John Wiley & Sons, Inc. v. Supap Kirtsaeng et al

Filing 15

BRIEF re: 14 Brief ISRAEL DECLARATION. Document filed by Supap Kirtsaeng. (Attachments: # 1 Exhibit Israel aff exh 1, # 2 Exhibit Israel decl exh 2, # 3 Exhibit ISRAEL DECL EXH 3, # 4 Exhibit ISRAEL DECL EXH 4, # 5 Exhibit ISRAEL DECL EXH 5, # 6 Exhibit ISRAEL DECL EXH. 6, # 7 Exhibit ISRAEL DECL EXH. 7)(Israel, Sam)

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ISRAEL DECLARATION EXHIBIT 4
11 of 33 DOCUMENTS
Encore Credit Corp. d/b/a ECC Encore Credit, Plaintiff, - against - Joseph LaMattina, LaMattina & Associates, Inc., Joseph W. LaForte, James LaForte, Jr., Tina
LaForte, James LaForte, Tara LaForte, James LaForte, Tara Gibson, Jaime Lynn
Guli, Francis Alfieri and Michael O'Leary, Defendants
CV-05-5442 (CPS)
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW
YORK
2006 U.S. Dist. LEXIS 2935

January 18, 2006, Filed
COUNSEL: [*1] Plaintiff: Encore Credit Corp. doing
business as ECC Encore Credit represented by Michelle
S. Feldman, Lamb v. Barnosky, LLP, Melville, NY.
Defendant: Joseph LaMattina represented by David Gerald Tobias, Stempel Bennett Claman & Hochberg, P.C.,
New York, New York.
Defendant: Jaime Lynn Guli represented by Christopher
Malley, Staten Island, NY.
JUDGES: Christopher P. Sifton, United States District
Judge.
OPINION BY: Charles P. Sifton
OPINION
MEMORANDUM OPINION AND ORDER
Sifton, Senior Judge.
Plaintiff Encore Credit Corp. d/b/a ECC Encore
Credit ("Encore") commenced this action on November
18, 2005 against defendants Joseph LaMattina ("LaMattina"), LaMattina & Associates, Inc. ("LaMattina & Associates"), Joseph W. LaForte, James LaForte, Jr., Tina
LaForte, James LaForte, Tara Gibson, Jaime Lynn Guli
("Guli"), Francis Alfieri and Michael O'Leary (collectively, the "defendants") alleging claims for conversion,
unjust enrichment, money had and received, negligence,
breach of fiduciary duty, and fraud. According to the
complaint and affidavits filed in support of this motion,
in July and August 2005, Encore wired $ 1,086,027.94 to
an account at Victory State Bank maintained by LaMattina [*2] & Associates in its capacity as a settlement
agent in connection with three real estate transactions.

However, defendants did not disburse the funds as instructed. Encore alleges that it has been unable to communicate with the defendants, and that the defendants
have or will dissipate and/or abscond with the money.
On November 18, 2005, plaintiff filed a motion for attachment pursuant to Rule 64 of the Federal Rules of
Civil Procedure and § 6201(3) of the New York Civil
Practice Law and Rules and for a preliminary injunction
pursuant to Rule 65 of the Federal Rules of Civil Procedure against all defendants. At a hearing held on December 5, 2005, I granted the motion with respect to all defendants except for defendant Guli and granted defendant
Guli additional time to respond to the motion. Defendant
Guli has now responded, and plaintiff Encore has filed a
reply.
Presently before the Court is plaintiff Encore's motion for an order of attachment and preliminary injunction against defendant Guli. For the reasons and upon the
findings of fact and conclusions of law set forth below,
plaintiff's motion is denied.
BACKGROUND
The following facts are taken from the complaint
and plaintiff [*3] Encore and defendant Guli's submissions in connection with this motion. The remaining defendants have failed to respond to the motion.
Plaintiff Encore is a licensed mortgage banker in the
business of making loans secured by real property. Encore is a California corporation with its principal place of
business in California. Defendant Joseph LaMattina is an
attorney licensed in the state of New York, a resident of
New York, and a shareholder, officer or director of defendant LaMattina & Associates or is otherwise affiliated
with LaMattina and Associates. Defendant LaMattina &
Associates is a law firm and a corporation organized and

