BSH Hausgerate GMBH v. Kamhi
Filing
76
OPINION: Based upon the conclusions set forth above, the motion for appointment of a receiver to administer, collect, and sell the Property is granted. The receiver shall be Stuart N. Siegel, whose duties and authority are established by the concurrent order. IT IS SO ORDERED. (Signed by Judge Robert W. Sweet on 9/25/2018) (ama)
·,
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - ----------------------------------x
BSH HAUSGERA.TE GMBH,
17 Ci v.
Petitioner,
OPINION
-againstJAK KAMHI,
Respondent.
------------------------------------x
APPEARANCES:
Attorneys for Petitioner
PILLSBURY WINTHROP SHAW PITTMAN LLP
1540 Broadway
New York, NY 10036-4039
By:
Kenneth W. Taber, Esq.
Nicholas M. Buell, Esq.
Attorneys for Respondent
DAVIDOFF BUTCHER & CITRON LLP
605 Third Avenue, 34 th Floor
New York, NY 10158
By:
Eric J. Przybylko, Esq.
577 6
Sweet, D.J.
Petitioner BSH Hausger~te GMBH ("BSH" or the
"Petitioner") has moved under Fed. R. Civ. P.
C.P.L.R. § 5228(a)
66 and New York
for the appointment of a receiver to
administer, collect, and sell the real property owned by
Respondent Jak Kamhi
("Kamhi" or the "Respondent")
West 53 rd Street, Apt. 32B, New York, NY 10019
located at 15
(the "Property"),
which is currently secured by an Order of Attachment. See ECF
No.
66.
Based upon the conclusions set forth below, the motion
is granted. The Court-ordered receiver is Stuart N. Siegel, of
Engel & Volkers New York Real Estate LLC.
I.
Prior Proceedings
Background on the parties, their arbitration
agreements, the foreign arbitration process before a panel of
three arbitrators
(the "Arbitral Tribunal"), the Final Award,
and confirmation of the Final Award are set forth in this
Court's October 18, 2017 Opinion (the "October Opinion"), and
its March 02, 2018 Opinion (the "March Opinion"). See BSH
Hausgerate, GMBH v. Kamhi, No. 17 Civ. 5776
1
(RWS), 2017 WL
4712226 , at *1 - *2
(S . D.N . Y. Oct . 18 , 2017) ; BSH Hausgerate , GMBH
v. Kamhi , 291 F . Supp . 3d 437
(S.D . N.Y . 2018). Familiarity with
the above is assumed. The following facts are presented only as
necessary to resolve the instant motion .
On October 2 , 2003 , BSH and Kamhi entered into a Share
Sale and Purchase Agreement , under which BS H purchased shares in
BSH Profilo Elektrikli Gerecler Sanayii A. S .
(the "SPA-BSH") .
See Declaration of Nicholas M. Buell dated July 28 , 2017
("Buell
July 28 Deel. " ) , Ex. A, Dkt . No . 10 . The SPA-BSH contained an
agreement to arbitrate disputes through the International
Chamber of Commerce's International Court of Arbitration (the
"ICC") and under the ICC ' s Rules of Arbitration (the "ICC
Rules " ) . Id ., Ex. A , '1I 10.
On October 7 , 2003 , Kamhi also signed a separate Share
and Sale Purchase Agreement with another party (the "SPA-DB "
and, together wi t h the SPA- BSH, the "Agreements") , and to which
BSH was not a party. See id. , Ex . B. Like the SPA- BSH , the SPADB also contained an agreement to arbitrate disputes before the
ICC and under the ICC Rules . See id . , Ex. B '1I 5 .
On October 7, 2013, Kamhi , one of five claimants (the
"Claimants"), submitted a Request for Arbitration to the ICC.
