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BRIGHT VIEW TRADING CO., INC. v. PARK

BRIGHT VIEW TRADING CO., INC., Plaintiff,
v.
SONYA CHUNG SUK PARK and JONG D. PARK, Defendants, MICHELLE JEWELRY, INC. and JONG D. PARK, Counterclaim-Plaintiffs, v. BRIGHT VIEW TRADING CO., INC., KENNETH J. GIACHETTA, Marshal, City of New York, CATHY WU, NOEL W. HAUSER, ESQ., and FIDELITY & DEPOSIT CO. OF MARYLAND, Counterclaim-Defendants.



The opinion of the court was delivered by: HAROLD BAER, JR., District Judge

OPINION & ORDER

Counterclaim defendant Noel W. Hauser ("Hauser"), counsel to the original plaintiffs in this action, moves to dismiss the first, second, ninth, and eleventh counterclaims of Michelle Jewelry, Inc. ("Michelle Jewelry") and Jong D. Park ("Mr. Park") (collectively, "counterclaim plaintiffs") for turnover and accounting, abuse of process, conversion, and vexatious litigation. For the reasons set forth below, Hauser's motion is granted in part and denied in part.

I. BACKGROUND

 
That now his Brightest Diamond is grown Darker by far than any Coalpit Stone
Edward Taylor, God's Determinations, The Preface (lines 43-44) (c. 1685)
  This case arises out of the longstanding personal and business relationship between two couples involved in the jewelry and precious stone industry. That relationship has begun to deteriorate, hastened by debt, accusations of foul play, and now this litigation. One lawsuit has spawned a series of counterclaims, which have been levied against the original plaintiff and its principal, along with plaintiff's counsel, a New York City Marshal, and a surety company. After a long and winding procedural history that has taken this case through four orders to show cause and a trip to bankruptcy court, plaintiff counsel moves to dismiss the counterclaims against him. Before reaching the merits of this motion, let me pause for a moment to provide some history.

  Robert Wu ("Mr. Wu") and Cathy Wu ("Ms. Wu") (collectively, "the Wus") are the officers and shareholders of Bright View Trading Co., Inc. ("Bright View"), a New York corporation with its principle place of business at 153 Centre Street in New York City. Beginning in 1996, the Wus, on behalf of Bright View, sold on "sale or return" a large quantity of jewelry and precious stones to Mr. Park and Sonya Chung Suk Park ("Ms. Park") (collectively, "the Parks"), both of whom are residents of New Jersey. At this juncture, it is unclear whether these sales were made to the Parks personally or as agents for the various businesses in which they have been involved, New-Ko Diamond Co., Michelle Jewelry, and JHP Jewelry Manufacture, Inc. Since its incorporation on January 12, 1998, Mr. Park was the president, sole shareholder, and was employed by Michelle Jewelry, a New York corporation with its principle place of business at 36 West 47th Street, New York City. At all relevant times, Ms. Park was an employee of Michelle Jewelry, but held no office. Michelle Jewelry was dissolved by proclamation by the New York Secretary of the State on June 27, 2001 for failure to pay taxes. Notwithstanding this dissolution, Michelle Jewelry continued to conduct business until it was required to cease operations as a result of the dispute between the Wus and Parks.

  On April 4, 2003, the Wus filed suit on behalf of Bright View against the Parks in their individual capacities for the sum of $458,721. A few days later, on April 7, 2003, on Bright View's application, the Court issued an ex-parte Order of Attachment pursuant to N.Y.C.P.L.R. § 6201 et seq. against the Park's property to satisfy the debt alleged in Bright View's complaint. The Order required Bright View to post a $20,000 attachment bond and directed the United States Marshal of the Southern District of New York ("U.S. Marshal") to levy on the defendants' property. The Court further ordered Bright View to move within ten days to confirm the Order of Attachment.

