Krineta Enters. Co. Ltd. v Lavidas

[*1] Krineta Enters. Co. Ltd. v Lavidas 2015 NY Slip Op 51167(U) Decided on July 24, 2015 Supreme Court, New York County Bannon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 24, 2015
Supreme Court, New York County

Krineta Enterprises Company Limited, Plaintiff

against

Athanasios Lavidas a/k/a ATHANASE LAVIDAS a/k/a ATHANESE LAVIDAS, Defendants.



161911/14



For the Plaintiff

H. Barry Vasios, Esq.

Holland & Knight LLP

31 West 52nd Street

New York, NY 10019

212-513-3410

For the Defendant

Michael P. Burke, Esq.

Wollmuth Maher & Deutsch LLP

500 Fifth Avenue

New York, NY 10110

212-382-3300
Nancy M. Bannon, J.

I. Background

This is an action pursuant to CPLR 5303 to enforce a 𔚾,068,423 judgment of the Athens Court of Appeals issued in favor of the plaintiff, a Cypriot corporation, and against the defendant, a Greek domiciliary with assets in Greece and New York, in a breach of contract [*2]action, which is now pending before the Supreme Court of Greece.

The plaintiff moves (1) pursuant to CPLR 3213 for summary judgment in lieu of a complaint for recognition of the foreign judgment and (2) pursuant to CPLR 6211(b) to confirm a December 10, 2014 ex parte order of attachment in the amount of $11.5 million, attaching 800 shares of Fifth and 67th Street, Inc., a cooperative corporation, which are allocated to the defendant's unit in the building, on the grounds that the defendant's assets in Greece are insufficient to satisfy the judgment and the defendant may have transferred a portion of the shares to his wife after the Greek action was commenced. The defendant opposes the plaintiff's motion and cross-moves (1) pursuant to CPLR 6223 to vacate the ex parte order of attachment or, in the alternative, to increase the amount of the undertaking to $11.5 million and (2), in effect, pursuant to CPLR 5306 to stay this proceeding on the ground that, due to a pending appeal, the Greek judgment is not final, conclusive and enforceable.

In 2007, the plaintiff paid 𔚽 million to purchase 3,366 shares, or approximately 5% interest, in a Greek joint stock company, Lavipharm Holding Group, S.A. ("Lavipharm"), which has an ownership interest in several pharmaceutical companies, from the defendant, a doctor and the sole shareholder of Lavipharm at that time. Although the parties dispute the precise valuation of the defendant's assets, it is undisputed that he owns a significant portfolio of stocks, bonds and real estate, as well an unpaid Lavipharm bond in the amount of 𔛁,283,335, which is specifically mentioned and recognized by the plaintiff in the parties' Shareholder and Subscription Agreement. The defendant maintains that the plaintiff is a shell corporation without any assets, such that any judgment monies paid to it would be irretrievably lost, leaving him without recourse should he ultimately prevail in the litigation.

According to the parties' agreement, if Lavipharm was not admitted to a stock exchange within 30 months, the plaintiff would be permitted to exercise a put option whereby the defendant would repurchase the shares. The agreement provided that any dispute arising under it was to be resolved in the courts of Athens, and Greek law would apply. In 2010, the plaintiff attempted to exercise the put option, but the defendant refused to repurchase the shares on the grounds that the agreement had been modified and the conditions necessary for exercising the option were not met.

The plaintiff then commenced an action in the Athens Multi-Member Court of First Instance in October 2011. In December 2012, that court awarded a money judgment against the defendant in the principal sum of 𔚾,068,423, plus interest. However, in a separate proceeding, the Athens Single Member Court of First Instance denied the plaintiff's application for an attachment and restraint of the defendant's assets in Greece to secure the plaintiff's judgment. Although that decision was not provided to this Court, it is undisputed that the court found that, in light of the defendant's considerable wealth, he was not a collection risk, and any such temporary measures to secure any potential judgment against him were unnecessary. In March 2013, the defendant sought an appeal to the Athens Court of Appeal, which, in June 2014, affirmed the judgment of the Court of First Instance awarding 𔚾,068,423, plus interest to the plaintiff. The defendant did not pay the judgment, but pursued a further appeal.

