Eleventh Circuit Finds District Court Lacked Jurisdiction to Freeze Defendant’s Assets During Pendency of Action to Confirm Arbitration Award Against Him

In Noble Prestige Ltd. v. Galle, the Eleventh Circuit Court of Appeals considered whether the trial court properly granted a preliminary injunction barring the defendants from dispersing assets during the pendency of the plaintiff’s motion to confirm an arbitration award rendered in its favor and against the defendants.

In that case, plaintiff Noble Prestige Ltd. issued a $500,000 loan to defendant Paul Horn to pursue litigation against AT&T, a telecommunications company. Under the terms of the loan, Horn agreed to repay Noble $5 million or 5% of his recovery from the litigation, whichever was greater. Noble also obtained a “security interest lien” in that portion of any recovery from AT&T. Thereafter, a Colorado state court found that Horn was unable to manage his own affairs due to various neurological disorders and placed Horn’s estate into a conservatorship. The Colorado court named defendant Craig Thomas Galle, Horn’s long-time attorney, as conservator of his estate.

The AT&T litigation ultimately settled for $57.5 million, and Noble sought to collect the $5 million it claimed it was owed by Horn under the loan. But the Colorado probate court refused to authorize Galle to repay the loan from Horn’s estate, and Noble initiated an arbitration proceeding in Hong Kong to enforce the terms of the loan. The arbitral panel found in Noble’s favor, and Noble filed a petition to confirm the award in federal court in the Southern District of Florida.

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