United States District Court, D. Nebraska
BROOM, CLARKSON, LANPHIER & YAMAMOTO, a Partnership; Plaintiff,
EDWARD KOUNTZE, individually and as Personal Representative of the Estate of Denman Kountze, Jr. in Collier County, Florida; and RASMUSSEN & MITCHELL, Defendants.
MEMORANDUM AND ORDER
Joseph F. Bataillon, Senior United States District Judge
This matter is before the Court on defendant Edward Kountze’s objection, Filing No. 87, to the findings of the magistrate judge, Filing No. 84, denying defendant’s motion to vacate and discharge an order of attachment, Filing No. 65. Pursuant to 28 U.S.C.A. § 636, this court has jurisdiction to review any pretrial matter decided by the magistrate judge where an objection has been raised questioning whether the magistrate judge’s order was erroneous or contrary to law. The Court will review this matter de novo. For the reasons stated below, the Court affirms the order of the magistrate judge.
This action arises out of a retainer agreement for professional legal services entered into on September 15, 2004, between the parties in this lawsuit. Defendant Kountze retained the services of plaintiff to represent him in various legal matters. Plaintiff was removed as counsel for defendant on January 24, 2013, in the midst of a Trust Administration Proceeding in Douglas County, Nebraska.
The initial action in this case was filed by the plaintiff on September 25, 2013, in the District Court of Douglas County, Nebraska to recover unpaid legal fees. Filing No. 1, Notice of Removal. The plaintiff seeks more than $375, 000 in unpaid attorneys’ fees for legal services it allegedly provided to the defendant in two Nebraska lawsuits. See Filing No. 59, Index of Evidence, Ex. 1 - Complaint ¶¶ 6-13. The state district court entered a default judgment against the defendant for failing to respond to the complaint. On July 16, 2014, the state court judge vacated the default judgment and ruled that Kountze “did not have actual notice of [the State Court Action] as required by Neb. Rev. Stat. § 25-525.”. See Filing No. 66, Index of Evidence in Support of Application to Vacate and/or Discharge Order of Attachment (“Index”), Ex. D - Order.
On October 8, 2013, plaintiff caused to be filed in the state court action a motion seeking an order of attachment of certain keys to three safety deposit boxes belonging to Mr. Kountze and located at First National Bank of Omaha. See Index, Filing No. 66, Ex. A. Defendant contends that plaintiff neither served Mr. Kountze with the motion, nor with the summons and complaint in the state court action. On October 17, 2013, an order of attachment was entered in the state court action, causing the Sheriff of Douglas County, Nebraska, to take custody of Mr. Kountze’s safety deposit box keys. See Filing No. 66, Index, Ex. B. The safety deposit box keys were previously being held by the Clerk of the Douglas County Court and could only be removed by Mr. Kountze.
Plaintiff further contends that defendant lived in Oregon and filed tax returns there from 2008 through 2012. Plaintiff states it “served notice by certified mail to Edward Kountze at three addresses: in care of Karla Gottschalk’s office in San Francisco; a Post Office Box in Eugene, Oregon; and Ted Kountze’s address in Eugene, Oregon. Filing No. 18, Ex. 10, p1. On or about December 12, 2013, after failing to perfect service of the summons and complaint on Mr. Kountze in the state court action, plaintiff filed a motion for service by publication. Filing No. 65, at 1-2. Defendant contends that plaintiff attempted to serve him in Eugene, Oregon, which was not a viable service address. Plaintiff also sought to publish notice in Omaha, Nebraska, even though defendant had allegedly not lived there for 7 years.
