Filed: Oct. 23, 2014
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Summary: Case: 12-15351 Date Filed: 10/23/2014 Page: 1 of 22 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 12-15351 and 13-10005 _ D.C. Docket No. 1:06-cv-21213-JAL ZELAYA/CAPITAL INTERNATIONAL JUDGMENT, LLC, llllllllllllllllllllllllllllllllllllllllPlaintiff - Appellant, versus JOHN ZELAYA, et al., llllllllllllllllllllllllllllllllllllllllDefendants - Appellees. _ Appeals from the United States District Court for the Southern District of Florida _ (October 23, 2014) Befor
Summary: Case: 12-15351 Date Filed: 10/23/2014 Page: 1 of 22 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 12-15351 and 13-10005 _ D.C. Docket No. 1:06-cv-21213-JAL ZELAYA/CAPITAL INTERNATIONAL JUDGMENT, LLC, llllllllllllllllllllllllllllllllllllllllPlaintiff - Appellant, versus JOHN ZELAYA, et al., llllllllllllllllllllllllllllllllllllllllDefendants - Appellees. _ Appeals from the United States District Court for the Southern District of Florida _ (October 23, 2014) Before..
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Case: 12-15351 Date Filed: 10/23/2014 Page: 1 of 22
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 12-15351 and 13-10005
________________________
D.C. Docket No. 1:06-cv-21213-JAL
ZELAYA/CAPITAL INTERNATIONAL JUDGMENT, LLC,
llllllllllllllllllllllllllllllllllllllllPlaintiff - Appellant,
versus
JOHN ZELAYA, et al.,
llllllllllllllllllllllllllllllllllllllllDefendants - Appellees.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(October 23, 2014)
Before TJOFLAT, JULIE CARNES, and GILMAN, ∗ Circuit Judges.
GILMAN, Circuit Judge:
∗
Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting
by designation.
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This case stems from Zelaya/Capital International Judgment, LLC’s (ZC’s)
attempt to collect on a $2,678,137.11 judgment that was entered against John Zelaya
in February 2004. The 2004 judgment against Zelaya was rendered by the United
States District Court for the Southern District of New York and was registered in the
Southern District of Florida in May 2006. ZC, however, was not a party to the suit
that led to the judgment. Instead, the prevailing parties in the 2004 case (Thomas
Telegades, Peter Tosto, and two investment firms) assigned their interests in the
judgment to ZC in May 2009, except that Tosto retained a 25% interest in any
amount recovered by ZC.
ZC subsequently sought a writ of execution against Zelaya from the Southern
District of Florida in September 2009. Soon afterward, ZC served writs of
garnishment on numerous banks that it believed were holding Zelaya’s assets,
including Deutsche Bank. The Securities and Exchange Commission (SEC) later
intervened in the case, asserting that it was entitled to a portion of Tosto’s 25%
interest in the 2004 judgment.
In June 2010, Zelaya deposited the full amount of the judgment (plus
post-judgment interest) into the district court’s registry. The court then dissolved
the writs of garnishment against all of the banks, granted Zelaya’s motion for a
satisfaction of the judgment, and awarded attorney fees and costs to Deutsche Bank.
For the reasons set forth below, we AFFIRM the judgment of the district court.
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I. BACKGROUND
In 2002, the SEC obtained a $4,480,063.82 judgment against Tosto in the
Southern District of New York based on claims of market manipulation. Tosto, in
turn, obtained a $2,678,137.11 judgment against Zelaya in the same court in
February 2004. The 2004 judgment was subsequently assigned to ZC in May 2009.
Tosto, however, retained a 25% interest in any recovery by ZC on the 2004
judgment.
