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Jpmorgan Chase Bank, N.A., Successor In Interest To the First v. Pt Indah Kiat Pulp and Paper Corporation Tbk

April 5, 2012

JPMORGAN CHASE BANK, N.A., SUCCESSOR IN INTEREST TO THE FIRST NATIONAL BANK OF CHICAGO, PLAINTIFF,
v.
PT INDAH KIAT PULP AND PAPER CORPORATION TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; PT PABRIK KERTAS TJIWI KIMIA TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; AND ASIA PULP AND PAPER COMPANY, LTD., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF SINGAPORE, DEFENDANTS.



The opinion of the court was delivered by: James F. Holderman, Chief Judge:

MEMORANDUM OPINION AND ORDER

On September 13, 2010, this court entered judgment in favor of JPMorgan Chase Bank ("JPMorgan") against Asia Pulp and Paper Company, Ltd., in the amount of $53.5 million, against PT Indah Kiat Pulp and Paper Corporation Tbk in the amount of $32.2 million, and against PT Pabrik Kertas Tjiwi Kimia Tbk in the amount of $21.3 million. (Dkt. No. 297.) On October 19, 2010, JPMorgan issued citations to discover the assets of the defendants for the purpose of enforcing the judgment. (Dkt. Nos. 302, 303.) The defendants moved to stay enforcement of the citations on the ground that an injunction issued against them by an Indonesian court (the "Indonesian Injunction") prohibited compliance. (Dkt. No. 330.) The motion to stay was referred to the assigned magistrate judge, Judge Geraldine Soat Brown. (Dkt. No. 361.) On November 16, 2011, Judge Brown denied the motion to stay and ordered the defendants to comply with the citations within fourteen days. (Dkt. No. 377.) On December 19, 2011, Judge Brown denied the defendants' motion to reconsider her November 16, 2011 ruling. (Dkt. No. 386.)

On January 3, 2012, the defendants filed objections to Judge Brown's ruling under Fed. R. Civ. P. 72(a). (Dkt. No. 391.) This court set a briefing schedule on January 10, 2012. (Dkt. No. 393.) Eight days later, the defendants filed a notice of appeal to the United States Court of Appeals for the Seventh Circuit stating that they were appealing Judge Brown's denial of the motion to stay. (Dkt. No. 394.) The Seventh Circuit requested a jurisdictional memorandum from the defendants "stating why this appeal should not be dismissed for lack of jurisdiction." Order, J.P. Morgan Chase Bank v. Asia Pulp & Paper Co., Ltd., No. 12-1136 (7th Cir. Jan. 26, 2012). The defendants' appeal remains pending in the Seventh Circuit, which has not yet addressed whether or not it has jurisdiction to entertain defendants' appeal.

On February 1, 2012, JPMorgan filed a "Motion to Compel Defendants' Compliance with Party Citations and for Sanctions" (Dkt. No. 403), seeking enforcement of the citations. JPMorgan's motion to compel and the objections to Judge Brown's orders are both currently pending before this court. For the reasons stated below, the objections to Judge Brown's orders (Dkt. No. 391) are overruled, and JPMorgan's motion to compel (Dkt. No. 403) is granted. The court declines to impose sanctions for the past conduct of the defendants, but will impose a sanction of $5,000 per day for each day after April 20, 2012, and $10,000 for each day after May 20, 2012, that the defendants have not complied with the citations.

BACKGROUND

The Indonesian Injunction arises out of an action brought in an Indonesian court by Indah Lestari against the defendants. (Dkt. No. 330, Ex. A ¶ 4.)*fn1 Indah Lestari alleged that the defendants defaulted on a purchase agreement for the sale of coal, and sought to prevent the defendants from avoiding a potential judgment by moving for an injunction to prohibit the defendants from revealing information about their assets to third parties. (Id.) The Indonesian court granted the injunction, which orders: the Defendants to abstain from providing statements and information on the assets of the Defendants and those owned by all subsidiaries of the Defendants to any party temporarily during the examination process of this case, except in respect of those required by the prevailing laws and regulations of the Republic of Indonesia and or as permitted/ordered/requested by the authorized agencies in the Republic of Indonesia. (Id. ¶ 7.) A little over a year later, the Indonesian court found in favor of Indah Lestari and entered judgment against the defendants. (Dkt. No. 369, Ex. 2-24.) The Indonesian court stated that the judgment "shall uphold the said Provisional Decision [issuing the Indonesian Injunction] in the Final Verdict accordingly" (Id. at 63) and that it is "[u]pholding the Provisional Decision in its entirety" (Id. at 91). The defendants' represent that the case is on appeal in Indonesia, but the appellate court has not yet rendered a decision. (Dkt. No. 370, at 3, 6.)

