Opinion
11595103
Decided May 16, 2005.
By way of a CPLR 3213 motion for summary judgment in lieu of complaint, plaintiff CDR Créances S.A. (CDR or Créances) seeks pursuant to CPLR § 5303 the recognition of a judgment dated February 12, 2003 rendered by the Paris Court of Appeal (the "French judgment"). The French judgment directed defendant Euro-American Lodging Corporation (EALC) to pay plaintiff CDR approximately $83 million in principal upon the various indebtedness at issue offset by the amount of certain advances it found that CDR owed EALC.
At or about the time that plaintiff filed the motion at bar, it also commenced a foreclosure action in this court (Index No. 108392/2003, hereinafter referred to as the "New York State foreclosure action"). By order and decision dated February 16, 2005 (Motion Sequence No. 3), this court dismissed the New York State foreclosure action.
EALC opposes the motion for summary judgment in lieu of complaint and cross-moves to dismiss this action in its entirety on the ground that it is barred by Section 1301 (3) of the Real Property Actions and Proceedings Law (RPAPL). EALC argues in the alternative that pursuant to CPLR § 5306 this action should be stayed pending an appeal from the French judgment or pending an appeal from the French judgment that EALC intends to bring.
The court shall treat the papers submitted on CDR's purported "cross-motion" as opposition to EALC's cross-motion because the moving party has no right to cross-move on its own motion under CPLR 2215. See Rizz Management Inc. v. Kemper Ins. Co., 4 Misc 3d 1005(A), 2004 NY Slip Op 50723(U), *2 (Civ Ct, Queens County, 2004) ("Plaintiff's cross to defendant's cross is nothing more than the impermissible service of supplemental papers").
The Loan and the Mortgage
Plaintiff alleges that under a loan agreement in 1991 Societé de Banque Occidentale (SBDO), its predecessor in interest, advanced $92 million to defendant EALC in connection with EALC's acquisition and improvement of the property known as 135 West 52nd Street for its conversion to the Flatotel Hotel. As security for the Loan, EALC granted SDBO two mortgages on the property. Save for two riders to the Loan Agreement that are written in English, the terms of the Loan Documents are in French. The mortgages were assigned to CDR by SDBO pursuant to an agreement dated June 1, 2001. Under the terms of the loan agreement and mortgages, French courts were to have sole and exclusive jurisdiction to determine whether any event of default upon the indebtedness occurred and whether the indebtedness could be accelerated. The documents also made any judgment with respect to that indebtedness subject to Article 53 of the New York State Civil Practice Law and Rules.
The French Litigation
In October 1992, defendant EALC commenced a breach of contract action in the Commercial Court of Paris against SDBO, claiming that SDBO had failed to advance loan proceeds of about $8 million during the construction phase of the hotel. SDBO interposed a counterclaim alleging EALC's default under the terms of the loan agreement between the parties, specifically its failure to pay principal on the loan on the maturity date and its failure to repay $13 million in New York real estate taxes paid by plaintiff Créances. One year later, the Commercial Court determined that SDBO breached the Loan Agreement in failing to advance certain funds and that Créances owed EALC $2,790,779. Créances paid EALC $2 million of this sum, as a provisional remedy, which left $790,779 with interest remaining to be paid.
Both sides submit expert opinions with respect to the French appeals process. Plaintiff's French law expert Bernard Audit, professor of law at the Sorbonne (University of Paris 2), states that the judgment rendered by the Commercial Court in 1993, as a judgment of first instance, was subject to a thorough review on the law and the facts by the appellate court (the Court of Appeal), and was therefore not immediately enforceable. In contrast, the French judgment, which was rendered by an appellate court, the French Court of Appeal, is immediately enforceable. Relief from an appellate court judgment, the French judgment in this instance, must be sought by way of a "petition for review" (pourvoi en cassation) to the French Supreme Court (Cour de cassation). The petition for review may be used only to challenge questions of law; review of the facts is beyond the jurisdiction of the French Supreme Court. The French Supreme Court will dismiss the petition if it finds it unjustified. If it finds the petition justified, the French Supreme Court will not decide the case itself but will quash the decision below and remand the case to a lower appellate court.
Defendant's expert Professor George A. Bermann, Columbia University School of Law, does not disagree in any material way with the opinions of plaintiff's expert. He adds that plaintiff may move to strike the petition for review on the grounds that the underlying judgment has not been paid and that the French Supreme Court must grant such motion unless it determines that the consequences of requiring payment of the judgment would be "manifestly excessive." The effect of striking the petition would be that the appeal would be suspended, and only definitely terminated at the end of two years unless the judgment was satisfied.