In May 2006, ZC registered the 2004 judgment in the Southern District of
Florida. The case remained dormant until September 2009, when a writ of
execution was issued against Zelaya. Writs of garnishment were also served on the
banks that were believed to hold Zelaya’s assets. One of the garnishee banks,
Deutsche Bank, filed an answer to the writ of garnishment in November 2009. In
its answer, Deutsche Bank disclosed that one of its accounts (held by an entity called
“Investors Trust Administration, LLC”) might be subject to the garnishment.
ZC then moved for a default judgment against Deutsche Bank, arguing that
the bank’s answer to the writ of garnishment was untimely under Florida law, and
that ZC was therefore entitled to an amount from the garnished account sufficient to
satisfy the 2004 judgment. The motion for default judgment against Deutsche
Bank prompted several rounds of motions practice, multiple subpoenas, and a
hearing before a magistrate judge.
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In January 2010, the SEC served Zelaya with its own writ of garnishment.
The writ contended that the SEC had an interest in the 2004 judgment against Zelaya
by virtue of its interest in the 2002 judgment against Tosto. In particular, the writ
alleged that Zelaya “may have possession, custody or control of property in which
. . . Peter Tosto . . . has a substantial nonexempt interest.” The SEC’s allegation
was premised on the fact that Tosto had retained a 25% interest in whatever amount
ZC might collect on the 2004 judgment.
Zelaya was accordingly faced with competing claims. On the one hand, ZC
asserted an interest in Zelaya’s funds as the assignee of the 2004 judgment against
Zelaya. On the other hand, the SEC asserted an interest as the judgment creditor of
its 2002 judgment against Tosto. The SEC, moreover, alleged that Tosto’s
assignment of the 2004 judgment to ZC might have been fraudulent. Zelaya
responded to this dilemma by filing a motion in May 2010 for (1) leave to deposit the
judgment amount plus post-judgment interest into the registry of the district court, or
(2) leave to file an interpleader action.
The magistrate judge assigned to the case held a hearing on Zelaya’s motion
in June 2010. One day after the hearing, the magistrate judge issued an omnibus
order in which he granted Zelaya leave to deposit the disputed funds (the
$2,678,137.11 judgment plus post-judgment interest, for a total of $2,892,250.82)
into the court’s registry. Zelaya deposited the funds five days later.
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ZC then filed objections to the magistrate judge’s omnibus order. Among its
objections, ZC contended that the district court lacked jurisdiction under Rule 69(a)
of the Federal Rules of Civil Procedure (which governs the procedure for collecting
on a judgment in federal court) and under Florida law to adjudicate the dispute over
the ownership of the funds. It also argued that Zelaya’s motion amounted to an
impermissible collateral attack on the 2004 judgment. Finally, ZC argued that
allowing Zelaya to deposit the disputed funds into the court’s registry unfairly
deprived ZC of property to which it was entitled.
The district court subsequently denied all of ZC’s objections to the June 2010
omnibus order, explaining that Rule 67 of the Federal Rules of Civil Procedure
commits the decision of whether to grant leave to deposit funds into the registry to
the court’s sound discretion. It held that the magistrate judge had not erred in
allowing Zelaya to deposit the disputed funds into the court’s registry pursuant to
Rule 67.
Following the deposit by Zelaya, the magistrate judge issued additional orders
that further streamlined the proceedings. One of the orders, which was issued in
September 2010, dissolved the writs of garnishment against the banks. The
magistrate judge reasoned that “Zelaya’s deposit into the Court’s registry has now
obviated the need for the writs associated with the above-listed [garnishment]
motions to remain in place.”
5
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Another order granted the SEC’s motion to intervene in the case as a matter of
right. The magistrate judge noted in the order that the SEC claimed that it was
“entitled to at least a portion of the amount currently deposited in the court registry
by reason of its [2002] judgment against Tosto” and that it “might be entitled to
more if there was indeed a fraudulent assignment by Tosto of his interest in the 2004
judgment against . . . Zelaya.”
