Pursuant to CPLR 5225, a Parent Bank Can Not Be Garnished Because a Judgment Debtor’s Assets Are Held in a Foreign Subsidiary Bank

The question before the Court of Appeals was whether a judgment creditor, pursuant to CPLR 5225, can obtain a turnover order against a bank to garnish the assets held by the bank’s foreign subsidiary. The plaintiff in this case, the Commonwealth of the Northern Mariana Islands, obtained two tax judgments against the tax debtors (the Millards) for over $18,000,000 each. The Millards left the commonwealth before the judgments were issued and settled in the Cayman Islands. The judgments were registered in the Southern District of Florida. The Canadian Imperial Bank of Commerce (CIBC) had a branch in New York. The commonwealth sought to garnish CIBC under the theory that the Millards had accounts in subsidiaries of CIBC, namely First Carribean International Bank Limited (CFIB) or its affiliates in the Cayman Islands. In determining the commonwealth could not get at the Millards assets in the Cayman Islands through the parent Canadian bank, the Court of Appeals, in a full-fledged opinion by Judge Rivera, wrote:

Under CPLR article 52, a special proceeding for a turnover order is the procedural mechanism devised by the Legislature to enforce a judgment against an asset of a judgment debtor, held in the “possession or custody” of a third-party.* * * … [W]e interpret the omission of “control” from section 5225 (b) as an indication that “possession or custody” requires actual possession. Commonwealth of the Northern Mariana Islands v Canadian Imperial Bank of Commerce …, No 58, CtApp, 4-30-13