In Ambrogi v. Reber, (Del. Cnty. Comm. Pls. Ct., Nov. 9, 2006), read opinon here, the Delaware County (Pennsylvania) Court of Common Pleas granted a preliminary injunction to prevent the potential dissipation of assets by defendants in a wrongful death action. The court was not persuaded by arguments that no liability had been determined yet, nor was it successfully argued that claims for fraudulent conveyance could be made in the future. Though plaintiffs, in general, are concerned that the defendants might be "judgment proof" by the time that a trial determines liability, the facts in this case were compelling. The defendants owned many investment properties. They were sued for wrongful death in connection with a fire in one of their buildings that resulted in the horrific death of a mother and child. The insurance on that building was only $1 million. After they were sued, the defendants sold, and were in the process of selling, many of their extensive holdings.
In order to address the argument that they were making themselves "judgment proof", the court ordered that all proceeds from the sale of any property they sold, or will sell, must be deposited into a court-supervised, interest-bearing account, that required court approval before any withdrawals were made. The court relied on a decision of the Pennsylvania Superior Court called Walter v. Stacy, 837 A.2d 1205 (Pa. Super. 2003). [In Pennsylvania, unlike Delaware, the trial court of general jurisdiction is the Court of Common Pleas and the intermediate appellate court is the Superior Court. For those not familiar with this part of the country, Delaware County, Pennsylvania is the jurisdiction adjacent to Wilmington, Delaware, across the line, and I have had, and do have, cases there.]
I thought this case would be of interest to business litigators who are often concerned about the defendants they are suing being, or becoming, "judgement proof" or otherwise unable to satisfy a judgment–if one is obtained after trial. In the State of Delaware, the Chancery Court has the ability to enter injunctions such as the one entered in this case, based on principles of Quia Timet and other related equitable doctrines.