The opinion of the court was delivered by: ROBERT L. CARTER
These two cases, 86 Civ. 395 (RLC) and 87 Civ. 6105 (RLC) have been consolidated. 86 Civ. 395 is an interpleader action in which plaintiff Alan Pressman ("Pressman")--as holder of funds belonging to Guido Steinvorth ("Steinvorth"), the decedent--sought and deposited said funds (the "Interpleader Funds") with the court in accordance with the court's order set forth in its Amended Opinion of July 31, 1989 ("Amended Opinion"). Pressman also seeks to recover his attorney's fees, costs and expenses for bringing the interpleader and defending other related actions. In the partial summary judgment motion presently before the court, defendant Olimpia Pena Tejera ("Pena"), as heir to the Steinvorth Estate, seeks an order pursuant to Rule 56, F.R.Civ.P., awarding her the Interpleader Funds. She also seeks summary judgment dismissing Pressman's claims for fees and costs.
87 Civ. 6105 is an action by counterclaimant Pena in which she moves for a full accounting by defendant Pressman of all Steinvorth assets in his possession. Pressman, however, has cross-moved, pursuant to Rule 12(b), F.R.Civ.P., for dismissal of Pena's accounting counterclaims on the basis that Pena has failed to join indispensable parties.
Lastly, Pena seeks discharge of a bond for costs which the court ordered Pena to post as security for expenses incurred in this litigation.
Guido Steinvorth was a Venezuelan citizen with business dealings in the United States, Latin America and Europe. Beginning in December, 1981, Steinvorth retained Pressman, a New York attorney, to handle his legal and financial affairs in the United States.
Steinvorth did business through a series of corporations and other entities. (Pena Aff. P 6.) Steinvorth apparently either owned these entities alone or with others, or managed them through powers of attorney. (Id.) These entities included the Vulcan Financial Corp. ("Vulcan"), Western Hemisphere Trade and Service Corp. ("Western Hemisphere"), Facundo, S.A. ("Facundo"), Devcon, BBH, R.W. Company, Occidental Trade and Occidental Properties (Id.) Pressman did legal work and managed funds for many of these entities. (Pena Aff., Ex. F.) Steinvorth also entrusted Pressman with various funds which were held in three accounts and a certificate of deposit. As of March, the value of these funds, the Interpleader Funds, totalled approximately $ 139,000. (Endorsement dated August 9, 1988 ("Endorsement") at 1.)
Steinvorth died in March, 1984 leaving a will in Venezuela. The will named Pena the universal heir of the Steinvorth Estate, (Pena Aff. P 9), but was contested by one of Steinvorth's sisters, Inga Goetz, and later by her children following her death. At that time, Pressman still held the Interpleader Funds and other assets which Steinvorth had entrusted to him. (Hr'g. Tr. at 103-04, Pena Aff. Ex. D.)
In the months subsequent to Steinvorth's death, Pena and her representatives requested, with limited success, Pressman to account for the Steinvorth assets in his possession. (Pena Aff. PP 11-15.) At the same time, other claimants to assets Steinvorth had entrusted to Pressman sued to recover those assets. These cases, the "Earlier Actions," are as follows:
2. Vulcan Financial S.A. v. Pressman, 84 Civ. 4264 (S.D.N.Y.) (Leval, J.) ("Vulcan")--Vulcan sued Pressman seeking recovery of monies owned by Vulcan under Pressman's control. Pressman initially refused to turn over the money because other parties had contacted him claiming ownership of Vulcan and their entitlement to the funds. However, following a court order, Pressman deposited the funds at issue into the court and the suit was dismissed. (Pressman Am. Compl. P 20.) Shortly thereafter, the money was paid to Vulcan. (Minkoff Aff. P 6(b) and Ex. 3.)
3. Facundo, S.A. v. Pressman, Index No. 5844/85 (N.Y. Co. Supreme Ct.) ("Facundo")--The directors of Facundo, a company owned by Steinvorth with Pena, sued Pressman to recover certain bonds (the "SACCO Bonds") which the company claimed it owned. The bonds had been placed in Pressman's care upon the instructions of Steinvorth. Pressman refused to turn over the bonds, believing they belonged to Steinvorth. Pressman still has the bonds and the case is pending. (Pressman Am. Compl. P 21.)
About two years after Steinvorth's death, Pressman initiated the interpleader action. In addition to seeking to pay the Interpleader Funds into court, he also sought to recover his fees for commencing the interpleader and defending the Earlier Actions. Subsequently, Pena counterclaimed seeking an accounting from Pressman. However because she was concerned that she could not bring a counterclaim in this type of interpleader action, she also commenced a separate action for the same relief. (Pena Mem. at 9.)
Thereafter, Pressman moved for a bond for costs, claiming that Pena's counterclaims were premature because the will contest had not yet been decided. In its Endorsement, the court granted the motion and ordered Pena to post a bond in the amount of $ 75,000. The bond has remained in place ever since that time.
