United States District Court, Southern District of New York
March 19, 2003
VISHIPCO LINE, HA NAM CONG TY, DIA NAM HANG HAI C.T., VIETNAM HANG HAI C.T., RANG DONG HANG HAI C.T., MEKONG SHIP CO. SARL, VISHIPCO SARL, THAI BINH C.T., VIET NAM TAU BIEN C.T., VAN AN HANG HAI C.T., CONG TY U TAU SAO MAI, PLAINTIFFS,
CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS. DR. MAC TRUONG, PLAINTIFF, V. CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS. HUGH MAC TRUONG, PLAINTIFF, V. CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS. THULINH MAC TRUONG, PLAINTIFF, V. CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS. MARYSE MAC TRUONG, PLAINTIFF, V. CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS. MAC TRUONG, DIP, PLAINTIFF, V. CHARLES SCHWAB & CO. AND LAYTON BROOKS & HECHT AND EAMONN F. FOLEY, ESQ., DEFENDANTS.
The opinion of the court was delivered by: Sidney H. Stein, United States District Judge.
OPINION AND ORDER
Mac Truong, Esq., who purports to represent plaintiffs Vishipco Line, Ha Nam Cong Ty, Dia Nam Hang Hai C.T., Vietnam Hang Hai C.T., Rang Dong Hang Hai C.T., Mekong Ship Co. SARL, Vishipco SARL, Thai Binh C.T., Viet Nam Tau Bien C.T., Van An Hang Hai C.T., and Cong Ty U Tau Sao Mai (collectively, "Vishipco"),*fn1 himself, his wife and children, brought these six actions against defendants Charles Schwab & Co. ("Schwab") and its attorneys, Layton Brooks & Hecht and Eamonn F. Foley, Esq. alleging that Schwab improperly handled plaintiffs' assets and Schwab and its attorneys conspired to restrict, and in fact restricted, plaintiffs' access to their property through misrepresentations or false pretenses. Defendants have now filed a motion in all six actions to (1) dismiss the actions pursuant to the doctrines of collateral estoppel and res judicata and failure to state a claim upon which relief can be granted; (2) enjoin Mac Truong from filing additional actions against Schwab or its attorneys; (3) enjoin Mac Truong and his wife, Maryse Mac Truong, from proceeding in a virtually identical action in New Jersey and directing them to withdraw that complaint; and (4) impose sanctions against Mac Truong for harassing and vexatious litigation tactics. At oral argument on December 5, 2002, this Court denied defendants' motion enjoining Mac Truong and his wife from proceeding in the New Jersey action. Now, for the reasons set forth below, defendants' motion is granted in all other respects.
The underlying facts of this Hydra-headed dispute have been repeatedly summarized in earlier decisions of this Court and New York Supreme Court in predecessor actions filed in those courts See e.g., Truong v. Charles Schwab, No. 02 Civ. 2533, 2002 WL 1159668 (S.D.N.Y. May 31, 2002) (SHS); Vitranschart, Inc. v. Levy, No. 00 Civ. 3618, 2000 WL 1239081 (S.D.N.Y. Aug. 31, 2000) (SHS); Mac Truong v. Vitranschart, Inc., No 98 Civ. 6328 (SHS), slip op. at 2-5 (S.D.N.Y. Jan. 21, 1999) (SHS); Mac Truong v. Charles Schwab, No. 604650/97, slip op. at 9-14 (N.Y. Sup.Ct. Apr. 3, 2000). This dispute has spanned two continents and more than a score of litigations. The time has drawn nigh to attempt to resolve it once and for all.
These six actions involve funds belonging to Vietnamese shipping companies that were nationalized after the fall of Saigon in 1975. In 1977, Truong Dinh Tran ("Tran"), a former manager of the companies, entered into an agreement with Mac Truong for Mac Truong to act on behalf of the companies — collectively known as Vishipco — to recover certain funds and settlement claims in return for receiving a percentage of the recovery as compensation. Mac Truong was able to recover some of the money and deposited it into certain accounts at Merrill Lynch & Co., Inc.
