BSH Hausgeräte, GMBH v. Kamhi

• Decision Date: 18 October 2017
• Docket Number: 17 Civ. 5776
• Parties: BSH HAUSGERÄTE, GMBH, Petitioner, v. Jak KAMHI, Respondent.
• Court: U.S. District Court — Southern District of New York

282 F.Supp.3d 668

BSH HAUSGERÄTE, GMBH, Petitioner,

v.Jak KAMHI, Respondent.

17 Civ. 5776

United States District Court, S.D. New York.

Signed October 18, 2017

PILLSBURY WINTHROP SHAW PITTMAN LLP, 1540 Broadway, New York, NY 10036, By: Kenneth W. Taber, Esq., Nicholas M. Buell, Esq. Attorneys for Petitioner,

DAVIDOFF HUTCHER & CITRON LLP, 605 Third Avenue, 34^th Floor, New York, NY 10158, By: Larry Hutcher, Esq., Eric J. Przybylko, Esq. Attorneys for Respondent,

OPINION

Sweet, D.J.

Petitioner BSH Hausgerate GMBH ("BSH" or the "Petitioner") has moved pursuant to Federal Rule of Civil Procedure 64 and New York Civil Practice Law and Rules ("CPLR") 6201, 6211, and 6212 to confirm the order of attachment dated July 31, 2017, as corrected on August 3, 2017 (the "Order of Attachment" or the "Attachment") issued against the real property of Jak Kamhi ("Kamhi" or the "Respondent") located at 15 West 53rd Street, Apt. 32B, New York, New York 10019 (the "Property"). Based upon the facts and conclusions set forth below, Petitioner's motion is granted.

Prior Proceedings

On October 2, 2003, BSH and Kamhi entered into a Share Sale and Purchase Agreement, under which BSH 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 Decl."), Ex. A.) The SPA–BSH contained an agreement to arbitrate disputes through the International Chamber of Commerce's International Court of Arbitration and under the ICC's Arbitration Rules (the "ICC"). (Id., Ex. A, ¶ 10.)

On October 7, 2003, Kamhi also signed a separate Share and Sale Purchase Agreement with another party (the "SPA–DB"), and to which BSH was not a party. (See id., Ex. B.) Like the SPA–BSH, the SPA–DB also contained an agreement to arbitrate disputes before the ICC and under the ICC's Arbitration Rules. (See id., Ex. B ¶ 5.)

On October 7, 2013, Kamhi, one of five claimants (the "Claimants"), submitted a Request for Arbitration to the ICC. (See id., Exs. C & E.) 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, (see id., Ex. C), triggered an automatic rescission that terminated the SPA–BSH agreement; 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 jurisdiction of the ICC. (See id., Exs. D ¶¶ 11–12 & E ¶ 10.) During the arbitration proceedings, BSH and the other arbitration respondents moved to have the arbitration bifurcated as to whether (i) the DA's termination automatically terminated the SPA–BSH and (ii) BSH caused the breach of the DA; after submissions, and initial denial, and a renewed motion, the tribunal of three arbitrators (the "Arbitral Tribunal") granted the request for bifurcation on August 11, 2015. (Declaration of Eric J. Przybylko dated September 14, 2017 ("Przybylko Decl."), Exs. 2–3, 7.) The 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 ¶ 47.)

On February 6, 2017, following submissions and two days of hearings and testimony, the Arbitral Tribunal issued their judgment, awarding BSH a money judgment against the Claimants in the amount of: (1) $544,230; (2) €1,900,487.13; 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 (the "Final Award"). (See Buell July 28 Decl., Ex. E ¶¶ 67–142, 574–79 & Sec. XVIII.) Prior to rendering its decision, the Arbitral Tribunal accepted briefing on whether a second phase would be unnecessary if the claim regarding automatic termination was rejected, and in its Final Award found that "no issue remains to be determined in any second phase of the proceedings." (Id., Ex. E ¶¶ 488, 492; see id. ¶¶ 457–59, 510, 515.)

BSH filed its petition to confirm the Final Award on July 28, 2017. (See Dkt. No. 1.) On July 31, 2017, this Court granted BSH's Ex Parte Application for an Order of Attachment against the Property, which was corrected on August 3, 2017. (Dkt. No. 3.) Title to the Property is solely in Kamhi's name, is unencumbered, and is a rented residence. (See Buell July 28 Decl., Exs. F, G, J.¹ )

On August 2, 2017, the Sheriff for the City of New York, pursuant to CPLR § 6216, levied upon the Property a Notice of Attachment indorsed with the name and address of Petitioner's attorneys and a certified copy of the Order of Attachment by filing with the New York County Clerk. (Declaration of Nicholas M. Buell dated August 4, 2017 ("Buell Aug. 4 Decl."), Exs. C, D, E, F.