ZC filed objections to both the dissolution and intervention orders. The
district court again denied all of ZC’s objections. In affirming the dissolution
order, the court explained that the dissolution of the writs of garnishment had not
resulted in any prejudice to ZC because the disputed amount was being safeguarded
in the court’s registry. And the intervention order was proper because, among other
things, the SEC had adequately established its interest in part of the 2004 judgment.
ZC next filed a notice of appeal from the order affirming the dissolution of the
writs of garnishment. That appeal, however, was dismissed by this court in May
2011 for lack of subject-matter jurisdiction because the dissolution of the writs of
garnishment did not constitute a final decision of the district court.
Another dispute arose over a motion by Zelaya seeking an acknowledgement
that he had satisfied the judgment, which he filed in December 2010. ZC opposed
the motion on the ground that it had not yet received the funds deposited into the
court’s registry. The magistrate judge recommended that Zelaya’s motion be
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granted. ZC objected to the report and recommendation, contending that a
satisfaction of the judgment would violate both Rule 69(a) of the Federal Rules of
Civil Procedure and Florida law. The district court denied ZC’s objections and
adopted the report and recommendation in full in August 2012.
The final part of the procedural history relevant to this appeal is Deutsche
Bank’s motion for attorney fees and costs, which was filed in October 2010 after the
district court had dissolved the writs of garnishment. Deutsche Bank contended
that it was entitled to recover these expenses under Florida law (Fla. Stat. § 77.28) as
a garnishee bank.
In its motion, Deutsche Bank requested a total of $88,305.70 for such
expenditures. It submitted detailed time and cost records in support of its request.
Deutsche Bank explained that, as a result of the writ of garnishment served upon it
by ZC, the bank had been
forced to respond to a motion to hold [Deutsche Bank] in
default, forced to review numerous motions to dissolve
writs of garnishment filed by [Zelaya], subpoenaed to
appear at a hearing on [Zelaya’s] motion to dissolve,
successfully moved to quash an improperly served
subpoena to appear at a hearing on a motion to dissolve the
writ, arranged for two witnesses to travel from New York
with counsel to appear at a hearing in the matter, collected
documents and information in response to subpoenas
served related to the writ of garnishment and required to
carefully monitor numerous motions in the matter that had
potential implications for [Deutsche Bank’s] obligations.
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The magistrate judge granted Deutsche Bank’s motion in part.
Characterizing the case as “lengthy and aggressively litigated,” he concluded that
Deutsche Bank was statutorily entitled to attorney fees and costs from ZC. The
magistrate judge nonetheless determined that the fees and costs were somewhat
high. He therefore reduced them by 20% across the board. Deutsche Bank did not
protest, but ZC filed objections to the award. The district court overruled ZC’s
objections in August 2012.
A notice of appeal by ZC followed in October of the same year. ZC
challenged the district court’s orders allowing Zelaya to deposit funds into the
court’s registry, dissolving the writs of garnishment, issuing a satisfaction of the
judgment, and awarding Deutsche Bank attorney fees and costs.
Shortly after ZC filed its notice of appeal in October 2012, the SEC and ZC
settled their dispute over the funds deposited into the court’s registry. The SEC
then filed a motion to withdraw as an intervenor and to withdraw its writ of
garnishment against Zelaya. In response, the district court granted the SEC’s
motion and disbursed the funds (a total of $2,895,365.01, which included interest
that had accrued while the funds were in the court’s registry) to ZC.
ZC then filed a second notice of appeal in December 2012, objecting on the
same grounds as the October 2012 appeal but also appealing from a final order
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entered in the case on October 29, 2012. The October 2012 and December 2012
appeals were consolidated by this court in January 2013.
