UBS Financial Services Inc. v. Mantovi et al
ORDER re 14 , 17 : The Court has reviewed Defendant Eileen Mantovi's response to the Order to Show Cause; Plaintiff failed to respond. The Court finds that this case is subject to the matrimonial exception and declines to exercise jurisdiction. See attached Order. Accordingly, the action is dismissed and the Clerk of Court is directed to close the case. Ordered by Judge Denis R. Hurley on 4/11/2018. (Bochner, Francesca)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
UBS Financial Services Inc.,
MEMORANDUM AND ORDER
- against –
LAWRENCE MANTOVI, and EILEEN
HURLEY, Senior District Judge:
Interpleader Plaintiff UBS Financial Services Inc. (“Plaintiff”) commenced this action on
October 10, 2017, seeking to deposit the liquidated value of a joint retirement account (the “UBS
Account”) with the Court in order to protect itself against conflicting claims made by former
spouses and Interpleader Defendants Lawrence and Eileen Mantovi (“Lawrence Mantovi” and
“Eileen Mantovi” respectively”). For the reasons discussed below, the Court declines to exercise
jurisdiction pursuant to the matrimonial exception and the case is dismissed in its entirety.
On January 24, 2018, Eileen Mantovi filed a proposed Order to Show Cause enjoining
Plaintiff from distributing, converting, rolling over, or transferring the UBS Account during the
pendency of this action. (Unsigned Order to Show Cause [DE 13] at 1.) The Court declined to
sign the Order to Show cause on the basis that the application appeared to fall within the
matrimonial exception to diversity jurisdiction. (Electronic Order [DE 15] dated Jan. 24, 2018.)
In accordance with its obligation to ensure that subject matter jurisdiction exists, the
Court entered its own Order directing the Parties to show cause why the matter should not be
dismissed for lack of subject matter jurisdiction pursuant to the matrimonial exception. (Order to
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Show Cause [DE 14] (Jan. 24, 2018).) The Parties were directed file initial responses on or
before February 7, 2018, and replies, if any, on or before February 14, 2018. (Id.)
On February 8, 2018, Eileen Mantovi’s counsel moved for an extension of time to file a
late response to the Order to Show Cause, on the basis that he was unable to access the ECF
system because of issues with his username and password. The Court hereby grants that request,
and accepts the late response. Neither Plaintiff nor Lawrence Mantovi filed either an initial
response or a reply to the Court’s Order to Show Cause. Despite the fact that Plaintiff failed to
respond to the Court’s January 24, 2018 Order to Show Cause, the Court will still consider
whether to entertain this interpleader action.
Principles Regarding Subject Matter Jurisdiction
Pursuant to 28 U.S.C. § 1332, Federal Courts have subject matter jurisdiction over civil
actions in which the matter in controversy exceeds $75,000 and is between citizens of different
states. The party asserting diversity jurisdiction has the burden to prove the same. Pennsylvania
Pub. Sch. Employees’ Ret. Sys., 772 F.3d at 118. “[D]iversity of citizenship should be distinctly
and positively averred in the pleadings, or should appear with equal distinctness in other parts of
the record[.]” Leveraged Leasing Admin. Corp. v. PacificCorp Capital, Inc., 87 F.3d 44, 47 (2d
Cir. 1996) (internal quotation marks omitted).
The Supreme Court has established that abstention from the exercise of federal
jurisdiction is “an extraordinary and narrow exception to the duty of a District Court to
adjudicate a controversy properly before it.” Colorado River Water Conservation Dist. V.
United States, 424 U.S. 800, 813 (1976) (internal quotations omitted). However, the Second
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Circuit has carved out an exception to federal jurisdiction for “issues ‘on the verge’ of being
matrimonial in nature . . . so long as there is no obstacle to their full and fair determination in
state courts” and “the interests of justice would be served by allowing the determination to be
made in [state court] in view of [the state court’s] great familiarity with matrimonial disputes and
the absence of any such expertise by the federal courts.” Am. Airlines, Inc. v. Block, 905 F.2d
12, 14 (2d Cir. 1990) (citing Bossom v. Bossom, 551 F.2d 474, 475 (2d Cir. 1976)); see also
Mitchell-Angel v. Cronin, 101 F.3d 108, 108 (2d Cir. 1996); Hamilton v. Hamilton-Grinols, 363
Fed. Appx. 767, 769 (2d Cir. 2010). This exception is known as the domestic relations exception
or the matrimonial exception.
