Opinion
99 Civ. 8934 (RWS)
January 30, 2003
Brian F. Mcdonough, Esq., Drinker Biddle Reath, New York, NY, for Interpleader-Plaintiff.
Kenneth Caruso, Esq., Jeffrey I. Wasserman, Esq., Chadbourne Parke, New York, NY, Attorney for Interpleader-Defendants J. Virgil Waggoner and J.V.W. Investment, Ltd.
James J. Mahon, Esq., Richardson Mahon Casey Rooney, New York, NY, Attorney for Interpleader-Defendant Donal Kelleher.
Andrew E. Tomback, Esq., Charles Westland, Esq., Jonathan W. Wolfe, Esq., Milbank Tweed Hadley Mccloy, New York, NY, for Cross-Claim Defendant.
OPINION
The parties to this action have demonstrated an awesome ability for complicated litigation. Presently pending before this Court are six motions, all while the principal decision of this Court of May 28, 2002 (the "Attachment Decision") is on appeal. These motions include (1) the motion of J.V.W. Investments Ltd. ("JVW") and J.V. Waggoner ("Waggoner") (collectively, the "Waggoner Parties"), pursuant to Local Rule 6.3 to reconsider the Attachment Decision, (2) the motion of the Waggoner Parties to stay the Attachment Decision pending appeal, (3) the motion by Raymond Winder, Provisional Liquidator (the "Liquidator") of Suisse Security Bank Trust, Ltd. ("SSBT") pursuant to Rule 54(b), Fed.R.Civ.P. for entry of judgment as directed by the Attachment Decision, (4) the motion of SSBT pursuant to Local Rule 54.2 for an additional undertaking, (5) the motion of SSBT for damages pursuant to CPLR 6212(e) and (6) the cross-motion of the Waggoner Parties to stay any determination of damages and attorneys' fees as directed by the Attachment Decision.
By order of August 11, the first three motions were taken off the calendar at the request of counsel, subject to later restoration. Although the Liquidator is the representative of the interests of SSBT, no formal substitution has been made and the term SSBT will be employed to include his interests.
The submission of these motions and their briefing schedule was also the subject of negotiation and controversy. By order of December 12, 2002, the submissions were deemed complete and the motions submitted.
Prior Proceedings
The course of the litigation prior to the Attachment Decision is described by that decision, familiarity with which is assumed.
The first motion for reconsideration and the motion for relief pending appeal was timely filed and briefed over the summer of 2002. The remaining motions were filed in the fall, and the parties negotiated unsuccessfully to resolve the issues raised. The principal concerns derive from the determination in the Attachment Decision granting SSBT attorneys' fees.
On November 8, 2001, the Waggoner Parties commenced an action against SSBT in the Supreme Court of the State of New York, New York County (the "State Court Action") and moved for an attachment over the same monies already attached in this action. On May 9, 2002, the Honorable Ira Gammerman granted the Waggoner Parties' motion for order of attachment and ordered that the State Court attachment constituted a "continuation" of the attachment in this action, an order currently the subject of an appeal by SSBT.
SSBT has moved before the Bankruptcy Court for a turnover order under Section 304 of the Bankruptcy Code, the resolution of 4 which is expected to turn on the determination on appeal of the Attachment Decision.
The appeal of the Attachment Decision is to be argued on February 3, 2003.
The Motion for Reconsideration Is Granted
A motion for reconsideration must be denied "unless the moving party can point to controlling decisions or data that the court overlooked — matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transportation, Inc., 70 F.3d 255, 257 (2d Cir. 1995). To ensure the finality of decisions, a motion for reconsideration is "construed narrowly and the standard is to be applied strictly." Ralph Oldsmobile Inc. v. General Motors Corp., 2001 WL 55729, at *2 (S.D.N.Y. Jan. 23, 2001); Dietrich v. Bauer, 198 F.R.D. 397, 399 (S.D.N.Y. 2001); Polar Int'l v. Reeve, 120 F. Supp.2d 267, 268 (S.D.N.Y. 2000); Golub v. Kidder, Peabody Co., 2000 WL 1346704, at *2 (S.D.N.Y. Sept. 19, 2000). Accordingly, the courts have made plain that a losing party may not use a motion for reargument as a device "to relitigate an issue already decided," Shrader, 70 F.3d at 257, or to "advance new facts, issues or arguments not previously presented to the court," New Shows, S.A. de C.V. v. Don King Prods., Inc., 2001 WL 882999, at *1 (S.D.N.Y. Aug. 3, 2001) (quoting O'Brien v. Bd. of Educ. Of Deer Park Union Free Sch. Dist., 127 F. Supp.2d 342, 345 (E.D.N.Y. 2001)).
