Preview
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
Exhibit 59
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023
Exhibit 60
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022
NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 1
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1 UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
2 ------------------------------x
3 MARCUS ABRAMS,
4 Plaintiff,
5 v. 20 Civ. 5174 (LLS)
6 UY TRADING LTD., et al,
7 Defendants. Order to Show Cause
8 ------------------------------x
New York, N.Y.
9 August 4, 2022
12:15 p.m.
10
Before:
11
HON. LOUIS L. STANTON,
12
District Judge
13
APPEARANCES
14
KIM & SERRITELLA
15 Attorneys for Plaintiff
BY: JAMES R. SERRITELLA
16
JAFFE & ASHER
17 Attorneys for Defendants
BY: GREGORY E. GALTERIO
18
19 Also Present: Justin Stone
20
21
22
23
24
25
SOUTHERN DISTRICT REPORTERS, P.C.
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1 (In the robing room)
2 THE COURT: Good afternoon.
3 The arithmetic in this case is a little baffling to
4 me. The order to show cause which I signed back in July
5 commands them to place 25 million of the net proceeds from the
6 sale into escrow, and the apartment seems to be listed for
7 eighteen-seven. So there's a discrepancy.
8 I've read your papers. I read your briefs. I'm
9 particularly impressed at what a good job was done on the reply
10 brief in the very short time available. It's nice to have good
11 lawyers on it. It's important for the client.
12 Which is Mr. Serritella?
13 MR. SERRITELLA: I'm Mr. Serritella, your Honor.
14 Good afternoon.
15 THE COURT: Your case is a marsh of contested issues
16 of fact. So it's going to be very hard to make any rulings on
17 the merits in terms of governing the outcome of the case. Tell
18 me on the facts exactly what relief you want between now and
19 the time of judgment. Is this a jury case?
20 MR. SERRITELLA: Correct, your Honor.
21 THE COURT: Excuse me?
22 MR. SERRITELLA: Correct, your Honor.
23 THE COURT: It is jury.
24 MR. SERRITELLA: Yes.
25 THE COURT: Tell me the relief you want. To me this
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1 is the important point we should be talking about.
2 MR. SERRITELLA: Yes, your Honor. Thank you.
3 If I may start with that.
4 This is a motion for an attachment. And so the relief
5 that --
6 THE COURT: Well, I know that because I've read your
7 papers.
8 MR. SERRITELLA: I know you know that. We're on the
9 record here, so sometimes I like to put things on the record.
10 But this is a motion for an attachment. And the
11 relief that we're seeking here is very discrete.
12 THE COURT: What do you want to attach?
13 MR. SERRITELLA: We want to attach the property that
14 your Honor mentions for sale.
15 THE COURT: How do you attach a building, and how does
16 it move away if you don't attach it?
17 MR. SERRITELLA: So, your Honor, you can -- there's
18 precedent for this. You can --
19 THE COURT: Excuse me?
20 MR. SERRITELLA: There is precedent for attachment on
21 a property. You could file paperwork --
22 THE COURT: I'm just asking how you do it.
23 MR. SERRITELLA: Yes. So you would -- if we were to
24 get an attachment order, we would file something with the
25 county clerk, and the sheriff would --
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1 THE COURT: What's that, a lis pendens?
2 MR. SERRITELLA: Similar to that, your Honor, it would
3 be, yes.
4 THE COURT: That will kill a sale pretty effectively.
5 The buyer is told by his agent or lawyer, You're not buying a
6 building, you're buying a lawsuit.
7 MR. SERRITELLA: So, your Honor, I can address that.
8 Justice Cohen in the commercial division actually
9 addressed this issue. And what he did back in his order in
10 January is he granted our motion for an attachment in the form
11 of equitable relief.
12 THE COURT: Why do I care what he did?
13 MR. SERRITELLA: So I think there's some precedent for
14 a judge doing this.
15 THE COURT: You could perfectly well be before Justice
16 Cohen, but you're brought up here. You know you brought it
17 here.
18 MR. SERRITELLA: Yes. Well, the amounts are
19 different.
20 THE COURT: I assume you want it conducted here.
21 MR. SERRITELLA: Right. So the amounts --
22 THE COURT: We start fresh.
23 MR. SERRITELLA: Right. So the amounts are different
24 there, your Honor. So the amount at stake in the other case is
25 not enough to -- there still would be equity in the property.
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1 So this is a separate lawsuit, right; so there's still equity
2 in this property that's at issue. So that's why we're bringing
3 the attachment here as well.
4 And so part of the problem too is the defendant here
5 Russell Abrams has been engaging in a lot of conduct --
6 THE COURT: I thought we were talking about how you
7 attach a building.
8 MR. SERRITELLA: Right. The reason why I bring this
9 up is because Mr. Russell Abrams has been violating other court
10 orders and transferring the property into other holding
11 companies that he controls.
12 THE COURT: How do you attach a building? Just as a
13 novice in this field, tell me how to do it. What do you do, go
14 out and put a lasso around it?
15 MR. SERRITELLA: No, you do file paperwork with the
16 county clerk to make it clear that --
17 THE COURT: You were telling me what that paper is.
18 Is it like a lis pendens?
19 MR. SERRITELLA: Similar, your Honor.
20 THE COURT: And what does it say?
21 MR. SERRITELLA: So it puts anyone on notice that
22 there is essentially an attachment or a lien on the property.
23 It's on a public record.
24 THE COURT: That's all. That is the attachment?
25 MR. SERRITELLA: Correct, your Honor.
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1 THE COURT: What purpose does that serve?
2 MR. SERRITELLA: So what it does, it prevents the
3 defendant here from transferring the property to somebody else
4 without --
5 THE COURT: Tell me in the abstract what purpose does
6 that serve.
7 MR. SERRITELLA: In the abstract it prevents further
8 fraudulent behavior and violations of court orders, and
9 attempts to frustrate judgments which has been going on by
10 these defendants in other proceedings for many months now. And
11 so it does serve a purpose, your Honor.
12 THE COURT: And it does those things simply by warning
13 the people who see it, that he'd better look into the validity
14 of the title more carefully.
15 MR. SERRITELLA: Correct, your Honor. Because we have
16 a situation with a defendant who has a propensity to engage in
17 behavior that we've laid out in our papers that seems to have
18 no regard or respect for court orders or process. And I think
19 we've laid this out pretty compellingly.
20 And so what's to stop them from selling this property
21 out from underneath my plaintiffs? And then once they do that,
22 because, as we've laid out, they've transferred all other
23 assets out of the country, and then how do we enforce a
24 judgment in this case or any other case? So it would be
25 extremely prejudicial to my clients if that happened.
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1 Now, if there is a would-be buyer, a bona fide
2 purchaser in an arm's-length transaction, and they want to buy
3 the property, then arrangements can be made to make that happen
4 involving us and even your Honor.
