Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

UBS Financial Services, Inc. v. Banco Popular De Puerto Rico

United States District Court, D. South Carolina, Greenville Division

August 16, 2017

UBS FINANCIAL SERVICES, INC. Plaintiff,
v.
BANCO POPULAR DE PUERTO RICO, MARIEL BABCOCK, and EDWARD WALTER SMITH, in his capacity as Personal Representative of the Estate of Mark Richard Babcock, Defendants.

          MEMORANDUM OPINION AND ORDER

          MARY GEIGER LEWIS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This is an interpleader action brought under 28 U.S.C. § 1335. The Court has jurisdiction under that same statute.

         Pending before the Court are Plaintiff UBS Financial Services, Inc.'s (Plaintiff) Motion to Interplead Bond, Discharge Plaintiff from Liability, Enjoin Defendants from Other Actions, and for Award of Attorneys' Fees and Costs (Plaintiff's Motion to Interplead Bond), Defendant Edward Walter Smith's, in his capacity as Personal Representative of the Estate of Mark Richard Babcock (Mr. Smith), motion to dismiss (Mr. Smith's Motion to Dismiss), and Defendant Banco Popular de Puerto Rico's (BPPR) Motion to Dismiss Crossclaims of Mariel Babcock (Mrs. Babcock) (BPPR's Motion to Dismiss Crossclaims). Having carefully considered the motions, the responses, the replies, the record, and the applicable law, it is the judgment of the Court: (1) Plaintiff's Motion to Interplead Bond will be granted as modified in part, granted in part, dismissed without prejudice in part, and denied in part; (2) Mr. Smith's Motion to Dismiss will be granted; (3) BPPR's Motion to Dismiss Crossclaims will be denied without prejudice; and (4) Mrs. Babcock will be granted leave to amend her crossclaim against BPPR.

         II. FACTUAL AND PROCEDURAL HISTORY

         This interpleader action arises out of multiple claims to a portion of the assets in a traditional individual retirement account (IRA) managed by Plaintiff. The IRA account at issue was originally owned by non-party Mark Richard Babcock (Mr. Babcock). See ECF No. 33-4. It was titled the “Mark Richard Babcock Traditional IRA” and bore an account number ending in 13 (Mr. Babcock's Account). See id. Mr. Babcock designated his wife, Mrs. Babcock, as the sole beneficiary of his Account. See ECF No. 33-6.

         Mr. Babcock died on July 4, 2015, in Greenville, South Carolina. See ECF No. 33-7. At the time of his death, Mr. Babcock was a resident of Greenville County, South Carolina. See Id. The estate of Mr. Babcock was opened in the Probate Court for Greenville County, South Carolina on or about July 14, 2015, and Mr. Smith is the personal representative of Mr. Babcock's Estate. See ECF No. 1 ¶¶ 4-5.

         On or about July 16, 2015, Mrs. Babcock completed and submitted Plaintiff's IRA Beneficiary Processing Form to request a transfer of the assets in Mr. Babcock's Account. See ECF No. 33-8. UBS subsequently opened a new account named the “Mark Richard Babcock Traditional IRA FBO Mariel Babcock” and ending in account number 32 (Mrs. Babcock's Account). See ECF No. 33-9. In July 2015, UBS transferred all of the assets in Mr. Babcock's Account to Mrs. Babcock's Account. See ECF Nos. 33-4, 33-9. Mrs. Babcock's Account remains active and is managed by Plaintiff's Greenville, South Carolina location. ECF No. 1 ¶ 17.

         On or about June 2, 2016, Plaintiff received an order (Account Restriction Order) from the Puerto Rican Commonwealth Trial Court, San Juan Division (Puerto Rico Court), in a collection action brought by BPPR against Mr. Babcock (Puerto Rico Action). See ECF No. 33-11. Neither Plaintiff nor Mrs. Babcock nor Mr. Smith is a party to the Puerto Rico Action. See id.

         The Puerto Rico Court entered the Account Restriction Order in response to an emergency motion brought by BPPR requesting a garnishment of Mr. Babcock's assets held by Plaintiff to permit BPPR to collect the deficiency on a foreclosure judgment it had obtained against Mr. Babcock. See id.; see also ECF No. 33-16 at 3. The Account Restriction Order directed UBS to prohibit withdrawals in both Mr. and Mrs. Babcock's Accounts that would result in an account balance of less than $399, 738.51 pending a decision by the Puerto Rico Court on BPPR's motion to garnish Mr. Babcock's assets. See ECF No. 33-11. After receiving the Account Restriction Order, UBS restricted Mrs. Babcock's Account and sent a letter addressed to Mr. Babcock as the account holder notifying him of the restriction and attaching a copy of the Account Restriction Order. See ECF Nos. 1 ¶ 18, 1-1.

         On or about June 29, 2016, Plaintiff received an order from the Puerto Rico Court (Garnishment Order) directing it to sell enough of the assets in Mr. Babcock's Account and/or Mrs. Babcock's Account to cover the deficiency of $399, 738.51, plus interest and costs, on BPPR's foreclosure judgment against Mr. Babcock. See ECF No. 33-12. On August 19, 2016, Plaintiff filed an Informative Motion with the Puerto Rico Court informing it of certain information Plaintiff deemed relevant to the Puerto Rico Action, such as Mr. Babcock's death. See ECF No. 52-1. On September 23, 2016, the Puerto Rico Court entered an order (September 2016 Order) directing Plaintiff to deposit $399, 738.51 with the Puerto Rico Court from Mr. Babcock's funds held by Plaintiff. See ECF No. 33-13.