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2006 U.S. Dist. LEXIS 2935, *

existing under the laws of the state of New York with its
principal place of business in New York. The complaint
alleges that the remaining defendants, Joseph W. LaForte, James LaForte, Jr., Tina LaForte, James LaForte,
Tara Gibson, Jaime Lynn Guli, Francis Alfieri and Michael O'Leary, are all individuals who reside in New
York and, during all relevant times, were shareholders,
officers, employees, or agents of LaMattina & Associates. Ms. Guli is a representative of Key Land Services,
Inc. ("Key Land"), a title abstract company retained by
Encore in connection [*4] with the loans.
At all relevant times, defendants LaMattina and
LaMattina & Associates maintained a settlement trust
account entitled "LaMattina & Associates, Inc, Joseph
LaMattina Settlement Trust Account," (the "Settlement
Trust Account") number 004-002648, at Victory State
Bank in Staten Island, New York.
In the ordinary course of business, if Encore approves a loan application, a loan closing is scheduled.
Encore typically retains outside counsel to represent Encore's interests at the closing, at which time the loan
documents, mortgage documents, and other necessary
documents are executed, and the funds are disbursed
according to instructions issued by Encore to the closing
attorney. Upon confirmation of a closing and the scheduled date of disbursement of the settlement funds, Encore
wires the funds to the closing attorney's trust account.
In July and August 2005, Encore approved the loan
applications of three borrowers: (1) Attilio Guarino, (2)
Raul Ivan Guzhambo, and (3) Wayne Smalls. Encore
retained defendants Joseph LaMattina and LaMattina &
Associates to represent Encore at the closings. The funds
for the three closings, $ 1,086,027.94 in total, were wired
to the Settlement [*5] Trust Account. However, the
funds were not disbursed as set forth in the closing instructions, and the location of the funds are currently
unknown to plaintiff. Plaintiff alleges that the LaMattina
defendants have orchestrated similar thefts of funds from
several other lending institutions, 1 and that the individual defendants (other than Joseph LaMattina) have been
arrested and criminally charged in connection with those
transactions.
1 Three related cases -- First Continental Mortgage and Investment Corp. v. LaMattina & Associates, Inc. and Joseph LaMattina, 05 CV 3901,
Accredited Home Lenders, Inc. v. LaMattina &
Associates, Inc. et al., 05 CV 4796, and Credit
Suisse First Boston Financial Corporation v.
LaMattina & Associates, Inc. et al, 05 CV 4350 were filed in this Court. In First Continental
Mortgage, I issued a Temporary Restraining Order, and the parties stipulated to converting that
into a preliminary injunction. In Credit Suisse

First Boston Financial Corporation (CSFBFC), I
granted plaintiff's motion for an order of attachment and preliminary injunction; however, plaintiff has not yet submitted the proposed order. I
granted motions for default judgment against
LaMattina & Associates in all three cases.
[*6] DISCUSSION
Jurisdiction
This Court has jurisdiction pursuant to 28 U.S.C. §
1332(a) in that the amount in controversy exceeds $
75,000 and there is diversity between the parties.
Order of Attachment
Plaintiff requests, pursuant to Rule 64 of the Federal
Rules of Civil Procedure and New York Civil Practice
Law and Rule § 6201(3), an order of attachment against
the assets of defendant Guli in an amount sufficient to
ensure satisfaction of a judgment of $ 1,086,027.94.
Under Rule 64, attachment is available in the manner provided by the law of the state in which the district
court is held. See Fed. R. Civ. P. 64. New York law requires that plaintiffs seeking attachment must show (1)
that there is a cause of action, (2) that there is a probability of success on the merits, (3) that a ground for attachment listed in C.P.L.R. 6201 exists, and (4) that the
amount demanded from defendant exceeds all counterclaims known to plaintiff. See N.Y.C.P.L.R. 6212(a).
Prejudgment attachment is a provisional remedy to
secure a debt by preliminary levy upon the property of
the debtor in order to conserve that property for eventual
execution.
[*7] Because attachment is a harsh remedy, the
statute must be strictly construed in favor of those
against whom it may be applied. See Michaels Elec.
Supply Corp. v. Trott Elec. Inc., 231 A.D.2d 695, 647
N.Y.S.2d 839 (2d Dept. 1996); P.T. Wanderer Assoc.,
Inc. v. Talcott Communications, Corp., 111 A.D.2d 55,
489 N.Y.S.2d 179 (1st Dept. 1985). Moreover, the granting of prejudgment attachments is discretionary, "'and
even when the statutory requisites are met, the order may
be denied.'" Elliott Assocs., L.P. v. Republic of Peru, 948
F. Supp. 1203, 1211 (S.D.N.Y.1996), quoting Filmtrucks,
Inc. v. Earls, 635 F. Supp. 1158, 1162 (S.D.N.Y.1986).
Cause of Action, Likelihood of Success on Merits, and
Amount of Counterclaims
I need not determine at this time whether plaintiff
has established a cause of action against defendant Guli,
whether plaintiff has a likelihood of success on the merits, and whether the amount demanded from defendant

