United States District Court, E.D. New York
GREUNER MEDICAL OF N.J. PC and CENTER FOR SPECIAL SURGERY OF ESSEX COUNTY, LLC, Plaintiff,
YAKINI BROWN Defendants.
MEMORANDUM & ORDER
K. CHEN, UNITED STATES DISTRICT JUDGE.
before the Court is Plaintiffs Greuner Medical of N.J. PC
(“Greuner Medical”) and Center for Special
Surgery of Essex County, LLC's (“CSS” and,
collectively with Greuner Medical, “Plaintiffs”),
Motion for an Order of Attachment and Expedited Discovery,
and for a Preliminary Injunction and Temporary Restraining
Order (“Motion”). For the reasons stated herein,
the Motion is denied.
Brown (“Defendant” or “Brown”)
received medical treatment from Plaintiffs at their
facilities in New Jersey from May 17, 2017 to June 26, 2017.
(Declaration of Adam Tonis, D.C. in Support of
Plaintiffs' Motion (“Tonis Decl.”), Dkt. No.
6-1 at ¶¶ 2, 4, 6, 8.) In connection with this
treatment, Defendant signed two patient agreements, one with
Greuner Medical on or about May 17, 2017, and the other with
CSS on or about May 24, 2017, (collectively the
“Contracts”), through which she assigned all
insurance benefit payments to Plaintiffs. (Id. at
¶¶ 4, 6.) At the time, Defendant was insured by the
Empire Plan, which is managed by United Healthcare.
(Id. at ¶ 10.) After Plaintiffs treated Brown,
they submitted medical claims to Untied Healthcare seeking
coverage for the treatment they provided. (Id. at
¶¶ 8, 9.) United Healthcare remitted multiple
benefit checks totaling $183, 529.87 (the
“Checks”) to Defendant as a result of these
claims. (Id. at ¶ 10.) Defendant allegedly did
not turn over the Checks to Plaintiffs. (Id.)
After learning on July 10, 2017, that the Checks had been
sent to Defendant, Plaintiffs made multiple attempts, via
telephone and mail, to reach Defendant. (Id. at
¶ 11.) To date, Plaintiffs have not been able to contact
August 3, 2017, Plaintiffs commenced this action, alleging
that Defendant breached the Contracts by failing to turn over
the Checks to Plaintiffs; they seek money damages.
(Complaint, Dkt. No. 1.) Defendant was served with the
Summons and Complaint on August 14, 2017. (Aff. of Service,
Dkt. No. 5.) On August 22, 2017, Plaintiffs moved for an
order to show cause seeking an order for attachment and
expedited discovery, and for a preliminary injunction and
temporary restraining order (“Motion”). (Motion,
Dkt. No. 6.) The Court held a show cause hearing
(“Hearing”), at which only counsel for Plaintiffs
appeared, on August 31, 2017. As stated on the record at the
Hearing and for the reasons stated herein, Plaintiffs'
motion is denied.
Plaintiffs' request for a preliminary injunction or a
temporary restraining order (“TRO”) is denied
because district courts do not have the authority under
Fed.R.Civ.P. 65 to grant TROs or preliminary injunctions
preventing a defendant from dissipating assets prior to
judgment being entered in an action for money damages.
See Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 130
(2d Cir. 2014) (discussing the Supreme Court's holding in
Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund,
Inc., 527 U.S. 308, 319, 330-33 (1999), which held that
“a district court had no authority pursuant to Rule 65
of the Federal Rules of Civil Procedure to issue a
preliminary injunction preventing a defendant from disposing
of its assets pending adjudication of a contract claim for
money damages.” (internal quotation marks and
alterations omitted)). Here, Plaintiffs seek to recover money
damages from Defendant for an alleged breach of contract,
which is barred by Grupo Mexicano. Accordingly,
Plaintiffs' request for a preliminary injunction and a
temporary restraining order is denied.
the Court finds that Plaintiffs have not met the statutory
requirements for a pre-judgment attachment of property under
Fed.R.Civ.P. 64. Rule 64 provides that a pre-judgment
attachment is available “under the law of the state
where the court is located . . . to secure satisfaction of
the potential judgment.” Fed.R.Civ.P. 64. The grounds
for attachment under New York law are set out in C.P.L.R.
§ 6212, which requires that parties seeking to attach
assets demonstrate “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 the
plaintiff.” C.P.L.R. § 6212.
Plaintiffs have requested an attachment pursuant to C.P.L.R.
§ 6201(3), which provides that attachment may be granted
to a plaintiff who has demanded a money judgment, when the
defendant acted “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.” C.P.L.R. §
6201(3); see also Colon v. Cole Bros. Circus, Inc.,
04-CV-3606, 2007 WL 3014706, at *2 (E.D.N.Y. Oct. 12, 2007)
(Under C.P.L.R. § 6201(3), “it is incumbent upon
the [plaintiff] to demonstrate that the defendant is acting
with intent to defraud.” (quoting Brastex Corp. v.
Allen Int'l, Inc., 702 F.2d 326, 331 (2d Cir.
