U.S. Court of Appeals for the Second Circuit, 2005

Six L'S Packing Co. v. All World Farms, Inc.

Six L'S Packing Co. v. All World Farms, Inc.
U.S. Court of Appeals for the Second Circuit · Decided May 5, 2005
128 F. App'x 207

Six L'S Packing Co. v. All World Farms, Inc.

Opinion of the Court

SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the judgment of the district court be AFFIRMED.

Jack Neiman appeals an October 15, 2004 judgment of the United States District Court for the Southern District of New York (Sprizzo, /.), declaring that the appellees have priority over certain funds. We assume that the parties are familiar with the facts, the procedural history, and the scope of the issues presented on appeal.

The district court declined to equitably subrogate Neiman’s interest in the proceeds of a sale of real property to that of a prior lienholder. Under New York law, “ ‘[wjhere property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lienholder.’ ” Bermuda Trust Co. v. Ameropan Oil Corp., 266 A.D.2d 251, 698 N.Y.S.2d 691, 692 (2d Dep’t 1999) (quoting King v. Pel-kofski 20 N.Y.2d 326, 333, 282 N.Y.S.2d 753, 229 N.E.2d 435 (1967)). Subrogation, however, “is unavailable if payments are made voluntarily.” Bermuda Trust, 698 N.Y.S.2d at 692; see also Nat’l Union Fire Ins. Co. v. Ranger Ins. Co., 190 A.D.2d 395, 599 N.Y.S.2d 347, 348 (4th Dep’t 1993) (“It is well settled that ‘[a] mere volunteer or intermeddler will not be substituted in the place of a person whose rights he seeks to acquire, simply because he has paid a debt, or discharged an obligation, for which that person was responsible.’ ”) (quoting Koehler v. Hughes, 148 N.Y. 507, 511, 42 N.E. 1051 (1896)). Similarly, the district court may consider whether the potential subrogee *209acted negligently. Roth v. Porush, 281 A.D.2d 612, 722 N.Y.S.2d 566, 568 (2d Dep’t 2001) (equitable subrogation inapplicable where “[t]he record indicates that there were facts which should have led the ... defendants and their title insurance company to conduct further inquiry”).

In declining Neiman’s equitable subro-gation request, the district court found that Neiman was an ineligible volunteer and had negligently failed to perfect his lien. Under New York law, “the decision to apply equitable subrogation is committed to the discretion of the trial court.” United States v. Baran, 996 F.2d 25, 29 (2d Cir. 1993). “Either an error of law or a clear error of fact may constitute an abuse of discretion.” Charette v. Town of Oyster Bay, 159 F.3d 749, 755 (2d Cir. 1998). Nei-man points to no error of law that substantially influenced the district court’s exercise of discretion. Moreover, the district court did not commit clear error in finding that Neiman was a volunteer and acted negligently.

For the reasons set forth above, the judgment of the district court is hereby AFFIRMED.

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