Opinion
Index #: E2020003156
02-16-2021
POSADAS DE PUERTO RICO ASSOCIATES, LLC, Plaintiff, v. CONDADO PLAZA ACQUISITION, LLC, CONDADO PLAZA ACQUISITION LAGOON, LLC, and CONDADO PLAZA ACQUISITION OCEAN, LLC, Defendants.
APPEARANCES Aaron Marks, Esq. KIRKLAND & ELLIS LLP Attorneys for Plaintiff Anthony D. Dougherty, Esq. TARTER KRINSKY & DROGIN, LLP Attorneys for Defendants and Roys Poyiadjis
NYSCEF DOC. NO. 309 APPEARANCES Aaron Marks, Esq.
KIRKLAND & ELLIS LLP
Attorneys for Plaintiff Anthony D. Dougherty, Esq.
TARTER KRINSKY & DROGIN, LLP
Attorneys for Defendants and
Roys Poyiadjis DECISION Odorisi, J.
This action arises out of the alleged breach of an agreement to sell the Condado Plaza Hilton in San Juan, Puerto Rico.
Pending before this Court are two Orders to Show Cause brought by Plaintiff, Posadas de Puerto Rico Associates, LLC ("Posadas" or "Plaintiff"). In the first application, Plaintiff seeks pursuant to Judiciary Law §753: (1) to hold Defendants in contempt of the July 16, 2020 Order which provides that "Defendants shall not initiate or continue to prosecute any action, suit, or proceeding arising out of the Agreement, or any amendment thereto, or any of the transactions contemplated thereby, in any court outside the State of New York, including the Puerto Rico Action", alleging that Defendants continued prosecuting the Puerto Rico Action by filing a Notice of Appeal in the Puerto Rico Action; (2) to hold Defendant in contempt of the order of this Court, dated July 16, 2020 that "Defendants shall obtain dismissal of the Puerto Rico Action," alleging that Defendants failed to obtain dismissal and take steps to prevent dismissal of the Puerto Rico Action; and (3) to hold Roys Poyiadjis, a person acting in concert with Defendant, in contempt of the July 16, 2020 Order by engaging in the same actions alleged as to Defendants in this application (the "First Contempt Application"). Plaintiff also seeks the imposition of a fine against Defendants, jointly and severally. A TRO requested by Plaintiff was not granted.
In the second Order to Show Cause, Plaintiff seeks to hold Defendants in contempt of the July 16, 2020 Order for initiating against Plaintiff an action in the Court of First Instance in Puerto Rico on November 17, 2020, namely Condado Plaza Acquisition LLC v Posadas de Puerto Rico Associates LLC, SJ-2020-cv-06202 (P.R. T.F.I. 2020), and seeks to hold Roys Poyiadjis in contempt for the same. Plaintiff also seeks the imposition of a fine against Defendants and Roys Poyiadjis, jointly and severally, for civil contempt (the "Second Contempt Application").
Based upon a review of: Plaintiff's Order to Show Cause for Contempt dated August 28, 2020 (Doc. #152), Affirmation of Aaron Marks, Esq. dated August 27, 2020, with exhibits (Doc. #141)- submitted in support of the First Contempt Application; the Affirmation of Anthony D. Dougherty, Esq. dated September 4, 2020, with exhibits (Doc. #160), the Affidavit of Leslie Y. Flores-Rodriguez, Esq. dated September 2, 2020, with exhibits (Doc. #163), the Affidavit of Roys Poyiadjis dated January 5, 2021, with exhibits (Doc. #298), - submitted in opposition to the First Contempt Application; the Order to Show Cause for Contempt dated November 23, 2020 (Doc. #237), the Affirmation of Aaron Marks, Esq. dated November 20, 2020, with exhibits (Doc. #239), the Affirmation of Erik Quarfordt, Esq. dated November 19, 2020, with exhibit (Doc. #245), the Affirmation of Giselle Sedano, Esq. dated November 20, 2020, with exhibits (Doc. #247)- submitted in support of the Second Contempt Application; the Affirmation of Leslie Y. Flores-Rodriguez, Esq. dated November 25, 2020, with exhibits (Doc. #253), the Affidavit of Roys Poyiadjis dated January 5, 2021, with exhibits- submitted in opposition to the Second Contempt Application; and upon hearing and considering the parties' argument remotely, the Court hereby GRANTS both applications for contempt.
