## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 07

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- 2020 J I M A A R ON, P laint if f ,
v. S US AN J. M AHL, D e f e ndan t

-Appe l l ant,
v.

M ERRI LL L Y NCH, P I ER CE , F EN NE R & S MITH, D efend a nt-A pp ellee.

Appeals from the United States District Court fo r the N o rthernDi stricto f Indian a, S outh Bend D ivisi on. No . 03 CV 656

—Rob ert L. Miller, Jr. , Chief Judge.
A RG UE D O CT OB ER 23, 2008

— D ECI DE D D ECE MBE R 18, 2008

Befo re B AUER, W OO D , a nd T INDER, C ircu it Judges.2 N os. 07

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- 2020 T INDER, C ircu it Judge. Su s a n M a h l an d J im A aron w ere l i ve - i n l o ve r s i n s o uthe r n Ca li for ni a i n the l at e 19 90 s. But th e r o m an ce o nl y l as te d unt i l 2 00 1 when Aar o n l eft M ah l f orano therwom an. H owever, f orth e p as t s eve n yea rs o r so, A aron ha s been ard uo us ly p urs ing M ah l, from Ca li forni a t o I nd i ana a nd then So uth Caro l i na; but sadl y, not because he i s havi ng second thoughts about the d em i se of th eir rela tio n sh ip

— as you w i l l so on le ar n, he ha s qui te a differ ent m oti vati on. I n the m eanti m e, M ahl has been drast i cal l y r ei nventi ng her sel f

. A nd fo r go od r eas on

— in ear l y 2 000, a Cali f or ni a l aw fi rm sued M ah l f orwh at w as essen tially em bezz lem en t from that firm d uring h er tenu re a s i t s ma n a g i n gp a r tn e r . T h a ts u i tr e s u l t e d i n a j u d g m en t for a littl e m ore tha n a m il li on d oll ars in favor ofthe fir m aga i nst M ahl

. N ot surpri si n gly , M ahl l eft the pra cti ce o f l aw , l eft C al i f or ni a, changed her l astn am e to Sco tt ( w hi ch i s ho w we w i l l r eferto herfro m thi s p oi nt on) and m ove d ev en tu ally to Sou th C ar o l i n a w h er e s h e a p p ar en tly st ill re si des. A t s om e point i n thi s t ra nsf or m ati on, S cot t o pened I RA accounts in LaPort e, I nd i ana, the proce eds o fwh i ch ar e at the hear t of the prese nt dispute ( and the reas on for M er ri l l Lynch bei ng i n thi s ca se)
. A nd the i nspir ati on f or Aar o n’ s co nt i nue d i nt eres t i n S co tt ? Acco r di ngt o Aar o n, the C al i f or ni a la w fi rm as si gned i ts j ud gm ent a gainst S cot t to hi m ( w hi ch m ay see m odd , bu t that i s not im port ant t o th i s appe al ) an d he ha s be ena tt empti ng

— u n su c c es sfu lly so f ar

— to col l ect on that j ud gm ent. U p to thi s point, thes e disputes have j ourne yed thr ough s tat e a nd federa l co urts i n C a l i f o r n i a , I n d i a n a , a n d S o u th C a r o l i n a . T o d a y we d et er m in e w h et h er an In d i an a d ist ric t c ou rtp ro p er ly g r a n t e d Me r r i l l L y n c h i n t e r p l e a d e r a s th e h o l d e r o fs o meN os. 07

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- 2020 3 of t h e a ss et s o ve r w h ich A ar o n a n d Sc ot t a re en ga ge d in tu g of w ar.

I . B a c kg r o und A ar on br ought these m att er s to the Ind i ana co urt sys tem bys ee k i ngt o do m es ti ca te the Ca l i f o r ni a j udg m enti n the ci rcui t co urt ofL aP or te County, I nd i ana, wh er e s om e o f Scott’s asse ts w ere located

. Th e L aP orte C ircuit Cou rt en te re d a te m p or ar y r es tr ain in g or d er ag ain st Sc ot t in Decem ber20 01, pro hibi ti ng herfro m tr an sfe rri ng tho se ass ets
. S cot t pr om ptl y vi ol ate d the cour t o rderand m ove d th e as se ts i nt o a cc o unt s wi thM er r i l l Ly nc h. The LaPort e Ci rcui t Cour t d om est i cate d A ar on’ s a ssi g ne d j udg m en t an d he l d S co tti n c o nt empt for mov i ng the fund s. I t a l so enter ed thr ee orders i n proc eedi ngs supp l em entalthatar e per ti nent t o thi s a pp eal

. The fi rs t or der, ente re d i n J anuary20 03, o rder ed M er ri l l Lynch not to del i verthe ass ets to Scot t or any otherp er son and not to d isp os e o f or t ra n sfe r t h e a ss et s. L ike th e p ar tie s, w e w ill re fer to thi s a s the “fre eze o rder

. ” Because the M er ril l Lynch accounts conta i ned re ti re m ent fund s, S cot t cha ll en g ed Aar o n’ s r i g htt o e xe cut e o n the funds underI ndi an a l aw . The seco nd or der, enter ed i n J une 2003 , dete rm i ned th atI ndi an a l aw di d no t ex empt S co tt ’ s funds fr o m e xe cutio n by A ar on ; ho w ev er , i t a l s o d et er m in ed th at it co u ld no t o r derthe a ss et s m o ve d b yS co tti n v i o l ation o fthe4 N os. 07

