United States District Court, D. New Mexico
ORDER DENYING JUDICIAL DEFENDANTS' MOTION TO
RELEASE FUNDS FROM COURT'S REGISTRY
KHALSA UNITED STATES MAGISTRATE JUDGE.
MATTER is before the Court on the Judicial Defendants'
Motion to Release Funds from Court's Registry (Doc. 107),
filed May 13, 2019. 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
VÃ¡zquez referred the motion to the undersigned pursuant to 28
U.S.C. Â§ 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
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.)
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.)
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).
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.)
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
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.”).
[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