In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2986
D EXIA C RÉDIT L OCAL,
Plaintiff-Appellee,
v.
P ETER G. R OGAN, et al.,
Defendants,
and
R OBERT C. R OGAN, B RIAN P.
R OGAN, and S ARA C. R OGAN,
Intervenors-Appellants.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 C 8288—Matthew F. Kennelly, Judge.
A RGUED F EBRUARY 22, 2010—D ECIDED N OVEMBER 24, 2010
Before K ANNE and W ILLIAMS, Circuit Judges, and
S PRINGMANN, District Judge.
Of the Northern District of Indiana, sitting by designation.
2 No. 09-2986
S PRINGMANN, District Judge. After obtaining a $124
million judgment against Peter Rogan (Rogan), Dexia
Crédit Local (Dexia) instituted supplemental pro-
ceedings to locate Rogan’s assets and satisfy its judg-
ment. In the course of supplemental proceedings, Dexia
requested the turnover of assets held in trusts that
Rogan had established, including trusts in the names of
each of his three adult children, Robert, Brian, and Sara
(the Rogan Children). After the district court froze the
trust assets in the course of preliminary proceedings,
the Rogan Children intervened in the supplementary
proceedings. The case advanced to a bench trial, and the
district court concluded that the trust assets actually
belonged to and were controlled by Rogan. The court
entered a final judgment ordering the turnover to Dexia
of nearly all the assets of the Rogan Children’s trusts,
and terminating the Rogan Children’s interests in those
trusts. The Rogan Children appealed. Finding that none
of the issues raised on appeal requires reversal, we
affirm the decision below.
I. BACKGROUND
A. The Underlying Lawsuit and Judgment
This case has its genesis in the Medicare and
Medicaid fraud scheme that Rogan perpetrated through
Edgewater Medical Center (EMC), a hospital on Chicago’s
north side, from at least 1993 to 2001. See United States
v. Rogan, 459 F. Supp. 2d 692 (N.D. Ill. 2006) (Rogan I),
aff’d United States v. Rogan, 517 F.3d 449 (7th Cir. 2008). In
1989, an entity that Rogan formed and controlled pur-
No. 09-2986 3
chased EMC. The Rogan-controlled entity managed and
administered EMC, and Rogan served as EMC’s chief
executive officer.
In 1994, EMC was sold to Northside Operating Com-
pany. To finance the purchase, Rogan caused the Illinois
Health Facilities Authority to issue approximately $41
million in bonds. Although he had sold EMC, Rogan
retained control of the hospital after the sale through a
series of transactions, and he then caused EMC to
enter into management contracts with two entities that
he also controlled, Braddock Management, L.P. and
Bainbridge Management, Inc. In 1997, Rogan arranged
to refinance the bond debt, and to this end, in June 1998,
he secured a letter of credit from Dexia guaranteeing
EMC’s repayment of the bonds. Eventually EMC’s
fraud was discovered, and the government stopped
Medicare and Medicaid payments to EMC. This caused
financial distress to EMC and, eventually, required
Dexia to pay $55 million on EMC’s behalf to satisfy ob-
ligations to bondholders. Dexia was unable to obtain
reimbursement from EMC.
In November 2002, Dexia sued Rogan and his manage-
ment company partners for fraud, conspiracy, and other
torts. Dexia alleged that, during the due diligence
process that led to its issuance of the letter of credit
and after Dexia issued the letter of credit, Rogan
defrauded Dexia by concealing that a significant portion
of EMC’s revenue was obtained through Medicare and
Medicaid fraud. Rogan vigorously defended against the
lawsuit for numerous years, but then moved to Canada
4 No. 09-2986
and abandoned his defense. In May 2007, Dexia ob-
tained a default judgment against Rogan and his
partner companies for $124 million.
B. The Government’s False Claims Act Suit
In 2002, the federal government instituted litigation
against Rogan under the federal False Claims Act (FCA),
31 U.S.C. §§ 3729-3733, for the submission of false
Medicare and Medicaid claims for patients referred to
EMC. 1 In that case, the district court found that Rogan
conspired with another EMC officer and physicians to
pay kickbacks and other improper benefits to the physi-
cians in return for patient referrals. These referrals
resulted in substantial profits for Rogan. See Rogan I, 459
F. Supp. 2d at 700. Although the government’s lawsuit
focused on particular false claims submitted from 1995
through 2000, the district court found that “[t]he con-
spiracy was evident in the early 1990s.” Id. The court
also concluded that the conspiracy began (albeit on an
apparently smaller scale) at least as early as 1993. See id.
(findings related to dealings between Roger Ehmen and
Dr. Ravi Barnabas); id. at 722 (findings related to
Dr. Barnabas). The court concluded that the govern-
ment proved that, from 1995 through 2000, Rogan
1
The other six participants in the fraud were charged crim-
inally and pleaded guilty. The theory advanced by the govern-
ment in the False Claims Act civil action was that Rogan
conspired with the six indicted persons to defraud the United
States.
No. 09-2986 5
caused EMC to submit over $19 million in false claims
to Medicare and Medicaid. Id. at 727.
C. The Rogan Children Trusts
In 1992, Rogan and his wife, Judith, set up three trusts
in Florida for the benefit of their children (the Domestic
Trusts). The Rogan Children are the only named bene-
ficiaries of the Domestic Trusts. A 10% stock interest in
EMC was the initial corpus for each of the Domestic
Trusts. After EMC was sold in August 1994, the Domestic
Trusts received money in exchange for the EMC stock
they held. The Domestic Trusts also owned entities that,
in turn, owned the management companies through
which Rogan continued to operate EMC following its
sale. During the period when Rogan operated EMC
through these entities—from 1994 through 1997—the
Domestic Trusts received millions of dollars in distribu-
tions from the entities. Fredrick Cuppy, who also served
as Rogan’s lawyer, was the trustee. He was later
removed as trustee by the district court as part of the
supplemental proceedings.
In June 1997, Rogan formed three additional trusts for
his children under Belizean law (Belizean Trusts and
collectively with the Domestic Trusts, the Trusts or
Rogan Children Trusts). He funded the Belizean Trusts
with interests in several of his companies. A company
owned by Cuppy served as the trustee.
6 No. 09-2986
D. Supplemental Proceedings
To collect its May 2007 judgment, Dexia served Peter
Rogan and Judith Rogan with citations to discover assets.
See Fed. R. Civ. P. 69; 735 ILCS § 5/2-1402. On Septem-
ber 26, 2007, Dexia initiated supplementary proceedings
against the Rogan Children Trusts by serving a citation
on Cuppy, the trustee of those Trusts. In February 2009,
Dexia served citations upon the individual children.
As part of the proceedings, the district court granted
various temporary restraining orders (TROs) to freeze
assets. Before the court converted the TROs into prelimi-
nary injunctions, the Rogan Children moved to inter-
vene for the purpose of protecting their claimed bene-
ficial interests in the Trusts. The parties engaged in dis-
covery related to the turnover proceedings, and the
Rogan Children lodged various procedural and jurisdic-
tional objections, none of which successfully ended the
proceedings or removed the Trust assets from consider-
ation.
