usdcsdny document united states district court...

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

---x SHAHEEN SPORTS INC and TAJMAHAL SPORTS COMPANY

USDCSDNY DOCUMENT ELECTRONICALLY FILED DOC II L

DAlE FILED ~ 1 lt1112shy

Plaintiffs 98-cv-5951 (LAP)

-against

ASIA INSURANCE COMPANY LTD

Defendant --------------- -----X

TAHIR HAMID

Petitioner 11 cv- 920 (LAP)

-v- Memorandum and Order

HABIB BANK LIMITED and NATIONAL BANK OF PAKISTAN

Respondents --- - --- ------x

LORETTA A PRESKA Chief United States District Judge

There are two motions sub judice in these related cases

The first is the motion of Plaintiffs Shaheen Sports Inc

(Shaheen) and Tajmahal Sports Company (Tajmahal) to

substitute Tahir Hamid (Hamid or Petitioner) as Plaintiff in

98 cv-5951 The second is Petitioner Hamids petition ll-cvshy

920 seeking the turnover of certain assets from Habib Bank

Limited (HBLIT) in which the 98-cv-5951 judgment debtor Asia

Insurance Company Ltd (Asia Insurance) has an interest

For the reasons below Plaintiffs motion for substitution in

1

Case 111-cv-00920-LAP Document 48 Filed 031412 of 24

98-cv-5951 is GRANTED and Petitioner Hamids motion for

turnover in 11-cv-920 is DENIED

I Background

The Court presumes the parties familiarity with the

relevant s in these related actions Nevertheless a brief

summary is helpful here

Shaheen and Tajmahal filed the underlying litigation

against Asia Insurance in August 1998 Tajmahal alleged that

As Insurance had failed to pay Tajmahals claim on certain

marine insurance policies and Shaheen claimed it was the third

party beneficiary of those insurance policies See HBL

Memorandum of Law in Response to Order to Show Cause 11-cv-920

(HBL Mem) at 4) On March 262003 the erk of the Court

entered judgment in favor of Shaheen and Tajmahal in the amount

of $36942391 against Asia Insurance Id Three months

after Shaheen and Tajmahal obtained this judgment Shaheen

dissolved ceasing to exist on June 25 2003 Id at 5)

Tajmahal remains a going concern in Pakistan (Id )

On February 28 2009 Hamid commenced the action in 11-cvshy

920 serving the New York branches of HBL and National Bank

Pakistan with a Petition Summons Subpoena and Restraining

Notice to Garnishee Id Hamids petition alleges that (1)

he is the successor in interest to both Tajmahal and Shaheen

(2) the judgment in 98 cv-5951 remains unpaid by Asia Insurance

2

Case 111-cv-00920-LAP Document 48 Filed 031412 Page 2 of 24

and (3) upon information and belief II assets of Asia Insurance

are within the possession of a Pakistani branch offices of HBL

and National Bank of Pakistan (rd) Hamid alleges that the

total amount of the judgment owed including post judgment

interest is now $41189127 Id at 4) After attempts to

locate the assets of Asia Insurance in the United States and

Europe Hamid had determined that HBL and National Bank of

Pakistan branches in Pakistan possessed certain of its assets

See Hamid Memorandum of Law in Support of Turnover (Hamid

Mem) at 2) Hamid served the New York branch offices of both

respondents which are not independently incorporated New York

corporations but offices controlled and governed directly by

the main office of each Respondent in Pakistan (Id at 2-3)

On May 20 2011 Judge Denise Cote of this Court entered an

Order prohibiting HBL and the Bank of Pakistan from making or

suffering any assignment or transfer of or any

interference with any property up to the sum of $41189127 in

which [the banks] have an interest andor which is in

possession control andor custody of the defendants belonging

to Asia Insurance Company Ltd of Pakistan 1I [dkt no 26]

Asia Insurance has subsequently filed a lawsuit against HBL in

Pakistan seeking a declaration that HBL be permanently and

temporarily restrained from alienating the assets of Asia

Insurance held in its Pakistani branch (HBL Mem at 7) To

3


date there has been no ruling on Asia Insurances request in

the Pakistani court (Id )