5 Practically speaking, if there's a buyer on the
6 property, they are going to make an offer, there will be an
7 acceptance. And there will be a due process period where a
8 title search will happen, and it will determine if there's
9 attachment or mortgage on the property. And then something can
10 be done to --
11 THE COURT: Well, it's listed with Corcoran, isn't it?
12 MR. SERRITELLA: Correct. Correct.
13 THE COURT: What's Corcoran going to be doing when
14 this mysterious buyer comes along?
15 MR. SERRITELLA: Well, that's, practically speaking,
16 your Honor, on the front end, if there really is a buyer. On
17 the front end, if there is a buyer who makes an offer and there
18 is an acceptance of that offer and they want to potentially go
19 through with the sale, there could be a process that could
20 allow that to happen, even with an attachment on the property.
21 And we're not -- we don't want to frustrate a sale.
22 THE COURT: But that's what you're going to do.
23 MR. SERRITELLA: Your Honor, it will not necessarily
24 frustrate a sale.
25 THE COURT: Look, let me get to the point.
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1 MR. SERRITELLA: Yes.
2 THE COURT: The reason I ask you what an attachment
3 is, is partly because I'm curious about what it is, and you've
4 told me. It's, in effect, no more than a lis pendens. I
5 understand about that. And I understand that anybody who sees
6 a lis pendens on an $18 million offer of an apartment is going
7 to look elsewhere.
8 Now, let me ask you -- you could keep waiting and some
9 other buyer will come, but it's not going to happen fast. Just
10 take that on faith for purposes of discussion. You want to
11 sell the apartment. You don't want anything to make it more
12 difficult. That's really the reality of it. A lis pendens
13 will do that.
14 So the question is do you really need one? Isn't what
15 you really want is for the apartment to be sold at a good big
16 price, and have that money remain here and not be spirited out
17 of the country by the defendants?
18 MR. SERRITELLA: Yes, your Honor, in the alternative
19 to an attachment. And that's what happened before Justice
20 Cohen; that was his --
21 THE COURT: Excuse me?
22 MR. SERRITELLA: Justice Cohen's order was exactly
23 that, in effect.
24 But there's another issue. The defendant has been
25 placing mortgages on the property and taking the proceeds of
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1 those mortgages --
2 THE COURT: Oh, yes, of course.
3 MR. SERRITELLA: -- outside the country.
4 THE COURT: Of course. They shouldn't be allowed to
5 do that.
6 MR. SERRITELLA: Right.
7 THE COURT: We are met in the name of an attachment at
8 the moment.
9 MR. SERRITELLA: Right. Okay.
10 THE COURT: Did he prevent them from -- oh, yes, and
11 then they agreed, and then they put a 25 -- 250,000 --
12 MR. SERRITELLA: Right. I think it's 450,000.
13 $450,000.
14 THE COURT: On the theory that was not an encumbrance.
15 MR. SERRITELLA: On Russell's theory, but that's
16 obviously not fact.
17 THE COURT: Excuse me?
18 MR. SERRITELLA: Under Russell's theory, but that
19 absolutely was an encumbrance. And they also transferred
20 ownership of the property from one entity to another.
21 THE COURT: Those things can be stopped. They are
22 simply minor obstacles along the way towards a judgment. You
23 don't need an attachment to stop them from mortgaging it.
24 MR. SERRITELLA: Right. But we need a court order to
25 stop them from mortgaging.
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1 THE COURT: Yes, of course.
2 MR. SERRITELLA: But one of our concerns, your Honor,
3 as you can imagine, is there have been violations of court
4 orders that have done just that. So an attachment would make
5 it harder to do that. Do you see what I mean?
6 THE COURT: Why?
7 MR. SERRITELLA: Because no lender is going to give
8 him a mortgage if there's already an existing attachment that
9 takes priority over another property. So that's where it's a
10 major concern as well, your Honor.
11 THE COURT: Let me hear from the defendants.
12 MR. GALTERIO: That would be me.
13 Do you want me to speak to this issue only, this
14 attachment?
15 THE COURT: Basically, I want to hear what you have to
16 say. But this is the issue we're talking about at the moment.
17 MR. GALTERIO: Right. Well, first of all, as far as
18 the remedy itself of attachment is concerned, I agree with your
19 Honor that it will discourage purchasers from offering any --
20 from getting involved in this, because they are buying the
21 lawsuit, as your Honor said.
22 THE COURT: But only experience will teach you. You
23 won't take it from us.
24 MR. GALTERIO: Okay. I realize that.
25 But I think it is really the fact, and I think that
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1 he's also shooting himself in the foot, because he's preventing
2 the proceeds from becoming liquid as opposed to staying in the
3 building.
4 THE COURT: But his distrust of your clients and his
5 appraisal of their ability to spirit money out of the country
6 regardless of the amount of lying that it may take to do is
7 very deep.
8 MR. GALTERIO: I understand that.
9 THE COURT: And so he's got to be satisfied that the
10 sealing away of any money paid from it from them until it's
11 determined who is entitled to it has to be very evident.
12 MR. GALTERIO: You know, your Honor, I would like to
13 address the element of likelihood of success.
14 THE COURT: Of what?
15 MR. GALTERIO: Of likelihood of success that is
16 necessary to obtain an attachment.
17 THE COURT: You can address it and I'll be interested
18 to hear what you say. But I'll tell you my impression from
19 reading the briefs is that the question of whether it's an
20 ERISA matter or not is only one of many factual issues not
21 necessarily determinative of the case --
22 MR. GALTERIO: I agree with you.
23 THE COURT: -- as a whole.
24 MR. GALTERIO: I agree with you.
25 THE COURT: So you're going to have to explain why all
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1 the other claims of fraud, why one brother against another can
2 be dismissed out of hand.
3 MR. GALTERIO: Well, Judge, if you concentrate on the
4 statute of limitations component of the brief, one of the
5 things that I'm concerned about, I'm not suggesting that there
6 are no monies left to be --
7 THE COURT: Excuse me?
8 MR. GALTERIO: I am not suggesting that the
9 defendant -- that the plaintiff does not have a claim for some
10 money that is not time-barred. But a huge component of the $25
11 million that he is seeking to attach involves a $5 million
12 loss. That $5 million loss has been compounded together with
13 returns on interest, prejudgment interest, etc., to an
14 exorbitantly high amount of money.
15 But that loss occurred ten years ago -- actually, ten
16 years prior to the filing of this complaint. And what I
17 really -- and I think we all should find a little bit contrived
18 about this motion is that in their brief, they claim that the
19 plaintiff, okay, did not know that his deferred and profit
20 sharing funds had lost that $5 million until approximately 2014
21 of July, which conveniently is just six years before the filing
22 of this claim.
23 In his papers, he says that at some point in time, the
24 account was transferred into a Wells Fargo account, and that he
25 didn't find out about it; and it was transferred without his
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1 permission and he didn't find out about it until later, years
2 later is what's said in the brief.
