“Rule 67 provides that funds may be placed on deposit with the court until it determines how the funds should be divided among the parties to a suit. The rule may be invoked only where there is a dispute concerning the funds.”
How later courts described this case
- “Rule 67 provides that funds may be placed on deposit with the court until it determines how the funds should be divided among the parties to a suit. The rule may be invoked only where there is a dispute concerning the funds.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT 10/4/2024 2:06 pm
EASTERN DISTRICT OF NEW YORK
U.S. DISTRICT COURT
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EASTERN DISTRICT OF NEW YORK
MULTI-STATE PARTNERSHIP FOR
LONG ISLAND OFFICE
PREVENTION, LLC
Plaintiff ,
MEMORANDUM
AND ORDER
-against- 24-CV-00013 (JMW)
SAMUEL KENNEDY et al.,
Defendants.
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A P P E A R A N C E S:
Howard A Newman, Esq.
Newman Law Offices
1717 K Street NW Suite 900
Washington, DC 20006
Attorney for Plaintiff
Kathleen Rose Fitzpatrick, Esq.
KRF Legal
249 Smith St, #118
Brooklyn, NY 11231
-and-
Peter Brown, Esq.
Peter Brown & Associates PLLC
260 Madison Avenue, Ste 16th Floor
New York, NY 10016
Attorneys for Defendants
WICKS, Magistrate Judge:
Plaintiff Multi-State Partnership for Prevention, LLC (“Plaintiff”) commenced this
declaratory judgment action on March 13, 2023 against Defendants Samuel Kennedy, Kennedy
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Technology MK, and Kennedy Technology LLC (collectively, “Defendants”) for copyright non-
infringement, trademark infringement, breach of contract, defamation and tortious interference in
the United States District Court for the District of Maryland, arising out of Plaintiff's
development of computer software program, PrepMod, developed in the early stages of the
COVID-19 pandemic. (ECF Nos. 1, 22.)
On March 1, 2024, Defendants Samuel Kennedy and Kennedy Technology MK filed an
Answer to the FAC, asserting counterclaims against Plaintiff for copyright infringement and
breach of contract, alleging that: (i) Defendants hold the exclusive right pursuant to the
Copyright Act to distribute, license and create derivative works of the PrepMod software, and
that Plaintiff knowingly and willfully infringed Mr. Kennedy’s exclusive right in the PrepMod
software by licensing it – or a derivative of it – to five institutions without authorization from
Mr. Kennedy; and (ii) Plaintiff breached its agreement with Defendants to pay Mr. Kennedy a
weekly rate $7,500 to create the PrepMod software. (ECF No. 48.) Plaintiff now moves the Court
pursuant to Federal Rule of Civil Procedure (“FRCP”) 67(a) to deposit funds associated with
Defendants’ breach of contract counterclaim (ECF No. 61). For the reasons stated herein,
Plaintiff’s Motion (ECF No. 61) is GRANTED.
DISCUSSION
Plaintiff seeks to deposit funds in its possession associated with Defendants’ breach of
contract counterclaim in the amount of $60,000.00 – which is the amount Plaintiff contends
Defendants can reasonably alleged they are owed under their claim for breach of contract – for
“safekeeping, pending the resolution of this case.” (ECF Nos. 61, 61-4.) While Defendants
contend that they are owed “damages of $105,000 for MSPP’s breach of its contract with Mr.
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Kennedy[,]” Plaintiff maintains that amount is at odds with the documents in this case. (Id. at 2.)
Specifically, Plaintiff identifies only one invoice associated with the alleged contract sent by
Defendants to Plaintiff – the second invoice in the amount of $60.000.00 – remains unpaid by
Plaintiff, and, therefore, the total amount that Defendants can reasonably allege they are owed
under its claim for breach of contract is actually $60,000.00 (hereafter, the “Funds”). (See ECF
No. 61-3.)1 “Consonant with its then-contemporaneous good-faith attempt to resolve the
contractual dispute and place the Funds in trust, Plaintiff wishes to submit the Funds into the
Court’s registry subject to a final determination by this Court as to which party breached the
contract.” (ECF No. 61 at 2.)
Defendants argue in opposition that invoking Rule 67 here is an “extreme and
unnecessary measure.” (ECF No. 62.) Defendants contend they have not asked Plaintiff to place
$105,000.00 – the total damages Kennedy expects to recover for Plaintiff’s breach of contract –
into escrow and providing the requested relief would be a waste of judicial resources. (Id. at 1.)
Defendants further maintain that “[i]f Plaintiff insists on voluntarily depositing the amount
Kennedy claims he is owed pursuant to the parties’ contract, Defendants respectfully request
Plaintiff deposit $105,000, in accordance with the pleadings.” (Id.)
Pursuant to Rule 67(a):
If any part of the relief sought is a money judgment or the disposition of a sum of money
or some other deliverable thing, a party—on notice to every other party and by leave of
court—may deposit with the court all or part of the money or thing, whether or not that
party claims any of it. The depositing party must deliver to the clerk a copy of the order
permitting deposit.