Facts
On November 20, 2019, after negotiations in New York through New York-based real estate lawyers, Posadas and CP Acquisition entered into a Purchase and Sale Agreement ("the Agreement"), whereby Posadas agreed to sell and CP Acquisition agreed to purchase the Condado Plaza Hilton in San Juan, Puerto Rico. CP Acquisition then assigned its rights and obligations under the Agreement to its affiliates, CP Lagoon and CP Ocean through Notices of Assignment. CP Acquisition, CP Lagoon and CP Ocean are each limited liability companies affiliated with Capital Partners, Inc., the New York-based family office of Roys Poyiadjis.
After execution of the Agreement, over the next few months, Buyer sought to extend the closing date, stating that it was seeking debt financing or equity co-investors on acceptable terms and also that it was facing delays in obtaining tax concessions from the Puerto Rican treasury. Pursuant to the Agreement, Buyer could extend the closing date until no later than February 28, 2020 upon payment of $1 million in additional earnest money, bringing the total to $4.1 million. On December 18, 2019, CP Acquisition exercised that option to adjourn the closing date to February 28, 2020. On February 28, 2020, Buyer sought a further extension until March 6, 2020, again for the purpose of finding debt financing or equity co-investors. The parties entered into the First Amendment to the Agreement.
As the March 6, 2020 closing date approached, Buyer again asked to delay the closing, stating that it was not prepared to close. Posadas agreed to another extension to March 17, 2020, and also insisted on several additional terms set forth in the Second Amendment to the Agreement, including depositing an additional $1 million of earnest money and Buyer's agreement to waive all conditions precedent to closing and also an agreement that if the deal fails to close, Posadas could immediately release the earnest money as liquidated damages and Buyer would not have a right to object to such release.
Due to the covid-19 pandemic, on March 15, 2020 Governor Wanda Vazquez Garced of Puerto Rico ordered the closure of non-essential governmental operations, businesses, and public accommodations and ordered an island-wide curfew. Notaries and law offices were consequently closed, and the March 17, 2020 closing could not proceed. Posadas and the Buyer entered into the Third Amendment to the Agreement, rescheduling the closing for the later of April 17, 2020 or five days after real estate closings were again possible in Puerto Rico, as long as that was before July 31, 2020.
Though not required by any agreements between the parties, on May 4, 2020, Posadas notified Buyer that the closing was now scheduled for May 11, 2020. Buyer objected to the closing date by letter dated May 6, 2020 and did not appear.
On May 8, 2020, Buyerfiled suit in the Tribunal of First Instance in San Juan, Puerto Rico and sought and received an order allowing it to record a lis pendens ex parte before Posadas was aware of the Puerto Rico lawsuit. On March 12, 2020, the Governor of Puerto Rico declared a state of emergency there to combat the effects of COVID-19.
Posadas sent Defendants a letter on May 13, 2020, demanding withdrawal of the lis pendens and noting that the Agreement contains an exclusive jurisdiction provision designating New York. Defendants rejected the request to dismiss the Puerto Rico action.
Procedural History
Defendants herein commenced an action on May 8, 2020 in the Tribunal of First Instance in San Juan, Puerto Rico and sought and received an order allowing it to record a lis pendens ex parte before Posadas was aware of the Puerto Rico lawsuit. The lis pendens enjoined Posadas from remarketing the hotel to any other potential buyers. In the Puerto Rico Action, Buyer demanded that Posadas transfer the hotel to them at a much lower price, claiming that the doctrine of rebus sic stantibus enabled the court to rewrite the fundamental price and other terms of the partes' Agreement, among other arguments.
This action was commenced on May 18, 2020, when Posadas submitted an ex parte order to show cause containing the following TRO provision which was granted by this Court:
[P]ending hearing and determination of this application and the entry of an Order thereon, or until further Order of this Court, Defendants are temporarily enjoined and restrained from taking any action in the Puerto Rico Action, or in any court other than this Court, to prevent Posadas from prosecuting its claims in this Court. . . .
Posadas at the same time also moved for summary judgment in the Puerto Rico action.