3 My client attached to his declaration the account
4 opening statements for those Wells Fargo accounts. They were
5 signed by the defendants in September of 2012. For him to say
6 that it was done without his permission and he didn't discover
7 it until July of 2014, is very convenient for statute of
8 limitations purposes. But this is not a normal ERISA case.
9 This is a case where he signed that account as a co-applicant;
10 he had trading authority over that account; he could have
11 opened up the internet and looked at what the balance of that
12 account was at any time because he was an account holder.
13 On top of that, your Honor, the losses occurred
14 sometime in 2010. Conveniently, they attached to their papers
15 as proof of this original $8 million that was in this fund a
16 statement from January 1 of 2010. Then we don't see any
17 statements at all. The defendant borrowed from his deferred
18 compensation fund in 2010 $1.8 million. And he's expecting the
19 Court to believe in the face of all this evidence, especially
20 signature cards that he opened an account that he had trading
21 authority over, where those monies were contained; that he had
22 no idea that monies had been lost until 2014. It's simply
23 incredible.
24 THE COURT: Well, you better take his deposition,
25 don't you think? And ask him about it.
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1 MR. GALTERIO: I think so.
2 But we're talking about likelihood of success. And if
3 there's proof that he signed an account opening statement, the
4 very account in which these funds were deposited, and he's
5 claiming that he did not know that they had decreased in value
6 until 2014, two years later, it's unbelievable.
7 But whether or not we decide that it's a question of
8 fact or not a question of fact, we have to step back and
9 remember that we're in the context of a motion for attachment.
10 And in a motion for attachment, you have to show likelihood of
11 success. And I say you cannot show likelihood of success that
12 you're going to recover $25 million worth of damages when you
13 knew about five million of them in 2010.
14 And also, he claims that every single last penny that
15 was due to him under this deferred compensation plan was due
16 January 1, 2007. On January 2 -- 2017, excuse me.
17 On January 2, 2017, he didn't get paid. He had actual
18 knowledge at that point in time that he had a claim; and he had
19 actual knowledge of a breach of fiduciary duty claim had he
20 opened up his eyes. And he can't turn a blind eye. And three
21 years later, he still didn't file this action. He waited three
22 years and six months.
23 So all I'm trying to say to you, your Honor, is this
24 is not a dispositive motion. I'm not moving to dismiss, I'm
25 not moving for summary judgment; I'm saying to your Honor,
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1 let's think about likelihood of success on the merits.
2 So we have, in my opinion, a higher likelihood of
3 success than not, that all, if not most of these claims, are
4 time-barred. But certainly to the extent that he is going to
5 allege a $5 million loss, he's going to compound the interest
6 on that from 2009, he's going to ask for prejudgment interest
7 on that from 2009, and that's going to turn into $20 million or
8 more. He cannot prove a likelihood of success on the amount of
9 his damages.
10 Now, I am not saying that there's not a claim. What's
11 the dollar claim? We say it's less than a million dollars.
12 And if you've read our papers, which I'm sure you have, we also
13 claim that we're entitled to an offset because of the $990,000
14 in unreimbursed insurance money that we had to spend in order
15 to settle a sexual discrimination and harassment case against
16 the defendant. And we paid all of that $990,000, and we're
17 going to commence an action for him because the payment was
18 made less than a year ago for indemnification. So we have an
19 offset.
20 I'm saying to your Honor that what you need to be
21 thinking about, what we all need to be thinking about, is
22 likelihood of success. Because if you don't show likelihood of
23 success, then you can't get an attachment.
24 Now, also, I think it's very important for us to
25 understand that there are allegations here of wrongdoing on
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1 behalf of my client. It's a lot of smoke, and I'd like to try
2 to help clear most of the smoke. Because when I get to the
3 mortgage issue, we're $250,000 over what the limit was in the
4 judge's order, but there was an explanation for that.
5 One of the things that are in the plaintiff's papers
6 is allegations that my client -- actually, it wasn't my client.
7 It was one of my clients, not Russell, but Sandra and others,
8 were sued in this GlobeOp lawsuit. And a lot of the
9 allegations in the plaintiff's complaint mirror the GlobeOp
10 lawsuit.
11 The papers make it sound as if the GlobeOp lawsuit is
12 still pending. It's not. The papers make it sound like no one
13 ever paid GlobeOp any money. That's not true. I've attached
14 to my papers proof positive that there was a satisfaction of
15 judgment filed in the GlobeOp case in 2015, five years before
16 this action was commenced. There's plenty of case law out
17 there that says you can't use somebody's past alleged
18 fraudulent transfers as a current basis for getting an
19 attachment.
20 But not only that, the fact that the judgment was
21 satisfied proves that the defendants pay their debts when
22 they're due, and there's no need to securitize them with an
23 attachment or anything else.
24 Another thing they say is that the state court granted
25 their motion for an attachment. It's not true. The state
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1 court did not grant an attachment, nor did the arbitrator in
2 the arbitration proceeding before they went to state court
3 grant an attachment. The state court judge granted an
4 injunction which essentially said, if you sell -- first of all,
5 you can't encumber the property for more than $9 million in
6 total; and two, didn't say you can't transfer the property. If
7 you sell the property, you've got to deposit $1.4 million into
8 escrow. That's what that said. That was a preliminary
9 injunction in aid of arbitration.
10 And as your Honor probably knows, in the federal court
11 system, under the Supreme Court law, the Grupo Mexicano, that
12 case, you're not allowed to issue an injunction restraining or
13 enjoining a foreign defendant from transferring its assets.
14 That's why they're asking for an attachment. And they're
15 trying to turn the attachment into an injunction. Because an
16 attachment is something that you serve on a garnishee or, in
17 the case of real property, as he's saying, something that you
18 file with the clerk. That freezes the property. You can't
19 have an attachment that says the property is attached, but it
20 can be sold and the proceeds have to be deposited in escrow.
21 That's a preliminary injunction. That's not an attachment.
22 They are two different remedies.
23 Also, if you look in the papers of the plaintiff, he
24 says, Oh, I think that the defendants have drained their New
25 York bank accounts and sent all of the money to South America.
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1 I have reason to believe. That is the sole basis that he
2 claims that the plaintiffs -- defendants have drained their
3 bank accounts and sent them to South America.
4 Yes, there have been some mortgages on the property.
5 Yes, there have been some transfers. But the law says just
6 because there's a transfer does not mean that there's grounds
7 for an attachment. You have to show that something nefarious
8 is going on; and you have to show that you're actually likely
9 to succeed on the merits of your claim.