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Scot t appe a le d , and the I nd iana Court ofAp peals affir m ed 1 the LaPo rt e Ci rc ui tCou r t ’ s Ju n e 20 03 det er m i nat i on thatI ndi ana l aw di d note xe m pt Sc ot t ’ s r et i re m en tac c ount s fro m e xe c ut i on b y A a ro n . M ahlv. A ar on , 8 0 9 N. E. 2 d 9 5 3 , 9 5 8

- 5 9 ( I nd

. Ct
. App
. 2 0 0 4 ). S ee Co l orado R i ver WaterC on ser vati on D i st . v. U n i te d S tat es , 424 2 (co n tin u ed ...) tem por a ryr e s t r a i ni ng o rder“ba ck to I nd i ana. ” The part i es 1 u n d e r stan d ably foun d the ord er confu sing. Th e third o r der, whi ch w e wi l l a ddr es s m o m en ta r i l y, e xpl aine d the reason ing beh ind the sec ond order. Des pi te the La Po r te Ci r cui t Cou r t’ s se co nd o r dertha t th e funds c o ul d no t be o r der ed ba ckto I ndi an a, A ar o n s o ug ht an d obtained a n e x p arte w rit of execu tion from the clerk o fthe c o ur t, i n a t t e mptt o h a v e the M er ri l l Ly nc h fun ds turned ove r to hi m . M er ri l l Lynch, sti l l bound b y the fre eze o r der, r efus ed to c o m pl y . S co ttfi l ed a m o ti o n to quas h the w ri t o fexec uti on, and the LaPort e Ci rcui t Cour t s et a hear i ng o n the is su e. Ratherthan w ai t forthe hear i ng, A ar on filed a co m p lain t a ga in st Sc ot t a n d M er rill L yn c h in the U. S. Dis tr i ct Cour t forthe N or ther n Dist ri ct ofI nd i ana. N oting tha t Aaron’ s pre ci se l ega l theo ryo f r ec ov er y was uncle ar, the dist ri ct c ourt const rued A ar on’ s com pla i nt as r eque st i ngtha t th e co ur t en f o r ce the wri t o f ex ec ut i o n a nd re quir e M er ri l l Lynch to tur n ove r the fun d s to wh i ch Aar o n was e nt i tl ed. M er r i l l Lync h fi l ed a c o unt er cl ai m a nd cross-claim against A aron and Scott for interp lead er. I n Se ptem ber20 04, the dist ri ct c ourtst aye d the ca se pu rs uant to the C o lo rad o R iverdoctr i ne w hi l e the LaPor te 2N os. 07

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(
. . . c on t i nu e d) 2 U
. S. 800 ( 1976) (holding that in narrow circ um st ances a federal cou rt can d ecline to exer cise jurisd iction w he re a sta t e c o u r t is co n te m p o ra n eo u sly ex er ci sin g ju ri sd ic tio n ). C irc u it C ou rtco n sid er ed Sc ot t’s m ot ion to q u as h th e w rit of ex ecu tion. I n M arch 2005 , th e L aP orte C ircu it C ou rt en tered i ts th ird ord e r g r an ting Scott’s m otion. T he cou rt ex p lain ed its se c on d ord er from Ju n e 2 00 3 in gr ea te r d et ail because “in re tr ospect, the Order was not ar tfull y dra fted

. . . and has cre ated cont inu ing con fusion.” Th e cou rt c lar ified th at t h e s ec on d ord er ru led th at Ind ian a la w d id not provi de Sco tt w i th an exem pti on f ro m executi on on her retirem en t acco un ts. T he order w as no t inten d ed , how ever, to all ow A aron to ex e c u t e on th e fun d s beca us e the cou rt l ac k ed th e po wer to o r der th e funds ba ck to I ndi an a

— “the at ta c h m en t o f D efe n d an t Sc ot t’s p er so n al p ro p er ty sh ou ld be a ccom pli shed thr ough a co urt i n herst ate o fr esid ence or an appropri ate federa l cour t. ” A fterthi s thi rd o rderhad b ee n affirm ed by th e In d ian a C ou rtof A p p ea ls, s e eA a ron v. Scott, 851 N .E .2d 3 0 9 ( In d . C t. A p p . 200 6), tran s. den ied, 869 N
. E.2 d 446 ( I nd

. 20 07) , t h e federa l di str i ct c ourtl i fted i ts sta y in Feb ruar y 2 007 to add re ss the par ti es’ cr oss m oti ons f orsum m ar y j ud gm ent. T h e d ist ric t c ou rtc on c lu d ed t h at M er rill L yn c h p ro p er ly re fused to co m plywith the now-vo i d w ri t o fexec uti on and, ther ef or e, M er ri l l Lynch w as n ot pers onal l y l i abl e t o A ar on. The co urt al so deter m i ned that i nter ple ader w as appropri ate bec ause M erri l l Lynch w as a di si nter est ed st ak eh o l derf ac i ngc o nfl i ct i ngc l ai m s be twe en A ar o n a nd6 N os. 07

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- 2020 S c o t t
. T h e c o u r tg r a n t e d Me r r i l l L y n c h ’ s mo t i o n f o r s u mm ar y j ud gm ent o n the i nter ple ader cl ai m s, with a not e that the o rderwould beco m e effecti ve afterM er ri l l Lynch deposi ted the fund s with the fed er al court ’ s r egi str y ( as re q u ire d b y sta tu to ry in te rp lea d er ). T h e L aP or t e C irc u it Court then li fted the fre eze o rderto al l ow M er ri l l Lynch to deposi t the funds. T he di str i ct c ourtsubse quentl y g ra nted M er ri l l Lynch’s m oti on t o enterfi nal j ud gm ent o n i ts i nt er pl ea derc l ai m unde r F ed. R. Ci v. P. 5 4(b)

. F i na l l y, the dist ri c t co urt aw ar ded M er ri l l Lynch att or neys’ fees fro m the inter ple ader sta ke. S cot t a pp eal ed fr om the gr ant o f i nter ple ader and the award ofat torneys’ fees .

