16‐1958‐cv Ladjevardian v. Republic of Argentina
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 COURTʹS 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 ʺSUMMARY ORDERʺ). A PARTY CITING 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 17th day of October, two thousand sixteen.
PRESENT: DENNY CHIN, SUSAN L. CARNEY, Circuit Judges. KATHERINE B. FORREST, District Judge.* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x MOHAMMAD LADJEVARDIAN, LAINA CORP., PENRIN SERVICES B.V.I., LAYMAN B.V., BAKA N.V., TROYTON CONSULTANTS LTD., SPHINX OVERSEA LTD., BLUEVIEW HOLDINGS LTD., JAHANSOOZ SALEH, Plaintiffs‐Appellants,
MEHDI SHARIFAN, KAMBIZ ANSARI, TIAL INC. B.V.I., MOZAFAR JANDAGHI, FARIDEH JANDAGHI, MOWDAR CORP., Plaintiffs,
v. 16‐1958‐cv
* Judge Katherine B. Forrest, United States District Court for the Southern District of New York, sitting by designation. THE REPUBLIC OF ARGENTINA, Defendant‐Appellee,
THE BANK OF NEW YORK MELLON, Non‐Party‐Appellee.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFFS‐APPELLANTS: JESSICA J. SLEATER, Andersen Sleater LLC, New York, New York.
FOR DEFENDANT‐APPELLEE: CARMINE D. BOCCUZZI, Michael M. Brennan, Richard Freeman, Clearly Gottleib Steen & Hamilton LLP, New York, New York.
FOR NON‐PARTY‐APPELLEE: ERIC A. SHAFFER and Evan K. Farber, Reed Smith LLP, New York, New York.
Appeal from the United States District Court for the Southern District of
New York (Griesa, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the order of the district court is AFFIRMED.
Plaintiffs‐appellants (ʺappellantsʺ), who hold bonds issued by and
judgments against defendant‐appellee the Republic of Argentina (the ʺRepublicʺ),
appeal from a May 26, 2016 opinion and order of the United States District Court for the
Southern District of New York denying appellantsʹ motions for writs of execution and
turnover orders directed at purported Argentine assets held by two non‐party financial
institutions, JPMorgan Chase & Co. (ʺJPMʺ) and Bank of New York Mellon (ʺBNYMʺ).
‐ 2 ‐ BNYM intervenes as a non‐party in opposition to the appeal. We assume the partiesʹ
familiarity with the underlying facts, procedural history, and issues on appeal.
On February 5, 2016, the Republic announced a global proposal for
settling the claims of all holders of outstanding defaulted Argentine bonds.
Bondholders owning the vast majority of outstanding claims thereafter entered into
settlement agreements with the Republic. Appellants did not. The district court
authorized the Republic to issue additional bonds to raise the funds to pay the
settlements. The Republic raised $9.371 billion.
On April 21, 2016, the Republic entered into a settlement trust agreement
with BNYM (the ʺAgreementʺ), naming BNYM as trustee. The Agreement provided
that on the closing date, BNYM would receive the proceeds from the bond sales and
thereafter would hold the funds in trust for the benefit of the settlement beneficiaries.
On April 26 and 29, 2016, appellants moved under Federal Rule of Civil Procedure 69(a)
for writs of execution and turnover orders against the Republic, JPM, and BNYM,
pursuant to New York Civil Practice Law and Rules (ʺCPLRʺ) §§ 5225(b) and 5230,
targeting the proceeds from the bond issuance that were ʺnot [being] used to payʺ
settlements with other bondholders. Joint App. at 26‐29. In their reply brief to the
district court below, appellants abandoned their claim to any assets held by JPM. The
‐ 3 ‐ district court denied their motion for a writ of execution and turnover order as to
BNYM.1
Appellants argue that the district court (1) abused its discretion in
determining that appellants are not entitled to a turnover order against the BNYM trust
funds, (2) erred in determining that the trust funds were immune from execution under
the Foreign Sovereign Immunities Act (ʺFSIAʺ), and (3) abused its discretion in denying
appellantsʹ motion for discovery. Because we conclude that the district court did not
abuse its discretion in denying the motion for a writ of execution and turnover order
against BNYM, we need not address appellantsʹ FSIA argument.