10 I don't understand how you can succeed on the merits
11 of a claim, especially to the extent that you're claiming a $5
12 million loss that occurred in 2010, ten years before this
13 action was commenced. The man borrowed 1.8 million from his
14 profit sharing funds in 2010. Are you telling me he didn't
15 look at his balance? He's saying, I never knew the Wells Fargo
16 account was opened up. And by the way, not only did I not know
17 it was opened up, it was opened up without my permission. And
18 I didn't find out about it until 2014.
19 Well, lo and behold, he signed the signature cards in
20 September of 2012. That's a lie. It's not true.
21 You can't get an attachment on a lie. You have to
22 show likelihood of success, which is some degree of proof.
23 I don't disagree that there might be a dispute over
24 the factual issues that needs resolution on the merits. And I
25 don't disagree that this is not a dispositive motion. But this
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1 is a motion in which we have to consider whether there is
2 likelihood of success. And for the reasons that I've said, not
3 only substantively statute of limitations, not only ERISA,
4 because my understanding of ERISA is that if you have a plan
5 and you can draw down from that plan before you're retired, it
6 doesn't qualify as an ERISA plan. These plans, the plans that
7 he has attached to his own complaint, provide for the
8 possibility of getting distributions before you're terminated.
9 My understanding of the law is that only a qualified
10 deferred compensation plan — and not a nonqualified deferred
11 compensation plan, of which these two plans clearly are, only
12 the qualified can you sue for a breach of refusal to return the
13 monies under ERISA. And top hat plans are not covered by
14 ERISA's fiduciary provisions. He knows that. He says in his
15 reply memorandum, Oh, these are not top hat plans. But if you
16 go to Count Five of the complaint, it says they're top hat
17 plans six times.
18 So I would suggest to you that the credibility of the
19 declaration and the exhibits that are being proffered to obtain
20 an attachment, a serious and harsh remedy, are not 100 percent
21 truthful, and I'm being kind when I say that.
22 Plus, your Honor, why is it that they filed this
23 action in July of 2020, ten years after he found out about the
24 $5 million loss, more than three years after the very last day
25 he was to receive every penny of his money under the plan? Why
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1 is it that he waited two more years to walk into court and ask
2 for a provisional remedy?
3 The law, as I know it, says you have to act rather
4 expeditiously. And what was preventing him from acting? I
5 would say nothing, because nothing prevented him from going to
6 the arbitrator and asking for an attachment; nothing prevented
7 him from going to Judge Cohen and asking for an attachment.
8 And by the way, both of those motions were denied. And the
9 only thing he got was a temporary restraining order or a
10 preliminary injunction, which he can't get here. This is why
11 he's trying to seek an attachment and kind of turn it inside
12 out into a preliminary injunction.
13 THE COURT: Why did Judge Cohen deny the attachment?
14 MR. GALTERIO: Because Judge Cohen said that -- well,
15 you have to look at the transcript. The judge did not
16 particularly articulate his reasons. When I read the
17 transcript, he kind of steered them in the direction. He says,
18 You don't want an attachment; you don't need an attachment.
19 What you need is a restraining order.
20 I guess essentially the same reasons you had, your
21 Honor: If I stick an attachment on this property, you're going
22 to shoot yourself in the head, because it's not going to sell
23 and you're not going to be able to get the money.
24 So I really think that we have quite a number of
25 issues that go directly to likelihood of success and, in fact,
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1 to me, prove otherwise. I'm not saying that it's impossible at
2 the end of the day that --
3 THE COURT: Is the test the same as the test for
4 entering a preliminary injunction?
5 MR. GALTERIO: The test for what, your Honor?
6 THE COURT: When we keep talking about the likelihood
7 of success.
8 MR. GALTERIO: Yes, likelihood of success is necessary
9 on a motion for an attachment.
10 THE COURT: Is that because it is similar to a
11 preliminary injunction?
12 MR. GALTERIO: Is it because it's similar to? I
13 don't -- you know, I don't know that I can profess to answer
14 that question. It's a separate requirement and it's a
15 statutory requirement in the case of an attachment, likelihood
16 of success.
17 THE COURT: Under New York state law.
18 MR. GALTERIO: That's correct, your Honor.
19 THE COURT: But under federal law, when you're dealing
20 with an injunction, of which the classic one of the
21 requirements is likelihood of success, there is an alternate,
22 which is that the matter is a fair ground for litigation; and
23 that the balance of hardships tilts decidedly in favor of the
24 party asking for the injunction.
25 MR. GALTERIO: That is not --
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1 THE COURT: If that is applied here, all that you have
2 told me is interesting when we get to a determination of the
3 merits of the case, but for the purpose of an attachment, it is
4 not, because what we're balancing on that issue is the
5 likelihood that your clients will be able to run away with the
6 money if -- unless an attachment is --
7 MR. GALTERIO: No, it's a likelihood of success on the
8 merits of the underlying claims that the plaintiff is asserting
9 against the defendant.
10 THE COURT: Excuse me?
11 MR. GALTERIO: It's the likelihood of success on the
12 underlying merits of the plaintiff's claims against the
13 defendants.
14 THE COURT: I understand. You've told me that four
15 times. That does not dispose of my question.
16 MR. GALTERIO: Well, your question, I think, is does
17 the alternative federal injunction standard apply to
18 attachment. And my answer to you is no, it does not. Because
19 through Federal Rule 64, the Court follows the state injunction
20 rules under the CPLR which requires a likelihood of success and
21 does not, to my knowledge, allow you to substitute the fair
22 ground for litigation standard.
23 THE COURT: Well, the reason we look to the state in
24 attachment cases is because there is no federal analogue; and
25 therefore, we follow in general the law of the state regarding
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1 an attachment. But whether that would govern each element of
2 the proof necessary for it is a separate question.
3 MR. GALTERIO: I think it does. I think you have to
4 show --
5 THE COURT: Of course you do.
6 MR. GALTERIO: -- you're likely to succeed on the
7 merits of your claim. And to me, the merits of the claim is
8 not only the statute of limitations, not only the ERISA
9 components, but the damage component. And to me, $25 million
10 is picked out of thin air.
11 THE COURT: Well, I've heard you in full and you've
12 argued the merits of your whole case at considerable length.
13 And it's interesting to hear it. But it brings me back to
14 where I started:
15 There is a whole field of fact issues in this
16 situation in the nature of his claim. And some are more or
17 less clearly barred by the statute of limitations. But the
18 determination of whether there should be an immediate grant of
19 the attachment does not turn on those things.
