United States District Court, S.D. New York
OPINION AND ORDER
JESSE M. FURMAN, District Judge.
PC-Palladio LLC ("Judgment Creditor") seeks to satisfy a judgment it obtained against Craig Nassi ("Judgment Debtor"), who appears in this action pro se. (Docket No. 48). Specifically, Judgment Creditor seeks a turnover of cash and other assets allegedly in Judgment Debtor's possession, an accounting of Judgment Debtor's assets, a charging order against Judgment Debtor's interests in four limited liability companies ("LLCs"), and a turnover of proceeds from those four entities. For the reasons explained below, Judgment Creditor's application for summary relief is GRANTED in part and DENIED in part. The Court will hold a trial with respect to the issues remaining open.
On May 1, 2013, the United States District Court for the Northern District of Illinois entered judgment against Judgment Debtor, in favor of Judgment Creditor, in the amount of $20, 161, 454.25 (the "Judgment"). (Decl. of Matthew Kane Supp. Mot. To Enforce Judgments Against Non-Parties ("Kane Alter Ego Decl.") (Docket No. 60), Ex. A). On July 3, 2013, Judgment Creditor registered the Judgment, which remains unpaid, in the United States District Court for the Southern District of New York. ( Id., Ex. B). Fifteen days later, Judgment Creditor served a restraining notice on Judgment Debtor, which - with certain narrowly defined exceptions not at issue here - forbade Judgment Debtor from "mak[ing] or suffer[ing] any sale, assignment, transfer or interference with any property in which he... has an interest" until the Judgment was satisfied. ( Id., Ex. C; N.Y. C.P.L.R. 5222(b)).
Judgment Debtor is - or at least was - in the business of real estate development. He is affiliated with LLCs known as BCN Management LLC ("BCN") and Caffettino LLC ("Caffettino"). The former, which Judgment Debtor describes as being "in the process of winding down" (Objection to Judge Furman's Oct 31, 2013 Order ("Alter Ego Opp'n") (Docket No. 78)), was initially formed to "run [Judgment Debtor's] real estate development business." ( Id. ). Caffettino was formed on September 19, 2013, and allegedly plans to develop a coffee shop in Manhattan. (Kane Alter Ego Decl., Ex. F ("Craig Nassi Oct. 11 Dep."), at 82:17-83:8).
Judgment Debtor's father, Bijan Nassi, is the managing member of four other LLCs that own or owned real estate in New York City: 242 Fifth Realty LLC ("242 Fifth"), West 176 Street Realty LLC ("West 176"), 315 Park Avenue South LLC ("315 PAS"), and 224 Centre Realty, LLC ("224 Centre") (together, the "Bijan Nassi Entities"). (Bijan Nassi's Mem. of Law. Opp'n P-C Palladio LLC's Mot. For an Order Requiring Turnover ("Bijan Nassi Opp'n") (Docket No. 100) 1, 6-10; Declaration of Bijan Nassi ("Bijan Nassi Decl.") (Docket No. 99) ¶¶ 10, 14, 18, 27). It is undisputed that, at one time, Judgment Debtor held interests in all four of these entities (Bijan Nassi Opp'n 6-10), but whether he still does, and the size of any such interests, are hotly disputed. Bijan Nassi contends that Judgment Debtor no longer possesses an interest in 242 Centre ( see Bijan Nassi Opp'n 11), and there is considerable disagreement as to the size of Judgment Debtor's interest in the other three entities ( compare id. 6-10 with Reply Mem. of Law Supp. Plaintiff/Judgment Creditor's Mot. for Order Requiring Turnover ("Bijan Nassi Turnover Reply Mem.") (Docket No. 107) 3-9). Three of the four LLCs have sold their main assets in recent years; 242 Fifth sold its property in December of 2012 (Bijan Nassi Decl. ¶ 12), West 176 sold its property in October of 2011 ( id. ¶ 15), and 315 PAS sold its property in May of 2013 ( id. ¶ 24). Bijan Nassi has retained the proceeds from the sales of 242 Fifth and West 176. ( Id. ¶¶ 12, 16).
