United States District Court, S.D. New York
OPINION AND ORDER
G. SCHOFIELD UNITED STATES DISTRICT JUDGE.
case arises from an intra-family dispute over the ownership
and control of Plaintiff Sea Trade Maritime Corporation
(“Sea Trade”), which until 2009 owned the ship
the M/V ATHENA. Plaintiffs Sea Trade and George Peters
(“Peters”) brought this action against Defendant
Stelios Coutsodontis (“Coutsodontis”), asserting
claims for wrongful arrest of the M/V ATHENA, breach of
fiduciary duty and frustration of corporate purpose. On
August 23, 2016, following a three-day bench trial, the Court
issued its findings of fact and conclusions of law (the
“Opinion”), familiarity with which is presumed.
As explained in the Opinion, the Court found for Plaintiffs
on the breach of fiduciary duty claim and dismissed the
wrongful arrest and frustration of corporate purpose claims.
The Court ordered Coutsodontis to forfeit his Sea Trade
shares as of the date of the Opinion and referred the matter
to Magistrate Judge Henry B. Pitman for an inquest on the
amount, if any, Coutsodontis is due based on the 50% interest
he held in Sea Trade from January 13, 2003, until the date of
the Opinion. Judgment to this effect was entered on August
24, 2016. Plaintiffs move to alter or amend the judgment
pursuant to Federal Rule of Civil Procedure 59. For the
following reasons, Plaintiffs' motion is denied.
standard governing a motion pursuant to Rule 59(e), in effect
a motion for reconsideration, “is strict, and
reconsideration will generally be denied unless the moving
party can point to controlling decisions or data that the
court overlooked.” Analytical Surveys, Inc. v.
Tonga Partners, LP., 684 F.3d 36, 52 (2d Cir. 2012), as
amended (July 13, 2012). Relief is available only if the
moving party “identifies an intervening change of
controlling law, the availability of new evidence, or the
need to correct a clear error or prevent manifest
injustice.” Kolel Beth Yechiel Mechil of Tartikov,
Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 104 (2d Cir.
2013). A motion for reconsideration is “not a vehicle
for relitigating old issues, presenting the case under new
theories, securing a rehearing on the merits, or otherwise
taking a second bite at the apple.” Analytical
Surveys, 684 F.3d at 52 (internal quotation marks and
citation omitted). The decision to grant or deny a motion for
reconsideration, whether under Local Rule 6.3, Rule 59(e) or
Rule 60(b), rests within “the sound discretion of the
district court.” See Aczel v. Labonia, 584
F.3d 52, 61 (2d Cir. 2009).
seek to amend the judgment in two regards. First, Plaintiffs
request removal of the time constraint on Coutsodontis'
forfeiture of Sea Trade shares -- which otherwise is
effective as of the date of the Opinion. Second, Plaintiffs
ask to eliminate the referral to Judge Pitman for an inquest
on the amount Coutsodontis is due based on his previous
ownership interest in Sea Trade. As explained below,
Plaintiffs motion is denied in both regards.
Time Constraint on Coutsodontis' Forfeiture of Sea Trade
motion to amend the judgment to eliminate the time constraint
on Coutsodontis' forfeiture of Sea Trade shares is denied
because Plaintiffs do not identify any clear error, new
evidence or manifest injustice that warrants relief under
time constraint on Coutsodontis' forfeiture of Sea Trade
shares is based on the Court's finding, explained in the
Opinion, that Peters has unclean hands. The doctrine of
unclean hands is based on the maxim that “he who comes
into equity must come with clean hands.”
CBF Indústria De Gusa S/A v. Amci Holdings,
Inc., 850 F.3d 58, 78 (2d Cir. 2017) (quoting
Keystone Driller Co. v. Gen. Excavator Co., 290 U.S.