During the course of ruling on the various challenges
lodged by the Rogan Children, the district court judge
discovered that two of the Defendants in Dexia’s under-
lying lawsuit, Bainbridge Management, L.P. (Bainbridge
LP) and Braddock Management, L.P. (Braddock LP), were
citizens of both Illinois and Belize. This dual citizenship
destroyed diversity jurisdiction, which does not exist
where the party on one side of a case is foreign—Dexia
is a French company—and the party on the other side
is both domestic and foreign. See Salton, Inc. v. Phillips
Domestic Appliances & Pers. Care B.V., 391 F.3d 871, 875
No. 09-2986 7
(7th Cir. 2004). The district court dismissed Bainbridge LP
and Braddock LP pursuant to Federal Rule of Civil Pro-
cedure 21 as nondiverse, dispensable parties. The
district court also discovered that the May 2007 default
judgment, which had been issued as a final judgment,
was not actually final because it did not dispose of
claims against Bainbridge LP (which was in bankruptcy
and subject to an automatic stay), and the district court
had not otherwise made any findings pursuant to
Federal Rule of Civil Procedure 54(b). The court then
ruled that the effect of dismissing the dispensable
parties, including the one that had been in bankruptcy,
was to make the May 2007 default judgment against
the remaining defendants, Rogan and Bainbridge Man-
agement, Inc. (distinct from Bainbridge LP), retro-
actively final as of May 2007.
The district court conducted a bench trial on Dexia’s
motion for turnover. On July 7, 2009, the court issued a 48-
page opinion granting Dexia’s motion for turnover of
assets, including those in the Rogan Children’s Trusts,
with the exception of $30,000 ($10,000 from each Trust)
that was gifted to the Trusts by an individual named
Scott Gross. This relief was predicated upon the court’s
finding that the Trust assets actually belonged to Rogan.
As alternative relief, the court imposed a constructive
trust on the property held by the Trusts. Again, the
court excluded the $30,000 that Dexia did not establish
was the result of Rogan’s fraudulent activities. This
appeal followed.
8 No. 09-2986
II. ANALYSIS
A. Subject Matter Jurisdiction
The Rogan Children argue that the district court
lacked and we lack subject matter jurisdiction over this
case. They contend that Dexia has formed an “unincorpo-
rated association” with LaSalle Bank, an Illinois corpora-
tion, and that LaSalle’s citizenship must be considered
when determining whether the federal court has subject
matter jurisdiction pursuant to 28 U.S.C. § 1332(a).
They assert that, because some of the defendants are
also Illinois citizens, Dexia’s unincorporated association
with an Illinois citizen destroys complete diversity of
citizenship. The Rogan Children’s claim that Dexia and
LaSalle should be considered an unincorporated associa-
tion is based on the following relationship: more than
one year after Dexia issued EMC the letter of credit,
LaSalle entered into a participation agreement with
Dexia to assume a portion of Dexia’s risk.
We must resolve a recognized issue of subject matter
jurisdiction before any other action is taken on a case,
United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942,
956 (7th Cir. 2003), and we review subject matter juris-
diction determinations de novo, Sapperstein v. Hager,
188 F.3d 852, 855 (7th Cir. 1999).
In the proceedings below, the district court determined
that only Dexia, not LaSalle, was the real party in
interest under Federal Rule of Civil Procedure 17. The
district court reasoned that LaSalle’s act of taking on
part of the obligations with respect to the letter of credit
did not transform it into a real party in interest with
No. 09-2986 9
regard to Dexia’s tort claims against Rogan. The Rogan
Children do not challenge this finding on appeal. Instead,
they assert that the finding under Rule 17 has no
bearing on their jurisdictional argument and that the
narrow issue on appeal is whether Dexia and LaSalle, by
sharing the profits and losses under the letter of credit,
were operating as an unincorporated association.2 Citing
our holding in Indiana Gas Co. v. Home Insurance Co.,
141 F.3d 314 (7th Cir. 1998), that all of the members be-
longing to a Lloyd’s of London syndicate had to be con-
sidered for purposes of diversity jurisdiction, the Rogan
Children criticize the district court for restricting its
analysis to whether Dexia and LaSalle formed a joint
venture or partnership, as opposed to some form of
unincorporated association akin to a Lloyd’s syndicate.
2
Despite arguing in their opening brief that the district
court’s determination regarding the real party in interest is not
relevant to their claim on appeal, the Rogan Children them-
selves cannot avoid discussing it. In their reply brief, they
argue that Dexia did not bring the suit on its own behalf
because Dexia’s judgment is for both its benefit and LaSalle’s
because LaSalle bore $20 million of the loss pursuant to the
participation agreement. The district court properly addressed
this when it reasoned that LaSalle suffered only a “trickle
down” harm of Rogan’s actions vis-à-vis Dexia, the party
that suffered the direct injury. See CCC Info. Servs., Inc. v. Am.
Salvage Pool Ass’n, 230 F.3d 342, 347 (7th Cir. 2000) (holding
that the real party in interest, whose citizenship is relevant
for purposes of determining diversity, is the party injured
and not its members who felt the injury only through a
trickle down effect).
10 No. 09-2986
Thus, the Rogan Children frame the issue as whether
Dexia and LaSalle operated as an unincorporated as-
sociation, and they leave unchallenged the trial court’s
determination that Dexia sued on its own behalf and is
the real party in interest.
It is true that when the question is “how the citizenship
of [a] single artificial entity is to be determined,”
the citizenship of that entity is not determined using
the real party to the controversy test. Carden v. Arkoma
Assocs., 494 U.S. 185, 187 n.1 (1990). But this principle
does not help the Rogan Children unless Dexia was
such an unconventional plaintiff, “that is, someone or
something other than either a natural person suing in his
own rather than a representative capacity, or a business
corporation,” Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th
Cir. 1998), and not a corporate entity. If Dexia is a corpo-
rate entity, the inquiry regarding its citizenship remains
straightforward. “[A] corporation is a corporation is a
corporation,” Cote v. Wadel, 796 F.2d 981, 983 (7th Cir.
1986), and determining its citizenship is as simple as
looking at the “State where it has been incorporated and
of the State where it has its principal place of business,”
28 U.S.C. § 1332(c)(1). As we explained in Society of
Lloyd’s v. Estate of McMurray, 274 F.3d 1133 (7th Cir.
2001), a lawsuit does not raise the subject matter juris-
diction problem that we addressed in Indiana Gas when
a corporation is the named party:
[In Indiana Gas], we held that complete diversity
did not exist between the parties because the com-
plaint named as defendants “Certain Underwriters
No. 09-2986 11
at Lloyd’s, London” and “Certain London Market
Insurance Companies.” See [141 F.3d] at 316. Because
these entities were not corporations, we treated them
as partnerships for purposes of diversity jurisdiction,
and since at least one Lloyd’s Name was domiciled
in the same state as the plaintiff, complete diversity
did not exist. See id. at 319. Here, the plaintiff is the
Society of Lloyd’s, a corporation incorporated under
the laws of England, and there is no question that
diversity jurisdiction exists.