II. ANALYSIS
A. Standard of review
All of the decisions by the district court at issue in this appeal (namely,
allowing Zelaya to deposit the disputed funds into the court’s registry, dissolving the
writs of garnishment, issuing a satisfaction of the judgment, and awarding attorney
fees and costs to Deutsche Bank) are reviewed under the abuse-of-discretion
standard. See Gulf States Utils. Co. v. Ala. Power Co., 824 F.2d 1465, 1475 (5th
Cir. 1987) (reviewing a district court’s decision to grant relief under Rule 67 of the
Federal Rules of Civil Procedure under the abuse-of-discretion standard); United
States v. Rostan, 565 F. App’x 798, 800 n.2 (11th Cir. 2014) (unpublished) (noting
the Fifth Circuit’s holding in United States v. Clayton,
613 F.3d 592, 595 (5th Cir.
2010), that a garnishment order is reviewed for abuse of discretion); AIG Baker
Sterling Heights, LLC v. Am. Multi-Cinema, Inc.,
579 F.3d 1268, 1270
(11th Cir. 2009) (holding that a district court’s decision to issue a satisfaction of the
judgment pursuant to Rule 60(b)(5) of the Federal Rules of Civil Procedure is
reviewed under the abuse-of-discretion standard); Walker Int’l Holdings,
Ltd. v. Republic of Congo,
415 F.3d 413, 418 (5th Cir. 2005) (holding that an award
of attorney fees in a garnishment action is reviewed under the abuse-of-discretion
9
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standard). We will not find that the district court abused its discretion unless it
applied the wrong law or its decision was manifestly erroneous. United States v.
Barner, 441 F.3d 1310, 1315 n.5 (11th Cir. 2006) (holding that a mistake of law is
by definition an abuse of discretion) (citing Koon v. United States,
518 U.S. 81, 100
(1996)); United States v. Frazier,
387 F.3d 1244, 1259 (11th Cir. 2004) (discussing
the abuse-of-discretion standard of review).
B. This court has jurisdiction over the consolidated appeal
Zelaya contends as a threshold matter that this court lacks jurisdiction over the
consolidated appeal. He argues that ZC’s October 2012 notice of appeal was
premature because the district court’s August 2012 order (in which the court
affirmed the magistrate judge’s order granting Zelaya’s motion for a satisfaction of
the judgment) did not dispose of all of the issues in the case. In particular, Zelaya
asserts that the issue of which party was entitled to the funds in the court’s registry
was not resolved by the August 2012 order.
Zelaya further argues that the December 2012 notice of appeal did not cure
the allegedly premature October 2012 notice of appeal. And although Zelaya
acknowledges that Rule 4(a)(1)(B) of the Federal Rules of Appellate Procedure
enlarges the time period for filing a notice of appeal from 30 days to 60 days when
the government is a party, he asserts that Rule 4(a)(1)(B) is inapplicable because the
SEC withdrew as an intervenor before the October 2012 notice of appeal was filed.
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Zelaya’s jurisdictional argument lacks merit. For one thing, the August 2012
order resolved the issue that gave rise rise to the post-judgment proceedings, so it
was a final order for the purpose of the October 2012 notice of appeal. See Mayer v.
Wall St. Equity Grp., Inc., 672 F.3d 1222, 1224 (11th Cir. 2012) (holding that “an
order is deemed final if it disposes of all the issues raised in the motion that initially
sparked the postjudgment proceedings”). Here, the issue that initially sparked the
post-judgment proceedings was the writ of execution against Zelaya, which was
resolved when the district court entered a satisfaction of the judgment in August
2012.
The second flaw in Zelaya’s jurisdictional argument is that the SEC’s
withdrawal as an intervenor did not shorten the appeal period from 60 days to 30
days because the SEC retained an interest in the outcome of the appeal due to its
entitlement to at least a part of Tosto’s recovery. See SEC v. Pension Fund of Am.
L.C., 377 F. App’x 957, 961 (11th Cir. 2010) (per curiam) (holding that the 60-day
period for filing a notice of appeal applies where the “SEC maintain[s] an interest”
in the outcome of the appeal, even if the SEC is not a party to the appeal). This
court accordingly has jurisdiction over the consolidated appeal.