I I . I nterplea der W e be gi n, as we m ust, with the d ist rict co urt’ s s ubj ectm atter juri sdic ti on, wh i ch Sc ottco ntends w as l acking. Aut ot e ch Te ch
. LP v. Int egral Re s e ar ch & D e v. Corp. , 49 9 F
. 3d 73 7, 74 2 ( 7th Ci r. 20 07)
. A ar on’ s co m pla i nt al l ege d dive rs i ty j uri sdic ti on under 2 8 U.S
. C. § 1 332. A ar on i s a ci ti zen o f In d ian a, Sc ot t is a c itiz en of Sou th C ar olin a, an d M er rill Lynch i s a Dela w ar e cor pora ti on w i th i ts pri nci pal pl ace of busi ness i n N ew Yor k. The am ou n t in co ntro ver sy w as al l ege d to ex c ee d $213, 000. A ar on’ s a l l ega ti ons sat i sfi ed § 1 332, so the dist ri ct c ourtcl ear l y had subj ect- m att er j ur i sdi ct i o n. S co tt ’ s co nc erns s te m , a ppar en tl y, fr o m the d is trict court ’s i nitial con side ration of M erril l L yn ch ’s i nter ple ader cl ai m un d er F ed . R. Ci v. P. 22 and i ts subsequ e ntu s e o fs t a t ut o r y i nt e r pl e a de r, s e to uti n 2 8 U. S
. C. § 1 33 5.N os. 07

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Scot t point s out thatthe dist ri ctcourt’ s switc h fro m Ru le 22 3 i nt er pl ea der t o s t atut or y i nt er pl ea der adve rs el y a ff ecte d the s t ake bec aus e s t atut or y i nt er pl ea der ’ s m anda t or y depos i t ofthe fund s i n the c ou r t ’ s r e gi s t r y was a t a x a bl e e ve nt
. P e r ha ps c oun tervai l i ng c ons i der at i ons warr ant ed the s wit c h; i n a ny e ve ntS c ot tdo e s n ota r gu e tha tthe di s t r i c tc ou r ts ho ul d no th a ve a l l o we d Me r r i l l L y n c h t o a s s e r t s t a t u t o r y i n t e r p l e a de r , s o we w il l not add res s the is sue further. Se cti on 1 335 provi des th e federa l co urt w i th an i nd epen den t ba si s f o r a ss er ting su bj ec t- m at te r j ur i sdi ct i o n, b ut Rule 22 does no t. Com m e r ci al Nat ’ l Bank o f Chi
. v. D e m os , 18 F. 3d 485, 48 8 ( 7th Ci r. 19 94)
. The di str ict c ou rtper m i tte d M er ri l l L ynch to p ro ceed onl y und erRule 22 i nter ple ader i ni ti al l y, bec ause i t, unli ke sta tutor y i nter ple ader, does not requ ire th e stake to be d ep o s it e d in th e federa l cou rt’s re gist ry . ( A s pre vi ousl y m enti oned, M er ri l l Lynch could not d e p o s it th e stake d ue to the L aP orte C ircuit Cou rt’s f r ee ze o r der

. ) J ur i sdi ct i o n was pr o per, th o ug h, b ec au se the d ist ric t c ou rth ad d ive rs ity j u ris d ict ion ov er A ar on ’s c laim an d sup p lem en tal j urisd iction over M err ill L yn ch ’s i nt erp lea d er cla im s. Se ei d. That the di str i ct c ourtl ate r perm i tted M erril l L yn ch to pr o ceed un d er statu tory interple ader

— on the co nd i ti on thatthe fre eze o rderbe re m ove d and the s tak e deposi ted

— did notdepri ve the cour t o f subj ect- m att erj uri sdic ti on. On ap p eal, we have j uri sdic

3 tio n be c au se th e d i s tr ict co u rten te re d fina l j u d gm en t in f a v o r o f M e r r i l l Ly nc h un de r F e d. R
. Ci v . P
. 5 4 ( b )
. 2 8 U. S
. C. § 1 291. The dis tr i ct c ourt ’ s g ra nt o f sum m ar y j ud gm ent in f avo r o fMe r r i l l L y n c h wa s b a s e d p u r e l y u p o n a d e c i s i o n o fl a w,8 N os. 07

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w h ich w e re vie w d e n ov o. O f f icer v. C ha se Ins. Life & Annui ty Co. , 54 1 F
. 3d 713, 714 ( 7th Ci r. 20 08)
. I nter ple ader is a n eq u ita b le p ro c ed u re u se d w h en th e s ta ke h old er is in danger ofexposur e t o double l i abi lity o r the v exati on o f litig at in g c on flict in g c laim s. Indi anap ol i s Colts v. M ayoran d C ityC o un cil o

f B a ltim o re, 741 F.2d 954 , 957 (7th C ir. 1984). I nter ple ader i s j usti fi ed on ly w hen the sta keho l der has a r ea l a nd r ea so nabl e fea r o fdo uble li abi l i tyo r c o nfl i ct i ng c laim s. Id. ; U nio n C ent. Life Ins. C o . v. Ha m ilto n S teel P rod s., Inc. , 44 8 F
. 2d 50 1, 50 4 ( 7th Ci r . 19 71 )
. A “ r ea l an d reas o nable fear” d oes not requ ire th e pa rty requ esting inte rp lea d er to sh ow th at th e c la i m an ts m igh t e ve n tu ally preva i l

