BANK OF AMERICA v. VELUCHAMY (June 16, 2011)

Pethinaidu and Parameswari Veluchamy owed Bank of America $39 million. When they defaulted, the Bank brought suit and obtained a judgment. The Bank began post-judgment proceedings to locate assets to satisfy the judgment. The Veluchamys were not very cooperative during those proceedings. They were slow in providing some information and refused to provide other information, asserting a Fifth Amendment privilege. Meanwhile, mostly through other sources, the Bank learned that the Veluchamys had transferred almost $20 million out of U.S. banks and into Indian banks. The Bank sought an emergency order requiring the Veluchamys to produce the transferred funds and to surrender their passports until they did so. Judge Shadur (N.D. Ill.) granted the Bank's request and ordered the Veluchamys to relinquish their passports. The Veluchamys appeal.

In their opinion, Judges Posner, Kanne, and Tinder affirmed. The Court first addressed its jurisdiction since the order obviously was not a final judgment. The Court concluded that it met the requirements for the collateral order exception -- it conclusively determined a question, the question is separate from the merits, and the decision would be unreviewable after a final judgment. A district court's powers in a post-judgment proceeding are governed by state law. Illinois law provides a number of tools, including the power to compel a party to produce funds under its control. The Court concluded that the power to compel a party to produce funds implied a power over the party itself. The Court emphasized that the such power is minimal and should be exercised only when necessary. Here, the Veluchamys had transferred most of their funds out of the country, they seemed to have significant assets in India and elsewhere, and they were reluctant to provide information about their assets. The Court concluded that this was the rare case where an order to surrender passports was warranted.