Opinion
CIVIL ACTION NO. H-03-1243
November 25, 2003
ORDER
Pending before the Court in the above referenced cause is the Defendant the United States of America's Motion for Relief or for New Trial or to Amend the Judgment Entered on August 29, 2003, Entitled "Order to Discharge Plaintiff with its Attorney Fee, to Disburse Funds in Registry of Court, and to Dismiss Case", and Response in Opposition to Motion to Discharge Plaintiff (Instrument No. 12).
Plaintiff, Normco Leasing, Inc. (hereinafter "Normco"), commenced this civil action in the nature of interpleader on April 14, 2003, (Instrument No. 1) so that this Court could determine the priority of adverse and conflicting liens held by the United States of America (hereinafter "IRS") and by Sterling Bank (hereinafter "Sterling"). The liens were attached to Normco's accounts receivable.
Normco initially deposited $26,862.91 into the Registry of the Court (Instrument No. 4), and then it supplemented this with funds amounting to $9,500.00 (Instrument No. 9). Furthermore, Normco is in possession of additional funds amounting to $14,250.00, of which the IRS is aware, and which have not been tendered to the Registry of the Court.
After Sterling advised Normco and the IRS that it no longer contested the lien of the IRS, Normco filed a Motion to Discharge Plaintiff and to Dismiss the Case (Instrument No. 10). In its Motion, Normco requested the Court to disburse funds to the IRS, to grant attorney's fees to Normco, and to dismiss this interpleader action. The Court granted that request in its order of dismissal (Instrument No. 11), from which the IRS now seeks relief (Instrument No. 12).
The IRS contests the legal basis of the request by Normco's counsel for attorney's fees and argues that "[t]he stakeholder of an interpleaded fund is not entitled to attorney's fees to the extent that they are payable out of a part of the fund impressed with a federal tax lien." Spinks v. Jones, 499 F.2d 339, 340 (5th Cir. 1974) (citing Commercial Standard Insurance Co. v. Campbell, 254 F.2d 432, 433 (5th Cir. 1958)). The Court agrees with the IRS's argument that as a matter of law attorney's fees should not have been awarded in this case.
Accordingly, the Court ORDERS that the IRS' Motion for Relief (Instrument No. 12) is GRANTED, and that the Court's Order of August 29, 2003, (Instrument No. 11) is VACATED. The Court further ORDERS that Normco's request for attorney's fees is DENIED.
It is further ORDERED that the Normco and its counsel shall pay over to the IRS all funds from accounts receivable being held by either and not paid into the Registry of the Court.
It is further ORDERED that the Clerk of Court shall disburse the total amount of the funds deposited into the Registry of the Court for the benefit of this civil action, together with interest accrued thereon, to the IRS, c/o of its attorney of record, Wanda M. Cohen.
Each party is ORDERED to bear its own costs and fees.