. “Ofcourse , the cl ai m s o fso m e inter ple aded parti es w i l l ul ti m ate l y b e dete rm i ned to be without m eri t. That, h ow ev er , i s t h e v er y p u rp os e o f th e p ro c e e d in g a n d it woul d ma k e l i t t l e s e n s e i n t e r ms e i th e r o f p r o t e c t i ng t he st ak eh o l dero r o fdo i ngj us ti ce e xpe di ti o us l y to di smi ss o ne possibl e cl ai m ant be cause an o the rp o s s ib l e c l a i man t a sse rt s the c l ai m o fthe fi rs t i s without m er i t. ” U nio n C ent. L ife Ins. Co. , 448 F.2d at50 4; John Hanc oc k M ut. Life Ins. Co. v. B eard slee, 21 6 F
. 2d 457, 46 0 ( 7th Ci r. 19 54) ( “[ T]he confl i cti ng cl ai m s a gainst the fund s need not b e s uch cl ai m s a s ca n fi na l l y b e pr o ve d in co ur t. ”)
. On th e o th erha nd, the advers e cl ai m s m ust m eeta “m i ni m althr esho l d l eve l o f substa nti al i ty. ” Indianapo li s C olts , 74 1 F .2 d at 958. A fter a co ur t ha s det er m i ne d tha t i nt er p leade r i s war r an te d, the cl ai m ants proce ed to a seco nd sta ge i n w hi ch the m er i ts of th eir c laim s a re res olv ed

. U nited Sta tes v. H igh Tech . P rod s., Inc. , 497 F.3d 637, 641 (6th C ir. 2007). T h e d is trict court gran ted Scott’s m otion to stay th e secon d stag e of interple ader w hi l e thi s a pp ealwas pend i ng.N os. 07

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- 2020 9 S co tta r g ue s th atM er r i l l Ly nch di d no t ha ve a r ea l a nd re aso nabl e fearo fdoubl e l i abi l i ty orthe vexa ti on o f l i t i g a t i ngc o nfl i c t i ngc l a i ms. S c o t t ’ s p o s i t i o n i s i nc r e dib l e, giv en th at M er rill L yn c h h as b e e n i n vo lve d sin c e 2 00 3 in cl ai m s fi l ed by Aar o n s panni ngs ta te a nd fede r alc o ur t ( an d mul t i pl e a pp e al s ) i n a di s pu t e o v e r p o s s e s s i o n o ffun ds that, fro m i ts i ncepti on, has been ess enti ally bet w een A ar on an d Sc ot t. T h er e is little d ou b t t h at Sc ot t, to o, w ou ld have sued M er ri l l Lynch i f M er ri l l Lynch had turned o ver the m one y to A ar on. I n f act, herat torneys w ro te a l ett er thre ate ni ng to do s o, wh i ch w as att ached as an exhibi t t o M er ri l l Lynch’s c lai m . S cot t pr ese nts tw o ar gum ents aga i nst M er ri l l Lynch’s r ealand re aso nabl e fear, bas ed up on the l egi ti m acy ofA ar on’ s cl ai m s. F i r st, Sc o tta r g ue s th atr es j udi ca ta de te r m i ne s th e ou tcom e of th is su it. R es j ud icata, or claim p reclusion, bars the r e l i t i g a t i ng o f c l a i ms i f “ the c a us e o f a c t i o n ha s bee n ful l y a nd fi na l l y de te r m i ne d o n the mer i ts b etwee n the sam e parti es by a co urt ofco m petent j uri sdic ti on. ” Ja rrard v. C D I Tel ecom m s. , Inc. , 40 8 F
. 3d 905, 91 6 ( 7th Ci r. 20 05) ( ci ti ng N eese v. Kelley, 7 0 5 N. E. 2 d 1 0 4 7, 1 0 5 1 ( I nd

. Ct
. App
. 1 9 9 9 ) ). Re s jud ica ta ba rs n oton ly th os e is su es ac tu ally d ec id ed in t h e p rior su it, bu t a ll oth er iss u es w h ich co u ld h av e b ee n br ou gh t. H ondo, Inc . v. St e r l i ng, 21 F. 3d 775, 77 9 (7t h C ir. 19 94 ). Sco tt be liev es th at th e L aP or te C irc u it Cou r t’ s J une 2003 or derde ci ded o n the mer i ts tha t th e fund s coul d no t be re turned to I nd i ana, i
. e. , that Sco tt w as en t i t l e d t o p o s s e s s i o n o f th e fu n d s . Aa r o n ’ s c l a i m , s he ar gues, co uld not be the basi s f or a re al and r eas onabl e fear of c on flict in g c laim s b ec au se A ar on alre ad y los t t h at ba tt le in st at e c ou rt
.10 N os. 07

