Gliklad v. Cherney

• Decision Date: 07 December 2016
• Docket Number: Index No. 602335/2009
• Citation: 2016 NY Slip Op 32401 (U)
• Parties: ALEXANDER GLIKLAD, Plaintiff, v. MICHAEL CHERNEY, Defendant.
• Court: New York Supreme Court

2016 NY Slip Op 32401(U)

ALEXANDER GLIKLAD, Plaintiff, v. MICHAEL CHERNEY, Defendant.

Index No. 602335/2009

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 45

December 7, 2016

DECISION AND ORDER

HON. ANIL C. SINGH, J.:

Defendant Michael Cherney moves pursuant to CPLR 5015(a)(2) and CPLR 5015(a)(3) to vacate an amended judgment, contending that newly discovered and previously unavailable evidence obtained from a government archive of bank records in Russia establishes that the judgment was obtained as a result of material misrepresentations of plaintiff Alexander Gliklad tantamount to a fraud on the court. Plaintiff opposes the motion.

The alleged newly discovered evidence tendered by Cherney are financial records of a defunct bank that were retrieved from archives maintained by an agency of the government of Russia. Kuzbassprombank was a bank headquartered in the Kemerovo region of Russia. It was registered with the Russian banking authorities in 1992. Its banking license was revoked by the Bank of Russia in October 2000. It was declared bankrupt in January 2001 and was liquidated on November 12, 2002. The bank's records are now in the government archive.

Gliklad commenced the instant action in August 2009 to enforce a $270 million promissory note signed by Cherney in 2003. Cherney filed an answer asserting nine affirmative defenses, including lack of consideration.

On July 19, 2012, Justice Melvin Schweitzer issued an opinion and order striking Cherney's first counterclaim and first affirmative defense.

Subsequently, Gliklad moved pursuant to CPLR 3126 to strike Cherney's ninth affirmative defense, lack of consideration, as a sanction for failure to comply with discovery requests. In a memorandum opinion dated August 8, 2013, Justice Schweitzer granted the motion, writing:

In light of Mr. Cherney's contradictory statements regarding funds given to Mr. Gliklad, his contradictory statements about the existence and availability of Kuzbass Coal documents, and his contradictory statements about the goodwill of the partners who may possess those documents, the court finds that Mr. Cherney's excuses and explanations for why he cannot provide any documents attesting to his alleged Kuzbass Coal investment ... are expedient and simply not credible.

The court has given Mr. Cherney ample opportunity to produce these documents; documents that were the subject of discovery requests made over three years ago. After Mr. Gliklad first requested these documents, their production had been the subject of many meet and confers, but production by Mr. Cherney has not been forthcoming. The discovery process culminated in the court's January 31 Order, and the July 19 order giving Mr. Cherney one last chance to account forthe missing Kuzbass Coal documents in a deposition. Since the deposition didn't provide any credible excuses for his failure to produce the requested documents, the court finds it to be a reasonable inference that Mr. Cherney's failure to furnish the aforementioned Kuzbass Coal documents is willful and contumacious. "Willful and contumacious behavior can be inferred by a failure to comply with court orders, in the absence of adequate excuses. A party that permits discovery to trickle in with a cavalier attitude should not escape adverse consequences." Henderson-Jones v. City of New York, 87 AD3d 498, 504 [1^st Dept., 2011]. Pursuant to CPLR 3126, the Court finds it just to strike Mr. Cherney's ninth affirmative defense.

(Gliklad v. Cherney, 2013 WL 7862260 [2013] (internal citation omitted)).

The Appellate Division affirmed in a unanimous opinion, writing:

The court's finding that defendant's conduct in connection with certain discovery requests was willful and contumacious is supported by the record; thus, the court properly imposed the discovery sanction of striking defendant's first counterclaims and his first and ninth affirmative defenses as a result of that conduct.

(Gliklad v. Cherney, 113 A.D.3d 505, 506 [1^st Dept., 2014]).

Justice Schweitzer awarded summary judgment in favor of Gliklad and against Cherney in a memorandum opinion dated March 26, 2014 (NYSCEF Doc. No. 928; Gliklad v. Cherney, 2014 WL 1398229). Regarding defendant's affirmative defense of lack of consideration, Justice Schweitzer wrote in pertinent part:

This defense is based on the proposition that Mr. Cherney already owned his 26.73% interest in Kuzbass Coal through a joint venture at the date of the note, and that the note lacked consideration. Mr. Cherney failed to produce any documentation to corroborate his claim,and neglected to explain obvious contradictions that resulted in his numerous shifting positions.

