On July 2, an Indiana bank filed an interpleader action in the U.S. District Court for the Central District of California seeking judicial guidance on whether it must transfer approximately $144 million in pledged collateral to the CFPB in connection with an enforcement judgment against a nonbank consumer lender. As previously covered by InfoBytes, the U.S. Supreme Court denied the lender’s certiorari petition on March 2, in a case in which the 9th Circuit upheld the CFPB’s restitution award. The bank served as custodian of a pledged account under a control agreement entered into by the parties to stay execution of the amended judgment — which awarded over $157 million — while the defendants pursued appellate review.

According to the complaint, the CFPB instructed the bank on June 11 to transfer all collateral, citing a “Final Resolution” after the Supreme Court’s denial of certiorari and warning that noncompliance would violate the control agreement and expose the bank to liability. The bank further alleges that on the same day, counsel for the judgment debtors sent conflicting instructions, demanding the bank maintain the status quo and arguing that the “Final Resolution” had not occurred due to a pending motion under Federal Rule of Civil Procedure 60(b) to vacate the amended judgment (covered by InfoBytes here). The judgment debtors later warned the bank it would face breach-of-contract claims, damages, and attorneys’ fees if it transferred the collateral.

In a follow-up letter on June 12, the complaint notes, the CFPB reiterated its demand and asserted that the anticipated filing of a Rule 60(b) motion “does not affect the judgment’s finality or suspend its operation.” The bank states in its complaint that it is a neutral stakeholder with no beneficial interest in the account and faces a genuine risk of multiple liability regardless of which party’s instructions it follows. The bank asks the court to require the parties to litigate their competing claims among themselves, to declare the bank’s rights under the control agreement, and to discharge it from liability.