Dewar v Bangkok Bank Pub. Co. Ltd

Annotate this Case

Download PDF

Dewar v Bangkok Bank Pub. Co. Ltd 2012 NY Slip Op 32904(U) October 26, 2012 Supreme Court, New York County Docket Number: 112560/2010 Judge: Shlomo S. Hagler Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. UEDON 121712012 [* 1] S E COURT OF T ATE OF NEW YORK - NEW YORK COUNT PR DOUGLAS M. DEWAR, INDEX NO,: - against - Petitioner, I1256012010 MOTION DATE: MOTION SEQ. NO.: BANGKOK BANK BLlC COMPANY LIMITED, NEW YORK BRANCH, 001 MOTION CAL. NO.: Respondent. Petition pursuant to CPLR 5 5225(b) for a turnover order. ' Notice of Petition and Petition with Affirmation in Support & Exhibits A through D ........................ Motion in Opposition to Petition with Affir unse' Eric ZiSSU, Esq. ............................................ and Exhibits A and B ................. Respondent's Memorandum of Law in Support of Motion to Deny the Turnover Petition .............. ............... Petitioner's Reply Memorandum of Law with Exhibits A and B Petitioner's Supplemental Memorandum of Law in Opposition s 1 through 5 Dismiss and in Support of the Petition wit Transcript of April 16, 2012 Oral Argument .......... .................. ............... 2 3 """" I ! Cross-Motion: 0 Yes dN0 Number of Cross-Motions: Upon the foregoing papers, it i hereby ordered that this Petition and Motion are s follows: by respondent to dismiss i udice to the e p n b s t f Decision and Order. , he a@ached separate i I 2e O ! ................ ! 3 NOV 19 Dated: October 26, 2012 New York, New York Motion is: Check if Appropriate: 0 SETTLE ORDER 0 DO NOT POST i ...J I 6 [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: Part 17 UOUGLAS M. DEWAR, Index No.: 112560/2010 Plaintiff, - against - BANGKOK BANK PUBLIC COMPANY LIMITED, NEW YORK BRANCH, DECISION & ORDER Respondent. r- HON. SHLOMO S. HAGLER, J.S.C. BACKGROUND 4 Petitioner Douglas M. Dewar ( Dewar or pe nt credi r and a citizen c9 /v York Branch 01 W~ishingtonState. Respondcnt Bangkok Bank ( Bangkok Bank NY or respondent ), is a New York City branch of Bangkok Bank Public Company Limited ( Bangkok Bank ), located in and incorporated under the laws of the Kingdom of Thailand. 1112009, pctitioner coriinieticed an action in Washington State Superior Court, King County, and later on April 2, 2010, obtained a Stipulation and Agreed Judgment against the judgment debtor Bradley E. Beddall ( Beddall or judgment debtor ) in the total amount of $4,109,115.48. (See Exhibit A to the Petition.) Prior to the entry ofjudgment, Reddall transferred $140,000 from a hank it1 Washington State to a bank account at the parent Bangkok Bank in the Kingdom of 1 hailand. Petitioner allcges that he has identified two bank accounts at the parent Bangkok Bank which, upon inhrmation and belief, contain the funds transferred out of the United States by the judgnient debtor. (Pctition at 1 1 1 .) In September 2010, petitioner duly domesticated the 1 [* 3] Washington State judgment in the Supreme Court of the State of New York, New York County. (See Exhibit B to the Petition.) PROCI3DURAL HISTORY Petitioner seeks an order, pursuant to CPLR $5225(b), to compel Bangkok Bank NY to turn over the judgment debtor s funds held in the parent Bangkok Bank to satisfy petitioner s judgment. Respondent Bangkok Bank NY has moved for an order, pursuant to CPLR $5 404(a) and 5240, denying tlic petition in all respects on the grounds that (1) it is not and has never been the holder of the funds belonging to the judgment debtor and thus holds no funds that can be turned over to the petitioner, and (2) petitioner has failed to properly serve the judgment debtor with notice of this turnover proceeding in compliance with CPLR 8 5225.2 DISCUSSION l lie primary issue in this proceeding is whether this Court can order Bangkok Bank NY to turnover the judgment debtor s funds held by its parent bank in Bangkok, Thailand based on a foreign judgment which has been domesticated in New York State. The resolution of this issue is dependent upon three factors: (1) did the judgment debtor I~CCCIVC proper noticc of this turnover proceeding pursuant to CPLR 6 5225(b); (2) does this Court have pcrsoiial jurisdiction over the parent Bangkok Bank; and (3) did the petitioner bring the proceeding against the proper party as garnishee. 