C. The district court did not err in allowing Zelaya to deposit the disputed
funds into the court’s registry
11
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Turning now to the merits of the appeal, we first address ZC’s contention that
the district court erred when it allowed Zelaya to deposit the disputed funds into the
court’s registry. ZC offers a number of arguments in support of this contention.
First, ZC argues that permitting Zelaya to interplead the disputed funds
amounted to an impermissible collateral attack on the 2004 judgment. This
argument lacks persuasive force because Zelaya did not challenge the validity of the
2004 judgment. Instead, as the district court explained, Zelaya was “ready and
willing to pay the amount of the judgment” but found himself “in a dilemma not of
his own making.”
The caselaw and the Federal Rules of Civil Procedure, moreover, support the
district court’s decision to permit Zelaya to deposit the disputed funds into the
court’s registry. One case in particular, United States Overseas Airlines v.
Compania Aerea Viajes Expresos de Venezuela, S.A., 161 F. Supp. 513 (S.D.N.Y.
1958), is directly on point. In Overseas Airlines, a judgment debtor sought leave
from the district court to deposit funds into the court’s registry when two judgment
creditors asserted conflicting claims to the funds. The court, invoking Rule 67 of
the Federal Rules of Civil Procedure, allowed the judgment debtor to deposit the
funds.
Id. at 515–16. It held that “the dilemma [was] not of the judgment
debtor[’s] making” and that the debtor “should be permitted to pay the amount of the
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judgment into court and to have the Clerk enter a satisfaction of judgment.” Id. at
515.
The district court in the present case did not err in relying on Overseas
Airlines. Furthermore, Rule 67 specifically authorizes the court’s actions. Rule
67 provides that “[i]f any part of the relief sought is a money judgment or the
disposition of a sum of money . . . , a party . . . may deposit with the court all or part
of the money.” Fed. R. Civ. P. 67(a). The “core purpose” of the rule is to “relieve
a party who holds a contested fund from responsibility for disbursement of that fund
among those claiming some entitlement thereto.” Alstom Caribe, Inc. v. Geo. P.
Reintjes Co., 484 F.3d 106, 113 (1st Cir. 2007). Those were precisely the
circumstances faced by the district court here, and the court did not abuse its
discretion by applying Rule 67 to arrive at an “insightful and equitable solution to
the dilemma facing [Zelaya].” See Cajun Elec. Power Coop., Inc. v. Riley Stoker
Corp.,
901 F.2d 441, 445 (5th Cir. 1990).
ZC further argues that the district court impermissibly froze ZC’s assets and
enjoined ZC from executing on the 2004 judgment by allowing the disputed funds to
be deposited into the court’s registry. In support of this argument, ZC cites various
cases in which federal courts have held that a defendant’s assets may not be frozen
via an injunction for the purpose of preserving the assets to satisfy a potential future
judgment. See, e.g., De Beers Consol. Mines v. United States, 325 U.S. 212 (1945).
13
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These cases, however, are easily distinguishable both because the judgment here
was final, not simply potential, and because the district court did not enter an asset
freeze against ZC at all. The court instead allowed Zelaya to deposit the disputed
funds into the court’s registry while ZC and the SEC resolved their competing
claims. See Overseas Airlines, 161 F. Supp. at 515 (holding that Rule 67 is “broad
enough to authorize the payment into court of a judgment, notwithstanding that there
are adverse claims to the proceeds of the judgment”). ZC’s argument that the
court’s actions amounted to an impermissible asset freeze and injunction therefore
lacks merit.
Next, ZC contends that it was entitled to immediate access to the judgment
amount because the SEC’s claim to the funds was invalid from the outset. This
argument, however, is fatally flawed because the law does not require a judgment
debtor to decide the validity of competing claims. Cf. Michelman v. Lincoln Nat.
