Vertiv Group Corporation v. Rivera

Background

Vertiv Group Corporation filed an interpleader action concerning a disputed 401(k) account consisting of securities. Interpleader is a procedure that allows a stakeholder holding disputed property to ask the court to resolve competing claims and protect the stakeholder from multiple liability. Vertiv moved for an order approving the interpleader, distributing the account, releasing Vertiv from liability, and dismissing Vertiv from the case.

The motion was unopposed. Kim Mourino was the only defendant to appear and filed a response without a lawyer. She stated that Carlos H. Rivera and Lydia Lafuente had communicated that they were willing to enter an agreement consistent with the final designation, while Beth Lafuente remained nonresponsive. At a July 31, 2024 hearing, the court said it was prepared to approve the interpleader, release Vertiv from liability, and dismiss Vertiv from the case, subject to further steps concerning distribution and any default judgment.

Court’s action

Vertiv submitted a proposed order. The proposed order would release Vertiv from liability and dismiss it from the case, but would also allow Vertiv to retain the disputed securities because Vertiv represented that it could not simply deposit the account into the court’s registry.

The court scheduled a September 11, 2024 telephone hearing to determine distribution of the funds. It ordered defendants to submit by September 4 a proposal for distributing the funds among defendants who had appeared. The court stated that it would not order distribution to a person who had not appeared unless an appearing defendant showed a basis for that distribution. The court also planned to set a deadline for filing a default judgment against defendants who had not appeared. If the appearing defendants reached an agreement and presented it to the court without objection, the court said it could cancel the hearing, decide distribution on the written submissions, and set the default-judgment deadline on the papers.

The court held Vertiv’s proposed order in abeyance, meaning it postponed a decision on that proposed order. Although the court stated that Vertiv’s motion otherwise satisfied the requirements for releasing Vertiv from liability, it identified a possible problem with the proposed method of holding the funds. The interpleader statute allows jurisdiction when the stakeholder deposits the money or property into the court’s registry or posts a bond in an amount and with security the court considers proper. The court questioned whether Vertiv’s proposed retention of the securities without a bond was consistent with that requirement.

Separately, the court directed the clerk to enter a certificate of default against Beth Lafuente. The opinion did not decide the final distribution of the account or enter the proposed order approving the interpleader.