20 MR. GALTERIO: I'm not understanding why you believe
21 that to be the case. Because if you have to establish
22 likelihood of success --
23 THE COURT: Well, because my own belief is that he
24
Preview
FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 Exhibit 59 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 02/25/2023 Exhibit 60 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 1 02/25/2023 M84VABRO 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 3 MARCUS ABRAMS, 4 Plaintiff, 5 v. 20 Civ. 5174 (LLS) 6 UY TRADING LTD., et al, 7 Defendants. Order to Show Cause 8 ------------------------------x New York, N.Y. 9 August 4, 2022 12:15 p.m. 10 Before: 11 HON. LOUIS L. STANTON, 12 District Judge 13 APPEARANCES 14 KIM & SERRITELLA 15 Attorneys for Plaintiff BY: JAMES R. SERRITELLA 16 JAFFE & ASHER 17 Attorneys for Defendants BY: GREGORY E. GALTERIO 18 19 Also Present: Justin Stone 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 2 02/25/2023 M84VABRO 1 (In the robing room) 2 THE COURT: Good afternoon. 3 The arithmetic in this case is a little baffling to 4 me. The order to show cause which I signed back in July 5 commands them to place 25 million of the net proceeds from the 6 sale into escrow, and the apartment seems to be listed for 7 eighteen-seven. So there's a discrepancy. 8 I've read your papers. I read your briefs. I'm 9 particularly impressed at what a good job was done on the reply 10 brief in the very short time available. It's nice to have good 11 lawyers on it. It's important for the client. 12 Which is Mr. Serritella? 13 MR. SERRITELLA: I'm Mr. Serritella, your Honor. 14 Good afternoon. 15 THE COURT: Your case is a marsh of contested issues 16 of fact. So it's going to be very hard to make any rulings on 17 the merits in terms of governing the outcome of the case. Tell 18 me on the facts exactly what relief you want between now and 19 the time of judgment. Is this a jury case? 20 MR. SERRITELLA: Correct, your Honor. 21 THE COURT: Excuse me? 22 MR. SERRITELLA: Correct, your Honor. 23 THE COURT: It is jury. 24 MR. SERRITELLA: Yes. 25 THE COURT: Tell me the relief you want. To me this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 3 02/25/2023 M84VABRO 1 is the important point we should be talking about. 2 MR. SERRITELLA: Yes, your Honor. Thank you. 3 If I may start with that. 4 This is a motion for an attachment. And so the relief 5 that -- 6 THE COURT: Well, I know that because I've read your 7 papers. 8 MR. SERRITELLA: I know you know that. We're on the 9 record here, so sometimes I like to put things on the record. 10 But this is a motion for an attachment. And the 11 relief that we're seeking here is very discrete. 12 THE COURT: What do you want to attach? 13 MR. SERRITELLA: We want to attach the property that 14 your Honor mentions for sale. 15 THE COURT: How do you attach a building, and how does 16 it move away if you don't attach it? 17 MR. SERRITELLA: So, your Honor, you can -- there's 18 precedent for this. You can -- 19 THE COURT: Excuse me? 20 MR. SERRITELLA: There is precedent for attachment on 21 a property. You could file paperwork -- 22 THE COURT: I'm just asking how you do it. 23 MR. SERRITELLA: Yes. So you would -- if we were to 24 get an attachment order, we would file something with the 25 county clerk, and the sheriff would -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 4 02/25/2023 M84VABRO 1 THE COURT: What's that, a lis pendens? 2 MR. SERRITELLA: Similar to that, your Honor, it would 3 be, yes. 4 THE COURT: That will kill a sale pretty effectively. 5 The buyer is told by his agent or lawyer, You're not buying a 6 building, you're buying a lawsuit. 7 MR. SERRITELLA: So, your Honor, I can address that. 8 Justice Cohen in the commercial division actually 9 addressed this issue. And what he did back in his order in 10 January is he granted our motion for an attachment in the form 11 of equitable relief. 12 THE COURT: Why do I care what he did? 13 MR. SERRITELLA: So I think there's some precedent for 14 a judge doing this. 15 THE COURT: You could perfectly well be before Justice 16 Cohen, but you're brought up here. You know you brought it 17 here. 18 MR. SERRITELLA: Yes. Well, the amounts are 19 different. 20 THE COURT: I assume you want it conducted here. 21 MR. SERRITELLA: Right. So the amounts -- 22 THE COURT: We start fresh. 23 MR. SERRITELLA: Right. So the amounts are different 24 there, your Honor. So the amount at stake in the other case is 25 not enough to -- there still would be equity in the property. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 5 02/25/2023 M84VABRO 1 So this is a separate lawsuit, right; so there's still equity 2 in this property that's at issue. So that's why we're bringing 3 the attachment here as well. 4 And so part of the problem too is the defendant here 5 Russell Abrams has been engaging in a lot of conduct -- 6 THE COURT: I thought we were talking about how you 7 attach a building. 8 MR. SERRITELLA: Right. The reason why I bring this 9 up is because Mr. Russell Abrams has been violating other court 10 orders and transferring the property into other holding 11 companies that he controls. 12 THE COURT: How do you attach a building? Just as a 13 novice in this field, tell me how to do it. What do you do, go 14 out and put a lasso around it? 15 MR. SERRITELLA: No, you do file paperwork with the 16 county clerk to make it clear that -- 17 THE COURT: You were telling me what that paper is. 18 Is it like a lis pendens? 19 MR. SERRITELLA: Similar, your Honor. 20 THE COURT: And what does it say? 21 MR. SERRITELLA: So it puts anyone on notice that 22 there is essentially an attachment or a lien on the property. 23 It's on a public record. 24 THE COURT: That's all. That is the attachment? 25 MR. SERRITELLA: Correct, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 6 02/25/2023 M84VABRO 1 THE COURT: What purpose does that serve? 2 MR. SERRITELLA: So what it does, it prevents the 3 defendant here from transferring the property to somebody else 4 without -- 5 THE COURT: Tell me in the abstract what purpose does 6 that serve. 7 MR. SERRITELLA: In the abstract it prevents further 8 fraudulent behavior and violations of court orders, and 9 attempts to frustrate judgments which has been going on by 10 these defendants in other proceedings for many months now. And 11 so it does serve a purpose, your Honor. 12 THE COURT: And it does those things simply by warning 13 the people who see it, that he'd better look into the validity 14 of the title more carefully. 15 MR. SERRITELLA: Correct, your Honor. Because we have 16 a situation with a defendant who has a propensity to engage in 17 behavior that we've laid out in our papers that seems to have 18 no regard or respect for court orders or process. And I think 19 we've laid this out pretty compellingly. 20 And so what's to stop them from selling this property 21 out from underneath my plaintiffs? And then once they do that, 22 because, as we've laid out, they've transferred all other 23 assets out of the country, and then how do we enforce a 24 judgment in this case or any other case? So it would be 25 extremely prejudicial to my clients if that happened. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 7 02/25/2023 M84VABRO 1 Now, if there is a would-be buyer, a bona fide 2 purchaser in an arm's-length transaction, and they want to buy 3 the property, then arrangements can be made to make that happen 4 involving us and even your Honor. 5 Practically speaking, if there's a buyer on the 6 property, they are going to make an offer, there will be an 7 acceptance. And there will be a due process period where a 8 title search will happen, and it will determine if there's 9 attachment or mortgage on the property. And then something can 10 be done to -- 11 THE COURT: Well, it's listed with Corcoran, isn't it? 12 MR. SERRITELLA: Correct. Correct. 