1 Whcthcr recpondcnt s papers are treated as a rnotiorl or merely as opposition to the petition, is not substantively significant as the result ofthe decision is the same. 2. Significantly, respondent Bangkok Bank NY has not raised a defense of lack of personal jurisdiction under GPLR 8 321 1. [* 4] F ~t u iI I A I le2.stions c To begin with, it should be noted that respondent has failed to submit an affidavit or afilrrnation from an individual with personal knowledge in support of its motion which contains any facts to challenge the allegations in the petition or support claims and arguments made in its nicmorandun~of law. The afiirmation of Erik M. Zissu in support of respondent s motion, dated February 22, 201 1 , merely refers to two attached exhibits - one being a copy of the petitioner s Restraining Notice and lnformatioiz Subpoena dated September 24, 2010 and the second is a copy of a letter dated September 27,20 10, froni Guillermo Rodriguez, VP & Compliance Risk Manager at Bangkok Rank NY to the petitioner s attorney informing him that Bangkok Bank NY neither had ii rclatiiinship WI th, nor handled any transactions for thejudgment creditor and directed petitioner s counsel to contact the parent Bangkok Bank directly. While respondent also submitted a memorandum of law which included certain factual allegations, this memorandum cannot be used as the basis for admissible facts and can not take the place of an affidavit or affirmation of a person with a c ~ u a I\nowledgt. ,SPPP l ,JIM11f ¬olding cl orp v (7ongre.w FinancialC orp., 4 NY3 373 (2005) ( Thc conclusory affidavit of 3MD s president, which relied entirely on the memorandum of law prepared by JMD s attorney, provides no factual basis to support any conclusion ); Brown v Smith, XS AD3d 1648, 1649 (4th Dept 201 1) ( a niemorandum of law also has no evidentiary value ); Eden Roc-k Finuncc. FLind! 1, 1 . v Gerova Financial Group, Lid., 34 Misc 3d 1205(.A)(Sup Ct, NY County 20 I 1 ) (Bernard 3 . Fried, J.) ( Thc numerous factual assertions made by counsel for Gerova in its memoranda of law, upon which its arguments arc based, would lack any evidentiary value even on a motion for summary judgment ). As a result, respondcnt has not presented any evidence in admissible form to rebut any of petitioner s factual allegations, which must be accepted as tinconti oturted l?ir purposes of this motion and thc petition. -3 - [* 5] Notice to dudmnent Debtor Respondent argues that the petition should be denied on the grounds that the judgment debtor has not been properly served with notice of this turnover proceeding. However, petitioner has ~ u b m i t t c d al lidavit of service by Daniela Marando. sworn to on November 16,2010, evidencing ati service of the Notice of Petition and Petition for Turnover pursuant to CPLR 5 5225(bj, with the a f h i a t i o n in support ol the Petition, and a Request for Judicial Intervention, by certified mail with return receipt requested, upon judgment debtor Bradley E. Beddall at his last known address. Respondent argues that this scrvice was insufficient and that petitioner should have made additional attenipts at either mail or in person service upon the judgment debtor. This Court Gnds that petitioner s service upon the judgment debtor coinplied with the notice provisions of CPLR 3 5225(b), especially in light of the alleged attempts of the judgment debtor to avoid the execution of the judgment. Jurisdiction Over Banpkok Bank NY and Parent Bangkok Bank 1 Petitioner argues that it is entitled to an order against Bangkok Bank NY to turnover assets held by its parent Bangkok Bank, located in the Kingdom of Thailand, based on the decision in Kochler 17 Birnk.of Bermudu l,td,, 12 NY3d 533 (2009). In that landmark case, the Court of Appeals, ccrtitying a clucstion 1i.um the Second Circuit held that a court sitting in New York that has persoiial j iirisciiction over a garnishee bank can order the bank to produce [assets of the judgment debtor] located outsidc New York, pursuant to CPLR 5225(bj. 12 NY3d at 541. As the Court explained, the principle that a New York court niay issuc ajudgment ordering the turnover ofoutol-slalc asscts IS iiot Iiiiiited t o judgment debtors, but applies equally to ganiishces. Id. -4- [* 6] The Koohler court noted the difference between pre-judgment attachments which are governed by Article 62 of the CPLR and require in rem jurisdiction over the property, from postjudgment turnover proceedings which are governed by Article 52 of the CPLR and only require ,lurisdiction. 111 / 1 0 r \ 0 / 1 ~ ~ ~ 7 I hc Court approvingly discussed several First Department cases that permitted New York courts to order turnover of judgment debtor assets held outside of New York Slate as follows: The First Department of the Appellate Division has expressly held that judgment debtors can be ordered to turn over out-of-state assets under CPLR article 52 (see Gryphon Dom. VL LLC v. APP lnll h . 