Life Ins. Co., 685 F.3d 887, 898 (9th Cir. 2012) (holding that the remedy of
interpleader, which allows a stakeholder to join parties with claims that may expose
him to multiple liability, “is designed so that stakeholders do not have to make legal
predictions about the merits of claims”). Zelaya, in other words, was not required
to take the risk that the SEC’s claim might prove meritorious and thus cause Zelaya
to pay twice. We therefore reject ZC’s arguments on this point.
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ZC also contends that the district court erred in halting the post-judgment
accrual of statutory interest after Zelaya deposited the disputed funds. Citing
Florida law, ZC argues that “post-judgment [statutory] interest is not cut off by
payment of funds into the court registry.” The federal courts, however, have
overwhelmingly held that post-judgment statutory interest stops accruing once the
disputed funds are deposited into the court’s registry. See, e.g., Cordero v.
Jesus-Mendez, 922 F.2d 11, 18–19 (1st Cir. 1990) (stating the rule). And even if
Florida law applied to this procedural issue (which it does not), ZC has misstated the
law. In a case directly on point, the Florida District Court of Appeal has held that
depositing funds into the court’s registry “precludes a levy from being made against
[the debtor’s] property, [and] arrests the further accrual of interest on the
judgment.” Gerardi v. Carlisle,
232 So. 2d 36, 39 (Fla. Dist. Ct. App. 1969). The
district court accordingly did not err in holding that the deposit by Zelaya halted the
post-judgment accrual of statutory interest.
ZC further attacks the district court’s decision to dissolve the writs of
garnishment against the banks. The court dissolved the writs as moot following
Zelaya’s deposit of the disputed funds into the court’s registry. ZC argues that the
court violated Florida law by dissolving the writs prematurely.
Writs of garnishment are governed in the first instance by Rule 69 of the
Federal Rules of Civil Procedure. See Fed. R. Civ. P. 69(a)(1) (explaining that the
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“procedure on execution, in proceedings supplementary to and in aid of a judgment,
. . . must accord with the procedure of the state where the court is located, but a
federal statute governs to the extent it applies”). Rule 69 thus provides that Florida
law applies to the writs in question to the extent that it does not conflict with federal
law.
Under Florida law, the purpose of a writ of garnishment is to help the
judgment creditor secure a debt owed to the creditor by the judgment debtor.
Pleasant Valley Farms & Morey Condensory Co. v. Carl, 106 So. 427, 429 (Fla.
1925) (noting that a writ of garnishment “is a substantial . . . and a material aid in the
collection of the debt held by [the creditor] against the defendant”). Florida law
permits a court to dissolve a writ of garnishment on its own motion for any number
of reasons. See
id. (holding that writs of garnishment may be dissolved sua sponte
by the court). In this case, the writs of garnishment against the banks served no
purpose once the disputed funds had been deposited by Zelaya into the court’s
registry. ZC needed no further help in securing its debt at that point because the
entire amount of the judgment plus post-judgment interest was being safeguarded by
the district court. The court therefore did not err in dissolving as moot the writs of
garnishment.
D. The district court did not err in granting Zelaya’s motion for a
satisfaction of the judgment
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Turning now to the satisfaction-of-judgment issue, ZC contends that the
district court erred in issuing a satisfaction of the judgment to Zelaya. ZC argues
that the satisfaction was premature because it was issued in August 2012, three
months before the district court disbursed the disputed funds to ZC. According to
ZC, this premature satisfaction violated Florida law. ZC also argues that the court
erred in relying on Rule 60(b)(5) of the Federal Rules of Civil Procedure in issuing
the satisfaction.
The argument against applying Rule 60(b)(5) can be disposed of quickly.
Federal courts regularly issue satisfactions of judgment pursuant to Rule 60(b)(5).
See, e.g., Zamani v. Carnes, 491 F.3d 990, 995 (9th Cir. 2007) (“Rule 60(b)(5) is
generally invoked when a party seeks entry of satisfaction of judgment because no
acknowledgment of satisfaction has been delivered due to an ongoing dispute over
the judgment amount.”).
