United States District Court, S.D. New York
July 21, 2004.
LANKLER SIFFERT & WOHL, LLP, DECISION STRATEGIES, L.L.C., DECISIONQUEST, INC., LEXECON INC., WILLIAM PURCELL, STEVE THEL, DONNA M. HITSCHERICK, and CORNERSTONE RESEARCH, INC., Plaintiffs,
A. CAL ROSSI, JR., BASIC CAPITAL MANAGEMENT, INC. and GENE PHILLIPS, Defendant. A. CAL ROSSI, JR. and BASIC CAPITAL MANAGEMENT, INC., Third-Party Plaintiffs, v. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY, Third-Party Defendant.
The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Plaintiffs Lankler, Siffert & Wohl LLP ("LSW"), Decision
Strategies, L.L.C., ("Decision Strategies"), DecisionQuest, Inc.
("DecisionQuest"), Lexecon, Inc. ("Lexecon"), Steve Thel ("Thel")
and Donna M. Hitscherich ("Hitscherich") (collectively, the
"Moving Plaintiffs") move for an order pursuant to
28 U.S.C. § 1963 directing the registration of the amended judgments of each
of the Moving Plaintiffs against the defendants A. Cal Rossi, Jr.
("Rossi") and Basic Capital Management ("BCM") (collectively, the
"Defendants") in the United States District Court for the
Northern District of Texas. For the reasons set forth below, the
Moving Plaintiffs have shown good cause to register the judgment.
However, registration of the judgment will be deferred to allow
the Defendants an opportunity to post a supersedeas bond.
Plaintiffs filed their complaint in this action on December 19,
2002, alleging non-payment of attorneys' fees and other related
fees. The Moving Plaintiffs' motion for partial summary judgment
on their account stated claim was granted on October 10, 2003. See
Lanker, Siffert, Wohl v. Rossi, 287 F. Supp.2d 398 (S.D.N.Y.
2003). On March 19, 2004, the Court granted the request of BCM and Rossi
to amend the judgments to reflect the federal post-judgment rate of
interest and granted the request of the Moving Plaintiffs to certify the judgment pursuant to Federal
Rule of Civil Procedure 54(b). See Lanker, Siffert & Wohl v.
Rossi, 02 Civ. 10055, 2004 WL 541842 (S.D.N.Y. Mar. 19, 2004).
The amended judgments were entered on April 22, 2004.
The Moving Plaintiffs filed the instant motion on May 25, 2004,
and the motion was taken on submission on June 30, 2004.
Moving Plaintiffs Have Shown Good Cause to Register the
28 U.S.C. § 1963 provides that a judgment may be registered
"when ordered by the court that entered the judgment for good
cause shown," notwithstanding the pendency of an appeal. Donel
Corp. v. Kosher Overseers Ass'n of America, Inc., 92 Civ. 8377,
2001 WL 1512589, at *1 (S.D.N.Y. Nov. 28, 2001); Woodward &
Dickerson v. Kahn, 89 Civ. 6733, 1993 WL 106129, at *1 (S.D.N.Y.
Apr. 2, 1993).
While improper transfers or other activity designed to deprive
plaintiff of the benefits of the judgment are sufficient to
satisfy the requirement of good cause, they are not necessary.
"`Good cause' is established `upon a mere showing that the [party
against whom the judgment has been entered] has substantial
property in the other [foreign] district and insufficient
[property] in the rendering district to satisfy the judgment.'"
Owen v. Soundview Fin. Group, Inc., 71 F. Supp.2d 278, 278-9
(S.D.N.Y. 1999); Jack Frost Laboratories, Inc. v. Physicians & Nurses
Manufacturing Corp., 951 F. Supp. 51, 52 (S.D.N.Y. 1997),
(quoting Woodward & Dickerson, 1993 WL 106129, at *1)).
The Moving Plaintiffs have stated in an affidavit that they
have had asset searches performed both inside and outside the
State of New York. The searches have uncovered no real property
or bank accounts of either Defendant located within New York.
However, the searches revealed both real property and bank
accounts of one or both Defendants located in the State of Texas,
among other jurisdictions. "Judgment creditors . . . `need not
show exact evidence of assets' and registration may be granted
upon a `lesser showing.'" Owen 71 F. Supp.2d at 279 (quoting
AT&T Corp. v. Public Service Enterprises of Pennsylvania, Inc.,
98 Civ. 6133, 1999 WL 672543, at *6 (S.D.N.Y. Aug. 26, 1999)).
The Defendants have confirmed that BCM has over $100 million in
assets, including in the Northern District of Texas. The
Defendants have not submitted any evidence of assets in the State
of New York, but instead argue that the Defendants have "a good
faith and well grounded claim and cause of action against
American International Specialty Lines Insurance Company, the recovery
of which will satisfy Movants orders." Defendants Brief at 5. However,
"the theoretical availability of other sources to obtain the judgment,
such as insurance coverage or recoveries from other Judgment Debtors, is irrelevant." Pereira v. Cogan, 00
Civ. 619, 2003 WL 22510410 (S.D.N.Y. Nov. 4, 2003).
The Defendants have therefore not rebutted the statements
regarding the location of assets. "In the absence of contrary
evidence, the affidavit in support of the judgment creditors'
motion should be presumed true." Donel, 2001 WL 1512589, at *2;
AT&T Corp., 1999 WL 672543, at *6. "[The judgment debtor's]
careful failure to controvert any of the facts asserted by the
judgment creditor permits acceptance thereof for purposes of this
motion." Owen 71 F. Supp.2d at 279. The Moving Plaintiffs have
therefore shown good cause to register the judgment in the
Northern District of Texas.
The Defendants Are Permitted to File a Supersedeas Bond
The Defendants request that in the event that the court finds
good cause to register the judgment, permission to register the
judgment should be deferred until after it has refused or failed
to post a supersedeas bond. See Cheminova v. Griffin LLC,
182 F. Supp.2d 68, 80 (D.D.C. 2002) (mandating such a procedure
because "[i]n most cases, the bond will provide sufficient
protection of the judgment creditor's interest."). Because the
Defendants have stated their intention to post a bond, the
registration of the judgment will be deferred 14 days from the issuance of this opinion. If no bond has been posted by that
time, the judgment may be registered.
The amount of the bond shall be sufficiently large to satisfy
the full amount of the judgment plus the interest which will
accrue for at least one year from the date of the entry of the
amended judgments. According to the calculations of the Moving
Plaintiffs, that amount is $1,421,092.28. Further, as suggested
by the Moving Plaintiffs, the Defendants, if they choose, may
also post a single supersedeas bond encompassing the amount of
the judgment in a related case before this court, FTI
Consulting, Inc. v. Rossi, 03 Civ. 4033. Partial summary
judgment was entered against Defendants Rossi and BCM on
substantially similar grounds on February 25, 2004. See FTI
Consulting, Inc. v. Rossi, 03 Civ. 4033, 2004 WL 359378
(S.D.N.Y. Feb. 25, 2004).
For the reasons stated above, the Moving Plaintiffs have shown
good cause pursuant to 28 U.S.C. § 1963 for the registration of
its judgment against the Defendants in the Northern District of
Texas. However, registration of the judgment shall be deferred 14
days from the issuance of this Opinion to allow the Defendants to file a supersedeas bond. Defendants may also combine the amount
of the bond in this case with the amount of the judgment plus
interest in FTI Consulting, Inc. v. Rossi.
It is so ordered.
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