95 F.3d 848 (9th Cir. 1996), 95-56823, Hilao v. Estate of Marcos

Docket Nº:95-56823.
Citation:95 F.3d 848
Party Name:96 Daily Journal D.A.R. 11,080 Celsa HILAO, et al., Plaintiffs-Appellees, v. ESTATE OF Ferdinand E. MARCOS, Defendant, and Swiss Bank Corporation and Credit Suisse, Appellants.
Case Date:September 11, 1996
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 848

95 F.3d 848 (9th Cir. 1996)

96 Daily Journal D.A.R. 11,080

Celsa HILAO, et al., Plaintiffs-Appellees,


ESTATE OF Ferdinand E. MARCOS, Defendant,


Swiss Bank Corporation and Credit Suisse, Appellants.

No. 95-56823.

United States Court of Appeals, Ninth Circuit

September 11, 1996

Argued and Submitted June 18, 1996.

Page 849

Michael H. Rauch, Fried, Frank, Harris, Shriver & Jacobson, New York City; Paul J. Bschorr, Dewey Ballantine, New York City, for appellants.

Page 850

Robert A. Swift, Kohn Swift & Graf, Philadelphia, PA; Jon M. Van Dyke, Honolulu, HI, for plaintiffs-appellees.

Appeal from the United States District Court, for the Central District of California, Manuel L. Real, District Judge, Presiding. D.C. No. MISC 30412-R.

Before: FLETCHER, PREGERSON, and RYMER, Circuit Judges.

FLETCHER, Circuit Judge:

This appeal arises out of proceedings to enforce a judgment of nearly $2 billion against the Estate of Ferdinand E. Marcos in favor of nearly 10,000 class plaintiffs (referred to hereinafter collectively as "Hilao") who suffered (or are family members of those who suffered) torture, "disappearance", and summary execution during Marcos' tenure as president of the Philippines. 1 Swiss Bank Corporation and Credit Suisse (the Banks) appeal jointly from an order of the district court directing them to deposit into the court registry all assets in deposit accounts at the Banks that are claimed by the Estate of Ferdinand Marcos. We have jurisdiction under 28 U.S.C. § 1292(a)(1) and vacate the order.


Hilao registered its Hawai'i judgment against the Estate in the Central District of California in May 1995 pursuant to 28 U.S.C. § 1963. That same month, writs of execution and notices of levy, together with notices of deposition in aid of execution, were served on the Los Angeles wholesale branch of Credit Suisse and on the Los Angeles representative office of Swiss Bank Corporation. 2 The writs and notices purported to levy upon deposit accounts "opened, closed or controlled, directly or indirectly, by Ferdinand E. Marcos in his own name or under [any of 26 enumerated] aliases or pseudonyms". The Banks have submitted apparently undisputed declarations stating that the Los Angeles offices have no deposit accounts or information concerning deposit accounts in those names and that the Los Angeles offices have no access to information concerning the Banks' deposit accounts located in Switzerland. Since 1986, the Marcos accounts in banks in Switzerland have been frozen by order of the Swiss Federal Council or the Swiss Federal Office of Police in connection with a request by the Republic of the Philippines for international legal assistance; the Republic has alleged that the funds on deposit were stolen from the government's coffers and has attempted to reclaim them. Each Bank completed the required garnishee's memorandum in response to the notice of levy and provided the same information.

On 17 May 1995, the Banks both moved to vacate and quash the levies and the deposition notices. Before replying to these motions, Hilao served the Banks with additional notices of depositions. Hilao and the Banks then agreed that the Banks would adjourn the hearing date on the motions to vacate and would produce certain witnesses and documents; the Banks reserved all rights to object to Hilao's execution and discovery efforts. The banks produced documents from their Los Angeles offices, made certain objections to discovery notices and subpoenas, and produced four deponents in Los Angeles and Toronto.

On 20 October 1995, Hilao moved for entry of judgment against the Banks in the full amount of the judgment against the Estate and accrued interest for the Banks' alleged failure to comply with the levies. Later, Hilao moved for sanctions against the Banks.

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On 8 December 1995, the district court heard argument on all the pending motions. On 11 December, the court entered an order that, while not mentioning any of the pending motions, directed the Banks to deposit into the court registry "as an interpleader proceeding all assets in the possession of the BANKS that are the subject matter of this proceeding".

The Banks filed a notice of appeal on 14 December 1995. The same day, the Banks moved the district court for a stay of the order pending appeal; the motion was denied on 19 December 1995. This court then granted a stay of the district court's order pending this expedited appeal.