In 1975, the United States government blocked all assets of the Vietnamese government that were located in the U.S., see the Trading With the Enemy Act ("TWEA"), 50 U.S.C. App. §§ 1 et seq., until 1995, when the U.S. and Vietnam entered into a treaty pursuant to which the U.S. agreed to unblock these assets and release them to the Vietnamese government, except for the sum of $200 million, which it retained to compensate U.S. nationals. See the Vietnam Claims Settlement Act ("VCSA"), 22 U.S.C. § 1645 et seq. The VCSA purported to settle all nationalization-related property claims between the two nations. See To v. Bentsen, No. 93 Civ. 6241, 1995 WL 86422 (S.D.N.Y. Mar. 2, 1995), aff'd To v. Bank of New York, 101 F.3d 681 (2d Cir. 1996). See also To v. Rubin, 99 F.3d 400 (2d Cir. 1995) (unpublished disposition). Mac Truong represented the plaintiffs in To v. Bentsen and To v. Rubin.
In June 1995, Merrill Lynch wrote to Mac Truong to inquire whether the Vietnamese government was now the rightful owner of the funds that had been deposited with it on behalf of Vishipco. In lieu of responding to the letter, Mac Truong (1) unilaterally transferred the funds to Schwab, where he established accounts under the same names as at Merrill Lynch and (2) opened five individual accounts at Schwab for himself, his wife and his two children.*fn2 At some point in time, a dispute arose between Tran and Mac Truong over control of these accounts. Tran eventually convinced Schwab to deny Mac Truong access to the accounts.
In 1997, Mac Truong filed suit in New York Supreme Court (Truong v. Charles Schwab, No. 604650/97), claiming he was the rightful owner of the funds (the "Funds").*fn3 On June 18, 1998, Judge Cozier of New York Supreme Court dismissed Mac Truong's complaint against Schwab for misrepresentation and conversion, among other claims, finding that Schwab was authorized to control the accounts. See Truong v. Charles Schwab, No. 604650/97, slip op. at 15-16 (June 18, 1998). Prior to this adjudication, Mac Truong filed a second New York state court action against Tran and others for fraud and conversion. See Truong v. Nguyen, et al., No. 102512/98.
In April 2000, the New York state court consolidated the two state actions and granted summary judgment to Tran, Dai Nam and Vishipco Lines on the grounds that Mac Truong had forfeited any claim to his portion of the Funds by transferring the Funds to his own accounts. See Truong v. Charles Schwab, No. 604650/97, slip op. at 22 (N.Y. Sup. Ct. Apr. 3, 2000) ("the court finds that plaintiff has forfeited his right to compensation, in the form of commissions or otherwise, effective upon his unlawful transfer of corporate funds into his personal accounts in or about August 1995."), aff'd 289 A.D.2d 98, 735 N.Y.S.2d 15 (1st Dep't 2001)."*fn4
In July 2000, subsequent to the New York court's determination that Mac Truong had no claim to the Funds, Mac Truong and his wife (Maryse Mac Truong) filed a petition for personal bankruptcy in New Jersey. See Foley Aff., Ex. B at 5. The bankruptcy judge, noting that "this case has all the makings of another Jarndyce v. Jarndyce," dismissed the bankruptcy petition on October 23, 2002 because "the debtor hasn't moved its case forward not even a quarter of an inch." See Foley Aff., Ex. B at 13; see also Mac Truong Aff., Ex. 14.
In October 2001, "The Government of Vietnam" ("Vietnam"), allegedly represented by Richard Zweig, intervened in the state court action. That court noted that Vietnam had a "plausible claim to the disputed assets" based on the VCSA. See Truong v. Charles Schwab, No. 604650/97, slip op. at 1, 4 (N.Y. Sup. Ct. Oct. 5, 2001). Vietnam filed cross-claims against all parties in October 2001 and in March 2002 filed an amended cross-claim seeking a declaratory judgment that it was the rightful owner of the Funds.
On September 26, 2002, the New York court dismissed Vietnam's claim to the Funds since Zweig had neither provided documentation nor depositions that the court ordered to prove that he in fact represented Vietnam. See Truong v. Charles Schwab, No. 604650/97, slip op. at 3, 8 (N.Y. Sup. Ct. Sept. 26, 2002). The court also directed Schwab to turn the Funds over to Vishipco Lines and Dai Nam and granted Schwab attorney's fees of $14,151.50 (Id. at 7-8, 10).
