Weston Capital Advisors, Inc. v. PT Bank Mutiara, TKB
Filing
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MEMORANDUM AND OPINION re: 27 MOTION to Vacate Judgment filed by PT Bank Mutiara, TKB. For the foregoing reasons, the Court vacates the October 4, 2013 order, but allows Plaintiff, if it chooses to do so, to seek an order of attachment. The Court's Order is signed separately. (Signed by Judge Paul A. Crotty on 11/19/2013) (rsh)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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WESTON CAPITAL ADVISORS, INC.
PENSION FUND
USDCSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: November 19, 2013
Plaintiff,
13 Civ. 06945 (PAC)
- against MEMORANDUM & OPINION
PT BANK MUTIARA TBK
Defendant.
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HONORABLE PAUL A. CROTTY, United States District Judge:
Defendant PT Bank Mutiara Tbk ("Defendant" or "Bank Mutiara") moves, pursuant to
Fed. R. Civ. P. 60(b), to vacate a judgment entered ex parte upon the application of Plaintiff
Weston Capital Advisors, Inc. Pension Fund ("Plaintiff' or "Weston") to recognize a judgment
against Defendant in the country of Mauritius. For the reasons set forth below, the Court grants
Defendant's motion, but provides that Plaintiff may seek an order of attachment pursuant to
Federal Rule of Civil Procedure 64 and Article 62 of the CPLR for Defendant' s assets located in
New York.
BACKGROUND
Weston commenced this action on October 1,2013 by filing a verified petition and ex
parte application for recognition of a foreign judgment obtained against Bank Mutiara in the
Supreme Court of Mauritius-Commercial Division, dated February 15, 2013 (the "Mauritian
Judgment"). The Mauritian Judgment was based on allegations that Bank Mutiara failed to
return deposits made by First Global Funds Limited PCC ("FGFL"), totaling US $15,501 ,807,
which FGFL had wired to Bank Mutiara in October 2008 and November 2008. FGFL attempted
to enforce the judgment in Mauritius, but Bank Mutiara held no assets there. FGFL sold the
Mauritian Judgment to Weston pursuant to a Purchase and Sale Agreement dated September 30,
2013. Through the Agreement, FGFL received stock in Weston and Weston received the money
judgment, which it sought to enforce in New York where Bank Mutiara holds assets.
On October 1, 2013, Weston initiated this action by filing, ex parte, a verified petition
and application for recognition of a foreign judgment. On October 3, 2013, this Court ordered
that Weston have judgment against Bank Mutiara based on the underlying Mauritian Judgment,
and ordered service of process on Bank Mutiara. An affidavit of service of judgment on Bank
Mutiara was entered on October 9, 2013, and Weston proceeded to enforce the judgment. On
October 24,2013, Plaintiff filed an ex parte motion for tum-over of Bank Mutiara's funds held
by Standard Chartered Bank. On October 25,2013, Plaintiff filed an ex parte motion for tumover of Bank Mutiara's funds held by Wells Fargo Bank. This Court granted both tum-over
motions on October 28,2013.
Notwithstanding the notice it received, Bank Mutiara took no legal initiative until its
assets were seized under the tum-over orders. At that point in time, Bank Mutiara retained
counsel, and moved to enjoin enforcement of the tum-over orders. In response to Bank
Mutiara's motion, this Court held oral argument on October 31,2013. The contested issue was
whether this Court should temporarily enjoin enforcement of the tum-over orders for the purpose
of giving Defendant an opportunity to contest the conclusiveness of the Mauritian Judgment
under NY CPLR Article 53.
The Court directed the parties to negotiate a TRO on consent, but when those
negotiations failed, this Court issued a temporary restraining order ("TRO") on November 11,
2013. The terms ofthe TRO required Plaintiff to retum the money transferred to it under the
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tum-over orders, upon Defendant's posting a bond for the full amount of the Mauritian
judgment. To date, Defendant has not posted such a bond.
Defendant now moves, pursuant to Federal Rule of Civil Procedure 60(b), to vacate this
court's judgment recognizing the Mauritian Judgment, as well as the subsequent orders remitting
$19,202,226.221 from Bank Mutiara's funds to Plaintiff. Defendant claims that (1) entering the
judgment violated Defendant's right to due process because Plaintiffs motion was made ex
parte, without notice to Defendant; (2) Plaintiffs purchase of the Mauritian Judgment was
champertous and thus should never have been enforced; and (3) this Court lacked the ability to
enforce the Mauritian Judgment because the Court does not have personal jurisdiction over the
Defendant.
For the reasons that follow , this Court grants Defendant's motion to vacate the Court's
judgment of October 3, 2013, which recognized and enforced the Mauritian Judgment. The
Court erred when it entered judgment without prior notice to Defendant. In light ofthis
disposition, and the recognized need for fUl1her proceedings as to the validity of the Mauritian
judgment, it is unnecessary at this time to decide issues (2) and (3). These issues are preserved
for subsequent proceedings.
DISCUSSION
I.
Legal Standard
Bank Mutiara seeks vacatur of this Court's prior Judgment under Federal Rule of Civil
Procedure 60(b)(6), which provides that "[o]n motion and just terms, the cOUl1 may relieve a
party ... from final judgnlent, order, or proceeding" for any reason that justifies relief not
specifically listed elsewhere in 60(b). Motions are in the sound discretion of the court, and
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generally granted only upon a showing of exceptional circumstances. Mendell v. Gollust, 909 F.