Estate of McMurray, 274 F.3d at 1134 (citing Indiana Gas,
141 F.3d at 316, 319). Likewise, Dexia, the entity that
initiated the lawsuit to recover for fraud, conspiracy, and
other related torts, is a corporation incorporated under
the laws of France and has its principal place of business
in France. And “the status of the named litigant gov-
erns—provided that the litigant is an entity rather than
a name for an unincorporated association such as a part-
nership.” Downey v. State Farm Fire & Cas. Co. 266 F.3d
675, 680 (7th Cir. 2001) (citing Carden, 494 U.S. 185;
Indiana Gas Co., 141 F.3d 314).
The Rogan Children cannot escape the conclusion that
this case did not involve an “unconventional party”
that should have prompted the district court to take
heed of “a jurisdictional warning flag” in relation to
that entity. Cosgrove, 150 F.3d at 731. The Rogan Children’s
claim that the district court should have entertained
further notions that “Dexia Crédit Local” actually meant
something akin to a Lloyd’s of London syndicate or
other form of unincorporated association is unfounded.
12 No. 09-2986
Complete diversity of citizenship exists, and we affirm
the district court’s determination regarding subject
matter jurisdiction.
B. Finality of Judgment
In Illinois, supplemental proceedings under § 2-1402
are not available to creditors “until after judgment
capable of enforcement has first been entered in their
favor.” Marble Emporium, Inc. v. Vuksanovic, 790 N.E.2d 57,
62 (Ill. App. Ct. 2003) (citing cases discussing § 2-1402);
see also Ill. Sup. Ct. R. 277(a) (“A supplemental pro-
ceeding authorized by section 2-1402 of the Code of
Civil Procedure may be commenced at any time with
respect to a judgment which is subject to enforcement.”);
735 ILCS 5/2-1402(a). The Rogan Children argue that,
when Dexia issued citations to discover assets in the
supplemental proceedings, it held a non-final judgment
and that the citations were therefore invalid. They
submit that although the district court entered a final
judgment nunc pro tunc after dismissing nondiverse
parties under Federal Rule of Civil Procedure 21, the
remainder of the proceedings was void because no
new citations based on the final judgment were issued.3
3
The Rogan Children submit, without citation to the record,
that the district court entered a final judgment nunc pro tunc.
Our review of the record reveals that, on February 9, 2009, the
district court dismissed Defendants Bainbridge LP and
Braddock LP pursuant to Rule 21 and, in doing so, deter-
(continued...)
No. 09-2986 13
In this appeal, the Rogan Children do not dispute
that the district court’s dismissal of nondiverse parties
was a proper exercise of its authority under Rule 21. See
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 &
n.6 (1989); Hurley v. Motor Coach Indus., Inc., 222 F.3d
377, 380 (7th Cir. 2000). We recently held, in a separate
appeal filed by Judith Rogan challenging the district
court’s issuance of a preliminary injunction in these
same supplementary proceedings, that “the district
court properly dismissed the nondiverse parties under
[Rule] 21 and preserved its jurisdiction.” Dexia Credit
Local v. Rogan, 602 F.3d 879, 883 (7th Cir. 2010).
On the claim that they do advance—that the dismissal
of non-diverse parties was insufficient to retroactively
render the May 2007 judgment final—we disagree. The
Rogan Children make no attempt to explain what
purpose would be served by requiring that the dis-
covery citations be re-issued. Nor do they explain why
it would be necessary. Rule 21 dismissals are retro-
active, Newman-Green, 490 U.S. at 829, and the complaint
is read as if the dismissed party had never been
included, LeBlanc v. Cleveland, 248 F.3d 95, 99 (2d Cir.
2001). Retroactive applications of Rule 21 have permit-
ted appellate courts to affirm decisions of district courts
3
(...continued)
mined that the Rogan Children no longer had any basis to
challenge the finality of the May 2007 judgment “due to the
retroactive effect of the Rule 21 dismissals.” (R. 100-01.) Perhaps
this is what the Rogan Children meant by nunc pro tunc. In
any event, it makes no difference to the analysis.
14 No. 09-2986
on the merits despite the fact that the change in the
parties did not occur until much later in the litigation,
thereby avoiding the “waste of time and resources [that]
would be engendered by remanding to the District Court
or by forcing the[ ] parties to begin anew.”Newman-Green,
490 U.S. at 838. The Supreme Court observed:
[i]f the entire suit were dismissed, Newman-Green
would simply refile in the District Court against the
[defendants remaining after the Rule 21 dismissal] and
submit the discovery materials in hand. The case
would then proceed to a preordained judgment. . . .
Newman-Green should not be compelled to jump
through these judicial hoops merely for the sake of
hypertechnical jurisdictional purity.
Id. at 837 (citing Newman-Green, Inc. v. Alfonzo-Larrain, 854
F.2d 916, 932, 939-40 (7th Cir. 1988) (Easterbrook, J.,
dissenting)). The Rogan Children have offered us no
answer to this rationale. Their suggestion that Dexia
should be required to jump through the judicial hoop
of refiling their citations, only to proceed in the district
court to a preordained judgment, does not comport with
the efficient administration of justice.
Moreover, the district court’s actions were entirely
consistent with considerations of finality in those
situations where a judgment becomes final during the
pendency of an appeal. See Lovelette v. S. Ry. Co., 898
F.2d 1286, 1289 (7th Cir. 1990) (“[T]he failure to certify
a judgment on a separate claim as final under Rule 54(b)
can be cured where the rest of the claims and parties
are dismissed during the pendency of the appeal.”). Just
No. 09-2986 15
as in Lovelette, “[w]e see no reason not to extend an analo-
gous principle to the present situation,” id., particularly
when we also allow nunc pro tunc orders to render non-
final orders final and confer appellate jurisdiction—
without dismissal of the appeal or need to re-file the
notice of appeal, see Local P-171, Amalgamated Meat
Cutters and Butcher Workmen of N. Am. v. Thompson Farms
Co., 642 F.2d 1065, 1073 (7th Cir. 1981) (holding that a
district court has the power to add a Rule 54(b) certif-
ication to an order nunc pro tunc after the filing of a pre-
mature notice of appeal). See also King v. Gibbs, 876
F.2d 1275, 1278 (7th Cir. 1989).
Once the district court properly dismissed the non-
diverse parties, only those parties against whom judg-
ment had already been entered remained in the case.
The retroactive application of Rule 21 rendered the judg-
ment final and enforceable against these remaining
parties, and the court did not err in allowing the matter
to proceed upon the citations that had already issued.
C. Scope of a District Court’s Authority in Supple-
mental Proceedings
Federal Rule of Civil Procedure 69(a) provides that
“[t]he procedure on execution [of a money judgment]—
and in proceedings supplementary to and in aid of judg-
ment or execution—must accord with the proce-
dure of the state where the court is located.” Fed. R.
Civ. P. 69(a)(1). In Illinois, 735 ILCS 5/2-1402 and
Illinois Supreme Court Rule 277 govern supplemental
16 No. 09-2986
proceedings. Supplementary proceedings are post-judg-
ment processes that support the judgment creditor in
asset discovery and final satisfaction of judgment. Star
Ins. Co. v. Risk Mktg. Group, Inc., 561 F.3d 656, 662-63 (7th
Cir. 2009). The applicable statute provides:
[a] judgment creditor . . . is entitled to prosecute
supplementary proceedings for the purposes of exam-
ining the judgment debtor or any other person to
discover assets or income of the debtor not exempt
from the enforcement of the judgment, a deduction
order or garnishment, and of compelling the appli-
cation of non-exempt assets or income discovered
toward the payment of the amount due under the
judgment.