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T ho u g h w e m u st r e sp ect the d ecision of the L aP or te C ircu it 4 Co urt, w e n o te thati ts determ inat ion that i t had personal (co n tin u ed ...) On the co ntra ry, the J une 200 3 o rder d ec ided that Sco tt’ s fund s were not exem pt fro m exec ut ion by Aar o n un derI ndi an a l aw, b utthe c o ur t co ul d no t o r derthe fund s ba ck to I nd i ana. Though the or der was so m ew hat opaque, the cour t’ s e xplanat i on i n i ts M ar ch 200 5 o rder w as clear: T he J un e 13, 2003 Ord er i n d ic ates th at th is Cou rt co ul d no t o r derthe funds b ac kt o I ndi an a. The Court w as an d conti nues to be ofthe opi ni on that the a tta chm ent o fDefen dant Sco tt’ s per sonal p rop erty sh ou ld be acc om p li sh ed throu gh a court i n herst ate o fr esi dence oran a pp ro pri ate federa l co ur t. Co ns eque nt l y, thi s Cou r t do es notha ve the abi l i ty to or der the ass ets hel d by M er ri l l Lynch to be turned overto the Pl ai nti ffi n part i alsa ti sf acti on of the j ud gm en t. O nly a South Ca r o lin a cou rt or a federa l co urt can do that. (i nt erna l citation om itted ). Th e L a Porte Circu it Cou rt’s deci si on that i t la cked the abi l i ty to orderthe fund s ba ck to I nd i ana i s m ostd eci ded l y not in Sco tt’ s fa voron the m er i ts. Se e Ja r rard , 40 8 F
. 3d at 916 ( “[ A pp el l ant] di spl ays a l es s- th an - co m pl et e unde r st an di ngo fthe re l ev an t do ct r i ne at i ssue. The .

. . di sm i ssa lo n the b asi s o fj uri sdic ti on cer tai nl y di d not a m ount t o a ful l and fi nal adj ud i cati on o n th e m er its
. . . so res ju d ica ta , or cla im p re c lu sio n, clea rly d oe s n otap p l y h er e.” ). Fu rt h er , th e L aP or te C irc u it 4N os. 07

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(
. . . c on t i nu e d) 4 j ur i s di c t i on ove r gar ni s he e- defen dantM er ri l l Lync h i n the proceedings s up plem ental m ight h ave all ow ed itto order M er ri ll L y n ch to m o v e t h e fu n d s b a ck to In d ia n a . S ee Stat e Farm M u t. A u to. In s. C o. v. Estep , 873 N
. E.2d 1021, 1033 n. 13 ( Ind. 2007) ( Boeh m , J
. , c onc ur ri ng i n pa rtan d d is s en t i ng i n pa rt ) ( not i ng tha t a ga rn ishee ’ s pr esen ce in p ro ceed i n g s sup p lem en tal is neces sar y to ac quire j uris dicti on over the deb tor’ s prop erty that i s i n the ga rn i s hee’ s pos s es s i on)
. Obvious l y the c our tha d the po we r t o orde r S c ot tt o r e t ur n the fun ds , bu tS c ot th a d a l r e a dy been violat ing the court ’ s order to return the funds f or t w o years at tha t po int. A s noted at oral argum ent, i n real ity the fund s are no m ore than an el ec t ro ni c e nt ry i n M er ri l l Lync h’ s dat aba s e s ys t em an d ar e nots i t t i ng i n a sui t c as e i n a vaul tsom ewhe re outs i de o fthe s t a t e o fI nd i a na . Eve n un de r the r e s t r i c t i ve vi e w tha tthe fun ds w ere locat ed in South Caroli na and beyond the court’ s in r em j uris dicti on, the Suprem e Court has noted that “the m axi m that per s ona l t y ha s i t s s i t us atthe dom i c i l e ofi t s owne r i s a fi c t i on of l i m i t e d u t il it y. ” H a n so n v . D en c k la , 357 U.S
. 235, 249 ( 1958) ( f ootnot e om i t t ed)

. I ndi ana c our t s have i gnor ed the m ax i m an d de c l i ne d t o e x e r c i s e j ur i s di c t i oni n I nd i a na whe r e i twou l d h a ve b ee n in a p p ro p ri a te
. SeeSal erv. Iri ck, 8 0 0 N. E. 2 d 9 6 0 , 9 7 1

- 7 2 ( I nd

. Ct
. A pp. 20 03 ) ( hol di ng thati n r em j ur i s di c t i on was no tappr opriat e wh ere the annu it ie s at i ss ue w ere not p res ent in I nd iana, eve n th ough the d ec ede nt ’ s d om i c i l e was Indi ana )
. Conve rs el y, the court m ay hav e been able to e xer ci se i n rem j uris dicti on in an appr opr i at e s i t uat i on s uc h a s thi s one, w he re in re m j ur i s di c t i on was l ac ki ng o nl y bec aus e Sc ot trem ove d the funds f ro m I ndi ana in v io la tio n o f th e c o u rt ’s or d e r . Se e, e . g. , Uni t e d S t a t e s v. One 1 9 7 9 R o lls- R o y c e C o rn ic h e C o n v er tib le, 77 0 F .2d 713 , 71 6-17 ( 7th (co n tin u ed ...)12 N os. 07

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(
. . . c on t i nu e d) 4 Cir. 1985) ( “[ A ] court’ s j uris dicti on rem ains over the res i n a n in rem ac t i on i fthe res i s rem ove d or rel ea s ed a c c i dent al l y, fra udul en t l y, or i m pro per l y fro m the c our t ’ s c ont ro l