We review a denial of a writ of execution and turnover order for abuse of
discretion. See Aurelius Capital Partners, LP v. Republic of Argentina, 584 F.3d 120, 129 (2d
Cir. 2009). CPLR § 5225(b) permits a judgment creditor to obtain assets that are owned
by the judgment debtor but in the possession of a third party when two requirements
are met: first, the judgment debtor has an interest in the property; and second, the
judgment debtor is entitled to possess the property, or, in the alternative, the judgment
creditorʹs rights are superior to those of the party in possession. Beauvais v. Allegiance
Sec., Inc., 942 F.2d 838, 840 (2d Cir. 1991). Here, the district court correctly denied
appellantsʹ motion for a writ of execution and turnover order because the Republic does
1 The district court noted that ʺJPMʹs only role in the bond issuance was as an initial purchaser of bonds for resale to its clients,ʺ and it did not receive any bond proceeds. Special App. at 5.
‐ 4 ‐ not have an interest in the trust funds, the Republic is not entitled to possess the trust
funds, and the appellants do not have rights to the trust funds that are superior to
BNYMʹs rights.
The Agreement provided that the Republic irrevocably assigned its ʺright
to receive the full amount of the [proceeds from the bond sale] upon the closing . . . of
the issuance of the New Bondsʺ to be held by the trustee for the benefit of the
bondholders who had entered into settlement agreements. Joint App. at 185. It left the
Republic without ʺany right, title or interest (including, for the avoidance of doubt,
proprietary or reversionary interest) of any kindʺ in the proceeds. Id. at 187. This
language is unambiguous, and appellantsʹ argument that the Republic has an interest in
the trust funds is directly contradicted by the plain language of the Agreement. The
BNYM account is not, as appellants suggest, an ordinary bank account, but a trust. See
In re Doman, 890 N.Y.S.2d 632, 634 (2d Depʹt 2009) (express trust requires, inter alia,
ʺactual delivery of the fund or property, with the intention of vesting legal title in the
trusteeʺ (emphasis added)). BNYM is the trustee of the account, not the Republicʹs
agent.
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16‐1958‐cv Ladjevardian v. Republic of Argentina
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 COURTʹS 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 ʺSUMMARY ORDERʺ). A PARTY CITING 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 17th day of October, two thousand sixteen.
PRESENT: DENNY CHIN, SUSAN L. CARNEY, Circuit Judges. KATHERINE B. FORREST, District Judge.* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x MOHAMMAD LADJEVARDIAN, LAINA CORP., PENRIN SERVICES B.V.I., LAYMAN B.V., BAKA N.V., TROYTON CONSULTANTS LTD., SPHINX OVERSEA LTD., BLUEVIEW HOLDINGS LTD., JAHANSOOZ SALEH, Plaintiffs‐Appellants,
MEHDI SHARIFAN, KAMBIZ ANSARI, TIAL INC. B.V.I., MOZAFAR JANDAGHI, FARIDEH JANDAGHI, MOWDAR CORP., Plaintiffs,
v. 16‐1958‐cv
* Judge Katherine B. Forrest, United States District Court for the Southern District of New York, sitting by designation. THE REPUBLIC OF ARGENTINA, Defendant‐Appellee,
THE BANK OF NEW YORK MELLON, Non‐Party‐Appellee.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFFS‐APPELLANTS: JESSICA J. SLEATER, Andersen Sleater LLC, New York, New York.
FOR DEFENDANT‐APPELLEE: CARMINE D. BOCCUZZI, Michael M. Brennan, Richard Freeman, Clearly Gottleib Steen & Hamilton LLP, New York, New York.
