19-3121
U.S. Bank National Association v. Triaxx Asset Management LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT
ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
21st day of October, two thousand twenty.
Present:
DEBRA ANN LIVINGSTON,
Chief Judge,
DENNY CHIN,
Circuit Judge,
KATHERINE POLK FAILLA,
District Judge.*
_____________________________________
U.S. BANK NATIONAL ASSOCIATION, solely in its
capacity as Trustee,
Interpleader Plaintiff-Appellee,
v. 19-3121
TRIAXX ASSET MANAGEMENT LLC, FKA ICP ASSET
MANAGEMENT LLC, SERENGETI ASSET
MANAGEMENT, LP, TRIAXX PRIME CDO 2006-2
LTD., TRIAXX PRIME CDO 2007-1, LTD.,
Interpleader Defendants-Cross
Defendants-Appellants,
v.
*
Judge Katherine Polk Failla, of the United States District Court for the Southern District of New York,
sitting by designation.
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PACIFIC INVESTMENT MANAGEMENT COMPANY,
LLC,
Interpleader Defendant-Cross
Defendant-Appellee.
CERBERUS CAPITAL MANAGEMENT, L.P.,
Interpleader Defendant-Cross
Claimant.
_____________________________________
For Interpleader Plaintiff-Appellee: ALEXANDER S. LORENZO (Elizabeth A. Buckel on the
brief), Alston & Bird LLP, New York, NY
For Interpleader Defendant-Cross MICHAEL A. HANIN, Kasowitz Benson Torres LLP,
Defendant-Appellant Serengeti Asset New York, NY; Henry B. Brownstein, Kasowitz
Management, LP: Benson Torres LLP, Washington, DC
For Interpleader Defendants-Cross ERIC N. WHITNEY, Arnold & Porter Kaye Scholer LLP,
Defendants-Appellants Triaxx New York, NY
Asset Management LLC, FKA ICP
Asset Management LLC, Triaxx
Prime CDO 2006-2 Ltd., and Triaxx
Prime CDO 2007-1, Ltd.:
For Interpleader Defendant-Cross SANDEEP SAVLA (Greg Mortenson on the brief), Latham
Defendant-Appellee: & Watkins LLP, New York, NY
Appeal from a judgment of the United States District Court for the Southern District of
New York (Nathan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Triaxx Asset Management LLC (“Triaxx”), Serengeti Asset Management, LP, and their
co-appellants (together, “Appellants”) appeal from a September 17, 2019 judgment of the United
States District Court for the Southern District of New York (Nathan, J.) entered after a bench trial.
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On appeal, Appellants do not challenge the substance of the district court’s judgment, but instead
assert that the district court erred by concluding it had subject matter jurisdiction over the case.
We assume the parties’ familiarity with the underlying facts, the procedural history of the case,
and the issues on appeal.
* * *
We review the district court’s factual findings regarding subject matter jurisdiction for
clear error and its legal conclusion as to whether subject matter jurisdiction exists de novo. Oscar
Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 193 (2d Cir. 2003). Below, the district court
concluded that subject matter jurisdiction existed under the Edge Act, 12 U.S.C. § 632, which
gives federal courts jurisdiction over certain actions involving nationally chartered corporations.
For Edge Act jurisdiction to exist, three things must be true: first, the suit must be a civil action;
second, a “corporation organized under the laws of the United States” must be a party; and third,
the suit must “aris[e] out of transactions involving international or foreign banking, or banking in
a dependency or insular possession of the United States, or out of other international or foreign
financial operations.” Id.; see Am. Int’l Grp., Inc. v. Bank of Am. Corp., 712 F.3d 775, 780 (2d Cir.
2013). In American International Group, we further clarified that the federally chartered
corporation must actually engage in the relevant offshore transaction for Edge Act jurisdiction to
exist. Am. Int’l Grp., Inc., 712 F.3d at 784. Because this action is indisputably civil, Appellants
focus their arguments on the second two requirements for Edge Act jurisdiction, arguing neither
is met. For the reasons that follow, we agree with the district court that the Edge Act provides
subject matter jurisdiction.
First, Appellants challenge the district court’s conclusion that U.S. Bank—which is the
only federally chartered corporation involved—is actually a party. They note that their amended
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crossclaim (which is at issue here) did not name U.S. Bank as a party. Further, they argue that this
omission is appropriate because U.S. Bank faces no risk of liability in this dispute because its role
is limited to taking ministerial actions at the behest of Triaxx. And therefore, because there is no
risk of liability, they argue U.S. Bank is not a party for the purposes of the Edge Act. See
Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 792 (2d Cir. 1980)
(concluding that Edge Act jurisdiction existed where the federally chartered corporation faced
potential liability).
We agree with the district court, however, that the Corporacion Venezolana standard is
met in this case. While U.S. Bank is indeed not named as a party in the amended crossclaim, the
pleading asks for the court’s judgment to be binding on the Trustee all the same. Moreover, Triaxx
initiated proceedings in the Cayman Islands against U.S. Bank asking for essentially the same
declaratory relief as in its crossclaim in the district court and, accordingly, that action was stayed
pending the outcome of these proceedings. Our conclusion is further buttressed by our reading of
the relevant Indentures, which we understand to make U.S. Bank potentially responsible, in part,
to the Noteholders and more than a mere passive instrumentality of Triaxx. Indeed, during oral
argument, counsel for PIMCO directed the Court’s attention to sections of the Indentures to this
effect. Taken together, these facts lead us to conclude that U.S. Bank, which commenced the
original interpleader, faced a risk of liability in this case and, as such, is a party for the purposes
of the Edge Act.
Second, Appellants argue that this case does not have the required foreign elements for
Edge Act jurisdiction. In essence, they urge us to look closely at the specific consequences that
flow from the district court’s decision and to conclude that because there are no foreign elements,
Edge Act jurisdiction is inappropriate. But this Circuit’s cases do not require such a tight
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connection. For example, in Wilson v. Dantas we held that the Edge Act created jurisdiction over
breach of fiduciary duty and contract claims arising out of work done by an individual as part of
an international investment program. 746 F.3d 530, 534–35 (2d Cir. 2014). The relevant question
is whether the claim arises out of foreign transactions, not whether foreign transactions will result
from relief being granted or withheld.
Here the relevant claims do indeed “aris[e] out of . . . international or foreign financial
operations” by U.S. Bank. 12 U.S.C. § 632. In its role as Trustee, U.S. Bank entered into a set of
complex financial relationships that, in addition to other obligations, have resulted in it holding a
lien over securities held by the Cayman Islands-based Issuers. This is thus a foreign financial
transaction. Moreover, Appellants’ crossclaim arises out of this same web of financial
relationships. Indeed, for the sale ordered by the district court to take place, U.S. Bank must release
the lien. That is sufficient.
In sum, based on these facts we conclude that U.S. Bank is indeed a party and furthermore
that this suit arises out of its foreign financial activities. And therefore, because this is a civil case,
the Edge Act gave the district court subject matter jurisdiction to decide its merits.
* * *
We have considered Appellants’ remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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