J. Remora Maintenance LLC v Efromovich

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J. Remora Maintenance LLC v Efromovich 2019 NY Slip Op 33072(U) October 16, 2019 Supreme Court, New York County Docket Number: 650943/2011 Judge: Debra A. James Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: IAS MOTION 59EFM PART HON. DEBRA A. JAMES Justice ---------------------------------------------------------------------------------X J. REMORA MAINTENANCE LLC, and REMORA MAINTENANCE LLC, INDEX NO. 650943/2011 MOTION DATE 04/02/2019 MOTION SEQ. NO. Plaintiffs, 006 007 -vDECISION + ORDER ON MOTION GERMAN EFROMOVICH, Defendant. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 006) 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 209, 210, 211, 212, 213, 214, 215, 216, 217, 218,219,220,221,222,223,224, 225,226 CONTEMPT were read on this motion to/for The following e-filed documents, listed by NYSCEF document number (Motion 007) 196, 197, 198, 199, 200,201,202,203,204,205,206,207 were read on this motion to/for VACATE - DECISION/ORDER/JUDGMENT/AWARD. ORDER Upon the foregoing documents, it is ORDERED that plaintiffs' their claim that Efromovich motion is in is denied with contempt for not respect to providing information regarding his Itau/Helm Bank account in his response to their information subpoena, and it is further ORDERED that Efromovich's cross motion to dismiss is denied; and it is further ORDERED that the remaining issues in plaintiffs' motion is referred to a Special Referee to hear and report at the time of 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 1 of 15 Page 1 of 15 [*FILED: 2] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 trial; and it is further ORDERED that a Judicial Hearing Officer ( JHO) or Special Referee shall be designated to hear and report to this court on the following individual issues of fact, which are hereby submitted to the JHO/Special Referee for such purpose: (1) Efromovich's interest, if any, in the$ 3.1 million transferred out of his personal Citibank account, and whether those transfers violated the restraining notice; (2) Efromovich's ownership interest in the assets held in the Itau/Helm Bank account; (3) Efromovich's role in numerous entities with which he may be affiliated (as listed in the January 14, 2019 Perrelle affirmation, paragraphs 4, 5, 6, 7 and 8), and whether he wholly owns or controls those entities for the purpose of piercing the corporate veil; ( 4) what compensation, in any form, does Efromovich receive from Avianca Holdings, S.A; and (5) the referee is authorized to order the production of documents that are required to resolve the aforementioned issues. ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119, 64 6-38 6-3 02 8 or spref@nycourts.gov) for placement at the earliest possible date upon the calendar of the Special Referees Part (Part SRP), which, in accordance with the Rules of that Part (which are posted on the website of this court at www. nycourts. gov I supctmanh at the "References" 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 2 of 15 link) , shall Page 2of15 [*FILED: 3] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 assign INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 this matter at the initial appearance to an available JHO/Special Referee to hear and report as specified above; and it is further ORDERED that counsel shall immediately consult one another and counsel for plaintiff shall, within 15 days from the date of this Order, 918 6) or submit to the Special Referee Clerk by fax e-mail "References" information link called an on for Information the court's therein Sheet (accessible website) and that, (212-401- containing as soon as at the all the practical thereafter, the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees Part; and it is further ORDERED that on the initial appearance in the Special Referees Part the parties shall appear for a pre-hearing conference before the assigned JHO/Special Referee and the date for the hearing shall be fixed at that conference; the parties need not appear at the conference with all witnesses and evidence; and it is further ORDERED that, except as otherwise directed by the assigned JHO/Special Referee for good cause shown, the trial of the issues specified above shall proceed from day to day until completion and counsel must arrange their schedules and those of their witnesses accordingly; and it is further ORDERED that counsel shall file memoranda or other documents directed to the assigned JHO/Special Referee in accordance with 