As for ZC’s argument that the district court issued a premature satisfaction of
the judgment, this argument fails because the satisfaction comported with Florida
law in all relevant respects. Florida law provides that the debtor’s deposit of the full
amount of the judgment plus post-judgment interest in the court’s registry “satisfies
the judgment.” Weaver v. Stone, 212 So. 2d 80, 81 (Fla. Dist. Ct. App. 1968)
(citing Fla. Stat. § 55.141). And Florida law does not require the plaintiff to accept
the tendered amount before a satisfaction of the judgment may be issued. See
id.
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(“There is no requirement that the plaintiff consent to the satisfaction.”). The
district court thus did not err in issuing a satisfaction of the judgment to Zelaya after
he deposited the disputed funds in the court’s registry.
E. The district court did not err in its award of attorney fees and costs to
Deutsche Bank
Finally, ZC challenges the award of attorney fees and costs to Deutsche Bank.
ZC’s main argument is that it was improperly deprived of the right to a jury trial on
the writ of garnishment issued against Deutsche Bank. According to ZC, Florida
law guarantees the right to a jury trial in a garnishment action. ZC contends that a
jury should have determined whether Deutsche Bank was an innocent stakeholder
before the district court awarded attorney fees and costs to the bank.
ZC’s jury-trial argument has some surface plausibility. Specifically, the
Florida statute cited by ZC (Fla. Stat. § 77.08) does provide for jury trials in
garnishment actions, see id. (“On demand of either party a jury summoned from the
body of the county shall be impaneled to try the issues.”), but the right to a jury trial
in a garnishment action is not absolute notwithstanding the statute’s use of the word
“shall.” A jury trial is not required, for example, if it would serve no purpose. See
Tortuga Marine Salvage Co. v. Hartford Acc. & Indem. Co.,
171 So. 2d 54, 55
(Fla. Dist. Ct. App. 1965) (holding that the right to a jury trial in a garnishment
action is not absolute where “a summary ruling on the question of title to the
garnished property” is warranted); see also SEC v. Mut. Benefits Corp., No.
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04-60573-CIV, 2010 WL 5148461, at *2 (S.D. Fla. Nov. 30, 2010) (“Both parties
recognize that under Florida law, summary judgment in a garnishment proceeding is
appropriate when there are no issues of material fact . . . .”).
The purpose of jury trials in garnishment actions, moreover, is to resolve any
issues raised in a garnishee’s answer to the writ of garnishment. Windsor-Thomas
Grp., Inc. v. Parker, 782 So. 2d 478, 483 (Fla. Dist. Ct. App. 2001) (explaining the
purpose of jury trials in garnishment actions). A jury trial in the present case would
have served no purpose because the writs were properly dissolved by the district
court following Zelaya’s deposit of the disputed funds into the court’s registry. The
deposit by Zelaya thereby mooted the issues, if any, raised in Deutsche Bank’s
answer to the writ of garnishment. No jury trial was required under these
circumstances.
Nor was the district court required to make a threshold determination that
Deutsche Bank was an innocent stakeholder before awarding attorney fees and costs
to the bank. Nothing in § 77.28 or any other section of Florida’s garnishment
statute requires such a determination. See generally Fla. Stat. §§ 77.01-.28. And
Florida courts have held that a trial court may award attorney fees and costs in a
garnishment action to a party in its discretion even where there is no prevailing
party. See First Nat’l Bank & Trust of Stuart v. Bryan, 427 So. 2d 392, 392 (Fla.
Dist. Ct. App. 1983) (“Allocation of that portion of the [attorney] fee . . . was
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appropriate in view of the fact that these parties entered into a settlement agreement,
so that as between them there was no prevailing party.”). ZC’s innocent-
stakeholder argument thus lacks merit.