2
See id., Exs. C, E
~
1 (defining the five claimants as
"Claimants"). In the arbitration, Claimants sought monetary and
non-monetary relief based on the theory that the termination of
a distributorship agreement in 2008
(the "DA"), to which BSH was
not a party, triggered an automatic rescission that terminated
the SPA-BSH; accordingly, Claimants requested either that BSH
return its SPA-BSH shares or pay damages for allegedly causing
the breach. See id., Exs. C, E
~~
143-47. On January 15, 2014,
BSH filed its Answer to the Request for Arbitration, consenting
to the ICC's jurisdiction. See id., Exs. D
~~
11-12, E
~
10. The
parties and Arbitral Tribunal agreed to the arbitration's Terms
of Reference on May 19, 2014. See Declaration of Nicholas M.
Buell dated September 22, 2017
("Buell Sept. 22 Deel.") Ex. A,
Dkt. No. 44.
During the arbitration proceedings, BSH and the other
respondents in the arbitration moved to have the arbitration
bifurcated as to whether (i) the DA's termination automatically
terminated the SPA-BSH (the "Automatic Termination Claim") and
(ii) BSH caused the breach of the DA (the "Breach Claim"); on
August 11, 2015, after briefings, an initial denial, and a
renewed motion for bifurcation, the Arbitral Tribunal granted
the request. Declaration of Eric J. Przybylko dated September
14, 2017
("Przybylko Deel."), Exs. 2-3, 7, Dkt. No. 39. The
3
Arbitral Tribunal noted that, after resolving the question of
automatic termination, subsequent issues, "if any, will be
determined by the [Arbitral] Tribunal in consultation with the
Parties." Id. , Ex. 7
c_rr
4 7.
On February 6 , 20 1 7 , the Arbitral Tribunal issued its
Final Award, awarding BSH a money judgment against the Cla imants
in the amount of :
(1) $544,230;
(2) €1 ,90 0 ,4 87 .1 3 ; and (3)
interest on those amounts under Article 4(a) of the Turkish Law
No. 3095 , at the applicable rate, compounded annually, from
February 7, 2017 until full and final settlement of the award.
See Buell July 28 Deel., Ex. E
c_rrc_rr
67 -14 2 , 574-79 & sec. XV III.
On August 1, 2017, an Order of Attachment was issued
by this Court , securing a total amount of $3,000,000, which was
levied "upon the real property at 15 W. 53~ Street, Apt. 32B,
New York , New York 10019" (the "Property " ) . See ECF No.
3 at 2.
On March 2, 2018 , this Court issued its March Op ini on ,
confirming the Final Arbitration Award. BSH Hausgerate, GMBH v.
Kamhi, 291 F. Supp. 3d 437
(S .D.N.Y. 2018). In it the Court
found "[r]espondent ha[d] not met his 'hea vy '
burden to avoid
confirmation ." Id. (quot ing Albtelecom SH.A. v. UNIFI Commc'ns,
4
Inc ., No. 16 Civ . 9001
(PAE) , 2017 WL 2364365 , at *4
(S.D.N .Y.
May 30 , 2017)) .
On April 3 , 2018 , Final Judgment was entered by this
Court, awarding $544,230 in BSH's favor against Kamhi,
€1 , 900 , 487 .1 3 in BSH's favor against Kamhi, and interest on both
amounts totaling $6 , 270.57 and €10 , 941 .47, respectively. See ECF
No. 66 .
On April 3, 20 1 8 , BSH moved under Fed. R. Civ . P.
64,
66 , and 69 , as well as N.Y. C.P.L.R. § 5228(a), to appoint a
receiver to administer, collect, and sell the Property, in order
to satisfy the Final Judgment.
II.
Applicable Standard
Section 5228 of New York 's C.P.L. R . vests with courts
the discretion to appoint a receiver "to administer, collect ,
improve, lease, repair or sell any real or personal property in
which the judgment debtor has an interest or to do any other
acts designed to satisfy the judgment. " N.Y. C.P.L.R . 5228
(McKinney). If appointed, t he Court 's "order of appointment
shall specify the property to be received, the duties of the
receiver and the manner in which they are to be performed." Id.;
5
see also United States v. Vulpis,
967 F.2d 734, 736 (2d Cir.
1992). "A receiver shall be entitled to necessary expenses and
to such commissions, not exceeding five percent of the sums
received and disbursed by him, as the court which appointed him
allows." Id.
