On January 13, 2015, in National Maritime Services, Inc. v. Straub, the US Court of Appeals for the Eleventh Circuit held that the district court had ancillary jurisdiction over a supplementary proceeding to avoid the fraudulent transfer of assets by a judgment debtor (No. 13-15349, (11th Cir. Jan. 13, 2015)).

The plaintiff, National Maritime Services, Inc. sued Burrell Shipping Company and its owner, Glenn Straub, in the US District Court for the Southern District of Florida for breach of contract and unjust enrichment. The claims arose from management and custodial services that National Maritime had provided for a vessel owned by Burrell Shipping. After a bench trial, the district court entered a final judgment against Burrell Shipping but ruled that Straub was not individually liable to National Maritime. However, when National Maritime attempted to execute on the judgment, it was unsuccessful because Burrell Shipping had no assets. During the action, Burrell Shipping had sold the vessel, its only asset, and transferred the proceeds to Straub.

National Maritime then initiated a supplemental proceeding against Straub to void the transfer of proceeds from Burrell Shipping to Straub under a Florida law that allows a court to void a transfer of property made by the judgment debtor to delay, hinder or defraud creditors (Fla. Stat. § 56.29(6)(b)). The district court held that it had ancillary jurisdiction over the supplemental proceeding because National Maritime was seeking assets of a judgment debtor (Burrell Shipping) that were found in the hands of a third party (Straub). The court ruled that the transfer was void and entered judgment against Straub in the amount of final judgment against Burrell Shipping.

On appeal, the Eleventh Circuit affirmed. The circuit court addressed for the first time when a supplementary proceeding falls within the ancillary jurisdiction of a district court. The court found that ancillary jurisdiction exists in two circumstances:

The circuit court noted that the latter category encompasses a broad range of supplementary proceedings involving third parties to protect and enforce federal judgments. However, the US Supreme Court has held that ancillary jurisdiction does not extend to a new lawsuit to impose liability on a third party (see Peacock v. Thomas, 516 US 349, 359 (1996)).

The Eleventh Circuit found that the district court had ancillary jurisdiction over this supplemental proceeding because National Maritime only sought to disgorge Straub of a fraudulently transferred asset, not to impose liability for a judgment on a third party. The circuit court reasoned that Straub's liability was limited to the proceeds that Burrell Shipping fraudulently transferred to him and was not held personally liable for the judgment against Burrell Shipping. In upholding the exercise of ancillary jurisdiction, the Eleventh Circuit followed the approaches of other circuits, including the US Courts of Appeals for the Second and Ninth Circuits.