13 THE COURT: What's Corcoran going to be doing when 14 this mysterious buyer comes along? 15 MR. SERRITELLA: Well, that's, practically speaking, 16 your Honor, on the front end, if there really is a buyer. On 17 the front end, if there is a buyer who makes an offer and there 18 is an acceptance of that offer and they want to potentially go 19 through with the sale, there could be a process that could 20 allow that to happen, even with an attachment on the property. 21 And we're not -- we don't want to frustrate a sale. 22 THE COURT: But that's what you're going to do. 23 MR. SERRITELLA: Your Honor, it will not necessarily 24 frustrate a sale. 25 THE COURT: Look, let me get to the point. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 8 02/25/2023 M84VABRO 1 MR. SERRITELLA: Yes. 2 THE COURT: The reason I ask you what an attachment 3 is, is partly because I'm curious about what it is, and you've 4 told me. It's, in effect, no more than a lis pendens. I 5 understand about that. And I understand that anybody who sees 6 a lis pendens on an $18 million offer of an apartment is going 7 to look elsewhere. 8 Now, let me ask you -- you could keep waiting and some 9 other buyer will come, but it's not going to happen fast. Just 10 take that on faith for purposes of discussion. You want to 11 sell the apartment. You don't want anything to make it more 12 difficult. That's really the reality of it. A lis pendens 13 will do that. 14 So the question is do you really need one? Isn't what 15 you really want is for the apartment to be sold at a good big 16 price, and have that money remain here and not be spirited out 17 of the country by the defendants? 18 MR. SERRITELLA: Yes, your Honor, in the alternative 19 to an attachment. And that's what happened before Justice 20 Cohen; that was his -- 21 THE COURT: Excuse me? 22 MR. SERRITELLA: Justice Cohen's order was exactly 23 that, in effect. 24 But there's another issue. The defendant has been 25 placing mortgages on the property and taking the proceeds of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 9 02/25/2023 M84VABRO 1 those mortgages -- 2 THE COURT: Oh, yes, of course. 3 MR. SERRITELLA: -- outside the country. 4 THE COURT: Of course. They shouldn't be allowed to 5 do that. 6 MR. SERRITELLA: Right. 7 THE COURT: We are met in the name of an attachment at 8 the moment. 9 MR. SERRITELLA: Right. Okay. 10 THE COURT: Did he prevent them from -- oh, yes, and 11 then they agreed, and then they put a 25 -- 250,000 -- 12 MR. SERRITELLA: Right. I think it's 450,000. 13 $450,000. 14 THE COURT: On the theory that was not an encumbrance. 15 MR. SERRITELLA: On Russell's theory, but that's 16 obviously not fact. 17 THE COURT: Excuse me? 18 MR. SERRITELLA: Under Russell's theory, but that 19 absolutely was an encumbrance. And they also transferred 20 ownership of the property from one entity to another. 21 THE COURT: Those things can be stopped. They are 22 simply minor obstacles along the way towards a judgment. You 23 don't need an attachment to stop them from mortgaging it. 24 MR. SERRITELLA: Right. But we need a court order to 25 stop them from mortgaging. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 10 02/25/2023 M84VABRO 1 THE COURT: Yes, of course. 2 MR. SERRITELLA: But one of our concerns, your Honor, 3 as you can imagine, is there have been violations of court 4 orders that have done just that. So an attachment would make 5 it harder to do that. Do you see what I mean? 6 THE COURT: Why? 7 MR. SERRITELLA: Because no lender is going to give 8 him a mortgage if there's already an existing attachment that 9 takes priority over another property. So that's where it's a 10 major concern as well, your Honor. 11 THE COURT: Let me hear from the defendants. 12 MR. GALTERIO: That would be me. 13 Do you want me to speak to this issue only, this 14 attachment? 15 THE COURT: Basically, I want to hear what you have to 16 say. But this is the issue we're talking about at the moment. 17 MR. GALTERIO: Right. Well, first of all, as far as 18 the remedy itself of attachment is concerned, I agree with your 19 Honor that it will discourage purchasers from offering any -- 20 from getting involved in this, because they are buying the 21 lawsuit, as your Honor said. 22 THE COURT: But only experience will teach you. You 23 won't take it from us. 24 MR. GALTERIO: Okay. I realize that. 25 But I think it is really the fact, and I think that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 11 02/25/2023 M84VABRO 1 he's also shooting himself in the foot, because he's preventing 2 the proceeds from becoming liquid as opposed to staying in the 3 building. 4 THE COURT: But his distrust of your clients and his 5 appraisal of their ability to spirit money out of the country 6 regardless of the amount of lying that it may take to do is 7 very deep. 8 MR. GALTERIO: I understand that. 9 THE COURT: And so he's got to be satisfied that the 10 sealing away of any money paid from it from them until it's 11 determined who is entitled to it has to be very evident. 12 MR. GALTERIO: You know, your Honor, I would like to 13 address the element of likelihood of success. 14 THE COURT: Of what? 15 MR. GALTERIO: Of likelihood of success that is 16 necessary to obtain an attachment. 17 THE COURT: You can address it and I'll be interested 18 to hear what you say. But I'll tell you my impression from 19 reading the briefs is that the question of whether it's an 20 ERISA matter or not is only one of many factual issues not 21 necessarily determinative of the case -- 22 MR. GALTERIO: I agree with you. 23 THE COURT: -- as a whole. 24 MR. GALTERIO: I agree with you. 25 THE COURT: So you're going to have to explain why all SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 12 02/25/2023 M84VABRO 1 the other claims of fraud, why one brother against another can 2 be dismissed out of hand. 3 MR. GALTERIO: Well, Judge, if you concentrate on the 4 statute of limitations component of the brief, one of the 5 things that I'm concerned about, I'm not suggesting that there 6 are no monies left to be -- 7 THE COURT: Excuse me? 8 MR. GALTERIO: I am not suggesting that the 9 defendant -- that the plaintiff does not have a claim for some 10 money that is not time-barred. But a huge component of the $25 11 million that he is seeking to attach involves a $5 million 12 loss. That $5 million loss has been compounded together with 13 returns on interest, prejudgment interest, etc., to an 14 exorbitantly high amount of money. 15 But that loss occurred ten years ago -- actually, ten 16 years prior to the filing of this complaint. And what I 17 really -- and I think we all should find a little bit contrived 18 about this motion is that in their brief, they claim that the 19 plaintiff, okay, did not know that his deferred and profit 20 sharing funds had lost that $5 million until approximately 2014 21 of July, which conveniently is just six years before the filing 22 of this claim. 23 In his papers, he says that at some point in time, the 24 account was transferred into a Wells Fargo account, and that he 25 didn't find out about it; and it was transferred without his SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 13 02/25/2023 M84VABRO 1 permission and he didn't find out about it until later, years 2 later is what's said in the brief. 3 My client attached to his declaration the account 4 opening statements for those Wells Fargo accounts. They were 5 signed by the defendants in September of 2012. For him to say 6 that it was done without his permission and he didn't discover 7 it until July of 2014, is very convenient for statute of 8 limitations purposes. But this is not a normal ERISA case. 9 This is a case where he signed that account as a co-applicant; 10 he had trading authority over that account; he could have 11 opened up the internet and looked at what the balance of that 12 account was at any time because he was an account holder. 