In Am. Airlines—the foundational case on the matrimonial exception—the Second
Circuit found that a federal district court impermissibly intruded upon state law matrimonial
jurisdiction in collecting and ordering the distribution of funds when the corresponding
maintenance obligations and arrears had not been reduced to a final judgment in state court. 905
F.2d at 14. More recently, in a Southern District case that cited Am. Airlines, the court explained
that ruling on the proper distribution of assets was “an action clearly matrimonial in nature.”
Ramney v. Bauza, 2011 WL 4056896, at *3 (S.D.N.Y. Aug. 31, 2011). In another recent
Southern District case, the court concluded that confirming an arbitration award, and thereby
“ruling on the proper distribution of assets” was matrimonial in nature and subject to the
domestic relations exception. Genger v. Genger, 252 F. Supp. 3d 362, 368 (S.D.N.Y. 1017).
Thus, cases that require the court to determine how to divide marital property fall squarely within
the matrimonial exception.
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Defendant Eileen Mantovi’s Arguments
In the letter filed on behalf of Defendant Eileen Mantovi, counsel avers that the Court has
jurisdiction over the dispute, and should exercise such jurisdiction in this matter. (Response to
Order to Show Cause [DE 17-1] at 1 (hereinafter “Response”).) In support of this assertion,
counsel argues that “[t]he Court is not being asked to rule on the marital status of the parties,
issues involving child support or to determine the terms of Mr. and Ms. Mantovi’s divorce. Ms.
Mantovi simply seeks that this Court interpret the prior agreements and order between her and
Mr. Mantovi concerning the [UBS Account].” (Id.) Counsel cites to an older Fifth Circuit case
in which the court found that it had jurisdiction over a contractual dispute requiring the
defendant to pay retirement benefits to the plaintiff. See Erspan v. Badgett, 647 F.2d 550 (5th
Cir. 1981). Counsel also cites to a similar case decided in the Eleventh Circuit from 1987. See
Kirby v. Mellenger, 830 F.2d 176 (11th Cir. 1987) (finding that the “core” of the matter was not
a domestic relations issue). These cases are not binding on this Court, and given the contrary
and controlling precedent in the Second Circuit, they are also unpersuasive.
The Matter is Dismissed as Subject to the Matrimonial Exception
Based on the information provided to the Court in the Complaint, the Unsigned Order to
Show Cause, the telephone conference, and the Response, the Court finds that the central issue in
this case is matrimonial in nature. Specifically, Plaintiff seeks to distribute the UBS Account
with the Court and remove itself from any further liability. Concurrently, Defendant Eileen
Mantovi has asked the Court to enjoin Plaintiff from distributing the UBS Account should
Lawrence Mantovi pass away, and to distribute her portion of the UBS Account to her. The
wrinkle here is that there is no information in the record whatsoever explaining how the UBS
Account is to be divided between Eileen and Lawrence Mantovi. In fact, it seems that the
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matrimonial court has not yet issued a decision on that question. Thus, the nature of this action
would require the Court to determine how to divide and distribute the UBS Account. As
discussed above, it is well established in the Second Circuit that “ruling on the proper
distribution of assets” is matrimonial in nature and subject to the matrimonial exception. See,
e.g., Genger, 252 F. Supp. 3d at 368. Therefore, the Court finds that this case is subject to the
matrimonial exception and declines to exercise jurisdiction.
Second Circuit precedent requires the Court to consider whether there is any obstacle to
the full and fair determination of this matter in state court. Am. Airlines, Inc. v. Block, 905 F.2d
at 14. The Court finds that there is not.1
Based on the foregoing, the Court declines to exercise jurisdiction. Accordingly, the
action is dismissed and the Clerk of Court is directed to close the case.
Dated: Central Islip, New York
April 11, 2018
Denis R. Hurley
United States District Judge
As an additional note, this is an interpleader action and “it is well recognized that interpleader is
an equitable remedy, and a federal court may abstain from deciding an interpleader action if another
action could adequately redress the threat that the stakeholder might be held doubly liable.” Am. Airlines,
905 F.2d at 14 (citing Home Indemnity Co. v. Moore, 499 F.2d 1202, 1205–06 (8th Cir. 1974)).
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