Thereafter, on April 24, 2014, a default judgment was entered against Mr. Kountze in the state court action. Defendant contends that plaintiff and his counsel David Lanphier knew they could have served his Nebraska attorney and accountant named Kathryn M. Hemenway. Further, defendant contends that plaintiff knew that a California attorney, Rory P. Bartle, Esq. likewise represented the defendant. Plaintiff did not contact Mr. Bartle either regarding the lawsuit. When notice of publication in the state court action was authorized, a notice of publication of the suit was sent to Edward Kountze care of Karla Gottschalk and all addresses that were used in the notice of withdrawal of plaintiff in the Heirloom Trust appeal. As for the Florida address, plaintiff contends that defendant claimed he left Florida with his family after 2011 because of fear for their safety and his Florida home was rented. However, defendant also indicates that he has lived in Florida since his appointment as the personal representative of the Trust. But when the Trust was created in 2005, he listed his address at a P.O. Box in Boulder, Colorado. Plaintiff also argues that Kountze has claimed different addresses in different lawsuits, claiming to be a resident of California in one suit.
In June, 2014, plaintiff filed a court case in Florida in an attempt to enforce the Nebraska default judgment from the state court action. Plaintiff did not cause a copy of that action to be mailed to the residential address in Florida where Mr. Kountze contends he resides, which is owned by a Trust. Mr. Kountze is one of the trustees for this Trust. According to Mr. Kountze, a friend later allegedly told him that he had been sued. Mr. Kountze states that he then checked the docket and found out he had in fact been sued. Within the month, Mr. Kountze filed his application to reopen and vacate the state court default judgment in Douglas County, Nebraska. The state court judge specifically found that Mr. Kountze did not have actual notice of the state court action as was required by Neb. Rev. Stat. § 25-525, and sustained Mr. Kountze’s application to reopen and vacate default judgment. See Filing No. 66, Index, Ex. D; Ex. C, at ¶ 13. Mr. Kountze then filed a Notice of Removal to this Court on the basis of diversity jurisdiction.
Thereafter, Mr. Kountze learned of the motion for attachment and that his safety deposit box keys are no longer being held by the Clerk of Douglas County. He argues the October 17, 2013, order of attachment was entered without his knowledge or a copy of a summons or complaint served on him. Thus, he cannot access his safety deposit box.
The defendant asks this Court to vacate the order of attachment. Defendant contends he did not ever try and avoid service of process and that adequate grounds did not exist to attach his safety deposit box keys in the first instance. Moreover, plaintiff’s affidavit submitted in support of his motion seeking an order of attachment did not sufficiently set forth any of the required grounds for pre-judgment attachment under Neb. Rev. Stat. § 25-1001, argues Kountze.
The plaintiff argues it had grounds for the attachment pursuant to Neb. Rev. Stat. § 25-1001. Mr. Kountze’s letters of appointment in the Collier County Florida Court, for the Denman Kountze Jr. estate, state that Edward Kountze is a Trustee of the Fifth Trust Amendment to the Restated Trust /u/d 5/19/05. Filing No. 68, Ex. 7 p. 1-2. That Trust is a Spendthrift Trust, Filing No. 68, Ex. 2 pp.13-31-see specifically p. 21, Article Tenth, Page ID 1603, titled Spendthrift Provision which provides: “Until distributed, no gift or beneficial interest shall be subject to anticipation or to voluntary or involuntary alienation”. Plaintiff argues that is the motivation for not posting a bond to discharge the attachment.
Defendant moves to vacate and/or discharge the order of attachment entered on October 17, 2013 pursuant to Neb. Rev. Stat. § 25-525. Following removal, state court attachments are preserved “in the same manner as they would have been held to answer final judgment or decree had it been rendered by the State court.” 28 U.S.C. § 1450. Under Nebraska law, at the commencement of a civil action for the recovery of money, a plaintiff may attach property of the defendant when the defendant “has absconded with the intent to defraud his or her creditors[.]” Neb. Rev. Stat. § 25-1001(1); see Fed. Farm Mortg. Corp. v. Hughes, 289 N.W. 866, 868 (Neb. 1940) (“[P]roperty of a nonresident defendant may be attached at or after the commencement of the action.”). “To ‘abscond’ ...