National Elks group gets disputed funds

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Where a dispute arose between the Elks Grand Lodge and a local lodge over $666,090 deposited with a bank, the funds were awarded to the national group after the local lodge failed to file an answer or respond to the action.

Background

This is an interpleader action filed by Skyline National Bank seeking to resolve competing claims to $666,090.69 that are deposited in accounts held by the bank. One of the defendants is the Benevolent and Protective Order of Elks of the United States of America Inc., or BPOE, a not-for-profit, national fraternal organization that is comprised of local lodges that operate under BPOE charters. The other defendant is Galax Elks Lodge #2212 Inc., a local lodge that operated under a BPOE charter in Galax, Virginia.

On Aug. 28, 2020, BPOE trustees, Vincent Brandtner and Montie Largin, filed a motion to intervene. On Oct. 21, 2020, the court granted the trustees’ motion to intervene.

On Nov. 6, 2020, intervenors and BPOE filed an unopposed motion for judgment on the pleadings. Intervenors argue that they are entitled to possession of the funds in dispute because: (1) Galax Lodge forfeited any right to claim the funds by failing to file an answer and (2) BPOE law governs the dispute and vests trustees with former Galax Lodge funds and property. Intervenors also argue that the court should award the bank reasonable attorney’s fees.

Jurisdiction

Pursuant to 28 U.S.C. § 1335, “district courts shall have original jurisdiction over any civil action of interpleader . . . filed by any person, firm, or corporation, association, or society having in his or its custody or possession money or property of the value of $500 or more . . . ,” if there are two or more claimants of diverse citizenship and the plaintiff has deposited the disputed money with the court.

Here, it is uncontested that Galax Lodge and BPOE are diverse claimants. In addition, the bank has deposited $666,090.69 with the court as the funds in dispute. Therefore, the court has proper jurisdiction over this interpleader action.

Default judgment

Over five months have elapsed since the bank filed this interpleader action and Galax Lodge has failed to file an answer. Moreover, Galax Lodge “has not communicated to [opposing] counsel any intention to contest the action or the award of [f]unds.” Given Galax Lodge’s failure to plead or defend this action, the court will enter a default judgment awarding the contested funds in the amount of $666,090.69 to intervenor trustees Brandtner and Largin.

Attorneys’ fees

“A federal court has the discretion to award attorney’s fees and costs to the stakeholder in an interpleader action when it is fair and equitable to do so.” Here, the recipient of the funds, the trustees, are requesting the award of attorneys’ fees on behalf of the bank. No parties are contesting the award of attorney’s fees.

The $6,500 amount in attorney’s fees that the trustees request to be paid to the bank is a relatively small portion of the $666,090 in dispute and would not significantly deplete these funds. Therefore, the court will award $6,500 in attorney’s fees to be paid to the bank from the funds deposited with the court, before such funds are awarded to the trustees.

Trustees’ and BPOE’s motion for judgment on the pleadings granted.

Skyline National Bank v. Galax Elks Lodge #2212 Inc., Case No. 7:20-cv-00470, Jan. 27, 2021. WDVA at Roanoke (Dillon). VLW 021-3-033. 8 pp.