The court ordered that Mr. Cherney be deposed to explain where any documentation relating to his ninth affirmative defense could be found or explain why it was unavailable. Instead of any evidence to support his positions or credible excuses for his failure to produce the requested documents, the court found blatant contradictions in his testimony and struck his ninth affirmative defense.

Having lost his two key affirmative defenses, Mr. Cherney relies primarily on the argument that Mr. Gliklad has not established his prima facie case. When convenient, Mr. Cherney has contended that the note is complete, because his contention was that the value of the note was owed to him. In an attempt to prevent summary judgment, Mr. Cherney now contends that issues of fact exist with respect to completeness. This court has given Mr. Cherney over four years to produce required documents and has been burdened with repeatedly dealing with his willful, obstructionist behavior. Mr. Cherney has contradicted himself multiple times, and has provided insufficient evidence to establish any of his affirmative defenses.

Mr. Gliklad has sufficiently established his prima facie case. Mr. Cherney's remaining affirmative defenses are all without merit, and Mr. Cherney has not raised a material issue of fact with respect to the basis for this motion.

(NYSCEF Doc. No. 928, pp. 3-4)(emphasis in original).

Judgment was entered on April 15, 2014.

In a memorandum opinion dated October 29, 2015, the Appellate Division modified the judgment for a recalculation of interest and affirmed the order awarding summary judgment in favor of Gliklad (Gliklad v. Cherney, 132 A.D.3d 601 [1^st Dept., 2015]). The Appellate Division found that Gliklad submitted proofof the incomplete executed promissory note containing an obligation to repay and the subsequent documentation that completed the note, and evidence that Cherney did not pay, and Cherney failed to raise a triable issue with respect to a bona fide defense.

The revised judgment based on a proper calculation of interest was entered on November 4, 2015.

Cherney filed a motion in the First Department for leave to appeal to the Court of Appeals, which was denied in a decision dated May 17, 2016.

Defendant Michael Cherney asserts in a sworn affidavit that the judgment should be vacated based upon bank records the were unavailable while the matter was in active litigation. Specifically, Cherney contends that the newly discovered evidence proves that Gliklad made repeated misrepresentations to the court that he purchased a block of shares in KuzbassRazrezUgol ("Kuzbass Coal") with a $15 million transfer of funds from an account of his company Otava Invest & Trade, Ltd., to an account of Kuzbassprombank at Credit Suisse First Boston. Gliklad made this representation as part of his claim that he sold this same block of stock to Cherney as consideration for the promissory note that he was suing Cherney to enforce. Cherney states that he submitted documents from Kuzbass Coal and affidavits from persons with knowledge of the ownership of the stock in thatcompany to prove that Gliklad never owned the particular block of stock that he claimed to have sold to Cherney or any other stock in Kuzbass Coal. In other words, Cherney maintains that Gliklad lied to the court about transferring $15 million to Kuzbassprombank to pay for the block of Kuzbass Coal stock that he claimed to have later sold to Cherney as consideration for the promissory note.

Cherney asserts that, prior to the entry of judgment, his only knowledge of Kuzbassprombank, the Russian bank to which Gliklad allegedly transferred the $15 million, was that it went out of business in the early 2000s. Cherney contends that he had no information as to what happened to its records or whether they were available.

Noting that judgment was entered against him in April 2014, Cherney asserts that in September or October of that same year, "I received information that some kind of court proceeding involving Kuzbassprombank was pending in Russia" (Cherney Affidavit, p. 2, para. 3). "This information prompted me to wonder if any records of Kuzbassprombank might still exist" (id., at para. 3).

Cherney retained lawyers in Russia to investigate whether the bank documents were still available. Subsequently, the lawyers informed Cherney that upon the bank's liquidation in 2002, all of the bank's records had been transferred to a government archive in the Kemerovo region of Russia, where the bank hadoperated. Further, the lawyers had been granted access to the archive to review and copy bank records, and the lawyers, or someone acting on their instructions, visited the archive in 2015 and copied a few bank documents that were believed to be relevant to whether the transfer of funds described by Gliklad had taken place in the manner that Gliklad had represented to the court.

Cherney retained an accounting firm. Forensic accountants and Cherney's Russian and New York based legal teams worked together copying and reviewing thousands of pages of bank documents.

Cherney contends that the forensic accountants identified a series of loans to Kuzbassprombank from a Latvian bank named Bank Saules and a Lithuanian bank named Bank Snoras that took place in February 1998, shortly after Gliklad transferred...