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 3 of 15 Page 3of15 [*FILED: 4] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 the Uniform Rules of the Judicial Hearing Officers and the Special Referees (available at the "References" link on the court's website); and it further ORDERED that any motion to confirm or disaf firm the Report of the JHO/Special Referee shall be made within the time and in the manner specified in CPLR 4403 and Section 202.44 of the Uniform Rules for the Trial Courts; and it is further ORDERED that, unless otherwise directed by this court in any Order that may be issued together with this Order of Reference to Hear and Report, the issues presented in any motion identified in the first submission paragraph of the hereof Report shall of the be held in JHO/Special abeyance Referee pending and the determination of this court thereon; and it is further ORDERED that counsel for the party seeking the reference or, absent such party, counsel for the plaintiff shall, within 30 days from the date of this order, serve a copy of this order with notice of entry, together with a completed Information Sheet, upon the Special Referee Clerk in the Motion Support Office in Rm. 119 at 60 Centre Street, who is directed to place this matter on the calendar of the Special Referee's Part (Part 50 R) for the earliest convenient date. DECISION On their judgment enforcement application, plaintiffs seek an order from this the court holding defendant in contempt, alleging 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 4 of 15 Page 4of15 [*FILED: 5] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 that he violated a valid restraining notice and failed to provide them with complete information regarding his assets in his response to their information subpoena. Plaintiffs also seek an order directing defendant to turn over all his assets held in two bank accounts, serving and on to the turn board over of the compensation directors of he Avianca receives from Holdings, S.A. Defendant cross-moves to dismiss the application. Factual and Procedural Background1 This action arises out of the breach of a personal guarantee. Plaintiffs J. Remora Maintenance LLC and Remora Maintenance LLC (together Remora) 30, 2014, seek to enforce a judgment, entered on January in their favor and against defendant German Efromovich (Efromovich), in the amount of approximately $12.7 million (the Judgment) . On June 10, 2014, Remora served a information subpoena upon Efromovich. restraining notice and By notice of motion dated June 17, 2014, Efromovich moved to vacate or quash the restraining notice and information subpoena. November 13, 2014, (Marcy Friedman, By decision on the record, dated and so ordered on March 23, J.), 2105, the court upheld the restraining notice but vacated the information subpoena without prejudice to reservice of a more 1 Portions of this factual recitation are taken from the court's decision and order dated October 12, 2018 (Marcy Friedman, J.) . 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 5 of 15 Page 5of15 [*FILED: 6] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 appropriately limited information subpoena. On or about December 8, 2014, Remora served Efromovich with a revised information subpoena. Efromovich served a sworn response dated January 13, 2105. For more than three years, no further enforcement proceedings were taken in this action. On February 22, 2018, plaintiffs moved, in the Commercial Division before Justice Marcy Friedman, for an order, pursuant to CPLR 5251, holding Efromovich in contempt for allegedly violating the restraining notice and allegedly falsely answering the information subpoena; an order, pursuant to CPLR 5225, directing Efromovich to turnover assets in a bank account at Itau (Panama), S.A. formerly known as Helm Bank (Itau/Helm Bank); and an order, pursuant to CPLR 5226, directing payment to Remora of compensation to be received by Efromovich as a director of Avianca Holdings, S. A. (Avianca Holdings) . Efromovich cross-moved to dismiss the proceeding and to strike the information subpoena. On October 12, 2018, Justice Friedman issued an order holding that the matter was to be transferred from the Commercial Division because the Commercial Division Rules provide that proceedings to enforce a Such court judgment cannot be heard in the Commercial Di vision. also noted that the issues raised by Remora, that Efromovich violated the restraining notice by transferring over $3 million in assets from his personal bank account to third parties, and that Efromovich