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Ally Bank v. Reimer

January 29, 2010


The opinion of the court was delivered by: William D. Wall, United States Magistrate Judge


Before the undersigned on referral from District Judge Spatt is a motion for an order of attachment and injunctive relief submitted by plaintiff Ally Bank ("Ally"). See Docket Entry ("DE") [3]. For the reasons stated herein, it is recommended that plaintiff's motion for an order of attachment be denied and that its motion for a preliminary injunction be granted.


Defendant John Reimer is Vice-President/Comptroller of 1st Republic Mortgage Bankers, Inc. ("1st Republic"). Am. Compl. ¶13. 1st Republic has allegedly been involved in questionable financial transactions involving several banks in addition to plaintiff Ally. One particular case, CV 09-0247 (ADS) GMAC Bank v. 1st Republic Mortgage Bankers, Inc., et al. (the "Related Action"), was brought by GMAC (Ally's predecessor) against 1st Republic and its principals, including Reimer, seeking to recover substantial loans made to 1st Republic.*fn1 GMAC alleges that 1st Republic is indebted to it for over $10,000,000. See Related Action, CV 09-0247, Compl. ¶10, DE [5-1]. In addition to his actions as a corporate officer, Reimer is alleged to have personally retained the proceeds from advances rightfully belonging to GMAC. Id. ¶¶ 63-64.

On January 13, 2009, representatives of another plaintiff bank, Firstrust Bank ("Firstrust") visited 1st Republic's offices to "determine the extent of the fraud." MacElree Aff. at ¶11, DE [3]. According to Ally, the successor in interest to GMAC, it was "advised that Reimer abruptly left the 1st Republic offices during the January 13 Meeting and has not since returned to 1st Republic's offices." Id. ¶11. On January 14th, Reimer transferred title to a property located at 166 Guildford Court, West Hempstead, New York (the "West Hempstead property") to defendant Jeanne Keramis. MacElree Aff. at ¶32. The Bargain and Sale Deed was recorded on January 29, 2009. See MacElree Aff., Ex. O. On January 21, 2009, GMAC commenced the Related Action. The transfer of the West Hempstead property is not discussed in the Related Action, nor is Keramis named as a defendant.

The current action was commenced on July 1, 2009; in addition to Reimer and Keramis, the original complaint named Neil Sisskind, Scott P. Sisskind, David Anakie and Linkup Media. DE [18]. Plaintiff also moved, by order to show cause, for a temporary restraining order and an order of attachment. DE [3]. The order to show cause was signed by Judge Spatt on July 1st. DE [6]. According to affidavits of service filed by plaintiff, Keramis was personally served with the order to show cause and related papers on July 3, 2009, and she also accepted service of Reimer's papers. See DE [9]. Judge Spatt referred the matter for report and recommendation. Memo & Order, DE [12]. On July 21, 2009, plaintiff filed an amended complaint naming only Reimer and Keramis as defendants. DE [18].

Two proceedings were held before the undersigned. The first, on July 9, 2009, was attended by plaintiff's counsel and counsel for Neil Sisskind and Scott Sisskind. See Minute Entry, DE [14]. The hearing was adjourned temporarily due to the bankruptcy filing of Scott Sisskind, and a second proceeding was scheduled for July 20, 2009. A hearing on plaintiff's motion was held on July 20, 2009 and was attended by plaintiff's counsel and counsel for defendant Reimer. At that time, the undersigned directed the plaintiff to provide additional briefing on several issues. Reimer also submitted papers. On August 10, 2009, an attorney filed a notice of appearance on behalf of defendant Keramis. DE [26]. She also submitted a letter motion requesting an opportunity to respond to the order to show cause. DE [25].*fn2 The undersigned denied her request, noting that she had "provided no reason for her failure to respond to the order to show cause or to appear at either of the two proceedings" held previously. Elec. Order of 8/11/09.


After the matter was originally referred to the undersigned, Ally amended its complaint and eliminated several defendants and causes of action. The Amended Complaint alleges four causes of action brought pursuant to sections 273, 275, 276 and 276-a of New York's Debtor and Creditor Law ("DCL"). As the Amended Complaint names only Reimer and Keramis and concerns only the allegedly fraudulent transfer of the West Hempstead property. , the court will limit its analysis accordingly. Indeed plaintiff's counsel has represented that Ally seeks only "an Order of Attachment against the [West Hempstead] property and a preliminary injunction enjoining her from encumbering or conveying the property pending a determination of this action." Ltr., DE [27].

