Citigroup Glob. Mkts., Inc. v. KLCC Invs., LLC, D and D Trust

17-308-cv
Citigroup Glob. Mkts., Inc. v. KLCC Invs., LLC, et al., D and D Trust
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A
PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED
BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the eighteenth day of December, two thousand seventeen.
PRESENT: BARRINGTON D. PARKER,
GERARD E. LYNCH,
DENNY CHIN,
Circuit Judges.
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CITIGROUP GLOBAL MARKETS, INC.,
Interpleader Plaintiff-Counter-
Defendant-Appellee,
v. 17-308-cv
KLCC INVESTMENTS, LLC,
Interpleader Defendant-Counter-
Claimant-Appellee,
KENNETH CAYRE,
Third-Party-Defendant-Appellee,
D AND D TRUST,
Interpleader Defendant-Counter-
Claimant-Third-Party-Plaintiff-
Appellant. *
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FOR INTERPLEADER PLAINTIFF- JOHN EVAN JENKINS, III, Lubiner, Schmidt
COUNTER-DEFENDANT-APPELLEE: & Palumbo, LLC, Cranford, New Jersey.
FOR INTERPLEADER DEFENDANT- M. RYAN PINKSTON (Richard M. Resnik, on
COUNTER-CLAIMANT-APPELLEE the brief), Seyfarth Shaw LLP, San Francisco,
AND THIRD-PARTY-DEFENDANT- California, and New York, New York.
APPELLEE:
FOR INTERPLEADER DEFENDANT- EUGENE KILLIAN, JR., The Killian Firm, P.C.,
COUNTER-CLAIMANT-THIRD- New York, New York.
PARTY-PLAINTIFF-APPELLANT:
Appeal from the United States District Court for the Southern District of
New York (Preska, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the orders of the district court are AFFIRMED.
This interpleader action was filed in the district court below in 2006 by
interpleader plaintiff Citigroup Global Markets, Inc. ("Citigroup"), the holder of an
account containing securities pledged as collateral -- twice -- by non-party Solomon
Dwek. By memorandum and order entered September 28, 2015, the district court
granted summary judgment in favor of KLCC Investments, LLC and Kenneth Cayre
* The Clerk of Court is respectfully directed to amend the official caption to conform to
the above.
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(together "KLCC"), dismissed the crossclaims of D and D Trust ("D&D"), dismissed all
counterclaims against Citigroup, discharged Citigroup as interpleader plaintiff, and
denied without prejudice Citigroup's request for attorneys' fees and expenses. By order
entered January 24, 2017, after Citigroup filed a new motion for fees and costs, the
district court awarded Citigroup fees and costs in the amount of $246,125.15 to be paid
by D&D. The district court found that, as a matter of law, KLCC had priority over D&D
to the securities account, and assessed fees and costs against D&D as "the losing
claimant." S. App. 47. D&D appeals both the grant of summary judgment and the
award of attorneys' fees and costs to KLCC. We assume the parties' familiarity with the
underlying facts, procedural history, and issues on appeal.
"We review the grant of . . . summary judgment de novo, accepting as true
the factual allegations of the . . . complaint[] and drawing inferences based upon these
allegations in the light most favorable to the . . . plaintiffs." In re Bank of N.Y. Derivative
Litig., 320 F.3d 291, 297 (2d Cir. 2003) (alteration in original) (citation omitted).
"Summary judgment is appropriate only if it can be established that 'there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.'" Alibrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d 82, 85 (2d Cir. 2003)
(per curiam) (quoting Fed. R. Civ. P. 56(c)).
In an interpleader action, as a general matter, the interpleader's costs and
attorneys' fees are awarded from the interpleader fund, but ultimately they are to be
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"paid by the party whose claim has been adjudged groundless, and whose assertion of
the claim necessitated the interpleader and thereby prevented the successful claimant
from obtaining the fund undiminished by interpleader costs." Globe Indem. Co. v. Puget
Sound Co., 154 F.2d 249, 250 (2d Cir. 1946). The court only deviates from this general
rule when "special circumstances" warrant it. Id. at 251. We review a district court's
award of fees and costs in an interpleader action for abuse of discretion. See
Septembertide Publ'g, B.V. v. Stein & Day, Inc., 884 F.2d 675, 683 (2d Cir. 1989) ("[Costs
and attorneys' fees] may, in the discretion of the court, be taxed against one of the
parties when their conduct justifies it.").
An independent review of the record and relevant case law confirms that
KLCC was entitled to summary judgment for substantially the reasons set forth in the
district court's September 28, 2015 memorandum and order. See Citigroup Glob. Mkts.,
Inc. v. KLCC Invs., LLC, No. 06-CV-5466 (LAP), 2015 WL 5853916, at *7-14 (S.D.N.Y.
Sept. 28, 2015). In addition, we discern no error or abuse of discretion in the district
court's award of fees and costs to Citigroup against D&D.
We have considered all of D&D's arguments and find them to be without
merit. Accordingly, we AFFIRM the orders of the district court.
FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk
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