In September 2014, the defendant brought an appeal (a "cassation") of the judgment to the Supreme Court of Greece, an "extraordinary" method of review under which only questions of law are reviewed, on the grounds that the Athens Court of Appeal made certain legal errors [*3]in rendering its decision. Before the Supreme Court of Greece, the defendant sought a stay of enforcement of the judgment, both pending determination of the cassation ("stay of enforcement") and temporarily until the request for a stay of enforcement was heard ("temporary restriction of enforcement"). Shortly after the plaintiff filed the instant motion, the Greek court granted a temporary restriction of enforcement of the judgment and the defendant's application for a stay of enforcement was scheduled to be heard there on February 9, 2015. On that date, the Supreme Court of Greece suspended enforcement of the judgment "for the amount beyond five hundred thousand euro (�,000) of the capital awarded by the [Athens Court of Appeals] along with the attributable interest, until the issuance of a decision of the Supreme Court on the [cassation]." The cassation was scheduled to be heard on April 27, 2015. This Court has not been informed of any decision by the Supreme Court of Greece.

II. Discussion

A. Motion for Summary Judgment in Lieu of Complaint

CPLR 3213

"Under CPLR article 53, a judgment issued by the court of a foreign country is recognized and enforceable in New York State if it is final, conclusive and enforceable where rendered (CPLR 5302).'" Daguerre, S.A.R.L. v Rabizadeh, 112 AD3d 876, 877 (2nd Dept. 2013); see Abu Dhabi Commercial Bank PJSC v Saad Trading, Contracting and Financial Svcs. Co., 117 AD3d 609 (1st Dept. 2014). According to CPLR 5302, a foreign country judgment may be "final, conclusive and enforceable where rendered even though an appeal therefrom is pending or it is subject to appeal." CPLR 5303 provides that the mechanism for enforcing a foreign judgment is a motion for summary judgment in lieu of a complaint pursuant to CPLR 3213. See Banco Popular North America v Victory Taxi Mgmt., Inc., 1 NY3d 381 (2004); Mister Money Israel, Ltd. v Leibowitz, 100 AD3d 842 (2nd Dept. 2012).

Here, in support of its motion, the plaintiff argues that a final, conclusive, and enforceable foreign country judgment has been rendered in its favor and that there exists no grounds for non-recognition under CPLR 5304. However, in opposition, the defendant submitted proof and argues that the Greek judgment is not final, conclusive and enforceable at this time. The plaintiff, who did not mention the cassation in its initial papers, now maintains that, at the time this action was filed, it was unaware of the pending cassation before the Supreme Court of Greece. The parties do not dispute that a temporary restriction of enforcement of the Greek judgment was not instituted until on or about December 23, 2014, several weeks after the plaintiff commenced this action. Subsequently, on February 9, 2015, the Supreme Court of Greece issued a partial stay of enforcement of the judgment "beyond five hundred thousand euro (�,000)" of the amount awarded pending their determination of the cassation. The Greek judgment, therefore, is only partially enforceable. In addition, it appears as though the Supreme Court of Greece heard the cassation on April 27, 2015 and has yet to render a decision on the matter. Under these circumstances, recognition of the Greek judgment would be premature at this time. See Banco Nacional De Mexico, S.A. v Societe Generale, 34 AD3d 124 (1st Dept. 2006); Cecuk v MacAdoo, 284 AD2d 188 (1st Dept. 2001); LBS Bank-New York v Yutex, Inc., 283 AD2d 281 (1st Dept. 2001). Accordingly, the plaintiff's motion for summary judgment in lieu of complaint for the recognition of the Greek judgment is denied without prejudice to renew. See generally Schulz v Barrows, 94 NY2d 624 (2000).

