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WORLD ATH. SPORTS CORP. v. MAHMOUD REZA PAHLAVI

September 26, 1966

WORLD ATHLETIC SPORTS CORP., Plaintiff,
v.
Mahmoud Reza PAHLAVI and Fatemeh Pahlavi, Defendants



The opinion of the court was delivered by: LEVET

MEMORANDUM

 LEVET, District Judge.

 The defendants have moved for an order "(1) dismissing this action unless the plaintiff shall, within 30 days, pay to the defendants a judgment for $10,000 costs, heretofore awarded to them in the New York Supreme Court, (2) staying the plaintiff from taking further proceedings until such payment be made, and (3) granting to the defendants such further relief as may be just."

 Prior actions by the same plaintiff against the same defendants were instituted in the Supreme Court of the State of New York in 1963. The complaint in one of these actions, that against (Prince) Mahmoud Reza Pahlavi, was on an alleged check of the defendants, dated March 28, 1963, in the amount of $1,250,000. The complaint in the companion action, that against (Princess) Fatemeh Pahlavi, was on another alleged check, dated March 28, 1963, in the amount of $1,250,000.

 On August 27, 1963, the plaintiff entered two purported "default " judgments against each defendant on each check for $1,250,000 plus interest and costs, in the New York County Clerk's office. This was based upon affidavits that the summonses had been personally handed to each defendant at the TWA Terminal in Idlewild Airport (now Kennedy), New York City, on August 6, 1963, and that the defendants were in default for nonappearance.

 Upon discovery of the existence of the "default" judgments, the defendants moved in the Supreme Court in 1965 to vacate them for non-service of process. Extensive hearings upon the traverse of service were held in New York City and in Iran before Irving Kirschenbaum, Referee. It was proved in substance that neither defendant had been served, nor, indeed had even been in the Western Hemisphere for several years prior to 1963, when they were supposedly served. The hearings upon the traverse were very costly to the defendants, as the proceedings required the bringing of six witnesses from Iran to New York, and the sending of two lawyers and the Referee from New York to Iran to take additional testimony there.

 Thereafter, the Referee rendered his report. Upon the basis thereof and the evidence taken, Mr. Justice Irving Levey of the State Supreme Court rendered a decision on December 7, 1965, granting the defendants' motion to vacate the judgments. The essence of the decision stated:

 
"I have reached the conclusion that the evidence submitted in this connection in behalf of the plaintiff is unworthy of belief and cannot be accorded any credence whatsoever. On the other hand, I have concluded that the testimony adduced in behalf of the defendants is both persuasive and of the highest quality; and, finally, that the defendants have established by an overwhelming preponderance of the credible and believable evidence that no service of process was ever effected on either of the defendants.
 
"Accordingly, the defendants' motions are granted, and the judgments vacated. Settle order."

 As a result, the default judgments against these defendants were vacated and the fixation of costs was reserved. The Referee's fees, fixed by the State Court and paid by the defendants, alone amounted to $28,000. The State Court fixed the total costs against plaintiff at $10,000 and judgments therefor were entered. Although plaintiff appealed from the orders vacating the default judgments and the order fixing costs at $10,000, the appeal was later dismissed.

 The present complaint in this court was instituted on February 7, 1966. There are two causes of action alleged, one against (Prince) Mahmoud Reza Pahlavi and the other against (Princess) Fatemeh Pahlavi. The same relief is sought in the present complaint as that set forth in the prior state action.

 The defendants answered the complaint on or about April 1, 1966, alleging that the checks were forgeries, and further that the court does not have jurisdiction.

 Counsel for the defendants states that upon his own knowledge the cost to defendants for legal fees and disbursements in vacating the aforesaid state judgments were upwards of $100,000.

 Counsel for the defendants states that many judgments are now open against plaintiff and that it appears that the plaintiff-corporation was ...


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