Appeal from an Order for Distribution of Interpleader Funds entered on August 14, 2007, in the United States District Court for the Eastern District of New York (Wexler, J.), in an interpleader action commenced by plaintiff-stakeholder, the United States of America on behalf of the United States Postal Service, against numerous defendants-claimants with competing claims to funds in the sum of $2,405,150.32 deposited by the plaintiff into the registry of the Clerk of the District Court, the District Court having denied a motion for summary judgment made by defendant-claimant-appellant Goldberg & Connolly and ordering that the appellant's claim to the fund was subordinate to defendant-claimant-appellee New York Community Bancorp's claim.
The opinion of the court was delivered by: Miner, Circuit Judge
Argued: November 17, 2008
Before: MINER, SOTOMAYOR, and RAGGI, Circuit Judges.
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.*fn1 (f/n/a Roslyn Savings Bank) ("Roslyn"), 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.
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.
I. Establishment of the Interpleader Fund and Claims
Thereto Abcon was retained by the USPS in connection with a Queens, New York construction project for work on the dock and elevators at the USPS Queens Processing and Distribution Center in Flushing, New York.
On or about December 31, 1997, the USPS terminated the contract with Abcon, alleging default in the performance of the contract. After the contract was terminated by the USPS, Abcon commenced an action in the United States Court of Federal Claims alleging wrongful termination. United States v. Abcon Assocs., No. CV 05-3178, 2006 WL 3751261, at *1 (E.D.N.Y. Dec. 18, 2006). On July 17, 2001, a judgment was entered in the Court of Federal Claims in favor of Abcon, pursuant to which Abcon was to be paid an amount "to be determined as provided by" the terms of the contract between Abcon and the USPS (the "USPS Judgment"). Abcon Assocs., Inc. v. United States, 49 Fed. Cl. 678, 690--91 (2001). On December 4, 2002, the United States Court of Appeals for the Federal Circuit affirmed the judgment of the Court of Federal Claims without opinion. Abcon Assocs., Inc. v. United States, 52 F. App'x 510 (Fed. Cir. 2002).
On June 28, 2005, following an audit by the Defense Contract Audit Agency, the USPS issued a final decision determining that Abcon was to be awarded the sum of $2,405,150.32 in satisfaction of the terms of the USPS Judgment. Before that decision was issued, however, USPS received notice of various judgments and other claims against Abcon. Id. As a result of these claims, USPS did not pay the agreed-upon sum but instead obtained leave from the District Court to deposit the funds ...