Law Offices of David Efron, P.C. v. Candelario
842 F.3d 780
| 1st Cir. | 2016Background
- Efron (and his firm) represented plaintiffs in a federal case that settled; defendants deposited attorney-fee funds with the U.S. District Court for the District of Puerto Rico clerk.
- In a separate Puerto Rico Superior Court divorce judgment, Candelario obtained a large money judgment against Efron and sought to garnish amounts owed to him to satisfy that judgment.
- Candelario served the federal clerk with a translated garnishment order and asked the district court to transfer the funds it was holding for Efron to the Puerto Rico Superior Court.
- The district court ordered the registry funds disbursed to the Superior Court for that court to decide distribution; Efron appealed and the transfer was stayed.
- The First Circuit treated the registry funds as belonging to Efron for purposes of the appeal, resolved whether a state court can garnish federal registry funds, and reviewed whether the district court could transfer those funds to a state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a state court garnish funds deposited in a federal court registry? | Candelario: Superior Court may garnish to satisfy its judgment against Efron. | Efron: Federal registry funds are protected from state garnishment under custodia legis. | State court cannot garnish funds in federal registry; custodia legis protects those funds. |
| Can a federal district court transfer registry funds to a state court absent transferring the case? | Candelario: District court may send funds to Superior Court for execution of its judgment. | Efron: District court lacked authority to make a naked transfer without transferring the related case or cause of action. | District court cannot transfer registry funds to another court without a concomitant transfer of the case or cause of action. |
| Does Candelario have a right (or permissive) to intervene in the federal action to claim the funds? | Candelario: (did not seek intervention; argued she could not as of right and permissive intervention was untimely) | Efron: No right to intervene; her claim is unrelated to the underlying federal case. | No right to intervene; her post-judgment claim is not sufficiently related to the settled federal litigation to confer ancillary jurisdiction. |
| Remedy: What must the district court do with the deposited funds? | Candelario: Funds should be disbursed to the Superior Court to satisfy her judgment. | Efron: Funds should be disbursed pursuant to the original provisions governing the settlement/registry. | Reversed: district court must pay the funds according to the original terms under which they were deposited; not to the Superior Court. |
Key Cases Cited
- The Lottawanna, 87 U.S. 201 (1873) (federal court registry funds are held in custodia legis and not subject to state attachment or garnishment)
- Osborn v. United States, 91 U.S. 474 (1875) (federal court retains control over registry funds until distribution by court decree)
- Motlow v. Missouri ex rel. Koeln, 295 U.S. 97 (1935) (state courts lack jurisdiction to enforce liens on property in custodia legis)
- Bucher v. Vance, 36 F.2d 774 (7th Cir. 1929) (applies Lottawanna to bar state garnishment of federal registry funds)
- White v. FDIC, 19 F.3d 249 (5th Cir. 1994) (reaffirms that custodia legis bars attachment of funds in federal court registries)
- Garrick v. Weaver, 888 F.2d 687 (10th Cir. 1989) (registry funds not subject to attachment; court approval required for withdrawal)
- Landau v. Vallen, 895 F.2d 888 (2d Cir. 1990) (custodia legis prevents garnishment that would frustrate court’s purpose for deposited funds)
- United States v. Van Cauwenberghe, 934 F.2d 1048 (9th Cir. 1991) (federal registry funds generally not subject to writs of attachment or garnishment)
- Alstom Caribe, Inc. v. Geo. P. Reintjes Co., 484 F.3d 106 (1st Cir. 2007) (a court may not effectuate a non-consensual transfer of deposited funds to another court without transferring the case or cause of action)