Opinion ID: 3023443
Heading Depth: 3
Heading Rank: 4

Heading: May the Fund Raise SIP’s Set-Off Claim as

Text: a Defense to the Garnishment? Finally, the Fund argues that IFC breached its agency agreement with SIP by diverting the Fund’s assets and that the Fund’s ability to raise SIP’s claim of a set-off precludes summary judgment on the garnishment action. We disagree. First, this was SIP’s defense in arbitration, which was rejected by the arbitrators. This is not a direct appeal of the arbitrators’ ruling, so if the Fund were in privity with SIP, the arbitrators’ ruling, confirmed by the District Court in its Order of September 7, 2004, would preclude litigation of this issue under res judicata. Transamerica Occidenal Life Ins. Co. v. Aviation Office of America, Inc., 292 F.3d 384, 393 (3d Cir. 2002). -36- Second, the Fund, as garnishee, may not raise the judgment debtor’s defenses as against the judgment creditor. Fed. R. Civ. P. 69 states that “[t]he procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held . . ..” Although the interpretation of the indemnification Agreement is governed by Delaware law, the case was before the United States District Court for the Eastern District of Pennsylvania. We look therefore to Pennsylvania law regarding enforcement of the judgment. Under Pennsylvania law, a garnishee “may not assert any defense on behalf of the defendant against the plaintiff or otherwise attack the validity of the attachment.” PA. R. CIV. P. 3145(d)(2). Therefore, the Fund may not raise SIP’s set-off claim as a defense. Because no genuine issues of material fact remain and all issues of law have been decided in favor of IFC, we hereby order summary judgment in favor of IFC in its garnishment action.