Northern Mariana Islands v. Millard
287 F.R.D. 204
S.D.N.Y.2012Background
- CNMI is a judgment creditor with two unpaid tax judgments against William and Patricia Millard, initially about $18.3 million each, now exceeding $118 million with interest.
- Millards renounced U.S. citizenship and reside in the Cayman Islands; CNMI registered the judgments in this district and in the Southern District of Florida in 2011.
- CNMI seeks turnover under Rule 69 and NY CPLR 5225, plus a preliminary injunction and additional discovery against funds CNMI alleges are held by CFIB Cayman accounts via CIBC.
- CIBC had previously been restrained and instructed to preserve documents related to accounts; proceedings are under seal and complexly coordinated across judges.
- Court denies turnover because CFIB Cayman accounts are not in the possession or custody of CIBC under CPLR 5225(b), but grants an injunction pending appeal to preserve the status quo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CPLR 5225(b) turnover requires possession or custody of property | CNMI argues possession/control exists via practical power over CFIB through CIBC. | CIBC contends CFIB is a separate entity; no possession or custody by CIBC. | Turnover denied; lack of possession or custody by CIBC. |
| Whether this court has jurisdiction to order turnover against CIBC | CNMI asserts ancillary enforcement extends to assets held by a third party. | CIBC denies exposure or control over CFIB assets. | Court has jurisdiction under ancillary enforcement; CNMI can proceed in principle. |
| Whether an injunction pending appeal should issue to preserve assets | CNMI shows likelihood of success on merits and risk of dissipation; irreparable harm without relief. | CIBC disputes likelihood of success and harm to bank; no need for stay. | Injunction pending appeal granted to maintain status quo. |
| Whether CNMI's discovery motion should be granted or denied as moot | Discovery needed to locate assets and gather evidence of control. | Discovery moot if turnover is denied. | Discovery motion denied as moot. |
Key Cases Cited
- Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (N.Y. 2009) (discusses extraterritorial reach and control concepts in turnover context)
- Tomlinson v. El Paso Corp., 245 F.R.D. 470 (D. Colo. 2007) (discovery reach beyond possession through control or right to obtain)
- Bank of N.Y. v. Meridien BIAO Bank Tanz. Ltd., 171 F.R.D. 135 (S.D.N.Y. 1997) (control includes legal right or practical ability to obtain documents)
- In re Auction Houses Antitrust Litig., 196 F.R.D. 444 (S.D.N.Y. 2000) (factors and approach to cross-border discovery and jurisdiction)
- Dole Food Co. v. Patterson, 538 U.S. 468 (U.S. 2003) (corporate law principles on control and asset reach)