A Receivership Court Has Exclusive Jurisdiction Over the Receivership Property but Not Necessarily the Receivership Defendant

A court that appoints a receiver over property of a defendant typically has exclusive jurisdiction over such property and imposes a stay against commencing any litigation that would affect it.  A plaintiff that seeks to file suit to recover, impair, or affect property of a receivership estate or otherwise in the hand of the receiver or in the custody of the receivership court, must first seek leave and/or stay relief from the receivership court before filing suit.  And, such an in rem action should be brought in the court that appointed the receiver.  See Riehle v. Margolies, 279 U.S. 218, 224 (1929).

Where a suit is brought not against the receiver or receivership property but against the receivership defendant, and the relief sought is strictly in personam (i.e., its object is to establish liability and/or liquidate a claim against the receivership defendant personally as opposed to against its property), the suit may be brought in a court other than the court that appointed the receiver.  See id. (holding that state court had jurisdiction over claim brought against a defendant subject to federal receivership because such action did not deal directly with any property of receivership estate, but instead adjudicated defendant’s liability); see also Seaboard Air Line Ry. Co. v. Dorsey, 149 So. 759, 760 (Fla. 1932) (“The rule is well settled that the appointment of a receiver for the defendant does not abate an action against it nor will it bar the prosecution to judgment of such action.”).  Further, the party seeking in personam relief against the receivership entity is not required to seek leave from the court appointing the receiver prior to seeking such relief.  See Haire v. Overseas Holdings Ltd. Partnership, 908 So. 2d 580 (Fla. 2d DCA 2005) (holding that trial court had subject matter jurisdiction over plaintiff’s damages claims because they did not interfere with receiver’s exclusive possession of and control over receivership property).

In the event a plaintiff obtains a judgment against a receivership defendant in an in personam action, such judgment could only determine the existence and the amount of the claim against that defendant, and would not entitle the plaintiff to execute on or otherwise proceed against property of the receivership estate, in the hands of the receiver, or in the custody of the receivership court.  See 91 A.L.R. 996.  “The Receiver’s interest would be implicated only after the plaintiffs obtained a money judgment and sought to execute their judgment against the defendants’ assets.”  Wolff v. Cash 4 Titles, 351 F.3d 1348, 1354 n.19 (11th Cir. 2003).  To do so, of course, the plaintiff would have to seek leave and/or stay relief from, and then bring a separate in rem proceeding in, the receivership court.  See id.