FOR NON‐PARTY‐APPELLEE: ERIC A. SHAFFER and Evan K. Farber, Reed Smith LLP, New York, New York.
Appeal from the United States District Court for the Southern District of
New York (Griesa, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the order of the district court is AFFIRMED.
Plaintiffs‐appellants (ʺappellantsʺ), who hold bonds issued by and
judgments against defendant‐appellee the Republic of Argentina (the ʺRepublicʺ),
appeal from a May 26, 2016 opinion and order of the United States District Court for the
Southern District of New York denying appellantsʹ motions for writs of execution and
turnover orders directed at purported Argentine assets held by two non‐party financial
institutions, JPMorgan Chase & Co. (ʺJPMʺ) and Bank of New York Mellon (ʺBNYMʺ).
‐ 2 ‐ BNYM intervenes as a non‐party in opposition to the appeal. We assume the partiesʹ
familiarity with the underlying facts, procedural history, and issues on appeal.
On February 5, 2016, the Republic announced a global proposal for
settling the claims of all holders of outstanding defaulted Argentine bonds.
Bondholders owning the vast majority of outstanding claims thereafter entered into
settlement agreements with the Republic. Appellants did not. The district court
authorized the Republic to issue additional bonds to raise the funds to pay the
settlements. The Republic raised $9.371 billion.
On April 21, 2016, the Republic entered into a settlement trust agreement
with BNYM (the ʺAgreementʺ), naming BNYM as trustee. The Agreement provided
that on the closing date, BNYM would receive the proceeds from the bond sales and
thereafter would hold the funds in trust for the benefit of the settlement beneficiaries.
On April 26 and 29, 2016, appellants moved under Federal Rule of Civil Procedure 69(a)
for writs of execution and turnover orders against the Republic, JPM, and BNYM,
pursuant to New York Civil Practice Law and Rules (ʺCPLRʺ) §§ 5225(b) and 5230,
targeting the proceeds from the bond issuance that were ʺnot [being] used to payʺ
settlements with other bondholders. Joint App. at 26‐29. In their reply brief to the
district court below, appellants abandoned their claim to any assets held by JPM. The
‐ 3 ‐ district court denied their motion for a writ of execution and turnover order as to
BNYM.1
Appellants argue that the district court (1) abused its discretion in
determining that appellants are not entitled to a turnover order against the BNYM trust
funds, (2) erred in determining that the trust funds were immune from execution under
the Foreign Sovereign Immunities Act (ʺFSIAʺ), and (3) abused its discretion in denying
appellantsʹ motion for discovery. Because we conclude that the district court did not
abuse its discretion in denying the motion for a writ of execution and turnover order
against BNYM, we need not address appellantsʹ FSIA argument.
We review a denial of a writ of execution and turnover order for abuse of
discretion. See Aurelius Capital Partners, LP v. Republic of Argentina, 584 F.3d 120, 129 (2d
Cir. 2009). CPLR § 5225(b) permits a judgment creditor to obtain assets that are owned
by the judgment debtor but in the possession of a third party when two requirements
are met: first, the judgment debtor has an interest in the property; and second, the
judgment debtor is entitled to possess the property, or, in the alternative, the judgment
creditorʹs rights are superior to those of the party in possession. Beauvais v. Allegiance
Sec., Inc., 942 F.2d 838, 840 (2d Cir. 1991). Here, the district court correctly denied
appellantsʹ motion for a writ of execution and turnover order because the Republic does
1 The district court noted that ʺJPMʹs only role in the bond issuance was as an initial purchaser of bonds for resale to its clients,ʺ and it did not receive any bond proceeds. Special App. at 5.
‐ 4 ‐ not have an interest in the trust funds, the Republic is not entitled to possess the trust
funds, and the appellants do not have rights to the trust funds that are superior to
BNYMʹs rights.
