Allstate Insurance Company et al v. Mirvis et al

Filing 710

ORDER: For the reasons discussed in the attached Memorandum and Order, the 707 request for a stay pending appeal by Non-Parties Lyubov Mirvis and Tatyana Mirvis is denied. Ordered by Judge Pamela K. Chen on 6/26/2020. (Marks, Miriam)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ALLSTATE INSURANCE COMPANY, et al.,
Plaintiffs,

MEMORANDUM & ORDER
08-CV-4405 (PKC) (PK)

- against MARK MIRVIS, et al.,
Defendants.
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PAMELA K. CHEN, United States District Judge:

On April 24, 2020, the Court adopted in its entirety the Report and Recommenda tio n
(“R&R”) of the Honorable Peggy Kuo, United States Magistrate Judge, which, in turn, had granted
in its entirety Plaintiffs’ motion to enforce the judgment against Judgment Debtor Mark Mirvis. 1
(See generally Order, Dkt. 704.) Specifically, this Court ordered that: (1) Defendant Mark
Mirvis’s and Non-Party Lyubov Mirvis’s tenancy by the entirety in the real property known as 289
Bayberry Drive North, Hewlett Harbor, New York 11557 (the “Property”), as well as Lyubov
Mirvis’s survivorship rights in the Property, be terminated; (2) the U.S. Marshals sell Defendant
Mirvis’s interest in the Property pursuant to the procedures set forth in New York Civil Practice
Law and Rules § 5236; (3) the proceeds of the sale be placed into the Court’s registry pending an
By way of brief background, Plaintiffs Allstate Insurance Company, Allstate Indemnity
Company, Deerbrook Insurance Company, Allstate New Jersey Insurance Company, and Allstate
Property & Casualty Insurance Company (“Plaintiffs”) brought this action on October 30, 2008,
alleging civil claims based on violations of, inter alia, the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. §§ 1961, 1962(c)–(d), 1964(c), and New York common law, in
connection with Defendant Mark Mirvis and his co-Defendants’ involvement in an extensive
criminal organization that engaged in massive automobile insurance fraud. (See Complaint, Dkt.
1, ¶¶ 1–38.) On May 5, 2015, default judgment was entered for Plaintiffs in the amount of
$45,657,401.01, for which Defendant Mirvis and other defaulting co-Defendants were adjudged
jointly and severally liable. (Dkt. 303.) On June 17, 2019, Plaintiffs filed a motion to enforce the
judgment as to Defendant Mirvis. (Dkt. 631.)
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adjudication of the rights of the parties with interests in the Property; and (4) the sale of the
Property be stayed for three months from the date of the Order. (Id. at 16.) On April 27, 2020,
Lyubov and Tatyana Mirvis (the “Non-Parties”) appealed the Court’s April 24, 2020 Order. (Dkt.
705.) On June 5, 2020, Non-Parties moved for a stay pending appeal. (Dkt. 707.) The Court held
a show cause hearing on June 25, 2020, at which the Court orally denied the stay, with a written
decision to follow. (June 25, 2020 Minute Entry.)
DISCUSSION
I.

Legal Standard
“A district court may enter a stay pending appeal upon considering four well-establis hed

factors: ‘the likelihood of success on the merits, irreparable injury if a stay is denied, substantia l
injury to the party opposing a stay if one is issued, and the public interest.’” Sanders v. Houslanger
& Assocs., PPLC, No. 17-CV-8985 (DC), 2018 WL 6444922, at *3 (S.D.N.Y. Nov. 5, 2018)
(quoting Mohammed v. Reno, 309 F.3d 95, 100 (2d Cir. 2002)). These factors are weighed such
that “the probability of success that must be demonstrated is inversely proportional to the amount
of irreparable injury [the movant] will suffer absent the stay.” Mohammed, 309 F.3d at 101
(internal quotation and citation omitted). “A stay is not a matter of right, even if irreparable injury
might otherwise result. It is instead an exercise of judicial discretion, and the propriety of its issue
is dependent upon the circumstances of the particular case.” Id. (quoting Nken v. Holder, 556 U.S.
418, 433 (2009)).
II.

Analysis
A.