In an effort to satisfy the Judgment, Judgment Creditor filed three motions. First, Judgment Creditor proposed - and the Court issued - an order against Judgment Debtor to show cause why judgment should not be entered against BCN and Caffettino, and why BCN and Caffettino should not be directed to turn over all assets until the Judgment is satisfied (the "alter ego motion"). (Docket No. 58; Mem. of Law. Supp. Judgment Creditor's Mot. for Order Enforcing Judgment Against Non-Parties ("Alter Ego Mem.") (Docket No. 59)). Second, Judgment Creditor filed a motion seeking a turnover of assets listed in financial statements provided by Judgment Debtor to a third party; a turnover of paintings allegedly purchased by Judgment Debtor; and an accounting of assets that have been allegedly disposed of since June 30, 2013 (the "Craig Nassi turnover motion"). (Docket No. 80; Mem. Law Supp. Judgment Creditor's Mot. for Turnover Order ("Turnover Mem.") (Docket No. 81). Third, Judgment Creditor filed a motion related to Judgment Debtor's interests in the Bijan Nassi Entities (the "Bijan Nassi turnover motion"). (Docket No. 66). This third motion seeks an order directing Bijan Nassi individually, and as the managing member of the Bijan Nassi Entities, to turn over funds held on behalf of Judgment Debtor and debt owed to Judgment Debtor, and an order charging the membership interests of the Judgment Debtor with payment of the Judgment. (Docket No. 66). The Court will address the three motions in turn.
A. Legal Standard
"In a special turnover proceeding based on New York law, made applicable pursuant to Rule 69 [of the Federal Rules of Civil Procedure, ] a court may grant summary relief where there are no questions of fact, but it must conduct a trial on disputed issues of fact on adverse claims in a turnover matter." Cordius Trust v. Kummerfeld, No. 99 Civ. 3200 (DLC), 2004 WL 616125, at *6 (S.D.N.Y. Mar. 30, 2004) (internal quotation marks omitted), aff'd in part, vacated in part, 143 F.Appx. 761 (2d Cir. 2005) (summary order); see also In re Port of N.Y. Auth., 18 N.Y.2d 250, 255 (1966) (holding that the summary judgment standard applies to CPLR special proceedings). Accordingly, "[s]ummary relief may not be granted unless the submissions of the parties taken together show that there is no genuine [dispute] as to any material fact and that the moving party is entitled to a judgment as a matter of law." Cordius Trust, 2004 WL 616125, at *6 (internal quotation marks omitted). As with a motion for summary judgment, "[t]he moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the court must view all facts in the light most favorable to the non-moving party." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)). Where, as here, a party is proceeding pro se, the Court must treat that party's submissions with "special solicitude." Graham v. Lewinski, 848 F.2d 342, 344 (2d Cir. 1988).
B. Alter Ego Motion
The Court turns first to the alter ego motion, which seeks an order allowing Judgment Creditor to enforce the Judgment against BCN and Caffettino. A party seeking to pierce the corporate veil must show that "(1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury." Motorola Credit Corp. v. Uzan, 739 F.Supp.2d 636, 640 (S.D.N.Y. 2010) (internal quotation marks omitted). To determine whether the owners have exercised the requisite degree of domination, courts consider a variety of factors, including "failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use." Superior Transcribing Serv., LLC v. Paul, 898 N.Y.S.2d 234, 236 (2d Dep't 2010) (internal quotation marks omitted).
In this case, Judgment Creditor makes a forceful argument for "reverse veil piercing" of both BCN and Caffettino. That is, there is ample support in the record for a reasonable fact finder to conclude that Judgment Debtor exercises complete domination over the two entities and that such domination has been used to commit a fraud or wrong against Judgment Creditor - namely, by preventing Judgment Creditor from enforcing its judgment. Nevertheless, there are material factual disputes with respect to Judgment Debtor's domination of both entities. With respect to BCN, such disputes include, but are not limited to, the following:
(1) Whether Judgment Debtor's personal expenses on the American Express BCN statement were treated (let alone properly treated) as deferred compensation in lieu of salary ( see Craig Nassi Oct. 11 Dep., at 124:15-19);
(2) whether members of BCN other than Judgment Debtor (including Eli Tenenbaum, Chuck Swain, Eric Feldman, Yiani Bellis, Jim Bush, Michelle Tall, Felicia Majcherek, and Gilbert Manzanaras) exist, and, if so, their percentage interest or interests in the entity ( see Kane Alter Ego Decl., Ex. Q ("Craig Nassi Oct. 29 Dep."), at 313:25-314:5; Docket No. 71, Ex. D ("BCN Operating Agreement"));
(3) whether the operating agreement for BCN produced by Judgment Debtor on November 18, 2013, is genuine ( see BCN Operating Agreement; Nov. 19, 2013 Letter (Docket No. 72), at 3-4); and
(4) whether BCN ever kept meeting minutes ( see Nassi Oct. 11 Dep., at 74:2-5).
With respect to Caffettino, the material disputes of fact include, ...