Chopp Computer Corporation, Inc., a British Columbia Corporation v. United States of America Painewebber Incorporated, a Delaware Corporation

dissenting:

The majority holds that the United States can step in and seize the funds in a judgment debtor’s investment account, even though it knows that a state court has already issued a preliminary injunction against the debtor’s use of those funds in another judgment creditor’s favor. I believe that the majority’s opinion is unwarranted in light of existing precedent. I also believe that the majority erroneously rewards the government for its improper conduct. Accordingly, I dissent.

A. Constructive Trust.

The majority argues that CHoPP cannot prevail on its conversion claim against the United States because CHoPP did not have ownership of the account on the date that the government seized the funds. See Majority Opinion, supra, at 1347-49 [hereinafter Maj. Op.]. The majority’s argument is incorrect for the following reasons.

First, the majority errs in. holding that CHoPP did not have ownership of the funds through a constructive trust. When it awarded final judgment in CHoPP’s favor, the superior court imposed a constructive trust on the funds effective as of the date of the illegal stock transactions — a year and a half before the United States levied on the account.…

5 F.3d 1344 CHoPP COMPUTER CORPORATION, INC., a British Columbia Corporation, Plaintiff-Appellant, v. UNITED STATES of America; PaineWebber Incorporated, a Delaware Corporation, Defendants-Appellees. No. 91-15991. United States Court of Appeals, Ninth Circuit. Argued and Submitted July 20, 1992. Decided Sept. 29, 1993. William T. Bisset, Hughes, Hubbard & Reed, Los Angeles, CA, for plaintiff-appellant. John D. Giffin, Keesal, Young & Logan, San Francisco, CA, Erik P. Doerring, Asst. U.S. Atty., San Francisco, CA, for defendants-appellees. Appeal from the United States District Court for the Northern District of California. Before: CANBY, REINHARDT and LEAVY, Circuit Judges. CANBY, Circuit Judge. 1 CHoPP Computer Corporation (CHoPP) appeals from the district court's summary judgment in favor of the United States and PaineWebber Incorporated (PaineWebber), in CHoPP's action for damages arising from an alleged wrongful levy of funds contained in a PaineWebber account. We have jurisdiction under 28 U.S.C. Sec. 1291 , and we affirm. 2 * Alex Laurins, a former investment promoter, controlled the PaineWebber account. The competing claims to that account arose from separate…

CHoPP Computer Corporation (CHoPP) appeals from the district court’s summary judgment in favor of the United States and PaineWebber Incorporated (PaineWebber), in CHoPP’s action for damages arising from an alleged wrongful levy of funds contained in a PaineWebber account. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm.

I

Alex Laurins, a former investment promoter, controlled the PaineWebber. account. The competing claims to that account arose from separate actions that CHoPP and the United States had pursued against Laurins.

CHoPP sued Laurins and others in 1986, contending that they had engaged in a scheme to disparage CHoPP and thereby drive down the price of CHoPP’s stock, so that Laurins and others could profit from short sales of that stock. CHoPP sought to recover profits from the short sale of its stock, wherever found, that resulted from the tortious disparagement. CHoPP obtained a preliminary injunction from the Superior Court for the City and County of San Francisco. That injunction provided, in relevant part:

CHoPP Computer Corp. v. Laurins, No. 862163, slip. op. at 2 (Cal.Sup.Ct. Aug. 25, 1986) (preliminary injunction). Neither the United States nor…