Dexia Credit Local v. Rogan

In citation to discover assets proceeding filed after creditor obtained $124 million default judgment against debtor in fraud action, Dist. Ct. did not err in finding that certain assets held in trusts established by debtor on behalf of his children actually belonged to debtor and were susceptible to being turned over to creditor in partial satisfaction of default judgment. Doctrine of issue preclusion prevented children from re-litigating date that debtor's fraudulent conduct began for purpose of identifying assets covered by instant turnover order, even though children were not parties in underlying fraud action, since debtor's interests in underlying fraud action were similar to children's interests in defending against imposition of constructive trusts in instant supplemental proceedings. Ct. also rejected children's argument that instant turnover order was improper because: (1) creditor failed to track assets that had been transferred to children's trusts to prevent commingling of said assets from legitimate assets; (2) creditor failed to issue second set of citation to discover assets pleadings after Dist. Ct. had entered final nunc pro tunc order in underlying fraud action that had effective date that pre-dated initial citation pleadings; (3) Dist. Ct. acted beyond scope of instant supplemental proceeding by adjudicating substantive property rights of children in trust assets; and (4) children were entitled to jury trial to determine ownership of trust assets.