13 On top of that, your Honor, the losses occurred 14 sometime in 2010. Conveniently, they attached to their papers 15 as proof of this original $8 million that was in this fund a 16 statement from January 1 of 2010. Then we don't see any 17 statements at all. The defendant borrowed from his deferred 18 compensation fund in 2010 $1.8 million. And he's expecting the 19 Court to believe in the face of all this evidence, especially 20 signature cards that he opened an account that he had trading 21 authority over, where those monies were contained; that he had 22 no idea that monies had been lost until 2014. It's simply 23 incredible. 24 THE COURT: Well, you better take his deposition, 25 don't you think? And ask him about it. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 14 02/25/2023 M84VABRO 1 MR. GALTERIO: I think so. 2 But we're talking about likelihood of success. And if 3 there's proof that he signed an account opening statement, the 4 very account in which these funds were deposited, and he's 5 claiming that he did not know that they had decreased in value 6 until 2014, two years later, it's unbelievable. 7 But whether or not we decide that it's a question of 8 fact or not a question of fact, we have to step back and 9 remember that we're in the context of a motion for attachment. 10 And in a motion for attachment, you have to show likelihood of 11 success. And I say you cannot show likelihood of success that 12 you're going to recover $25 million worth of damages when you 13 knew about five million of them in 2010. 14 And also, he claims that every single last penny that 15 was due to him under this deferred compensation plan was due 16 January 1, 2007. On January 2 -- 2017, excuse me. 17 On January 2, 2017, he didn't get paid. He had actual 18 knowledge at that point in time that he had a claim; and he had 19 actual knowledge of a breach of fiduciary duty claim had he 20 opened up his eyes. And he can't turn a blind eye. And three 21 years later, he still didn't file this action. He waited three 22 years and six months. 23 So all I'm trying to say to you, your Honor, is this 24 is not a dispositive motion. I'm not moving to dismiss, I'm 25 not moving for summary judgment; I'm saying to your Honor, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 15 02/25/2023 M84VABRO 1 let's think about likelihood of success on the merits. 2 So we have, in my opinion, a higher likelihood of 3 success than not, that all, if not most of these claims, are 4 time-barred. But certainly to the extent that he is going to 5 allege a $5 million loss, he's going to compound the interest 6 on that from 2009, he's going to ask for prejudgment interest 7 on that from 2009, and that's going to turn into $20 million or 8 more. He cannot prove a likelihood of success on the amount of 9 his damages. 10 Now, I am not saying that there's not a claim. What's 11 the dollar claim? We say it's less than a million dollars. 12 And if you've read our papers, which I'm sure you have, we also 13 claim that we're entitled to an offset because of the $990,000 14 in unreimbursed insurance money that we had to spend in order 15 to settle a sexual discrimination and harassment case against 16 the defendant. And we paid all of that $990,000, and we're 17 going to commence an action for him because the payment was 18 made less than a year ago for indemnification. So we have an 19 offset. 20 I'm saying to your Honor that what you need to be 21 thinking about, what we all need to be thinking about, is 22 likelihood of success. Because if you don't show likelihood of 23 success, then you can't get an attachment. 24 Now, also, I think it's very important for us to 25 understand that there are allegations here of wrongdoing on SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 16 02/25/2023 M84VABRO 1 behalf of my client. It's a lot of smoke, and I'd like to try 2 to help clear most of the smoke. Because when I get to the 3 mortgage issue, we're $250,000 over what the limit was in the 4 judge's order, but there was an explanation for that. 5 One of the things that are in the plaintiff's papers 6 is allegations that my client -- actually, it wasn't my client. 7 It was one of my clients, not Russell, but Sandra and others, 8 were sued in this GlobeOp lawsuit. And a lot of the 9 allegations in the plaintiff's complaint mirror the GlobeOp 10 lawsuit. 11 The papers make it sound as if the GlobeOp lawsuit is 12 still pending. It's not. The papers make it sound like no one 13 ever paid GlobeOp any money. That's not true. I've attached 14 to my papers proof positive that there was a satisfaction of 15 judgment filed in the GlobeOp case in 2015, five years before 16 this action was commenced. There's plenty of case law out 17 there that says you can't use somebody's past alleged 18 fraudulent transfers as a current basis for getting an 19 attachment. 20 But not only that, the fact that the judgment was 21 satisfied proves that the defendants pay their debts when 22 they're due, and there's no need to securitize them with an 23 attachment or anything else. 24 Another thing they say is that the state court granted 25 their motion for an attachment. It's not true. The state SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 17 02/25/2023 M84VABRO 1 court did not grant an attachment, nor did the arbitrator in 2 the arbitration proceeding before they went to state court 3 grant an attachment. The state court judge granted an 4 injunction which essentially said, if you sell -- first of all, 5 you can't encumber the property for more than $9 million in 6 total; and two, didn't say you can't transfer the property. If 7 you sell the property, you've got to deposit $1.4 million into 8 escrow. That's what that said. That was a preliminary 9 injunction in aid of arbitration. 10 And as your Honor probably knows, in the federal court 11 system, under the Supreme Court law, the Grupo Mexicano, that 12 case, you're not allowed to issue an injunction restraining or 13 enjoining a foreign defendant from transferring its assets. 14 That's why they're asking for an attachment. And they're 15 trying to turn the attachment into an injunction. Because an 16 attachment is something that you serve on a garnishee or, in 17 the case of real property, as he's saying, something that you 18 file with the clerk. That freezes the property. You can't 19 have an attachment that says the property is attached, but it 20 can be sold and the proceeds have to be deposited in escrow. 21 That's a preliminary injunction. That's not an attachment. 22 They are two different remedies. 23 Also, if you look in the papers of the plaintiff, he 24 says, Oh, I think that the defendants have drained their New 25 York bank accounts and sent all of the money to South America. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 18 02/25/2023 M84VABRO 1 I have reason to believe. That is the sole basis that he 2 claims that the plaintiffs -- defendants have drained their 3 bank accounts and sent them to South America. 4 Yes, there have been some mortgages on the property. 5 Yes, there have been some transfers. But the law says just 6 because there's a transfer does not mean that there's grounds 7 for an attachment. You have to show that something nefarious 8 is going on; and you have to show that you're actually likely 9 to succeed on the merits of your claim. 