735 ILCS 5/2-1402(a). The service of a citation to
discover assets initiates supplemental proceedings. Id.;
see also Cacok v. Covington, 111 F.3d 52, 53 (7th Cir. 1997).
On appeal, the Rogan Children assert that the district
court acted outside its authority in adjudicating the
substantive property rights of third parties under
equitable theories such as alter ego. They claim that an
analysis of the scope of the proceedings is complicated
by the fact that even though Dexia was proceeding
under an alter ego theory throughout the case, the
district court ultimately analyzed the issue under an
ownership theory pursuant to our opinion in Star Insur-
ance. In that case, we held that the allegations that must be
made to pierce the corporate veil do not fall within the
scope of supplemental proceedings wherein the only
relevant inquiries are: “(1) whether the judgment debtor
No. 09-2986 17
is in possession of assets that should be applied to
satisfy the judgment; or (2) whether a third party is
holding assets of the judgment debtor that should be
applied to satisfy the judgment.” Star Ins. Co., 561 F.3d
at 660-61 (citing Pyshos v. Heart-Land Dev. Co., 630 N.E.2d
1054, 1057 (Ill. App. Ct. 1994)). The Rogan Children
assert that regardless of the theory used by the district
court, it did not have the authority to adjudicate their
personal property rights.
Although the Rogan Children contend that the district
court altered the legal theory upon which it relied and
thereby disadvantaged them, they do not clearly show
what this means to their appeal. Additionally, we do not
agree with their characterization of how this case was
framed or presented. The district court’s final order
granting turnover of assets was issued on July 7, 2009.
Earlier, in a March 12, 2009, order denying summary
judgment on the Rogan Children’s claim that Dexia
could not pursue sham trust, constructive trust, or alter
ego theories without filing a separate claim, the district
court wrote:
This argument misstates what Dexia is attempting
to accomplish in the supplemental proceedings. Dexia
has already prevailed on its claims against Peter
Rogan. Dexia now seeks to satisfy its judgment
against Rogan by collecting assets in the possession
of the Rogan domestic trusts that Dexia contends
are actually Peter Rogan’s assets based on the
equitable theories listed above. Dexia does not need
to assert a new claim to engage in such proceedings
18 No. 09-2986
to enforce its judgment against Peter Rogan. Though
the situation might be different were Dexia seeking
to hold the Rogan domestic trusts directly liable to
Dexia (in other words, irrespective of whether the
trusts’ assets are actually Peter Rogan’s), Dexia is not
now attempting to do so.
Dexia Crédit Local v. Rogan, 624 F. Supp. 2d 970, 982 (N.D.
Ill. 2009). In response to the Rogan Children’s argument
that Dexia could not use alter ego or veil piercing claims
in a supplementary proceeding, the court explained
that Illinois allows a judgment creditor to reach assets of
a debtor that are in the hands of third parties, which
was what Dexia was seeking. Id. at 982-83 (“[T]he
Rogan children place undue emphasis on the labels
Dexia has used to describe its equitable theories. In
these supplementary proceedings, Dexia does not
attempt to impose liability directly on Rogan domestic
trusts. Rather, Dexia asserts that those trusts hold
Peter Rogan’s assets. Dexia may use equitable theories,
including an alter ego theory or similar theories, to
attempt to prove that assertion.”).4 In a much earlier
order granting injunctive relief, the court similarly rea-
soned:
4
In its appellate brief, Dexia notes that courts have used the
term “alter ego” in traditional veil piercing cases and property
ownership cases, even though only the former implicates
the issue of derivative liability. Dexia maintains that, at every
stage, it advanced the alter ego/nominee theory only in the
context of property ownership, not as a means to pierce the
veil or impose derivative liability.
No. 09-2986 19
Illinois Supreme Court Rule 277(a), which governs
citation proceedings, likewise permits a proceeding
to be “against the judgment debtor or any third party
the judgment creditor believes has property of or
is indebted to the judgment debtor.” That is the pri-
mary basis upon which Dexia has proceeded in
this matter—its contention that third parties hold
property that actually is Peter Rogan’s, even though
it is held under some other guise.
Dexia Crédit Local v. Rogan, 2008 WL 4543013, at *6 (N.D.
Ill. Oct. 9, 2008). Consequently, the Rogan Children are
the only parties who have attempted to construe Dexia’s
claim as one that is akin to piercing the corporate veil.
The Rogan Children have shown us nothing that con-
vinces us that the district court granted relief outside
the proper scope of supplemental proceedings. A dis-
trict court may inquire as to whether third parties
hold assets of the judgment debtor, and once it is discov-
ered that a third party holds such assets, the court may
order the third party “to deliver up those assets to
satisfy the judgment.” Pyshos, 630 N.E. 2d at 1057; see also
Dowling v. Chi. Options Assocs., Inc., 847 N.E.2d 741, 746
(Ill. App. Ct. 2006) (“The provisions of section 2-1402 are
to be liberally construed, and the statute gives the court
broad powers to compel the application of discovered
assets or income in order to satisfy a judgment.”); Kennedy
v. Four Boys Labor Serv., Inc., 664 N.E.2d 1088, 1091 (Ill. App.
Ct. 1996) (stating that the Illinois statute “gives courts
broad powers to compel the application of discovered
assets or income to satisfy a judgment”); Elmhurst Auto
20 No. 09-2986
Parts, Inc. v. Fencl-Tufo Chevrolet, Inc., 600 N.E.2d 1229,
1233 (Ill. App. Ct. 1992) (noting that the supplemental
proceedings statute is not a mere discovery statute,
but permits the court to determine the rights of third
parties). As long as the action seeks the judgment
debtor’s assets and does not concern personal liability, it
falls within the scope of a supplemental proceeding.
Kennedy, 664 N.E.2d at 1092-93 (explaining that a claim
brought pursuant to the Fraudulent Transfer Act was
properly brought in supplementary proceedings be-
cause it did not concern personal liability, but attempted
to avoid the transfer of assets, sought recovery of the
actual assets transferred, and ordered that the property
be returned). Here, the district court determined that
the Children’s Trusts contained assets of the judgment
debtor, Peter Rogan. Accordingly, it held that Dexia was
entitled to turnover of the assets of the Children’s Trust,
terminated the interests of the Rogan Children in the
Trusts (with the exception of $30,000), and ordered the
trustee to turn over trust assets to Dexia. Following
turnover, the Trusts would continue to exist and hold
any property that did not belong to Peter Rogan. In taking
this action, the district court did not exceed the broad
power and authority that is granted to courts in supple-
mental proceedings to apply assets to satisfy a judgment.