In response, Mac Truong filed the six complaints presently before this Court, alleging that (1) Schwab improperly handled plaintiffs' assets and (2) Schwab and its attorneys illegally transferred, and conspired to transfer, plaintiffs' assets to other parties through misrepresentation and false pretenses. At the end of October 2002, Truong also filed a complaint in the U.S. District Court in the District of New Jersey alleging the same claims, but adding the law firm of Sills, Cummis, Radin, Tischman, Epstein & Gross — Schwab's local counsel in New Jersey in the Mac Truong bankruptcy petition — as an additional defendant.
On November 19, Schwab moved by order to show cause for the relief it seeks here and on December 5, 2002, the Court held oral argument on that motion.
A. Standard of Review
In reviewing a motion to dismiss a complaint, a court must accept as true the factual allegations in the complaint and must read the pleadings in the light most favorable to, and draw all reasonable inferences in favor of, the non-moving party. See Weinstein v. Albright, 261 F.3d 127, 131 (2d Cir. 2001); Bolt Elec., Inc. v. City of New York, 53 F.3d 465, 469 (2d Cir. 1995). Dismissal of the complaint is only proper when "it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). The review is limited, and "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). The Court's function on a motion to dismiss a complaint is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985).
B. Collateral Estoppel
Pursuant to the Full Faith and Credit Act, "judicial proceedings of any court of any  State . . . shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State . . . from which they are taken." 28 U.S.C. § 1738. "If the proceedings of a state trial court comported with due process, every federal court must afford the final judgment entered therein the same preclusive effect it would be given in the courts of that state." Conopco v. Roll Intern., 231 F.3d 82, 87 (2d Cir. 2000) (citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81, 85, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984)). Pursuant to New York law, collateral estoppel "prevents a party from relitigating an issue decided against that party in a prior adjudication. It may be invoked to preclude a party from raising an issue (1) identical to an issue already decided (2) in a previous proceeding in which that party had a full an fair opportunity to litigate," and (3) "the issue that was raised previously must be decisive of the present action." Curry v. City of Syracuse, 316 F.3d 324, 331 (2d Cir. 2003) (quoting Fuchsberg & Fuchsberg v. Galizia, 300 F.3d 105, 109 (2d Cir. 2002); LaFleur v. Whitman, 300 F.3d 256, 271 (2d Cir. 2002)). We now turn to the tripartite test of Curry.
1. Was the Issue Presently Before the Court Already Decided in the
The issue of whether Schwab wrongfully took or withheld funds rightfully belonging to Mac Truong is present here and was also present in New York state court. Plaintiffs contend that the state court litigation involved the issue of Mac Truong's commission for his services rendered to Vishipco, while the "main issue" of the present actions is "Schwab's failure to return" to plaintiffs their assets deposited with Schwab. Pl. Opp. at 8-9; Compl. ¶¶ 24, 27, 30.
However, at New York Supreme Court, Mac Truong alleged, in 13 causes of action, that "Schwab is wrongfully withholding funds which rightfully belong to [Mac Truong]." Truong v. Charles Schwab, No. 604650/97, slip op. at 5 (N.Y. Sup. Ct. Apr. 3, 2000). Those funds are the same Funds that are in dispute in the present action. See Id. at 24-25; Pl. Opp. at 9-10. The state court then determined, at summary judgment, that Schwab (1) had authority to maintain control over the accounts, (2) took "appropriate steps" to restrict Mac Truong's access to the accounts, (3) did not make material misrepresentations to the court and (4) did not abuse the judicial process. See Truong v. Charles Schwab, No. 604650/97, slip op. at 6-10, 12 (N.Y. Sup. Ct. Apr. 3, 2000). The state court also declared Vishipco Lines and Dai Nam "the lawful owners of the interpleaded assets." Id. at 23. On appeal, the Appellate Division, First Department, additionally confirmed that "it is clear as a matter of law . . . the motion court properly found that plaintiff [i.e., Mac Truong] was not entitled to any portion of the disputed funds as a commission." Truong, 289 A.D.2d at 99. Therefore, the New York courts have conclusively determined that not only did Schwab properly handle the Funds and properly denied plaintiffs access to the Funds, but also that Mac Truong had no right to any portion of the Funds.
Accordingly, the first requirement, "that the issue being raised in the present case is identical to an issue that has already been decided in a previous adjudication," has been satisfied. Curry, 316 F.3d at 331-32.
