Enter to open, tab to navigate, enter to select
State Courts Cannot Garnish Funds Deposited in Federal Court Registry: First Circuit
Practical Law Legal Update w-004-8458 (Approx. 3 pages)
State Courts Cannot Garnish Funds Deposited in Federal Court Registry: First Circuit
by Practical Law Litigation
| Published on 05 Dec 2016 • USA (National/Federal) |
In Law Offices of David Efron, P.C. v. Candelario, the US Court of Appeals for the First Circuit, in a matter of first impression for the court, joined other circuit courts to hold that state courts cannot garnish funds deposited in a federal court registry.
On December 2, 2016, In Law Offices of David Efron, P.C. v. Candelario, the US Court of Appeals for the First Circuit, in a matter of first impression for the court, joined other circuit courts to hold that state courts cannot garnish funds deposited in a federal court registry ( (1st Cir. Dec. 2, 2016)).
David Efron and Madeleine Candelario were involved in divorce proceedings before the Puerto Rico Superior Court. In an unrelated case in the federal district court, the Efron firm (which is solely owned by David Efron) secured a settlement for its clients and its attorneys' fees were deposited with the district court clerk. Candelario alleged that Efron refused to make payment and sought garnishment of the funds on deposit in the federal district court registry. The Puerto Rico Superior Court issued an order garnishing the funds from the federal district court registry to satisfy the state court judgment. The district court directed disbursement of the funds to the Puerto Rico Superior Court, and the Efron firm appealed.
The First Circuit reversed and remanded, holding that the Puerto Rico Superior Court cannot garnish funds deposited in a federal district court's registry and that the district court cannot transfer funds without transferring the case. Among other things, the First Circuit found that:
- Funds in federal district court registries are protected under the doctrine of custodia legis from garnishment or attachment by a state court (Lottawanna, 87 U.S. 201 (1873)). The principle is based on avoiding a clash between jurisdictions which would result from using one process to seize assets in the control of another judicial authority.
- Other circuit courts that have addressed this question have reached the same result, including the US Courts of Appeals for the Second, Fifth, Seventh, Ninth, and Tenth Circuits (see Landau v. Vallen, 895 F.2d 888, 893-94 (2d Cir. 1990); White v. F.D.I.C., 19 F.3d 249, 253 (5th Cir. 1994); Bucher v. Vance, 36 F.2d 774, 776 (7th Cir. 1929); United States v. Van Cauwenberghe, 934 F.2d 1048, 1062 (9th Cir. 1991); Garrick v. Weaver, 888 F.2d 687, 695 (10th Cir. 1989)).
- The Second Circuit explained that custodia legis bars garnishment that would prevent the court from disposing funds in accordance with the purpose for which they were deposited (Landau, 895 F.2d at 893-94).