Janvey v. Alguire
2010 WL 5095506
5th Cir.2010Background
- SEC sued Stanford Group Company (SGC) and related Stanford entities, including Stanford International Bank (SIB), alleging a massive Ponzi scheme.
- The district court appointed a Receiver to marshal the Stanford estate and freeze assets pending litigation.
- Following Adams, the Fifth Circuit ordered thawing of Stanford investors’ accounts, but the Receiver obtained a preliminary injunction freezing numerous former SGC advisers’ and employees’ accounts.
- Employee Defendants moved to compel arbitration under promissory notes with FINRA arbitration clauses; the district court granted a preliminary injunction without ruling on the arbitration issue.
- The Receiver sought to extend the freeze under TUFTA, asserting transfers to employees were fraudulent and recoverable, and the district court distinguished TUFTA relief from an attachment.
- The court ultimately held that the district court had power to issue the injunction before arbitrability was decided, that the injunction was not overbroad or an attachment, and that the Receiver’s claims are not subject to arbitration because he sues on behalf of estate creditors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court could grant injunction before arbitrability | Receiver | Employee Defendants | Yes; court power preserved status quo pending arbitration |
| Whether district court abused discretion in granting injunction | Receiver | Employee Defendants | No; district court did not abuse discretion |
| Whether injunction was overbroad | Receiver | Employee Defendants | No; injunction properly limited to affected assets |
| Whether TUFTA injunction was proper instead of an attachment | Receiver | Employee Defendants | Proper use of TUFTA injunction, not an attachment |
| Whether Receiver's claims are subject to arbitration | Receiver | Employee Defendants | Receiver not bound to arbitrate; claims arise for creditors |
Key Cases Cited
- Adams, 588 F.3d 831 (5th Cir. 2009) (frozen accounts and related receivership context; background for this appeal)
- Teradyne v. Mostek Corp., 797 F.2d 43 (1st Cir. 1986) (precedent supporting injunctive relief to preserve status quo pending arbitration)
- Salvano, 999 F.2d 211 (7th Cir. 1993) (limits on injunctions pending arbitration; duration until panel acts)
- RGI, Inc. v. Tucker & Associates, Inc., 858 F.2d 227 (5th Cir. 1988) (circuit split on injunctions during arbitration; not controlling here)
- Moses H. Cone Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court 1983) (FAA principles; discretion in arbitrability matters)