2. Did Plaintiffs Have a Full and Fair Opportunity to Litigate in the
To determine whether a party had a full and fair
opportunity to litigate,
"`the various elements which make up the realities of
litigation,' should be explored, including `the size
of the claim, the forum of the prior litigation, the
use of initiative, the extent of the litigation, the
competence and experience of counsel, the availability
of new evidence, indication of a compromise verdict,
differences in the applicable law and foreseeability
of future litigation."
Curry, 316 F.3d at 332 (citing Kosakow v. New Rochelle
Radiology Assocs., P.C., 274 F.3d 706, 734 (2d Cir.
The "various elements which make up the realities of litigation" all point to the conclusion that plaintiffs have had a completely full and fair opportunity to litigate the issue in these actions in the state court forum. First, Mac Truong had competent and experienced counsel throughout. He was initially represented in New York state court by Harry Fractenberg, but has appeared pro se since October, 1998. See Truong v. Charles Schwab, No. 604650/97, slip op. at 5-6 (N.Y. Sup.Ct. Apr. 3, 2000). There is no indication in the record that Mr. Fractenberg was not "competent and experienced counsel," and Mac Truong, though appearing pro se, has, by his own admission, "practiced law for more than 20 years" and "commenced and finished with success over 15,000 legal actions or proceedings." Mac Truong Aff. ¶ 2.
As to the "use of initiative" and "the extent of the litigation," this Court noted more than two years ago in Vitranschart, Inc. v. Levy that the litigation stemming from the dispute of ownership of the Funds "has spanned two continents, repeatedly involved both the New York State and federal judicial systems, and led to many judicial opinions." Vitranschart, Inc. v. Levy, No. 00 Civ. 3618, 2000 WL 1239081, *1 (S.D.N.Y. Aug. 31, 2000). See also Truong v. Schwab, 2002 WL 1159668 at * 1 ("The case, now its fifth year of litigation, is remarkable . . . for the eagerness of several of the parties to tax the time and resources of both the state and federal court systems in a tireless effort to avoid an unfavorable resolution."). As noted above, this dispute has even crossed the Hudson River and entered the U.S. Bankruptcy Court for the District of New Jersey. See Foley Aff, Ex. B. As to "the forum of the prior litigation," it is manifest that the New York State and federal court systems have provided plaintiffs with a full panoply of procedural rights and thoughtful consideration of the legal contentions. In sum, plaintiffs have very much had a full and fair opportunity to litigate this issue.
3. Is the Issue Raised Previously Decisive in the Present Actions?
An issue is "`decisive in the present action' if it would prove or disprove, without more, an essential element of any of the claims set forth in the complaint." Curry, 316 F.3d at 332; LaFleur, 300 F.3d at 273-74. The issue of whether Schwab wrongfully took or failed to return money rightfully belonging to Mac Truong is decisive of the present action. Even if the Funds belonged to plaintiffs, the New York state court, as discussed previously, has already determined that Schwab's exercise of authority over the funds was legal, as was Schwab's decision to restrict Mac Truong's access to the Funds. Therefore, the issue before this Court — whether Schwab wrongfully took or withheld funds rightfully belonging to Mac Truong — was raised previously and decided previously in the New York state courts, and is decisive in the present action.
Pursuant to New York law, "[c]ollateral estoppel binds not only the parties to the suit but also their privies." Conte v. Justice, 996 F.2d 1398, 1402 (2d Cir. 1993) (citations omitted). "Among other things, privity has been held to include those who, although not actual parties, exercise practical control over an action." Id. Courts look to a totality of circumstances to determine the issue of control, including (1) representation by the same attorney, (2) whether the parties to be bound "relate directly to the identical property interest at issue in the prior action" and (3) whether there is an indication that "the prior action was `managed as [the party bound] thought it should be.'" Id. at 1402-03 (citations omitted); Christopher D. Smithers Foundation, Inc. v. St. Luke's-Roosevelt Hosp. Center, 00 Civ. 5502, 2003 WL 115234, at *3 (S.D.N.Y. Jan. 13, 2003) ("The presence of a single driving force behind both lawsuits creates sufficient identity between the parties for collateral estoppel to apply.") (citing Alpert's Newspaper Delivery, Inc. v. New York Times Co., 876 F.2d 266, 270 (2d Cir. 1989)).
