In the
United States Court of Appeals
For the Seventh Circuit
No. 08-3500
D EXIA C RÉDIT L OCAL,
Plaintiff-Appellee,
v.
P ETER G. R OGAN, et al.,
Defendants,
and
JUDITH K. R OGAN,
Citation Respondent-Appellant.
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 JUNE 3, 2009—D ECIDED A PRIL 26, 2010
Before E ASTERBROOK, Chief Judge, and R OVNER and
S YKES, Circuit Judges.
R OVNER, Circuit Judge. In a supplementary proceeding
to enforce a judgment against Peter Rogan and related
partnerships, Dexia Crédit Local obtained a preliminary
2 No. 08-3500
injunction barring Judith Rogan, Peter’s wife, from con-
tinuing to transfer certain assets. On appeal, Judith
asserts that the district court lacked subject-matter juris-
diction and that the preliminary injunction was improper.
We conclude otherwise and affirm.
I.
This appeal has its genesis in the longstanding Medicare
and Medicaid fraud scheme that Peter Rogan carried out
through Edgewater Medical Center from 1993 to 2001.
See United States v. Rogan, 517 F.3d 449, 451 (7th Cir. 2008).
In 1998 Peter and one of his related partnerships sought
to refinance Edgewater’s bond debt to get a lower
interest rate. Concealing the fraud scheme, they arranged
for Dexia to guarantee Edgewater’s repayment of the
bonds.
Dexia brought this diversity action against Peter and
his related partnerships for fraud, conspiracy, and other
torts relating to this longstanding scheme. See 28 U.S.C.
§ 1332. But Peter abandoned his defense of this suit by
absconding to Canada, and Dexia obtained a default
judgment for $124 million against him and some of his
partnerships. To satisfy its judgment, Dexia served Judith
Rogan with a citation to discover assets. See F ED. R. C IV.
P. 69; 735 ILCS § 5/2-1402.
Next, Dexia filed an ex parte motion for a temporary
restraining order (“TRO”) to freeze certain of Judith’s
assets. Dexia asserted in an affidavit that it would sustain
irreparable harm if the Rogans had advance notice of
No. 08-3500 3
the freeze-order. See F ED. R. C IV . P. 65(b). Dexia also
appended documentation to show that Judith was
helping her husband conceal assets by placing his assets
in accounts under her name, opening offshore accounts,
and sending money to him or his creditors from these
accounts. According to Dexia’s motion, she even helped
him flee to Canada by opening new bank accounts
there and transferring several million dollars from
other offshore accounts into these Canadian accounts.
The district court granted the TRO without notice to the
Rogans, concluding that there was good cause to believe
that Judith acted as the alter ego of her husband and
disposed of his assets for his benefit. Under the terms
of the TRO, Judith was prohibited from transferring,
concealing, or dissipating any assets owned or controlled
by Peter and certain defined entities, including trusts
purportedly owned by the Rogans’ children, pending
the court’s determination of Dexia’s request to extend the
TRO into a preliminary injunction under the same terms.
Judith promptly moved to dissolve the TRO on grounds
that it was based solely on Dexia’s affidavit, which was
improper hearsay; that the TRO was vague and overly
broad; and that the district court lacked subject-
matter jurisdiction over her, a non-party. The court
denied Judith’s motion as moot, explaining that it would
address all arguments at a hearing three days later to
determine whether the TRO should be converted into a
preliminary injunction. Dexia’s and Judith’s counsel did
not object.
But Judith could not point to any evidence in the record
to contest Dexia’s assertion that she acted as the alter
4 No. 08-3500
ego of her husband. Although before the preliminary
injunction hearing she submitted an affidavit disputing
her control over various bank accounts, and at the
hearing her former attorney and a former employee
testified that Peter had no interest in some of her assets,
she later withdrew all this evidence. When the hearing
resumed in the afternoon, Judith’s counsel informed the
court that Judith had filed for bankruptcy that morning
and that she was withdrawing her affidavit and the
offered testimony. The next day, however, Dexia
informed the court that Judith’s bankruptcy petition had
been declared a “nullity from its inception” because
she failed to comply with minimum filing requirements.
