Document Type

Article

Publication Date

5-7-2009

Abstract

Appellant Goldberg & Connolly ("G & C") appeals from an Order for Distribution of Interpleader Funds ("Order") entered on August 14, 2007, in the United States District Court for the Eastern District of New York (Wexler, J.). The Order distributed funds, inter alia, to appellee New York Community Bancorp, Inc. (f/n/a Roslyn Savings Bank) ("Roslyn"),[1] in payment of its claimed perfected security interest in an Interpleader Fund ("Fund") set up by the United States Postal Service ("USPS"). The Fund was created to satisfy a judgment the USPS owed ("USPS Judgment") to Abcon Associates, Inc. ("Abcon"), a contractor the USPS had previously retained and later learned had a number of existing claims against it, necessitating the establishment of the Fund. As a result of Roslyn's prioritized interest, the remaining claimants to the Fund, including G & C, were left with no recovery.

68*68 Prior to the Order, on December 20, 2006, G & C made a motion for summary judgment seeking a determination that Roslyn did not possess a perfected security interest in the Fund. The District Court rejected this argument and concluded that Roslyn's claim to the Fund was senior to G & C's competing claim. See United States v. Abcon Assocs., No. CV 05-3178, 2006 WL 3751261 (E.D.N.Y. Dec. 18, 2006).

In this appeal, we review the district court's analysis of Roslyn's interest in the Fund and consider whether the General Loan and Security Agreement that created Roslyn's interest constituted an assignment of judgment for purposes of N.Y. Gen. Oblig. Law § 13-103, or a security interest in money under N.Y. U.C.C. Law art. 9. We conclude that the General Loan and Security Agreement's assignment of "all sums recovered" from the USPS Judgment constituted an assignment of money or proceeds received from the USPS Judgment and not an assignment of the USPS Judgment itself. As a result, pursuant to N.Y. U.C.C. Law § 9-312(b)(3), Roslyn could perfect its interest only by taking possession of the proceeds of the Fund. Having failed to do so, Roslyn's interest in the Fund is unperfected and therefore junior to G & C's interest. We thus vacate the Order and remand to the District Court for further proceedings.

Comments

565 F.3d 66 (2009)

GOLDBERG & CONNOLLY, Defendant-Cross-Defendant-Counter-Claimant-Cross-Claimant-Appellant, Ara Plumbing & Heating Corp., on behalf of itself and other Judgment creditors entitled to share in the funds received by Abcon Associates, Inc., in connection with the St. Charles Hospital Project, Steven G. Rubin & Associates, P.C., Intervenor-Defendant-Counter-Claimant, Abcon Associates, Inc., The Roslyn Savings Bank, Defendants-Cross-Defendants-Counter-Claimants, Hi-Lume Corporation, St. Vincent's Catholic Medical Centers of New York, Kamco Supply Corporation, Defendants-Cross-Defendants-Counter-Claimants, Haas & Najarian, LLP, Defendant-Cross-Defendant-Counter-Defendant-Counter-Claimant-Cross-Claimant, United States Fidelity & Guaranty Company, Lovett Silverman, HSBC USA, Inc., Defendants-Cross-Defendants-Counter-Claimants, v. NEW YORK COMMUNITY BANCORP., INC., Defendant-Cross-Defendant-Counter-Claimant-Appellee, United States of America, United States Postal Service, Plaintiff-Counter-Claimant-Defendant.

Docket No. 07-3868-cv.

United States Court of Appeals, Second Circuit.

Argued: November 17, 2008.

Decided: May 7, 2009.

New York Law School location: File #3759, Box #153

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