Defendants Can Be Subject To Pre-Judgment Asset Freezes
I've written many time about clients who underestimate their creditors zeal and underestimate the ability of courts to freeze assets during litigation. Most people incorrectly believe that courts can do nothing more in civil cases than issue money judgements, and that creditors have the task of finding and seizing non-exempt assets. Most people also understand that courts can freeze assets though injunctions and temporary restraining orders to stop debtors from transferring their assets after money judgments are entered which give creditors an interest in debtors property.
Recently, I learned of a civil case in federal court where the federal judge took more drastic action to the dismay of the defendant. The court and plaintiff were frustrated by repeated delays on the part of the defendant and his litigation attorney to comply with plaintiff's discovery orders. The court sanctioned the defendant by dismissing his pleadings and entering a default for an amount to be determined later. Even though no amount of damages had been determined and no final judgment against defendant entered, the court ordered the defendant and his controlled business entities not to transfer any assets. This order is not directed to any specific property, but is a restraint on the persons from taking any action to transfer any asset.
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