In their reply brief, the Rogan Children assert for the
first time that the imposition of a constructive trust re-
quires proof of elements that extend beyond the scope
No. 09-2986 21
of supplemental proceedings.5 The Rogan Children
have not independently and sufficiently developed their
theory challenging the district court’s authority to
impose a constructive trust. See JTC Petroleum Co v. Piasa
Motor Fuels, Inc., 190 F.3d 775, 781 (7th Cir. 1999)
(warning that a litigant must do more than assert a
novel theory that it wants us to buy); see also Long v. Teach-
ers’ Ret. Sys. of Ill., 585 F.3d 344, 349 (7th Cir. 2009) (under-
developed arguments are considered waived). More-
over, as we have often noted, arguments raised for the
first time in a reply brief are waived. See Hess v. Reg-Ellen
Mach. Tool Corp., 423 F.3d 653, 665 (7th Cir. 2005).
D. Right to a Jury Trial
The turnover order challenged in this appeal was
issued after a bench trial. The Rogan Children claim
that they should have been granted a jury trial pursuant
to the Seventh Amendment because the district court’s
determination of the true ownership of trust assets is
an action at law, not equity.
The right to a jury trial in federal court hinges on
federal procedural law. Int’l Fin. Servs. Corp. v. Chromas
Techs. Canada, Inc., 356 F.3d 731, 735 (7th Cir. 2004). Federal
5
In their opening brief, the Rogan Children appear to assume
that the imposition of a constructive trust was within the
scope of the proceedings, arguing only that there was insuf-
ficient tracing evidence for the court to impose it. We
will address the tracing issue later in this Opinion.
22 No. 09-2986
Rule of Civil Procedure 38(a) preserves to parties
the right of a trial by jury as declared by the Seventh
Amendment to the Constitution or as otherwise
provided by federal statute. The Seventh Amendment
provides that “[i]n Suits at common law, where the
value in controversy shall exceed twenty dollars, the
right of trial by jury shall be preserved.” U.S. C ONST.
amend. VII. To determine whether a particular action
will resolve legal rights and thus give rise to a jury trial
right, we must examine both the nature of the claim
for relief and the remedy sought. Marseilles Hydro Power,
LLC v. Marseilles Land & Water Co., 299 F.3d 643, 648 (7th
Cir. 2002). First, we must “compare the . . . action to
18th-century actions brought in the courts of England
prior to the merger of the courts of law and equity.
Second, we examine the remedy sought and determine
whether it is legal or equitable in nature.” Tull v. United
States, 481 U.S. 412, 417-18 (1987) (citations omitted). The
“ ‘abstruse historical’ search for the nearest 18th-century
analog,” id. at 421; Chauffeurs, Teamsters & Helpers Local
No. 391 v. Terry, 494 U.S. 558, 565, is less important
than determining whether the remedy sought is
equitable or legal in nature, see Tull, 481 U.S. at 421;
Granfinanciera S.A. v. Nordberg, 492 U.S. 33, 42 (1989);
Marseilles, 299 F.3d at 648.
Here, the outcome of the second and more important
inquiry regarding the nature of the remedy sought leads
to the conclusion that the Rogan Children were not
entitled to a jury trial. Legal remedies traditionally
involve money damages, while equitable remedies
are typically coercive and enforceable directly on the
No. 09-2986 23
persons or things to which they are directed. Int’l Fin.,
356 F.3d at 736 (citing Great-West Life & Annuity Ins. Co.
v. Knudson, 534 U.S. 204, 210 (2002)). “A suit seeking
only equitable relief is not a suit at common law,
regardless of the nature of the issues likely or even
certain to arise in the case.” Marseilles, 299 F.3d at 648.
In the supplemental proceedings, Dexia sought the turn-
over of assets belonging to Peter Rogan, the judgment
debtor. The district court explained:
The Rogan Children are the putative beneficiaries
of those trusts. As such, their interests in the trusts
are intangible assets. Dexia is attempting to terminate
the children’s intangible interests and obtain a turn-
over of the assets of the trusts, which are held not
by the children, but by the trustees of the trusts.
(Mar. 30, 2009, Order at 6.) At no time did Dexia seek
derivative liability against the Trusts themselves or
money damages from the Rogan Children, and the relief
ultimately obtained was enforceable directly on the
Trusts and was equitable in nature. See Resolution
Trust Corp. v. Ruggiero, 994 F.2d 1221, 1225 (7th Cir.
1993) (holding that an order that property be turned over
to the judgment creditor because it was actually the
property of the judgment debtor was in the nature of
specific performance); In re Estate of Beckhart, 864 N.E.2d
1002, 1005 (Ill. App. Ct. 2007) (describing the remedial
and equitable character of constructive trusts); see also
People ex rel. Hartigan v. Candy Club, 501 N.E.2d 188, 191
(Ill. App. Ct. 1986) (describing a constructive trust as “a
device used by chancery to compel one who unfairly
24 No. 09-2986
holds property to convey the property to the party to
whom it justly belongs”). The nature of the relief
sought was purely equitable, thus it mattered not
whether any of the issues were legal in their nature.
The Rogan Children were not entitled to have a jury
decide whether Rogan owned and controlled the assets
that were held in the Children’s Trusts, and the district
court’s decision to conduct a bench trial does not
warrant reversal.
E. Statutes of Limitations
Under Federal Rule of Civil Procedure 69(a), Illinois
procedural law applies to Dexia’s effort to enforce its
judgment, and Illinois law imposes a seven-year limita-
tions period. 736 ILCS 5/12-108(a) (“Except as herein
provided, no judgment shall be enforced after the ex-
piration of 7 years from the time the same is rendered,
except upon the revival of the same by a proceeding
provided by Section 2-1601 of this Act.”). In May 2007,
the district court entered judgment against Rogan. Dexia
filed its motion for turnover of assets well within seven
years of this judgment. Nevertheless, because Dexia
pursued the equitable remedy of a constructive trust
on any assets belonging to Rogan that were held in
the Children’s Trusts, the Rogan Children claim that the
seven-year statute of limitations does not apply and
instead that Illinois’s five-year statute of limitations
applies. See Hagney v. Lopeman, 590 N.E.2d 466, 462
(Ill. 1992) (holding that, in Illinois, a five-year statute of
limitations applies to an action for constructive trusts).
No. 09-2986 25
They contend that the limitations period began to run in
early 2001 when the Federal Bureau of Investigation
informed Dexia that Rogan was being investigated
for Medicare fraud or, at the latest, when Dexia filed
its own lawsuit in November 2002. This, according to the
Rogan Children, would have required Dexia to file
its claim for the imposition of a constructive trust by
November 14, 2007.
We review statute of limitations determinations
de novo. In re marchFIRST Inc., 589 F.3d 901, 903 (7th
Cir. 2009). Dexia maintains that the Rogan Children
have waived this statute of limitations argument.
Although the Rogan Children asserted as an affirmative
defense in response to the citations that Dexia’s claims
were barred “by the applicable statute of limitations,”
they did not claim that the five-year statute of limita-
tions for constructive trusts barred Dexia’s claim until
they filed a post-trial brief on June 5, 2009. The only
specific statute raised prior to trial was Florida’s statute
of repose. Failure to argue a specific statute of limita-
tions, even if others are argued, constitutes waiver. Ander-
son v. Flexel, Inc., 47 F.3d 243, 247 (7th Cir. 1995).
