Morgan Stanley Smith Barney LLC v. Johnson, No. 18-3106 (8th Cir. 2020)Annotate this Case
Morgan Stanley filed suit under the Federal Arbitration Act (FAA) to confirm an arbitration award against defendant. After defendant did not respond, the district court entered judgment in favor of Morgan Stanley. Then the district court entered an order granting in part Morgan Stanley's motions to appoint a receiver under Federal Rule of Civil Procedure 66 and to enter a charging order under Rule 69(a) and Minn. Stat. 322C.0503. Defendant appealed.
The Eighth Circuit affirmed, holding that the district court did not abuse its discretion in appointing a receiver under Federal Rule 66 to exercise extraordinary investigative powers to determine whether Morgan Stanley's substantial judgment can be paid within a reasonable time. The court also held that the district court did not abuse its discretion by appointing a general receiver over his interests in the LLCs. In this case, Morgan Stanley's motion for a charging order under Minn. Stat. 322C.0503 properly relied on Federal Rule 69(a) and state law, while its motion for a receiver relied on the district court's federal equitable powers under Rule 66.