Name of Assigned Judge Joan B. Gottschall Sitting Judge if Other or Magistrate Judge than Assigned Judge
Plaintiff Securities and Exchange Commission's motion to disburse funds  is granted.
O[ For further details see text below.] Docketing to mail notices.
The SEC filed this action alleging that Robert Falor defrauded investors in his businesses of $9 million. The complaint named Jennifer Falor, Robert's ex-wife, as a relief defendant, and the SEC alleges that $930,000 of investor funds were transferred to or spent on behalf of Jennifer.
On October 1, 2009, Jennifer filed a motion, pursuant to Federal Rule of Civil Procedure 67(a), for leave to deposit $500,000 with the court. (Doc. 11.) The motion explained that another entity-Hotel 71 Mezz Lender, LLC ("Mezz Lender"), who is not a party to this suit-had obtained a judgment against Jennifer in New York state court in the amount of $52,404,066.54. The SEC and Mezz Lender disputed who had priority over Jennifer's assets. The SEC supported the motion, and the court granted the parties' request. (Docs. 13, 16.)
Now, the SEC has filed a motion seeking leave to disburse some of the funds deposited with the court. (Doc. 57.) The SEC and Mezz Lender reached an agreement amongst themselves that Mezz Lender should receive 75% of the funds deposited with the court and then relinquish any claim to the rest of the funds. Jennifer opposes the motion.
Rule 67 provides a mechanism for depositing funds with the court pending the resolution of any dispute over who has a right to the funds. The rule provides, in part:
If any part of the relief sought is a money judgment or the disposition of a sum of money or some other deliverable thing, a party-on notice to every other party and by leave of court-may deposit with the court all or part of the money or thing, whether or not that party claims any of it.
Fed. R. Civ. P. 67(a). "The Rule 67 procedure provides a place of safekeeping for disputed funds pending the resolution of a legal dispute . . . ." In re Dep't of Energy Stripper Well Exemption Litig., 124 F.R.D. 217, 218-19 (D. Kan. 1989).
According to Wright & Miller, "Rule 67 is a rather unimportant rule. Predictions made at the time it was adopted that there are 'not very many occasions for the application of this rule' have proven accurate." Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, 12 Federal Practice and Procedure § 2991 at 58 (2d ed. 1997). There do not appear to be any reported cases analogous to this one. "The parties to a suit may stipulate about the disposition of money deposited in ...