Cynthia Warmbie v. The Bank of New York Mellon

Background

Cynthia Warmbier and Frederick Warmbier, individually and as personal representatives of the Estate of Otto Warmbier, filed a petition seeking a turnover order under Section 201(a) of the Terrorism Risk Insurance Act of 2002, Rule 69 of the Federal Rules of Civil Procedure, and cited New York enforcement provisions. A turnover order directs a person holding property to deliver it to a judgment creditor.

The plaintiffs held a December 24, 2018 judgment from the U.S. District Court for the District of Columbia against North Korea for $501,134,683.80. That judgment concerned the torture, hostage taking, and extrajudicial killing of Otto Warmbier. The judgment was later registered in the Southern District of New York, and the District of Columbia court authorized attachment and execution to enforce it.

The funds at issue were held by The Bank of New York Mellon in an account belonging to Far Eastern Bank, a Russian bank that the Treasury Department’s Office of Foreign Assets Control designated as a Specially Designated National on or about May 27, 2022. The designation was based in part on Far Eastern Bank’s provision of banking services to North Korea’s state-owned airline and other North Korean government organizations. The bank blocked the funds, which originally totaled $2,131,241.43. By October 12, 2023, they had grown to $2,203,258.68 through accrued interest.

Prior Findings and Notice

The court had previously determined that Far Eastern Bank was an agency or instrumentality of North Korea and that North Korea was a terrorist party under the Terrorism Risk Insurance Act. The court directed the Clerk to issue a writ of execution covering the funds, and a U.S. Marshal served the writ on The Bank of New York Mellon on or about February 2, 2023.

The order states that no other judgment creditor or person or entity with an actual or potential interest in the funds served an earlier writ. It therefore found that the plaintiffs had priority over the funds. The plaintiffs also provided notice to North Korea and Far Eastern Bank in a manner the court had approved. Both had an opportunity to object, including to challenge Far Eastern Bank’s status as an agency or instrumentality of North Korea, but neither appeared or responded. The Bank of New York Mellon was served and did not oppose the requested order.

Ruling

The court granted the plaintiffs’ unopposed motion for entry of a final turnover order and judgment. It entered judgment in favor of Cynthia and Frederick Warmbier concerning the subject funds in the amount of $2,203,258.68, plus interest accruing after October 12, 2023.

The court ordered The Bank of New York Mellon to transfer the funds and all later-accrued interest to the plaintiffs’ counsel by wire transfer within 20 days of the order. The order states that the judgment supersedes and overrides regulations, executive orders, or other requirements that would otherwise require the bank to continue holding the funds, prohibit payment to the plaintiffs, or require an Office of Foreign Assets Control license before the transfer.

After the transfer, The Bank of New York Mellon, its parent company, and its affiliates would be released from obligations and liability concerning the funds to the plaintiffs, Far Eastern Bank, North Korea, and any other person or entity. The plaintiffs and others would also be permanently barred from bringing claims against the bank concerning the funds. The writ and other enforcement devices covering the funds would then be terminated and treated as vacated. The order applies only to these funds, is final and appealable under Federal Rule of Civil Procedure 54(b), disposes of claims concerning their turnover, and reserves jurisdiction to enforce the order.