United States District Court, E.D. New York
For Dafeng Hengwei Textile Co., Ltd., Plaintiff: Bing Li, LEAD ATTORNEY, Law Offices of Bing Li, LLC, New York, NY.
For Aceco Industrial & Commercial Corporation, Aceco, Inc., Defendants, Counter Claimant: Todd Wengrovsky, LEAD ATTORNEY, Todd Wengrovsky, Calverton, NY; Richard A. Chen, LAW OFFFICES OF RICHARD ALAN CHEN, ESQ., Flushing, NY.
For David Liu, also known as David Z. Liu, also known as Zuowei Liu, Chang-Zhu Yu individually and as agents of Aceco Industrial & Commercial Corporation and Aceco, Inc., also known as Cee Cee Yu, Aceco, Inc., Chang-Zhu Yu, individually and as agents of Aceco Industrial & Commercial Corporation and Aceco, Inc., Defendants, Counter Claimants: Jonathan S. Gould, Law Office of Jonathan Gould, New York, NY.
For China CITIC Bank International Limited, N.Y. Branch, Garnishee: Orlee Goldfeld, LEAD ATTORNEY, New York, NY.
For Rockaway Associates, Interested Party: Richard A. Chen, LAW OFFFICES OF RICHARD ALAN CHEN, ESQ., Flushing, NY.
For Dafeng Hengwei Textile Co., Ltd., Counter Defendant: Bing Li, LEAD ATTORNEY, Law Offices of Bing Li, LLC, New York, NY.
MEMORANDUM & ORDER
MARGO K. BRODIE, United States District Judge.
Plaintiff Dafeng Hengwei Textile Co., Ltd. filed the above-captioned action against Defendants Aceco Industrial & Commercial Corporation, Aceco, Inc. (collectively " Aceco" ), David Liu and Chang-Zhu Yu on October 24, 2013. Plaintiff asserts claims against Aceco for breach of contract and for account stated, and seeks to hold Liu and Yu liable through a veil-piercing theory of liability. By order dated October 30, 2013, the Court granted Plaintiff an ex parte prejudgment order of attachment (the " Attachment Order," Docket Entry No. 5), allowing the United States Marshal to levy against properties in which Defendants have an interest. On or about November 7, 2013 and February 11, 2014, Plaintiff caused the U.S. Marshal to levy certain property owned by Aceco, Liu and Yu. Liu and Yu (collectively " Movants" ) seek to vacate the Attachment Order. (Def. Mot. to Vacate Order of Attachment (" Def. Mot." ), Docket Entry No. 34.) The Court referred the motion to vacate to Magistrate Judge Victor V. Pohorelsky for a report and recommendation. By Report and Recommendation (" R& R" ) dated August 21, 2014, Judge Pohorelsky recommended that the Court grant Movants' motion to vacate the Attachment Order. (" R& R," Docket Entry No. 57.) Plaintiff timely filed an objection to Judge Pohorelsky's R& R, (" Pl. Obj.," Docket Entry No. 61), and Movants timely responded to Plaintiff's objections, (" Def. Response," Docket Entry No. 63). With Plaintiff's consent, Movants submitted a
supplemental response to Plaintiff's objections on September 29, 2014. (" Supp. Def. Response", Docket Entry No. 68.) No other objections were filed. For the reasons set forth below, the Court adopts the R& R in its entirety.
The Court assumes familiarity with the parties and background to this case, which is set forth in greater detail in its October 20, 2014 Memorandum and Order. Dafeng Hengwei Textile Co. v. Aceco Indus. & Commercial Corp., 54 F.Supp.3d 279, 2014 WL 5319688 (E.D.N.Y. Oct. 20, 2014). The facts necessary to decide this motion are outlined below.
a. The alleged breach of contract
Plaintiff, a Chinese textile manufacturer, commenced this action on October 23, 2013, seeking to recover on an unpaid contract in the amount of $1,977,642.02 from Defendants, who distributed textiles from Plaintiff for resale in the United States through K-Mart. (Compl. ¶ ¶ 13-17.) Movants are the primary officers and sole shareholders of Aceco. Aceco contracted with Plaintiff to supply its products beginning in late 2009. ( Id. ¶ 14.) Though the parties initially agreed that the payment term was " Documents against Payment (" D/P" ) at sight," ( id. ¶ 15), Aceco's collecting bank was occasionally unable to satisfy Plaintiff's invoices, at which point Aceco would request payment extensions and promise to make future payments, ( id. ¶ 20). Aceco began to accumulate an unpaid balance based on its failure to pay as promised. ( Id. ¶ 21.) Over the course of 2013, Aceco negotiated additional shipments from Plaintiff upon promises to pay the outstanding amount. ( Id. ¶ ¶ 22-30.)
During the same period of time in 2013, Aceco paid $1,298,741.15 toward its overdue existing balance, leaving an unpaid total of $1,977,642.02. ( Id. ¶ 31.) By the end of July 2013, China Citic Bank, Aceco's collecting bank, returned to Plaintiff all unpaid invoices and payment requests. ( Id. ¶ 34.) Despite repeated requests, Aceco failed to pay its outstanding balance. ( Id. ¶ ¶ 37-51.) Plaintiff alleges that Aceco terminated its business relationship with ...