New York: The Next Mecca for Judgment Creditors? An Analysis of Koehler v. Bank of Bermuda, Ltd.

New York may have just become a great place to be a judgment creditor. In the summer of 2009, the Court of Appeals of New York handed down its decision in Koehler v. Bank of Bermuda Ltd. In Koehler, the court upheld a turnover order directing a garnishee to transfer a non-resident judgment debtor’s assets, deposited in a Bermuda bank, into New York. Under Koehler, assets anywhere in the world may now be garnishable in New York so long as the garnishee is subject to the state’s jurisdiction. This decision greatly broadens New York courts’ power to enforce judgments by reaching property located outside of New York. Accordingly, the decision is an incredible victory for judgment creditors, yet a serious defeat for judgment debtors. Because of New York’s status as a financial and corporate capital – and the concomitant number of institutions doing business within the state – this decision has a potentially far-reaching impact. Perhaps not surprisingly, the Koehler decision raises some serious constitutional and policy concerns. As some commentators fear, the decision may ultimately turn New York courts into a “mecca” for judgment creditors seeking to reach assets located anywhere in the world. This Comment seeks to explore the issues raised by the Koehler decision. In doing so, this Comment analyzes theories of due process and state power in the realm of postjudgment garnishments. This Comment ultimately concludes that the Koehler decision was correctly decided, particularly because it will afford judgment creditors an incredibly useful tool in satisfying their judgments.