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Brastex Corp. v. Allen International Inc.

March 2, 1983

BRASTEX CORPORATION, PLAINTIFF-APPELLANT,
v.
ALLEN INTERNATIONAL, INC., DEFENDANT-APPELLEE.



Appeal from an order of the United States District Court for the Southern District of New York, John E. Sprizzo, Judge, denying plaintiff's motion to confirm an order ot attachment previously issued by that court and to continue levies pursuant thereto. Affirmed.

Author: Pierce

Before: TIMBERS, KEARSE and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

This is an appeal from an order of the United States District Court for the Southern District of New York, John E. Sprizzo, Judge, entered on September 20, 1982, denying appellant's motion to confirm an ex parte order of attachment issued by that court on April 2, 1982, and to extend the validity of the levies made pursuant thereto.*fn1

The plaintiff-appellant, Brastex Corporation (Brastex), a Delaware corporation with its principal place of business in New York, is engaged in the wholesale towel business. The defendant-appellee, Allen International, Inc. (Allen), an Arizona corporation currently licensed to do business in New York,*fn2 is a customer of Brastex. The present litigation began when Brastex filed a complaint on March 26, 1982, against Allen, for, inter alia, damages incurred by Allen's failure to render payment for towels sold and delivered to Allen by Brastex.*fn3 To secure payment of an anticipated judgment, Brastex applied for an ex parte pre-judgment order of attachment in the amount of $86,093.07. The order was issued by Judge John E. Sprizzo of the United States District Court for the Southern District of New York on April 2, pursuant to Rule 64 of the Federal Rules of Civil Procedure*fn4 and section 6201 of the Civil Practice Law and Rules of the State of New York (CPLR), which reads, in pertinent part:

§ 6201. Grounds for attachment.

An order of attachment may be granted in any action, except a matrimonial action, where the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants, when:

1. the defendant is a nondomiciliary residing without the state, or is a foreign corporation not qualified to do business in the state; or

3. the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts. . . .

N.Y. CPLR § 6201(1), (3) (McKinney 1980) (emphasis added). The district court found the plaintiff entitled to the order of attachment under section 6201(1) because the defendant, Allen International, Inc., was a foreign corporation not qualified to do business in the State of New York.

Pursuant to the order of attachment, Brastex filed an undertaking and, on April 20, timely moved to confirm the order filed on April 2. While the motion to confirm was pending, the United States Marshal for the Southern District of New York levied on two Allen customers -- R. H. Macy's & Co. and Bloomingdale Brothers Corp. -- on April 26 and 29, respectively. On September 15, oral argument was held in the district court on Brastex's motion to confirm. At that time, attorneys for Allen submitted confirmation from the Secretary of State of New York that Allen had qualified, on September 1, 1982, to do business in New York State under the name of Allen Textiles, Inc. In view of these changed circumstances, the court denied Brastex's motion to confirm the attachment and extend the levies, noting:

We all know the Supreme Court has indicated in recent years this is a drastic remedy and one not lightly to be given. The legislature of the State of New York has narrowed the grounds since 1977 with respect to when an attachment against a foreign corporation may be granted and has specifically by its action said you can't get it in every case against a foreign corporation. The only time you can is if they are not licensed to do business then, but now they are. In the absence of some controlling authority from the State Court I must make my own decision, and I think it would be inconsistent with the legislative intent under Subdivision 1 for this Court to continue an attachment and to extend the levies when the statutory basis of Subdivision 1 no longer exists.

Tr. 23-24.*fn5 The district judge also rejected Brastex's argument that subsection 3 was applicable, stating that section 6201(3) "requires a separate and independent finding of fraud."*fn6 Tr. 15.

On appeal, the parties assert two principal claims. First, as a threshold issue, appellee Allen contends that this Court lacks jurisdiction to review an order granting or denying a provisional remedy which is not a final order. Second, appellant Brastex asserts that section 6201(1) should not apply to dissolve the pre-judgment attachment in this case. It contends that it could not have been the intent of the New York State legislature to allow a corporation to avoid a previously valid ...


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