Each of the factors set forth in Conte to help determine whether the plaintiffs are in privity with each other for purposes of collateral estoppel are met here. First, plaintiffs in the present actions are all represented by the same attorney, namely Mac Truong, including Mac Truong himself. Second, the Funds are the identical "property interests at issue" as in the prior state court actions. See Truong v. Charles Schwab, No. 604650/97, slip op. at 24-25 (N.Y. Sup. Ct. Apr. 3, 2000); Pl. Opp. at 9-10 (which list the identical accounts). Third, the parties in the present actions are Mac Truong, his wife — Maryse Mac Truong, his son — Hugh Mac Truong, and his daughter — Thulinh Mac Truong. It is certainly likely that Mac Truong and his family believe that he managed the state court actions properly; in any event, there is no indication that they believe otherwise. Given the "totality of circumstances," there is indeed "the presence of a single driving force" — Mac Truong — behind the state actions and the present actions such that collateral estoppel binds not only Mac Truong, but also the other plaintiffs to these present actions.*fn5
C. Res Judicata
Pursuant to New York law, the doctrine of res judicata, or claim preclusion, provides that "[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Maharaj v. Bankamerica Corp., 128 F.3d 94, 97 (2d Cir. 1997). "The policy against relitigation of adjudicated disputes is strong enough generally to bar a second action even where further investigation of the law or facts indicates that the controversy has been erroneously decided, whether due to oversight by the parties or error by the courts." Legal Aid Society v. City of New York, No. 96 Civ. 5141, 1997 WL 394609, at *2 (S.D.N.Y. July 11, 1997) (citation omitted).
New York utilizes a "`transactional approach' to res judicata; thus `once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.'" Yoon v. Fordham Univ. Faculty and Administrative Retirement Plan, 263 F.3d 196, 200 (2d Cir. 2001); Ferris v. Cuevas, 118 F.3d 122, 126 (2d Cir. 1997). "Under [New York's transactional] analysis, a variation in the facts alleged, legal theories asserted, or relief sought in the new pleading generally will not affect the result, because separately stated causes of action `may nevertheless be grounded on the same gravamen of the wrong upon which the action is brought.'" Yoon, 263 F.3d at 201 (citations omitted).
Here, plaintiffs bring three causes of actions: (1) improper handling of plaintiffs' accounts, (2) restricting plaintiffs' access to their property through misrepresentations or false pretenses and (3) conspiring to restrict plaintiffs' access to their property through misrepresentations or false pretenses. The September 26, 2002 New York County Supreme Court decision in the two consolidated state court cases resulted in a valid final judgment — as the parties conceded at the December 5, 2002 oral argument — and neither party has appealed that judgment. Applying New York's transactional analysis, it is clear that these actions are "grounded on the same gravamen of the wrong" as the state actions. The state court actions were grounded in the claim that Schwab restricted Mac Truong's access to the Funds. The present actions are similarly grounded in the claim that Schwab restricted access to the Funds. That the present actions allege the involvement of additional defendants, namely Schwab's attorneys, does not alter the fact that the transaction underlying both state and federal actions is the same.
Plaintiffs contend that, even if res judicata applies to Mac Truong, res judicata is not applicable because the present action involves Hugh Mac Truong, Thulinh Mac Truong and Maryse Mac Truong, who were not involved in the state actions. However, "res judicata bars future litigation between the same parties, or those in privity with them, on the same cause of action." Ferris, 118 F.3d at 126. As discussed above, plaintiffs are either in privity with Mac Truong or were directly involved in the state actions. Therefore, plaintiffs are prevented from filing these six federal actions, which are based on the same causes of action as in state court.
Even assuming for the sake of argument that the present actions are new and distinct from those alleged in state court, there is no reason why these issues could not have been raised in New York state court. Plaintiffs contend that these six actions could not have been brought previously because Schwab continued to withhold the Funds subsequent to the state court's final judgment of September 26, 2002. However, such withholding of the Funds by Schwab clearly arises "out of the same transaction or series of transactions" as at state court and are thus barred from adjudication here.