1 “Defendants admit that [Plaintiff] had requested at least one invoice, which was promptly paid in full
around May 1, 2020. Three months after submission of the first invoice, on August 3, 2020, Defendants
eventually sent a second invoice in the amount of $60,000, and on August 17, 2020, sent a third and final
invoice for $15,000, which they admit the latter was promptly paid within two days.” (ECF No. 61 at 2.)
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Fed. R. Civ. P. 67(a).
“‘The Rule 67 procedure provides a place of safekeeping for disputed funds pending the
resolution of a legal dispute…’” Radha Geismann, M.D., P.C. v. ZocDoc, Inc., 909 F.3d 534,
541 (2d Cir. 2018) (quoting LTV Corp. v. Gulf States Steel, Inc. of Ala., 969 F.2d 1050, 1063
(D.C. Cir. 1992)). Rule 67 is appropriately invoked where, as here, the sum of money is in itself
in dispute. See ECF No. 61 (the actual amount owed by Plaintiffs for breach of contract is
disputed between the parties, as Plaintiff contends the amount is $60,00.00 and Defendants argue
the amount of $105,000.00); see also Prudential Ins. Co. of Am. v. BMC Indus., Inc., 630 F.
Supp. 1298, 1300 (S.D.N.Y. 1986); Manufacturers Hanover Overseas Cap. Corp. v. Southwire
Co., 589 F. Supp. 214, 221 (S.D.N.Y. 1984) (“Rule 67 provides that funds may be placed on
deposit with the court until it determines how the funds should be divided among the parties to a
suit. The rule may be invoked only where there is a dispute concerning the funds.”); United
States v. New York State Supreme Ct., Erie Cnty., No. 07-CV-27S, 2008 WL 305011, at *3
(W.D.N.Y. Feb. 1, 2008) (“Erie Cnty.”) (internal citations omitted) (“The purpose of Rule 67 is
to relieve the depositor of responsibility for a fund in dispute”); Lennon v. Allegiance Acct.
Servs., LLC, No. 19-CV-1541-LJV-LGF, 2023 WL 8291718, at *3 (W.D.N.Y. Dec. 1, 2023)
(internal citations omitted) (collecting cases) (“[C]ourts have recognized that the core purpose of
Rule 67 is to relieve a party who holds a contested fund from responsibility for disbursement of
that fund among those claiming some entitlement thereto.”).
And, in accordance with Rule 67, Plaintiff “may deposit with the court all or part of” the
money judgment sought by Defendants for their breach of contract counterclaim. Fed. R. Civ. P.
67(a). To this end, Plaintiff may deposit its requested amount of $60,000.00, which is part of the
$105,000.00 Defendants assert they are owed for Plaintiff’s alleged breach. See e.g., Resolute
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Partners, LLC v. BaseCom Const., Inc., No. 3:12 CV 1291 JBA, 2012 WL 6004217, at *1 (D.
Conn. Nov. 30, 2012), modified in part, No. 3:12 CV 1291 JBA, 2013 WL 6118212 (D. Conn.
Nov. 20, 2013) (granting Plaintiff’s motion to deposit funds in the amount of $55,384.72,
“representing the disputed July 2012 payment” to Defendant); B.F. Goodrich Co. v. Murtha, No.
CIV. 387CV00052PCD, 2004 WL 3249236, at *3 (D. Conn. Aug. 24, 2004) (allowing a party to
deposit funds where they did not “submit[] the exact amount of funds purportedly owed” by
them). Accordingly, the Court finds it appropriate that Plaintiff deposit funds into the Court’s
registry the amount of $60.000.00.
In so ruling, the Court makes no determination or even suggestion that $60,000.00 is in
fact the amount in dispute between the parties, or that $60,000.00 is the amount owed by
Plaintiff to Defendants under the alleged agreement. See e.g., Erie Cnty., No. 07-CV-27S, 2008
WL 305011, at *3 (granting defendant’s motion to deposit funds in the amount of $111,442.91,
and noting that “[i]n so ruling, the Court makes no determination as to [defendant’s] claim of
priority over all or part of the funds of which he retains possession.”); Radha Geismann, M.D.,
P.C., 909 F.3d at 541 (internal citations omitted) (“Indeed, on its face, Rule 67 is just a
procedural mechanism that allows a party to use the court as an escrow agent. It does not itself
determine who is entitled to the money.”); LTV Corp., 969 F.2d at 1063 (internal citations
omitted) (Rule 67 “shall not abridge, enlarge or modify any substantive right. The Rule 67
procedure provides a place of safekeeping for disputed funds pending the resolution of a legal
dispute, but it cannot be used as a means of altering the contractual relationships and legal duties
of the parties.”).
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CONCLUSION
For the reasons stated herein, Plaintiff’s Motion to Deposit Funds (ECF No. 61) is
GRANTED. Plaintiff may deposit, pursuant to any instructions by the Clerk of this Court, into
its registry the amount of sixty-thousand dollars and no cents ($60,000 USD), which should,
pursuant to law, earn interest on behalf of Plaintiff, to be held pending the resolution of this
matter and distributed by further order of this Court.
Dated: Central Islip, New York
October 4, 2024
S O O R D E R E D:
/S/James M. Wicks
JAMES M. WICKS
United States Magistrate Judge
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