Eleventh Circuit Clarifies Limits on Ancillary Enforcement: No Rule 69/Section 56.29 Constructive-Trust Proceedings Against Non‑Judgment Debtors

Introduction

This appeal arises at the intersection of federal ancillary enforcement jurisdiction, Florida’s post‑judgment supplementary proceedings statute, and creative creditor strategies to collect sovereign debt. Casa Express Corp., as trustee of the Casa Express Trust, obtained a $43.36 million federal judgment in the Southern District of New York against the Bolivarian Republic of Venezuela on defaulted global bonds and a note. Seeking to collect in Florida, Casa initiated supplementary proceedings under Florida Statutes section 56.29 to reach eight Miami properties titled in corporate entities allegedly controlled by Venezuelan businessman Raul Gorrin Belisario.

Casa’s theory was not that Venezuela had fraudulently transferred its own assets to evade the New York judgment. Rather, Casa alleged that Gorrin bribed Venezuelan treasury officials to obtain preferential foreign exchange contracts, siphoned proceeds through a currency‑exchange scheme, and used those ill‑gotten gains to purchase the Florida real estate through six shell companies. On that basis, Casa asked the federal district court in Florida to impose a constructive trust over the properties and deem them “Venezuela’s” for execution purposes.

The district court granted several defense motions, including a ruling that it lacked ancillary jurisdiction under federal law to hear Casa’s supplementary proceeding. On appeal, the Eleventh Circuit affirmed the lack of ancillary jurisdiction, concluded that Casa’s proceeding sought to impose liability on non‑judgment debtors based on new facts and theories unrelated to the New York judgment, and distinguished its earlier decision in National Maritime Services, Inc. v. Straub. The court vacated the district court’s alternative merits rulings and remanded with instructions to dismiss without prejudice for lack of subject matter jurisdiction.

Summary of the Opinion

• The Eleventh Circuit held that the district court lacked ancillary enforcement jurisdiction to entertain Casa’s Florida supplementary proceeding under Federal Rule of Civil Procedure 69(a) and Florida Statutes section 56.29.
• Two independent Peacock problems defeated ancillary jurisdiction:
  • Casa’s proceeding sought to impose an obligation to satisfy an existing federal judgment on third parties who were not already liable on that judgment (Gorrin and his corporate entities).
  • The proceeding was predicated on different facts and entirely new theories (bribery, unjust enrichment, constructive trust) unrelated to the New York contract action on the bonds and note.
• Straub does not apply: that case involved a classic fraudulent‑transfer claim tied to the judgment debtor’s own dissipation of assets, with the third party’s exposure limited to the value of assets fraudulently conveyed. Here, Venezuela never owned the Miami properties and did not transfer them to the appellees.
• Casa identified no independent basis for federal subject matter jurisdiction (e.g., diversity or federal question) over its constructive‑trust claims against the private third parties; at oral argument it conceded it relied solely on ancillary jurisdiction.
• Result: Affirmed lack of ancillary jurisdiction; vacated alternative merits rulings; remanded to dismiss the supplementary proceeding without prejudice for lack of subject matter jurisdiction.

Analysis

Precedents and Authorities Driving the Decision

Kokkonen v. Guardian Life Insurance Co. of America (U.S. 1994). Kokkonen frames ancillary jurisdiction’s two narrow strands: (1) to resolve claims that are factually interdependent with claims properly before the court; and (2) to enable a court to manage its proceedings and effectuate its decrees, including enforcing judgments. The Eleventh Circuit applied the second strand here, asking whether the Florida supplementary proceeding was a legitimate exercise of enforcement jurisdiction, or something “entirely new and original.”

Peacock v. Thomas (U.S. 1996). Peacock is the controlling limit. It holds that ancillary enforcement jurisdiction does not allow a federal court, in a subsequent lawsuit, to impose an obligation to satisfy a federal judgment on a person not already liable for that judgment, especially where the proceeding rests on different facts and new theories (e.g., veil piercing, conspiracy, fraudulent conveyance) not litigated in the original case. The Eleventh Circuit found this case to be “like Peacock, not Straub.”