1 ~C o , B C , 41 A.D.3d 25 [ l s t Dept.20071, Iv. denied 10 N.Y.3d 705 [2008]; See also Miller v. Doniger, 28 A.D.3d 405 [ 1st Dept.20061; Stiirbare I/ fartnerv v. Sloan, 216 A.D.2d 238 [lst Dept. 19951). [I Jheexplicit rationale was that the court could order the defendant judgment debtor to turn over property because it had personal jurisdiction over the defendant (Gryphon, 41 A.D.3d at 3 1, citing Starhare, 21 6 A.D.2d at 239). Recently, the First Department endorsed the position that New York courts have the power to coiiiiiiiind a garnishce present in the state to bring out-of-state assets iincier thc garnishee s control into the statc (Morgtlnthau v. Avian Resources L t J , 49 A.D.3d 50, 54 1 st Depl 20071, mod. on other ,qroundr 1 1 N.Y.3d 383 [2008]). As that court noted, the key to the reach of the turnover order is personal jurisdiction over a particular defendant. [A] turnover order nierely directs a defendant, over whom the New York court has jurisdiction, to bring its own property into New York (Gryphon, 41 A 13.3d at 31). A Ncw York court has the authority to issue a turnover order pertaining to extraterritorial property, if it has personal jurisdiction over a j udgrncnt debtor in possession of the property. As long as tlic debtor is subject to the court s personal jurisdiction, a clclivery order can be cffective even when the property sought is outside the stale Siegel, NY Prac. (j 5 IO, at 866 (4th ed.). The Court explained the rationale behind its decision to extend the power of the New York c o u r t \ to ; I hank holding extratcrritorial liinds or assets of the judgrnerit debtor as follows: Both CPLR 5225(a) and (b) provide that a judgment creditor may obtain an order from a Ncw York court, requiring a defendant -5- [* 7] who is in possession or custody of money or other personal property in which a judgment debtor has an interest to turn over the property or pay the money to the judgment creditor. CPLR 5225(a) applies when the property sought is in the possession of the judgment debtor himself. CPLR 5225(b) applies when the property is not in the j iidgment debtor s possession. The most significant difference between the subdivisions is that CPLR 5225(a) is invoked by a /nolion made by the judgment creditor, whereas CPLR 5225(b) requires a special proceeding brought by the judgment creditor against the garnishee. The reason for this procedural distinction is that the garnishee, not being a party to the main action, has to be independently subjected to the court s jurisdiction. But both CPLR 5225(a) and (b) contemplate an order, directed at a defendant who is amenable to the personal jurisdiction of the court, requiring him to pay money or deliver property. 12 NY3d at 540-41 The Koehler majority pointed out that Article 52 authorizes a judgment creditor to file a niotion against a judgment debtor to compel turnover of assets or, when the property sought is not i ti thc possession of the judgment debtor himself, to commence a special proceeding against a garnishee who holds the assets. fd,at 537. A garnishee is a person other than the judgment debtor who has property in his possession or custody in which a judgment debtor has an interest. CPLR $ 105(i). I Iic dissent in k oehlcr was concerned about the broad reach of the majority decision and po i I 1t ed o 11 t t i ; t : t 1 The majority s holding opens up a forum-shopping opportunity for any judgment creditor trying to reach an asset of any judgment debtor held by a bank (or any other garnishee) anywhere in the world. If the bank has a New York branch - either one that is not separiitelv incorporated, or a subsidiarv with which the parent s relationship is close enough to subiect the parent to New York jurisdiction - thc iudgrnent creditor, havinp repistered the iudmnent in New York, can obtain an order requirinp the asset to be delivered here. It is, apparently, irrelevant whether New York has any relationship with the judgment creditor, the judgmcnt debtor or tlic dispute between them - indeed, in this case, so far as the record shows, no such relationship exists. I2 NY3d 542 (,emphasisadded). [* 8] Significantly, neither the majority nor the dissent in Kuehler discussed the impact of its decision upon what is known as the separate entity rule Indeed, neither opinion even mentioned the -separate entity rule. Senarate Entitv Rule Respondent has argued in its memorandum of law that New York has a separate entity rule which reqiiires that cach branch of a bank be treated as a separate entity for attachment or garnishmciit purposes. See McC lo.rke~yv Chase Mmhattan Bunk, 1 1 NY2d 936 (1962). The separate entity rule dates back to the early 1900 s and provides that each branch of a bank is treated as a separate entity, in no way concerned with accounts maintained by depositors in other branches or at a home office (Lanier Saperstein and Geoffrey Sant, Outside Counsel, The Separate l < n t i t l<i/le rhh~ ~~ Deep Divide, NYI,J, April 13, 201 2, quoting Cronnn v k h i l l i n g , 100 NYS2d 474, 476 (Sup C t N Y County 1950). Thc rationale behind this judicially created doctrine is that it was impractical to require baiik branches [and even the home bank] to constantly monitor accounts in all the other branches and that requiring branches to freeze or turn over assets held in foreign coun~rics could implicate or violate that country s banking laws, raising comity concerns. Id. Cince thr Kochlcr. decision, there has been a dispute over whether the separate entity doclrine is still good law or whether it has been implicitly overturned by Koehler. See Global 7 echnolog~Inc. v Royal B m k qfZbu2ada. 34 Misc 3d 1209(A) (Sup Ct, N Y County 2012) (Michael D. Stallman, I.) (discussing aiid analyzing post-Kuehler decisions). S w ulsn Saperstein and Sant, Outside C ou~~scI, Seprrrde Enfity Rule. The Deep Divide. The Respondcnt cites to Global Technology, lnc. v Royul Bunk o f C h n u h . 