Questions of law, whether federal or state, are reviewed de novo. Twenty-Three Nineteen Creekside, Inc. v. Commissioner, 59 F.3d 130, 131 (9th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1034, 134 L.Ed.2d 111 (1996); Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). While a district court's decision to enter an injunction is reviewed for an abuse of discretion, America West Airlines, Inc. v. National Mediation Board, 986 F.2d 1252, 1258 (9th Cir.1992), issues of law underlying a district court's injunction are reviewed de novo, Miller v. California Pacific Medical Center, 19 F.3d 449, 455 (9th Cir.1994). A district court's interpretation of federal rules is reviewed de novo. Claar v. Burlington Northern R.R. Co., 29 F.3d 499, 500 (9th Cir.1994) (Federal Rules of Evidence).


I. Effectiveness of Levy

Federal Rule of Civil Procedure 69(a) governs execution proceedings in federal courts. It provides that

[t]he procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought, except that any statute of the United States governs to the extent that it is applicable.

We therefore begin our analysis with California law.

California enacted in 1982 a revised comprehensive scheme governing the enforcement of judgments, the Enforcement of Judgments Law ("EJL"), which is codified as Title 9 of California's Code of Civil Procedure. The law includes an entire division on the enforcement of money judgments. See Cal.Civ.Proc. §§ 695.010 et seq. The EJL makes all property of a judgment debtor subject to enforcement of the judgment and allows enforcement by levy against that property, including a debtor's deposit accounts. Cal.Civ.Proc. §§ 695.010, 699.710, 699.080(a)(5). The manner in which a judgment creditor can levy upon a deposit account is specifically set forth: "[T]o levy upon a deposit account, the levying officer shall personally serve a copy of the writ of execution and a notice of levy on the financial institution with which the deposit account is maintained." Cal.Civ.Proc. § 700.140(a). The general provisions of the EJL further provide that "if a writ, notice, order, or other paper is required to be personally served under this title" and "[i]f the service is on ... a financial institution", then "service shall be made at the office or branch that has actual possession of the property levied upon or at which a deposit account levied upon is carried". Cal.Civ.Proc. § 684.110(a),(c). Because there is no dispute that the deposit accounts of the Estate are not carried at the Banks' Los Angeles offices, under California law the personal service of the writs of execution and notices of levy at those locations was ineffective to levy on the Estate's accounts. 3

Page 852

Hilao is incorrect in its assertion that provisions of the International Banking Act of 1978, 12 U.S.C. §§ 3101 et seq., constitute an applicable federal statute that under Rule 69(a) preempts California execution law. Under 12 C.F.R. § 28.11, promulgated under the Act, "[a] foreign bank operating at any Federal branch or agency is subject to service of process at the location of each such Federal branch or agency". 4 The offices at which the notices of levy were served, however, are not Federal branches or agencies. The International Banking Act provides that "a foreign bank ... may ... establish one or more Federal branches or agencies in any State in which ... it is not operating a branch or agency pursuant to State law", 12 U.S.C. § 3102(a)(1), and California's Financial Code provides that "[n]o foreign (other nation) bank which maintains a federal agency or federal branch in this state shall concurrently be licensed to maintain an agency or branch office in this state", Cal.Fin.Code § 1707. Thus, federal and state branches and agencies of foreign banks are mutually exclusive under both federal and state law. Credit Suisse's Los Angeles branch is licensed by California's State Banking Department as a wholesale branch, while Swiss Bank Corporation's Los Angeles office is licensed by the state as a representative office. Since the Banks both have state-licensed branches in California, 5 their California offices cannot be federal agencies or branches. Therefore, service of the notice of levy at the Los Angeles offices was not authorized by 12 C.F.R. § 28.11 in derogation of California execution law under Rule 69(a).

A more difficult question is whether or not Rule 4.1 of the Federal Rules of Civil Procedure preempts California execution law under Rule 69(a) as to service of a notice of levy. 6 Rule 4.1 provides that "[p]rocess other than a summons ... or subpoena ... shall be served by a United States marshal, a deputy United States marshal, or a person specially appointed for that purpose" and that "[t]he process may be served anywhere within the territorial limits of the state in which the district court is located". 7 Hilao argues that it complied with these requirements and therefore service was proper and the levy effective.

Case law in at least one circuit appears to hold that a general rule of procedure such as Rule 4.1 does not apply in supplementary execution...

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