         On October 11, 2016, Plaintiff filed a motion to reconsider in the Puerto Rico Action requesting the Puerto Rico Court reconsider its Garnishment Order and the September 2016 Order. See ECF No. 33-15; see also ECF No. 33-2 at 6. The Puerto Rico Court entered an order denying Plaintiff's motion to reconsider on February 16, 2017. ECF No. 33-15.

         On March 3, 2017, Plaintiff filed its interpleader complaint (Complaint) in this action, naming BPPR, Mrs. Babcock, and Mr. Smith as defendants. ECF No. 1. On or about that same day, the Puerto Rico Court entered an order (March 2017 Order) instructing Plaintiff to comply with its prior orders and pay the garnished sum into the Puerto Rico Court within ten days or be subject to “severe penalties.” See ECF No. 33-16.

         Mrs. Babcock filed a motion for a temporary restraining order in this action on March 10, 2017, ECF No. 7, which the Court granted on March 13, 2017, ECF No. 9. On March 17, 2017, Mrs. Babcock filed a motion for a preliminary injunction requesting the Court enjoin Plaintiff from transferring any money from her Account to BPPR or the Puerto Rico Court or acting in furtherance of any garnishment order in the Puerto Rico Action. ECF No. 15. The parties fully briefed Mrs. Babcock's motion for a preliminary injunction, and, following a hearing, the Court entered an Agreed Preliminary Injunction Order. ECF No. 51.

         Plaintiff filed its Motion to Interplead Bond on March 22, 2017, ECF No. 33, and Mr. Smith filed his Motion to Dismiss on March 23, 2017, ECF No. 35. Mrs. Babcock filed a response on March 27, 2017, informing the Court she does not oppose Mr. Smith's Motion to Dismiss. ECF No. 38. On April 4 and 5, 2017, Mrs. Babcock and BPPR filed responses in opposition to Plaintiff's Motion to Interplead Bond, respectively. ECF Nos. 49, 50. BPPR filed a response in opposition to Mr. Smith's Motion to Dismiss on April 6, 2017, ECF No. 52, and, that same day, Plaintiff filed a response informing the Court it does not oppose Mr. Smith's Motion to Dismiss, ECF No. 54. Mr. Smith replied in support of his Motion to Dismiss on April 13, 2017. ECF No. 57. On April 14, 2017, Plaintiff filed a reply in support of its Motion to Interplead Bond. ECF No. 59.

         BPPR filed its Motion to Dismiss Crossclaims on June 9, 2017. ECF No. 72. Mrs. Babcock responded in opposition to BPPR's Motion on July 17, 2017, ECF No. 78, to which BPPR replied on July 24, 2017, ECF No. 79.

         The Court, having been fully briefed on the relevant issues, is now prepared to discuss the merits of Plaintiff's Motion to Interplead Bond, Mr. Smith's Motion to Dismiss, and BPPR's Motion to Dismiss Crossclaims.

         III. PLAINTIFF'S MOTION TO INTERPLEAD BOND

         In Plaintiff's Motion to Interplead Bond, it requests an order: (1) directing it to interplead a nominal bond concerning the disputed assets; (2) relieving it of any further liability regarding the disputed assets and discharging it from this action; (3) enjoining Defendants from instituting or prosecuting any proceeding in state, including Puerto Rico, or federal court affecting Mrs. Babcock's Account; and (4) awarding it reimbursement for its attorneys' fees and costs incurred in this action. The Court will address each of Plaintiff's requests in turn.

         A. Plaintiff's Request for an Order Directing it to Interplead a Nominal Bond

         1) Contentions of the Parties

         Plaintiff contends it should be permitted to interplead a bond under 28 U.S.C. § 1335 because it faces multiple claims to the assets in Mrs. Babcock's Account and takes no legal position as to which Defendant is entitled to the assets. Plaintiff submits permitting it to deposit a bond in a nominal amount is appropriate under the circumstances. Plaintiff posits that permitting it to deposit a nominal bond conditioned upon its compliance with any final order of the Court regarding the rightful owner of the assets avoids the risk of irreparable harm to Mrs. Babcock, satisfies the statutory interpleader requirements, and mitigates costs. Plaintiff further explains § 1335 contemplates the Court may exercise discretion regarding the amount of a bond to be posted in an interpleader action.

         BPPR argues the Court should require Plaintiff to deposit the entire amount at issue or an equivalent bond. In support of this position, BPPR avers the Court lacks jurisdiction over this action if the money or bond deposited is unable to cover the amount in controversy. BPPR maintains a nominal bond is insufficient to confer jurisdiction or to protect its interests.

         Both Mrs. Babcock and Mr. Smith have failed to oppose the portion of Plaintiff's Motion to Interplead Bond requesting the Court direct Plaintiff to interplead a nominal bond.

         2) ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.