ZC also protests that the net amount of attorney fees and costs awarded to
Deutsche Bank (a total of $70,644.56) was excessive and unreasonable. In
particular, ZC asserts that Deutsche Bank’s positions are inconsistent. It argues
that Deutsche Bank cannot be a disinterested, innocent garnishee while
simultaneously requiring “the services of five attorneys working a total of 200
hours” to comply with the writ of garnishment.
This argument, however, ignores the fact that ZC is largely responsible for the
efforts expended by Deutsche Bank in this case. As the magistrate judge noted, the
garnishment proceedings were “lengthy and aggressively litigated.” The
magistrate judge’s observation is an understatement. Over 450 entries appear on
the district-court docket in the proceedings, which is an unusually high number for a
garnishment action. And ZC objected to virtually everything that the magistrate
judge did. In short, Deutsche Bank had no choice but to invest substantial time in
this case due to ZC’s aggressive conduct.
The same conduct is also what led the district court to conclude that ZC
should be responsible for paying Deutsche Bank’s attorney fees and costs. ZC
argues that Zelaya should instead be the one to pay. In a typical garnishment
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proceeding, the costs of the garnishee are taxed against the prevailing party. See
Fla. Stat. § 77.28. But Florida law does not answer the question of who should pay
a garnishee’s attorney fees and costs when no party has truly prevailed. The district
court reasoned, based on a similar case in Texas, that where Florida’s garnishment
statute does not “mandate which party should bear the garnishee bank’s expenses in
the circumstances of the instant case, the matter lies within the discretion of the trial
court.” See Cantu v. Butron, 905 S.W.2d 718, 720 (Tex. Ct. App. 1995).
In exercising its discretion, the district court concluded that Zelaya should not
be charged with Deutsche Bank’s attorney fees and costs because “he was not
actually responsible for these particular garnishment proceedings absent any finding
that he controlled the Investors Trust accounts [held by Deutsche Bank].” On the
other hand, ZC initiated and vigorously litigated the garnishment proceedings, and
then failed to meet its burden of proving that the account to be garnished was
Zelaya’s property. See Nat’l Car Rental Sys., Inc. v. Bruce A. Ryals Enters., Inc.,
380 So. 2d 529, 530 (Fla. Dist. Ct. App. 1980) (noting that the garnishor must prove
that the property to be garnished is the debtor’s). The district court therefore did not
abuse its discretion in determining that ZC should pay Deutsche Bank’s attorney
fees and costs.
ZC further argues that the district court should have permitted discovery and
held an evidentiary hearing regarding Deutsche Bank’s claim. But ZC never
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offered any particularized objection to the attorney fees and costs sought by
Deutsche Bank, so its argument lacks merit. See Gonzalez v. J.C. Penney Corp.,
209 F. App’x 867, 870 (11th Cir. 2006) (holding that an evidentiary hearing on
attorney fees is required only when “there [a]re disputes of fact, and where the
written record [i]s not sufficiently clear to allow the trial court to resolve the
disputes”) (alterations in original and internal quotation marks omitted).
The record in this case is sufficiently clear to allow the district court to resolve
the attorney-fees issue without a hearing. See id. (“It is perfectly proper to award
attorney’s fees based solely on affidavits in the records.”) (internal quotation marks
omitted). Finally, the court adequately considered ZC’s general objections to
Deutsche Bank’s request for attorney fees and costs and affirmed the magistrate
judge’s 20% reduction. See Loranger v. Stierheim,
10 F.3d 776, 783 (11th
Cir. 1994) (holding that an across-the-board percentage reduction in attorney fees is
appropriate so long as the court provides a “concise but clear explanation of its
reasons for the reduction”). We thus conclude that the district court did not abuse
its discretion regarding the amount of attorney fees and costs to be paid Deutsche
Bank from the judgment funds otherwise due ZC.
VI. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the
district court.
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