Citadel Mgt. v. Hertzog

• Decision Date: 30 November 1999
• Parties: CITADEL MANAGEMENT INC., Plaintiff,<BR>v.<BR>JOHAN HERTZOG, Also Known as JOHAN C. HERTZOG, Also Known as JOHAN TY-SONHERTZOG, et al., Defendants.
• Court: New York Supreme Court

182 Misc.2d 902

703 N.Y.S.2d 670

CITADEL MANAGEMENT INC., Plaintiff,

v.JOHAN HERTZOG, Also Known as JOHAN C. HERTZOG, Also Known as JOHAN TY-SONHERTZOG, et al., Defendants.

November 30, 1999.

Morris K. Mitrani, New York City, for defendants.

Mintmire & Associates, Palm Beach, Florida (Mercedes Travis of counsel), for plaintiff.

OPINION OF THE COURT

THOMAS V. POLIZZI, J.

This action arises out of judgments rendered by the High Court of Justice, Queen's Bench Division, England (hereinafter English Court), in litigation entitled Citadel Mgt. v Equal Ltd. (1998 C No. 798) in the amount of $40,100,000 plus interest at the rate of 8% per annum against defendant Johan Hertzog on August 5, 1998 and $5,000,000 plus interest at the rate of 8% per annum against defendant Telesis Trust Inc. (hereinafter Telesis) on October 14, 1998. By order of this court dated September 13, 1999 an application for an attachment and a motion for summary judgment in lieu of complaint were consolidated under index No. 11531/99.

Pursuant to CPLR article 53, a foreign country money judgment which is final and conclusive may be enforced in this State by a motion for summary judgment in lieu of complaint. (CPLR 5303.) Under the doctrine of comity, the New York courts will recognize the judgment provided it is based on procedures compatible with our concepts of due process, by tribunals which are fair and impartial, and when personal jurisdiction is obtained over the defendant. (CPLR 5304 [a] [1], [2]; see, Bridgeway Corp. v Citibank, 45 F Supp 2d 276; Greschler v Greschler, 51 NY2d 368.)

Defendant Hertzog appeared in the English case by filing an acknowledgment of service of the writ of summons with the High Court of Justice on May 21, 1998, by his solicitors Thomson & Co. giving notice of his intention to defend the claim. Thereafter, John Wilson Thomson, Hertzog's solicitor, and a defendant in the English case, was subject to a contempt proceeding which resulted in the shutting down of his office and the seizure of his files by the Office for the Supervision of Solicitors. Mr. Hertzog alleges that he was unaware of these events as well as the service of the statement of claim on July 22, 1998 on Thomson's office which required a response within 14 days. A default judgment was entered on August 5, 1998.

Under CPLR 5305 (a) (2), a defendant's voluntary appearance in a foreign proceeding constitutes a submission to jurisdiction and removes any jurisdictional barrier to granting recognition to the foreign country judgment mandated by CPLR 5304 (a) (2). Jurisdiction was clearly obtained over Hertzog upon the filing of the acknowledgment of service. Inasmuch as the English courts have traditionally been viewed as in compliance with our standards of due process under a system which provides impartial tribunals, this judgment is conclusive and no mandatory basis for nonrecognition has been presented. (See, Dynamic Cassette Intl. v Lopez & Assocs., 923 F Supp 8; Yihye v Blumenberg, 260 AD2d 371; Soloman Ltd. v Biederman & Co., 177 AD2d 350; Overseas Dev. Bank in Liquidation v Nothmann, 115 AD2d 719.)

Hertzog's assertions that discretionary grounds for nonrecognition exist under CPLR 5304 (b) (2) and (4) due to the premature entry of the default judgment and the manner in which the statement of claim was served are also without merit. While it is conceded that the August 5th judgment was entered one day early, the service of the statement of claim on Hertzog's solicitor of record appears to be in conformance with the rules of the English Court existing at that time. (Order 67 of Rules of Sup Ct 1965.) Although in the opinion of Mr. Hertzog's expert, Thomas Coates, a licensed solicitor in the Supreme Court of England and Wales, that these irregularities would result in the English Court setting aside the judgment, it is clear that Hertzog has to date made no attempt to vacate the judgment on the basis of any irregularity or so-called "sharp practice" involved in the entry of a default under the facts described. (See, Colonial Bank v Worms, 550 F Supp 55.) Under these circumstances this court declines to exercise its discretionary authority and refuse recognition.

Accordingly, summary judgment is awarded to plaintiff against defendant Hertzog in the amount of $40,100,000 plus interest at the rate of 8% per annum.

This court will next address the Telesis default judgment. Telesis is a Delaware corporation with its principal place of business in California. On July 9, 1998 the English Court granted joinder of Telesis in that litigation and provided for service by mail which was posted on August 28, 1998 to the corporation's address in California. A default judgment was entered on October 14, 1998. As stated by defendant Hertzog, the President and Chief Executive Officer of Telesis, the corporation does not maintain a place of business in England and has never engaged in business in England. Hertzog acknowledges that Telesis was the recipient of funds wired from England to its New York bank account for the alleged purpose of purchasing paintings as security for the underlying contract that is the subject of the English litigation.

Unlike the judgment entered against Hertzog, personal jurisdiction was not obtained over Telesis under any of the grounds set forth in CPLR 5305 (a). While CPLR 5305 (a) (5)...