National Maritime Services, Inc. v. Straub (11th Cir. 2015). Straub is the Eleventh Circuit’s leading case on ancillary jurisdiction in Florida supplementary proceedings. There, ancillary jurisdiction existed to unwind a fraudulent transfer by the judgment debtor, where the third party’s exposure was limited to disgorgement of the transferred asset’s value. The court distinguished Straub because Casa did not allege that Venezuela transferred its own assets to appellees to evade the New York judgment; Venezuela never owned the Miami properties. Thus, Casa sought to shift liability to new parties, not merely recover a judgment debtor’s asset held by a transferee.

Other authorities: The opinion also cites foundational jurisdiction cases (University of South Alabama v. American Tobacco Co.; Holston Investments), a reminder that Rule 69 and state supplementary procedures do not themselves supply federal subject matter jurisdiction. Jackson‑Platts v. GE Capital is cited to note that independent jurisdiction (e.g., diversity) can exist over section 56.29 proceedings, but Casa did not assert any such basis. DiMaio supports vacating alternative rulings and remanding for dismissal without prejudice once subject matter jurisdiction is lacking.

The Court’s Legal Reasoning

1. Ancillary enforcement jurisdiction is narrow. Post‑judgment, a federal court may use ancillary jurisdiction to enforce its decrees against those already bound, employing tools like attachment and garnishment. But the court may not create new substantive liability or adjudicate entirely new theories unrelated to the original judgment.
2. Casa’s constructive‑trust theory sought to shift liability, not enforce compliance by the judgment debtor.
   • The New York judgment ran against Venezuela for contractual nonpayment of bonds and a note. The Florida proceeding targeted different actors (Gorrin and his companies) and different conduct (bribery of Venezuelan officials, unjust enrichment, and property purchases in Miami).
   • The properties are not Venezuela’s assets transferred to evade the New York judgment; they are assets Casa alleges were bought with proceeds of an earlier corrupt scheme. To succeed, Casa would have to prove new wrongdoing and trace alleged misappropriated funds into the Florida properties—quintessential new facts and new legal theories.
   • That is exactly what Peacock forbids: using ancillary jurisdiction in a subsequent action to impose an obligation to pay an existing federal judgment on someone not already liable.
3. Straub’s fraudulent‑transfer pathway is unavailable.
   • Straub permitted ancillary jurisdiction because the judgment debtor itself transferred its own asset to a third party during the pendency of the case, and the court’s order merely “vindicated its authority” by restoring the status quo and preventing evasion of the judgment.
   • Casa did not invoke section 56.29’s fraudulent‑transfer provision and did not allege a transfer by Venezuela of the Miami properties (or any asset) to appellees. The theory here is constructive trust predicated on separate unlawful enrichment—not a debtor’s evasive transfer.
   • Even if Casa could prove the constructive‑trust merits, the relief would effectively shift payment responsibility from Venezuela to private third parties. That is beyond ancillary jurisdiction.
4. No independent jurisdiction pled or argued. The absence of ancillary jurisdiction does not categorically foreclose federal jurisdiction; a party can establish diversity or federal‑question jurisdiction for an independent action. Casa, however, relied solely on ancillary jurisdiction and identified no independent jurisdictional grant. The Eleventh Circuit “found none.” The case must therefore be dismissed without prejudice.
5. Scope of decision and remedial posture. Having resolved subject matter jurisdiction, the court vacated the district court’s alternative merits rulings and remanded with instructions to dismiss without prejudice. The panel did not reach other issues (e.g., personal jurisdiction, FSIA execution immunity, OFAC sanctions, act‑of‑state, standing, or the adequacy of constructive trust pleadings).

Impact and Practical Implications

For judgment creditors (especially sovereign debt creditors):