[*4]

B. Motion to Confirm, Cross-Motion to Vacate

Ex Parte Order of Attachment - CPLR article 62

The plaintiff moves pursuant to CPLR 6211(b) to confirm the December 10, 2014 ex parte order of attachment on the grounds that the defendant's unidentified assets in Greece are insufficient and that it appears that the defendant transferred a portion of his New York assets, his cooperative apartment shares, after the Greek action was commenced. That attachment, granted pursuant to CPLR 6201(5), on the basis of "a judgment which qualifies for recognition under the provisions of article 53," levied the shares in the defendant's cooperative in the amount of $11.5 million and required the plaintiff to post an undertaking of only $1,000. The subject apartment unit includes the entire third floor of 2 East 67th Street which the plaintiff now contends is valued at approximately $30 million. For the reasons set forth below, the plaintiff's motion to confirm the order of attachment is denied and the defendant's cross-motion pursuant to CPLR 6223(b) to vacate the order of attachment is granted.

On a motion to confirm an order of attachment, the plaintiff has the burden of establishing "that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist, and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff." CPLR 6212(a); see Ford Motor Credit Co. v Hickey Ford Sales, Inc., 62 NY2d 291 (1984); Faberge Intl., Inc. v Di Pino, 109 AD2d 235 (1st Dept. 1985); Computer Strategies, Inc. v Commodore Business Machines, Inc., 105 AD2d 167 (2nd Dept. 1984). In addition to the statutory requirements for an attachment, there must be some identifiable necessity for the attachment, such as the "risk that the defendant will not be able to satisfy the judgment." VisionChina Media Inc. v Shareholder Representative Servs., LLC, 109 AD3d 49, 60 (1st Dept. 2013). "The risk should be real whether it is a defendant's financial position or past and present conduct.' [citations omitted]." Id. at 60. Since mere suspicion or speculation is not enough, a defendant's stated or indicated intent to dispose of assets or some other evidentiary proof must be submitted to support an attachment. See CPLR 6212(a); Ford Motor Credit Co. v Hickey Ford Sales, Inc., supra; Faberge Intl., Inc. v Di Pino, supra; Eaton Factors Co. v Double Eagle Corp., 17 AD2d 135 (1st Dept. 1962). Without such proof, the motion will not be granted. See Ford Motor Credit Co. v Hickey Ford Sales, Inc., supra; Computer Strategies,Inc. v Commodore Business Machines, Inc., supra; McDonnell & Co. v Sarlie, 21 AD2d 767 (1st Dept. 1964).

Similarly, on a defendant's motion to vacate an order of attachment, the plaintiff has the burden "of establishing the grounds for the attachment, the need for continuing the levy and the probability that [it] will succeed on the merits." CPLR 6223(b); see Raze Contracting, Inc. v Colombo, 16 AD3d 656 (2nd Dept. 2005).

The decision whether to grant a motion for an order of attachment or to confirm or vacate such an order ultimately rests within the sound discretion of the court. See VisionChina Media Inc. v Shareholder Representative Servs., LLC, supra; Cargill Financial Servs. Intl., Inc. v Bank Fin. and Credit, Ltd., 70 AD3d 456 (1st Dept. 2010), lv app dism 14 NY3d 853 (2010); Morgenthau v Avion Resources Ltd., 49 AD3d 50 (1st Dept. 2007) aff'd as modified 11 NY3d 383 (2008). However, because attachment is a harsh remedy and is "in derogation of the common law" (Penoyar v Kelsey, 150 NY 77, 80 [1896]), courts strictly construe CPLR article 62 in favor of those against whom it may be employed. See VisonChina Media Inc. v Shareholder Representative Servs., LLC, supra; Elton Leather Corp. v First General Resources [*5]Co., 138 AD2d 132 (1st Dept. 1988); P.T. Wanderer Assoc., Inc. v Talcott Communications Corp., 111 AD2d 55 (1st Dept. 1985).

Here, the plaintiff has not established all elements required by CPLR 6212(a) to warrant confirmation of the ex parte order of attachment. Even assuming that the plaintiff has a cause of action to enforce a Greek judgment, as set forth above, due to the temporary restriction and partial stay of enforcement of the judgment imposed by the Supreme Court of Greece, the action is premature and the plaintiff has not demonstrated, in these papers, a probability of success. Although the plaintiff's Greek counsel contends that the defendant's cassation is more likely than not to be denied, counsel does not provide any basis for such contention other than his conclusory assertion that the plaintiff's opposition to the cassation is valid. Furthermore, as discussed herein in regard to the stay granted by this court, the plaintiff has not established the grounds for the attachment in that it has not shown that the Greek judgment currently qualifies for recognition under CPLR article 53. See CPLR 6201(5). While the plaintiff has demonstrated "that the amount demanded from the defendant exceeds all counterclaims known to it" (CPLR 6212[a]) inasmuch as no claims have been asserted by the defendant, its failure to establish all the requirements under CPLR 6201 mandates denial of its motion.

