Broker Genius Inc. v. Seat Scouts LLC

Background

After a ten-day jury trial, the court entered a January 22, 2019 judgment awarding Broker Genius $3,000,000 against Drew Gainor on a breach-of-contract claim and $1,500,000 against Gainor and Seat Scouts LLC on an unfair-competition claim. The defendants filed a notice of appeal. They did not post a bond or obtain a stay, so Broker Genius remained free to enforce the judgment.

Broker Genius sought an order under 28 U.S.C. § 1963 directing the Clerk of Court to certify the judgment and allowing Broker Genius to register it in other federal districts where the defendants had assets. The requested districts included the District of Nebraska, District of Delaware, District of Massachusetts, Eastern District of North Carolina, and Northern District of California. Seat Scouts and Gainor opposed the request.

Legal standard

Section 1963 permits registration of a federal district court judgment in another federal district after the judgment becomes final through an appeal or expiration of the appeal period. It also permits registration earlier when the court that entered the judgment finds good cause. The court explained that good cause may be shown by evidence that the defendant has substantial property in another district and insufficient property in the district that entered the judgment to satisfy the award.

Court’s analysis

Broker Genius represented that its investigation had found no defendants’ assets in New York. The opposition did not dispute that point. Broker Genius also presented evidence that Gainor and Seat Scouts had assets outside New York. The court found that this evidence established good cause for registration in districts where the defendants had assets.

The court further noted evidence concerning the defendants’ business dealings with Pistol Enterprises LLC after judgment was entered. Two judges had expressed concern that assets might be dissipated or transferred in a way that would prevent Broker Genius from recovering the judgment. The court stated that this evidence was not necessary to establish good cause but further supported its conclusion.

Disposition

Judge Sidney H. Stein granted Broker Genius’s motion. The Clerk of Court was directed to certify the judgment dated January 22, 2019, and Broker Genius was permitted to register the judgment in federal districts where the defendants had assets, including the five districts identified in the order.