Goya Foods Inc v. Ulpiano, UNANUE-CASAL

• Decision Date: 06 November 2001
• Docket Number: UNANUE-CASAL,01-1585,Nos. 01-1214,s. 01-1214
• Parties: (1st Cir. 2001) GOYA FOODS, INC., Plaintiff, Appellee, v. ULPIANO, a/k/a CHARLES UNANUE, Defendant, Appellant. LILIANE UNANUE and KALIF TRADING, INC., Defendants. GOYA FOODS, INC., Plaintiff, Appellee, v. LILIANE UNANUE, Defendant, Appellant. ULPIANO, a/k/a CHARLES UNANUE, and KALIF TRADING, INC., Defendants. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 124

275 F.3d 124 (1st Cir. 2001)

GOYA FOODS, INC., Plaintiff, Appellee, v. ULPIANO UNANUE-CASAL, a/k/a CHARLES UNANUE, Defendant, Appellant.

LILIANE UNANUE and KALIF TRADING, INC., Defendants.

GOYA FOODS, INC., Plaintiff, Appellee, v. LILIANE UNANUE, Defendant, Appellant.

ULPIANO UNANUE-CASAL, a/k/a CHARLES UNANUE, and KALIF TRADING, INC., Defendants.

Nos. 01-1214, 01-1585

United States Court of Appeals For the First Circuit

Heard Nov. 6, 2001

Decided December 27, 2001

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Jose Antonio Fuste, U.S. District Judge

Jan Alan Brody with whom Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein was on brief for defendant Liliane Unanue.

Charles Unanue on brief pro se.

Ira Brad Matetsky, Legal Department, Goya Foods, Inc., with whom Arturo J. Garca-Sola and McConnell Valdes were on brief for plaintiff Goya Foods, Inc.

Before Boudin, Chief Judge, Kravitch,^* Senior Circuit Judge, and Lynch, Circuit Judge.

BOUDIN, Chief Judge.

This appeal grows out of efforts by Goya Foods, Inc. ("Goya") to enforce a state court judgment against Charles Unanue and to reach certain of his assets held in the name of other parties including his wife Liliane. Prior history is recounted in Goya Foods, Inc. v. Unanue, 233 F.3d 38 (1st Cir. 2000)("Goya I"), cert. denied, 121 S.Ct. 1964 (2001). What follows is a brief history of the background and a summary of events since Goya I.

In 1987, Goya sued Charles in New Jersey state court for breach of a settlement agreement governing an earlier dispute. While the state court suit was ongoing, Charles filed for bankruptcy in 1990 in Puerto Rico and the bankruptcy estate became a party to the New Jersey litigation. In February 1995, the New Jersey court entered a judgment against both Charles and his estate for $6.9 million. In re Unanue, No. M-128817, slip op. (N.J. Super.Ct. Ch. Div. Feb. 23, 1995). On September 12, 1995, the bankruptcy court dismissed Charles' bankruptcy case without granting him a discharge. In re Unanue-Casal, No. 90-04490, slip op. at 5 (Bankr. D.P.R. Sept. 12, 1995).

In November 1995, after the New Jersey judgment was entered, Goya filed an action in the federal district court in Puerto Rico against Charles, his wife, Liliane, and Kalif Trading (a Panamanian corporation organized by Charles), seeking to enforce the New Jersey judgment against certain assets nominally held by Liliane or Kalif. Included among these assets were cooperative shares in Apartment 10A, at 625 Park Avenue in New York City. Although the shares were titled in Liliane's name, Goya said Charles had paid the purchase price and maintenance fees on the apartment and was the true beneficial owner.

At the outset, Goya moved for provisional remedies to ensure its ability to collect any judgment it might obtain. Goya sought a prohibition on the alienation of certain properties held by Charles, Liliane and Kalif, including the shares in Apartment 10A. The district court granted the request on November 17, 1995. The order reads, in part:

ORDERED that defendants, their agents, employees, and all persons holding property for them or acting in concert with them, are prohibited from alienating or in any way assigning, transferring, selling or otherwise disposing or encumbering any of the real properties, including cooperative shares, listed below

. . . .

2. Apartment 10A at Park Avenue, New York, New York, cooperative shares pertaining to which are held in the name of Liliane Unanue.

The court issued a second order, similar to the first, specifically prohibiting alienation of the shares to Apartment 10A. That order reads:

ORDERED that defendant Liliane Unanue, her agents, employees, and all persons holding property for her or acting in concert with her, are prohibited from alienating or in any way assigning, transferring, selling or otherwise disposing or encumbering any of the cooperative shares pertaining to Apartment 10A at Park Avenue, New York, New York, or her ownership interest in the premises represented by such shares.