240, 241 (1933)). Under New York law, “[t]he doctrine
of unclean hands applies when the offending party is guilty
of immoral, unconscionable conduct directly related to the
subject matter in litigation and which conduct injured the
party seeking to invoke the doctrine.” Lucia v.
Goldman, 44 N.Y.S.3d 89, 91 (2d Dep't 2016)
(internal quotation marks omitted); accord Nat'l
Distillers & Chem. Corp. v. Seyopp Corp., 214 N.E.2d
361, 362 (N.Y. 1966). The doctrine is an affirmative defense,
and therefore the defendant who invokes the doctrine has the
burden of proof. See Gidatex, S.r.L. v. Campaniello
Imports, Ltd., 82 F.Supp.2d 126, 130 (S.D.N.Y. 1999);
see also ING Real Estate Fin. (USA) LLC v. Park Ave.
Hotel Acquisition, LLC, 933 N.Y.S.2d 217, 217 (1st
Dep't 2011) (affirming summary judgment for plaintiff
where defendant failed to raise issue of fact as to its
unclean hands affirmative defense). “Application of the
‘unclean hands' doctrine rests with the discretion
of the court, which is ‘not bound by formula or
restrained by any limitation that tends to trammel the free
and just exercise of discretion.'”
Aris-Isotoner Gloves, Inc. v. Berkshire Fashions,
Inc., 792 F.Supp. 969, 969-70 (S.D.N.Y. 1992) (quoting
Keystone Driller, 290 U.S. at 245),
aff'd, 983 F.2d 1048 (2d Cir. 1992).
satisfied his burden of proof regarding the unclean hands
defense. He pleaded the defense in his Answer and raised it
in his proposed findings of fact and conclusions of law, at
trial and in post-trial briefing. At trial, Peters testified
that he never recognized Coutsodontis as a Sea Trade
shareholder, never invited Coutsodontis to any Sea Trade
shareholder meetings and never would accept Coutsodontis as a
Sea Trade shareholder. Peters took those positions even
though Coutsodontis was adjudged the owner of 50% of Sea
Trade shares as early as January 2009, in the Athens
Shareholder Action, which Peters' mother and fellow Sea
Trade shareholder had commenced. See Multi-Member
Court of First Instance of Athens [Pol. Pr.] [district court]
1391/2009, p. 3 (Greece). This evidence supports the
Opinion's finding that Peters has unclean hands because
he breached a fiduciary duty he owed to Coutsodontis as a
fellow shareholder in a closely held corporation. See
Palatkevich v. Choupak, No. 12 Civ. 1681, 2014 WL
1509236, at *25 (S.D.N.Y. Jan. 24, 2014) (“Under New
York law, ‘Shareholders in a close corporation owe each
other a duty to act in good faith.' The failure to do so
constitutes a breach of fiduciary duty.” (internal
citation omitted)); Ross v. Moyer, 730 N.Y.S.2d 318,
320 (1st Dep't 2001) (“Where a plaintiff has
committed breaches of fiduciary duties owed to a defendant,
the doctrine of unclean hands applies to bar such plaintiff
from seeking relief on his or her equitable claims.”).
Also, as required for application of the unclean hands
doctrine, Peters' refusal to treat Coutsodontis as a
shareholder was directly related to the subject matter of
this action -- the ownership and control of Sea Trade -- and
injured Coutsodontis by requiring him to continue litigating
the issue of whether he inherited Sea Trade shares.
light of Peters' unclean hands, the time constraint
imposed on Coutsodontis' forfeiture of Sea Trade shares
was reasonable and within the Court's authority to grant
equitable relief. “[I]n determining whether the
doctrine of unclean hands bars an equitable remedy, courts
are permitted to weigh the wrongdoing of the plaintiff
against the wrongdoing of the defendant.”
Dunlop-McCullen v. Local 1-S, AFL-CIO-CLC, 149 F.3d
85, 92-93 (2d Cir. 1998); accord Wells Fargo Bank v.