10 I don't understand how you can succeed on the merits 11 of a claim, especially to the extent that you're claiming a $5 12 million loss that occurred in 2010, ten years before this 13 action was commenced. The man borrowed 1.8 million from his 14 profit sharing funds in 2010. Are you telling me he didn't 15 look at his balance? He's saying, I never knew the Wells Fargo 16 account was opened up. And by the way, not only did I not know 17 it was opened up, it was opened up without my permission. And 18 I didn't find out about it until 2014. 19 Well, lo and behold, he signed the signature cards in 20 September of 2012. That's a lie. It's not true. 21 You can't get an attachment on a lie. You have to 22 show likelihood of success, which is some degree of proof. 23 I don't disagree that there might be a dispute over 24 the factual issues that needs resolution on the merits. And I 25 don't disagree that this is not a dispositive motion. But this SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 19 02/25/2023 M84VABRO 1 is a motion in which we have to consider whether there is 2 likelihood of success. And for the reasons that I've said, not 3 only substantively statute of limitations, not only ERISA, 4 because my understanding of ERISA is that if you have a plan 5 and you can draw down from that plan before you're retired, it 6 doesn't qualify as an ERISA plan. These plans, the plans that 7 he has attached to his own complaint, provide for the 8 possibility of getting distributions before you're terminated. 9 My understanding of the law is that only a qualified 10 deferred compensation plan — and not a nonqualified deferred 11 compensation plan, of which these two plans clearly are, only 12 the qualified can you sue for a breach of refusal to return the 13 monies under ERISA. And top hat plans are not covered by 14 ERISA's fiduciary provisions. He knows that. He says in his 15 reply memorandum, Oh, these are not top hat plans. But if you 16 go to Count Five of the complaint, it says they're top hat 17 plans six times. 18 So I would suggest to you that the credibility of the 19 declaration and the exhibits that are being proffered to obtain 20 an attachment, a serious and harsh remedy, are not 100 percent 21 truthful, and I'm being kind when I say that. 22 Plus, your Honor, why is it that they filed this 23 action in July of 2020, ten years after he found out about the 24 $5 million loss, more than three years after the very last day 25 he was to receive every penny of his money under the plan? Why SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 20 02/25/2023 M84VABRO 1 is it that he waited two more years to walk into court and ask 2 for a provisional remedy? 3 The law, as I know it, says you have to act rather 4 expeditiously. And what was preventing him from acting? I 5 would say nothing, because nothing prevented him from going to 6 the arbitrator and asking for an attachment; nothing prevented 7 him from going to Judge Cohen and asking for an attachment. 8 And by the way, both of those motions were denied. And the 9 only thing he got was a temporary restraining order or a 10 preliminary injunction, which he can't get here. This is why 11 he's trying to seek an attachment and kind of turn it inside 12 out into a preliminary injunction. 13 THE COURT: Why did Judge Cohen deny the attachment? 14 MR. GALTERIO: Because Judge Cohen said that -- well, 15 you have to look at the transcript. The judge did not 16 particularly articulate his reasons. When I read the 17 transcript, he kind of steered them in the direction. He says, 18 You don't want an attachment; you don't need an attachment. 19 What you need is a restraining order. 20 I guess essentially the same reasons you had, your 21 Honor: If I stick an attachment on this property, you're going 22 to shoot yourself in the head, because it's not going to sell 23 and you're not going to be able to get the money. 24 So I really think that we have quite a number of 25 issues that go directly to likelihood of success and, in fact, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 21 02/25/2023 M84VABRO 1 to me, prove otherwise. I'm not saying that it's impossible at 2 the end of the day that -- 3 THE COURT: Is the test the same as the test for 4 entering a preliminary injunction? 5 MR. GALTERIO: The test for what, your Honor? 6 THE COURT: When we keep talking about the likelihood 7 of success. 8 MR. GALTERIO: Yes, likelihood of success is necessary 9 on a motion for an attachment. 10 THE COURT: Is that because it is similar to a 11 preliminary injunction? 12 MR. GALTERIO: Is it because it's similar to? I 13 don't -- you know, I don't know that I can profess to answer 14 that question. It's a separate requirement and it's a 15 statutory requirement in the case of an attachment, likelihood 16 of success. 17 THE COURT: Under New York state law. 18 MR. GALTERIO: That's correct, your Honor. 19 THE COURT: But under federal law, when you're dealing 20 with an injunction, of which the classic one of the 21 requirements is likelihood of success, there is an alternate, 22 which is that the matter is a fair ground for litigation; and 23 that the balance of hardships tilts decidedly in favor of the 24 party asking for the injunction. 25 MR. GALTERIO: That is not -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 22 02/25/2023 M84VABRO 1 THE COURT: If that is applied here, all that you have 2 told me is interesting when we get to a determination of the 3 merits of the case, but for the purpose of an attachment, it is 4 not, because what we're balancing on that issue is the 5 likelihood that your clients will be able to run away with the 6 money if -- unless an attachment is -- 7 MR. GALTERIO: No, it's a likelihood of success on the 8 merits of the underlying claims that the plaintiff is asserting 9 against the defendant. 10 THE COURT: Excuse me? 11 MR. GALTERIO: It's the likelihood of success on the 12 underlying merits of the plaintiff's claims against the 13 defendants. 14 THE COURT: I understand. You've told me that four 15 times. That does not dispose of my question. 16 MR. GALTERIO: Well, your question, I think, is does 17 the alternative federal injunction standard apply to 18 attachment. And my answer to you is no, it does not. Because 19 through Federal Rule 64, the Court follows the state injunction 20 rules under the CPLR which requires a likelihood of success and 21 does not, to my knowledge, allow you to substitute the fair 22 ground for litigation standard. 23 THE COURT: Well, the reason we look to the state in 24 attachment cases is because there is no federal analogue; and 25 therefore, we follow in general the law of the state regarding SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 FILED: NEW YORK COUNTY CLERK 02/25/2023 07:05 AM INDEX NO. 654992/2022 NYSCEF DOC. NO. 79 RECEIVED NYSCEF: 23 02/25/2023 M84VABRO 1 an attachment. But whether that would govern each element of 2 the proof necessary for it is a separate question. 3 MR. GALTERIO: I think it does. I think you have to 4 show -- 5 THE COURT: Of course you do. 6 MR. GALTERIO: -- you're likely to succeed on the 7 merits of your claim. And to me, the merits of the claim is 8 not only the statute of limitations, not only the ERISA 9 components, but the damage component. And to me, $25 million 10 is picked out of thin air. 11 THE COURT: Well, I've heard you in full and you've 12 argued the merits of your whole case at considerable length. 13 And it's interesting to hear it. But it brings me back to 14 where I started: 15 There is a whole field of fact issues in this 16 situation in the nature of his claim. And some are more or 17 less clearly barred by the statute of limitations. But the 18 determination of whether there should be an immediate grant of 19 the attachment does not turn on those things. 20 MR. GALTERIO: I'm not understanding why you believe 21 that to be the case. Because if you have to establish 22 likelihood of success -- 23 THE COURT: Well, because my own belief is that he 24