• Constructive‑trust collection suits against non‑judgment debtors cannot be shoehorned into ancillary enforcement jurisdiction. If the target assets never belonged to the judgment debtor and the theory requires proving new wrongdoing by third parties, Peacock controls. You must file an independent action with its own subject matter jurisdictional basis.
• Straub remains viable but narrow. Ancillary jurisdiction can support Florida section 56.29 proceedings to unwind a fraudulent transfer by the judgment debtor, where the third party’s liability is capped at the value of the transferred asset and the proceeding directly vindicates the original judgment. It does not extend to veil‑piercing, conspiracy, constructive trust, or other theories that create new liability.
• Plan for an independent jurisdictional hook. Consider:
  • Diversity jurisdiction: Confirm complete diversity and amount in controversy. Many collection targets in Florida are Florida citizens/entities, which can defeat diversity if the creditor is not diverse.
  • Federal question: Typically absent in state‑law constructive‑trust or unjust‑enrichment claims. FSIA does not create jurisdiction over private third parties.
  • State court: When no federal basis exists, state court may be the appropriate forum for an independent constructive‑trust action.
• OFAC sanctions remain a separate gating issue. While not reached here, creditors targeting sanctioned property will generally need an OFAC license before any transfer or sale. Expect sanctions issues to surface in any independent action.
• FSIA execution immunity issues postponed, not resolved. The panel did not reach whether the properties are immune from attachment under the FSIA. In any independent action, creditors must be prepared to address whether targeted assets qualify as “property in the United States of a foreign state” and whether any FSIA exceptions apply. Here, because the properties are held by private entities, FSIA’s execution provisions may not apply directly unless the property can be legally attributed to the foreign state.
• Default judgments and merits rulings do not survive once subject matter jurisdiction is lacking. The remand instruction to dismiss without prejudice for lack of subject matter jurisdiction wipes away alternative merits determinations. Creditors can re‑plead in a court of competent jurisdiction without being bound by vacated rulings.

For Florida post‑judgment practice:

• Section 56.29 is a powerful procedural tool, but it does not supply federal subject matter jurisdiction. Rule 69 imports state procedure; it does not expand federal judicial power.
• Fraudulent transfer proceedings under section 56.29 may fit within ancillary jurisdiction if they target debtor‑transferred assets. Constructive‑trust theories aimed at property never held by the debtor do not.
• When suing non‑judgment debtors, plead and prove an independent jurisdictional basis. Do not assume the original federal judgment supplies all necessary jurisdictional authority over third parties.

Complex Concepts Simplified

• Ancillary jurisdiction: A narrow doctrine that lets federal courts handle certain matters related to a case already properly before them, including enforcing their own judgments. It does not allow a new lawsuit to impose liability on someone not bound by the original judgment.
• Peacock rule: After you win a federal judgment, you cannot use ancillary jurisdiction to create new liability against third parties based on new facts. You can only use it to compel compliance with the existing judgment by those already bound.
• Fraudulent transfer vs. constructive trust:
  • Fraudulent transfer: The judgment debtor wrongfully moves its own assets to avoid paying a judgment. The remedy is to unwind that transfer and recover that asset (or its value) from the transferee.
  • Constructive trust: An equitable device to prevent unjust enrichment by treating someone as a trustee of property acquired through wrongdoing. In Florida, it generally requires a promise, transfer in reliance, a confidential relationship, and unjust enrichment. It often involves new facts and parties, which takes it outside ancillary enforcement jurisdiction.
• Rule 69(a) and section 56.29: Rule 69 lets a federal judgment be enforced using state procedures. Section 56.29 is Florida’s post‑judgment mechanism to reach assets in the hands of third parties. Neither rule creates federal jurisdiction where it otherwise does not exist.
• FSIA (Foreign Sovereign Immunities Act): Governs when foreign states can be sued and when their property can be attached or executed upon in the U.S. It was central to Casa’s original New York judgment against Venezuela but not a jurisdictional basis against private third parties in Florida.
• OFAC sanctions: When property or parties are sanctioned, transactions involving that property are generally blocked. A license from OFAC is usually required to sell or transfer the property, even to satisfy a judgment.
• “Trustee ex maleficio”: A person treated as a trustee due to wrongdoing (maleficence), such as knowingly participating in a breach of trust. It is an equitable concept that can support a constructive trust but still requires an appropriate jurisdictional forum.

Conclusion

Casa Express v. Bolivarian Republic of Venezuela marks a clear statement from the Eleventh Circuit: federal ancillary enforcement jurisdiction cannot be used to convert a money judgment against one debtor into equitable remedies against unrelated third parties based on new facts and theories. Peacock governs, and Straub’s exception is confined to true fraudulent‑transfer scenarios where the judgment debtor’s own asset was moved to frustrate collection and where the third party’s exposure is merely to return that asset (or its value).

For creditors, the decision is a blueprint and a warning. To pursue third‑party constructive‑trust or similar equitable claims, one must file an independent action and establish a separate basis for federal jurisdiction—or proceed in state court. For federal courts, the opinion reinforces that Rule 69 and state supplementary procedures do not expand the judicial power conferred by Article III and congressional grants. The case’s dismissal without prejudice preserves Casa’s ability to pursue its theories in a proper forum, but it also cements an important jurisdictional boundary in post‑judgment practice within the Eleventh Circuit.