Opinion
19 Civ. 8669 (MKV) (GWG)
01-26-2023
MAJOR LEAGUE BASEBALL PROPERTIES, INC., Petitioner, v. CORPORACION DE TELEVISION Y MICROONDA RAFA, S.A., et al., Respondents.
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN United States Magistrate Judge.
On September 14, 2020, judgment was entered against the defendant Corporacion de Television y Microonda Rafa, S.A. (“Telemicro”), in favor of plaintiff Major League Baseball Properties, Inc. (“MLB”) confirming an arbitral award of $6,012,463.97 plus post-judgment interest and attorneys' fees. Judgment and Order, dated Sept. 14, 2020 (Docket # 38). In an attempt to collect on its judgment, MLB has filed this petition seeking an order directing Telemicro to turn over certain funds and personal property, directing nonparty Telemicro International Holding Corporation (“TIHC”) to turn over the proceeds of a broadcasting contract involving Telemicro, and directing nonparties TIHC and JPMorgan Chase Bank, N.A. (“Chase”) to turn over funds held in a checking account in TIHC's name at Chase.TIHC has cross-moved to quash a restraining notice filed against its bank account at Chase. For the following reasons, MLB's motion should be granted in part and denied in part, and TIHC's cross-motion to quash should be denied.
Notice of Petitioner's Motion for Turnover, filed May 31, 2022 (Docket # 122) (“Pet. Mot.”); Memorandum of Law in Support of Petitioner's Motion for Turnover, filed May 31, 2022 (Docket # 123) (“MLB Mem.”); Declaration of Leif T. Simonson in Support of Petitioner's Motion for Turnover, filed May 31, 2022 (Docket #124) (“Simonson Decl.”); Letter from Henry E. Marines, filed June 10, 2022 (Docket # 128); Letter from Leif T. Simonson, filed June 13, 2022 (Docket # 128); Response by Garnishee in Opposition to the Turnover Motion, filed July 5, 2022 (Docket # 131) (“TIHC Opp. Mem.”); Declaration of Henry E. Marines, filed July 5, 2022 (Docket # 132); Reply Memorandum of Law in Support of Petitioner's Motion for Turnover, filed July 19, 2022 (Docket # 140) (“MLB Reply Mem.”); Letter from Leif T. Simonson, filed Sept. 12, 2022 (Docket # 145); Letter from Henry E. Marines, filed Sept. 13, 2022 (Docket # 146); Letter from Leif T. Simonson, filed Sept. 15, 2022 (Docket # 148); Response to MLB's Letter, filed Sept. 20, 2022 (Docket # 149); Supplemental Memorandum of Law Concerning the Deposition of Maribeth Gomez, filed Nov. 10, 2022 (Docket # 167) (“MLB Supp. Mem.”); Letter from Henry E. Marines, filed Nov. 17, 2022 (Docket # 169) (“TIHC Supp. Opp.”).
Notice of Motion to Quash the May 31, 2022 Restraining Notice, filed Oct. 14, 2022 (Docket # 153); Memorandum of Law in Support of Motion to Quash, filed Oct. 14, 2022 (Docket # 155) (“TIHC Quash Mem.”); Letter from Leif T. Simonson, filed Oct. 19, 2022 (Docket # 158); Memorandum of Law in Opposition to TIHC's Motion to Quash, filed Nov. 2, 2022 (Docket # 161) (“MLB Quash Opp.”); Reply Memorandum of Law in Further Support of TIHC's Motion to Quash, filed Nov. 16, 2022 (Docket # 168) (“TIHC Quash Reply”).
I. BACKGROUND
On May 31, 2022, MLB filed the instant petition for turnover. See Pet. Mot. On the same date, MLB served a restraining notice on Chase for a checking account at Chase that had been opened by nonparty TIHC on March 15, 2015 (“Chase Account”). Decl. of Maribeth Gomez, annexed as Exhibit 2 to Marines Decl., filed July 5, 2022 (Docket # 132-2) (“Maribeth Gomez Decl.”), at ¶ 16; Restraining Notice, annexed as Exhibit A to Letter from Leif T. Simonson, filed June 13, 2022 (Docket # 129-1). While Telemicro and Chase were served with the petition (Docket ## 126, 139), neither Telemicro nor Chase has filed any opposition papers.
In its petition for turnover, MLB asserts that because Telemicro has failed to satisfy the judgment rendered against it, MLB is entitled to the contents of certain accounts held by Telemicro in the Dominican Republic. MLB Mem. at 19-20. MLB also argues that it is entitled to turnover of a Bell 407 helicopter, tail number N876AC, which it alleges is owned by Telemicro. Id. at 15-16, 20. Because Telemicro has not responded to this petition, these requests are unopposed.
