16

‐ 1958

‐ cv

Ladjevardian v. Republic of Argentina

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT

. C ITATION TO A

SUMMARY ORDER FILED ON OR AFTER J ANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY

F EDERAL R ULE OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ʹ S L OCAL R ULE 32.1.1.

W HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT

, A PARTY MUST

CITE EITHER THE F EDERAL A PPENDIX OR AN ELECTRONIC DATABASE ( WITH THE NOTATION

ʺ SUMMARY ORDER ʺ ). 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 17 th 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,

Plainti ff

s

‐ Appellants

,

MEHDI SHARIFAN, KAMBIZ ANSARI, TIAL INC.

B.V.I., MOZAFAR JANDAGHI, FARIDEH JANDAGHI,

MOWDAR CORP.,

Plainti ff

s

,

v. 16

‐ 1958

‐ cv

* Judge Katherine B. Forrest, United States District Court for th e Southern District

of New York, sitting by designation.‐ 2

‐ 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

.

Plainti ff s

‐ appellants ( ʺ appellants ʺ ), who hold bonds issued by and

judgments against defendant

‐ appellee the Republic of Argentina (the ʺ Republic ʺ ),

appeal from a May 26, 2016 opinion and order of the United States District Court for the

Southern District of New York denying appellants ʹ motions for writs of execution and

turnover orders directed at purported Argentine assets held by two non

‐ party fi nancial

institutions, JPMorgan Chase & Co. ( ʺ JPM ʺ ) and Bank of New York Mellon ( ʺ BNYM ʺ ).‐ 3

‐ BNYM intervenes as a non

‐ party in opposition to the appeal. We assume the parties ʹ

familiarity with the underlying facts, procedural history, and issues on appeal.

On February 5, 2016, the Republic announced a global proposal for

se tt ling the claims of all holders of outstanding defaulted Argentine bonds.

Bondholders owning the vast majority of outstanding claims thereafter entered into

se tt lement agreements with the Republic. Appellants did not. The district court

authorized the Republic to issue additional bonds to raise the funds to pay the

se tt lements. The Republic raised $9.371 billion.

On April 21, 2016, the Republic entered into a se tt lement trust agreement

with BNYM (the ʺ Agreement ʺ ), 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 bene fi t of the se tt lement bene fi ciaries.

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 ( ʺ CPLR ʺ ) §§ 5225(b) and 5230,

targeting the proceeds from the bond issuance that were ʺ not [being] used to pay ʺ

se tt lements 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‐ 4

‐ 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 ( ʺ FSIA ʺ ), and (3) abused its discretion in denying

appellants ʹ 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 appellants ʹ 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: fi rst, 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

creditor ʹ s 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

appellants ʹ motion for a writ of execution and turnover order because the Republic does

1 The district court noted that ʺ JPM ʹ s 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.‐ 5

‐ 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

BNYM ʹ s rights.

The Agreement provided that the Republic irrevocably assigned its ʺ right

to receive the full amount of the [proceeds from the bond sale] upon the closing

. . . of

the issuance of the New Bonds ʺ to be held by the trustee for the bene fi t of the

bondholders who had entered into se tt lement agreements. Joint App. at 185. It left the

Republic without ʺ any right, title or interest (including, for the avoidance of doubt,

proprietary or reversionary interest) of any kind ʺ in the proceeds. Id. at 187. This

language is unambiguous, and appellants ʹ 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 Dep ʹ t 2009) (express trust requires, inter alia

,

ʺ actual delivery of the fund or property, with the intention of vesting legal title in the

trustee ʺ (emphasis added)). BNYM is the trustee of the account, not the Republic ʹ s

agent. Chau ff

eurs, Teamsters & Helpers, Local No. 391 v. Terry

, 494 U.S. 558, 586 (1990)

(Kennedy, J.

, dissenting) ( ʺ A 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 bene fi ciaries in accordance with the‐ 6

‐ Agreement ʹ s se tt lement 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 ( ʺ BCRA ʺ ) 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).

Appellants ʹ representation that BCRA participated in the April 2016 bond o ff ering and

received the proceeds on behalf of Argentina is insu ffi cient to carry their burden. See

First Nat ʹ l City Bank v. Banco Para El Comercio Exterior de Cuba

, 462 U.S. 611, 628

‐ 29 (1983)

(presumption overcome where instrumentality is ʺ so extensively controlled by its

owner that a relationship of principal and agent is created, ʺ or instrumentality ʹ s

separate status would ʺ work fraud or injustice ʺ ).

Appellants also fail to meet the second step of § 5225(b). As the district

court correctly held, ʺ even 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 Trust ʹ s

bene fi ciaries. 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‐ 7

‐ the funds as they are holding them in trust for the bene fi ciaries. Accordingly,

appellants are not entitled to a turnover order pursuant to § 5225(b).

In the fi nal sentence of their motion for a writ of execution and turnover

order, appellants requested discovery ʺ if the Court requires more information to

identify the speci fi c accounts with Argentina ʹ s 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 appellants ʹ remaining arguments and conclude they

are without merit. Accordingly, we AFFIRM the order of the district court.

FOR THE COURT:

Catherine O ʹ Hagan Wolfe, Clerk