Treasure Chest Themed Value Mail, Inc. v. David Morris International, Inc.

Filing 73

MEMORANDUM AND ORDER: For the reasons set forth above, plaintiff's motion to register judgment in other districts is granted. The Clerk of Court is respectfully directed to terminate the motions listed at docket entries 64 and 67. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 5/6/2019) (anc)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------X
TREASURE CHEST THEMED VALUE
MAIL, INC.,
Plaintiff,

MEMORANDUM AND ORDER

- against -

17 Civ. 1 (NRB)

DAVID MORRIS INTERNATIONAL, INC.,
Defendant.
----------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
In January 2017, plaintiff Treasure Chest Themed Value Mail,
Inc.

commenced

an

action

against

defendant

International, Inc. for breach of contract.

David

Morris

The parties proceeded

to a June 5, 2018 bench trial before this Court, at the conclusion
of which we granted plaintiff’s motion for a directed verdict.
Specifically, we found for plaintiff on its sole claim for breach
of

contract,

counterclaim

and
for

against
unjust

defendant

enrichment.

decision explained our reasoning.

on
Our

its

sole

remaining

subsequent

written

See Treasure Chest Themed Value

Mail, Inc. v. David Morris Int’l, Inc., No. 17-cv-1 (NRB), 2018 WL
3130601 (S.D.N.Y. Jun. 26, 2018).

We awarded plaintiff $82,000,

plus 1.5% prejudgment interest per month on $45,000 after August
1, 2016, and 9% prejudgment interest per annum on $37,000 after
January 1, 2017.

Id. at *6.

Judgment was entered by the Clerk of

Court in the total sum of $105,225.72 on June 28, 2018.
1

Defendant subsequently appealed our decision.

See Treasure

Chest Themed Value Mail, Inc. v. David Morris Int’l, Inc., No. 182181 (2d Cir. filed Jul. 25, 2018).

The parties participated in

court-ordered mediation pursuant to the Second Circuit’s Local
Rule 33.1 and filed a joint stipulation of dismissal that allowed
defendant to reinstate the appeal by December 17, 2018.
Doc. No. 37.
plaintiff

See id.

Before the deadline to reinstate the appeal expired,

filed

with

this

Court

a

request

for

a

Clerk’s

Certification of a Judgment to be Registered in Another District
(“AO

451

Form”).

plaintiff’s request.

See

ECF

No.

55.

Defendant

objected

to

See Letter from Brian Lehman to the Court,

Nov. 6, 2018, ECF No. 56.

Defendant argued that, by signing the

AO 451 Form, the Clerk of Court would be endorsing the form’s
standard language that “the time for appeal ha[d] expired” even
though the

deadline

to

reinstate

stipulation had not passed.

the

See id.

appeal

under

the

joint

In light of the conflict

arising from the language in the AO 451 Form and the short time
remaining for reinstatement, we denied plaintiff’s request.

See

Letter from the Court to the Parties, Nov. 29, 2018, ECF No. 59.
After defendant timely reinstated the appeal, plaintiff filed
a pre-motion letter seeking leave to file a motion to register
this Court’s June 26, 2018 judgment in another district pursuant
to 28 U.S.C. § 1963.

See ECF No. 60.

We granted plaintiff’s

request, and plaintiff subsequently moved to register the judgment
2

in the federal district courts of Washington, Texas, Delaware, and
Florida.

See ECF No. 64.

The filing of a notice of appeal does not automatically stay
the enforcement of the appealed judgment.

Rather, as provided in

Rule 8 of the Federal Rules of Appellate Procedure, the judgment
debtor must move for a stay or injunction or the approval of a
supersedeas bond.

In this case, defendant has done none of these.

Thus, as judgment creditor, plaintiff may enforce the judgment
while the appeal is pending.

One of the enforcement mechanisms

available to plaintiff is registration of the judgment in another
district under 28 U.S.C. § 1963, which provides in relevant part:
A judgment in an action for the recovery of money or
property entered in any . . . district court . . .
may be registered by filing a certified copy of the
judgment in any other district . . . when the
judgment has become final by appeal or expiration of
the time for appeal or when ordered by the court
that entered the judgment for good cause shown.
28 U.S.C. § 1963 (emphasis added).
“good

cause”

can

be

shown

by

The statute’s requirement of

evidence

that

defendant

lacks

sufficient property in the judgment forum to satisfy the judgment
and has substantial property in another district.

See, e.g.,

Columbia Pictures Television, Inc. v. Krypton Broadcasting of
Birmingham, Inc., 259 F.3d 1186, 1197–98 (9th Cir. 2001); Chicago
Downs Ass’n, Inc. v. Chase, 944 F.2d 366, 372 (7th Cir. 1991);
Jack Frost Lab., Inc. v. Physicians & Nurses Mfg. Corp., 951 F.
Supp. 51, 52 (S.D.N.Y. 1997).
3

Defendant

does

not

dispute

plaintiff’s

assertion

that

defendant, a corporation duly formed and existing under California
law, does not have any assets in the state of New York.

Relying

on a declaration by plaintiff’s counsel, Mr. Daniel Knox, plaintiff
asserts

that

defendant’s

defendant

has

representation

on

assets
its

in:

(1)

website

Texas

that

its

based

on

principal

offices are located in Texas; (2) Florida based on defendant’s
registration with the Florida Secretary of State; (3) Florida and
Washington based on defendant’s business relationships 1 with client
companies that are located in the states; and (4) Delaware based
on defendant’s receipt of revenue from a Delaware limited liability
company.

