Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

FIDELITY PARTNERS v. FIRST TRUST CO. OF NEW YORK

June 15, 1999

FIDELITY PARTNERS, INC., PETITIONER
v.
FIRST TRUST COMPANY OF NEW YORK; MORGAN GUARANTY TRUST COMPANY OF NEW YORK; EUROCLEAR SYSTEM; ING BANK OF MANILA; AND PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION RESPONDENTS.



The opinion of the court was delivered by: Stein, District Judge.

OPINION & ORDER

Petitioner moves pursuant to Fed. R.Civ.P. 60(b) for relief from a judgment of this Court dated December 9, 1997, entered pursuant to an Opinion and Order dated December 1, 1997, denying its petition for an order directing delivery of a definitive bearer bond to it, and pursuant to Fed.R.Civ.P. 15(a) to amend its petition. As set forth below, petitioner's motion is denied as moot. The following facts are set forth, in large part, in the Opinion and Order dated December 1, 1997, No. 97-5184, 1997 WL 752725 (S.D.N.Y. Dec.5, 1997)*fn1 and the opinion of the Second Circuit, 142 F.3d 560 (2d Cir. 1998), and are summarized here for case of reference.

BACKGROUND

I. First New York Lawsuit: Fidelity Partners, Inc. v. Philippine
  Export & Foreign Loan Guarantee Corp., 96 Civ. 0407

In January 1996, Fidelity filed an action against Philippine Export and Foreign Loan Guarantee Corporation ("Philguarantee") in New York State Supreme Court for New York County seeking to enforce a California judgment against Philguarantee that it had received by assignment. That action was removed to the United States District Court for the Southern District of New York and is entitled Fidelity Partners, Inc. v. Philippine Export & Foreign Loan Guarantee Corp., 96 Civ. 0407. On May 27, 1997, Judge Charles Brieant signed a restraining order barring Philguarantee from disposing of its $1.75 million participation interest in Series B Philippine Reduction Interest Bonds ("FLIRBs").

II. This Action

In July 1997, Fidelity brought this turnover petition pursuant to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1610, as well as Fed.R.Civ.P. 69 — which utilizes New York Civil Practice Law and Rules 5225(b) and 5227 — to compel respondent First Trust Company of New York to deliver to Fidelity a definitive bond, in Fidelity's name, representing the $1.75 million interest held by respondent Philguarantee in the FLIRBs.*fn2 Philguarantee held its participation interest in the FLIRBs through ING Bank of Manila. The only entity on whose books the interest of Philguarantee was reflected was ING Bank. ING Bank, in turn, held its interest in the FLIRBs through Euroclear, where its interest was reflected in a book-entry credit to a securities account maintained by Morgan Guaranty's Brussels branch office. See Fidelity Partners, Inc. v. First Trust Co. of New York, 58 F. Supp.2d 52, 53 (S.D.N.Y. 1997). In turn, Morgan London, as sub-custodian for Morgan Brussels, is the holder of the Global Bearer Certificates representing the FLIRBs, and is the only recorded owner of the FLIRBs reflected on the books of First Trust, the New York based fiscal and paying agent, registrar, transfer agent, and authenticating agent pursuant to the terms of three fiscal agency agreements entered into by the issuer. Id.

In its determination of December 1, 1997, this Court denied Fidelity's petition on two grounds. First, Philguarantee's interest in the FLIRBs was located in the Republic of the Philippines, where Philguarantee resides and where ING Bank of Manila, upon whose books Philguarantee's interest was represented, is located. Id. Because neither the FLIRBs, nor Philguarantee's participation interest in the FLIRBs, was located in the United States, Fidelity could not execute on those assets because the underlying judgment that Fidelity was seeking to enforce permitted execution only upon Philguarantee's assets located within the United States. Id.

Second, this Court held that respondent First Trust was an improper garnishee pursuant to section 5201(c)(4) of the CPLR because it was not a "firm or corporation which carries on its books an account in the name of the judgment debtor." Id. Therefore, First Trust could not be ordered to deliver a definitive bearer bond in the amount of Philguarantee's participation interest in the FLIRBs to Fidelity and, in turn, have Morgan Guaranty, Euroclear, and ING Bank of Manila make entries in their respective books representing this transfer by First Trust. Id. In addition, pursuant to the N.Y.U.C.C. — which governs the rights of a creditor to reach a judgment debtor's interest in a security — the judgment debtor's account can be reached only by process upon the financial intermediary upon whose books the interest of the debtor appears. Id. (citing N.Y.U.C.C. § 8-317(4)). Accordingly, Fidelity's efforts to execute on its judgment with respect to the FLIRBs were more properly directed at ING Bank of Manila, upon whose books Philguarantee's interest was reflected. Id. Moreover, CPLR §§ 5225 and 5227 and N.Y.U.C.C. § 8-317(6)*fn3 did not provide a basis for directing First Trust to deliver a definitive bearer bond to Fidelity where First Trust was a financial intermediary, and not a judgment debtor. Id. at 54.

III. Restraining Order in Fidelity Partners, Inc. v. Philippine
    Export & Foreign Loan Guarantee Corp., 96 Civ. 0407

On December 12, First Trust — apparently uncertain that this Court's endorsement of December 5 denying its motion on grounds of mootness reflected a view that Judge Brieant's restraining order in the first New York action had been effectively terminated by the December 1 Opinion and Order dismissing Fidelity's turnover petition — moved for an order formally vacating the restraining order in Fidelity Partners, Inc. v. Philippine Export & Foreign Loan Guarantee Corp., 96 Civ. 0407. On that same day, Fidelity wrote a letter expressing its view that the restraining order had not been vacated by virtue of either the December 1 Opinion and Order or the December 5 endorsement. On December 15, Fidelity filed a notice of appeal from the December 1 Opinion and Order. On December 18, Fidelity moved for a stay of any dissolution of the restraining order and opposed First Trust's request to vacate the restraining order. By order dated December 24, First Trust's motion to vacate the restraining order in Fidelity Partners, Inc. v. Philippine Export & Foreign Loan Guarantee Corp., 96 Civ. 0407, was granted "for the reasons set forth in this Court's Opinion and Order dated December 1, 1997," but the vacatur of the restraining order was stayed pending appeal. On December 31, Fidelity filed a notice of appeal from the December 24 order which was then consolidated with Fidelity's appeal from the December 10 judgment entered on the December 1 Opinion and Order in this action.

IV. Appeal

On January 13, 1998, Morgan received a letter from ING Bank indicating that ING had sold Philguarantee's participation interest in the FLIRBs on December 6, 1997. On appeal, the Second Circuit wrote that Philguarantee was "entitled to consider itself freed of any restraint concerning sale of its interest in the FLIRBs after December 1, and was surely entitled to do so after December 5, when Judge Stein indicated that he regarded further consideration of the restraining order as moot." See Fidelity Partners, Inc. v. First Trust Co. of New York, 142 F.3d 560, 565-66 (2d Cir. 1998). The Second Circuit remanded the appeal for this Court to decide whether Philguarantee had sold its participation interest in the FLIRBs on ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.