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Thomas Industries, Inc. v. City of Bristol

United States District Court, D. Connecticut

August 25, 2018

CITY OF BRISTOL, et al., Defendants.


          Jeffrey Alker Meyer United States District Judge.

         This is an interpleader action brought by plaintiff Thomas Industries, Inc., to establish which claimants are entitled to the proceeds from the sale of certain machines formerly owned by BW Manufacturing, Inc. Defendants United States of America, Connecticut Department of Labor, and City of Bristol each claim statutory liens in the interpleaded funds. Defendant Chapman Machine Company, Inc., claims it is entitled to some of the interpleaded funds because it, rather than BW Manufacturing, Inc., owned certain machines that plaintiff sold. Plaintiff seeks attorney's fees from the interpleaded fund. For the reasons detailed below, I conclude that the United States of America is entitled to most of the interpleaded funds, that the Connecticut Department of Labor is entitled to some of the funds, and that plaintiff is entitled to an award of limited attorney's fees, but that the City of Bristol and Chapman Industries, Inc., are not entitled to any of the interpleaded funds.


         The material facts in this case are undisputed unless otherwise indicated. Gary Weed owned two businesses: BW Manufacturing, Inc. (“BW”) and Chapman Machine Company, Inc. (“Chapman”). BW operated out of a warehouse in Bristol, Connecticut. Beginning in 2009, BW became delinquent on its tax obligations. BW failed to pay quarterly employee withholding taxes for the quarterly tax periods ending on June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010, December 31, 2010, March 31, 2011, and June 30, 2011. As a result, the IRS made a number assessments: on September 21, 2009, for $138, 343.00; on December 21, 2009, for $120, 937.98; on April 5, 2010, for $80, 072.79; on June 28, 2010, for $87, 126.14; on September 20, 2010, for $59, 910.52; on March 28, 2011, for $12, 384.25; on June 20, 2011, for $7044.92; and on October 3, 2011, for $5, 177.04. Doc. #140-2 at 2.

         BW also failed to pay unemployment compensation contributions to the Connecticut Department of Labor (“DOL”). As a result, it made a number of assessments and filed liens against BW. First, it filed a lien on August 26, 2010, in the amount of $27, 191.51 for the first and second quarters of 2010; on November 24, 2010, in the amount of $25.00 for the third quarter of 2010; on April 12, 2011, in the amount of $558.63 for the fourth quarter of 2010; and on September 28, 2011, in the amount of $7, 251.33 for the first and second quarters of 2011 and a special assessment for 2010.[1] Doc. #15 at 1-2

         BW also failed to pay personal property taxes to the City of Bristol (“City”). As a result, the City recorded tax liens on the personal property of BW Manufacturing on September 12, 2011, in the amount of $7, 850.57, corrected to $15, 701.14 plus accrued interest and fees on June 8, 2012; on September 13, 2011, in the amount of $20, 852.50; and on February 6, 2012, in the amount of $58, 982.50, corrected to $54, 571.18 on June 8, 2012. Doc. #39-2 at 1-3.

         In early 2012, Gary Weed contacted an auctioneer, plaintiff Thomas Industries, Inc., and proposed that plaintiff auction off some of BW's equipment. Weed acquiesced to a proposal stating that all of the machinery to be auctioned belonged to BW. A little more than a week before the auction, Weed notified plaintiff that not all of the machines were owned by BW and that the proceeds of the auction should be transferred to two different accounts. Doc. #153 at 11 (¶ 35). The auction took place on March 8, 2012, and yielded $729, 519.13 in proceeds. After the auction, Weed claimed that nine of the machines were owned by Chapman and not BW. As a result, Chapman claims a right from the auction proceeds to $128, 650.

         On April 10, 2012, plaintiff filed this interpleader action in state court, naming the City of Bristol, Chapman Machine, Inc., the Connecticut Department of Labor, and the United States of America (“USA”) as defendants. Doc. #1-2 at 2. The USA timely and properly removed the action to this Court on May 17, 2012. The City has since filed a cross-claim against all defendants, asserting a claim to some of the funds and asserting a claim to any money recoverable by Chapman. On February 1, 2013, the Court granted an interlocutory judgment of interpleader and ordered plaintiff to deposit $675, 805.62 with the Clerk of Court. Doc. #105.[2] An initial round of summary judgment motions were denied in 2013. See Docs. # 108-10.[3] All parties except Chapman have now filed renewed motions for summary judgment, and plaintiff has also moved for an award of attorney's fees in connection with its fees for filing and litigating this interpleader action.


         The principles governing the Court's review of a motion for summary judgment are well established. Summary judgment may be granted only if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). I must view the facts in the light most favorable to the party who opposes the motion for summary judgment and then decide if those facts would be enough-if eventually proved at trial-to allow a reasonable jury to decide the case in favor of the opposing party. My role at summary judgment is not to judge the credibility of witnesses or to resolve contested issues of fact but solely to decide if there are enough facts that remain in dispute to warrant a trial. See generally Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (per curiam); Pollard v. New York Methodist Hosp., 861 F.3d 374, 378 (2d Cir. 2017).

         As an initial matter, I address the basis for federal jurisdiction over this interpleader action. The parties' briefs presume that jurisdiction is predicated on the federal interpleader statute, 28 U.S.C. § 1335. That statute, however, requires two or more parties in the action to be diverse. Id. § 1335(a)(1). Here, there is no diversity of citizenship because each party is a citizen of Connecticut, and the USA is not a citizen for diversity purposes. See Commercial Union Ins. Co. v. United States, 999 F.2d 581, 584 (D.C. Cir. 1993). Although not stated in the state-court complaint, this interpleader action was presumably brought pursuant to Conn. Gen. Stat. § 52-484, the state interpleader statute. Nevertheless, this Court has jurisdiction because Congress has authorized the federal government to remove any interpleader action to federal court in which the government is party. See 28 U.S.C. §§ 1444, 2410(a)(5).

         Whether this interpleader action is brought pursuant to 28 U.S.C. § 1335 or Conn. Gen. Stat. § 52-484, the analysis is the same. There must be real and genuine conflicting claims to the single fund. See Metro. Life Ins. Co. v. Mitchell, 966 F.Supp.2d 97, 102 (E.D.N.Y. 2013); Trikona Advisers Ltd. v. Haida Investments Ltd., 318 Conn. 476, 484 (2015). Then, “[t]he court should readily grant discharge of the [plaintiff] stakeholder, unless it finds that the stakeholder may be independently liable to a claimant or has failed to satisfy the various requirements of interpleader, including, when required, deposit of the stake.” New York Life Ins. Co. v. Apostolidis, 841 F.Supp.2d 711, 720 (E.D.N.Y. 2012) (quoting Moore's Federal Practice); Trikona Advisers, 318 Conn. at 484. Next, “the Court adjudicates the claims among the remaining adverse parties.” Metro. Life Ins. Co., 966 F.Supp.2d at 102; Trikona Advisers; 318 Conn. at 484. There is no dispute that there are genuine competing claims to the funds and that plaintiff should be discharged of liability.[4] The crux of this case is the priority of the competing claims to the fund, which is too small to satisfy all of the lienor defendants' claims.

         Chapman's Claims

         Chapman asserts a claim to the proceeds of nine machines that it alleges it owned prior to the auction. Plaintiff and the USA argue that Chapman is not entitled to the proceeds because it ...

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