See Pl.’s Decl. ¶¶ 5-17.

Defendant

argues

that

plaintiff’s

assertions

defendant’s assets are “false or speculative.”

regarding

Def.’ Opp. to Pl.’

Mot. to Register J. under 28 U.S.C. § 1963 (“Def.’ Opp.”), ECF No.
65, at 4.

However, the only assertion that defendant factually

challenges is the assertion that the “David Morris International
Inc.” registered to do business in Florida is not the defendant
because the Florida-registered entity is a Delaware corporation
while the defendant entity in this case was sued as a California

1 According to plaintiff, “it is reasonable to presume that [defendant’s]
clients are in possession of [d]efendant’s assets in the form of accounts
payable to [d]efendant.” See Jan. 19, 2019 Decl. of Daniel Knox (“Pl.’s Decl.”),
ECF No. 70, ¶ 12.

4

corporation. 2

As to the other assertions in Mr. Knox’s affidavit

concerning defendant’s clients who might owe defendant money,
defendant merely raises questions about how plaintiff’s counsel
got his information but offers no evidence to dispute plaintiff’s
fundamental assertions. 3
In fact, courts in this District have held that a judgment
creditor (i.e., a party seeking registration of the judgment in
another district) “need[s] not show exact evidence of assets and
registration may be granted upon a lesser showing.”

Owen v.

Soundview Fin. Grp., Inc., 71 F. Supp. 2d 278, 279 (S.D.N.Y. 1999)
(internal citation and quotation marks omitted).

“In the absence

of contrary evidence, the affidavit in support of the judgment
creditors’ motion should be presumed to be true” and is sufficient
to

demonstrate

“good

cause.”

Id.

Therefore,

Mr.

Knox’s

declaration sufficiently demonstrates defendant’s assets in other

2 After plaintiff’s motion to register the judgment in other districts
was fully briefed, defendant requested a pre-motion conference on its
anticipated motion to disqualify Mr. Knox from representing plaintiff based on
his failure to correct his false statement that defendant was registered to
conduct business in Florida. See Letter from Brian Lehman to the Court, Feb.
4, 2019, ECF No. 67. Defendant argues that Mr. Knox’s failure violates Rule
3.3(a)(1) of the New York Rules of Professional Conduct, which states: “A lawyer
shall not knowingly make a false statement of fact to a tribunal or fail to
correct a false statement of material fact or law previously made to the tribunal
by the lawyer.” However, even assuming that Mr. Knox failed to correct the
statement and that defendant’s counsel demonstrated the statement’s falsity,
this type of mistake, which has had no consequence whatsoever, is not a valid
or reasonable ground for the imposition of a disqualification sanction.
Therefore, we deny defendant’s request.
3
None of these “issues” remotely supports defendant’s rather
extraordinary argument that Mr. Knox should be disqualified from representing
plaintiff under Rule 3.7 of the New York Rules of Professional Conduct.

5

districts, and plaintiff has shown “good cause” under 28 U.S.C. §
1963.

See

id.;

see

also

Karaha

Bodas

Co.

v.

Perusahaan

Pertambangan Minyak Dan Gas Bumi Nebara, 264 F. Supp. 2d 484, 489
(S.D. Tex. 2002) (granting the judgment creditor’s motion to
register judgment in other districts based on an affidavit by the
creditor’s counsel).
Moreover, defendant seems to believe that it is the judgment
debtor’s role to instruct the judgment creditor on the remedies it
can pursue even after defendant chose not to bond the judgment
during the appeal.

Specifically, defendant argues that plaintiff

should have engaged in post-judgment discovery pursuant to Rule
69(a)(2) of the Federal Rules of Civil Procedure to gather more
facts

regarding

motion.

defendant’s

Def.’ Opp., at 6-7.

assets

before

filing

the

instant

Defendant advances this argument

without any citation to case or rule 4 – presumably because no such
law exists.

Next, defendant argues that, instead of seeking to

register the judgment in other federal district courts, plaintiff
should seek to register the judgment in the state courts of
Washington, Texas, Delaware, and Florida because defendant “can
seek a stay pending the outcome of the direct appeal” if the

4 Rule 69(a)(2) does not require a judgment creditor to engage in postjudgment discovery.
Rather, it merely states: “In aid of the judgment or
execution, the judgment creditor or a successor in interest whose interest
appears of record may obtain discovery from any person — including the judgment
debtor — as provided in these rules or by the procedure of the state where the
court is located.” Fed. R. Civ. P. 69(a)(2) (emphasis added).

6

judgment is registered in state courts.

Id. at 13-15.

Not only

does defendant fail to cite any case law to support its argument,
but

such

a

requirement

would

effectively

write

Rule

8

of

the

Federal Rules of Appellate Procedure out of the federal rules that
apply to this case.
should

not

avail

Finally,

itself

of

actions in multiple states.
an

approach

is

the

only

defendant suggests that plaintiff

Section

1963,

to

rather

file

new

The suggestion that such

Id. at 9.
way

but

get

judicial

supervision

is

obviously flawed: judgment collection following registration under
Section 1963 is certainly not a nwild West" event.
For
register

the

reasons

judgment

set

forth

above,

in other districts

plaintiff's

is granted.

motion

to

The Clerk of

Court is respectfully directed to terminate the motions listed at
docket entries 64 and 67.
SO ORDERED.

Dated:

New York, ·New York
May tt._, 2019
BUCHWALD
UNITED STATES DISTRICT JUDGE

7