In addition, plaintiffs contend that res judicata does not apply because there is a material fact in dispute as to whether there has been, or need be, an accounting of the Funds. In April 2000, the New York state court ordered a "long accounting" of the Funds. See Truong v. Charles Schwab, No. 604650/97, slip op. at 24-25 (N.Y. Sup. Ct. Apr. 3, 2000). However, on September 26, 2002, the state court, after recognizing the state appellate decision holding that Mac Truong "was not entitled to any portion of the disputed funds as a commission," determined that an accounting was not necessary, and directed the Funds be turned over to Vishipco Lines and Dia Nam. See Truong v. Charles Schwab, No. 604650/97, slip op. at 7-8 (N.Y. Sup. Ct. Sept. 26, 2002). Even were an accounting necessary — and there is no apparent reason why it should occur — any such error does not establish the "considerable injustice" necessary to require relitigation of the action. See Legal Aid, 1997 WL 394609 at *2 (citing Reilly v. Reid, 45 N.Y.2d 24, 28, 379 N.E.2d 172, 175, 407 N.Y.S.2d 646, 648 (1978) ("[a]fterthoughts or after discoveries however understandable and morally forgivable are generally not enough to create a right to litigate anew")); 17 Vista Assoc. v. City of New York, 1996 WL 197762, at *7 (S.D.N.Y. Apr. 23, 1996) (no exceptional circumstances present that would result in such considerable injustice as to require a "less rigorous" application of res judicata).
Plaintiffs also claim that res judicata does not apply because the state courts lacked the subject matter jurisdiction to determine the ownership of the assets because the issue is a non-justiciable political question. Specifically, plaintiffs contend that the Second Circuit in its 1995 decision in To v. Rubin, 99 F.3d 400 (2d Cir. 1995) (unpublished disposition) permanently enjoined the plaintiffs, of which Tran was allegedly one, from continuing to allege ownership of the assets blocked pursuant to the TWEA, except in the Southern District of New York.
As set forth previously, in 1975 the United States government blocked all assets of the Vietnamese government that were located in the U.S. until 1995 when the U.S. and Vietnam entered into a treaty pursuant to which the U.S. agreed to unblock these assets and release them to the Vietnamese government, except for the sum of $200 million, which it retained to compensate U.S. nationals.
However, the present assets in dispute, although blocked prior to 1995, were never released to the Vietnamese government, nor are they part of the $200 million compensation fund. In fact, the present assets are not the property of the government of Vietnam. See In Vishipco Line et al. v. Chase Manhattan Bank, N.A., 660 F.2d 854, 862 (2d Cir. 1981). In Vishipco Line, Chase Manhattan Bank refused to pay certain funds to the plaintiffs in that action, including Vishipco, because they alleged that Vishipco had been "nationalized by the Vietnamese government and therefore cannot sue on [its] own behalf." Id. at 861. The Second Circuit rejected that argument, opining that "the record does not support the finding that the Vietnamese government became the successor in interest to the corporate plaintiffs [Vishipco]."*fn6 Id. at 862.
Therefore, as the Second Circuit had previously determined that Vietnam was not a successor in interest to Vishipco, and, correspondingly, that Vishipco could sue on its own behalf, it was certainly within the province of the state courts to determine whether Vishipco owned the disputed assets. See Truong v. Charles Schwab, No. 604650/97, slip op. at 3, 8 (N.Y. Sup. Ct. Sept. 26, 2002); Truong v. Charles Schwab, No. 604650/97, slip op. at 22 (N.Y. Sup. Ct. Apr. 3, 2000), aff'd 289 A.D.2d 98, 735 N.Y.S.2d 15 (1st Dep't 2001). Plaintiffs' arguments to the contrary are without merit.
As plaintiffs note, this Court took judicial notice that the Funds are assets "of former South Vietnamese shipping companies that were nationalized by the Vietnamese government after the fall of Saigon in 1975." Pl. Opp. at 16; Truong v. Schwab, No. 02 Civ. 2533, 2002 WL 1159668, at * 1 (May 31, 2002). However, this Court did not decide, nor was it presented with the issue of, whether by nationalizing Vishipco, Vietnam became its successor in interest. As the Second Circuit and the state courts have already adjudicated this issue, it cannot be relitigated in this Court.
As this Court has determined that plaintiffs' claims are barred pursuant to the doctrines of collateral estoppel and res judicata, it is not necessary to decide whether plaintiffs' claims should be dismissed for failure to state a claim upon which relief can be granted.*fn7
D. Injunction Preventing Mac Truong from Filing Additional Actions
Without Court Approval
Defendants request that this Court enjoin Mac Truong from filing any additional actions, in either his individual capacity as a party or as an attorney, against Schwab or its attorneys. "The issuance of a filing injunction is appropriate when a plaintiff `abuse[s] the process of the Courts to harass and annoy others with meritless, frivolous, vexatious or repetitive . . . proceedings.'" Lau v. Meddaugh, 229 F.3d 121
, 123 (2d Cir. 2000) (per curiam), cert denied, 534 U.S. 833, 122 S.Ct. 81, 151 L.Ed.2d 44 (2001) (citations omitted); see also Malley v. New York City Bd. of Educ., 112 F.3d 69
, 69 (2d Cir. 1997) (fun g injunction may issue if numerous complaints filed are based on the same events); In re Sassower, 20 F.3d 42
, 44 (2d Cir. 1994); Pentagen Technologies Int'l. Ltd. v. United States, 172 F. Supp.2d 464, 473-74 (S.D.N.Y. 2001).