. ”) ( c i t i ng Th e R io G ra nde, 90 U .S. 4 5 8 , 46 5 (18 7 4 )). Sco tt sim ilarly arg u es tha t collate ral es t o p p e l ap p lies. 5 Col l at er al e s t oppe l , or i s s ue pre clu sion, pr eve nt s a par t y fro m r e l i t i ga t i ng i s s ue s th a tha ve al r e a dy be e n l i t i ga t e d a nd de c i de d. Wol veri n e M u t. Ins. v. V an ce ex re l
. Ti n sl ey, 32 5 F .3d 939 , 94 3 (7th Cir. 2003). “ A d is m is sal f or l ack ofj uris dicti on precludes rel it igat ion ofthe i ss ue actuall y d eci ded , nam el y the j uris dicti onal i ss ue. ” Perry v. Shea han , 22 2 F .3d 30 9 , 31 8 (7t h C ir . 20 0 0 ). Court’ s deci si on o n the l i m i tat i on o fi ts own j uri sdic tion has no bearing on the pow er s w i el ded by the federa l co urt. Scott als o a r g u e s res j ud icata on th e basis of A aron ’s sta te- cour t a pp eal

. The Ind i ana Courto fA pp eal s a ffi rm ed th e L a P o r t e C i r c u i tC o u r t ’ s Mar c h 2 0 0 5 o r d e r o n t wo grou nd s relevant he re: (1) th e L aP orte C ircuit Cou rt’s clerk l acke d the autho ri ty to i ssue a w ri t of executi on i n contr aventi on o fthe cour t’ s pri ororder ; and ( 2) A ar on def aul ted hi s a rgum ent that the co urt did h av e j uri sdic ti on t o or der th e funds t o I ndi an a be ca us e he n ever appe al ed f r o m the Jun e 2003 ord er. Res j ud icata d oes not a p p ly to bar A aron ’s claim on th e basis of th ese d ecisions, ei th er. 5 Se c ond, Sco tt ar gues that M er ri l l Lynch di d no t have a re aland re aso nabl e fearo fdoubl e l i abi l i ty orthe vexati on of l iti gating confli cting claim s beca us e A aron ’s only theory ofr e c o v e r y e s po us e d in the fe de r a l c o mpl a i ntwa s fr i vol ous fro m the outse t. A ar on’ s co m pla i nt se t o ut i n twelv eN os. 07

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Th e a bl e a nd e x pe ri e nc e d di s t r i c tc ou r tj udg e c a n ha r dl y be 6 faulte d f or f ailing to b e clairv oy an t. parag ra phs that A ar on had a j ud gm ent a gainst S cot t en te red by the LaPor te Cir cui t Cour t, M er ri l l Lynch c o nt r o l l e d fi ve a c c o un t s b e l o ng i ngt o S c o t t, Aa r o n ha d a w ri t o fexec uti on agai nst those accounts, and M er ri l l Lynch re fused to honor the w ri t. The co m pla i nt nam ed both Sco tt an d M err ill L yn ch as de fend an ts. W he n th e d istri ct cou rt st ayed the ac tion p en d ing the La Porte Circu it Cou rt’s de t e r mi na t i o n o fthe wr i to fexec ut i o n’ s v a l i di t y, i tma de tw o obse rv ati ons that Sco tt fi nd s s i gni fi cant. Fi rs t, i t no ted t ha tA a r o n ’ s th e o r y o fr e c o v e r y w a s u n c l e a r b u th e a ppea r ed to be as k i ng th e co ur t to en f o r ce th e wri t o fe xe cuti on a nd r e qu i r e M e r r i l l Ly nch t o t urn o v e r the fun ds to w hi ch A ar on was enti tl ed. S eco nd , the dis tr i ct c ourtnot ed that the s tat e co urt’ s dete rm i n at ion ofthe w ri t’ s v al i dity w oul d l i kel y di spose o fal l cl ai m s in the federa l cas e. W he n th e d istri ct court li fted the sta y nea rly th ree years l at er, i t per m i tt ed th e par ti es to su ppl ementthe i r mot i o ns f orsum m ar y j ud gm ent, after w hi ch the cour t g ra nted i nter ple ader f orM er ri l l L ynch. T he d i str i ct c ourt ’ s deci si on perm i tting the cas e t o proce ed w as c on trar y t o i ts af or emen t i o ne d two o b s e r v a t i o ns b e c a us e th e c a s e wa s p r o c e e di ng und er a differ ent theo ry than expected and the st ate c o u r t d e c i s i o n h a d n o t d i s p o s e d o f a l l th e c l a i ms . By 6 gran ting th e m otion, Scott c o m p lai ns , the d istri ct cou rt all ow ed A aron ’s new theory

— re p lev in

— to “t ip -to e[] in th roug h th e side d oor. ” Scott ass erts th at th e d istri ct cou rt sh ou ld h av e d i sm iss ed th e c as e b ec au se A ar on ’s o n ly14 N os. 07

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The Su pre m e Cour te xpl ai ne d i n Bel l A tla nti c Corp. v. 7 Tw o m b ly, 55 0 U .S. 5 4 4 , —— , 127 S. Ct. 1955, 1964- 65 ( 2007) , that “a p lain t i ff’s ob liga tion to p ro v id e the gro u nd s of his en title[m en t] to relief re qu ires m or e tha n lab els a nd con clu sion s, and a f or m ul ai c r ec i t at i on ofthe e l em en t s ofa c aus e ofac t i on wil l no tdo.

