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Requisite Personal Jurisdiction; Enforcement of Judgment Procedure Discussed
JW Oilfield Equipment, LLC v.
Commerzbank AG, No. 18 MS 0302 (PKC)(S.D.N.Y. Jan.
2011) [enhanced version available to lexis.com subscribers], makes a series of
useful international litigation rulings relating to enforcement and collection
of money judgments. In this regard, see generally the discussion of
issues relating to enforcement of judgments in our e-book, International
Practice: Topics and Trends. Based on a judgment rendered in
favor of Oilfield in Oklahoma, a judgment for attorneys' fees was rendered in
favor of Oilfield and against the plaintiff in the Oklahoma action, JJS
Oilfield Supply GmbH (JSS). JJS did not satisfy the judgment, and
Oilfield commenced a turnover proceeding in the Southern District of New York
(the case in which the current decision was rendered). JJS holds funds in
Germany in Commerzbank.
The noteworthy rulings in the case
First, the Court relied on Fed. R.
Civ. P. 69(a)(1), which provides that a money judgment is enforced by a writ of
execution, and the "procedure on execution-and in proceedings supplementary to
and in aid of judgment or execution -must accord with the procedure of the
state where the court is located" if no federal statute applies. New York
procedure includes Section 5225(b) of the N.Y. CPLR. It provides the
process by which a judgment creditor may compel "a person in possession or
custody of money or other personal property in which the judgment debtor has an
interest . . . to pay the money, or so much of it as is sufficient to satisfy
the judgment, to the judgment creditor".
Second, the Court applied CPLR
5225(b) extraterritorially on the basis of Koehler v. Bank of Bermuda Ltd.,
12 N.Y.3d 533 (2009) [enhanced version / unenhanced version available from lexisONE Free Case Law], answering question certified by Koehler v. Bank of
Bermuda Ltd., 544 F.3d 78 (2d Cir.2008) [enhanced version / unenhanced version].
The New York Court of Appeals concluded that "a New York court with personal
jurisdiction over a defendant may order [that defendant] to turn over
out-of-state property regardless of whether the defendant is a judgment debtor
or a garnishee." New York's Highest Court reasoned that, when a judgment debtor
is subject to a New York court's personal jurisdiction, "that court has
jurisdiction to order the judgment debtor to bring property into the state,
because the court's authority is based on its personal jurisdiction over the
Third, the District Court in the
turnover proceeding upheld this application of CPLR 5225 against a claim of
unconstitutionality asserted by Commerzbank on behalf of its depositor,
JJS. The District Court first found that Commerzbank lacked standing to assert
the constitutional rights of Commerzbank.
Fourth, the bank asserted that the
"separate entity rule", which we have posted on before (e.g., here) protected
the German branch from turning over the funds. The Court found the
Fifth, the Court also found that
comity did not require it to decline jurisdiction. The bank argued, but
did not appear to prove, that "German banking law does not allow a German bank
to respond to an execution of a foreign judgment unless ordered to do so by a
German court". Nonetheless, the District Court went through the five
factor comity test laid out in, e.g., Minpeco, S.A. v. Conticommodiaty Servs.,
Inc., 116 F.R.D. 517 (S.D.N.Y. 1987) [enhanced version ], which
has been applied to discovery requests but not (as best we can tell) to
enforcement proceedings. Those factors are:
(a) vital national interests of each
of the states,
(b) the extent and the nature of the
hardship that inconsistent enforcement actions would impose upon the person,
(c) the extent to which the required
conduct is to take place in the territory of the other state,
(d) the nationality of the person,
(e) the extent to which enforcement
by action of either state can reasonably be expected to achieve compliance with
the rule prescribed by that state.
Sixth, the District Court also
rejected a defense by the bank on forum non conveniens grounds.
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