15-149-cv
`FirstBank Puerto Rico v. Barclays Capital Inc.
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`UNITED STATES COURT OF APPEALS
`FOR THE SECOND CIRCUIT
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`SUMMARY ORDER
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`RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
`SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
`BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
`WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
`MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
`NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
`OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
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`At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
`Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
`29th day of March, two thousand sixteen.
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`PIERRE N. LEVAL,
`Present:
`ROSEMARY S. POOLER,
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`RICHARD C. WESLEY,
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`Circuit Judges.
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`_____________________________________________________
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`IN RE: LEHMAN BROTHERS HOLDINGS, INC.,
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`Debtor.
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`_____________________________________________________
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`FIRSTBANK PUERTO RICO,
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`Plaintiff-Appellant,
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`v.
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`15-149-br
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`BARCLAYS CAPITAL INC.,
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`Defendant-Appellee.
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`_____________________________________________________
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`Jeffrey A. Mitchell, Dickstein Shapiro LLP (Judith Cohen, on the
`Appearing for Appellant:
`brief), New York, NY.
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`Appearing for Appellee:
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`Boaz S. Morag, Cleary Gottlieb Steen & Hamilton LLP (Lindsee
`P. Granfield, on the brief), New York, NY.
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`Appeal from the United States District Court for the Southern District of New York (Buchwald,
`J.).
`ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
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`AND DECREED that the order of said District Court be and it hereby is AFFIRMED.
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`FirstBank Puerto Rico appeals from the December 29, 2014 decision of the United States
`District Court for the Southern District of New York (Buchwald, J.) which affirmed the May 10,
`2013 decision of the United States Bankruptcy Court for the Southern District of New York
`(Peck, B.J.). The decision denied FirstBank’s attempt to recover from defendant Barclays
`Capital, Inc. certain securities that FirstBank pledged to Lehman Brothers Special Financing Inc.
`(“LBSF”) as security for an interest rate swap agreement. FirstBank also appeals from the district
`court’s decision affirming the bankruptcy court’s imposition of sanctions for contempt on
`FirstBank. We assume the parties’ familiarity with the underlying facts, procedural history, and
`specification of issues for review.
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`We affirm substantially for the reasons set forth in the thorough opinions of the
`bankruptcy and district courts below. The bankruptcy court held, and the district court affirmed,
`that LBSF’s sale of the securities that FirstBank initially posted as collateral to Lehman Brothers
`Inc. (“LBI”) cut off FirstBank’s interest in the collateral against LBI (or any subsequent
`transferee) pursuant to the International Swaps and Derivatives Association Master Agreement
`and Credit Support Annex. The bankruptcy and district courts also held that the securities at
`issue were transferred to Barclays as part of its purchase of assets in the underlying bankruptcy
`proceedings. The appropriate venue to litigate whether such securities were transferred as part of
`the sale was bankruptcy court, not a district court proceeding.
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`We also affirm the orders requiring FirstBank to pay Barclays’s “reasonable counsel fees
`and costs incurred in defending against this litigation that has been pursued knowingly by
`FirstBank in violation of the Sale Order.” In re Lehman Bros. Holdings Inc., No. 08-13555,
`2013 WL 6283572 (Bankr. S.D.N.Y. Dec. 3, 2013), aff’d, 526 B.R. 481 (S.D.N.Y. 2014). As
`noted by the district court, the “Sale Order clearly prohibits suits with respect to ‘Purchased
`Assets’ as defined in the ‘Purchase Agreement,’ the Sale Order clearly incorporates the
`Clarification Letter into its definition of the ‘Purchase Agreement,’ and the Clarification Letter
`clearly defines ‘Purchased Assets’ to include the collateral.” In re Lehman Brothers, 526 B.R.
`481, 496 (S.D.N.Y. 2014), as corrected (Dec. 29, 2014). Moreover, the sanctions were imposed
`only after extensive discovery and after Barclays offered First Bank an opportunity to withdraw
`its lawsuit without sanctions.
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`We have considered the remainder of FirstBank’s arguments and find them to be without
`merit. Accordingly, the order of the district court hereby is AFFIRMED.
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`FOR THE COURT:
`Catherine O’Hagan Wolfe, Clerk
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