By Decision dated July 16, 2020, this Court granted Plaintiff's application and denied a cross motion by Defendants. Shortly thereafter, the Puerto Rico Court dismissed the Puerto Rico Action on Posadas' motion. Defendants then sought a stay or modification of the July 16 Injunction Order from the Fourth Department, and Justice Smith of the Fourth Department declined to sign the proposed Order to Show Cause.
Defendants then moved in this Court to restrain Posadas from selling the hotel and related assets and also requested a modification to the anti-suit injunction to permit Defendants to appeal the Puerto Rico decision. This Court granted a TRO as to the sale of the hotel but no interim relief was sought or granted with respect to the anti-suit injunction.
On August 18, 2020, Defendants filed a notice of appeal with the Court of Appeals in Puerto Rico seeking to revive the Puerto Rico Action. The first contempt application to be considered herein followed.
Thereafter, this Court issued an Amended Order to Show Cause on August 28, 2020, directing Defendants to post an undertaking in the sum of $9,200,690 to protect Plaintiff against potential economic harms created by the previously granted TRO. On September 2, 2020, Plaintiff informed the Court that the undertaking still had not been posted, and the Court on September 8, 2020 stated that a second amended Order to Show Cause would be signed on September 10, 2020 if the undertaking was not yet been posted. Just before that deadline, Condado filed a voluntary bankruptcy petition, admittedly to obtain an extension of the TRO without posting the undertaking. This action was then removed by Condado to Bankruptcy Court.
Posadas intervened in the Bankruptcy action and moved for dismissal. On October 5, 2020, the Bankruptcy Court issued a decision in Posadas' favor, including a finding that the PSA terminated as of May 11, 2020. The Bankruptcy Court vacated the TRO preventing a sale of the Hotel in light of its decision.
Plaintiff then entered into negotiations with several potential buyers to sell the Hotel. Roys Poyiadjis was a silent partner to one of the prospective bidders, but on November 9, 2020, Plaintiff ultimately entered into a new PSA with a consortium not including Mr. Poyiadjis. The PSA was scheduled to close, and did close, on December 10, 2020.
On November 17, 2020, Condado commenced the Second Puerto Rico Action asserting that Condado continued to have right to purchase the Hotel under the PSA and alleged that Posadas entered into a new contract to sell the Hotel and related assets, breached the PSA, and that the new buyer had tortiously interfered with Condado's contractual rights.
On November 30, 2020, after the Court signed the Second Contempt Application by Posadas alleging contempt for defiance of the anti-suit injunction. Defendants moved to dismiss the appeal in the First Puerto Rico Action. That appeal was dismissed on December 3, 2020 after Posadas had already filed its opposition to the appeal.
Legal Analysis
Posadas brings two contempt applications, both aimed at alleged violations of this Court's July 16, 2020 Decision and Order.
Judiciary Law §753 (A)(3) sets forth a civil contempt provision for "disobedience to a lawful mandate of the court." As the Court of Appeals has explained:
Civil contempt has as its aim the vindication of a private right of a party to litigation and any penalty imposed upon the contemnor is designed to compensate the injured private party for the loss of or interference with that right . . .McCormick v Axelrod, 59 NY2d 574, 582-583 (1983) (internal citations omitted), amended, 60 NY2d 652. See also, Matter of Forsyth v City of Rochester, 185 AD3d 1499, 1501 (4th Dept 2020).
In order to find that contempt has occurred in a given case, it must be determined that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect. It must appear, with reasonable certainty, that the order has been disobeyed . . . Moreover, the party to be held in contempt must have had knowledge of the court's order, although it is not necessary that the order actually have been served upon the party. . . Finally, prejudice to the right of a party to the litigation must be demonstrated . . .
The party asking for a civil contempt adjudication bears the burden of proof on the above elements by clear and convincing proof. See El-Dehdan v El-Dehdan, 26 NY3d 19, 29 (2015). See also, Matter of Mundell v New York State Dept. of Transp., 185 AD3d 1470, 1471 (4th Dept 2020). The punishment for civil contempt is a fine and/or imprisonment. See Judiciary Law §§ 753 & 754.