Likelihood of Success on the Merits

Non-Parties’ appeal of the Court’s April 24, 2020 Order primarily concerns the termina tio n
of Lyubov Mirvis’s tenancy by the entirety in the Property. (Non-Parties’ Memorandum of Law

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in Support of a Stay (“Non-Parties’ Mem.”), Dkt. 707-1, at 2.) Non-Parties now argue that their
appeal has a strong likelihood of success on the merits because, contrary to the Court’s April 24,
2020 Order, “no court has recognized that the New York Debtor and Creditor Law [(the “NY
DCL”)] authorizes that a non-party be punished for assisting in a fraudulent conveyance to shield
assets from creditors.” (Id. at 5.)
Non-Parties’ argument, however, is substantively the same as their objections to Judge
Kuo’s R&R—objections which the Court explicitly rejected. 2

(See Non-Parties’ Objections

(“Objs.”), Dkt. 695, at 2–6.) In its April 24, 2020 Order, the Court explained why Non-Parties’
reasoning, as argued in those objections, was not sufficiently persuasive so as to warrant rejection
or modification of the R&R. (See Order, Dkt. 704, at 9–16.) Non-Parties’ mere disagreement with
the Court’s analysis is insufficient to establish a likelihood that their appeal will succeed on the
merits. 3
Non-Parties’ memorandum in support of the stay highlights two cases—United States
Fidelity & Guaranty Co. v. J. United Electrical Contracting Corp., 62 F. Supp. 2d 915 (E.D.N.Y.
1999), and Hassett v. Goetzmann, 10 F. Supp. 2d 181 (N.D.N.Y. 1988)—that Non-Parties only
briefly addressed in their objections to the R&R. (See Objs., Dkt. 695, at 4.) The Court observes
that the first case, U.S. Fidelity, is distinguishable from the instant action on its face, as it involves
the pre-judgment attachment of property and a spouse who was not involved in the fraudule nt
conveyance at issue. See 62 F. Supp. 2d at 921, 924–25. In Hassett, the court found that a trustee
was not entitled to enforce judgments against the judgment debtor’s wife and son without first
attempting to satisfy the judgments via the property fraudulently conveyed to them by the
judgment debtor. See 10 F. Supp. 2d 181, 192–93. To the extent that Hassett may arrive at a
conclusion different from that of the court in Clarkson Co. Ltd. v. Shaheen, 553 F. Supp. 905
(S.D.N.Y. 1982), upon which this Court’s April 24, 2020 Order and the R&R rely in part, such
disagreement among district courts within this Circuit was previously considered by the Court (see
Order, Dkt. 704, at 13), and therefore does not enhance Non-Parties’ likelihood of success.
2

Plaintiffs note that the New York State Legislature on April 4, 2020 amended the relevant
provision of the NY DCL to state that a creditor may obtain “subject to applicable principles of
equity and in accordance with applicable rules of civil procedure, any other relief as the
circumstances may require.” (Plaintiffs’ Memorandum of Law in Opposition (“Pls.’ Mem.”), Dkt.
709, at 2 (emphasis in original) (quoting N.Y. Debt. & Cred. Law 276(a)(3)(iii)).) At the June 25,
2020 hearing, Non-Parties also noted this amendment and argued, in effect, that changes to this
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Moreover, because “the probability of success that must be demonstrated is inversely
proportional to the amount of irreparable injury” suffered by Non-Parties absent a stay,
Mohammed, 309 F.3d at 101, and because Non-Parties have failed to demonstrate any “irreparable
injury” that will result (see infra), Non-Parties would have to show a very high likelihood of
success on the merits—a degree of likelihood that the Court finds all the more unattainable in light
of its April 24, 2020 Order and the R&R. Accordingly, the Court finds that this factor weighs
against granting a stay.
B.

Irreparable Injury if a Stay Is Denied

Non-Parties next argue that, if the Court does not stay enforcement, “it is likely that Lyubov
Mirvis will lose her ownership interest in the Property and that the Mirvis Non-Parties will be
forced to seek a new home.” (Non-Parties’ Mem., Dkt. 707-1, at 5.) Plaintiffs argue that NonParties do not face the prospect of irreparable harm to Lyubov, as she will retain her title to the
Property as a tenant-in-common, and the Court’s April 24, 2020 Order does not award possession
of or otherwise order her eviction from the Property. (Pls.’ Mem., Dkt. 709, at 17.)
When facing the prospect of losing title to real property, a party moving for a stay pending
appeal must show both that they will lose title prior to resolution of the appeal and that such loss
would be caused by denial of the stay. In re: MDM Golf of Gillette Ridge, LLC, No. 15-CV-27
(JBA), 2015 WL 12804567, at *6 (D. Conn. May 8, 2015) (citing In re Baker, No. 01-CV-24227

