Richardson v. Younce (In re Nail), No. 22-01379 (Bankr. W.D.Mich. June 8, 2023)
On June 8, 2023, the U.S. Bankruptcy Court for the Western District of Michigan issued a memorandum decision and order dealing with a motion by the chapter 7 trustee, who had prevailed in litigation, for authority to conduct an examination of the judgment debtor pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. To begin with, the court explained that Rule 2004 does not apply for two reasons. First, Rule 2004 does not apply in pending litigation, where Rule 30 of the Federal Rules of Civil Procedure applies (through Rule 7030 of the Federal Rules of Bankruptcy Procedure).
Second, Rule 2004 does not apply to discovery in aid of judgment. Instead, Rule 69 of the Federal Rules of Civil Procedure (through Rule 7069 of the Federal Rules of Bankruptcy Procedure) applies. Although Rule 69 allows a judgment creditor to employ state-court procedure as well as any procedure “provided in these rules…” this naturally refers to the Federal Rules of Civil Procedure, not the Federal Rules of Bankruptcy Procedure.
However, in a show of extraordinary practicality, the court did not deny the motion. Instead, the court converted it to a motion under Rule 69 and granted the motion.
In dicta, the court offered some advice. The court noted that enforcement of judgments under federal law is “confusing, even difficult, for the federal courts and litigants.” Accordingly, the court suggested that the Trustee consider domesticating the judgment under the Uniform Enforcement of Foreign Judgments Act and utilize state court to enforce the judgment.