In exercising discretion to appoint a receiver, courts
consider three factors: "(l) alternative remedies available to
the creditor
. (2) the degree to which receivership will
increase the likelihood of satisfaction .
(3) the risk of
fraud or ins olvency if a receiver is not appointed." See e.g.,
Hotel 71 Mezz Lender LLC v. Falor, 14 N.Y.2d 303 , 317
(2010),
United States v . Zitron , No. 80 Civ . 6535 (RLC) , 1990 WL 13278,
at *l (S .D.N.Y. Feb. 2 , 1990); Baker v . Dorfman, No.
9385 (DLC), 2000 WL 1010385, at *7
99 Civ.
(S .D.N.Y. July 21 , 2000) .
Where the party seeking appointment of a receiver "fail[s] to
demonstrate a special reason to justify the appointment of a
receiver," the motion should be denied. See generally Galen
Technology Solutions, Inc. v . VectorMAX Corp., 107 A.O. 3d 435,
435-36 (1st Dep't 2013) .
6
III. The Motion to Appoint a Receiver is Granted
(1)
Alternative Remedies Available
As to the first factor,
Petitioner contends that,
because Defendant's only asset in New York is the Property, its
sale is necessary to satisfy the judgment, and a receiver sale
is the best way to accomplish the sale. See id. at 7 ("First,
absent the sale of the Property, BSH will be unable to recover
the amounts owed to it pursuant to the Final Judgment .").
Respondent argues in opposition that BSH has
alternative remedies available. Resp. Memo. in Opp., ECF No. 72.
First, Kamhi notes that it offered to BSH an ownership interest
in a "brand name for marketing small consumer electronics in
Turkey." Id. at 6 . Second, "Kamhi offered to pay BSH a total o f
$3.1 million in installments between July 2018 and March 2019,
which would exceed the face value of the judgment including
post-judgment interest." Id. Petitioner understandabl y rejected
the first proposal, reasoning that it "has no interest in
entering any such further business dealings with Kamhi," Pet.
Memo. in Reply, ECF No. 73 at 8 , and the second proposal because
"more than 50 % of the total payments would only be made in
7
February and March of 2019." Id. These proposals,
for the
reasons Petitioners provide, do not amount to meaningful
alternative remedies. The only alternative remedy available to
Petitioner is sale of the Property by a sheriff in a public
auction.
(2)
Whether Receiver would Increase the Likelihood of
Satisfaction
As to whether a receiver would "increase the
likelihood of satisfaction," (Hotel 71 Mezz Lender LLC v.
14 N.Y.2d 303, 317
(2010))
Falor,
Petitioner contends that it would,
citing commentary by a New York Civil Practice treatise which
recognizes that "a receiver conducting a private sale will be
able to realize a greater sum for the property than will a
sheriff conducting a public sale." See Pet. Memo. in Reply,
ECF
No. 73, at 9 (citing 11 Weinstein, Korn & Miller, New York Civil
Practice, 5228.09. Petitioner avers that a receiver "experienced
in the sale of luxury properties" brings a higher sale price and
would therefore "greatly increase the likelihood of
satisfaction." Id.
734,
736
(citing United States v. Vulpis,
(2d Cir. 1992)
967 F.2d
(recognizing the appropriateness of a
receiver when "a public auction is inadequate.")
8
Petitioner also cites an August 2017 online listing of
the Property by a private broker on Streeteasy.com for $3.495
million ("The Ad"). See Memo. in Reply, ECF. No. 73 at 9
("[Kamhi] himself listed the Property for sale with a private
broker on August 2, 2017
. with an asking price of
$3,495,000."); see Pet. Memo in Opp., at 12-13, see also Buell
Deel., Ex. B, ECF No. 56-2. That the $3,495,000 asking price is
"significantly higher than the current total Final Judgment"
suggests a receiver sale would satisfy the Final Judgment. See
Pet. Memo in Reply, ECF No. 73 at 10. Whether a receiver sale is
more likely to satisfy the Final Judgment than a sheriff's sale,
however, is not entirely clear.