In determining whether to restrict the access of a litigant to the courts, the Second Circuit has enumerated a number of factors, including the parties' history of litigation and motive in pursuing the litigation, whether the party is represented by counsel, whether the party has caused needless expense to other parties or posed an unnecessary burden on the courts, and whether other sanctions would be adequate. See Safir v. U.S. Lines, Inc., 792 F.2d 19, 24 (2d Cir. 1986); O'Diah v. New York City, 2002 WL 1941179, at *20 (S.D.N.Y. Aug. 21, 2002); Fitzgerald v. Field, 1999 WL 1021568, at *5 (S.D.N.Y. Nov. 9, 1999). However, "[u]ltimately, the question the court must answer is whether a litigant who has a history of vexatious litigation is likely to continue to abuse the judicial process and harass other parties." Safir, 792 F.2d at 24.
Mac Truong has abused the process of the Court in pursuing these actions. Over four years ago, Mac Truong filed a federal action in the Southern District of New York that asserted claims of conversion of the Funds against Tran and others, and sought a declaratory judgment stating "that the funds held by Schwab belong to Mac Truong."*fn8 Vitranschart, Inc. v. Levy, 2000 WL 1239081, at *3 (S.D.N.Y. August 31, 2000). This Court, in (1) dismissing the third party complaint Mac Truong had brought against two state court justices who had ruled against his positions as well as his adversary's law firm, and (2) placing the action on the suspense docket due to ongoing state proceedings, opined that Mac Truong "has been enjoined by federal judges from bringing additional federal litigations and has sued two state judges who have adjudicated his state litigations on the grounds that they conspired with his adversary against him." Id. at * 1. This Court then put Mac Truong on notice "that any further harassing or vexatious litigation by him will be subject to sanction." Id. at * 11.
Since then, Mac Truong has been threatened with arrest by a judge for refusing to return some of the Funds that he had misappropriated, Transcript of Proceedings before Judge Gammerman, Truong v. Charles Schwab, No. 604650/97 (April 29, 2002); see also Foley Aff., Ex. J at 13, 15-16, attempted to "remove" the state and federal actions to a federal bankruptcy court, Foley Aff., Ex. P at 4, and filed seven complaints, six here and one in the District of New Jersey, that should not have been filed pursuant to the doctrines of collateral estoppel and res judicata. In October 2002, U.S. Bankruptcy Judge Winfield, prior to dismissing Mac Truong's bankruptcy petition, noted that Mac Truong had a "penchant for filing litigation in any court within striking distance," and that he "has done nothing to prove to this Court that this [bankruptcy proceeding] is anything more than just a piece of litigation he has failed to use." Ex. B at 4, 13-14. In short, Mac Truong is a vexatious litigant who has continued to file numerous repetitive, meritless and frivolous actions despite past warnings by several courts.
Therefore, this Court has every reason to believe that Mac Truong is "likely to continue to abuse the judicial process and harass other parties," Safir, 792 F.2d at 24, and grants Schwab's request for an injunction against Mac Truong preventing him from filing any action, in any capacity, against Schwab or its attorneys. Mac Truong and those in privity with him may only file an action against Schwab or its attorneys after he has shown the court in which the action is to be filed a copy of the injunction and obtained that court's permission to file. See In re Martin-Trigona, 9 F.3d 226, 228-29 (2d Cir. 1993).
Defendants seek sanctions against Mac Truong pursuant to Rule 11 of the Federal Rules of Civil Procedure. However, Rule 11 requires that "[a] motion for sanctions under this rule shall be made separately from other motions or requests." As defendants did not file a separate motion for sanctions pursuant to Rule 11, defendants' motion is denied.