The court granted the preliminary injunction under the
same terms as the TRO, and Judith’s counsel did not
object. At a later hearing, the court explained its decision
by noting that Judith had withdrawn her evidence in
opposition to the injunction and she did not object to its
terms.
After Judith appealed the preliminary injunction, we
ordered her to supplement her jurisdictional statement
to address the citizenship of the named partnership-
defendants. At this point, she discovered that complete
diversity was lacking in Dexia’s original action against
Peter because diversity jurisdiction does not exist where
the party on one side of a case is foreign and the party
on the other side includes both domestic and foreign
parties. See Salton, Inc. v. Phillips Domestic Appliances & Pers.
Care B.V., 391 F.3d 871, 875 (7th Cir. 2004); Allendale Mut.
Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 428 (7th Cir.
No. 08-3500 5
1993). Judith discovered that Dexia was a French
company and two of the named partnership-defendants
had partners who were Belizean corporations. She then
supplemented her jurisdictional statement on appeal and
identified the citizenship of these partners. In the district
court, she also moved to dismiss Dexia’s citation to dis-
cover her assets.
While this appeal was pending, the district court denied
her motion and dismissed the two nondiverse parties,
concluding that they were unnecessary and dispensable.
The court further stated that under Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826 (1989), the dismissal of the
dispensable nondiverse parties acted retroactively to
validate any acts occurring before dismissal. Thus, the
court concluded that the judgment in the underlying
action was final and that the Rogans could no longer
challenge Dexia’s citation to discover her assets on juris-
dictional grounds.
II.
Judith presents two issues on appeal: (1) whether the
district court had subject-matter jurisdiction over the
case; and (2) whether the district court abused its discre-
tion when it entered the preliminary injunction.
A. Subject-Matter Jurisdiction
Dexia first asserts that Judith’s subject-matter jurisdiction
argument is waived because she never raised it at the
6 No. 08-3500
hearing on the preliminary injunction. But we have an
independent duty to ensure subject-matter jurisdiction,
see Büchel-Ruegsegger v. Büchel, 576 F.3d 451, 453 (7th Cir.
2009); EEOC v. The Chi. Club, 86 F.3d 1423, 1428 (7th Cir.
1996), and neither the parties nor their lawyers may
waive arguments that the court lacks jurisdiction. United
States v. Tittjung, 235 F.3d 330, 335 (7th Cir. 2000); see
also Dave v. Ashcroft, 363 F.3d 649, 652 (7th Cir. 2004).
Judith argues that the district court lacked subject-
matter jurisdiction over Dexia’s original action against
Peter and his related partnerships because the presence
of foreign parties on both sides of the case spoiled
diversity jurisdiction. And if Dexia’s original judgment
was void for lack of jurisdiction, she continues, the court
lacked jurisdiction over Dexia’s citation to discover her
assets. Judith’s jurisdictional challenges, however, come
too late. The judgment against Peter is final. She might
have mounted an attack on subject-matter jurisdiction
before a final decision was entered in Dexia’s original
action, but she did not. “[S]ubject-matter jurisdiction
may not be attacked collaterally.” Travelers Indem. Co. v.
Bailey, 129 S. Ct. 2195, 2205 (2009) (quotation and internal
citation omitted); Kontrick v. Ryan, 540 U.S. 443, 455 n.9
(2004). In any event, the parties have not discussed the
difference between direct and collateral challenges to a
judgment. And even if we could entertain Judith’s collat-
eral attack, we would conclude that the district court
properly dismissed the nondiverse parties under
Federal Rule of Civil Procedure 21 and preserved its
jurisdiction. See Newman-Green, Inc., 490 U.S. at 832; Jass v.