I. Order of Attachment

Pursuant to Rule 64, "every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment." Fed. R. Civ. P. 64(a). New York law provides for the issuance of an order of attachment under some circumstances. See CPLR §6201. Plaintiff bears "a heavy burden in attempting to establish its right to an attachment, because 'New York attachment statutes are construed strictly against those who seek to invoke the remedy.'" National Audubon Soc'y, Inc. v. Sonopia Corp., 2009 WL 636952, at *2 (S.D.N.Y. March 6, 2009)(quoting Buy This, Inc. v. MCI Worldcomm Communications Inc., 178 F. Supp. 2d 380, 383 (S.D.N.Y. 2001)).

Pre-judgment attachments are available under New York law "to obtain quasi-in-rem jurisdiction over a foreign defendant or to establish security for satisfaction of a potential judgment, or both." Reading & Bates Corp. v. National Iranian Oil Co., 478 F. Supp. 724, 726 (S.D.N.Y. 1979); see also Rothberg v. Chloe Foods Corp., 2008 WL 268061, at *7 (E.D.N.Y. Jan. 29, 2008)("Prejudgment attachment is a provisional remedy to secure a debt by preliminary levy upon the property of the debtor in order to conserve that property for eventual execution."). As both Reimer and Keramis are New York residents and are already subject to the court's jurisdiction, "attachment is only permitted upon a showing that the defendant is attempting to dispose of his assets in order to frustrate the ability of the plaintiff to collect any judgment that might ultimately be obtained." Ames v. Clifford, 863 F. Supp. 175, 177 (S.D.N.Y. 1994). In such a case, "attachment should issue only upon a showing that drastic action is required for security purposes." Buy This Inc., 178 F. Supp. 2d at 383 (emphasis in original) (quoting Reading & Bates, 478 F. Supp. at 726-27 (citations omitted)).

To prevail on their motion, plaintiffs have the burden of proving, by affidavit or written evidence, the four elements required under New York law: "that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist, and that the amount demanded from the defendant exceeds all counterclaims known to plaintiff." CPLR §6212(a). In this case, plaintiffs claim as their grounds for attachment CPLR §6201(3) that provides that an order of attachment may be granted when "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. CPLR §6201(3).

The first statutory requirement to be proved by plaintiffs is that they have stated a claim for money damages. Specifically, §6201 provides for attachment "where the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment." CPLR §6201. "The standard for determining whether a cause of action exists for purposes of attachment under New York law is a liberal one. Unless the plaintiff's papers clearly establish that the plaintiff must ultimately be defeated, a cause of action exists." Algonquin Power Corp. v. Trafalgar Power, 2000 WL 33963085, at *7 (N.D.N.Y. Nov. 8, 2000).

Despite the exchanges made at the prior proceedings and the court's request for additional briefing, plaintiff has not convinced the court that an order of attachment is appropriate in this case in light of the reasoning in Trafalgar Power, Inc. v. Aetna Life Ins. Co., 131 F. Supp. 2d 341 (N.D.N.Y. 2001). In Trafalgar, the various parties were involved in multiple actions. In one case, CV 99-1238, plaintiff Trafalgar Power, Inc. ("TPI") stated a breach of contract claim against defendants Algonquin Power Corporation, Inc and Algonquin Power Income Fund ("Algonquin"), and Algonquin asserted counterclaims against TPI.*fn3 At some point in time, TPI obtained a $7.6 million tort judgment "in a separate yet related professional malpractice action." 131 F. Supp. 2d at 343. TPI assigned the judgment to Pine Run Virginia, Inc. ("Pine Run") for "Five ($5.00) Dollars and other good and valuable consideration." Id. at 345. Upon learning of the assignment, and of the fact that both TPI and Pine Run were owned by the same individual, Algonquin filed a separate action, CV 00-1246, asserting a cause of action for conversion and claiming that the assignment violated DCL ยงยง273 and 276. Algonquin claimed that TPI was ...

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