Here, Posadas seeks only monetary relief on these contempt applications. In regard to a fine, the Judiciary Law provides in relevant part that:
. . . Where it is not shown that such an actual loss or injury has been caused, a fine may be imposed, not exceeding the amount of the complainant's costs and expenses, and two hundred and fifty dollars in addition thereto . . .N.Y. Judiciary Law §773 (emphasis added). See also, State v Unique Ideas, Inc., 44 NY2d 345, 349 (1978) (civil contempt fines must be remedial in nature and effect . . . [and] [t]he award should be formulated not to punish an offender, but solely to compensate or indemnify private complainants); Rechberger v Rechberger, 139 AD2d 906, 907 (4th Dept 1988).
If a fine is imposed to punish an offense committed with respect to an enforcement procedure under the civil practice law and rules or pursuant to section two hundred forty-five of the domestic relations law, and it has not been shown that such an actual loss or injury has been caused and the defendant has not appeared upon the return of the application, the order imposing fine, if any, shall include a provision granting the offender leave to purge himself of the contempt within ten days after personal service of the order by appearing and satisfying the court that he is unable to pay the fine or, in the discretion of the court, by giving an undertaking in a sum to be fixed by the court conditioned upon payment of the fine plus costs and expenses and his appearance and performance of the act or duty, the omission of which constitutes the misconduct for which he is to be punished. . . .
Attorneys' fees are a viable part of a moving party's costs and expenses. See Gonnard v. Guido, 141 AD3d 649, 650 (2d Dept 2016).
The penalty imposed for civil contempt is "designed not to punish but, rather, to compensate the injured private party or to coerce compliance with the court's mandate or both." In re Peer, 50 AD3d 1511, 1512 (4th Dept 2008). The court has discretion in determining what contempt sanction to issue. See Dickson v. Ferullo, 96 AD2d 745 (4th Dept 1983). "'A motion to punish a party for civil contempt is addressed to the sound discretion of the [hearing] court. . . .'" Rech v Rech, 162 AD3d 1731, 1732 (4th Dept 2018) (citation omitted).
Defendants
It is uncontroverted that the July 16 Order was a lawful, unequivocal mandate, that Defendants were aware of it, and that the Order was disobeyed in both instances as alleged by each application for contempt: the filing of an appeal and the filing of the Second Puerto Rico Action. Defendants' proffered excuses for the violation of the July 16, 2020 Order do not excuse the clear, unquestionable and blatant violations. As Posadas aptly notes in its moving papers, asking for forgiveness rather than permission when it comes to an injunction is contempt. Defendants were not exempt from the July 16 Order to the extent they felt they had to protect their economic or litigation interests.
While Defendants had moved to modify or vacate the preliminary injunction in this Court prior to the first violation (filing the appeal in Puerto Rico), Defendants did not seek any temporary relief which would have allowed an exception to the July 16 Order pending the return date on the application. Likewise, though Defendants sought relief from the Fourth Department, they did not ask the Fourth Department to modify the injunction solely to allow an appeal in Puerto Rico. Similarly, though it could have, Defendants did not seek leave from this Court for modification of the anti-suit injunction prior to commencing the Second Puerto Rico Action.
Also, contrary to Defendants' arguments, the violations of the July 16 Order have prejudiced Posadas' rights insofar as Posadas was forced to expend additional money it would not have had to spend otherwise. Defendants arguments that Posadas' prejudice would have, in effect, been significantly lessened by the proposed stipulation to extend the time to oppose the appeal and Defendants' eventual withdrawal of the Second Puerto Rico Action, are unpersuasive. Attorneys fees were expended in both instances, and that is sufficient to show prejudice. See Gottlieb v Gottlieb, 137 AD3d 614, 618 (1st Dept 2016) ("Legal fees that constitute actual loss or injury as a result of a contempt are routinely awarded as part of the fine"); Matter of Fishel v New York State Div. of Hous. & Community Renewal , 172 AD2d 835, 838 (2nd Dept 1991) (noting that a party therein "ignored a valid judicial mandate of which it was undeniably aware, and in so doing, caused the petitioner to incur additional expenses to her detriment. Such prejudicial disobedience fully justified the court's finding of contempt").
Here, Posadas has incurred direct costs associated with Defendants' violations of the July 16 Order, including review and translation of filings, expenses incurred prior to the offer of a stipulation extending the due date to oppose the appeal, costs incurred in researching and drafting the brief opposing the appeal, motion to dismiss the Second Puerto Rico Action, and opposition to the emergency relief sought in the Second Puerto Rico Action.
