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Cargill Financial Services International, Inc. v. Bank Finance and Credit Limited

NEW YORK SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT


February 11, 2010

CARGILL FINANCIAL SERVICES INTERNATIONAL, INC., PLAINTIFF-APPELLANT,
v.
BANK FINANCE AND CREDIT LIMITED ALSO KNOWN AS OJSC BANK FINANCE AND CREDIT, DEFENDANT-RESPONDENT.

Three orders, Supreme Court, New York County (Charles E. Ramos, J.), entered July 7, 2009, which, as corrected and memorialized in an order entered August 5, 2009, denied plaintiff's application for an order of attachment of all funds contained in defendant's correspondent accounts located in New York and vacated a TRO previously granted by the court, unanimously affirmed, with costs. The June 18, 2009 temporary restraining order, which was extended by order of this Court entered September 8, 2009, is vacated.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Mazzarelli, J.P., Andrias, Moskowitz, Renwick, Richter, JJ.

601890/09

Contrary to the motion court's conclusion, plaintiff's evidence established a basis for quasi in rem jurisdiction, in that defendant, a Ukranian bank, utilized its New York correspondent accounts to receive funds and make interest payments pursuant to the terms of the parties' loan agreements and associated letters of credit (see generally Banco Ambrosiano v Artoc Bank & Trust, 62 NY2d 65 [1984]). Even if plaintiff established a statutory basis for attachment of the accounts, given the nature of correspondent banking and its importance in international transactions, the court did not abuse its discretion by denying plaintiff's broad request to restrain all funds in the accounts. The evidence showed that a substantial part of the funds therein was held for the benefit of third- party clients of defendant who used the accounts to transact foreign business in U.S. currency. Thus, the wholesale attachment of all funds in the accounts would have interfered with innocent third parties' access to their money. As such, it was within the court's discretion to deny plaintiff's attachment application (see Morgenthau v Avion Resources Ltd., 49 AD3d 50 [2007], mod on other grounds, 11 NY3d 383 [2008]; J.V.W. Inv. Ltd. v Kelleher, 41 AD3d 233 [2007]). The Decision and Order of this Court entered herein on October 27, 2009 is hereby recalled and vacated (see M-5116 decided simultaneously herewith).

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

20100211

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