However, the Court may impose sanctions against Mac Truong pursuant to 28 U.S.C. § 1927, which, unlike Rule 11, contains no separate motion requirement. See Ted Lapidus, S.A. v. Vann, 112 F.3d 91, 96 (2d Cir. 1997) (Rule 11 sanctions require signed pleadings and motions while section 1927 "violations do not hinge on the presence of a paper."). See also Sassower v. Field, 973 F.2d 75, 80 (2d Cir. 1992) (holding that section 1927 sanctions are applicable to attorneys who represent themselves pro se). Mac Truong had notice and opportunity to object to the issuance of sanctions at the December 5, 2002 hearing before this Court, and his opposition papers neither oppose nor even refer to sanctions. See In re Ames Dept. Stores, Inc., 76 F.3d 66, 70 (2d Cir. 1996) ("[D]ue process requires that courts provide notice and opportunity to be heard before imposing any kind of sanctions.") (italics in original).
Pursuant to 28 U.S.C. § 1927, "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." Such sanctioning is not to be taken lightly: section 1927 requires a "clear showing of bad faith on the part of an attorney, and that bad faith may be inferred only if actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay." Salovaara v. Eckert, 222 F.3d 19, 35 (2d Cir. 2000) (citations omitted); Keller v. Mobil Corp., 55 F.3d 94, 100 (2d Cir. 1995) (bad faith or improper purpose is required to support a request for fees pursuant to 28 U.S.C. § 1927). Accordingly, in order to impose sanctions pursuant to section 1927, "the trial court must find clear evidence that (1) the offending party's claims were entirely meritless and (2) the party acted for improper purposes." Revson v. Cinque & Cinque, P.C., 221 F.3d 71, 79 (2d Cir. 2000) (citing Agee v. Paramount Communications Inc., 114 F.3d 395, 398 (2d Cir. 1997)).
Here, plaintiffs' claims are completely meritless. As noted previously, this Court and others put Mac Truong on notice, over two years ago, that any further "harassing or vexatious litigation . . . will be subject to sanction." Vitranschart, 2000 WL 1239081 at * 11. However, Mac Truong did not accede to this warning, and continued to file a multiplicity of lawsuits, including the six presently before the Court. After filing these lawsuits as unrelated actions, Mac Truong inundated the courts with spurious default judgment motions, orders to show cause and requests to file motions directing the courts to release the Funds to plaintiffs.*fn9
Based on the prior decisions in state and federal courts, Mac Truong should have known that the issues and claims presently before this Court would be barred pursuant to the doctrines of collateral estoppel and res judicata. See Lipin v. National Union Fire Ins. Co. of Pittsburgh, PA, 202 F. Supp.2d 126, 140 (S.D.N.Y. 2002) (sanctions granted where the plaintiff should have known that claims barred by collateral estoppel). Reformulating previously adjudicated claims as conspiracy is not sufficient to avoid sanctions. Id. (citation omitted). Likewise, plaintiffs should have known that their contentions that resolution of this dispute presented a "non-justiciable political question" or that a federal bankruptcy court in New Jersey somehow has jurisdiction over these actions, had "absolutely no chance of success under existing precedents." Shafli v. British Airways PLC, 83 F.3d 566, 570 (2d Cir. 1996) (ordering Rule 11 sanctions).
Given the utter lack of merit of Mac Truong claims, as well as the unreasonable and vexatious multiplicity of actions filed, this Court can only reasonably conclude that his actions were "undertaken for some improper purpose," such as harassing defendants and delaying the inevitable disposition of the Funds. See Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986) ("an award under § 1927 is proper when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay.").
Accordingly, this Court orders defendants to submit an affidavit within 10 days setting forth the total hours spent, services rendered, and hourly rates for services rendered in connection with defendants' present motion. Mac Truong may respond within 10 days thereafter.
For the reasons set forth above, defendants' motion to dismiss the actions pursuant to collateral estoppel and res judicata is granted. The Clerk of Court is directed to enter judgment dismissing the complaints with prejudice. Mac Truong is enjoined from commencing any new proceedings, as either a party or as counsel, against Schwab or its attorneys for claims relating to the transactions or occurrences alleged against these defendants in the complaints filed in these actions, without first obtaining permission from the court in which the action is to be filed and by showing that court a copy of the injunction. In addition, defendants are directed to submit an affidavit setting forth the total hours spent and legal services rendered and hourly fees for Schwab's counsel in connection with defendants' present motion.