Here, because the Rogan Children failed to identify the
five-year statute of limitations for constructive trusts
before the trial, Dexia had no notice that the Rogan Chil-
dren were attempting to bar their claim on this basis,
and it was thus prevented from defending against this
limitation defense through the presentation of evidence.
See, e,.g., Frederickson v. Blumenthal, 648 N.E. 2d 1060, 1063
(Ill. App. Ct. 1995) (noting that the burden is on the
plaintiff to show the application of Illinois’s discovery
26 No. 09-2986
rule to justify filing constructive trust action outside the
five-year statute of limitations). Dexia does present argu-
ment in response to the Rogan Children’s belated statute
of limitations claim: that Dexia initiated enforcement by
serving citations in June and September 2007, before the
November 2007 limitations deadline proposed by the
Rogan Children; and that the limitations period was tolled
under the discovery rule because Cuppy obstructed
Dexia from obtaining critical information about the
Trusts. They contend that Dexia’s November 2002
lawsuit only established that it was aware that Rogan
fraudulently induced it to issue the letter of credit by
concealing fraud at EMC and that the Trusts received
proceeds of the sale of EMC, not that the transfers were
part of Rogan’s scheme to defraud creditors. The Rogan
Children’s failure to raise the specific statute of lim-
itations defense has limited Dexia’s ability to fully
develop the arguments against application of the five-
year statute of limitations and highlights why its failure
should constitute waiver. For their part, the Rogan Chil-
dren have not presented any excuse for waiting until
after the trial to raise the five-year statute of limitations
as an affirmative defense.
In any event, all of this is beside the point if the five-
year statute of limitations is inapplicable in this suit, as
the district court held. The statute the Rogan Children
cite states:
Except as provided in Section 2-725 of the “Uniform
Commercial Code”, approved July 31, 1961, as
amended, and Section 11-13 of “The Illinois Public
No. 09-2986 27
Aid Code”, approved April 11, 1967, as amended,
actions on unwritten contracts, expressed or implied,
or on awards of arbitration, or to recover damages
for an injury done to property, real or personal, or to
recover the possession of personal property or dam-
ages for the detention or conversion thereof, and all
civil actions not otherwise provided for, shall be
commenced within 5 years next after the cause of
action accrued.
735 ILCS 5/13-205. The supplemental proceedings in this
case were not an action on a contract or award of arbitra-
tion, an action to recover damages for injury to property
or to recover the possession of personal property, an
action for damages for detention or conversion of such
property, or an action not otherwise provided by stat-
ute. The proceedings were initiated to enforce and
satisfy a previously-obtained money judgment. Thus, the
statute specifically governing such proceedings deter-
mines the rights and liabilities of the parties. See Fed. R.
Civ. P. 69(a); 736 ILCS 5/12-108(a). Dexia obtained a
judgment and then issued citations to discover assets
within seven years of obtaining that judgment, which
is the recognized procedure in Illinois to enforce a judg-
ment and to discover and recover assets that may
be applied in satisfaction of the judgment. See Pontikes
v. Perazic, 692 N.E. 2d 712, 716-17 (Ill. App. Ct. 1998).
We find no error in the district court’s application of
the seven-year statute of limitations.
The Rogan Children also argue that Dexia’s 2008
motion for turnover of assets in the Domestic Trusts
28 No. 09-2986
is barred by Florida’s statute of repose. Under Florida
law, an action based on fraud must be initiated within
twelve years after the date of the commission of the
alleged fraud, regardless of the date when the fraud was
or should have been discovered. Fla. Stat. § 95.031(2)(a).
The district court held, we believe correctly, that
Dexia’s action seeking turnover of Rogan’s assets held
in the Trusts did not implicate Florida’s limitations
period for fraud, but was instead governed by the same
limitation that applies to the enforcement of judgments.
When Dexia initiated supplemental proceedings, it had
already obtained a judgment based upon Rogan’s fraud.
The Rogan Children provide no argument to persuade
us that, merely because some of the assets amenable to
turnover are held in Trusts that were first established in
Florida, the nature of the citation proceedings has been
altered or requires application of a separate statute of
repose. The only choice of law analysis they make
is under Florida law, but Rule 69(a) provides that pro-
ceedings supplemental must accord with the procedure
of the state where the court is located. The Rogan
Children do not advance any choice of law analysis
under Illinois law.
We conclude that the statute of limitations and the
statute of repose cited by the Rogan Children did not
bar the supplemental proceedings.
F. District Court’s Findings of Fact
After a bench trial, a district court’s findings of fact
may only be set aside if they are found to be “clearly
No. 09-2986 29
erroneous.” Fed. R. Civ. P. 52(a)(6). We reverse only if
we are left with a “ ‘definite and firm conviction that a
mistake has been committed.’ ” RK Co. v. See, ___ F.3d ___,
No. 07-3984, 2010 WL 3655946, at *4 (7th Cir. Sep. 22,
2010) (quoting Anderson v. City of Bessemer City, 470
U.S. 564, 573 (1985)). When there are two permissible
views of the evidence, the district court’s choice between
them cannot be clearly erroneous. Johnson v. Doughty,
433 F.3d 1001, 1012 (7th Cir. 2006). However, we
review determinations regarding the application of issue
preclusion de novo. See United States v. Thyfault, 579
F.3d 748, 750 (7th Cir. 2009).
The Rogan Children challenge the district court’s
finding that Rogan’s fraud began in the early 1990s, and
no later than 1993, a finding that was critical to the
district court’s imposition of a constructive trust on the
1994 bond proceeds. (This finding was not relevant to
the district court’s determination that Peter Rogan
owned the assets in the Trusts.) To make this finding
regarding the beginning date of Rogan’s fraud, the
district court determined that findings from Rogan I,
459 F. Supp. 2d 692, precluded relitigation of the issue.
Issue preclusion bars successive litigation of an issue
of fact or law actually litigated and resolved in a valid
court determination essential to the prior judgment, even
if the issue recurs in the context of a different claim.
Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (holding that
the preclusive effect of a federal-court judgment is deter-
mined by federal common law). Preclusion applies if
(1) the issue sought to be precluded is the same as that
30 No. 09-2986
involved in the prior action; (2) the issue was actually
litigated; (3) the determination of the issue was essential
to the final judgment; and (4) the party against whom
estoppel is invoked was fully represented in the prior
action. Restatement (Second) of Judgments § 27; Bobby v.
Bies, ___ U.S. ___, 129 S. Ct. 2145, 2152 (2009) (defining
the elements of issue preclusion in federal litigation);
Chi. Truck Drivers, Helpers & Warehouse Union (Indep.)
Pension Fund v. Century Motor Freight, Inc., 125 F.3d 526, 530
(7th Cir. 1997). The Rogan Children assert that issue
preclusion does not apply because the propriety of the
1994 sale of EMC was not at issue in Rogan I, and
because neither they nor the Trusts were parties in that
case.