. . . ” ( al t er at i on i n ori gi nal ) ( i nt er nalquot at i on m ar ks om itted ). O d d ly, Sco tt uses this qu ota tion to ar g u e tha t in Aar on’ s c om p lain t, “the re i s no l abe l , l etal one an y ofthe el em ents ofa cause o faction for reple vin. ” Aaron d id not nee d to p ro v id e labels and elem ents ; he m erel y needed f actual al l eg at i ons thatwer e “e nought o r ai s e a r i ghtt o r el i efabo ve the specul ati ve level

. ” Id. at 1965. theo ryo fr eco ver y in the com p laint had been f or ecl ose d w he n th e L aP orte C ircuit Cou rt conc ed ed that its clerk sh o ul d ne ve r ha ve i ss ue d Aar o n the wri t o fe xe cut i o n. But A ar on’ s co m pla i nt, adm i tte dlym or e fo cused on the wri t o f ex ec ut i o n, al so na m ed S co tt as a defen dan t, a l l eg ed th athe had a j ud gm ent a gainst he r, and cl ai m ed to be enti tl ed to her acco unts atM errill L ynch. S cot t wants the cas e t o be d ism iss ed be c au se A ar on ’s c om p lain t d id n otst at e a cla im

— he did not use the w or d “ re ple vi n” or i denti fy a ny o ther wo r k a b l e l e g a l the o r y . Und e r the n o t i c e p l e a di ngs t a nd a r d, of c ou rs e, a com p lain t ne ed n ot c on ta in leg al t h eo rie s. See, e . g. , O ’Grady v. Vill
. of Li be rtyville, 3 04 F.3d 719, 72 3 (7th C ir. 2002 ) ( noti ng tha t a l though the pl ai nti ffdi d not a dvance a par ti cul arthe o r y unt i l the s um m ar y j udg m en t st ag e, the com p lai nt w as ad eq ua te t o p u t the d efend an t on n otice). A ar on’ s co m pla i nt ga ve Sco tt noti ce that he h ad a j ud gm en t a ga in s t h e r a n d h e b elie ve d th ath e w as lega lly enti tl ed to the m oneyi n herM er ri l l L ynch acc ounts. Even 7N os. 07

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Sco tt also asserts th at A aro n w ill nev e r b e a b le to p rev ail 8 und era re pl evi n the or y. Sh e ex pl ai ns whi c h e l em en t s of rep lev in u nd er In d ian a law A aro n h as no t yet a ttem p ted to s h o w, e . g . , u n de r I n di a n a C o de § 3 2

- 3 5

- 2

- 4 , t o r e c ove r f or re pl evi n Aar on m us tfi l e an affidavi ts howi ng thathe i s the ow ne r of the p ro p erty or law fully entitled to the p ro p erty
. T his arg u m en t is p rem atu re; b oth p arties w ill ha v e t h e o p p or tu nity to prove enti tl em ent to the fu nd s in the s econd st age ofi nter
pl e a de r , w hi c h the di s t r i c tc ou r ts t a ye d p e nd i ng thi s a ppe a l

. To pr e va i l , Aa r onwi l l ne e d t o pr ov e th a the i s e nt i t l e d t o the fun ds u nd er rep lev in o r an oth er l e g a l t h e or y , b u t his f ailu re to d o so a tth i s t i me i s n o tf a t a l t o Me r r i l l L y n c h ’ s i n t e r p l e a d e r c l a i m. tho ugh the wr i to fe xe c ut i o n s ho ul d n o th a v e b e e n i s s ue d, Aa r o n ’ s c l a i m wa s n o t f r i v o l o u s f r o m th e o u t s e t, a n d t he d ist ric t c ou r t d i d n oterr by co n sid er in g A ar on ’s c laim und erano thertheo ry . 8 S c o t t ’ s di s c us s i o n a b o utwh e ther A a r o n ha s s t a t e d a cl ai m di ver ts our att enti on fro m the questi on pre sente d by th i s appe al, tho ug h: Di d M er r i l l Ly nc h h av e a r ea l a nd r ea so nabl e fea r o f do ubl e l i ab i li ty or co nfl i ct i ng c l a i ms

— cl ai m s which m eeta “m in i m althr esho l d l eve l o f substa nti al i ty” ? Indianap ol is Colts , 74 1 F
. 2d at 957- 58. A ar on and Sco tt have ass er ted co nfl i cti ngc l a i ms a gainst the as set s he l d b y M er r i l l Lyn ch, a nd tho se c l ai m s ea si l y meetthe sta nd ar d fo r substa nti al i ty. A ar on has a j ud gm ent a gainst Scott an d a state cou rt’s det erm ination th a t her fun d s are no t ex empt fr o m e xe cut i o n. S co ttwas the o wnero fthe fu n d s a n d w ou ld like t o p os se ss th em on c e a ga in . M er rill Lynch’s fearof confl i cti ng cla i m s w as re aland re aso nabl e, and the di str i ct c ou rtpro perl y g ra nted i nter ple ader to16 N os. 07

