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Collins v. Daniels

United States District Court, D. New Mexico

October 1, 2019

DARLENE COLLINS et al., Plaintiffs,
v.
CHARLES W. DANIELS et al., Defendants.

          ORDER DENYING JUDICIAL DEFENDANTS' MOTION TO RELEASE FUNDS FROM COURT'S REGISTRY

          KIRTAN KHALSA UNITED STATES MAGISTRATE JUDGE.

         THIS MATTER is before the Court on the Judicial Defendants' Motion to Release Funds from Court's Registry (Doc. 107), filed May 13, 2019.[1] Plaintiffs filed a response in opposition to the motion on May 24, 2019, and the Judicial Defendants filed a reply in support of it on June 2, 2019. (Docs. 108, 109.) On August 30, 2019, United States District Judge Martha Vázquez referred the motion to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil Procedure 72(a). (Doc. 111.) The Court, having reviewed the pleadings, the record, and the relevant law, and being otherwise fully advised, FINDS that the motion is premature and should be DENIED.

         On March 22, 2018, this Court entered an order permitting Plaintiffs' counsel A. Blair Dunn to

deposit into the registry of the Court $14, 868.00, the stipulated amount of the Rule 11 sanction imposed on Plaintiffs' counsel pending Plaintiffs' appeal of the Court's Order granting Judicial Defendant[s'] Motion to Dismiss and any future final order awarding attorney's fees pursuant to the Court's Order Granting Rule 11 Sanctions against Plaintiffs' counsel.

(Doc. 90 at 1.) The order further provided that “Defendants may withdraw the funds from the Court registry upon prevailing in the final disposition of the case.” (Id. at 2.)

         In the motion presently before the Court, the Judicial Defendants seek an order “directing the withdrawal and release to Judicial Defendants of the funds held in the Court'[s] registry, $14, 868.00 plus applicable interest.” (Doc. 107 at 2.) In support of this motion, the Judicial Defendants observe that the United States Court of Appeals for the Tenth Circuit affirmed this Court's orders, including its order awarding Rule 11 sanctions against Mr. Dunn, on February 25, 2019, with the mandate issued on April 9, 2019. (See Doc. 106.) According to the Judicial Defendants, this means that Plaintiffs' “appeal” is no longer “pending” and the Court's award of Rule 11 sanctions is now final. (Doc. 107 at 2.)

         In their response in opposition to the Judicial Defendants' motion, Plaintiffs argue that the motion is premature because “Plaintiffs' appeal is still pending.” (Doc. 108 at 1-2.) As Plaintiffs observe, when they filed their response on May 24, 2019, the deadline for filing a petition for writ of certiorari in the United States Supreme Court had not yet expired, and Plaintiffs notified Defendants and the Court of their intent to file one. (Id.) And accordingly, on June 28, 2019, they did so. (Doc. 110 at 1.) To date, Plaintiffs' certiorari petition remains pending before the Supreme Court. Moreover, one of the questions Plaintiffs have presented to the Supreme Court for review is: “Were the sanctions against one of the attorney[s] responsible for the initiation of the litigation proper in light of [the Supreme Court's] decisions and decisions from other Courts of Appeals?” Collins v. Daniels, No. 19-26, Petition for Writ of Certiorari at ii (U.S. Jun. 28, 2019).

         The Judicial Defendants, in their reply, contend that they “do not understand the term ‘appeal, '” as used in the Court's order permitting Mr. Dunn to deposit funds into the court registry, “to include cert petitions.” (Doc. 109 at 2.) Rather, “[g]iven how infrequently cert petitions are granted, Judicial Defendants believe the Rule 67 Order would have referred to that review process explicitly if this Court intended for it to be included.” (Id.) However, acknowledging that they may be mistaken, the Judicial Defendants alternatively request that the Court “require the release of the funds at issue at this time with the caveat that, in the unlikely event that Plaintiffs' cert petition is granted, Judicial Defendants will redeposit said funds in the Court's registry.” (Id.)

         The funds at issue were deposited into the court registry pursuant to Federal Rule of Civil Procedure 67. (Doc. 90 at 1.) “Rule 67 permits a party, upon notice to every other party, and by leave of court, to deposit with the court all or any part of a sum of money.” Garrick v. Weaver, 888 F.2d 687, 694 (10th Cir. 1989) (quotation marks and brackets omitted). Money paid into the court registry pursuant to Rule 67 may be withdrawn only “in accordance with 28 U.S.C. §§ 2041 and 2042 and any like statute.” Fed.R.Civ.P. 67(b). Thus, as the Judicial Defendants tacitly acknowledge,

[i]t is well settled that funds in the registry of the court cannot be executed against in the absence of court order. See 28 U.S.C. § 2042 (“No money deposited [in the registry of the court] shall be withdrawn except by order of the court.”); The Lottawanna, 87 U.S. (20 Wall.) 201, 224, 22 L.Ed. 259 (1874) (fund in registry “is not subject to attachment either by foreign attachment or garnishment” and “no money deposited ... shall be withdrawn except by the order of the judge”).

Garrick, 888 F.2d at 695; see also Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541, 545 (7th Cir. 2017) (“As both Rule 67 and 28 U.S.C. §§ 2041 and 2042 recognize, funds can be withdrawn from the court's registry only under the control of, and with the permission of, the court.”).

         Moreover,

[t]he fact that . . . deposited funds are to be disbursed by “order of court, ” 28 U.S.C. § 2042, does not . . . give the district court carte blanche to dispose of deposited funds as it sees fit, without regard either to the rights of the parties or to the applicable law. Funds deposited pursuant to Rule 67 are not at the disposal of the judge but, rather, are held in trust for their rightful owner. Their disbursement must be in accordance with the law.

Alstom Caribe, Inc. v. George P. Reintjes Co., 484 F.3d 106, 114 (1st Cir. 2007) (citation omitted); see also Fulton Dental, LLC, 860 F.3d at 545 (“Once the funds are interpleaded, they will be released to the parties who have proven an entitlement to them.”). Hence, for the Court to disburse the funds at issue to the Judicial ...


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