Rogan I did not concern whether the sale of the
hospital or the financing of that sale involved fraud, but
the court did consider and determine the latest possible
starting point of Rogan’s healthcare fraud scheme. 459
F. Supp. 2d at 700-01. Examining evidence related to
the origins of the fraud and conspiracy, the district
court in Rogan I determined that Rogan and several
doctors conspired in the early 1990s to arrange
referrals to Rogan’s hospital in return for kickbacks,
resulting in substantial profits for Rogan. Id. at 700; see also
id. at 722-24 (describing how from 1993 to 1998 Rogan
arranged for EMC to enter into a series of teaching and
physician-recruiting contracts with physicians that
violated the Stark and Anti-Kickback Statutes and thus
knowingly caused EMC to submit false claims to the
federal government). That determination regarding
No. 09-2986 31
Rogan’s pre-1995 relationships with co-conspirators
and the starting point of the fraudulent activity was
essential to the decision that Medicaid and Medicare
claims that Rogan caused to be submitted in 1995 and
later were false, 31 U.S.C. § 3729(a)(1)-(2). It was also
essential to the conclusion that he was a member of the
charged conspiracy and committed numerous overt acts
in furtherance of the conspiracy, 31 U.S.C. § 3729(a)(3),
including negotiating and signing contracts.
It is true that the Rogan Children were not parties in
the prior action. However, this does not end the inquiry
as there are several recognized exceptions to the general
rule that a person who was not a party to a suit has not
had a full and fair opportunity to litigate issues in that
suit. The district court applied one such exception: the
“adequately represented” exception. See Taylor, 553 U.S.
at 894-95 (recognizing that, in certain limited circum-
stances, a nonparty may be bound by a judgment
because he was adequately represented by someone
with the same interests who was a party to the suit).
We agree with the district court’s reasoning that
Rogan had the same interests in Rogan I as his children
(or the Trusts) had in defending against the imposi-
tion of a constructive trust in the supplementary pro-
ceedings—namely, to persuade the trier of fact that
Rogan did not knowingly engage in healthcare fraud.
Had Rogan not engaged in such fraud, the Court
could not follow to the present day the assets he
originally obtained and put into the Trusts, and could not
impose a constructive trust. See Schultz v. Schultz, 696
N.E.2d 1169, 1173 (Ill. App. Ct. 1998) (“A constructive
32 No. 09-2986
trust is an equitable remedy imposed against one
whom, by some form of wrongdoing such as actual or
constructive fraud, . . . has been unjustly enriched.”); see
also Johnson v. La Grange State Bank, 383 N.E.2d 185, 195 (Ill.
1978) (refusing to impose constructive trust on assets
where fraud was not established). The government suc-
ceeded on its claims under the FCA by showing that
Rogan engaged in fraud. Rogan I, 459 F. Supp. 2d at 716-
17 (including as an element of a claim under the FCA
that the defendant caused to be presented to the
United States a false or fraudulent claim for payment or
made, used, or caused another to make or use a false
statement of document); id. at 722 (discussing proof that
Rogan caused EMC to submit claims for reimburse-
ment from Medicare and Medicaid for services that were
not in compliance with the Stark and Anti-Kickback
Statutes and were thus false). The government also estab-
lished the elements of, and was entitled to recover dam-
ages for, common law fraud and unjust enrichment. Id.
at 728. Issue preclusion prevents the Rogan Children
from challenging the finding that Rogan’s fraud began
no later than 1993.
In their opening brief on appeal, the Rogan Children
list five of the district court’s factual findings related
to Rogan’s ownership of the Trust property that they
contend were not supported by competent evidence.
However, they fail to make any attempt to show how
these findings were clearly erroneous. We need not con-
sider this undeveloped claim, especially in light of the
burden a party alleging error bears to demonstrate that
a particular factual finding is clearly erroneous. Carnes
No. 09-2986 33
Co. v. Stone Creek Mech., Inc., 412 F.3d 845, 847 (7th Cir.
2005).
G. Constructive Trust
The Rogan Children claim error with respect to the
district court’s imposition of a constructive trust on the
assets held in the Trusts. They admit that the district
court traced some property to the Trusts, but argue that
the court never determined whether the Trusts still
owned any of that property or received property from
other sources (aside from the $30,000 in gifts that the
court excluded from the turnover order). They contend
that “no one knows precisely what the trusts own
and, therefore, what assets are subject to a constructive
trust.” (Appellant Br. 29.)
Under Illinois law, a constructive trust is imposed to
prevent unjust enrichment by imposing a duty on the
person receiving the benefit to convey the property back
to the person from whom it was received. Martin v.
Heinold Commodities, Inc., 643 N.E.2d 734, 745 (Ill. 1994)
(citing Restatement of Restitution § 160). “[I]t is a
restitutionary remedy which arises by operation of law,
and is imposed by a court . . . in situations where a
person holding money or property would profit by a
wrong or be unjustly enriched at the expense of another
if he were permitted to retain it.” People ex rel. Daley for
Use of Cook County v. Warren Motors, Inc., 483 N.E.2d
427, 430 (Ill. App. Ct. 1985) (internal citations omitted); see
also FTC v. QT, Inc., 605 F. Supp. 2d 999, 1008 (N.D. Ill.
2009) (stating that a constructive trust is created by the
34 No. 09-2986
court to avoid unjust enrichment when a party has ob-
tained money to which he is not entitled and in equity
and good conscience ought not to retain) (citing Smithberg
v. Ill. Mun. Ret. Fund, 735 N.E.2d 560, 565 (Ill. 2000)).
“ ‘The particular circumstances in which equity will
impress a constructive trust are as numberless as the
modes by which property may be obtained through
bad faith and unconscientious acts.’ ” Warren Motors,
483 N.E.2d at 431 (quoting County of Cook v. Barrett, 344
N.E.2d 540, 545 (Ill. App. Ct. 1976)). A party seeking
a constructive trust must establish “the existence of
identifiable property to serve as the res upon which a
trust can be imposed and possession of that res or its
product by the person who is to be charged as the con-
structive trustee.” People ex rel. Hartigan v. Candy Club,
501 N.E.2d 188, 191 (Ill. App. Ct. 1986).
The Rogan Children do not deny that Dexia met its
initial burden to trace the proceeds of fraud to the Trusts.
In other words, Dexia showed that the Rogan Children
Trusts received money from the sale of EMC and man-
agement fees for services provided by Rogan-controlled
entities, or held stock in companies that received this
money. On appeal, they argue that since all of the
transfers occurred before 2002, Dexia was required to
establish what happened to the sale proceeds and man-
agement fees after they were transferred to the Trusts.
The Rogan Children are, in essence, proposing that
since 2002, legitimate funds may have been commingled
with the pre-2002 transfers. They do not point to evi-
dence of such commingling or equivocally argue that
commingling occurred. Instead, they contend that
No. 09-2986 35
nobody knows for sure. However, even if such commin-
gling occurred, it would not impose an additional
burden of proof on Dexia. See In re Estate of Wallen, 633
N.E.2d 1350, 1360 (Ill. App. Ct. 1994) (“[O]nce claimant
made a specific showing that the administrator com-
mingled the assets of the corporation with those of
the estate, the burden shifted to the administrator to sort
out and account for those assets as he was in the best
position to know of them.”); De Fontaine v. Passalino, 584
N.E.2d 933, 942 (Ill. App. Ct. 1991) (holding that when
a trustee commingles his own property with that of
the beneficiaries, the burden rests on the trustee to
show which property belonged to the trustee before the
commingling). In addition, when a trustee has com-
mingled trust funds with his own and subsequently
withdrawn sums from the combined fund for his own
use, the conclusive presumption is that the trustee with-
drew his own funds first, leaving behind the trust funds.