After denying the Unanues' motions to dismiss the suit for lack of personal jurisdiction, the district court held a 10 day bench trial in July 1997 and issued its opinion on October 31, 1997. The court found that Liliane and Kalif Trading were holding properties for Charles and that Goya could execute against those properties. Goya Foods, Inc. v. Unanue-Casal, 982 F. Supp. 103, 112 (D.P.R. 1997). It discussed, at some length, Apartment 10A, and ruled that Goya has a right "to execute judgment over . . . any residence registered to [Liliane's] name . . . ." Id. However, the court sua sponte stayed enforcement of the judgment pending Charles' appeal to this court and his appeal of the underlying state court judgment (even though the Unanues were not required to post a bond). Id.

The New Jersey appellate court subsequently affirmed the state judgment and the state supreme court denied further review. In re Unanue, 710 A.2d 1036, 1041 (App. Div.), cert. denied, 724 A.2d 801 (1998). In an opinion issued November 28, 2000, this court affirmed the Puerto Rico judgment, making clear that as to Liliane, the judgment reached only those properties at issue in the case. See Goya Foods, Inc., 233 F.3d at 45-46. The Supreme Court recently denied certiorari. 121 S. Ct. 1964 (2001).

However, in October 2000, while the appeal of the Puerto Rico district court judgment was still pending before us, Goya discovered that the Unanues had secretly sold Apartment 10A in June 1998 for $4.6 million and had directed that $4.2 million of the sale price--apparently the balance after commissions--be wired to a Swiss bank account in Liliane's name. Goya claims both Charles and Liliane played integral roles in the sale.

When it learned of the sale, Goya filed an ex parte motion, on October 16, 2000, asking the district court for an order directing Charles and Liliane to appear in person and show cause why they should not be held in contempt of court. The court issued the show cause order on October 20, 2000. It reads:

ORDERED that defendant Charles Unanue a/k/a Ulpiano Unanue Casal and defendant Liliane Unanue each shall APPEAR PERSONALLY BEFORE THIS COURT, together with counsel if they be so advised, on the 31st day of October, 2000, at 9:30 a.m. [in the United States Courthouse in Hato Rey, Puerto Rico] and then and there SHOW CAUSE why they should not be held in CONTEMPT OF COURT for their knowing and willful violation of the [November 17, 1995] Orders of this Court, and why the Court should not grant appropriate relief therefor . . .

The court emphasized that Charles and Liliane were to "APPEAR PERSONALLY" in court for the hearing, "such that an appropriate warrant for their arrest and detention shall issue upon their failure to appear as directed." The court also vacated the stay of execution it had placed on its judgment, effective October 27, 2000, unless Charles and Liliane deposited $4.6 million with the court or posted a bond. Further, the court granted Goya's request to conduct discovery regarding the details of the sale of Apartment 10A.

The Unanues were notified of the order on October 24, 2000, at their residence in New York City. Liliane's New Jersey attorney, Jan Brody, was also served with a copy. The Unanues, however, failed to appear at the scheduled hearing; instead, after receiving the show cause order, they apparently left New York for Paris. To this date, they remain fugitives; they have not appeared before the court, nor have they made any effort to pay the underlying judgment.

Two attorneys, whom the Unanues had contacted the day before the hearing, did appear at the hearing. They informed the court they had not yet decided whether to represent the couple and requested additional time to familiarize themselves with the case to make their decision. The court responded:

The problem that I have here is that there was an order entered by this court regarding disposition of assets, and the order was violated. We're not talking about the sale of a car; we're talking about the sale of an apartment for over $4 million. It's a major thing, and the papers on record show that these monies were transferred to some account in Europe . . . And under these circumstances, I would have expected the defendants . . . with or without counsel, to appear here today.

This record is full of instances in which these defendants, out of disrespect for orderly proceedings before a court of justice or because of the fact that they were proceeding pro se in many various instances in which they appeared, the truth of the matter is that they have not complied with a number of dispositions. And under these circumstances, the only thing that I find prudent to do is one of two things. Either forget about it and not enforce the order and just assume that they are incapable of complying and forget about it, simply, or just have them arrested. And I think there are only two alternatives, and the alternative of choice is the order. We're going to enforce orders of this Court and not allow these things to happen in this case, or any other case.

The only other alternative is to order their arrest. So what I will do is this. I will ask the court to issue an arrest warrant against these two individuals. . . .

There will be no bail, no bail posted, and upon their arrest, these individuals should be transferred to this district, and then I will set a hearing. This will give them the opportunity now of dealing with counsel and hiring local counsel, because the hearing won't be held today. I'm just taking a preventive measure, basically to avoid further flouting of the orders of this Court.

Thereupon, bench warrants were issued for the arrest of the Unanues.

The district court also granted Goya's motions, filed the day of the hearing, to execute judgment against another apartment located in San Juan, and to appoint a...