to make any payments to Williams. See Williams Settlement at 1-2.

Under the qualified assignment, Metlife purported to assume "all of [Abell's] liability to make" periodic payments to Williams, but nothing more. See Qualified Assignment at 1. For her part, Williams did not release Abell from all liability; she agreed only to "release[] and discharge[] [Abell] from all liability to make" periodic payments—to the extent he had any suchliability. Id. Substituting Asset for Abell, this assignment went as planned: Asset (Abell)⁷assigned its obligations to pay Williams to the settlement servicer; the next step was for Williams to assign the judgment to Asset.

The magistrate judge, however, found that because Abell had an obligation under the settlement agreement to make payments to Williams (which he did not), and because Metlife assumed that (nonexistent) obligation, Abell was no longer liable to Williams for anything. See R&R at 14. Thus, Williams' judgment was somehow rendered nugatory, so that when Williams assigned it to Asset, Asset received nothing. After all, it is elementary that an assignee can have no greater rights than those possessed by the assignor. See, e.g., LeRoy Adventures, Inc. v. Cafritz Harbour Group, Inc., 640 A.2d 193, 199 (D.C. 1994) (citation omitted). But the qualified assignment did not even involve the judgment. See Qualified Assignment at 1-4. It only involved Asset's⁸ end of the deal—payment to the settlement servicer, who then assumed an obligation to pay Williams. Williams never assigned her judgment—her right to receive payment of $3,000,000, guaranteed by her right to enforce that judgment—until November 21,...