II Plaintiffs Motion to Substitute in 98-cv-5951

Original Plaintiffs Shaheen and Tajmahal have filed a

motion to substitute Hamid as Plaintiff the underlying

action [dkt no 38] To date the motion remains unopposed

by Asia Insurance

Moreover Plainti have submitted substantial affidavits

and other documents supporting Hamids claim to be the

successor-in-interest to the money judgment in 98-cv 5951 For

example Hamid himself submitted an affidavit [dkt no 39] in

which he explains that he at all times was Shaheens sole

shareholder and caused it to be dissolved by proclamation in

June 2003 (See Affidavit of Tahir Hamid (Hamid Aff) 7

10 12) Plaintiffs attorney Frederick A Lovejoy so

represents to this Court that prior to Shaheens dissolution he

examined an executed assignment of rights to the judgment in

this case between Shaheen and Hamid which he advised was

adequate to transfer the rights in the judgment between the two

See Affidavit of Frederick A Lovejoy (Lovejoy AfflI) 10

[dkt no 41] i Supplemental Affidavit of Frederick A Lovejoy

(Supp Lovejoy AfL) 4-8 and Ex I [dkt no 43])

It is also clear that Tajmahal has been treated throughout

this litigation as a nominal plainti When ruling on Asia

4


Insurances motion to dismiss this action on the basis of forum

conveniens Judge Robert L Carter noted that (a]lthough

plaintiff Tajmahal is a Pakistani corporation Shaheen appears

to be the real party in interest See Shaheen Inc v ----------~-----~---------

Asia Ins Co Ltd 89 F Supp 2d 500 505 (SDNY 2000)

(citing Alaska Russia Salvrnon Caviar Co Inc v MV Marit

Maersk 2000 WL 145124 at 3 4 (SDNY Feb 2 2000raquo

Tajmahal has also separately represented to this Court that any

judgment rendered in this matter is the property of Shaheen and

that it instructed Asia Insurance at all times to issue

certificates of insurance for the subject goods in Shaheens

name (See Affidavit of Kahlid Mahmood Gundra (Gundra Aff)

9-12 [dkt no 10] i Lovejoy Aff 8-9)

Upon consideration of Plaintiffs submissions on their

motion and Asia Insurances lure to oppose it the Court

concludes that Plaintiffs motion to substitute Hamid as

Plaintiff in 98-cv-5951 is GRANTED in the interests of justice

and the convenience of Hamid as the remaining judgment

creditor in this case

III Petitioner Hamids Motion for Turnover in ll-cv-920

Petitioner Hamid brings this turnover action under the New

York CPLR sectsect 5225(b) and 5227 Under Fed R Civ P 69(a) a

federal district court has the authority to enforce a judgment

by attaching property in accordance with the law the state in

5


v Bank of Bermudawhich the district court sits See

Ltd Koehler I 544 F3d 78 85 (2d Cir 2008) New York

Civil Practice Law and Rules (CPLR) sect 5225 authorizes a court

to order the delivery of property that belongs to a judgment

debtor but is not in his possession See CPLR 5225(b)

Moreover under CPLR sect 301 it is the general rule that New York

courts may exercise general jurisdiction over a foreign

corporation where that corporation is engaged in such a

continuous and systematic course of doing business [in New

York] as to warrant a finding of its presence in this

jurisdiction Simonson v Intl Bank 14 NY2d 281 285

(1964) There lS no serious spute that the Court has general

jurisdiction over Respondents in this case

A Personal Jurisdiction and the Separate Entity Rule

The New York Court of Appeals recently made clear that at

least as a general matter a New York court with personal

j sdiction over a defendant may order him to turn over out-of

state property regardless of whether the defendant is a judgment

debtor or a garnishee Koehler v Bank of Bermuda Ltd

Koehler III 577 F3d 497 499 (2d 2009) (quoting Koehler

v Bank of Bermuda Koehler II 12 NY3d 533 541 (2009)