2d 724, 731 (2d Cir. 1990).
II. Procedural Due Process and Equitable Vacatur of the Judgment
"A New York court's decision whether to recognize a foreign judgment is governed only
by Article 53 and the principles of comity." Ocean Warehousing B.V. v. Baron Metals and
Alloys, InC., et. aI, 157 F.Supp.2d 245 (S .D.N.Y. May 29, 2001)(citing Victrix S.S. Co., S.A. v.
Salen Dry Cargo A.B., 825 F.2d 709, 713 (2d Cir. 1987). Article 53 specifies that "a foreign
judgment is enforceable by an action on the jndgnlent, a motion for summary judgment in lieu of
complaint, or in a pending action by counterclaim, cross-claim or affirmative defense." N.Y.
C.P.L.R. § 5303. There is no procedure for enforcing foreign judgments ex parte. What is
essential is that "any kind of judgment obtained in a foreign country must be sued upon, thereby
establishing a New York judgment, before the judgment debtor's New York property can be
used to pay the debt." Vincent Alexander, Practice Commentaries, McKinney' s Cons. Laws of
N.Y. [hereinafter Commentaries], Book 7B, C.P.L.R. § 6201:5 (emphasis added). In an action
brought under Article 53 ofthe CPLR, ajudgment-debtor defendant is entitled to raise numerous
grounds that CPLR § 5304 contemplates for non-recognition of a foreign judgment. See, e.g.,
Byblos Bank Europe, S.A. v. Sekerbank Turk Anonym Svrketi, 10 N.YJd 243, 248 (2008).
Enforcing a foreign judgment ex parte, as the Court allowed, deprived Defendant of
notice of the pending action, which in tum denied Defendant "the opportunity to be heard at a
meaningful time and in a meaningful manner." Mathews v. Eldridge, 424 U.S. 319, 333 (1976).
Defendant was never apprised of the action before judgment was entered, and was "never
afforded an opportunity to present [its] objections," Mullane v. Cent. Hanover Bank & Trust Co.,
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339 U.S. 306, 314 (1950), including the § 5304 grounds for non-recognition of a foreign
judgment.
Rule 60(b)(6) gives the court broad powers of equity to do justice in this case. See
Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012). While the judgment enforcing the Mauritian
Judgment must be vacated, simply vacating the judgment would place Defendant in a better
position than it would have been in, had the proper procedures been followed. Vacating the
judgment without more would risk giving Defendant an opportunity to remove its assets from
New York, making Plaintiffs enforcement of the judgment here impossible. This would not be
equitable.
While a plaintiffs action to enforce a foreign judgment must proceed on notice, a
plaintiff may appropriately seek attachment ofa defendant's assets ex parte. CPLR § 6201; see
AMF, Inc. v. Algo Distributors, Ltd., et aI., 48 A.D.2d 352, 358-59 (holding that CPLR § 6201 is
constitutional and that ex parte attachment does not violate due process). Under CPLR § 6201, a
plaintiff may obtain an order of attachment where plaintiff demonstrates: (1) existence of a cause
of action for money damages; (2) probability of success on the merits; (3) existence of one or
more statutorily-enumerated grounds; and (4) the amount demanded from defendant exceeds all
counterclaims known to plaintiff. Trafalgar Power, Inc. v. Aetna Life Ins. Co., 131 F.Supp.2d
341,346 (ND.NY. 2001). CPLR § 6201(5)'s purpose is to provide security while a New York
enforcement proceeding of a foreign judgment is pending. "The defendant in [Article 53 foreign
jUdgment] cases is an obvious security risk based on nonpayment of the former judgment- he is
already a judgment debtor- and the claim is prima facie meritorious based on the judgment
itself." Commentaries, CPLR § 6201 :5.
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Plaintiff may move ex parte for attachment under CPLR § 6201 prior to November 22,
2013, when the money must be remitted by Plaintiffto the banks that were subject to the turnover orders. The Court will consider such application for attachment pursuant to Federal Rule of
Civil Procedure 64 and Article 62 of the CPLR provided that the attachment order has an
appropriate bond.
Accordingly, the Court's modified order ("Order") vacates the judgment, but affords
Plaintiff an opportunity to move for attachment before the money is remitted by Plaintiff.
III. Procedure Going Forward
As noted above, the Court anticipates that Plaintiff will seek an order of attachment of
Defendant's assets located in New York, from fund s including, but not limited to, those held by
Standard Chartered Bank and Wells Fargo Bank. Plaintiff must post a proper bond for the
attachment, pursuant to CPLR § 6212.
Plaintiff has already filed its Petition seeking enforcement of the Mauritian Judgment
pursuant to CPLR Article 53. That Petition is sufficient under the Federal Rules of Civil
Procedure to commence a civil action. Defendant has received appropriate notice of the civil
action, and it may answer or otherwise move within 21 days from the date of this Order. The
Court anticipates that the parties will follow the procedure set forth in Article 53, including §
5304 for non-recognition of a foreign judgment, and such other procedures as are appropriate.
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CONCLUSION
For the foregoing reasons, the Court vacates the October 4,2013 order, but allows
Plaintiff, if it chooses to do so, to seek an order of attachment. The Court 's Order is signed
separately.
Dated: November/f, 2013
SO ORDERED
New York, New York
PAUL A. CROTTY
United States District Judge
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