Hodge, 939 N.Y.S.2d 98, 100 (2d Dep't 2012). A court
sitting in equity has power “as broad as equity and
justice require, ” U.S. Bank Nat. Ass'n v.
Losner, 44 N.Y.S.3d 467, 470 (2d Dep't 2016), and
“may grant any type of relief within its jurisdiction
appropriate to the proof whether or not demanded, imposing
such terms as may be just, ” State v. Barone,
546 N.E.2d 398, 400 (N.Y. 1989) (quoting N.Y. C.P.L.R. §
3017(a)). Here, the relief Peters requests is an order that
Coutsodontis forfeit his shares. Coutsodontis' breach of
his fiduciary duty to Sea Trade warrants forfeiture, but to
order forfeiture without a time constraint would give Peters
and his mother, Anna Peters, a windfall -- the full proceeds
from the sale of the M/V ATHENA, which was completed shortly
after the Court of First Instance in the Athens Shareholder
Action held that Coutsodontis owned 50% of Sea Trade
beginning January 13, 2003, when he inherited them from his
sister. Such a windfall to Peters would be unjust, as Peters
breached his fiduciary duty to Coutsodontis by refusing to
recognize him as a Sea Trade shareholder. The time constraint
on Coutsodontis' forfeiture avoids this windfall and
provides an equitable outcome by effectively splitting Sea
Trade's net profits during the time Peters and
Coutsodontis were both owners.
Plaintiffs' arguments for a different result is
persuasive. Most of the factual points that Plaintiffs raise
were presented at trial and considered in the Opinion, and
therefore are not proper for a reconsideration motion.
See Kolel Beth, 729 F.3d at 104 (reconsideration may
be granted based on “the availability of new
evidence” (emphasis added)); Analytical
Surveys, 684 F.3d at 52 (motion for reconsideration is
“not a vehicle for relitigating old issues”).
Additionally, Plaintiffs' factual points do not alter the
conclusion that Peters has unclean hands.
Plaintiffs note that they were not parties to the Athens
Shareholder Action and that Coutsodontis never sought
recognition of the decision in the Athens Shareholder Action
in any U.S. court. Neither of these facts excuses Peters'
failure to recognize Coutsodontis as a Sea Trade shareholder.
Peters was no stranger to the Athens Shareholder Action. His
mother commenced the Athens Shareholder Action, and Peters
testified that he had a shared interest in the outcome and
communicated with his mother's lawyers on her behalf.
Peters also cited the Athens Shareholder Action as a reason
to dismiss a competing action brought by Coutsodontis in New
York, arguing that the New York court should defer to the
pending litigation in the Greek courts. Once it was
determined in the Athens Shareholder Action that Coutsodontis
owned 50% of Sea Trade's shares, there was no reason why
Coutsodontis needed to seek recognition of that judgment in a
U.S. court in order to be recognized as a shareholder.
Coutsodontis' ownership is a matter of Greek inheritance
law that was adjudicated in a Greek court at the behest of
Peters' mother. Sea Trade is a Liberian corporation. The
only connection to the United States is that Peters and
Coutsodontis are U.S. citizens. Although Coutsodontis would
have needed to seek recognition of the judgment in a U.S.
court in order to enforce the judgment against Peters'
assets in the United States, see, e.g., N.Y.
C.P.L.R. § 5303 (a foreign country judgment is
enforceable by “an action on the judgment, a motion for
summary judgment in lieu of complaint, or in a pending action
by counterclaim, cross-claim or affirmative defense”),
Plaintiffs cite no authority supporting their argument that
recognition of the judgment in a U.S. court is a prerequisite
to Coutsodontis being recognized as a shareholder.
Plaintiffs argue that Peters would have breached his
fiduciary duty to his mother, Anna Peters, if he had
recognized Coutsodontis as a shareholder. This argument is
incorrect, as Anna Peters was the Plaintiff seeking
declaratory relief in the Athens Shareholder Action and is
therefore bound by ...