Prudential Health Care Plan, Inc., 88 F.3d 1482, 1492 (7th
No. 08-3500 7
Cir. 1996). Under Rule 21, a district court can dismiss
dispensable, nondiverse parties either before or after a
final judgment. Newman-Green, Inc., 490 U.S. at 827, 832
n.6; see also Grupo Dataflux v. Atlas Global Group, L.P., 541
U.S. 567, 572-73 (2004); Caisse Nationale de Credit Agricole
v. CBI Indus., Inc., 90 F.3d 1264, 1271 (7th Cir. 1996).
B. The Preliminary Injunction
Judith next makes a host of challenges to the district
court’s entry of the preliminary injunction. She asserts,
for instance, that the district court failed to make
findings of fact and conclusions of law in violation of
Federal Rule of Civil Procedure 52; that the court failed
to specify its reasons for the injunction, to state its
terms specifically, and to describe in reasonable detail
the acts restrained in violation of Federal Rule of Civil
Procedure 65(d); that the injunction was overly broad;
and that the injunction could not be issued against her, a
non-party. Dexia responds that these arguments are
waived because they were not renewed when the court
entered the preliminary injunction.
We decline to find waiver here. Although arguments not
raised before the district court may not be raised for the
first time on appeal, Bus. Sys. Eng’g, Inc. v. Int’l Bus. Machs.
Corp., 547 F.3d 882, 889 n.3 (7th Cir. 2008), this rule is not
meant to be overly formalistic; rather, the requirement
that parties appeal only issues that have first been pre-
sented to the district court maintains the efficiency,
fairness, and integrity of the judicial system for all parties.
8 No. 08-3500
See Republic Tobacco Co. v. N. Atl. Trading Co., Inc., 381 F.3d
717, 728 (7th Cir. 2004); Boyers v. Texaco Ref. & Mktg., Inc.,
848 F.2d 809, 812 (7th Cir. 1988). It is true that Judith did
not reassert her objections to the preliminary injunction,
but she objected on the same grounds to the TRO
which contained identical terms and was issued by the
court for identical reasons, and the district court explained
that it would address Judith’s concerns regarding the
TRO when it considered the preliminary injunction. To
require her to re-raise her objections would be an overly
formalistic application of waiver.
As to the merits, Judith first argues that the injunction
violates Federal Rule of Civil Procedure 65(d) because
it lacks specific terms, a reasonable description of the
acts restrained or required, and reasons why it was
issued. See FED. R. C IV. P. 65(d)(1). We disagree. The
preliminary injunction directly addressed the key is-
sue—whether Judith controlled certain of Peter’s assets
and transferred funds from these accounts to elude
his creditors. And it described in reasonable detail
that Judith was prohibited from transferring, converting,
encumbering, concealing, or otherwise dissipating these
assets for the benefit of her husband or any of the entities
her husband controlled. Further, the court provided its
reasons for the injunction: Judith was doing everything
in her power to help her husband conceal his assets
from creditors. The injunction is sufficiently precise and
self-contained, and we require nothing more to comply
with Rule 65. See PMC Inc. v. Sherwin-Williams, Co., 151
F.3d 610, 619 (7th Cir. 1998); Bd. of Educ. v. Ill. State Bd. of
Educ., 79 F.3d 654, 657 (7th Cir. 1996).
No. 08-3500 9
Next, Judith asserts that the district court in two
respects did not comply with Federal Rule of Civil Pro-
cedure 52, which requires a court to substantiate the
issuance of an injunction with findings and conclusions
of law. See F ED . R. C IV. P. 52(a)(2). First, she asserts with-
out elaboration that the court was required to conduct
an evidentiary hearing. But the court need not conduct
an evidentiary hearing unless one is called for as a result
of a fact issue created by the response to a motion for
a preliminary injunction. See, e.g., In re Aimster Copyright
Litig., 334 F.3d 643, 653-54 (7th Cir. 2003); Promatek
Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 814 (7th Cir.
2002); Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167,
1171 (7th Cir. 1997). Here, Judith raised no issue of fact;
rather she withdrew her evidence and did not object
when the court entered the injunction.
Second, she argues that the court did not comply with
Rule 52 by not making Rule 52’s requisite factual
findings in a written order accompanying the injunction.
