On Oct. 23, a divided New York Court of Appeals issued a significant decision which adversely impacts on New York judgment creditors’1 rights to collect on judgments against defendants’ funds located outside of the United States. Motorola Credit Corp. v. Standard Chartered Bank, ___ N.Y. 3d ___, 2014 WL 5368774 (Oct. 23, 2014). In its ruling on a question certified to it by the U.S. Court of Appeals for the Second Circuit, the New York Court of Appeals diminished the significance and reach of its recent decision in Koehler v. Bank of Bermuda, 12 N.Y.3d 533 (2009). In Koehler, the New York Court of Appeals held that a court in New York may order a foreign bank over which the court has personal jurisdiction to turn over to a judgment creditor stock certificates owned by the judgment debtor, even when those stock certificates are held by the foreign bank outside of the United States.
The Koehler decision was understood by many as permitting a judgment creditor to attach the defendant’s monies held outside the United States in a foreign bank account through the service of a restraining notice under NY CPLR 5222 upon the New York branch of that foreign bank.2 However, in Motorola, the court ruled that the service of a restraining notice on the New York branch of a multinational bank does not result in the attachment of the defendants’ funds in accounts located in the bank’s foreign branches. In reaching this holding, the Motorola majority expressly based its decision on the New York common law doctrine known as, the “separate entity rule.”
‘Motorola’
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