People v. Barrett, 90 N.E.2d 94, 98 (Ill. 1950); see also In re
Comm’r of Banks & Real Estate, 764 N.E.2d 66, 101 (Ill.
App. Ct. 2001) (stating that where a trustee commingles
funds and later withdraws money from the commingled
fund, the trust account holder is entitled to enforce
his equitable lien upon the funds that remain).
The district court cited various examples of Rogan
manipulating trust assets for his purposes, drawing
from the Trusts as a single pool of assets without regard
for any separation of title or identity of the named benefi-
ciaries. With the exception of a $10,000 gift to each of
the Domestic Trusts by a third party, there is neither
proof of any legitimate source for the assets of the Trusts
36 No. 09-2986
to counter the evidence presented by Dexia nor evidence
that any person other than Rogan had control over trust
assets. Moreover, the reason that Dexia’s evidence of
transfers pre-dates 2002 is not difficult to understand in
the context of this case. In 2001, EMC terminated its
contract with Rogan’s management companies fol-
lowing its discovery of Rogan’s fraud. Additionally,
EMC closed in December 2001, and the government
initiated litigation against Rogan in May 2002.
The Rogan Children have not pointed to any evidence
that would undercut the district court’s determinations
that the Trusts were funded by Rogan’s fraud (and not
some legitimate contributor) and that he continued to
control those assets once deposited, either directly or
through his agents. We find no error in the district’s
court’s imposition of a constructive trust on all but
$30,000 of the trust assets.
H. Citation Respondents
Dexia served on Peter Rogan, Judith Rogan, and Fredrick
Cuppy citations to discover assets. The Rogan Children
argue that there was insufficient evidence that any of
these citation respondents held Rogan’s property.
They assert that neither Peter nor Judith have been
shown to be “in possession of any assets held by” the
Trusts “which are the property of Peter Rogan.” (Appellant
Br. 41.) Likewise, they assert that no evidence was pre-
sented at trial showing that Cuppy was in possession of
such assets, and that he was removed as trustee of the
Domestic Trusts by order of the district court. The Rogan
No. 09-2986 37
Children argue that because these third parties did not
possess assets of the judgment debtor, the district court
had no authority to enter a judgment against them.
The Rogan Children’s argument is misplaced. The
district court did not find that any of these respondents
personally possessed assets of Rogan—that was not the
relevant inquiry. In ordering the turnover of assets
the court found that Dexia was entitled to turnover of
the assets of the Trusts (excluding $30,000) because
the Trusts themselves held the property of Rogan, the
judgment debtor. He funded the Trusts through money
fraudulently obtained and never relinquished control
of those assets once they were placed in the Trusts. To
effectuate turnover, the district court terminated any
interests held by the Rogan Children in those Trusts
(except for $30,000), ordered any existing trustee to
turn over the assets to Dexia, and directed Dexia to file
a motion for the appointment of a trustee for any Trust
that did not currently have a trustee so that the court
could appoint a trustee who would be ordered to turn
trust assets over to Dexia.
This order against the Trusts was consistent with the
citation that Dexia issued to Cuppy. The citation stated
that it was being issued to Cuppy “[i]ndividually, as
partner in the law firm of Burke Costanza & Cuppy, and as
an agent, trustee, and/or lawyer for any person/entity
identified in Rider A.” (Supp. App. 168.) Rider A plainly
identified the Rogan Children Trusts as entities to
which the citation applied. Thus, the Trusts themselves
were respondents. In addition, Rogan was a citation
38 No. 09-2986
respondent. By serving these citations, Dexia perfected
its judgment lien on all personal property belonging to
Rogan that was in his possession or control, or in the
possession or control of the third-party Trusts. 735 ILCS
§ 5/2-1402(m).
Although the Rogan Children think it important that
Cuppy was removed as the trustee prior to the issuance
of the turnover order, they present no authority
showing that his removal as trustee meant that the
Trusts were no longer citation respondents, or that the
district court was no longer empowered to compel
assets within the Trusts to satisfy the judgment. The
district court specifically allowed for the appointment of
a new trustee, upon which occurrence the court would
order the new trustee to turn over the assets of the
Trusts. We find no error.
I. Personal Jurisdiction over Robert Rogan
Robert Rogan argues that we should reverse the
district court’s judgment against him because the court
did not have personal jurisdiction over him. Robert
argues that he is a California citizen and has no contacts
with Illinois.
For appeal purposes, supplementary proceedings to
enforce judgments are treated as separate, free-standing
lawsuits. Star Ins. Co., 561 F.3d at 659. Orders within
supplemental proceedings are appealable to the same
extent as in a regular lawsuit. Id.; see also Laborer’s Pension
Fund v. City Work Unlimited, Inc., 919 F.2d 491, 493-94 (7th
No. 09-2986 39
Cir. 1990). The district court’s July 7, 2009, order to turn-
over assets of the Rogan Children Trusts, except for
$30,000, was a final, appealable order. However, the
November 18, 2008, order of the district court that
Robert Rogan seeks to appeal is not final and appealable.
On November 18, 2008, the district court denied
Robert’s motion to dismiss for lack of personal juris-
diction. The district court specifically distinguished
between cases in which the party challenging jurisdic-
tion is accused of wrongdoing and cases where the party
is believed to be the innocent recipient of fraudulently
obtained money. (Appellants’ App. 81-88.) Consistent
with this distinction, the court’s turnover order was not
a ruling on Dexia’s claim against Robert personally as a
fraudulent transferee of trust assets, did not otherwise
suggest wrongdoing by Robert, and was not against
him individually.
Robert argues that the issue of personal jurisdiction is
dispositive because a district court violates due process
when it uses a turnover proceeding to adjudicate the
property rights of third parties who are not amenable
to jurisdiction in that forum, and that the district court’s
turnover order terminated his interest in the Trusts.
(Appellants’ Br. 23 (citing Bollore S.A. v. Import Warehouse,
Inc., 448 F.3d 317, 324 (5th Cir. 2006) (construing
Texas’s turnover statute in the context of an action to
pierce the corporate veil).) This argument appears, in
some ways, to be a re-formulation of the argument re-
garding the scope of supplemental proceedings because
it requires that we first find that the turnover order
40 No. 09-2986
adjudicated Robert’s substantive rights or seized his
assets. But we have already noted that the district
court’s order was based on its determination that the
Children’s Trusts held assets of the judgment debtor
because he only nominally placed them in the Trusts
and continued to exercise control over the property for
his own benefit. In other words, Peter Rogan never
actually transferred the assets to the Trusts. Accordingly,
property that did not actually belong to Peter Rogan,
i.e., $30,000 gifted by a third party, was not impacted
by the turnover order. Robert’s appearance and participa-
tion was not necessary to the entry of the turnover order
with respect to this property. Illinois’s supplementary
proceedings statute contemplates the relief ordered by
the district court in this case, and the Rogan Children
have pointed to no authority showing that Illinois’s
statute violates due process.
III. CONCLUSION
Based on the foregoing reasons, we A FFIRM the ruling
of the district court.
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