Eitzen Bulk A/S v. Bank of India

• Decision Date: 05 October 2011
• Docket Number: No. 09 Civ. 10118(AKH).,09 Civ. 10118(AKH).
• Parties: EITZEN BULK A/S, Petitioner, v. BANK OF INDIA, Respondent.
• Court: U.S. District Court — Southern District of New York

827 F.Supp.2d 234

EITZEN BULK A/S, Petitioner,

v.BANK OF INDIA, Respondent.

No. 09 Civ. 10118(AKH).

United States District Court, S.D. New York.

Oct. 5, 2011.

Eric John Matheson, Michael E. Unger, Freehill, Hogan & Mahar, LLP, New York, NY, for Petitioner.

Natalie Ann Napierala, Tiffany Elizabeth Cale, Rosner & Napierala, LLP, Jennifer Lynne Marlborough, Wormser, Kiely, Galef & Jacobs LLP, New York, NY, for Respondent.

ORDER AND OPINION GRANTING MOTION TO COMPEL ANSWERS TO SUBPOENAS SERVED ON NEW YORK BRANCH OF FOREIGN BANK

ALVIN K. HELLERSTEIN, District Judge:

This motion to compel represents yet another episode in the saga of petitioner and judgment creditor Eitzen Bulk A/S's efforts to collect on its judgment against non-party judgment debtor Ashapura Minechem Ltd. See Judgment, Eitzen Bulk A/S v. Ashapura Minechem, Ltd., No. 08 Civ. 8319 (Doc. No. 33) (S.D.N.Y. July 24, 2009). After recognizing and confirming, on Eitzen Bulk's motion, an English arbitral award rendered in Eitzen Bulk's favor, see Memo Endorsement, Eitzen Bulk A/S v. Ashapura Minechem, Ltd., No. 08 Civ. 8319 (Doc. No. 28) (S.D.N.Y. July 14, 2009); see also Order, Eitzen Bulk A/S v. Ashapura Minechem, Ltd., No. 08 Civ. 8319 (Doc. No. 32) (S.D.N.Y. July 24, 2009), I entered judgment in favor of Eitzen Bulk, and against Ashapura, on July 24, 2009, in the amount of $36,606,769.74, plus costs in the amount of two hundred fifty dollars and postjudgment interest at a rate of 5% per annum, see Judgment, Eitzen Bulk A/S v. Ashapura Minechem, Ltd., No. 08 Civ. 8319 (Doc. No. 33) (S.D.N.Y. July 24, 2009). Several months later, on December 3, 2009, Eitzen Bulk initiated this proceeding to enforce its money judgment by filing a petition for a turnover order in the New York State Supreme Court, and by serving upon four separate banks, as garnishees, restraining notices and information subpoenas, pursuant to N.Y. C.P.L.R. §§ 5222 and 5224. Respondent State Bank of India, which has since been dismissed from the proceeding, removed the matter from state court to this court on the basis of its status as “a foreign state,” 28 U.S.C. § 1441(d). Eitzen Bulk now moves to compel the Ml compliance of Respondent Bank of India—the only garnishee bank that remains in the proceeding—in answering Eitzen Bulk's information subpoenas and producing responsive documents. I heard oral argument on Eitzen Bulk's motion on May 23, 2011. For the reasons stated, the motion is granted.

Bank of India received Eitzen Bulk's first subpoena, at Bank of India's New York City office, on December 4, 2009. Unger Decl. Supp. Mot. to Compel Ex. 2, at 1. Although Bank of India responded to that subpoena on December 23, 2009, Bank of India limited its responses to information available from within its New York branch. Id. at 2–3. Subsequently, Eitzen Bulk served Bank of India, at its New York City office, with a number of supplemental subpoenas. Unger Decl. Supp. Mot. to Compel Exs. 3, 4, and 7. Bank of India has responded to most of the requests in most of those subpoenas, but not fully, completely, and responsively. In particular, Bank of India has continued to focus its responses on information available from within its New York branch, see, e.g., Unger Decl. Supp. Mot. to Compel Ex. 6, at 1, although counsel represents that the bank also did ask its Mumbai Overseas branch for information, Tr. of Oral Arg., 2–3, May 23, 2011. There is no suggestion that Bank of India has sought responsive information from any of its other branches.

To date, Bank of India has provided no full, substantive response to Eitzen Bulk's requests for the following:

[a] copy of all document[s] referencing, describing, initiating, or instructing any transaction, transfer of funds, or wire transfer, including Electronic Funds Transfers, which name Judgement Debtor ASHAPURA MINECHEM LTD. or any of its vessels including “ASHA PRESTIGE,” “ASHA ASHIK,” “ASHA HIMANI,” “ASHA MANAN,” from Jan 1, 2008, to present[;]

[a] copy of all communications, of any type, to, from, about, or related to Judgment Debtor ASHAPURA MINECHEM LTD., including letters, e-mails, faxes, or any other form of communication made to, received from, about, referencing or concerning ASHAPURA MINECHEM LTD. and/or its property, debts, credits, investments, transactions, vessels or any other relationship or activities from Jan 1, 2008 to the present[; and]

[s]et forth the date that BANK OF INDIA complied with its obligations under CPLR 5222–A(a)(b)(3), a copy of the communication sent to the debtor, and provide a copy of any response received.

