"Separate Entity" Rule Alive and Well in New York

In a much anticipated decision, New York's highest court, the Court of Appeals, confirmed on October 23, 2014, that the so-called "separate entity" rule continues to exist as a vibrant doctrine in the State of New York. Under the separate entity rule, a bank's branches in different jurisdictions are treated as "separate entities" for various purposes, including judgment enforcement.¹ The court's decision in Motorola Credit Corp. v. Standard Chartered Bank,² clears up some of the uncertainties created by that court's 2009 decision in Koehler v. Bank of Bermuda Ltd., and marks an important victory for the banking community.

Motorola had alleged that members of the Uzan family fraudulently diverted a substantial portion of a $2 billion loan from Motorola for their personal benefit. Motorola subsequently won a multibillion dollar judgment against the Uzans in the US District Court for the Southern District of New York. As part of its efforts to collect on this judgment,