Out of State Assets of Judgment Debtor May be Garnished if Bank is Subject to NY Jurisdiction
For me, a big part of a discussion regarding whether or not to litigate is figuring out whether there will be anything to collect. Today, in Koheler v. The Bank of Bermuda, Ltd, the New York Court of Appeals answered a certified question that might make you lean toward litigation. The decision extends the reach of a judgment creditor. Provided that a judgment garnishee is subject to New York personal jurisdiction, the garnishee can be ordered to turn over property of a judgment debtor that the garnishee controls even though the property is outside of the state, or the country. Since New York is a banking center, this could have a long reach.
The case was filed in the Southern District of New York in 1993 by an out of state judgment creditor who sought stock certificates or assets of a judgment debtor. The certificates were held in Bermuda by the Bank of Bermuda Limited, which was served through the Bank of Bermuda (New York) Ltd., allegedly a subsidiary or agent.
The District Court ordered the Bank to turn the certificates, or money sufficient to pay the judgment, over to the judgment creditor in 1993. Personal jurisdiction was litigated for ten years. Finally, in 2003, Bank of Bermuda, Ltd consented to personal jurisdiction.
This case appears to have a life span reminiscent of Jarndyce v. Jarndyce, and today’s opinion most probably won’t end it -- there is a three judge dissent that asserts that the majority holding may be unconstitutional. Meanwhile, if a judgment debtor or even a potential defendant has assets in a bank that is related to a bank located in New York, it bears consideration.