The only evidence adduced regarding the Property's
market value is The Ad, which suggests that sale by a receiver,
rather than a sheriff, would satisfy the judgment. Buell Deel.,
Ex. B, ECF No. 56-2. The Second Circuit has recognized that "a
traditional sale by the sheriff at auction to the highest
bidder, with no supervision by a court office, would not suffice
to protect the government's interest." See United States v.
Vulpis,
967, F.2d 734, 736 (2d Cir. 1992).
9
(3)
Risk of Fraud or Insolvency if Receiver is Not
Appointed
While no evidence has been adduced to suggest fraud or
insolvency would result from denial of the instant motion,
Petitioner's position is that such a finding is unnecessary.
Pet. Memo in Reply, ECF No. 73 at 5 ("appointment of a Receiver
. is, in fact, entirely a matter of judicial
discretion") (internal quotations omitted). Petitioner cites
Ernest Lawrence Group, Inc. v. Government Careers Center of
Oakland, No. 99-CV-3807, 2000 WL 1655234, at *2
(S.D.N.Y. Nov.
3, 2000) for the principle that appointment of a receiver is
"appropriate when, in the judgment of the court, a public
auction is inadequate either because it is unlikely to product
significant bids, or because leaving the property in the hands
of the judgment debtor creates a risk of fraud or insolvency."
(emphasis added).
While there is an absence of evidence regarding the
Property's value and expected sale price, the Ad, posted by a
reputable real-estate brokerage, suggests that a private sale
would result in satisfaction of the judgment, with excess
proceeds available for distribution to Respondent. A sale of the
10
property that both satisfies the Final Judgment and allows for
excess proceeds to be distributed is preferable to one that does
not. See Gasser Chair Co., Inc. v. Infanti Chair Mfg. Corp.,
2006 WL 616267 , at *4
(E .D.N. Y. Mar. 6 , 2006) ("When disposition
of the debtor's property by private negotiation is preferable to
an execution sale.")
This is especially true because the cost of a receiver
would not materially exceed a sheriff's "poundage fee." See Pet.
Memo. in Reply , ECF No. 73 at 9 ("Compare C.P.L.R.
§
5228
(Receiver entitled to compensation of up to five percent
. with C.P.L .R.
§
five percent [.] ")
8012(b) (1) (Sheriff entitled to poundage fees of
( internal quotations omitted) .
Respondent's remaining objection to appointment of a
receiver is that Petitioner's request is "procedurally
defective" for failure to include a receiver's oath, failure to
post an undertaking, and a commitment to keeping written records
concerning the receivership. Resp. Memo. in Opp ., ECF No. 72 , at
12. In view of Petitioner's revised Proposed Order , which
addresses each of these concerns, Respondent's objections are
without merit. See ECF 74-1. Moreover, "because the assets going
into receivership will be applied in satisfaction of the
11
judgment , there is no need for the Court to set a bond amount
under C . P . L.R. § 6403. " Daum Global Holding Corp v . Ybrant
Digita l Ltd ., No . 13 - CV-3 1 35 (AJN) , 2018 WL 21228 1 6 , at *4
(S.D . N. Y. May 8 , 2018) .
IV .
The Receiver
The Court hereby appoints St u art N. Siege l of Engel &
Volkers New York Real Estate LLC to serve as receiver to
administer , collect , and sel l the Property . The receiver ' s
duties and authority are established by the concurrent order .
12
Conclusion
Based upon the conclusions set forth above, the motion
for appointment of a receiver to administer, collect, and sell
the Property is granted. The receiver shall be Stuart N. Siegel,
whose duties and authority are established by the concurrent
order.
It is so ordered.
New York, NY
'7 i
September ..1-..J
,
2018
U.S.D.J.
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?