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2006 U.S. Dist. LEXIS 2935, *

exceeds all counterclaims known to plaintiff because, for
the reasons set forth below, I find that plaintiff has not
established grounds for attachment.
Grounds for Attachment
[*8] To establish the relevant grounds for attachment in this case, plaintiff (a) must be seeking a money
judgment, and (b) must show that defendant, with intent
to defraud creditors or frustrate enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or
removed it from the state or is about to do any of these
acts. See N.Y.C.P.L.R. 6201. Plaintiff in this case is seeking a money judgment.
To establish the second ground for attachment,
plaintiff must prove two elements: (1) that defendant
either is about to or has assigned, disposed of, encumbered, or secreted property, or removed it from the state;
and (2) that defendant has acted or will act with the intent to defraud her creditors or to frustrate the enforcement of a judgment that might be rendered in plaintiff's
favor. See Bank Leumi Trust Co. of New York v. Istim,
Inc., 892 F. Supp. 478, 482 (S.D.N.Y.1995).
"Removal, assignment or other disposition of property is not a sufficient ground for attachment; fraudulent
intent must be proven, not simply alleged or inferred, and
the facts relied upon to prove it must be fully set forth
[*9] in the moving affidavits." Abacus Federal Sav.
Bank v. Lim, 8 A.D.3d 12, 778 N.Y.S.2d 145 (1st Dept.
2004). "Fraud is not lightly inferred, and the moving
papers must contain evidentiary facts as opposed to conclusions proving the fraud." See Anderson v. Malley, 191
App.Div. 573, 181 N.Y.S. 729 (1st Dept. 1920). Affidavits containing allegations raising a mere suspicion of an
intent to defraud are insufficient. Rosenthal v. Rochester
Button Co., 148 A.D.2d 375, 539 N.Y.S.2d 11 (1st Dept.
1989). It must appear that such fraudulent intent really
exists in the defendant's mind. Eaton Factors Co. v.
Double Eagel Corp., 17 A.D.2d 135, 232 N.Y.S.2d 901
(1st Dept. 1962).
In the present case, plaintiff has not met its burden
of proving that defendant Guli had or has fraudulent intent. In fact, as defendant Guli argues in her response to
the motion, other than alleging that all of the individual
defendants (including defendant Guli) during all relevant
times, were shareholders, officers, employees, or agents
of LaMattina & Associates (which she denies) and that
the individual defendants (including defendant Guli)
were criminally [*10] charged and arrested in relation to
similar transactions with other lending institutions, plaintiff's moving papers allege facts specific to defendant
Guli in only one paragraph. Paragraph 12 of the declaration in support of plaintiff's motion of Alanna Darling
("Darling"), Director of Legal Services for Encore states:

The title abstract company that was retained by or on behalf of Encore to prepare title reports and obtain policies of title insurance for each of the loans was
Key Land Services, Inc., ("Key Land"). In
August, 2005, a representative of Encore
spoke with defendant Jaime Lynn Guli.
Ms. Guli held herself out as a representative of Key Land. She advised Encore,
among other things, the Key Land was
aware of the problems with these loan
closings. Guli stated that L&A had been
in business for 40 years and that Key
Land had done business with L&A for
several years and never had any problems.
In truth, Key Land has only been in business since May 20, 2004 and L&A has
only been in business since March 19,
2004.

Defendant Guli states that in fact she is an officer of
Key Land Title Insurance Company, and that she has no
interest in L&A. She notes that Darling's declaration
[*11] does not state that the representations made by
Guli caused Encore to do anything and that the conversation between Guli and Encore occurred after L&A had
already absconded with the funds. Further, defendant
Guli notes that plaintiff has not set forth any facts that
indicate that Guli has assigned, disposed of, encumbered
or secreted property, or removed it from the state or is
about to do any of these acts.
Plaintiff responds by arguing, "nothing set forth in
[defendant's response] is sufficient to overcome Encore's
right to an order of attachment and the preliminary injunctive relief that is the subject of the motion before this
Court." However, there is no presumptive right to an
order of attachment or preliminary injunction, and it is
not the defendant's burden to overcome any such presumption. To the contrary, it is plaintiff's burden to establish that the requirements for obtaining an order of
attachment are met and, as discussed above, even if
plaintiff meets its burden, the order may be denied at the
Court's discretion.
Plaintiff relies almost exclusively on a Felony Complaint against the individual defendants, including defendant Guli, for acts that are "strikingly similar" [*12] to
those complained of by Encore. However, proof that a
defendant committed the underlying, unlawful act is not,
by itself, sufficient to establish a ground for attachment.
Executive House Realty v. Hagen, 108 Misc.2d 986, 988,
438 N.Y.S.2d 174 (N.Y.Sup.1981) ("demonstrating a
cause of action for conversion is not a sufficient ground