Plaintiff's applications to hold Defendants in contempt are GRANTED. The matter will be referred to a referee to take proof of the damage, costs and expenses incurred. See, e.g., 1319 Third Ave. Realty Corp. v Chateaubriant Dev. Co., LLC, 57 AD3d 340 (1st Dept 2008).
Roys Poyiadjis
Posadas also seeks to hold Roys Poyiadjis in contempt. Poyiadjis is not a party to this action.
Judiciary Law §761 provides: "An application to punish for contempt in a civil proceeding shall be served upon the accused, unless service upon the attorney for the accused be ordered by the court or judge." Here, the issue of service arises because Poyiadjis was not a party to the action. "Where the contemnor was not a party to the underlying action, the contempt proceeding was viewed as a separate proceeding independent of the underlying action." Long Island Trust Co. v Rosenberg, 82 AD2d 591, 596 (2nd Dept 1981). As such, "[b]ecause jurisdiction over the person of the contemnor was required to entertain the proceeding, the order to show cause generally was required to be served personally on the contemnor as the process commencing the proceeding." Id. "Section 761 is a process service provision for civil contempt proceedings which local rules cannot alter. . ." Id. at 598. Service is necessary to obtain jurisdiction over the non-party.
Section 761, as set forth supra, allows for an exception in the event service upon the accused's attorney is ordered instead by the court. Here, it is uncontroverted that both Orders to Show Cause pending before the Court order service upon counsel for Defendants and Poyiadjis. The question then turns to whether in the circumstances presented, such service is sufficient to give the court jurisdiction over the accused.
Defense counsel contends that they had not been engaged by Poyiadjis at the time of the contempt applications and thus were not his attorneys, rendering service improper. In People ex rel. Golden v Golden, 57 AD2d 807 (1st Dept 1977), cited favorably by Plaintiff, the First Department found that service upon counsel met "jurisdictional prerequisites" where the attorneys had previously represented the accused, a New Jersey resident, in a related habeas corpus proceeding. The court further notes that there was "no doubt she was aware of these orders." Id. at 807. In Golden, the attorney served was involved in the accused's representation in directly related matters.
Here, that is not the case. There is no indication made to the Court that defense counsel herein had previously represented Poyiadjis within the context of this action. While defense counsel herein has filed complaints and affidavits in this litigation signed by Poyiadjis, the representation was always of the Defendant entities, not of Poyiadjis personally. Plaintiff notes that defense counsel herein was counsel of record to Poyiadjis in a separate, unrelated litigation in 2018. Some lower courts and treatises have questioned whether service upon counsel is sufficient if the counsel had not been retained or filed a notice of appearance in the relevant matter. See, e.g., Patillo v Patillo, 12 Misc2d 645, 650 (Sup Ct Bronx Co 1958) (". . . I hold that there must be proof of the actual relationship of attorney and client as of the time of the issuance of the order to show cause and of its service"). See also, NY Jur. Contempt §78 ("The 'attorney' to be served must be the attorney of record for the party accused of contempt, and not his or her counsel or any other attorney who has not formally appeared for him or her in the action. Under some circumstances, service on an attorney who states that he or she no longer represents the accused has been considered sufficient").
However, at least one other court has noted that a court has discretion as to the nature of the notice required for a jurisdictionally appropriate application. Addressing an order to show cause for contempt in a matrimonial action that did not require personal service, the First Department stated: "Being an order in the action, the nature of the notice to be given of an application to enforce the judgment by punishment for contempt is, therefor, within the discretion of the court, which may require only such notice as it may deem appropriate to advise the defendant of the relief sought against him and to give him an opportunity to be heard." Karpf v Karpf, 260 AD 701, 704 (1st Dept 1940). In Karpf, the court grappled with post-judgment jurisdiction in an action where the court already had complete jurisdiction over defendant and had authority to enforce its judgment. As such, Karpf differs significantly from the case at bar. See also, Richards v Richards, 88 Misc2d 984 (Sup Ct Rensselaer Co 1976); Burstein v Burstein, 12 Misc 521 (Sup Ct Bronx Co 1956). "[A]ny presumption that might arise concerning the agency of an attorney would not extend beyond the final judgment or apply to proceedings subsequent thereto." Karpf, 260 AD at 704.
