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MONES v. COMMERCIAL BANK OF KUWAIT

July 12, 2005.

BRUCE E. MONES, Petitioner,
v.
COMMERCIAL BANK OF KUWAIT, S.A.K., Respondent.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

  Petitioner Bruce E. Mones has moved for a finding of contempt against respondent Commercial Bank of Kuwait, S.A.K. ("CBK"). Mones alleges that CBK's failure to comply with this Court's December 23, 2003 Turnover Order constitutes contumacious conduct. Accordingly, Mones requests an order requiring CBK to pay: "(1) the amount owed to him under a prior Judgment by CBK depositors . . .; (2) $1,000 per day since May 24, 2004, when CBK received Mr. Mones' written payment instructions pursuant to the Turnover Order, until CBK has complied with the Turnover Order; and (3) reasonable attorney's fees and expenses incurred in seeking compliance with the Turnover Order, including the briefing, and if applicable, argument of this Motion for Contempt."*fn1 For the following reasons, Mones's motion for contempt is denied and the Turnover Order is vacated.

  II. BACKGROUND

  On June 18, 2003, Mones obtained a judgment from the United States District Court for the District of Columbia against the Limited Partner Judgment Debtors.*fn2 The "judgment was registered and made a judgment of this Court on August 19, 2003."*fn3

  Pursuant to the judgment, on September 17, 2003, restraining notices were issued and served on CBK at both its New York and Kuwait offices.*fn4 Under the judgment, Mones is entitled to receive funds on deposit with CBK belonging to the Limited Partner Judgment Debtors which are necessary to fully satisfy the judgment against them.*fn5 Accordingly, "the restraining notices prohibit respondent from transferring any property (including money) in which the Limited Partner Judgment Debtors have any interest."*fn6

  On December 4, 2003, Mones filed a Notice of Petition of Issuance of Order for Payment or Delivery of Property of Judgment Debtors in the Possession of CBK ("Petition for Turnover Order").*fn7 On December 11, 2003, the Petition for Turnover was served directly upon CBK at its main office in Kuwait via DHL.*fn8 At a December 23, 2003 hearing on Mones' Petition for a Turnover Order, this court granted the petition against CBK.*fn9 Thereafter, the Clerk of Court mailed a copy of the Turnover Order to all parties, including CBK, at both its New York and Kuwait offices.*fn10

  On January 23, 2004, petitioner's counsel alleges that he wrote to the then-manager of CBK's New York branch, Ms. Elham Y. Mahfouz, as well as to CBK's New York-based counsel at Gibson Dunn & Crutcher.*fn11 The letter requested a response regarding whether CBK intended to comply with the Turnover Order.*fn12 In addition, a copy of the Turnover Order was included.*fn13 Mones' counsel received no response to his inquiry.*fn14

  On May 24, 2004, petitioner's counsel sent another letter to CBK's Chairman & Managing Director, as well as the Chief General Manager & CEO in Kuwait. The letter contained formal payment instructions and demanded payment of the funds necessary to satisfy the judgment.*fn15 On May 27, 2004, the then-Head of Legal & LTO Division in Kuwait, Dr. Ibrahim Makarem, responded to Mones' counsel.*fn16 The letter represented that because CBK's New York branch office had closed, no jurisdiction existed under which the court could issue a valid order.*fn17 Accordingly, Dr. Makarem deemed the court order "ultra vires" and stated that CBK "is not responsible for the execution of said order."*fn18

  In a detailed letter dated May 27, 2004, Mones' counsel responded to CBK's claim that the court lacked jurisdiction.*fn19 The letter explained that the Turnover Order was in no way altered by the closing of CBK's New York branch. This was particularly true in light of the fact that CBK's Kuwait office was personally served with the Petition for Turnover.*fn20 Mones' counsel did not receive a response to his letter.*fn21

  On January 10, 2005, Mones' counsel served a Request for Admissions upon CBK, asking it to admit the following:
1. Admit that CBK has failed to comply in any respect with the Turnover Order, even though CBK has been fully aware of the Turnover Order since at least January 1, 2004.
2. Admit that CBK has failed to comply in any respect to the Written Payment Instructions, even though CBK received the Written Payment Instructions on or about May 24, 2004.
3. Admit that CBK has been in possession of funds of each of the Limited Partner Judgment Debtors . . . at one or more times since September 17, 2003, when the Restraining Notice was served upon CBK.
4. Admit that CBK has failed to comply in any respect with the Restraining Notice.*fn22
  In a response dated January 27, 2005, CBK's Acting Head of Legal & LTO Department confirmed receipt of the Request for Admissions. The letter also informed Mones' counsel that CBK did not consider itself a party to the dispute because petitioner lacked jurisdiction to seek funds from the stakeholder bank. Accordingly, CBK objected to the Request for Admissions.*fn23 Mones' counsel responded to these statements in his letter of February 2, 2005. Counsel advised CBK that its "refusal to respond to the Request for Admissions would result in CBK admitting each of the matters sought by Mones in the Request for Admissions."*fn24 Mones' counsel then requested that CBK contact him in order to resolve the matter amicably.*fn25 Mones' counsel did not receive a response to his February 2, 2005 letter.*fn26

  Mones now moves for an order of contempt against CBK. In support of his motion, petitioner argues that CBK, in violation of the Turnover Order, has repeatedly failed to distribute to him any funds it may hold that are owned by the Limited Partner Judgment Debtors.*fn27 CBK opposes the motion arguing, first, that the Court had no personal jurisdiction over CBK because CBK's New York branch was liquidated before the entry of the judgment in the Southern District of New York and second, that this Court lacked authority under New York law to direct a financial intermediary to transfer to Mones assets whose situs is outside the jurisdiction of the Court.

  III. LEGAL STANDARDS

  A. Personal ...


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