BSH moved to confirm the Order of Attachment on August 4, 2017, (Dkt. No. 23), which was heard and marked fully submitted on September 27, 2017.

Applicable Standard

Federal Rule of Civil Procedure 64 authorizes a federal court to seize "a person or property to secure satisfaction of the potential judgment" in accordance with "the law of the state where the court is located." Fed. R. Civ. P. 64. Under New York law, Section 6201 of the N.Y. CPLR lays out the grounds for attachment:

[a]n order of attachment may be granted in any action, except a matrimonial action, where the plaintiff has demanded and would be entitled ... to a money judgment against one or more defendants, when:

(1) the defendant is a nondomiciliary residing without the state, or is a foreign corporation not qualified to do business in the state; or

(2) the defendant resides or is domiciled in the state and cannot be personally served despite diligent efforts to do so; or

(3) the defendant, with intent to defraud his creditors or frustrate the 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; or

(4) the action is brought by the victim or the representative of the victim of a crime, as defined in subdivision six of section six hundred twenty-one of the executive law, against the person or the legal representative or assignee of the person convicted of committing such crime and seeks to recover damages sustained as a result of such crime pursuant to section six hundred thirty-two-a of the executive law; or

(5) the cause of action is based on a judgment, decree or order of a court of the United States or of any other court which is entitled to full faith and credit in this state, or on a judgment which qualifies for recognition under the provisions of article 53.

Capital Ventures Int'l v. Republic of Arg., 443 F.3d 214, 219 (2d Cir. 2006) (quoting N.Y. CPLR § 6201 ). "Any debt or property against which a money judgment may be enforced ... is subject to attachment." N.Y. CPLR § 6202.

To confirm an order of attachment, a plaintiff must show "that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in [N.Y. CPLR] Section 6201 exist, and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff." N.Y. CPLR § 6212(a) ; see Capital Ventures Int'l, 443 F.3d at 219. In addition to determining a statutory ground for attachment, a court must evaluate whether attachment "is needed to secure payment or obtain jurisdiction, and it retains discretion only to the extent that these determinations require weighing of evidence and also in balancing competing considerations." Mishcon de ReyaN.Y. LLP v. Grail Semiconductor, Inc., No. 11 Civ. 4971 (RJH), 2011 WL 6957595, at *3 (S.D.N.Y. Dec. 28, 2011) (internal quotation marks omitted) (quoting Capital Ventures Int'l, 443 F.3d at 221 ); see also Disney Enter., Inc. v. Finanz St. Honore, B.V., No. 13 Civ. 6338 (NG) (SMG), 2017 WL 1862211, at *2 (E.D.N.Y. May 8, 2017) ("[T]he party seeking an attachment must show the existence of one of the two purposes of an attachment, either the need to secure a judgment or to obtain jurisdiction.").² When evaluating a motion to confirm an attachment, a district court "must give the plaintiff the benefit of all the legitimate inferences that can be drawn from the facts pleaded." Gentile v. Conley, 636 F.Supp.2d 246, 251 (S.D.N.Y. 2009).

The Motion to Confirm the Attachment is Granted

In opposition to the instant motion, Respondent makes three arguments. First, Respondent contends that Petitioner has not, for several reasons, shown a likelihood of success on the merits as to the confirmation of the underlying arbitration award; second, that Petitioner has not demonstrated entitlement to an attachment in the amount of $3 million; and third, that the present circumstances warrant judicial discretion in denying the attachment. For the reasons below, Defendants arguments are unavailing, Petitioner has met its burden, and the instant motion is granted.

a. Cause of Action and Likelihood of Success

First, to confirm an order of attachment, a petitioner must show that there is a cause of action. See Mishcon de Reya, 2011 WL 6957595, at *4 (quoting N.Y. CPLR § 6212(a) ). Petitioner seeks confirmation of the Final Award against Respondent, one of the Claimants in the underlying arbitration. That there is a cause of action is not disputed, and therefore this element is met.

In greater dispute, however, is whether Petitioner has demonstrated a likelihood of success on the merits of its confirmation claim. Foreign arbitral awards are recognized and enforced under the Federal Arbitration Act (the "FAA"), which codified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), implemented by 9 U.S.C. § 201 et seq. See Arbitration between Oltchim,...