Weitzman v. Stein
| Decision Date | 01 March 1990 |
| Docket Number | D,No. 800,800 |
| Citation | 897 F.2d 653 |
| Parties | Carole Heller WEITZMAN, as assignee of Saul Weitzman, Plaintiff-Appellee, v. Sidney STEIN, Albert Feiffer and Norman Rubinson, Defendants, v. Beverly STEIN, Respondent-Appellant. ocket 89-7861. |
| Court | U.S. Court of Appeals — Second Circuit |
Louis Venezia, New York City (Venezia & Haber, on the brief), for plaintiff-appellee.
Arthur Halsey Rice, Miami, Fla. (Rice & Reiser, on the brief), for respondent-appellant.
Before OAKES, Chief Judge, and KEARSE and FLETCHER *, Circuit Judges.
In this action, which dates back to 1970 and was perhaps presciently described by a district court judge several years ago as "interminable," respondent Beverly Stein appeals from an order of the United States District Court for the Southern District of New York, David N. Edelstein, Judge, freezing her assets except for a $2,000 per month living allowance. On appeal, she contends principally (1) that the district court did not have personal jurisdiction over her, (2) that the plaintiff had not made a showing sufficient to warrant injunctive relief, and (3) that the court failed to make findings and follow proper procedures prior to entering the injunction. For the reasons below, we conclude that the injunction was improperly entered, and we vacate and remand for further proceedings.
In 1978, a judgment was entered in this action after a trial before Lloyd F.
MacMahon, Judge, in favor of Saul Weitzman against defendants Sidney Stein ("Sidney") and others, in the amount of $89,703.03, plus interest and costs. Saul Weitzman assigned the judgment to Carole Heller Weitzman ("Weitzman"). Respondent Beverly Stein ("Beverly"), Sidney's wife, was not a party to the action. The present appeal emanates from Weitzman's continuing efforts to enforce the judgment.
Supplemental proceedings following the 1978 judgment resulted in the district court's declaring that Sidney was the alter ego of two corporations, F.I.F. Consultants, Inc., and Investment Bancshares, Inc., and ordering Sidney to account for and turn over to the court all assets of the two corporations, as well as all other assets in his possession. Memorandum of Judge MacMahon dated May 20, 1986. Sidney failed to comply with this order and alleged that he had given his assets to Beverly. In 1987, after the case had been reassigned to Judge Edelstein, an amended judgment was entered in the sum of $442,729.33, including interest, costs, and attorneys' fees.
In April 1988, Weitzman sought an order pursuant to, inter alia, Sec. 5225(b) of the New York Civil Practice Law and Rules ("CPLR") (McKinney 1978), vacating Sidney's conveyances of assets to Beverly and compelling Beverly to turn those assets over to Weitzman. The motion labeled Beverly a "respondent" in the action. The court ordered Beverly to attend a hearing in the district court on April 11, 1988, at which she would be required to show cause why the conveyances to her were not fraudulent and void and why she should Above the caption, the Order To Show Cause bore the following legend:
not be compelled to disgorge those assets. Order To Show Cause of Judge Edelstein dated April 4, 1988.
In the text of the Order To Show Cause, it was
ORDERED that in the event that the respondent BEVERLY STEIN fails to appear at the time and place aforementioned, this Court shall issue an Order for the immediate arrest of the respondent BEVERLY STEIN; and ...
ORDERED that the respondent BEVERLY STEIN is hereby restrained from transferring the assets of F.I.F. Consultants, Inc. and Investment Bancshares, Inc. out of her possession, custody or control....
In opposition to the Order To Show Cause, Beverly submitted affidavits by Sidney. Sidney stated, inter alia, that Beverly was a resident of Florida, not New York; that she had been a Florida resident for some 30 years; that she had not conducted or transacted business "personally" in New York; and that she had visited New York only a handful of times in the past 20 years. He argued that "no facts have been set forth showing any jurisdictional basis for compelling Beverly Stein to travel from Florida to New York and to submit herself to the jurisdiction of this Court."
In two reply affirmations, Weitzman asserted that though Beverly perhaps had not transacted business in New York " 'personally,' " she was nonetheless subject to the court's long-arm jurisdiction pursuant to New York CPLR Sec. 302(a)(1) (McKinney Supp.1990) (), because Sidney had transacted business in New York for Beverly as her agent. Weitzman quoted Sidney's deposition testimony that he had signed papers in New York between October 9, 1986, and April 23, 1987, as agent for his wife or for her corporations, and that he had traveled to New York to take care of Beverly's business.
In an Order dated August 24, 1988 ("August 1988 Jurisdiction Order"), the district court tentatively rejected Beverly's jurisdictional arguments, concluding that "it appears that Beverly Stein is subject to the jurisdiction of this court." Id. at 4. The court found, inter alia, that Weitzman had made a prima facie showing that Sidney had acted as an agent in New York for Beverly in her personal capacity. It stated that at that juncture of the proceedings, a prima facie showing of jurisdiction sufficed and that "[c]oncurrently with the hearing on the application made pursuant to CPLR Sec. 5225(b) [], this court shall conduct a full evidentiary hearing on the subject of jurisdiction." August 1988 Jurisdiction Order at 2.
Eventually, the parties submitted papers in support of their respective positions on the merits of Weitzman's Sec. 5225(b) motion. In May 1989, following the last submission, the district court ordered Beverly to appear before the court on July 11, 1989, for her deposition.
On July 17, 1989, immediately after the deposition had been completed, Weitzman made an oral application to the district court for "a discovery order" requiring Beverly to compile information for Weitzman and to remain in New York while she did so. Weitzman's attorney gave a lengthy description of Beverly's deposition testimony; Beverly's attorney argued, inter alia, that the description mischaracterized the testimony. There was no deposition transcript.
Near the end of the hearing, the district court stated that Weitzman's application for the proposed discovery should be made by written motion and that "[i]n the meantime, while we're waiting for these papers When Beverly's attorney stated that he hoped this order would not be interpreted to prevent Beverly from paying for such items as groceries or the hotel expense she was incurring as a result of having to be in New York for her deposition, the court conducted the following interrogation:
Your lawyer says you are drawing from a bank account. Well, don't tell me you don't know what you are drawing.
....
....
....
....
....
.... I believe you are lying.
I am finished, I have given this person every opportunity to come forward.
(Id. at 54-59.)
The court modified its original order to provide that Beverly would be allowed to draw $2,000 per month for her expenses. The court stated that if Beverly violated the order it would hold her in contempt. It told her that she could return to Florida if she wished, but that if she did not return to New York when asked to appear in this action, the court would send the marshals to arrest her.
Weitzman had not moved for an order freezing Beverly's assets, and whatever papers were served on Beverly prior to the July 17 hearing did not advert to the possibility of a freeze order. Nor did Weitzman ask for such an order orally at the hearing or speak in support of it.
On July 24, 1989, the court entered an order formalizing the oral injunction issued at the July 17 hearing. The order ("July 24, 1989 Injunction") stated, in pertinent part, as follows:
Upon the argument heard by this Court and inquiry by this Court of Beverly Stein ...
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