After a decade of court proceedings, the Paris Court of Appeal rendered a judgment dated February 12, 2003, which directed EALC to pay CDR approximately $83 million in principal. It determined that EALC should offset $790,779 with interest against the amount EALC was obligated to pay Créances.
On May 23, 2003, EALC filed a "Notice of Petition" stating that it would file a petition seeking review of the French judgment before the Supreme Court of France. CDR filed an application to strike the petition from the docket, asserting, among other things, that the prerequisite that the judgment must be paid had not been met. EALC failed to respond but a non-party named Macson Express Corporation, Inc. filed objections (tierce opposition) to CDR's application.
On December 19, 2003, having dismissed Macson's objection as dilatory, the Supreme Court of France granted CDR's application and withdrew EALC's Petition for Review from its docket.
DECISION
The court shall grant CDR's motion and deny EALC's cross-motions. RPAPL § 1301 (1) states that
Where final judgment for the plaintiff has been rendered in an action to recover any part of the mortgage debt, an action shall not be commenced or maintained to foreclose the mortgage, unless an execution against the property of the defendant has been issued upon the judgment to the sheriff of the county where he resides * * * and has been returned wholly or partly unsatisfied.
RPAPL § 1301 (3) provides that "While the action is pending or after final judgment for the plaintiff therein, no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court in which the former action was brought."
While dismissing the New York State foreclosure action, finding that it ran afoul of RPAPL § 1301 (3), this court disagrees with defendant EALC that the instant action violates that section, since it does not constitute "any action to recover any part of the mortgage debt."
Plaintiff's right to pursue this action is entirely consistent with the decade old precedent of Central Trust Co. v. Dann ( 85 NY2d 767, 769) and Dollar Dry Dock Bank v. Piping Rock Builders, Inc. ( 181 AD2d 709, 710 [2nd Dept 1992]. Its action to domesticate a foreign country judgment is no more an action "to recover any part of the mortgage debt" than was the fraudulent conveyance action in Dollar Dry Dock Savings, in that "the two actions involve different questions of law and fact" ( id. at 710). Under CPLR §§ 5303 and 3213, the statutes relied upon by plaintiff, this action is founded upon a judgment, not a mortgage debt.
An alternative reason that RPAPL § 1301 is no bar to this action is suggested by the Court of Appeals decision in CIBC Mellon Trust Company v. Mora Hotel Corporation N.V. ( 100 NY2d 215, 222), when it is stated that:
Moreover, '[i]n proceeding under article 53, the judgment creditor does not seek any new relief against the judgment debtor, but instead merely asks the court to perform its ministerial function of recognizing the foreign country judgment and converting it into a New York judgment'.
Thus, as in Central Trust Company v. Dann ( 85 NY2d 767), where the Court of Appeals held that a junior mortgagee's application for surplus moneys did not constitute an independent foreclosure "action" within the meaning and operation of RPAPL 1301(3), EALC's argument for dismissal "cannot prevail against the plain language of [RPAPL § 1301 (3)], its underlying purpose and valid precedents." The legislative purpose of RPAPL § 1301 is "to avoid inappropriate duplicative and vexatious litigation by the same party," ( Id. at 772). Since plaintiff's cause, a proceeding under Article 53, is not an action for new relief but a mere application for the court to perform a ministerial act, it does not duplicate but in fact continues the action that resulted in the French judgment. Therefore RPAPL § 1301(3) has no application to the action at bar.
Moreover, the foregoing interpretation of RPAPL § 1301 is consistent and allows for the implementation of CPLR § 5303, which expressly provides that a foreign judgment is enforceable by a motion for summary judgment in lieu of complaint.
A fundamental "aim of New York's adoption of [Article 53 also known as the Uniform Foreign Country Money-Judgments Recognition Act (CPLR § 5309)] is . . . to enhance the prospect of recognition of a New York judgment by foreign courts." Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5301:1, at 540. As stated by the Court of Appeals in CIBC Mellon,
Article 53 was designed to codify and clarify existing law on the subject and, more importantly, to promote the efficient enforcement of New York judgments abroad by assuring by assuring foreign jurisdictions that their judgments would receive streamlined enforcement here.
