The opinion of the court was delivered by: Joseph N. Laplante United States District Judge
This case raises a question as to this court's jurisdiction to order
execution of a judgment against property when its ownership has been
put into dispute in pending state court proceedings.*fn1
Glenn Beane obtained an assignment of a judgment issued by
another United States District Court, in Nason v. Mii Techs., LLC, No.
04-77 (D. Me. Sept. 21, 2005), and subsequently registered here, see
28 U.S.C. § 1963, awarding, inter alia, roughly $15,550 against Mii
Technologies, L.L.C. He now seeks to execute on that judgment against
funds held in the account of a third-party law firm, Lawson & Persson,
P.C., at Meredith Village Savings Bank, claiming that those funds
belong to Mii.
Those funds, however, are the subject of an interpleader action in the Grafton County Superior Court, which Lawson & Persson commenced before Glenn began his efforts to execute against those funds here. Lawson & Persson, P.C. v. Beane, No. 09-113 (N.H. Super. Ct. June 15, 2009). As explained fully infra, even if this court has the jurisdiction to order an execution against funds that are the subject of an interpleader action in a state court, this court abstains from exercising that jurisdiction under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976).
There is a long-running dispute over whether the funds in Lawson & Persson's account belong to Mii, or to one of its owners, Alan Beane, who is also Glenn's brother. Alan and Glenn jointly owned Mii but, after the business collapsed in 2004, started battling each other in a series of lawsuits in this court and elsewhere. More than one of these suits has raised the issue of who owns the funds in the account (or the promissory note that generated the funds when its maker tendered a payment).
First, Glenn sued Mii in Grafton County Superior Court, naming both
Lawson & Persson and the Bank as "relief defendants." Beane v. Mii
Techs., LLC, No. 08-79 (N.H. Super. Ct. June 10, 2008). Glenn alleged,
among other things, that Mii had fraudulently transferred funds to
Alan by directing that Lovejoy,
Inc., which had purchased assets from Mii, provide part of the payment
in the form of a note payable to Alan in the sum of $150,000. Glenn
obtained a pre-judgment attachment against the note from the Superior
Court, which rejected--in a preliminary ruling--Alan's argument that
he, rather than Mii, owned the assets that Lovejoy purchased (which,
he claimed, would have entitled him to the payment). Beane v. Mii
Techs., LLC, No. 08-79 (N.H. Super. Ct. Oct. 18, 2008).*fn2
But Glenn voluntarily dismissed the fraudulent transfer claim
before trial, where the court found in Mii's favor on the rest of his
claims against it.
Shortly after bringing that action, Glenn commenced another lawsuit against Mii in Grafton County Superior Court, seeking to enforce a different promissory note (given by Mii to a third party lender, and subsequently purchased by Glenn). Beane v. Mii Techs., LLC, No. 08-157 (N.H. Super. Ct. Nov. 10, 2008). Glenn ultimately prevailed in this second case, and judgment was entered in his favor in April 2009. After filing the action, Glenn had obtained a pre-judgment attachment against the account itself, through trustee process upon Lawson & Persson and the Bank. But, after securing the judgment, he never sought to execute it against the account.
After receiving service of the trustee summons in that action, Lawson & Persson attempted to deposit the funds in the account in the Superior Court, but the clerk returned the check and directed it to file a petition for a bill of interpleader instead. Lawson & Persson eventually did so, alleging that it "is unable to determine and, to date, no definitive judgment has been rendered on the issue of whether the proceeds in [the] account are the property of Alan , Glenn , or Mii." While Lawson & Persson did not attempt to deposit the funds into the Superior Court again, its petition stated that they remained in its trust account and would "be paid to [the] court pursuant to such order as the court may make" (capitalization corrected). In October 2011, the Superior Court held a hearing on Glenn's motion for summary judgment, which is pending, and scheduled a final pre-trial conference, for February 8, 2012, as well as a bench trial for later that month.
A. Prior exclusive jurisdiction
It is an "ancient and oft-repeated rule--often called the doctrine of prior exclusive jurisdiction--that when a court of a competent jurisdiction has obtained possession, custody, or control of particular property, that authority and power over the property may not be disturbed by any other court." 13F Charles Alan Wright et al., Federal Practice & Procedure § 3631, at 272 (3d ed. 2009) (footnote omitted). As the court of appeals has explained, the doctrine is "essential to the dignity and just authority of every court, and the comity which should regulate the relations between all courts of concurrent jurisdiction." Mattei v. V/O Prodintog, 321 F.2d 180, 183-84 (1st Cir. 1963) (quotation marks omitted).
As such, the doctrine of prior exclusive jurisdiction bars one court from ordering the execution of a judgment against property in the possession of another court. 13F Wright, supra, § 3631, at 295 (citing Sec. Trust Co. v. Black River Nat'l Bank of Lowville, 187 U.S. 211 (1902)). Importantly, the doctrine "is not restricted to cases where property has been seized under judicial process before the second suit is instituted, but applies as well where suits are brought to marshal assets . . . and in suits of a similar nature where, to give effect to its jurisdiction, the court must control the property." Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456, 466 (1939).*fn3
Under the doctrine of prior exclusive jurisdiction, then, had Lawson & Persson deposited the disputed funds into the Superior Court as part of the interpleader action, that court would have "controlled" those funds so as to prevent this court from ordering an execution against them. See, e.g., Landau v. Vallen, 895 F.2d 888, 893-94 (2d Cir. 1990) (citing cases); 1 Clark A. Nichols et al., Cyclopedia of Federal Procedure § 2.99 (3d ed. 2009); cf. Rossi v. Gemma, 489 F.3d 26, 37 (1st Cir. 2007) (noting that the deposit of funds into a state court's registry "provides strong reasons to defer to a state court proceeding" over their ownership). But, under New Hampshire law, an interpleader action does not require the actual deposit of the disputed property with the court, so long as the petitioner "offer[s] to deliver possession on order of the court." Gordon J. McDonald, Wiebusch on New Hampshire Practice & Procedure § 37.06, at 37-4, in 5 New Hampshire Practice (3d ed. 2010) (citing Parker v. Barker, 42 N.H. 78 (1860)). ...