On November 25, 1988, a Venezuelan lower court ruled in Pena's favor in the will contest. (Pena Aff. P 19.) A mid-level appellate court affirmed this decision on June 29, 1989. (Id.) The will contestants than appealed to the Venezuela Supreme Court.
In its Amended Opinion, the court directed Pressman to deposit the Interpleader Funds into the registry of the court. However, it did not discharge him due to inadequacy of Pressman's documentation of the Steinvorth assets under his control. The court then stayed all further proceedings in this matter pending final determination by the Venezuelan courts as to the rightful heir of the Steinvorth Estate.
In November, 1991, the Venezuela Supreme Court rejected all claims by those contesting Steinvorth's will. (Pena Aff., Exs. A and B.) This ruling confirmed Pena's status as universal heir of the Steinvorth Estate. (Pena Aff., Ex. C.)
Since the Venezuela Supreme Court's rulings, the parties have conducted informal discovery and tried to negotiate a settlement. During this process, Pressman revealed, for the first time, a corporate account in the amount of $ 250,000 belonging to Western Hemisphere. Its proceeds had been paid to a court-appointed attorney. (Minkoff Aff. P 17.) Pressman also revealed that an accountant in New Jersey had ten boxes of records relating to entities in which Steinvorth possibly had an interest, which Pena was then allowed to inspect. (Id. P 18.) Pressman then disclosed that he had two more file drawers of documents in his office. However, Pressman refused to allow Pena to inspect these documents, claiming, among other things, that Pena had not established that Steinvorth had an ownership interest in the subject matter of the documents. (Larsen Aff. P 15.) Nevertheless, he offered to disclose these records to Pena in return for a general release. (Minkoff Aff. P 19.) Pena refused this offer and this motion followed.
A motion for summary judgment under Rule 56, F.R.Civ.P., may be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The party moving for summary judgment must initially demonstrate the absence of a genuine issue of material fact, which can be done merely by pointing out that there is an absence of evidence to support the non-moving party's claims. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). To defeat summary judgment, the non-moving party must go beyond the pleadings and designate "specific facts showing that there is a genuine issue for trial." Id. at 324.
Defendant/counterclaimant Pena argues that partial summary judgment is appropriate here because as the sole claimant and universal heir to the Steinvorth Estate, she is entitled to the Interpleader Funds which Pressman deposited with the court nearly five years ago. Although Pressman concedes that Pena is the "legal representative and heir" of the Estate, he argues that the monies cannot be properly transferred to her because she lacks the capacity to maintain this action due to her failure to obtain ancillary letters of administration from the Surrogate's Court, which is required of a representative of an estate whose decedent was domiciled outside the United States. See Rule 17(b), F.R.Civ.P. (capacity of an individual to sue or be sued in a representative capacity shall be determined by the law of the state in which the district court sits).
Rule 9(a), F.R.Civ.P., which governs the capacity of a party to sue or be sued, provides in pertinent part:
When a party desires to raise an issue as to the legal existence of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the party desiring to raise the issue shall do so by specific negative averment, which shall include supporting particulars as are peculiarly within the pleader's knowledge.
Under the Rule, if the defense is not raised in a timely manner, i.e. at the outset of a lawsuit, it is waived. See 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 2d § 1295 (1990); see also Wagner Furniture Interiors, Inc. v. Kemner's Georgetown Manor, Inc., 929 F.2d 343 (7th Cir. 1991) (defendant waived right to use capacity defense in motion to dismiss first amended complaint because of failure to timely raise capacity issue in direct negative averment); Windbourne v. Eastern Air Lines, Inc., 479 F. Supp. 1130, 1155 (E.D.N.Y. 1979), rev'd on other grounds, 632 F.2d 219 (2d Cir. 1980) (lack of capacity defense waived if not raised in answer).
Pena argues that Pressman waived the capacity defense by waiting more than seven years before raising it. Pressman, on the other hand, contends that he did raise this issue in his answer to Pena's amended complaint and in communications between counsel. (Larsen Aff. P 2.) Notwithstanding any reference to ancillary proceedings which may have been made during the course of these proceedings, the only time that Pressman formally raised anything resembling a lack of capacity defense was in his answer to Pena's amended complaint, where he stated that plaintiff did not have the "requisite legal standing to bring the instant suit." (Pressman Am. Answer at 9.) Even accepting Pressman's assertion that standing and capacity are in effect the same due to their often blurred distinctions among litigants and the courts, (Larsen Aff. P 2),
Rule 9(a), F.R.Civ.P. requires not only that the pleader make a specific negative averment of the plaintiff's capacity to sue, but also that the averment include "such supporting particulars as are peculiarly within the pleader's knowledge." Marston v. American Employers Insurance, Co., 439 F.2d 1035, 1041 (1st Cir. 1971). In the instant case, Pressman merely asserted that Pena did not have the requisite standing to bring this suit; he gave no particulars ...