CIBC Mellon 100 NY2d at 221 (citation omitted). Consistent with Article 53 and general principles of international comity, New York courts have been extremely liberal and have uniformly recognized foreign country judgments.
Article 53 "applies to any foreign country judgment which is final, conclusive and enforceable where rendered even though an appeal therefrom is pending or it is subject to appeal" (CPLR § 5302).
New York courts view a foreign judgment as final if it disposes of all issues in the lawsuit (11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5302.01). CPLR § 5303 defines a foreign country judgment as "conclusive between the parties to the extent that it grants or denies recovery of a sum of money," and the court's inquiry has been whether the judgment has res judicata effect ( Id.)
This court finds that plaintiff has met its burden and proved prima facie that the French judgment meets the three criteria set forth in Article 53. Defendant fails to raise any triable issues of fact with respect to any of the criterion. Therefore, under CPLR Article 53, plaintiff is entitled to recognition of the judgment of February 12, 2003 issued by the French court. CIBC Mellon, supra; see also, Seetransport Wiking Trader Schiffahrtsgesellschaft MBH Co. V Navimpex Centrala Navala, 29 F3d 79 (2d Cir 1994.)
Defendant does not oppose recognition on any CPLR § 5304 grounds, since it does not challenge the French court's in personam jurisdiction, impartiality or adherence to due process of law [CPLR § 5304(a) requirements for conclusiveness of a foreign judgment] or lack of subject matter jurisdiction, inter alia, [CPLR § 5304(b) discretionary grounds for non-recognition].
Defendant argues alternatively that pursuant to CPLR § 5306, the court should stay this action pending any further appeal of the French judgment. CPLR § 5306 provides:
If the defendant satisfies the court either that an appeal is pending or that he is entitled and intends to appeal from the foreign county judgment, the court may stay the proceedings until the appeal has been determined or until the expiration of a period of time sufficient to enable the defendant to prosecute the appeal.
Defendant has not convinced the court that it should exercise its discretion to stay this proceeding. Both CPLR § 5302 with its "even though an appeal" language and CPLR § 5306 make clear that a foreign country judgment that is "final, conclusive and enforceable where rendered" is recognizable under New York State law even though appeals in the foreign forum have not been exhausted. In any event, defendant already unsuccessfully sought relief from the French Court of Appeal, which reviewed and overturned that part of the Paris Commercial Court decision that rejected plaintiff's debt acceleration counterclaim.
Nor is this court persuaded by defendant's argument with respect to the European Court of Human Rights. Defendant's current assertion that the law conditioning access to the French Supreme Court on satisfaction of the judgment violates its human rights is ironic. Defendant most assuredly would have availed itself of that condition with respect to any judgment on its primary claim, which initiated the litigation in France. Moreover, notwithstanding a decade of French litigation, defendant has to date made no claim in the European Court of Human Rights. Nor does its expert put forth any details as to the manner of such an appeal. Therefore the rationale underlying CPLR § 5306, i.e. "to avoid the possible inconsistency of a judgment being invalidated in the rendering state and recognized here in New York" (11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5306.01) does not apply here as the possibility that the French Supreme Court or the European Human Rights Court will reverse the judgment of the Court of Appeal is extremely remote. Nor were the objections of non-party Mascon Express any more meritorious in France than in New York State. As, plaintiff points out and this court judicially notices, non-party Mascon Express in 1995 abandoned a lawsuit that it commenced against plaintiff in New York State court.
Finally, plaintiff is entitled to an attachment. CPLR 6201(5) provides for such a remedy where a foreign judgment qualifies for recognition under Article 53. Except for the posting of an appropriate undertaking, the terms of which will be determined at a hearing, plaintiff has made the requisite showing for an attachment under CPLR 6212.
Accordingly, it is
ORDERED that defendants' cross-motion to dismiss the complaint is DENIED; and it is further
ORDERED and ADJUDGED that plaintiff's motion for summary judgment in lieu of complaint pursuant to CPLR 3213 is GRANTED; and it is further;
ORDERED and ADJUDGED that plaintiff's motion for an order of attachment is GRANTED; and it is further
ORDERED that plaintiff shall serve a proposed order and judgment on ten days notice; and it is further
ORDERED that the parties shall appear on April 6, 2005 at 2:30 pm in IAS Part 59, 111 Centre Street, Room 1254, for a hearing on total amount of the undertaking to be fixed by the court.
This is the decision and order of the court.