The “separate entity rule” is a long-standing judge-made rule requiring that each branch of a bank be treated as a separate entity for purposes of attachment and execution in New York courts.1 Following a 2009 decision by the New York Court of Appeals in Koehler v. Bank of Bermuda,2 confirming that New York’s judgment enforcement statute reaches assets held outside the jurisdiction by a garnishee over whom the court has personal jurisdiction, New York courts have reached varying conclusions as to the continued application of the separate entity rule in the post-judgment enforcement context. Most recently, Southern District Judge Jed S. Rakoff held that the separate entity rule survives Koehler and protects banks subject to personal jurisdiction in New York from being ordered to restrain or turn over a judgment debtor’s assets held by branches outside the jurisdiction.

In our April 2011 column titled “Broad Judgment Enforcement in New York Federal Courts,”3 we reported, it now appears prematurely, the death knell of the separate entity rule in the context of judgment enforcement efforts directed at New York banks with assets of a judgment debtor held outside the jurisdiction. In that column, we discussed the then recent Southern District decision in JW Oilfield Equip. v. Commerzbank4 which relied on Koehler to reject application of the separate entity rule in post-judgment proceedings. Indeed, even the bank in that case, which vigorously resisted the turnover order, conceded that Koehler had “effectively preempt[ed]” the separate entity rule in that context.5

The ‘Motorola’ Decision

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