provision suggest that equitable relief was previously unavailable under the NY DCL. While NonParties are correct that the amended statute does not apply retroactively, the Court does not agree
that the only inference to be made from this amendment is that equitable relief was previously
unavailable under the NY DCL. Rather, as the Court explained at the show cause hearing, it is
equally plausible that the legislature sought to clarify that courts have the authority to fashion
equitable relief, such as termination of survivorship rights, in situations involving fraudule nt
conveyances of property, and thus sought to resolve the judicially created ambiguity on this issue,
as exemplified in cases like this one. Thus, the Court does not find that the recent amendment of
the NY DCL supports the conclusion that Non-Parties are likely to succeed on appeal.
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(DEM), 2005 WL 2105802, at *1 (E.D.N.Y. Aug. 31, 2005)). Plaintiffs argue that Non-Parties
have failed to demonstrate that either is true here: first, Lyubov will not lose title to the Property,
merely the right of survivorship; and second, such loss, if any, will not be caused by the stay, but
by the eventual decision on the merits of Non-Parties’ appeal. See In re Baker, 2005 WL 2105802,
at *1 (noting that, where the court already found that a debtor was unlikely to succeed on the merits
of his appeal, his loss of property was “inevitable and [] not an irreparable harm that would be
caused by the denial of a stay” (emphasis in original)). The Court agrees.
Both the Court’s April 24, 2020 Order and the R&R note that the Mirvis family is not
required to move out of the Property upon its sale, that the new purchaser could allow the family
to remain in the house as renters, or that a family member could purchase the Property. (Order,
Dkt. 704, at 8 (citing R&R, Dkt. 694, at 8–9).) As in In re Baker, any harm would not be caused
by denial of the stay but by execution of the judgment, given that the Court has already determined
that Non-Parties are unlikely to succeed on the merits of their appeal. Furthermore, although NonParties asserted at the June 25, 2020 hearing that Lyubov Mirvis will likely be “constructive ly
evicted”4 from the Property because the family has been unable to find a buyer who would permit
the Mirvises to remain in the Property, Non-Parties have put forth no evidence to support this
claim. Indeed, Non-Parties’ counsel acknowledged at the June 25, 2020 hearing that this harm
was “speculative.” Nor have Non-Parties offered any proof of their claim that Lyubov Mirvis, as
a tenant in common, might not make any profit from the sale of the Property, which could be used
to relocate and thus mitigate the alleged harm of being constructively evicted. Similarly, NonParties have proffered no evidence as to their financial condition to support their claim that they

Indeed, Non-Parties’ claim of “constructive eviction” is inapt in this situation, since
they are complaining about actual physical eviction.
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will be “irreparably injured” if a stay is not granted. As the Court has observed, based on Judge
Kuo’s findings, “[m]oney does not appear to be an issue” for Non-Parties. (Order, Dkt. 704, at 8
(quoting R&R, Dkt. 694, at 9).) “A party seeking a stay pending appeal must show a probable and
irreparable harm that is neither remote nor speculative, but actual and imminent.” In re MDM
Golf, 2015 WL 12804567, at *4 (quoting In re Am. Land Acquisition Corp., No. 12-76440 (AST),
2013 WL 2481534, at *1 (Bankr. E.D.N.Y. June 10, 2013)). Non-Parties have utterly failed to do
so. Accordingly, the Court cannot find that Non-Parties will suffer irreparable injury from the
denial of a stay, and this factor does not weigh at all in favor of granting a stay.
C.

Substantial Injury to the Party Opposing the Stay

Non-Parties argue that Plaintiffs will not be substantially injured and may even benefit
from a stay pending appeal “insofar as prospective buyers of 289 Bayberry may . . . price their
bids lower than they would otherwise for fear of legal action seeking to restore Lyubov’s right of
survivorship in the property.” (Non-Parties’ Mem., Dkt. 707-1, at 6.) Plaintiffs respond that they
will “incur additional harm on account of the substantial delay in the Marshals’ sale of 289
Bayberry that can be expected while the Movants pursue their meritless appeal[.]” (Pls.’ Mem.,
Dkt. 709, at 20.) The Court agrees with Plaintiffs. Judgment Debtor Mark Mirvis has evaded the
$45-million judgment against him for more than a decade, and the Court does not find that this
time should be needlessly prolonged.
D.

Public Interest

Non-Parties acknowledge that the public interest is “generally not served by a delay in
enforcement,” yet argue that the public interest would be served by a stay because the Property’s
sale price would not be affected as a result. (Non-Parties’ Mem., Dkt. 707-1, at 6.) Plaintiffs argue
that, as “[t]his matter has been litigated for the better part of a decade[,] . . . the public interest will

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not be served by delaying this dispute any further.” (Pls.’ Mem., Dkt. 709, at 21 (quoting In re
Mergenthaler, No. 15-CV-2031 (JS), 2015 WL 13227954, at *5 (E.D.N.Y. Apr. 29, 2015)).) The
Court again agrees with Plaintiffs and finds that it simply would not be in the public interest to
grant a stay, especially given the dogged efforts of the Mirvis family to prevent any collection on
the pending judgment against Defendant Mark Mirvis.
CONCLUSION
For the reasons discussed above, Non-Parties’ request for a stay pending appeal is denied.
SO ORDERED.
/s/ Pamela K. Chen
Pamela K. Chen
United States District Judge
Dated: June 26, 2020
Brooklyn, New York

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