But at a later hearing, the court pronounced its reasons
and conclusions orally, stating that the justifications for
the TRO would substantiate the court’s findings for the
preliminary injunction. Pronouncing its decision orally
on the record is acceptable. See F ED. R. C IV. P. 52(a)(1);
EEOC v. Severn Trent Serv., Inc., 358 F.3d 438, 442 (7th
Cir. 2004). Further, we note that Rule 52 facilitates
judicial review, see Mayo v. Lakeland Highlands Canning
Co., 309 U.S. 310, 316 (1940); Freeland v. Enodis Corp., 540
F.3d 721, 739 (7th Cir. 2008), by ensuring a sufficient
record from which we can render a decision. See Miranda
v. Bennett, 322 F.3d 171, 175 (2d Cir. 2003); Davis v. New
10 No. 08-3500
York City Hous. Auth., 166 F.3d 432, 436 (2d Cir. 1999);
Tekkno Labs., Inc. v. Perales, 933 F.2d 1093, 1097 (2d Cir.
1991). In this case, there were no contested matters;
Judith withdrew all her evidence, and the district court
provided its reasons and conclusions orally. Based on
the record before us, we conclude that the court ade-
quately complied with Rule 52.
Judith’s next argument is somewhat difficult to follow.
She contends that when Dexia withdrew its Rule 65(b)
affidavit, the absence of that affidavit somehow rendered
Dexia’s documentary evidence unauthentic and inad-
missible. But Judith misconstrues the course of events:
Dexia did not withdraw the affidavit, but instead sub-
mitted it in order to comply with Federal Rule of Civil
Procedure 65(b)(1), which requires a party seeking an
ex parte TRO to certify that the movant would suffer
irreparable harm. See F ED. R. C IV. P. 65(b)(1). And even
if Dexia’s evidence was inadmissible under the Federal
Rules of Evidence, we have recognized that a district
court may grant a preliminary injunction based on less
formal procedures and on less extensive evidence than a
trial on the merits. See, e.g., Ty, Inc., 132 F.3d at 1171; SEC
v. Cherif, 933 F.2d 403, 412 n.8 (7th Cir. 1991); see also
Johnson v. Couturier, 572 F.3d 1067, 1083 (9th Cir. 2009);
Cobell v. Norton, 391 F.3d 251, 261 (D.C. Cir. 2004);
Levi Strauss & Co. v. Sunrise Int’l Trading Inc., 51 F.3d
982, 985 (11th Cir. 1995). We find no error here.
Next, Judith contends that the injunction is overly
broad because it requires her to exercise control over her
children’s trusts and prohibits her from using certain of
No. 08-3500 11
her own assets. But the injunction here was tailored to
the scope of her alleged misconduct, and we cannot say
the court abused its discretion. See Lineback v. Spurlino
Materials, LLC, 546 F.3d 491, 505 (7th Cir. 2008); Gaddy v.
Abex Corp., 884 F.2d 312, 318 (7th Cir. 1989). When the
district court fashioned the broad injunction, it noted the
elaborate steps Judith had taken to evade creditors.
Further, the court relied upon evidence that Judith
did not dispute at the time of the injunction—evidence
documenting the extensive support she provided her
husband to conceal his assets, including her use of
offshore accounts and various trusts to funnel money
to Canada.
Last, Judith contends that the district court improperly
entered an injunction against her because she was not a
party to the underlying case. But one need not be a party
to be susceptible to an injunction. Under Illinois law—
which governs Dexia’s proceedings to execute its judg-
ment, see F ED. R. C IV. P. 69(a)—restraining orders are
proper against third-party defendants and citation re-
spondents. See 735 ILCS § 5/2-1402; Star Ins. Co. v. Risk
Mkt. Group Inc., 561 F.3d 656, 662-63 (7th Cir. 2009); Cacok
v. Covington, 111 F.3d 52, 54 (7th Cir. 1997).
Accordingly, we A FFIRM the ruling of the district court.
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