JW Oilfield Equipment, LLC v. Commerzbank AG, No. 18 MS 0302 (PKC)(S.D.N.Y. Jan. 2011), 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 include:
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), answering question certified by Koehler v. Bank of Bermuda Ltd., 544 F.3d 78 (2d Cir.2008). 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 judgment debtor.”
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 doctrine inapplicable.
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), 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, and
(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.