13‐2535‐cv(L)
Motorola Credit Corp. v. Standard Chartered Bank
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2014
(Argued: October 11, 2013 Decided: November 14, 2014)
Docket Nos. 13‐2535‐cv(L), 13‐2639‐cv(con)
MOTOROLA CREDIT CORPORATION,
Plaintiff‐Counter‐Defendant‐
Appellant‐Cross‐Appellee,
NOKIA CORPORATION,
Plaintiff‐Counter‐Defendant,
MOTOROLA, INC., KROLL ASSOCIATES, INC., CHRISTOPHER B. GALVIN, KEITH J.
BANE, WALTER KEATING, ED HUGHES, ERNST KRAMER,
Counter‐Defendants,
v.
STANDARD CHARTERED BANK,
Appellee‐Cross‐Appellant,
MURAT HAKAN UZAN, CEM CENGIZ UZAN,
Defendants‐Counter‐Claimants,
KEMAL UZAN, LIBANANCO HOLDINGS CO. LIMITED, MELAHAT UZAN, AYSEGUL
AKAY, ANTONIO LUNA BETANCOURT, UNIKOM ILETISM HIZMETLERI PAZARLAMA
A.S., STANDART PAZARLAMA A.S., STANDART TELEKOMUNIKASYON BILGISAYAR
HIZMETLERI A.S.,
Defendants.
Before:
CALABRESI, CHIN, and DRONEY, Circuit Judges.
Appeal from an order of the United States District Court for the
Southern District of New York (Rakoff, J.) holding that the ʺseparate entity ruleʺ
precludes a court from ordering a garnishee bank operating branches in New
York to restrain assets of judgment debtors held in foreign branches of the bank.
REMANDED to the district court to vacate the restraining order on
defendantsʹ assets.
HOWARD H. STAHL (George R. Calhoun, on the brief),
Fried, Frank, Harris, Shriver & Jacobson LLP,
Washington D.C., for Motorola Credit Corporation,
and Nokia Corporation.
BRUCE EDWARD CLARK (Patrick B. Berarducci, Sharon L.
Nelles, Bradley P. Smith, on the brief), Sullivan &
Cromwell LLP, New York, New York, for
Standard Chartered Bank.
Dwight A. Healy, White & Case LLP, for Amici Curiae
Institute of International Bankers, The Clearing
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House, European Banking Federation, and New York
Bankers Association.
PER CURIAM:
This appeal challenges an order entered by the United States District
Court for the Southern District of New York (Rakoff, J.), holding that the
ʺseparate entity ruleʺ precludes a court from ordering a garnishee bank with
branches in New York to restrain assets of judgment debtors held in foreign
branches of the bank. The district court initially granted a restraining order, then
held that defendantsʹ assets in foreign banks could not be restrained because of
the separate entity rule, and then stayed the release of the restraint on assets
pending appeal.
The facts are set forth in detail in our opinion filed in this case on
January 14, 2014. See Tire Engʹg & Distrib. L.L.C. v. Bank of China Ltd., 740 F.3d
108, 112‐13 (2d Cir. 2014). In that opinion, we certified the following question to
the New York Court of Appeals: ʺwhether the separate entity rule precludes a
judgment creditor from ordering a garnishee bank operating branches in New
York to restrain a debtorʹs assets held in foreign branches of the bank.ʺ1 Id. at
118.
1 We certified a second, related question from a companion case, namely, ʺwhether
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In an opinion filed October 23, 2014, the Court of Appeals answered
the certified question. Motorola Credit Corp. v. Standard Chartered Bank, No. 162
(N.Y. Oct. 23, 2014), available at 2014 WL 5368774. The Court answered the
question in the affirmative, holding that ʺa judgment creditorʹs service of a
restraining notice on a garnishee bankʹs New York branch is ineffective under the
separate entity rule to freeze assets held in the bankʹs foreign branches.ʺ Id., slip
op. at 13. The Court of Appeals thus explicitly adopted the separate entity rule,
concluding that ʺit is a firmly established principle of New York law, with a
history of application both before and after the 1962 adoption of the [New York
Civil Practice Law and Rules].ʺ Id., slip op. at 8.
The Court rejected plaintiffsʹ contention that its decision in Koehler v.
Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009), abrogated the rule, observing that ʺwe
did not analyze, much less overrule, the separate entity doctrine in Koehler.ʺ
Motorola, No. 162, slip op. at 10. A minority of the Court argued that ʺthe
majorityʹs adoption of the separate entity rule [was] inconsistent with Koehler,ʺ
id., slip op. at 14 (Abdus‐Salaam, J., dissenting), and that the rule ʺhas no
the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating
branches in New York to turn over a debtorʹs assets held in foreign branches of the bank.ʺ Tire
Engʹg, 740 F.3d at 117. The parties in the companion case entered into a stipulation to dismiss
the claims on February 18, 2014, which we approved on February 24, 2014. The New York
Court of Appeals accordingly withdrew that certified question. Tire Engʹg & Distrib. L.L.C. v.
Bank of China Ltd., 22 N.Y.3d 1152 (2014).
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application to these modern times,ʺ id., slip op. at 1 (Abdus‐Salaam, J.,
dissenting). The majority ruled, however, ʺthat abolition of the separate entity
rule would result in serious consequences in the realm of international banking
to the detriment of New Yorkʹs preeminence in global financial affairs.ʺ Id., slip
op. at 13 (majority opinion).
The ruling of the Court of Appeals resolves the principal claims
before us. We hold that the district court correctly concluded that the separate
entity rule precludes the restraint of assets held in Standard Chartered Bankʹs
foreign branches. We thus remand the case to the district court, with instructions
to vacate the restraining order on defendantsʹ assets.
REMANDED.
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