made false statements in his response to the 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 6 of 15 Page 6of15 [*FILED: 7] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 information subpoena by failing to disclose assets, bank accounts, ownership and interests, trans f ers2, were more appropriately addressed in a special proceeding. The court noted that: "Efromovich's roles in numerous entities with which he may be affiliated are therefore at issue in the both the contempt and turnover motions. The court assumes without deciding, for purposes of this motion, that Remora may ultimately be able to meet the legal threshold required to reach assets with which Efromovich is affiliated e.g.. to make a showing sufficient to pierce the corporate veil. Such a showing would, however, likely require a factually intensive inquiry that is more appropriately undertaken in a special proceeding The factual issues on the 5226 claim also overlap with the factual issues on the contempt and 5225 claims regarding Efromovich's roles in the affiliated entities" The court then converted the motions into a special proceeding and referred the matter to the trial support office for reassignment. On February 21, 2019, the motions were orally argued before the undersigned. In their Efromovich motion should be for held contempt, in contempt plaintiffs because argue he that violated the restraining notice by transferring over $3 million of his personal assets because to he third parties falsely swore without in satisfying his response the to Judgment, the and information subpoena by omitting the full extent of his personal assets, 2 In moving for contempt and turnover, Remora assets that Efromovich failed to identify all entities wholly owned and/or controlled by him and that he omitted 84 companies that plaintiffs claim Efromovich controls. 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 7 of 15 Page 7of15 the [*FILED: 8] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 names and assets of the entities he wholly owns and/or controls, and certain unlawful transfers he made. Plaintiffs allege that Efromovich is a director and executive officer of Synergy Group Corporation (Synergy Group), established for and that it is owned though a trust the benefit of Efromovich and his brother Jose Plaintiffs claim that Synergy Group is a Panamanian Efromovich. holding company that owns and controls over 80 companies across the aerospace, oil, gas and shipping sectors. Plaintiffs contend that Efromovich indirectly owns and controls Synergy Group and all of its affiliates, and that these assets are available to satisfy the Judgment. Plaintiffs also seek an order directing Efromovich to turn over all assets held by him in accounts at Itau/Helm Bank, and any other satisfied. bank, wherever located until the Judgment is Plaintiffs also seek an order directing Efromovich to turnover any and all payments he receives for serving on the board of directors for Avianca Holdings. Ef romovich opposes this motion on several grounds. Efromovich argues that pursuant to the court's October 15, 2018 order, these motions were converted into a special proceeding, yet plaintiffs have not taken any steps to convert the motions to a special proceeding. Further, Efromovich argues that plaintiffs waited three years to bring this contempt application challenging his responses to the information subpoena. that this misconduct should preclude them 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 8 of 15 Thus, Efromovich argues from being awarded Page 8of15 [*FILED: 9] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 interest on the judgment which accrued because of plaintiffs', not his, delay. In other words, the doctrine of laches should preclude plaintiffs' claims for interest on the judgment. Efromovich argues further that since plaintiffs' application seeking to hold him in contempt was not personally served on him, the contempt portion of the motion should be stricken. Efromovich also argues that plaintiffs' motion should be dismissed for failure to join necessary parties. Efromovich argues that plaintiffs seek turnover of assets held at the Itua/Helm Bank and his Avianca Holdings directorship fees, not joined those parties to this action. yet plaintiffs have Efromovich argues that Itau/Helm Bank and Avianca Holdings may be "inequitably affectedu by any judgment of this court if they are not joined in this action. Efromovich argues that plaintiffs cannot seek a contempt order based upon his alleged failure to comply with a non-judicial information