(certified question answered in the affirmative)) i see

=H~o~t~e~1~7~1~M~e~z~z~L~e=n~d~e=r~L=L=C~v~~~~ 14 NY3d 303 312 (2010)

6


([A] court with personal jurisdiction over a nondomiciliary

present in New York has jurisdiction over that individuals

tangible or intangible property even if the situs of the

property is outside New YorkI) After the Koehler cases it is

certainly established law in New York that where a court has

jurisdiction over a potential garnishee holding an asset in

which a judgment debtor has an interest the court can generally

direct turnover of that asset in the post judgment context even

if it is located outside New York

It has also long been considered settled law in New York

however that where that garnishee is a bank the court must

obtain jurisdiction over the specific bank branch holding the

asset before it may order any turnover notwithstanding its

general jurisdiction over the banking entity by virtue of its

New York branch This has become known as the separate entity

rule See Motorola Credit Corp v Uzan 288 F Supp 2d 558

560 (SDNY 2003) i Lok Prakashan Ltd v Indi

Inc No 00 Civ 5852 2002 WL 1585820 at 2 (SDNY July

16 2002) (New York law follows the separate entity rule for

purposes of attachment and execution ) i Partners

Inc v Phillipine Exp and Foreign Loan Gaur Corp 921 F

Supp 1113 1119 (SDNY 1996) (This rule of law known as

the separate entity rule provides that each branch of a bank

is a separate entity [and is] in no way concerned with accounts

7


maintained by depositors in other branches or at a home officell

(quoting Cronan v Schilling 100 NYS2d 474 476 (Sup Ct

1950) affd 126 NYS2d 192 (1st Dept 1953))) The original

rationale for this rule was avoiding the intolerable burden

that would otherwise be placed on banking and commerce See Det

Bergenske Dampskibsselskab v Sabre Shipping Corp 341 F2d 50

53 (2d Cir 1965) (quoting Cronan 100 NYS2d at 476raquo i see

also Joseph H Sommer Where is a Bank Account 57 Md L Rev

1 78 79 (1998) (describing why the separate entity rule is

unique to international banks) For the same reasons the rule

has so been codified in the Article of the New York Commercial

Code governing funds transfers and creditor processes See

NY UCC sectsect 4-A-105(1) (b)i 4-A-502(4) (A branch or

separate office of a bank is a separate bank for purposes of

this Article) (emphasis added) Applying the separate entity

rule in this case Hamid would be unable to secure a turnover of

assets held by HBL in Pakistan simply by serving its New York

branch 1

1 New York courts have created one specific exception to the separate entity rule-one that is not implicated in this case The exception applies only where (1) the restraining notice is served on the banks main office (2) the banks main office and braches are within the same jurisdiction and (3) the bank branches are connected to the main office by high-speed computers and are under the centralized control of the main office 1I John Wiley amp Sons Inc v Kirtsaeng No 08 Civ 7834 2009 WL 3003242 at 4 (SDNY Sept 15 2009) (internal (continued on next page)

8


B The S~parate Entity Rule after Koehler II

Hamid invites this Court to discard the separate entity

rule in this case largely as a result of the New York court of

Appeals holding in Koehler II which Hamid regards as

eliminating the separate entity rule sub silentio For the

reasons below this Court decl s this invitation First this

Court is not convinced that the New York Court of Appeals

squarely overturned the separate entity rule when it responded

to a question certified to it by the Court of Appeals for the

Second Circuit in 2008 Second the balance of subsequent

federal and state decisions after Koehler II does not support

the Petitioners position Finally the only post Koehler II

case in this district otherwise helpful to Petitioner JW

Oilfield Equipment LLC v Commerzbank AG 764 F Supp 2d 587

(SDNY 2011) is readily distinguishable both on its facts

and its reasoning For these reasons Hamids petition must be

denied

1 The Koehler Litigation

Koehler concerned the turnover of stock certificates

belonging to a judgment debtor that were physically held by the

Bank of Bermuda Ltd (BBL) in Bermuda See Koehler I 544

F3d at 80 In that case Koehler (the judgment creditor)