  The Order of Attachment was amended on April 15, 2003 to provide greater specificity as to what items were to be seized. Specifically, the Amended Order authorized Ms. Wu, as an officer of Bright View, to seize, under the supervision of the U.S. Marshal, "precious stones and other inventory, including diamonds, gold jewelry, precious metals and the like, comprising the inventory of the defendant Sonya Chung Suk Park located within the premises of `Michelle Jewelry'. . . ." Amended Order of Attachment at 3 (caps and bold removed). The Amended Order of Attachment was executed on April 23, 2003. The counterclaim plaintiffs allege that during the seizure, Ms. Wu, on behalf of Bright View, exceeded the scope of the Order and improperly seized Michelle Jewelry's entire inventory of jewelry and precious stones — property that did not belong to Mr. or Ms. Park, the only two named defendants in Bright View's suit.

  Following the seizure, Bright View moved by order to show cause on April 25, 2003 to confirm the attachment. A hearing on the motion was scheduled for April 30, 2003, but the parties were unable to appear. Bright View then informed the Court by letter that the Parks consented to the attachment and the parties were excused from their appearance. After the Parks failed to file an answer, Bright View moved for and was granted a default judgment on May 29, 2003 in the liquidated amount of $458,721, plus interest and costs.

  Michelle Jewelry and Mr. Park allege that some time after the default judgment was entered, Bright View, Ms. Wu and Hauser, the attorney for the plaintiff, delivered only a portion of the seized jewelry and precious stones to City Marshal Kenneth J. Giachetta ("City Marshal Giachetta") for sale at auction, which was scheduled for June 25, 2003. According to Michelle Jewelry and Mr. Park, "[m]any valuable items of jewelry and virtually all of the unmounted precious stones that had been seized pursuant to the levy were not delivered by Bright View, [Ms.] Wu and Hauser to [City] Marshall Giachetta, nor did they account for this valuable property or its whereabouts on any inventory given to the United States Marshal, or otherwise to this Court or any other entity or person." Answer and Counterclaims ("A & CC") ¶ 53. The essence of these allegations is that "Michelle Jewelry's inventory was converted for the personal benefit and use of one or more of said Counterclaim Defendants." Id. ¶ 55.

  On June 6, 2003, the Parks moved by order to show cause to vacate the default judgment based on Bright View's purported failure to serve the Parks with a summons and complaint and lack of subject matter jurisdiction. The Parks' jurisdictional argument was based on their assertion that Michelle Jewelry, not the Parks, was the proper defendant, which would have defeated the diversity of citizenship because both Bright View and Michelle Jewelry are New York corporations. The Court held argument on the motion, which was denied on June 30, 2003.

  The Parks, represented by new counsel, again moved by order to show cause on July 17, 2003 for a stay of the auction of the goods seized pursuant to the Amended Order of Attachment and for vacatur of the default judgment against them based on excusable neglect, the existence of meritorious defenses, and the brevity of the default. The Court held argument and a hearing on the Parks' motion on July 22 and 25, 2003. However, before the proceedings were complete, Michelle Jewelry filed a Chapter 11 petition in the United States Bankruptcy Court, Southern District of New York, which triggered the automatic stay provisions of 11 U.S.C. § 362. By Order dated January 26, 2004, the Honorable Prudence Carter Beatty dismissed both the reorganization petition and the adversary proceeding.*fn1 Thereafter, upon receipt of additional submissions and a pre-trial conference in which the parties further argued the merits of the Parks' pending motion, the Court vacated the default judgment by Order dated April 19, 2004. The Parks then interposed an answer and Michelle Jewelry and Mr. Park filed the counterclaims that form the basis of the instant motion.

  II. DISCUSSION

  A. Standard of Review

  On a motion to dismiss, "we accept all of plaintiff's factual allegations in the complaint as true and draw inferences from those allegations in the light most favorable to the plaintiff." Desiderio v. Nat. Ass'n of Sec. Dealers, Inc., 191 F.3d 198, 202 (2d Cir. 1999). At this juncture, "[o]ur consideration is generally limited to the facts as presented within the four corners of the complaint, to documents attached to the complaint, or to documents incorporated within the complaint by reference," although we may also consider matters of public record. Taylor v. Vt. Dep't of Educ., 313 F.3d 768, 776 (2d Cir. 2002). Our assessment of the claims is not guided by whether the plaintiff will ultimately prevail. Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985) ("The court's function on a Rule 12(b)(6) motion is not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient."). Therefore, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the 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 (1957). "Further, a complaint need only meet the requirements of our `simplified notice ...


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