Court Opinion

ID: 3207542
Source: CourtListenerOpinion
Date Created: 2016-05-27 16:00:56.362465+00
Date Added: 2024-06-11T14:29:02.413217
License: Public Domain

Case: 15-12085   Date Filed: 05/27/2016   Page: 1 of 6

                                                       [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 15-12085
                       Non-Argument Calendar
                     ________________________

                 D.C. Docket No. 1:13-cv-20610-CMA

LARRY E. KLAYMAN,

                                                          Plaintiff-Appellant,

                                 versus

JUDICIAL WATCH, INC.,
THOMAS FITTON,
PAUL ORFANEDES,
CHRISTOPHER FARRELL,
CONSTANCE RUFFLEY,

                                                       Defendants-Appellees.

                     ________________________

              Appeal from the United States District Court
                  for the Southern District of Florida
                    ________________________

                            (May 27, 2016)
               Case: 15-12085       Date Filed: 05/27/2016     Page: 2 of 6

Before WILLIAM PRYOR, ROSENBAUM, and FAY, Circuit Judges.

PER CURIAM:

       Plaintiff-Appellant Larry Klayman, an attorney proceeding pro se, filed this

defamation suit against the organization he founded, Judicial Watch, Inc.1

Klayman alleged that employees of Judicial Watch published a false statement

claiming that he had been convicted of a crime for failing to pay a large amount of

child support. A federal jury found that Klayman had been defamed and awarded

him $156,000 in compensatory damages and $25,000 in punitive damages, for a

total award of $181,000.

       After entry of judgment on the verdict, Judicial Watch filed an unopposed

motion to deposit the judgment amount into the registry of the court, pursuant to

Rule 67, Fed. R. Civ. P. According to Judicial Watch, Klayman’s ex-wife had

demanded that the judgment amount be paid to her instead of Klayman to satisfy a

$325,000 judgment she had obtained against Klayman in an unrelated proceeding.

Klayman’s ex-wife had filed a creditor’s bill in Ohio state court naming Klayman

and Judicial Watch as defendants. Concerned about its liability to Klayman’s ex-

wife, Judicial Watch sought to deposit the amount of the judgment “pending

resolution of the dispute between Klayman and [his ex-wife] concerning the

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          Klayman named several individuals as defendants in his amended complaint, but these
individuals were dismissed for lack of personal jurisdiction early in the proceeding. Klayman
also raised other claims, but only the defamation claim was charged to the jury.
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entitlement to the funds.” The court granted the motion, and Judicial Watch

deposited the funds on February 19, 2015.

        In May 2015, Klayman moved to withdraw the funds under Rule 67(b), Fed.

R. Civ. P., raising various arguments as to why he was entitled to the funds

notwithstanding his ex-wife’s demand.         The district court denied Klayman’s

motion. In the same order, the court also vacated its prior order granting Judicial

Watch’s unopposed motion to deposit funds into the court’s registry. The court

found that “the question of who should receive the funds deposited by the

Defendant and in what amounts may involve protracted proceedings and new

claims and defenses by a new party having nothing to do with the underlying and

long-concluded action.” Consequently, the court ordered the money returned to

Judicial Watch, noting that Judicial Watch may initiate a separate interpleader

action to protect itself. Klayman appeals the district court’s denial of his motion to

withdraw the funds.

        We review for an abuse of discretion a district court’s decisions allowing

deposit into or withdrawal from the court’s registry under Rule 67, Fed. R. Civ. P.

Zelaya/Capital Int’l Judgment, LLC v. Zelaya, 769 F.3d 1296, 1300 (11th Cir.

2014). Under this deferential standard of review, we must affirm unless the district

court “applied the wrong law or its decision was manifestly erroneous.” Id. at

1301.

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      Rule 67 of the Federal Rules of Civil Procedure 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). Any money paid into the court under Rule 67 “must be deposited and

withdrawn in accordance with 28 U.S.C. §§ 2041 and 2042 and any like statute.”

Fed. R. Civ. P. 67(b). Under § 2041,

             All moneys paid into any court of the United States, or
             received by the officers thereof, in any case pending or
             adjudicated in such court, shall be forthwith deposited
             with the Treasurer of the United States or a designated
             depositary, in the name and to the credit of such court.

             This section shall not prevent the delivery of any such
             money to the rightful owners upon security, according to
             agreement of parties, under the direction of the court.

28 U.S.C. § 2041. Section 2042 provides that “[n]o money deposited under section

2041 of this title shall be withdrawn except by order of court.” 28 U.S.C. § 2042.

      The core purpose of Rule 67 is “to relieve the depositor of responsibility for

a fund in dispute, such as in an interpleader action.” Gulf States Utils. Co. v. Ala.

Power Co., 824 F.2d 1465, 1474 (5th Cir. 1987); see also Zelaya, 769 F.3d at

1302. An interpleader action typically proceeds in two stages. Prudential Ins. Co.

of Am. v. Hovis, 553 F.3d 258, 262 (3d Cir. 2009). First, the court determines

whether interpleader is proper and “whether to discharge the stakeholder from

further liability to the claimants.” Id. Second, the court evaluates “the respective

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rights of the claimants to the interpleaded funds.” Id. The law does not require a

judgment debtor to decide the validity of competing claims to the judgment

amount. Zelaya, 769 F.3d at 1302-03. Rather, once funds are deposited, it is the

district court which “should determine ownership and make disbursement.” Gulf

States Utils Co., 824 F.2d at 1474.

      Here, the district court did not abuse its discretion. We are not persuaded by

Klayman’s arguments that the court should have allowed him to withdraw the

money. Judicial Watch deposited the funds because, it alleged, it faced competing

claims for the judgment amount and wished to protect itself from multiple liability.

In view of that purpose, it would not have made sense for the court to simply allow

Klayman to withdraw the funds without protecting Judicial Watch from a potential

claim from Klayman’s ex-wife or determining “the respective rights of the

claimants” to the funds. See Hovis, 553 F.3d at 262. Therefore, it was reasonable

for the court to deny Klayman’s motion to withdraw when the reasons for which

the court allowed Judicial Watch to deposit the funds had not been resolved.

      Furthermore, the district court rationally ordered the funds returned to

Judicial Watch. While the district court initially allowed Judicial Watch, with

Klayman’s acquiescence, to deposit the judgment amount into the court’s registry,

the court later recognized that the dispute should not be handled post-judgment in a

concluded case. Specifically, the court found that the dispute over the judgment

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funds “may involve protracted proceedings and new claims and defenses by a new

party having nothing to do with the underlying and long-concluded action.” In

other words, the district court determined that the judgment amount should not

have been deposited into the court’s registry in the first place and that the nature of

the dispute was more appropriate for an interpleader action, if necessary. Because

no interpleader action had been filed, the court reasonably ordered the money

returned to Judicial Watch.

      By ordering the return of the deposited funds, the district court effectively

returned the parties to the same positions they were in before the deposit occurred.

Klayman still has a $181,000 judgment against Judicial Watch, and he may pursue

whatever legal options are available to him to collect on that amount. See, e.g.,

Fed. R. Civ. P. 69. But Klayman has identified no authority under which the

district court was required to allow him to withdraw the deposited funds, nor has

he shown that the court made a clear error of judgment in denying his motion to

withdraw and ordering the funds returned to Judicial Watch. See Zelaya, 769 F.3d

at 1300-01. Accordingly, we affirm the denial of his motion to withdraw.

      AFFIRMED.

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