The plaintiff also fails to make the requisite showing of an "identifiable necessity for the attachment, such as the "risk that the defendant will not be able to satisfy the judgment." VisionChina Media Inc. v Shareholder Representative Servs., LLC, supra at 60. The plaintiff submits no proof from which the court may conclude that the defendant is attempting to dispose of his assets in Greece or in New York or will likely do so in the future.[FN1] Indeed, the plaintiff wholly fails to demonstrate what assets, apart from the apartment, the defendant may have in Greece or New York and fails to provide any basis to conclude that such assets are insufficient to satisfy the Greek judgment. In that regard, the plaintiff submits only a 2012 post from "The Real Deal", a New York real estate website, reporting an apparent listing for the apartment with an asking price of $30,000,000. Even assuming that to be the true value of the apartment, and crediting the plaintiff's contention that some of the shares were transferred, this alone still does not show that any final judgment could not be satisfied from the remaining shares or other of the defendant's assets. Indeed, as stated above, the plaintiff does not dispute the representation of defendant's counsel that the defendant's has considerable assets in Greece, including the 𔛁,283,335 Lavipharm bond contained in the parties' agreement, and that this was the very reason the Greek court, which was better situated to make that determination, denied the plaintiff's application for an attachment of the defendant's property in Greece.

Contrary to the plaintiff's contention, the other documents it submitted, copies of UCC financing statements, do not demonstrate that the defendant transferred shares in his cooperative apartment after the commencement of the Greek action in 2011. A UCC-1 statement merely indicates a creditor's security interest in a debtor's personal property. See UCC §§ 1-201(b)(35), 9-201(a). The plaintiff submits an undated UCC-1 Financing Statement showing the defendant to be the debtor and Atlantic Bank of New York as the creditor and an undated UCC-3 Financing Statement Amendment showing New York Commercial Bank as successor in interest to Atlantic Bank of New York, with Vana Lavidas listed as a new or [*6]additional debtor. This appears to reflect a mortgage re-financing rather than an attempt to dispose of assets. The plaintiff submits no proof, such as an endorsed stock certificate or new or amended proprietary lease, which may serve to establish a transfer in ownership interest in the apartment. See generally Matter of Estate of Carmer, 71 NY2d 781 (1988); Nahazi v Lieblich, 69 AD3d 427 (1st Dept. 2010), lv app denied 15 NY3d 703 (2010).

Moreover, the plaintiff's contention concerning the shares is refuted by the defendant's submission of a stock certificate of Fifth and 67th Street, Inc., dated August 9, 1994, and issued to the defendant and his wife, Vana Lavidas, reflecting her ownership interest in the 800 shares as of that year, some 17 years before the Greek action was commenced. The defendant also submits a UCC-1 financing statement, also dated August 1994, showing Vana Lavidas to be the debtor. Thus, the plaintiff's contention that the defendant is attempting to dispose of his New York assets amounts to nothing more than mere suspicion or speculation (see Faberge Intl., Inc. v Di Pino, supra) and its proof fails to show an identifiable risk that the judgment will not be satisfied. See VisionChina Media Inc. v Shareholder Representative Servs., LLC, supra.

Because the plaintiff failed to meet its burden of establishing the statutory requirements for an attachment, specifically the probability of success on the merits and the grounds for the attachment, as well as the necessity for continuing the levy, the plaintiff's motion to confirm the December 10, 2014 ex parte order of attachment is denied and the defendant's cross-motion to vacate the attachment is granted. See Ford Motor Credit Co. v Hickey Ford Sales, Inc., supra; Computer Strategies,Inc. v Commodore Business Machines, Inc., supra; McDonnell & Co. v Sarlie, supra. The defendant's alternative request for the relief, to increase the amount of the plaintiff's undertaking, is denied as academic.