34 Misc 3d 1209(A) (Sup Ct, NY County 201 2) (Michael D. Stallman, J.), Sumsun Logix I, orp. v Bank of China,el af, 3 I Misc 3d 1226(A) (Jane S. Solomon, J.), and Parhulk 11AS v Heritnge Maritime., et al, 35 SA, -7- [* 9] Misc 3d 235 (Sup Ct NY County 201 1) (0.Peter Sherwood, J.), three New York State trial level courts wI~c1-1 have held that the separate entity rule applies post-Koehler to prevent a New York court lrom ordering the turnover o f a judgment debtors assets that are held in foreign bank branches when faced with challenges from the respondent banks. There have been no appellate decisions in the New York State courts to resolve the question of whether the separate entity rule still survives in tlic aftermath of the Koehler decision. However. whether or not the separate entity rule still applies in post-judgment turnover proceedings after Koehler is not an issue this Court needs to decide in this case at this time. As Justice Stallman noted in Global Technologies, Koehler did not involve the separate entity rule, becausc the cntity scrvcd with the writ of execution was not a bank branch, but rather a whollyowncd Ncw York subsidiary of the Bank of Bermuda Ltd., served through an officer of the New York subsidiary. 34 M i x 3d at * 10. Personal Jurisdiction As noted in Koehler,a key issue to be decided is whether the New York court has personal jul-isdictior-~ over the garnishee bank. In Koehler, the Court of Appeals found that aNew York court had personal jurisdiction over Bank of Bermuda, Ltd. since it was doing business7 in New York through its wholly owned subsidiary located in New York. I n the instant case, respondent Bangkok Bank NY was properly served, has appeared as the I espondt.nt i l l this action and has not raised any objection to the Court s personal jurisdiction over 2. Similarly, in .JW Oilfield Equip., LLC v Commerzbunk AG, 764 F Supp 2d 587 (SDNY 201 1 ), the Southern District of New York court, relying on the Koehler decision, found that it had personal jurisdiction over the German branch of Commerzbaiik because it was doing busincss systeinatically and continuously though its New York branch, which was neither I ticorporatcci nor a separatc entity from its parent bank. -8- [* 10] it I I I this L i ~oflice i iiiatter. Additionally, respondent has not denied that its parent Bangkok Bank maintains and does business in New York through Bangkok Bank NY, the New York domestic branch of the parent bank located in Thailand. Signiikantly, however, neither the affirmation of Mr. Zissu, nor the attached exhibits, presents any evidence that Bangkok Bank N Y is a separate entity from the parent Bangkok Hank. Howcver, respondent argucs that since the parent Bangkok Bank has not been named as the garnishee or been served directly, this Court does not have personal jurisdiction over the parent Bangkok Bank. Respondent distinguishes Koehler from the case at bar, arguing that in Knshler the petitioner named the parent Bank of Bermuda Limited as the garnishee. where thejudgment debtors assets were actually located, and that once tlic parent bank agreed to the personal jurisdiction of the New York court through the scrvice upon its wholly owned subsidiary, there was no longer an issue of in jiursonum jurisdiction. In stark contrast to Koehler, petitioner in this proceeding only named lhe New York branch of the bank, not the parent bank in Thailand, which has not consented to per u) i I j 11 r i XII c t i o ti 11 Kcspondent is correct in pointing out that Koehler and CPLK 5 5225(b) requires that the turnover petition must be directed at the garnishee who holds or has control of the judgment debtors s assets. In the instant case, the garnishee who admittedly has possession of the judgment debtor s assets, and which should havc been named in the turnover petition, is the parent Bangkok 13 L l l i I\ . CONCLUSION Accordingly, this Court grants the motioii of respondent Bangkok Bank Public Company 1,itiiitcd. New York Branch to dismiss the turnover petition against it; and -9- [* 11] IT I I {EREBY ORDERED that thc turnovcr petition is dismissed without prejudice for the S petitioner to name the proper garnishee. The foregoing constitutes the Decision, Order and Judgment of this Court. Courtesy copies oI'this decision have been sent to counsel for the parties. Dated: October 26,2012 New York, New York -1 0-

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.