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2006 U.S. Dist. LEXIS 2935, *

for attachment"). The Felony Complaint does not allege,
much less establish, that defendant Guli will or has assigned, disposed of, encumbered, or secreted property, or
removed it from the state with intent to defraud Encore
or to frustrate a judgment in this case, a showing of
which is required in order to obtain an order of attachment.
Accordingly, plaintiff's motion for attachment is denied. 2
2 Plaintiff also seeks, pursuant to Rule 64 and
N.Y.C.P.L.R. § 6220 an order requiring defendant
Guli to appear immediately and testify as to [1]
"the location and/or disposition of the monies
improperly withdrawn from the Settlement Trust
Account or not used for their intended purpose;"
and [2] "the nature, status and actual location of
[her] assets...and to bring with [her] to the deposition all documents, books correspondence, records and tax returns maintained in connection
with the Funds and/or their assets...."

ships tipping decidedly in its favor." Genesee Brewing
Co. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir.
1997).
The showing of irreparable harm is the "single most
important prerequisite for the issuance of a preliminary
injunction." Bell & Howell: Mamiya Co. v. Masel Supply
Co., 719 F.2d 42, 45 (2d Cir. 1983). Irreparable harm
must be shown to be imminent, not remote or speculative, and the injury must be such that it cannot be fully
remedied by monetary damages. See Tucker Anthony
Realty Corp. v. Schlesinger, 888 F.2d 969, 975 (2d Cir.
1989). [*14] A preliminary injunction may issue to preserve assets as security for a potential money judgment
where the evidence demonstrates that a party intends to
frustrate a judgment by making it uncollectible. See Republic of the Philippines v. Marcos, 806 F.2d 344, 356
(2d Cir.1986); Signal Capital Corporation v. Frank, 895
F. Supp. 62, 64 (S.D.N.Y. 1995). Such a demonstration of
intent to frustrate a judgment will satisfy the requirement
of a showing of irreparable harm. See in re Feit & Drexler, Inc., 760 F.2d 406, 416 (2d Cir.1985); Signal Capital, 895 F. Supp. at 64.

According to N.Y.C.P.L.R. § 6220: "Upon
motion of any interested person, at any time after
the granting of an order of attachment and prior
to final judgment in the action, upon such notice
as the court may direct, the court may order disclosure by any person of information regarding
any property in which the defendant has an interest, or any debts owing to the defendant."

As discussed above, plaintiff has not alleged any
facts or provided any evidence that defendant Guli intends to frustrate a judgment in this case. I need not determine whether plaintiff has a likelihood of success on
the merits of her claims against defendant Guli, because
plaintiff has not established irreparable harm, which is
required to obtain a preliminary injunction.

Because I have denied plaintiff's motion for
an order of attachment, this motion is also denied.

Accordingly, plaintiff's application for a preliminary
injunction is denied.

[*13] Preliminary Injunction

CONCLUSION

Plaintiff also moves for a preliminary injunction
pursuant to Rule 65 of the Federal Rules of Civil Procedure, enjoining defendant Guli from, directly or indirectly, transferring, selling, alienating, concealing, converting, liquidating, or otherwise dissipating any of her
assets and/or property, wherever located, in an amount
up to $ 1,086,027.94 pending resolution of this action.

For the reasons stated above, plaintiff's motion for
an order of attachment and preliminary [*15] injunction
against defendant Guli is denied.

A preliminary injunction is appropriate if the moving party demonstrates "(a) irreparable harm, and (b)
either (1) a likelihood of success on the merits, or (2)
sufficiently serious questions going to the merits to make
them fair grounds for litigation and a balance of hard-

Dated: Brooklyn, New York, January 18, 2006

The Clerk is directed to furnish a filed copy of the
within to all parties and to the magistrate judge.
SO ORDERED.

By: /s/ Charles P. Sifton (electronically signed)
United States District Judge