The defendants have applied to Indonesian courts for permission to comply with the citations. (Dkt. No. 369, Exs. 2-19, 2-22, 2-25, 2-26.) On October 21, 2010, the Indonesian appellate court replied by stating that there are "no laws whatsoever that may be used by the Panel of Judges to deviate or avoid the provisional judgment . . . which, at present, is under examination process. Hence, we advise to wait until the case in question is settled by the Panel of Judges in the near future." (Dkt. No. 369, Ex. 2-29.)

ANALYSIS

Before ruling on the defendants' objections or on JPMorgan's motion to compel, this court must determine whether it has jurisdiction to proceed in light of the appeal of Judge Brown's orders that remains pending in the Seventh Circuit.

I. This Court's Jurisdiction

Typically, "[t]he filing of a timely notice of appeal confers jurisdiction over the matter on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal." Henry v. Farmer City State Bank, 808 F.2d 1228, 1240 (7th Cir. 1986). That "rule does not operate, however, where there is a purported appeal from a non-appealable order." United States v. Bastanipour, 697 F.2d 170, 173 (7th Cir. 1982); see also 20 George C. Pratt, Moore's Federal Practice § 303.32[2][b][iv][B] (3d ed. rev. 2012) [hereinafter Moore's] ("If an appeal is taken from a non-appealable order the district court may proceed with the case as if the notice of appeal had not been filed."). The power of district courts to proceed in such circumstances is widely accepted and based on the sound principle that "preventing district courts from proceeding when an appeal is taken from a non-appealable order would enable a party to interrupt the progress of the proceedings at will, and delay all proceedings until the appeal is dismissed or the circuit court remands the case." Moore's § 303.32[2][b][iv][B] (citing cases from the Second, Third, Fifth, Sixth, Seventh, Ninth, and Tenth Circuits). That concern is particularly acute here, where the court is concerned that the defendants may be improperly delaying compliance with the citations in an effort to thwart JPMorgan's attempts to collect on the judgment. This court will therefore consider whether Magistrate Judge Brown's orders were appealable to the Seventh Circuit.

Moving to that inquiry, it is plain that Judge Brown's orders are non-final and thus non-appealable. Under 28 U.S.C. § 1291, an appellate court may review a district court's final decisions. When evaluating finality, the court must "treat each postjudgment proceeding like a freestanding lawsuit and look for the final decision in that proceeding to determine the scope of" appellate review. Solis v. Current Dev. Corp., 557 F.3d 772, 775 (7th Cir. 2009). Applying that rule, the Seventh Circuit held in Central States, Southeast and Southwest Areas Pension Fund v. Express Freight Lines that orders granting postjudgment discovery are non-final. 971 F.2d 5, at 6 (7th Cir. 1992). The defendants point out that the Seventh Circuit subsequently hedged that ruling in dicta by stating that [w]e may have written too broadly when we said in Central States . . . that a discovery order issued in a supplemental proceeding is non-final, as of course it would be in an ordinary proceeding. Often the sole object of such a proceeding is discovery of the judgment debtor's assets, since once they are discovered the judgment creditor may levy on them without obtaining a further court order. Ill. Rev. Stat. ch. 110, ¶ 2-1501.

Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1225 (7th Cir. 1993). There are at least three reasons why Resolution Trust's possible exception to the general rule does not apply here.

First, the comments in Resolution Trust were merely an aside that had little to do with the case's holding-that the imposition of a resulting trust in postjudgment proceedings is appealable. Id. at ...


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