     12-1857-cv
     Commonwealth of the Northern Mariana Islands v. Canadian Imperial Bank of Commerce
 1
 2                                       UNITED STATES COURT OF APPEALS
 3                                              For the Second Circuit
 4                                        _______________________________
 5
 6                                                       August Term, 2012
 7
 8                   (Argued: August 22, 2012                                             Decided: May 15, 2013)
 9
10                                                Docket No. 12-1857-cv
11                                          _______________________________
12
13                              COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS,
14                                                                                                       Plaintiff-Appellant,
15
16                                                                —v.—
17
18                                       CANADIAN IMPERIAL BANK OF COMMERCE,
19                                                                                                      Garnishee-Appellee,
20
21                                                     WILLIAM H. MILLARD,
22                                                                                                                 Defendant,
23
24                                                 THE MILLARD FOUNDATION,
25                                                                                                                 Intervenor.
26
27                                          _______________________________
28
29                               Before: CABRANES, STRAUB AND HALL, Circuit Judges.
30                                       _______________________________
31
32   Appeal from an April 12, 2012 order of the United States District Court for the Southern District
33   of New York (Lewis A. Kaplan, Judge) denying Plaintiff-Appellant’s application for a turnover
34   order pursuant to N.Y. CPLR § 5225(b). Recognizing that this case turns upon unresolved issues
35   of New York State law, we certified to the New York Court of Appeals the following two
36   questions:
37
38   (1)     May a court issue a turnover order pursuant to N.Y. CPLR § 5225(b) to an entity that does
39           not have actual possession or custody of a debtor’s assets, but whose subsidiary might
40           have possession or custody of such assets?
41   (2)     If the answer to the above question is in the affirmative, what factual considerations
42           should a court take into account in determining whether the issuance of such an order is
43           permissible?
44



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 1   The New York Court of Appeals has responded in the negative to the first question and thus
 2   declined to answer the second. In light of this decision, we AFFIRM the order of the District
 3   Court and VACATE the injunction which has been in place pending appeal.
 4          _________________________________
 5
 6                          MICHAEL S. KIM, Kobre & Kim LLP, New York, NY, Melanie L. Oxhorn,
 7                               Ithaca, NY, for Plaintiff-Appellant.
 8
 9                          SCOTT D. MUSOFF (Timothy G. Nelson, Gregory A. Litt, on the brief)
10                                Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for
11                                Garnishee-Appellee.
12                                             _________________________________
13   PER CURIAM:

14          This is an appeal from an order of the District Court for the Southern District of New

15   York (Lewis A. Kaplan, Judge) denying Plaintiff Commonwealth of the Northern Mariana

16   Islands’ (“CNMI”) motion for a turnover order under Rule 69 of the Federal Rules of Civil

17   Procedure and N.Y. CPLR § 5225(b), and granting an injunction pending appeal. After hearing

18   oral argument, we certified to the New York Court of Appeals the following questions:

19            1. May a court issue a turnover order pursuant to N.Y. CPLR § 5225(b) to an entity that
20            does not have actual possession or custody of a debtor's assets, but whose subsidiary
21            might have possession or custody of such assets?

22            2. If the answer to the above question is in the affirmative, what factual considerations
23            should a court take into account in determining whether the issuance of such an order is
24            permissible?

25   N. Mar. I. v. Canadian Imperial Bank of Commerce, et al., 693 F.3d 274, 275 (2d Cir. 2012).

26          The New York Court of Appeals accepted certification. N. Mar. I. v. Canadian Imperial

27   Bank of Commerce, 19 N.Y.3d 1040, 954 N.Y.S.2d 2 (N.Y. 2012). The court answered the first

28   question in the negative, holding that in order “for a court to issue a post-judgment turnover

29   order pursuant to CPLR 5225(b) against a banking entity, that entity itself must have actual, not

30   merely constructive, possession or custody of the assets sought. That is, it is not enough that the

31   banking entity’s subsidiary might have possession or custody of a judgment debtor’s assets.” N.


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 1   Mar. I. v. Canadian Imperial Bank of Commerce, No. 58, 2013 WL 1798585, slip op. at 1-2

 2   (N.Y. Apr. 30, 2013). The court thus declined to answer the second question. Id. at 4. In light

 3   of its decision, we now AFFIRM the order of the District Court and VACATE the injunction.

 4           Familiarity with the facts of this case, as set forth in the District Court opinion below and

 5   the New York Court of Appeals’ opinion, is presumed. Previously, the District Court, in a well-

 6   reasoned and thoughtful opinion, denied Plaintiff’s motion for turnover, finding that the

 7   Canadian Imperial Bank of Commerce (“CIBC”) could not be said to have “possession or

 8   custody” over Defendant Millard’s Cayman Islands bank accounts within the meaning of N.Y.

 9   CPLR § 5225(b). N. Mar. I. v. Millard, 287 F.R.D. 204, 213-14 (S.D.N.Y. 2012). In support of

10   its motion, CNMI had pointed to, inter alia, CIBC’s 92 percent ownership of CIBC

11   FirstCaribbean International Bank (“CFIB”), a governance structure by which CIBC had full

12   oversight of CFIB’s operations, as well as overlaps in personnel between the two entities. Id. at

13   206-07. Examining the plain language of the statute, the District Court reasoned that omission in

14   the relevant section of the word “control,” which was used elsewhere in the CPLR, could not be

15   treated as inadvertent. Id. at 210-11. Thus, the court found that while CNMI had focused on the

16   “practical ability” of CIBC to order CFIB to turn over the judgment debtors’ assets, id. at 208, it

17   had not satisfied its burden under N.Y. CPLR § 5225(b) to show that CIBC was in “possession

18   or custody” of the Millards’ CFIB accounts. Further, although the Millards’ accounts were

19   housed at CFIB, that entity, “however closely linked to CNMI,” was not served in this action.

20   Id. at 214.

21           The New York Court of Appeals unambiguously confirmed the District Court’s

22   conclusion when it held that in order “for a court to issue a post-judgment turnover order

23   pursuant to CPLR 5225(b) against a banking entity” it was “not enough that the banking entity’s



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 1   subsidiary might have possession or custody of a judgment debtor’s assets.” N. Mar. I., 2013

 2   WL 1798585, slip op. at 2. The New York Court of Appeals, much like the District Court,

 3   reasoned that the plain language of § 5225(b) “refers only to ‘possession or custody,’ excluding

 4   any reference to ‘control, ’” id., slip op. at 6, and that “[t]he absence of this word is meaningful

 5   and intentional,” id.

 6          With this answer to the dispositive certified question, we now AFFIRM the District

 7   Court’s opinion.

 8          Recognizing that it was dealing with an “unsettled question of New York law on which it

 9   [was] unlikely to have the last word,” the District Court issued an injunction preventing the

10   further dissolution or movement of the Millards’ accounts pending appeal. N. Mar. I., 287

11   F.R.D. at 214-215. Upon affirmance of the District Court’s order denying the motion for a

12   turnover order, we hereby VACATE that injunction. The mandate shall issue forthwith.




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