Plaintiff correctly notes that the notice provided to Poyiadjis worked just as it was intended: defense counsel promptly notified Poyiadjis about the applications, the engagement was expanded to cover the contempt applications, and defense counsel zealously represented Poyiadjis in that regard. "An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v Central Hanover Bank & Trust Co., 339 US 306, 314 (1950). "The notice must be of such nature as reasonably to convey the required information. . . and it must afford a reasonable time for those interests to make their appearance." Id. "The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected. . . ." Id. at 315. See also, Oneida Indian Nation of New York v Madison County, 665 F3d 408, 428-29 (2nd Cir 2011) ("in assessing the adequacy of a particular form of notice, we must 'balanc[e] the interest of the State against the individual interest sought to be protected by the Fourteenth Amendment'") (citation omitted). "Nonetheless, where loss of liberty is involved constitutional rights must be carefully protected and the law literally complied with." Stagnar v Stagnar, 98 AD2d 983, 984 (4th Dept 1983). "It is well settled that proceedings in contempt are to be construed strict juris. . . No principle is more vital to the administration of justice than that no man should be condemned in his person or property without notice and an opportunity to make his defense." Goldie v Goldie, 77 AD 12, 14 (4th Dept 1902).
Poyiadjis undeniably had notice of the contempt applications and was able to secure counsel to represent his interests well in advance of the return date. Moreover, it is a matter of public record that Condado's attorneys in this matter were Poyiadjis' counsel long before the contempt application was filed. Not only has defense counsel produced affidavits signed by Poyiadjis in connection with this pending litigation, but they were also counsel to Poyiadjis in a separate litigation in New York County previously. See Slabakis v Poyiadjis, Index No. 655855-2018 (SupCt NY Co). Nevertheless, despite Poyiadjis' undeniable notice of the contempt applications, opportunity to respond and capable counsel, under New York law this alone is simply not enough to side step the service requirement and allow for service on former counsel in an unrelated action.
However, Plaintiff also notes that Poyiadjis was served with the contempt applications and all related papers by CPLR 308(2) by serving copies to Poyiadjis' actual place of business (Platinum Capital Partners, Inc.) and leaving them with a person of suitable age and discretion, followed by mailing the papers to the place of business after service was attempted. Plaintiff presents to the Court the Affidavit of Service dated December 21, 2020, averring that service was made upon "'John Doe', lobby security (refused to give his first and last name, and refused server access to go upstairs), a person of suitable age and discretion." See Affidavit of Service (Doc. #292). Defendants and Poyiadjis do not contest that service was attempted at Poyiadjis' actual place of business.
CPLR §308(2) allows for service on "a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be serviced and by either mailing the summons to the person to be served at his or her last known address or by mailing the summons by first class mail to the person to be served at his or her actual place of business. . . ." "'The person to whom delivery is made must objectively be of sufficient maturity, understanding and responsibility under the circumstances so as to be reasonably likely to convey the summons to the Defendant. Thus, delivery to adult relatives, employees, co-workers and apartment-house doormen as persons of suitable age and discretion, has been sustained.'" Roldan v Thorpe, 117 AD2d 790, 791 (2nd Dept 1986) (citations omitted). "[I]f a process server is not permitted to proceed to the actual apartment by the doorman or some other employee, the outer bounds of the actual dwelling place must be deemed to extend to the location at which the process server's progress is arrested." F.I. duPont, 41 NY2d at 797-98. See also, Bank of America, N.A. v Grufferman, 117 AD3d 508 (1st Dept 2014). If there is a question because a defendant rebuts the process server's affidavit, a hearing should be conducted to determine whether a building security guard or doorman was a person of suitable age and discretion within the meaning of CPLR 308(2). See Edwards-Blackburn v City of New York, 181 AD3d 791, 793 (2nd Dept 2020); Citibank, N.A. v Balsamo, 144 AD3d 964, 965 (2nd Dept 2016). A doorman is not precluded from being "a person of suitable age and discretion" as a matter of law where he refused the process server access to defendant's apartment, apparently on the defendant's instructions.. F.I. duPont, 41 NY2d at 797.