The only fact or authority claimed by the Waggoner Parties to have been overlooked is the entry of an attachment in the State Court Action, but no citation is presented as to the manner in which this fact was brought to the court's attention. Rather than rehearse the many submissions in connection with the Attachment Decision it will be assumed that the fact of this State Court Attachment was overlooked, and on that reconsideration is granted.
The relevant statute governing the award of costs and attorneys' fees to a party whose assets have been wrongfully attached is New York's Civil Practice Law and Rules ("CPLR") 6212(e) which provides in relevant part:
The plaintiff shall be liable to the defendant for all costs and damages, including reasonable attorney's fees, which may be sustained by reason of the attachment if the defendant recovers judgment, or if it is finally decided that the plaintiff was not entitled to an attachment of the defendant's property.
In Minskoff v. Fidelity Cas. Co., 28 A.D.2d 85, 87 (1st Dep't 1967), aff'd, 23 N.Y.2d 706 (1968), it was argued that because the court had vacated an attachment in conjunction with dismissing an action on the ground of forum non conveniens, there had been no "final decision" with respect to the attachment. The Appellate Division found the argument baseless and upheld an award 6 of damages to the party whose assets had been wrongfully attached:
It has been finally determined that the plaintiff . . . had no right to bring the action in this forum. Having no such right, he had no right to obtain an attachment here and this is a final determination on the merits of the attachment. Whether or not [plaintiff] can maintain an action in some other forum has nothing to do with the question presented.
Minskoff, 28 A.D.2d at 87.
In addition, SSBT will "recover judgment" against the Waggoner Parties within the meaning of CPLR 6212(e) by reason of this Court's dismissal of the action for lack of subject matter jurisdiction. CPLR 6212(e), entitles SSBT to recover the costs and fees expended in connection with this litigation.
Waggoner has suggested that the liability for any award for costs and fees is attributable solely to JVW. Rearg. Mem. at 11-12. JVW and Waggoner were plaintiffs with respect to the claims against SSBT and both moved for the attachment of SSBT's assets as recited in the Order of Attachment dated November 17, 2000. Where two plaintiffs obtain an attachment, both are liable for the defendant's costs and attorneys' fees, see Agnew v. Alicanto, 125 F.R.D. 355, 360 (E.D.N.Y. 1989) (holding that two plaintiffs who obtained a restraining order that was subsequently vacated were jointly liable for defendants' attorneys' fees).
The Waggoner Parties argue that the test for recovery of costs and attorneys' fees under CPLR 6212(e) is not "strict liability" — that there is allegedly "more play in the joints." Rearg. Mem. at 7, citing In re Koreag, Controle et Revision S.A., 130 B.R. 705, 716 (Bankr.S.D.N.Y. 1991), rev'd on other grounds and remanded, 961 F.2d 341 (2d Cir. 1991), cert. denied, 506 U.S. 865 (1992). Moreover, in Koreag, which was never mentioned by the Waggoner Parties in prior briefing, the court there did not hold an attachment wrongful and thus had no occasion to assess attorneys' fees against the party that had procured the attachment.
The Waggoner Parties' claim that the Court "overlooked the matter of proximate cause" was not presented to the Court in prior briefing, presumably because it is irrelevant until the quantum of attorneys' fees is to be assessed by the Court, and the Waggoner Parties have requested a "hearing as to the amount of any award of attorney's fees." Rearg. Mem. at 9, 11. At such a hearing the issues cited by the Waggoner Parties with respect to the character and attorneys' fee will be thoroughly explored unless the past proclivities of counsel are altered.
The Motion To Stay the Dissolution of the Attachment is Granted
The Attachment Decision and the judgment to be entered on the decision dissolved the attachment in the absence of this Court's jurisdiction. The Waggoner Parties have appealed that decision, the appeal is scheduled for argument in early February 2003, and the Waggoner Parties seek to maintain the attachment until the determination of the Court of Appeals.
Practically, the effect of the Attachment Decision has been stayed during the development of the instant motions, and by the position taken by the Bankruptcy Court. It is appropriate to formalize the present state of the proceeding to stay the effect of the Attachment Decision and any judgment entered upon it until the argument before the Court of Appeals, at which time any further stay can be determined by the reviewing court.