(continued from previous page) quotation marks omitted) i see also Digitrex Inc v Johnson 491 F Supp 66 67 69 (SDNY 1980)

9


served a writ of execution and restraining notice on a

subsidiary of BBL in New York Id As the district court noted

in denying Koehler1s request for turnover of the stock

certificates BBLs Bermuda branch itself had ultimately

consented to the personal jurisdiction of the district court and

therefore the separate entity rule [had] no role to play in

this case [because] [h]ere the foreign branch itself was

properly served Koehler v Bank of Bermuda Ltd 2005 WL

551115 1 at 12 (SDNY Mar 9 1 2005) Ultimately however

the district court held that it lacked the authority to attach a

res located beyond the court1s jurisdiction See id The Court

of Appeals for the Second Circuit found however that the

ability of the district court to attach assets abroad in

satisfaction of a domestic judgment was an open question under

New York law and therefore certified the question of its in rem

jurisdiction to the New York Court of Appeals See Koehler I

544 F3d at 82 Specifically the Court of Appeals for the

Second Circuit asked the New York Court of Appeals whether a

court sitting in New York may order a bank over which it has

personal jurisdiction to del stock certificates owned by a

judgment debtor (or cash equal to their value) to a judgment

creditor pursuant to NY CPLR Article 52 when those stock

certificates are located outside New York Id at 88

10


In a deeply divided 4-3 decision the New York Court of

Appeals answered in the affirmative Koehler II 12 NY3d at

541 The court ruled that Ua court sitting in New York that has

personal jurisdiction over a garnishee bank can order the bank

to produce stock certificates located outside New York Id

The court explained that CPLR Article 52 contains no express

territorial limitation barring the entry of a turnover order

that requires a garnishee to transfer money or property into New

York from another state or country Id at 539 It further

explained that the key to the reach of the turnover order is

personal jurisdiction over a particular defendant Id at 540

Having been answered in the firmative the Court of Appeals

for the Second Circuit then ruled that [b]ecause BBL consented

to the personal jurisdiction of the Southern District of New

York as of the commencement of the proceedings in 1993 [the

district court] had the authority to issue the 1993 turnover

order against BBL Koehler III 577 F3d at 499

Importantly the New York Court of Appeals did not mention

the separate entity rule as part of its analysis and appeared to

confine its inquiry to the stock certificates at issue in

Koehler See generally Koehler II 12 NY3d 533 Nor did the

Court of Appeals for the Second Circuit consider the separate

entity rule before issuing its final mandate in the Koehler

case See generally Koehler III 577 F3d 497 Petitioner

11


nevertheless argues that the question over its continued

viability in the post-judgment context has been squarely and

unambiguously answered (Hamid Mem at 3-4) This court

cannot agree

The New York Court of Appeals noted that CPLR Article 52

contains no express territorial limitation barring the entry of

a turnover order that requires a garnishee to transfer money or

property into New York from another state or country and that

the key to the reach of the turnover order is personal

jurisdiction over a particular defendant Koehler II 12

NY3d at 539-40 The separate entity rule however was a

court-made rule that did not involve any interpretation of

either CPLR Article 52 or 62 (post and pre-judgment attachment

respectively) See eg Cronan 100 NYS2d at 476 Clinton

Trust Co v Compania Azucarera Cent Ramona SA 14 NYS2d

743 746 (Sup Ct 1939) affd 15 NYS2d 721 (1st Dept

1939) Moreover the public policy considerations underlying

the separate entity rule as enacted by the New York

legislature continue to be reflected through its version of the

Uniform Commercial Code See eg NY UCC sectsect 4-Ashy

105(1) (b) i 4-A-502(4) supra As noted above those policy

considerations contemplate among other issues the intolerable

burden that would otherwise be placed on banking and commerce

if mere service of a writ to a New York branch could subject

12


foreign bank branches to competing claims See Sabre --~----~

Shipping Corp 341 F2d at 53 (quoting Cronan 100 NYS2d at

476) For that reason the separate entity rule is best

understood as a qualifier on the courts attachment power under

New York law in the specific context of extraterritorial

banking even where personal jurisdiction over a defendant is

otherwise obtained vis-a-vis a New York branch

Petitioner argues that the Koehler case has entirely

eliminated the separate entity rule sub silentio at least in

the case of post-judgment execution (See Hamid Mem at 3-4)