Here, the process server made repeated attempts to serve Poyiadjis at his place of business and was denied access by the lobby security guard. See Affidavit of Service (Doc. #292). The affidavit of service "constituted prima facie proof of proper service upon" Poyiadjis. See Citibank, N.A. v Balsamo, 144 AD3d at 965. In opposition, Poyiadjis does not rebut the affidavit of service through, for example, "specific and detailed averments that [he] never received" the applications, that he did not "den[y] access to a delivery person or received a call to authorize a delivery on the date in question or on any other day, and that the security guards are not authorized to receive packages or deliveries." Id. As Poyiadjis has not rebutted the presumption created by the Affidavit of Service, a hearing is not warranted on the facts before the Court.
Poyiadjis was properly served with the contempt applications pursuant to CPLR 308(2) and jurisdiction over him has been properly obtained.
While Poyiadjis is not a party to this action, there is authority in New York for holding a non-party in contempt. "[A]n injunction order is binding even upon persons who are not parties to the action if they have knowledge of the order and are either employees or agents of the Defendant, or act in collusion or combination with him." People v Poray, 67 Misc2d 591, 592 (SupCt Monroe Co 1971). See also, Rainbow Ranch Corp. v Rainbow Shops, Inc., 89 Misc2d 808 (SupCt Suffolk Co, Special Term Pt 1 1977).
Likewise, contempt findings have been upheld against principals who participated in a corporate entity's contemptuous acts. See, e.g., Tishman Constr. Corp. v United Hispanic Constr. Workers, Inc., 158 AD3d 436 (1st Dept 2018) (in holding the president of Defendant liable for civil contempt, the court stated: "Although Rodriguez was not personally served in this action, it is undisputed that he was involved in the negotiation of the stipulation, and was knowledgeable of the conditions set forth therein. . . Rodriguez himself violated the court's mandates. Under these circumstances, Rodriguez, even as a nonparty, can be punished for UHCW's violations of the stipulation and order"); Lipstick, Ltd. v Grupo Tribasa, S.A. de C.V., 304 AD2d 482 (1st Dept 2003) ("Sandoval can be punished for Defendants' contempt, even though not a party to the underlying action, upon such notice as the court deems appropriate and accords with due process"); Citibank v Anthony Lincoln-Mercury, 86 AD2d 828, 829 (1st Dept 1982) (finding that "Special Term should have included Assalone in the contempt order as he had been personally served and participated in the willful disobedience of the order. Assalone may not use his position as a sole stockholder and president of the Defendant corporations to shield himself from contempt proceedings when disobeying court orders").
Here, Poyiadjis is the principal of the Condado closely-held entities, the individual who verified pleadings for Defendants herein and in the Puerto Rico Actions, and was in communication with Posadas with respect to the hotel transaction. Poyiadjis unquestionably had notice of the July 16 Order. See El-Dehdan v El-Dehdan, 26 NY3d 19, 29 (2015) ("the party to be held in contempt must have knowledge of the court's order, although it is not necessary that the order actually have been served upon the party"). In the Second Puerto Rico Action, Poyiadjis states under penalty of perjury that he is the principal of Condado Plaza Acquisition LLC, Condado Plaza Acquisition Lagoon LLC, and Condado Plaza Acquisition Ocean LLC, and thus at the very least in that capacity had knowledge of the July 16 Order, though the record before the Court betrays that Poyiadjis' knowledge of the July 16 Order was not so limited.
Contrary to Defendants' contention, Posadas need not demonstrate facts sufficient for veil piercing, as that is not the avenue Posadas has chosen to hold Poyiadjis liable individually. Posadas seeks to hold Poyiadjis individually liable for his own acts and for aiding and abetting Condado in its contempt of the July 16 Order.
The applications for contempt are GRANTED as to Roys Poyiadjis. The matter will be referred to a referee to take proof of the damage, costs and expenses incurred. See, e.g., 1319 Third Ave. Realty Corp. v Chateaubriant Dev. Co., LLC, 57 AD3d 340 (1st Dept 2008).
Signed at Rochester, New York on February 16, 2021.
/s/ _________
HONORABLE J. SCOTT ODORISI
Supreme Court Justice