Judgment Will Be Entered
Rule 54(b) of the Federal Rules of Civil Procedure authorizes the Court to enter a "partial judgment when an action involves multiple claims or multiple parties, and there is `no just reason for delay' concerning an already decided claim on which judgment is sought." Pereira v. Cogan, 2002 U.S. Dist. LEXIS 4862, at *2 (S.D.N.Y. Mar. 21, 2002). Rule 54(b) may be invoked where there are "interests of sound judicial administration and 9 efficiency to be served" or where "there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal." Wilmington Trust Co. v. Aerovias De Mexico, S.A. de C.V., 893 F. Supp. 215, 223 (S.D.N.Y. 1995) (citation and internal quotations omitted). Under Rule 54(b), the decision to certify a final judgment is committed to the discretion of the district court. See Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8 (1980) ("It is left to the sound judicial discretion of the district court to determine the appropriate time when each final decision in a multiple claims action is ready for appeal. This discretion is to be exercised in the interest of sound judicial administration.") (internal quotation and citation omitted).
In particular, the courts have held that entry of a judgment is appropriate under Rule 54(b) where a court has issued a decision with respect to the merits and retains jurisdiction only with respect to the award of attorneys' fees. As the court held in Wilmington Trust, "there is no just reason for delay in the entry of a final judgment" on liability, "given that the largely ministerial task of determining the amount and reasonableness of attorneys' fees and expenses" will not affect that judgment. 893 F. Supp. at 223; see also One Hundred Pearl Ltd. v. Vantage Securities Inc., 1997 U.S. Dist. LEXIS 10276, at *6 n. 3 (S.D.N.Y. July 16, 1997) ("outstanding claims for costs and attorney's fees do not prevent the Court from entering final judgment" under Rule 1054(b)). Indeed, Rule 58 of the Federal Rules of Civil Procedure provides that the "entry of a final judgment shall not be delayed, nor the time for appeal extended in order to tax costs or award fees." Thus, Rule 58 "provides an additional ground on which to enter a final judgment even if Wilmington's claim for attorneys' fees is pending." Wilmington Trust, 893 F. Supp. at 225.
The Attachment Decision directed the parties to "[s]ettle judgment on notice." In United States v. American Soc'y of Composers, Authors Publishers, Civ. No. 13-95 (WWC), 1991 WL 331491 (S.D.N.Y. Aug. 8, 1991), aff'd. 956 F.2d 21 (2d Cir. 1992), the Court held that it was appropriate to use Rule 54(b) to "enhance the likelihood that appellate review will be available now," despite the fact that the Court believed that it was "likely" that the order was otherwise appealable. Id. Rather than dismissing for lack of appellate jurisdiction, the Second Circuit affirmed.
SSBT has submitted a judgment in compliance with the Court's direction and a counter-judgment has been submitted by the Waggoner Parties. A final judgment was signed by the Court on July 24, 2002, but prior to the entry that judgment was vacated at the request of SSBT, the moving party, on July 31. That judgment will now be signed concurrently with this opinion.
No Additional Undertaking Will Be Ordered
Rule 54.2 of the Local Rules of the United States District Court for the Southern District of New York ("Rule 54.2"), provides in relevant part:
The court, on motion or on its own initiative, may order any party to file . . . additional security for costs in such an amount and so conditioned as it may designate.
"Security for costs may include security for attorneys' fees [as part of a damages award] when a party is potentially entitled to attorney's fees by statute." Bressler v. Liebman, No. 96 Civ. 9310, 1997 WL 466553, at *6 (S.D.N.Y. Aug. 14, 1997); Selletti v. Carey, 173 F.R.D. 96, 100 (S.D.N.Y. 1997).
The statute under which SSBT is entitled to obtain damages is a New York State statute, CPLR 6212(e). See Concord Reinsurance Co., Ltd. v. Caja Nacional De Ahorro Y Seguro, No. 93 Civ. 6606, 1994 WL 260779 (S.D.N.Y. June 7, 1994) ("[A]ll relevant federal authority supports the position that the C.P.L.R. governs the allowable costs and attorney's fees to be awarded when it is found that a plaintiff was not entitled to an attachment.").
What has happened here is that after the initial order granting the attachment conditioned upon the filing of security in the amount of $200,000, the anticipated attorneys' fees, costs and 12 damages have escalated according to SSBT.
At the same time the Waggoner Parties have sought protection in the event that the attachment is dissolved and the funds returned to the Bahamas. In addition, the Waggoner Parties have advanced their belief that ultimately their setoff arising from SSBT's improper conduct will eclipse any damages resulting from the improperly obtained attachment.
While the Court does always have the authority under Local Rule 54.2 to increase security, the initial order seemed provident at the time. The vacating of the attachment has overtaken the requirement to post security, and in the exercise of discretion, the request to increase the security upon which the attachment was conditioned is denied.
The Damages Assessment Will Be Deferred
The hearing of CPLR 6212(e) damages will be deferred until the Attachment Decision and the judgment entered on it have been ruled upon by the Court of Appeals.
It is so ordered.