ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY.
Gibbons and Becker, Circuit Judges and Atkins, District Judge.*fn*
The Howard Savings Bank (Howard) appeals from an order, in an action still pending in the district court, denying its motion to vacate a stay of proceedings so as to permit it to move for a writ of attachment. Howard, a defendant in the pending action, sought the writ to attach property of Joseph Rascio and Mary Lou Rascio, against whom it asserts a cross-claim. This court granted an injunction pending appeal preventing the Rascios from removing from the district of New Jersey the property sought to be attached. The Rascios have moved before this court to dissolve that injunction. We deny that motion, and we reverse the district court's order.
Agents Auto Recovery Service, a firm operated by Joseph and Mary Lou Rascio, reposseses automobiles financed by lenders such as Howard. The firm repossessed an automobile operated by John Britton. Britton filed a diversity action in the United States District Court for the District of New Jersey charging Howard with conversion, false imprisonment, and assault and battery in connection with that repossession. Because Agents Auto had undertaken by contract to defend and indemnify Howard, and to carry comprehensive liability insurance against claims arising out of its repossession business, Howard cross-claimed against the Rascios. Prior to the filing of Britton's diversity suit, however, Howard had already commenced suit in the Superior Court of New Jersey to enforce the terms of a settlement agreement between Britton and Howard. On January 24, 1983, the district court stayed the diversity action except for the limited purpose of discovery to ascertain the citizenship of the Rascios.
After entry of the January 24 stay order, Howard sought unsuccessfully to serve process on the Rascios. While they were avoiding process, and avoiding negotiations with Howard's representatives, Howard became aware that it had issued four certificates of deposit in the name of Mary Lou DeIesso, and that Mary Lou DeIesso and Mary Lou Rascio were one and the same. Fearing that the Rascios were about to remove themselves and their property from the State of New Jersey, Howard moved on March 22, 1983 for a writ of attachment, and for an order lifting the stay of proceedings, for the limited purpose of permitting the attachment of the four certificates of deposit.
The district court denied these motions, expressing "serious doubts" about the validity of New Jersey's attachment statutes in light of Shaffer v. Heitner, 433 U.S. 186, 53 L. Ed. 2d 683, 97 S. Ct. 2569 (1977). This appeal, and the injunction pending appeal, followed.
New Jersey law provides two statutory grounds for attachment pertinent to Howard's cross-claim:*fn1
a. Where the facts would entitle plaintiff to an order of arrest before judgment in a civil action . . .; or
b. Where the defendant absconds or is a nonresident of this state, and a summons cannot be served on him in this state . . . .
N.J. Stat. Ann. § 2A:26-2(a), (b) (West 1952). An order of arrest (or capias ad respondendum) "shall issue in an action founded on a contract, express or implied . . . when the proof establishes . . . that defendant is about to remove any of his property out of the jurisdiction of the court . . . with intent to defraud his creditors; or . . . that defendant ...