In light of the significant policy principles underlying the

separate entity rule and its lengthy history in New York courts

however it is not unreasonable to expect that if the New York

Court of Appeals had chosen to eliminate it it would have said

so At the very least its role in the Koehler case was raised

by the Brief of the Clearing House Association LLC as Amicus

Curiae in Support of Respondent Koehler v Bank of Bermuda

Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18

and so this Court does not presume that the Court of Appeals did

not consider it The New York Appellate Division First

Department has previously said that any future exception to the

separate entity rule would require a pronouncement from the

Court of Appeals or an act of the Legislature Natl Union

13


Fire Ins Co v Adv Empt Concepts Inc 703 NYS2d 3 4

(1st Dept 2000)

Indeed both of the New York state courts to consider the

separate entity rule and post-judgment executions post Koehler

have recently held that the New York Court of Appeals decision

in Koehler could not reasonably be read to overturn it without

stating so in express terms In Samsun Logix Corp v Bank of

China No 10526210 2011 WL 1844061 (Sup Ct May 12 2011)

the court held that the Court of Appeals in Koehler did not

even mention the separate entity rule thereby strongly

indicating that it had not intended to overrule that doctrine 1I

Id at 3 Similarly in Parbulk II AS v Heritage Maritime

935 NYS2d 829 (Sup Ct 2011) the court held that

Koehler did not address the separate entity rule and therefore

[u]ntil the appellate courts in New York hold otherwise this

court is constrained to decline the invitation to ignore

established precedent applying the separate entity rule 1t Id

at 832 n1 This Court is similarly constrained

2 Post Koehler Cases

The Samsun and Parbulk II cases are instructive in that

they are the only New York state post-judgment execution cases

to analyze the viability of the separate entity rule postshy

Koehler and both courts found the rule had survived They are

not however the only New York courts to do so In Levin v

14


Bank of New York No 09 Civ 5900 2011 WL 812032 (SDNY

Mar 4 2011) Judge Robert Patterson of this Court found that

under New York law the separate entity rule applied to bar a

post-judgment writ of execution against a bank branch in

Maryland where the assets sought were in a New York branch of

the same bank See id at 12 The Koehler case played no role

in that decision See generally id

Additionally both the Court of Appeals for the Second

Circuit and the Southern District of New York have continued to

apply the separate entity rule in pre-judgment attachment cases

following Koehler strongly undercutting Petitioners argument

that it had been completely jettisoned sub silentio Koehler

II The Court of Appeals recently reiterated that the

separate entity rule dictates that each branch of a bank [be]

treated as a separate entity for attachment purposes Allied

Maritime Inc v Descatrade SA 620 F3d 70 74 (2d Cir 2010)

(quoting Sabre Shipping Corp 341 F2d at 53) Judge Donald

Pogue writing for this Court also recently observed that

under New York commercial law notice received by one branch

of a bank does not [even] constitute constructive notice to any

other branch of the same bank John Wiley amp Sons Inc 2009

WL 3003242 at 4 (quoting Gutekunst v Contl Ins Co 486

F2d 194 196 (2d Cir 1973)) Tellingly in light of the very

recent decision at that point in Koehler II Judge Pogue went on

15


to observe that although indeed the separate entity rule may be

outdated the court must follow the rule absent direction from

the New York legislature New York state courts or the Second

Circuit Id at 4 n9 see also Motorola Credit Corp 288 F

Supp 2d at 561 ([I]t is not for this Court to limit the

separate entity doctrine beyond the limits already set by the

courts of New York) This Court agrees

In fact only one case decided post-Koehler in the federal

and state courts has squarely concluded that Koehler preempts

any application of the separate entity doctrine 2 In JW Oilfield

Equipment LLC v Commerzbank AG 764 F Supp 2d 587 (SDNY

2011) Judge Kevin Castel found that respondent Commerzbank AG

conceded in its post-judgment execution briefing that Koehler

effectively preempts application of the separate entity rule

here See id at 595 Judge Castel reasoned that so long as a

New York court had general personal jurisdiction over

Commerzbank AG under NY CPLR sect 301 Koehler made clear that

this Court may issue a turnover order under NY CPLR sect 5225(b)