subpoena; contempt is only available for a violation of a judicial subpoena. Rather, the remedy for failure to comply with a non-judicial compliance with Efromovich argues the is to seek information that he has a judicial subpoena. complied order But with in the compelling any event, information subpoena and provided extensive answers to plaintiffs' questions. Further, plaintiffs' contention that Efromovich has other assets including over 80 entities which he controls, 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 9 of 15 simply raises an Page 9of15 [*FILED: 10] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 issue of fact to be resolved at an evidentiary hearing. With respect to plaintiffs' claim that, in his response to the information subpoena, he should have listed his Itau/Helm Bank account as an asset, Efromovich notes that that account was opened in March 2015, after he provided his response to the information subpoena. Therefore, since that account did not exist at the time the information subpoena was served, he cannot be in contempt. With controls, respect to various Efromovich argues entities that subsidiaries are not controlled, the owned, plaintiffs Synergy allege Group and he its or possessed by him. In fact, Synergy Group is owned by a trust, Synergy Trust. The Synergy Trust was established in Guernsey, Channel Islands in 1998. Efromovich notes that while he and his brother are discretionary beneficiaries of the Synergy Trust, the trust is controlled by the trustees. Accordingly, those entities are not his for the purposes of satisfying the Judgment. Efromovich argues that to the extent the information subpoena seeks information on the assets of the Synergy Group, it is overbroad and should be stricken. With respect to plaintiffs' claims that the transfers in and out of his Citibank account Efromovich contends that the violated the restraining notice, $1. 6 million transferred from his account to Synergy Shipyard was part of a loan from one of the Synergy Group entities to Synergy Shipyard. entity did not have a bank account, the 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 10 of 15 However, loan was since that facilitated Page 10of15 [*FILED: 11] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 through his Citibank account. With respect to the Avianca Holdings directorship fees, Efromovich contends that CPLR 5226 provides that 90% of those fees are exempt from judgment enforcement. Further, the director fees are only paid to Efromovich if he attends the board of director's Therefore, contrary to meetings; thus, they are contingent fees. plaintiffs' claims, these fees are not available for judgment enforcement. Discussion Efromovich's Cross Motion to Dismiss At the outset the court notes that on October 12, 2018, Justice Friedman converted this matter into a special proceeding and referred it an IAS Part. In the opinion of this court, this matter has already been converted into a special proceeding and requires no further action by plaintiffs. Efromovich's claim that plaintiffs failed to join necessary parties is without merit. To the extent plaintiffs seek to hold Efromovich in contempt no other parties are necessary. plaintiffs' Further, CPLR 5225 claim for the turnover of assets held by Efromovich in his Citibank and Itau/Helm accounts, a court may direct a judgment debtor to turnover assets in his possession (see Gryphon Dom. VI, LLC v APP Intl. Fin. Co., B.V., 41 AD3d 25, 36 [1st Dept 2007]; Miller v Doniger, 28 AD3d 405, 405 [l 5 t Dept 2006]; see also Weinstein-Korn-Miller, NY Civ Prac 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 11 of 15 ~ 5225.21 ["The court Page 11 of 15 [*FILED: 12] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 . may use CPLR 5225 (c) to order the debtor to execute and deliver a withdrawal slip so that his bank account in this or in another state may be reached"]). Since the funds that are held in these bank accounts are in Efromovich' s there are no other necessary parties. CPLR 5226 claim compensation, the for court the With respect to plaintiffs' turnover has the control and possession of power Efromovich's to direct Avianca Efromovich to turnover that compensation should it be found to be available to satisfy the Judgment. Moreover, contrary to Efromovich's arguments, to the extent plaintiffs' order to show cause seeks an order of contempt service upon Efromovich' s attorney was proper. provides "[a] n application contempt proceeding shall to be punish served NYS Judiciary Law for contempt upon the in accused, a § 7 61 civil unless service upon the attorney for the accused be ordered by the court or judge" (see Judiciary Law § 761). An order to show cause why a party to a special proceeding should not be punished for contempt for disobedience of an order made institute a new proceeding, but in such proceeding does is an order in such not special proceeding, and can be properly served upon the attorneys therein of the party proceeded against (see Matter of Shapiro, 64 Misc 476 [Sup Ct, NY County 1909]; See also [ 18 7 6] ; Hudson Str. Owner Equities, 127 [A] Pitt v Davison, LLC v Escof f ier, 37 NY 235 3 6 Misc 3d [App Term, pt Dept 2012]). 