C. Application to Stay the Action Pending Foreign Appeal

CPLR 5306

The defendant seeks to stay this action pursuant to CPLR 5306 until the cassation is decided by the Supreme Court of Greece. Initially, the court notes that although the defendant does not expressly seek such relief in a Notice of Motion (see CPLR 2214[a]), both parties have submitted papers in support and opposition thereto. Further, the court is satisfied that the relief is supported by the proof in the papers and that neither party is prejudiced by consideration of the application. See Tirado v Miller, 75 AD3d 153 (2nd Dept. 2010).

CPLR 5306 provides that "if the defendant satisfies the court either that an appeal is pending or that he [or she] is entitled and intends to appeal from the foreign country judgment, the court may stay the proceedings until the appeal has been determined or until the expiration of a period of time sufficient to enable the defendant to prosecute the appeal." Since there is a pending appeal in the Supreme Court of Greece, as well as the prior proceedings in the Greek courts and considering the nature of the parties' underlying agreement and the choice of law and forum selection provisions therein, this court finds that a stay of this action is warranted under CPLR 5306. Cf. CDR Crances S.A. v Euro-American Lodging Corp., 7 Misc 3d 1019(A) (Sup Ct, NY County 2005) [stay denied where French Court of Appeal previously ruled against defendant on its counterclaim].

A stay is further warranted under CPLR 2201, which provides that "[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of [*7]proceedings in a proper case, upon such terms as may be just." A court may grant a stay "to avoid the risk of inconsistent adjudications, application of proof and potential waste of judicial resources." Zonghetti v Jeromack, 150 AD2d 561, 562 (2nd Dept. 1989); see HSBC Bank v Despot, — AD3d — , 2015 WL 4256285 (2nd Dept. July 15, 2015); 952 Assocs., LLC v Palmer, 52 AD3d 236 (1st Dept. 2008). Because the parties in this action are identical to the parties in the pending action in Greece, the relief sought is the same, and the outcome of the Greek action is highly relevant to the outcome in this action, a stay pending the final adjudication of the cassation is proper in this case. See OneBeacon America Ins. Co. v Colgate-Palmolive Co., 96 AD3d 541 (1st Dept. 2012).

Therefore, in the exercise of this court's discretion, this action is stayed pending determination of the cassation presently pending before the Supreme Court of Greece or until further order of this court.

III. Conclusion

For the above-stated reasons, and upon the papers submitted, the plaintiff's motion for summary judgment in lieu of complaint (CPLR 3213) recognizing the foreign judgment pursuant to CPLR 5303 is denied without prejudice to renew, the plaintiff's motion pursuant to CPLR 6211(b) to confirm an ex parte order of attachment is denied, the defendant's cross-motion to vacate the order of attachment and stay this action is granted.

Accordingly, it is,

ORDERED that the branch of the plaintiff's motion for summary judgment in lieu of a complaint pursuant to CPLR 3213 is denied without prejudice, and it is further

ORDERED that the branch of the plaintiff's motion to confirm the December 10, 2014 ex parte order of attachment is denied, and it is further

ORDERED that the defendant's cross-motion to vacate the December 10, 2014 ex parte order of attachment is granted, and it is further

ORDERED that further proceedings in this action are stayed, except for an application to vacate or modify said stay, and it is further

ORDERED that either party may make an application by order to show cause to vacate or modify this stay upon the final determination of the appeal/cassation of decision number 4648/2014 of the Athens Court of Appeals, pending before the Supreme Court of Greece, or until further order of this court, and it is further

ORDERED that the defendant is directed to serve a copy of this order with notice of entry on the Trial Support Office (60 Centre Street, Room 158).

This constitutes the Decision and Order of the court.

[*8]Dated: July 24, 2015_______________________, JSC Footnotes

Footnote 1:The court would be remiss in not acknowledging the ongoing Greek debt crisis, and its impact on Greek citizens, including their recently reported difficulties in accessing bank funds. However, in deciding this motion, the court may not consider facts outside the papers submitted.