The Agreement provided that the Republic irrevocably assigned its ʺright
to receive the full amount of the [proceeds from the bond sale] upon the closing . . . of
the issuance of the New Bondsʺ to be held by the trustee for the benefit of the
bondholders who had entered into settlement agreements. Joint App. at 185. It left the
Republic without ʺany right, title or interest (including, for the avoidance of doubt,
proprietary or reversionary interest) of any kindʺ in the proceeds. Id. at 187. This
language is unambiguous, and appellantsʹ argument that the Republic has an interest in
the trust funds is directly contradicted by the plain language of the Agreement. The
BNYM account is not, as appellants suggest, an ordinary bank account, but a trust. See
In re Doman, 890 N.Y.S.2d 632, 634 (2d Depʹt 2009) (express trust requires, inter alia,
ʺactual delivery of the fund or property, with the intention of vesting legal title in the
trusteeʺ (emphasis added)). BNYM is the trustee of the account, not the Republicʹs
agent. Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 586 (1990)
(Kennedy, J., dissenting) (ʺA trustee is not an agent. An agent represents and acts for
his principal . . . . [A trustee] has no principal.ʺ (quoting Taylor v. Davis, 110 U.S. 330,
334‐35 (1884))). The Agreement does not require instruction from the Republic; it
instructs BNYM to deliver the trust funds to the beneficiaries in accordance with the
‐ 5 ‐ Agreementʹs settlement procedures, and provides that BNYM can take or refuse to take
action in its sole discretion.
Finally, appellants argue that the Republic has an interest in the surplus
funds in the trust account. The Agreement provides that any surplus trust funds shall
be paid to the Banco Central de la República Argentina (ʺBCRAʺ) for application against
the debt the Republic owes to BCRA. Appellants argue that the Republic and BCRA are
the same entity. We presume that an instrumentality of a foreign state has separate
juridical status and appellants carry the burden of proving that BCRA is not entitled to
separate recognition. EM Ltd. v. Republic of Argentina, 473 F.3d 463, 479 (2d Cir. 2007).
Appellantsʹ representation that BCRA participated in the April 2016 bond offering and
received the proceeds on behalf of Argentina is insufficient to carry their burden. See
First Natʹl City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 628‐29 (1983)
(presumption overcome where instrumentality is ʺso extensively controlled by its
owner that a relationship of principal and agent is created,ʺ or instrumentalityʹs
separate status would ʺwork fraud or injusticeʺ).
Appellants also fail to meet the second step of § 5225(b). As the district
court correctly held, ʺeven if the Republic had a theoretical interest in the proceeds, it
could not possess them because it could not claw them back from BNYM or the Trustʹs
beneficiaries.ʺ Special App. at 8. Moreover, appellants have not established that their
rights to the trust funds are superior to the rights of BNYM, which has a legal interest in
‐ 6 ‐ the funds as they are holding them in trust for the beneficiaries. Accordingly,
appellants are not entitled to a turnover order pursuant to § 5225(b).
In the final sentence of their motion for a writ of execution and turnover
order, appellants requested discovery ʺif the Court requires more information to
identify the specific accounts with Argentinaʹs proceeds in the U.S.ʺ Pls.ʹ Mem. of Law
at 9, Ladjevardian v. Republic of Argentina, No. 06‐cv‐3276 (S.D.N.Y. April 29, 2016), ECF
No. 45. The district court decided it did not need that information to decide the motion
and denied the informal request for discovery. Appellants argue that the district court
abused its discretion by denying their request. The district court invited appellants to
make a motion for discovery using proper procedures. They did not do so. In these
circumstances, there was no abuse of discretion.
* * *
We have reviewed appellantsʹ remaining arguments and conclude they
are without merit. Accordingly, we AFFIRM the order of the district court.
FOR THE COURT: Catherine OʹHagan Wolfe, Clerk
‐ 7 ‐