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 12 of 15 Page 12of15 [*FILED: 13] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 Efromovich's contention that plaintiffs' contempt application must be denied based on the doctrine of laches, is unavailing. To satisfy the elements of the doctrine of laches, Efromovich must demonstrate an unreasonable and inexcusable delay by plaintiffs which resulted in prejudice to him 121 Ad2d 332, 334 a judgment, prejudice [1 5 t Dept 1986]). However, a delay in enforcing resulting in accruing interest, to a defendant Family Charitable Efromovich (see Dante v 310 Associates, (see Found., could have C. T. Inc., paid does not constitute Holdings, 154 AD3d 433 the judgment Ltd. [1 5 t v Schreiber Dept and 2017]). avoided the accumulation of interest. Efromovich's argument that plaintiffs' motion dismissed because of their failure satisfy 22 NYCRR § must be 202.7(a), is without merit because this rule only applies to a "motion relating to disclosure 202.7[a]) turnover of or to a bill of particulars" Plaintiffs' motion seeks assets, is a it not an (see order of 22 NYCRR contempt discovery motion. § and Likewise, Efromovich's argument that contempt is not a remedy available under the CPLR for non-compliance with an information subpoena is not correct (see In re Estate of Lupoli, 275 AD2d 44 Idaho Potato Packers Corp. v. Hunts Point Indus. [2d Dept 2000]; Park, Inc., 58 AD2d 547 [l 5 t Dept 1977]). Efromovich's argument that the information subpoena is overbroad because it asks for information regarding the assets of 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 13 of 15 Page 13of15 [*FILED: 14] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM INDEX NO. 650943/2011 NYSCEF DOC. NO. 230 RECEIVED NYSCEF: 10/16/2019 Synergy Group is also without merit. Should plaintiffs succeed in their application to pierce the corporate veil and establish that Synergy Group and its affiliates are assets of Efromovich, they will be entitled to information regarding those assets. Whether Efromovich violated restraining the notice by transfers in and out of his Itau/Helm Bank and Citibank accounts, and whether director's infra). plaintiffs fees Thus, are entitled to from Avianca Holdings, Efromovich' s board are issues of fact of (see Efromovich is not entitled to dismissal of those claims. Plaintiffs' Motion for Contempt and Turnover of Assets Plaintiffs' failure to provide information denied. application them subpoena, Since that for with due information, regarding account contempt was his not in Itau/Helm opened to Efromovich's response Bank to the account until March is 2015, Efromovich did not fail to report it to plaintiffs. With respect to the remaining issues raised in plaintiffs' application, as noted Efromovich' s roles in by Justice numerous Friedman entities with affiliated are issues in both plaintiffs' the questions which he of may be contempt and turnover motions and are factually intensive. Likewise, the issues whether Efromovich is entitled to a board of director's fee and the turnover of such a fee overlap with the issues of contempt and plaintiffs' CPLR § 5225 claims regarding Efromovich's roles in the 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 14 of 15 Page 14of15 [*FILED: 15] NEW YORK COUNTY CLERK 10/16/2019 03:26 PM NYSCEF DOC. NO. 230 INDEX NO. 650943/2011 RECEIVED NYSCEF: 10/16/2019 affiliated entities. Therefore, these issues shall be referred to a Judicial Hearing Officer or Special Referee who shall hear and report their findings on these factual issues. 10/16/2019 DATE CHECK ONE: APPLICATION: CHECK IF APPROPRIATE: ~ NON-FINAL DISPOSITION CASE DISPOSED ::;T::E:RDER 0 GRANTED IN PART DENIED INCLUDES TRANSFER/REASSIGN SUBMIT ORDER FIDUCIARY APPOINTMENT 650943/2011 J. REMORA MAINTENANCE LLC vs. EFROMOVICH, GERMAN Motion No. 006 007 15 of 15 D 0 OTHER REFERENCE Page 15of15

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