directing Commerzbank to turn over funds up to the amount of the

2 Petitioner also reI on Judge Hellersteins recent Order in Eitzen Bulk S v State Bank of India No 09 Civ 10118 2011 WL 4639823 SDNY Aug 5 2010 This Order has been vacated by the Court of Appeals however and will play no part in todays opinion See Eitzen Bulk Als v State Bank of India No 10 3352 cv (2d Cir May 122011) ([T]he district courts order directing Appellant to engage in turnover litigation with respect to a maritime contract dispute is VACATED )

16


judgment regardless of whether those accounts are held in

Germany or New York See id at 593 In reaching this

conclusion Judge Castel predicted that Koehler indicates that

New York courts will not apply the separate entity rule in postshy

judgment execution proceedings Id at 595 However as now

evidenced by the subsequent state court holdings in Samsun and

Parbulk II supra both decided well after Commerzbank this

appears not to be the case See eg Samsun 2011 WL 1844061

at 3 Parbulk II 935 NYS2d at 832 nl (This court

disagrees [with Commerzbank] The question certified to the New

York Court of Appeals by the United States Court of Appeals for

the Second Circuit did not involve the separate entity rule and

the New York Court of Appeals did not address it ) In any

event for reasons further described below this Court is

convinced that whatever its merits Commerzbank is not a case

on all fours with the petition currently before the Court

On balance the Court finds that the weight of subsequent

federal and state decisions after Koehler II cuts decidedly

against Petitioners position on the separate entity rule The

Court is particularly mindful that New York state courts have

uniformly rejected Petitioners reading of Koehler while

explicitly disagreeing with the only federal holding in this

district to embrace it

17


3 Commerzbank and Due Process

A final word may be helpful on the s that distinguish

this case from the turnover proceeding in Commerzbank

particularly in light of the policy underlying the separate

entity rule in New York The most obvious difference is Judge

Castels observation that Commerzbank appeared to concede that

the separate entity rule would not apply after Koehler II See

Commerzbank 764 F Supp 2d at 595 Far from conceding that

point here HBL argues strenuously that the separate entity rule

is alive and well (See generally HBL Mem)

More important however I is Judge Castels conclusion thatI

Commerzbank had put forth no evidence that it could rightfully

refuse to pay over the assets it holds [elsewhere] to a location

in New York II See Commerzbank 764 F Supp 2d at 596 By

contrast HBL makes the colorable claim here that it could

refuse (or be required to refuse) to make such a trans of

funds under Pakistani law ~~__~~ HBL Mem at 22 23i

Declaration of Muhammad Akram (Akram Decl II) ~ 5 I [dkt no 38]

(describing why Section 5 of the Pakistani Foreign Exchange

Regulation Act of 1947 operates to prohibit Asia Insurance from

directing and HBL from executing such a transfer of funds out of

Pakistan) i HBL Sur-Reply Memorandum of Law in Response to Order

to Show Cause (HBL Reply MemlI) at 7-8) Similarly Judge

ICastel noted in Commerzbank that it was signif that a

18


German court had declined to issue a preliminary injunction

ordering Commerzbank to pay over the judgment debtors assets

then frozen in its German branchs accounts by order of this

Court Commerzbank 764 F Supp 2d at 597 Thus he reasoned

the German court had not uespoused the view that the interests

of Germany in applying its own banking laws outweighs the United

States interest in enforcing its own judgmentslt and therefore

Commerzbank uwill not likely be caught in the crosshairs of

German law1t Id Unfortunately the same cannot be said for

HBL in this case HBL has submitted evidence that such a

transfer of assets would violate Pakistani law and is currently

defending Asia Insurances pending suit for injunctive relief in

Pakistans courts See HBL Mem at 7) Unlike Commerzbank

there has been no favorable resolution of the Pakistani

litigation to date rd

These s are significant as they implicate both the

underlying rationale for the separate entity rule New York as

well as concerns for HBLs due process See United States v

First Natl City Bank 321 F2d 14 (2d Cir 1963) revd on

other grounds 379 US 378 (1965) (UThe nature of garnishment

proceedings is such that the garnishor obtains no greater right

against the garnishee than the garnishees creditor had It)