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. See U ni on Cen t
. Lif eIns
. Co. , 448 F. 2d at 503 ( noti ng tha t inter ple aded parti es w er e properbec ause they w er e a dvers e cl ai m ants w ho cl ai m ed or m i ght c l ai m to be en tit led to th e fu n d s h eld by th e s ta ke h old e r); M et ro. Lif e Ins. C o . v. W

hit ler, 172 F.2d 631 , 632 (noting th at stat ut ory in te rp lea d er w as ap p ro p ria te w h e re tw o in d ivid u als c laim ed to be th e b en efic iar y of a life ins u ra n c e p olic y); cf. Indianapo li s C olts , 74 1 F
. 2d at 95 7 (not i ng tha t the par ti es w er e no t cl ai m ants to the s am e s tak e where one party sought to ass er t own er shi p of the N FL f ra nchis e t hro ugh e mi n e n td o ma i n b u tth e o th e r p a r t y h a d n o c o n fl i c t i ng claim of ow ne rship ); Francis I
. duP ont & Co
. v. O ’Keef e, 36 5 F. 2d 141, 14 2- 43 ( 7th Ci r. 19 66) ( noti ng tha t inter ple ader w as proper l y deni ed w here the appell ant f aced n o risk o f confl i cti ng cl ai m s be cause an es tat e’ s a dm i ni str ato r w as vest ed w i th excl usi ve ti tl e t o i nd ebte dn ess appel l ant o w ed to the de ced en t).

I I I . Att orneys’ Fees S co tt al so ar g ue s th atthe di st r i ctc o ur t er r ed byg r an ting M er ri l l Lynch att or neys’ fees . S he o bj ects to the ti m i ng o f th e aw ard and to the aw ard being t a k e n f rom the interple ader sta ke, but she doe s no t co ntestthe am ount offees aw ar ded

. W e rev i ew the dis tr i ct c ourt ’ s g ra nt o fat torneys’ f e e s f or ab u se of d isc re tio n . C inta s C o rp. v. P erry, 51 7 F
. 3d 459, 469 (7th C ir. 2008). S cott obj ec ts t o the t i m i ngo fthe a war d b ec au se the cour t’ s o rdero ccurr ed w hi l e S cot t’ s a pp ealwas pend i ng. Gen er al l y, a pa r ty ’ s fi l i ngo fa no ti ce o fa ppea l di ve st s th e dist ri ct c ourto fj uri sd ict i on o vertho se aspects o fthe caseN os. 07

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- 2020 17 in vo lve d in t h e a p p ea l. M ay v . Sh e ahan , 22 6 F. 3d 876, 87 9 (7th C ir. 2000). A lthou gh d istri ct courts com m only aw ard at to rn ey s’ fe es w h i l e a n ap p ea l is p en d in g, Apos t ol v. Gall i on , 8 7 0 F
. 2 d 1 3 3 5 , 1 3 3 7( 7 th Ci r . 1 9 8 9 ) , S c o t tc onte nd s th atthe c o ur t sh o ul d no t ha ve g r an te d fee s o uto fthe i nter ple ader sta ke beca u se her appeal tur ned on wh ether interp lead e r sh ou ld h ave be en grante d

. Be cau se interple ader w as proper, S cot t’ s co ncer n i s m oo t. T h e p ar ti es do not disa gr ee w i th the st andard used by the dist ri ct cour t to aw ar d a tto rney s’ fe es

— a co urt m ay aw ar d att or neys’ fee s and costs to a preva i l i ng st ake hol der i n an i n te rp l eaderact i on i fthe cos ts ar e dete rm i ned to be re aso nabl e a nd the sta keho l der’ s eff or ts ar e no t par t o fi ts n or m al c ou rs e o f bu sin es s. Se eU nio n C ent. Li f eIns . Co. v. Ham il ton Steel Prods. , Inc. , 493 F.2d 76, 79 ( 7th Cir. 1974); Trav elers In dem . C o . v . Isra el , 354 F.2d 488 , 490 (2d Cir. 1965). T he district cou rt foun d th at M erril l L yn ch w as a d isi nt erest ed sta keho l der w hose eff or ts w er e no t par t o fi ts nor m al cour se ofbusi ness. I t a l so f ound that the case was com ple x an d invol ved exte nsi ve disc ove ryand m oti ons pract i ce, M er ri l l Lynch did nothin g im properto pro l ong the pr oc ee d in gs , w as n otres p o n s i b l e for “ th e filin g of m u ltip le l aw sui ts i n m ult i ple j uri sdic ti ons, ” and acted i n go od f ai th an d wi th di l i g en ce th r o ug ho ut th e fede r al l i ti g at i o n. The c ou r t’s find in gs su p p or t it s c on c lu sio n to aw ar d M er rill Lynch atto rney s’ fees . The parti es al so agr ee that cour ts often a w ar d atto rney s’ fee s from th e int er p lea d er st ak e. Fi rs tTr us tCorp. v. Bryant, 410 F. 3d 842, 85 6 (6t h Ci r. 20 05) ( “Despit e the l ack of expli ci t s tatutor y a uthori zati on, m oder n federa l prac ti ce18 N os. 07

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- 2020 fol low s the tra d iti ona l eq uity rule th at gives the tri al court disc re tion t o al l ow a dis i nter est ed sta keho l der t o re cove r att or ney’ s fees and cos ts f ro m t h e stak e i tse l f

. ” ( i nter nal qu otation m arks om itted ))
. Sco t t c ont en d s tha t the cou rt had the disc re ti on t o

— an d sh ou ld

— m ak e Aar o n “ paythe frei gh t.” The key w ord i s “d iscre t ion , ” an d the cou rt proper l y exer ci sed i t. This ar gum ent, to o, i s without m er i t.

I V . Concl usio n W e AF FIRM t h e di str i ct c ourt ’ s g ra nt o fsum m ar y j ud gm e n t o n th e in te rp lea d er cla im s t o M er rill L yn c h, as w ell as the a w ar d ofat torneys’ fees .

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