Unger Decl. Supp. Mot. to Compel Ex. 7, at 5. Bank of India has objected to the first two of these three requests on the ground that “[r]esponding to these requests is onerous and unduly burdensome to Bank of India, New York Branch as it does not maintain any account of ASHAPURA MINECHEM LTD” and on the additional ground that “the requested documents cannot be easily obtained to [sic] Bank of India, New York Branch.” Unger Decl. Supp. Mot. to Compel Ex. 6, at 4. Bank of India has made no response to the third above-quoted request.

Under New York law, a judgment creditor may serve an information subpoena on a party other than the judgment debtor only if the judgment creditor certifies that it “has a reasonable belief that the party receiving the subpoena has in [its] possession information about the debtor” that will aid in collection of the judgment. N.Y. C.P.L.R. § 5224(a)(3)(i). The information that Bank of India has provided in response to Eitzen Bulk's subpoenas—some of which Bank of India maintains it was under no legal compulsion to provide, but rather disclosed voluntarily—confirms that Ashapura does, in fact, conduct business with Bank of India's “Mumbai Overseas” branch. In addition, Eitzen Bulk has obtained wire transfer activity reports from Wells Fargo showing that, as recently as July 2010, Ashapura received funds sent via wire transfer to at least one account at Bank of India's overseas branch, although Ashapura's account number is redacted from the reports. Under Reply Decl. Support. Mot. to Compel. Ex. 3,

In its memorandum of law in opposition to the motion to compel, Bank of India describes its New York City office as “a branch of Bank of India[,] which has its head office in Mumbai,” Resp't's Mem. Opp'n Mot. to Compel 3, and counsel acknowledged at oral argument that the New York branch is “not a separate corporation,” Tr. of Oral Arg., 13, May 23, 2011. The State of New York Banking Department likewise considers the New York branch “an office of a foreign bank that is licensed ... to conduct banking business in New York.” Unger Decl. Supp. Mot. to Compel Ex. 11. However, Bank of India states that its New York branch maintains its customers' accounts separately from accounts held at other branches of the bank and “has no authority or control over any accounts held at any other branches.” Kaimal Aff. Opp'n Mot. to Compel ¶¶ 12–13. Moreover, Bank of India states that its New York branch “has no direct access to information regarding any accounts held at any other branches.” Id. ¶ 15.

Bank of India maintains that its New York branch “has provided all of the information available to it” in response to Eitzen Bulk's subpoenas and has “exceeded all obligations that it has under New York law.” Resp't's Mem. Opp'n Mot. to Compel 7. However, by limiting its responses to materials available from within its New York branch, Bank of India has misconstrued the scope of its obligations under New York law.

When a judgment creditor seeks to enforce a money judgment in federal court, the court applies the procedure of the state where the court is located, unless a federal statute applies. Fed. R. Civ. P. 69(a)(1). A judgment creditor also “may obtain discovery from any person,” in aid of execution, in accordance with state procedure. Fed.R.Civ.P. 69(a)(2).

New York law allows a judgment creditor to serve three different types of subpoenas—deposition subpoenas, subpoenas duces tecum, and information subpoenas—on judgment debtors and garnishees alike. See N.Y. C.P.L.R. § 5224(a)(1)-(4). A subpoena is a useful tool in the postjudgment enforcement context, as the scope of disclosure is broad: under N.Y. C.P.L.R. § 5223, “[a]t any time before a judgment is satisfied or vacated, the judgment creditor may compel disclosure of all matter relevant to the satisfaction of the judgment, by serving upon any person a subpoena.” ¹ (emphasis added).

Although Eitzen Bulk labeled as “information subpoenas” the subpoenas it served on Bank of India, the three above-quoted requests—those as to which Bank of India has, as yet, made no substantive response—also seek the production of documents. As a result, those particular requests function not only as part of an information subpoena, but also as a subpoena duces tecum, i.e., a subpoena that “require[es] the production of books and papers for examination at a time and place named therein,” id. § 5224(a)(2).

Under New York law, a subpoena duces tecum served on a corporation doing business or licensed to do business in New York reaches all responsive materials within the corporation's control, even if those materials are located outside New York. See id. § 5224(a–1) (establishing that service of subpoena duces tecum subjects corporation to “the full disclosure prescribed by [N.Y. C.P.L.R. § 5223] whether the materials sought are in the possession, custody or control of the [corporation] within or without the state”). In other words, New York law “expressly allows the securing of out-of-state materials by in-state service of a subpoena on the party in control of the materials,” Koehler v. Bank of Berm. Ltd., 12 N.Y.3d 533, 883 N.Y.S.2d 763, 911 N.E.2d 825, 829 (2009). There is no question that Eitzen Bulk served its subpoenas on Bank of India in state, by service upon Bank of India's New York branch. Nor is there any question that Eitzen Bulk seeks the production of...