Commerzbank 764 F Supp 2d at 596 (UThe question is

whether [the judgment debtor] if it were New York could

19


direct the [foreign garnishee] to pay over the money it holds on

deposit in [judgment debtors] name to an account in New

York) HBL raises a colorable claim in this case that granting

Hamids ition for turnover of these assets would

impermissibly vest him with greater rights than are enjoyed by

judgment debtor Asia Insurance under the laws of Pakistan

Moreover HBL argues that were it required to turn over

Asia Insurance assets in New York this would not discharge its

obligations to Asia Insurance in Pakistan because Pakistans

courts do not recognize judgments in US courts See HBL Mem

at 23 and n6) HBLs concern for potential inconsistent

judgments and double liability is therefore very real See

~ JP Chase Bank NA v Motorola Inc 846 NYS2d

171 178 87 (1st Dept 2007) (reversing a garnishment ordered

below because the sk of double liability in a foreign court

was too great) i Oppenheimer v Dresdner Bank AG 377 NYS2d

625 632-33 (2d Dept 1975) affd 41 NY2d 949 (1977) (giving

effect to a German courts order of attachment as though it had

been ordered by a New York court in order to avoid the

unconscionable result of double liability) i see also Harris v

Balk 198 US 215 226 (1905) (It ought to be and it is the

object of courts to prevent the payment of any debt twice

over) Indeed the New York Appellate Division Second

Department has gone so far as to state that the admonishment of

20


the Supreme Court of the United States in Harris to prevent

double liability is incorporated into CPLR Articles 52 and 62

See Oppenheimer 377 NYS2d at 632 affd 41 NY2d 949 It

is clear that these judicial priorities are implicated to a far

greater extent here than they were in Commerzbank

It will come as no surprise that the separate entity rule

from its inception was designed to target the concerns of banks

susceptible to such multiple claims first across branches and

more recently across borders __~____~ Motorola Credit Corp

288 F Supp 2d at 560-61 (The putative purpose of this

doctrine is to avoid undue interference with ordinary banking

transactions [and] the original rationale of avoiding

undue disruption of routine banking practices may still carry

weight when the requested transfers involve banks subject to

foreign laws and practices) Even if Koehler II can be read

as some have to suggest that the New York Court of Appeals due

process considerations in the post-judgment context have become

ly relaxed see eg Damien H Weinste New York

The Next Mecca for Judgment Creditors An Analysis of Koehler

v Bank Bermuda Ltd 78 Fordham L Rev 3161 3194-95

(2010) I Court of Appeals for the Second Circuit

elsewhere specifically instructed that a federal court may not

alter an established rule of New York law when there has been no

indication by the New York lawmakers that they have changed

21


their point of view 1I See Sabre Shipping Corp 341 F2d at 53

Even if it is no longer the case after Koehler II that New York

courts have not given any hint of eliminating the separate

entity rule see Motorola Credit Corp 288 F Supp 2d at 561

it remains more than reasonable in light of the policy concerns

described above to expect that the court do so in clear terms if

it is so inclined Moreover this expectation is accord with

the post-Koehler New York state court decisions in Samsun and

Parbulk II

For these reasons Hamids ition must be denied

4 28 USC sect 1292 (b) Appealability

This Court is acutely aware of the lack of clarity

permeating this area of the law following the New York Court of

Appeals decision Koehler II The Court is also aware of the

relative frequency of these CPLR Article 52 turnover proceedings

in both the federal and state courts of New York and therefore

of the relatively high risk of varied and inconsistent views on

this subject going forward With respect to the case at bar

the Court is also concerned about the balance of equities in

denying Hamids petition and thereby ending the temporary

restraint placed on HBL and National Bank of Pakistan by Judge

Cote in her May 20 2011 Order [dkt no 26] only to have the

Court of Appeals for the Second Circuit (or ultimately the New

22


York Court of Appeals) later displace the substance of this

opinion on appeal

For these reasons the Court finds pursuant to 28 USC sect

1292(b) that this Order uinvolves a controlling question of law

as to which there is substantial ground for difference of

opinion and that an immediate appeal from the order may

materially advance the ultimate termination of the litigation

See 28 USC sect 1292(b) i see also Klinghoffer v Achille Lauro

921 F2d 21 23-24 (2d Cir 1990) (noting that a controlling

question of law exists where the reversal of an order would

terminate an action or it involves issues that affect a wide

range of pending cases) Accordingly Petitioner is permitted

to make an application to the Court of Appeals for such an

appeal within 10 days of this Order see 28 USC sect 1292(b)

and Judge Cotes May 20 2011 Order shall be extended for the

same 10-day period at which point Petitioner must seek any

further temporary injunctive relief directly from the Court of