1983)). “Intent to defraud must be proved, and the
facts relied upon to prove it must be fully set out in the
moving affidavits.” Coley v. Vannguard Urban
Improvement Ass'n, Inc., No. 12-CV-5565
(PKC) (RER), 2016 WL 7217641, at *10 (E.D.N.Y. Dec. 13, 2016)
(quoting Eaton Factors Co. v. Double Eagle Corp.,
232 N.Y.S.2d 901, 903 (N.Y.App.Div. 1962) (per curiam)
(quotation marks and alterations omitted)); see also
Colon, 2007 WL 3014706, at *2 (“Fraud is not
lightly inferred, and the moving papers must contain
evidentiary facts-as opposed to conclusions-proving the
fraud.”) (quoting Brastex Corp., 702 F.2d at
331)); JSC Foreign Econ. Ass'n Technostroyexport v.
Int'l Dev. & Trade Servs., Inc., 306 F.Supp.2d
482, 487 (S.D.N.Y. 2004) (stating that it is insufficient
“to submit affidavits containing allegations that
merely raise suspicions of fraudulent intent”). A
plaintiff must show “that such fraudulent intent really
exists in the defendant's mind.” DLJ Mortgage
Capital, Inc. v. Kontogiannis, 594 F.Supp.2d 308, 319
(E.D.N.Y. 2009) (citations and internal quotations omitted).
The plaintiff “must present more than ‘a
scintilla of proof as to the requisite elements of the fraud
cause of action alleged in the complaint.'”
Trigo Hnos., Inc. v. Premium Wholesale Groceries,
Inc., 424 F.Supp. 1125, 1132 (S.D.N.Y. 1976)
(“Trigo Hnos. II”) (quoting
MacMillan v. Hafner, 344 N.Y.S.2d 729, 730
“direct evidence of fraudulent intent is rare, courts
often look for the presence of ‘badges of fraud'
which commonly accompany fraudulent transfers in determining
whether to infer fraudulent intent” from a disposition
of assets. U.S. Fid. & Guar. Co. v. J. United Elec.
Contracting Corp., 62 F.Supp.2d 915, 924 (E.D.N.Y.
1999). The “badges of fraud” courts consider
include: (1) a close relationship between the parties
involved in the transfer or transaction; (2) secrecy in the
transfer; (3) a questionable transfer not in the usual course
of business; (4) gross inadequacy of consideration; (5) the
transferor's knowledge of the creditor's claim and
the transferor's inability to pay it; (6) the use of
fictitious parties; (7) the retention of control of the
property by the transferor after transfer. See Id.
(citing HBE Leasing v. Frank, 48 F.3d 623, 639 (2d
Cir.1995)); DLJ Mortg. Capital, 594 F.Supp.2d at
Court finds that Plaintiffs have not carried their burden of
proving that Defendant had the intent to defraud or to
frustrate the enforcement of a judgment. Although Plaintiffs
sent multiple letters and made several phone calls to
Defendant, Plaintiffs' inability to reach Defendant alone
is insufficient to carry their burden of showing intent to
defraud. (Tonis Decl., Dkt. No. 6-1 at ¶11.) Indeed, at
the Hearing, Plaintiffs' counsel acknowledged that he had
been advised of alternative explanations for Defendant's
failure to respond to Plaintiffs' attempted
communications. Plaintiff's counsel was first told by the
person who answered the phone believed to belong to Defendant
that Defendant was in the hospital. On a later occasion,
Plaintiff's counsel was told that Defendant was on
vacation. Although an inability to reach Defendant after
multiple attempts raises a suspicion of intent to defraud or
frustrate the enforcement of a judgment, these facts do not
rise to the level of proving such intent for purposes of
justifying pre-judgment attachment under C.P.L.R.
§§ 6212 and 6201(3). See JSC Foreign
Econ., 306 F.Supp.2d at 487 (stating that it is
insufficient “to submit affidavits containing
allegations that merely raise suspicions of fraudulent
intent”); DLJ Mort., 594 F.Supp.2d at 319
(plaintiff must show “that such fraudulent intent
really exists in the defendant's mind”) (citations
and internal quotations omitted).
there is currently no evidence that Defendant has attempted
to dissipate the funds at issue. Although Plaintiff's
counsel advised the Court at the Hearing that one check for
approximately $122, 000 was purportedly cashed, he had no
information on who had cashed the check and whether any of
the proceeds from that check had been spent by Defendant.
Plaintiff's counsel also had no information indicating
that any of the other checks at issue, which account for
approximately $61, 000 of the missing insurance
reimbursements, had been cashed or that their proceeds had
been spent by Defendant. Thus, the proceeds from the checks
at issue may not have been converted and/or dissipated, which
the Court finds significant in determining whether Defendant
intends to defraud Plaintiffs.
the evidence that Plaintiffs currently proffer is
insufficient to establish Defendant's fraudulent intent
for purposes of imposing a pre-judgment attachment. See
Dafeng Hengwei Textile Co., Ltd. v. Aceco Indus. & Comm.
Corp. (“Dafeng Textile”), 54
F.Supp.3d 287, 294 (E.D.N.Y. 2014) (“Plaintiff's
assertion that the money paid from K-Mart should have gone
directly to Plaintiff and that Defendant's failure to pay
it directly to Plaintiff, and failure to account for exactly
to whom the money was paid, is insufficient to support an
inference of fraud.”); Northeast United Corp. v.
Lewis, 137 A.D.3d 1387, 1388 (N.Y. App Div. 2016)
(attachment is “a drastic remedy, ” and is
“strictly construed in favor of those against whom it