15-149-cv FirstBank Puerto Rico v. Barclays Capital Inc.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRON IC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
29 th day of March, two thousand sixteen.

Present: PIERRE N. LEVAL, ROSEMARY S. POOLER, RICHARD C. WESLEY, Circuit Judges

.

_____________________________________________________

IN RE: LEHMAN BROTHERS HOLDINGS, INC.,

Debtor.

_____________________________________________________

FIRSTBANK PUERTO RICO,

Plaintiff-Appellant

,

v. 15-149-br

BARCLAYS CAPITAL INC.,

Defendant-Appellee

.

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Appearing for Appellant: Jeffrey A. Mitche ll, Dickstein Shapiro LLP (Judith Cohen, on the brief ), New York, NY.

Appearing for Appellee: Boaz S. Morag, Cl eary Gottlieb Steen & Hamilton LLP (Lindsee P. Granfield, on the brief ), New York, NY.2 Appeal from the United States Di strict Court for the Southern Di strict of New York (Buchwald,
J. ). ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the order of said Dist rict Court be and it hereby is AFFIRMED

.

FirstBank Puerto Rico appeals from the December 29, 2014 decision of the United States
District Court for the Southern District of New York (Buchwald, J. ) which affirmed the May 10, 2013 decision of the United States Bankruptcy Co urt for the Southern District of New York (Peck, B.J. ). The decision denied FirstBank’s atte mpt to recover from defendant Barclays Capital, Inc. certain securities that FirstBank pledged to Lehman Brothers Special Financing Inc. (“LBSF”) as security for an interest rate swap ag reement. FirstBank also appeals from the district court’s decision affirming the bankruptcy cour t’s imposition of sanctions for contempt on FirstBank. We assume the parties’ familiarity with the underlying facts, procedural history, and specification of issues for review.

We affirm substantially for the reasons set forth in the thorough opinions of the bankruptcy and district c ourts below. The bankruptcy court hel d, and the district court affirmed,
that LBSF’s sale of the securities that FirstBank in itially posted as collateral to Lehman Brothers Inc. (“LBI”) cut off FirstBank’s interest in the collateral against LBI (or any subsequent transferee) pursuant to the In ternational Swaps and Derivative s Association Master Agreement and Credit Support Annex. The bankruptcy and district courts also held th at the securities at issue were transferred to Barclays as part of its purc hase of assets in the underlying bankruptcy proceedings. The appropriate venue to litigate whet her such securities were transferred as part of the sale was bankruptcy court, no t a district court proceeding.

We also affirm the orders requiring FirstBa nk to pay Barclays’s “reasonable counsel fees and costs incurred in defending against this litigation that has been pursued knowingly by
FirstBank in violati on of the Sale Order .” In re Lehman Bros. Holdings Inc ., No. 08-13555, 2013 WL 6283572 (Bankr. S.D.N.Y. Dec. 3, 2013), aff’d, 526 B.R. 481 (S.D.N.Y. 2014). As noted by the district court, the “Sale Order clear ly prohibits suits with respect to ‘Purchased Assets’ as defined in the ‘Purchase Agreemen t,’ the Sale Order clearly incorporates the
Clarification Letter into its definition of the ‘P urchase Agreement,’ and the Clarification Letter clearly defines ‘Purchased Asse ts’ to include the collateral.” In re Lehman Brothers , 526 B.R. 481, 496 (S.D.N.Y. 2014), as corrected (Dec. 29, 2014). Moreover, th e sanctions were imposed only after extensive discovery and after Barclays offered First Bank an opportunity to withdraw
its lawsuit without sanctions.

We have considered the remainder of FirstB ank’s arguments and find them to be without merit. Accordingly, the order of the district court hereby is AFFIRMED.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk