Summary
awarding $4,000 in attorney's fees where the requested amount was "excessive given the simplicity of" bringing an interpleader action
Summary of this case from Wells Fargo Bank v. Krenzen Auto Inc.Opinion
98 Civ. 6241 (LAK)
March 3, 2000
ORDER
This is an interpleader action in which plaintiffs have paid money into Court (the "Interpleader Fund"), disavowed any claim to the money, expressed a fear of multiple liability in light of conflicting claims among defendants to the Interpleader Fund, and sought a discharge from liability. Defendants have settled the disputes inter se and now move to distribute the Interpleader Fund, net of attorneys' fees to plaintiffs, to them in accordance with their settlement. Plaintiffs move for a discharge from liability and for attorneys' fees.
The Scope of the Discharge
Plaintiffs and defendants disagree as to the scope of the discharge to which plaintiffs are entitled.
The controversy that gave rise to this action had its genesis in certain business arrangements between plaintiffs and defendant Newby Toms. Plaintiffs were obliged to make certain payments to Toms under a June 30, 1995 agreement. Plaintiffs Hoffman and Wolff were obliged also to make additional payments to him under January 1997 and July 1997 agreements. Toms claims to have assigned his remaining distributions under the 1995 agreement to Emerald.
In 1996, defendant Emerald Investors Trust's assignor obtained two judgments against Toms totaling approximately $879,000. In 1998, defendant Machidera, Inc. obtained a judgment against Toms in the amount of $2.2 million. Machidera and Emerald's predecessor thereafter served plaintiffs with restraining notices and/or executions in efforts to enforce the judgments.
As indicated above, defendants have settled their disputes concerning their respective entitlements out of the Interpleader Fund. Plaintiffs, however, seek a judgment discharging them from any further liability to any of the defendants under the 1997 agreements whereas defendants Toms and Megadeal Associates contend that the discharge should be limited to the amounts paid by plaintiffs into the Interpleader Fund. Megadeal contends that other payments may be due under the 1997 agreements. Moreover, it asserts that it may have another claim against plaintiffs for payments made to Toms prior to the commencement of the litigation. In plaintiffs' view, any such claims are compulsory counterclaims here and must be discharged in light of Megadeal's failure to assert them.
An interpleader plaintiff who asserts no claim to a fund that is paid into court to abide the resolution of conflicting claims among others is entitled to judgment discharging it from liability with respect to the fund. It may well be that plaintiffs and Megadeal have disputes, even disputes that arise from transactions that bear some relationship to the circumstances in which plaintiffs became obligated to pay the sums deposited into the Interpleader Fund. But the amended complaint did not seek resolution of those disputes, and Megadeal has pressed no counterclaim seeking their resolution. Should Megadeal hereafter sue plaintiffs with respect to those matters, plaintiffs will be free to assert that the judgment here bars Megadeal's action on the theory that its claims were compulsory counterclaims here, just as Megadeal will be free to contend that the judgment here has no preclusive effect. But it would be inappropriate for this Court to resolve that issue now, as the matter has not been tendered to it properly. Indeed, there would be substantial question as to whether the Court would exercise its discretion to entertain a declaratory judgment action, had one been brought, in view of the availability of coercive relief. In any case, however, the possibility of future litigation between plaintiffs and Megadeal, which at the moment is a hypothetical possibility, affords no reason to grant plaintiffs a discharge from liability greater than that to which they are entitled — a discharge from liability with respect to the Interpleader Fund.
Attorneys' Fees
Plaintiffs are entitled to recover reasonable attorneys' fees for bringing the interpleader action. The amounts claimed, however, are excessive given the simplicity of the task. Accordingly, the Court awards plaintiffs the sum of $4,000, which shall be paid out of the Interpleader Fund.
Plaintiffs' request for an additional award against Megadeal alone of $4,550 for preparing its motion for discharge is frivolous and is denied.
Conclusion
Defendants' motion is granted. Plaintiffs' motion is granted to the extent that plaintiffs shall recover attorneys' fees in the amount of $4,000 from the Interpleader Fund and denied in all other respects. The Clerk shall close the case.
SO ORDERED.