Appeals pursuant to any appeal

CONCLUSION

For the foregoing reasons Plaintiffs motion for

substitution in 98-cv-5951 [dkt no 38] is GRANTED Petitioner

Hamids motion for a turnover writ of execution pursuant to CPLR

sectsect 5225(b) 5227 and Fed R Civ P 69(a) in 11-cv-920 [dkt

no 8] is DENIED Interlocutory appeal from this Order pursuant

23


to 28 USC sect 1292(b) is GRANTED The May 20 2011 Order of

the Court granting temporary injunctive relief to Hamid in 11shy

cv-920 [dkt no 26] is extended for a period of 10 days from

the date of this Order All other remaining requests for relief

and pending motions in both actions are DENIED as moot

SO ORDERED

Dated New York New York6

March h 2012


24


98-cv-5951 is GRANTED and Petitioner Hamids motion for

turnover in 11-cv-920 is DENIED

I Background

The Court presumes the parties familiarity with the

relevant s in these related actions Nevertheless a brief

summary is helpful here

Shaheen and Tajmahal filed the underlying litigation

against Asia Insurance in August 1998 Tajmahal alleged that

As Insurance had failed to pay Tajmahals claim on certain

marine insurance policies and Shaheen claimed it was the third

party beneficiary of those insurance policies See HBL

Memorandum of Law in Response to Order to Show Cause 11-cv-920

(HBL Mem) at 4) On March 262003 the erk of the Court

entered judgment in favor of Shaheen and Tajmahal in the amount

of $36942391 against Asia Insurance Id Three months

after Shaheen and Tajmahal obtained this judgment Shaheen

dissolved ceasing to exist on June 25 2003 Id at 5)

Tajmahal remains a going concern in Pakistan (Id )

On February 28 2009 Hamid commenced the action in 11-cvshy

920 serving the New York branches of HBL and National Bank

Pakistan with a Petition Summons Subpoena and Restraining

Notice to Garnishee Id Hamids petition alleges that (1)

he is the successor in interest to both Tajmahal and Shaheen

(2) the judgment in 98 cv-5951 remains unpaid by Asia Insurance

2


























3








by Asia Insurance


















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branch 1


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denied







9

























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cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























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Parbulk II















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opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























3








by Asia Insurance


















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5

























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branch 1


8


















denied







9

























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11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















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Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24








by Asia Insurance


















4


























5

























6


























7



















branch 1


8


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























5

























6


























7



















branch 1


8


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24

























6


























7



















branch 1


8


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























7



















branch 1


8


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24



















branch 1


8


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


















denied







9

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24

























10


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























11





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24





cannot agree





















12



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24



















Ltd 12 NY3d 533 (Mar 17 2009) 2009 WL 1615261 at 18






13



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24



(1st Dept 2000)























14


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























15






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24






















16

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24

























17


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























18


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























19


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























20


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24


























21










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24










Parbulk II















22



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24



opinion on appeal

















CONCLUSION






23







SO ORDERED


March h 2012


24







SO ORDERED


March h 2012


24


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