MLB also asserts that it is entitled to the proceeds of a distribution contract between TIHC and a company called Thema America, Inc. (“Thema”). Id. at 11-13, 24-25. MLB alleges that all payments under this agreement are made directly to Telemicro, not to TIHC, and argues that Telemicro is the beneficiary of the contract, with TIHC a beneficiary in name only. Id. at 24. As a result, MLB argues it is entitled to these payments to satisfy its judgment against Telemicro. Id. While Telemicro has not appeared, TIHC has responded, asserting that it has “no property interest” in Thema's payments, and argues that Thema, rather than TIHC, should have been named as a garnishee relating to this debt. TIHC Opp. Mem. at 11.
Finally, MLB asserts that it is entitled to the contents of the Chase Account, which is in TIHC's name. MLB Mem. at 22. MLB argues that Telemicro exercises “actual control” over this account, making the contents eligible property for turnover. Id. TIHC responds that MLB has not shown that Telemicro controls the Chase Account and that, in fact, Telemicro has no interest in the Chase Account. TIHC Opp. Mem. at 9-10.
II. LEGAL STANDARD Fed. R. Civ. P. 69(a)(1) provides that “[t]he procedure on execution [of a money judgment] - and in proceedings supplementary to and in aid of judgment or execution - must accord with the procedure of the state where the court is located.” Under N.Y.C.P.L.R. § 5225(a), a judgment creditor may seek an order requiring that a judgment debtor turn over property or money in its possession to satisfy a judgment. Additionally, section 5225(b) allows a judgment creditor to seek an order requiring that a nonparty turn over funds or property in which the judgment debtor has an interest. Fed.R.Civ.P. 69(a) makes sections 5225(a) and 5225(b) applicable in federal court. See Alliance Bond Fund, Inc. v. Grupo Mexicano de Desarrollo, S.A., 190 F.3d 16, 20-21 (2d Cir. 1999) (applying § 5225(b) pursuant to Rule 69(a)); HBE Leasing Corp. v. Frank, 48 F.3d 623, 633 (2d Cir. 1995) (section 5225(b) is made “applicable in the District Court via Fed.R.Civ.P. 69(a)”); Deflora Lake Dev. Assocs. v. Hyde Park, 2016 WL 7839191, at *1 (S.D.N.Y. June 9, 2016) (applying § 5225 as a whole pursuant to Rule 69(a)).
Section 5225(b) allows a judgment creditor to commence a “special proceeding” to require payment of money
against a person in possession or custody of money or other personal property in which the judgment debtor has an interest, or against a person who is a transferee of money or other personal property from the judgment debtor, where it is shown that the judgment debtor is entitled to the possession of such property or that the judgment creditor's rights to the property are superior to those of the transferee[.]
“A special proceeding is a creature of New York law with no federal analogue,” however. Mitchell v. Lyons Prof. Services, Inc., 109 F.Supp.3d 555, 565 (E.D.N.Y. 2015), aff'd, 819 F.3d 636 (2d Cir. 2016). The Second Circuit has held that in federal court “a party seeking a money judgment against a non-party garnishee may proceed by motion and need not commence a special proceeding, as long as the court has personal jurisdiction over the garnishee.” CSX Transp., Inc. v. Island Rail Terminal, Inc., 879 F.3d 462, 469 (2d Cir. 2018).
The Second Circuit has summarized the application of N.Y.C.P.L.R. § 5225(b) as follows:
[The statute] provides for a two-step analysis in determining whether property belonging to a judgment debtor - but in possession of a third party - should be turned over to a judgment creditor. First, it must be shown that the judgment debtor “has an interest” in the property the creditor seeks to reach. Where this first step is satisfied, the trial court must, second, then make one of two findings: it must find either that the judgment debtor is “entitled to the possession of such property,” or it must find that “the judgment creditor's rights to the property are superior” to those of the party in whose possession it is. Only after both steps of the analysis are demonstrated may the trial court order the transferee to turn over the property to the judgment creditor ....Beauvais v. Allegiance Secs., Inc., 942 F.2d 838, 840-41 (2d Cir. 1991) (citing Key Lease Corp. v. Manufacturers Hanover Trust Co., 499 N.Y.S.2d 66, 68 (1st Dep't 1986)); accord United Int'l Holdings, Inc. v. The Wharf (Holdings) Ltd., 988 F.Supp. 367, 374 (S.D.N.Y. 1997).
In a proceeding under N.Y.C.P.L.R. § 5225(b), “[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.” CSX Transp., 879 F.3d at 473 (citations & internal quotations omitted); accord HBE Leasing Corp., 48 F.3d at 633. Thus, “[a] motion under Rule 69(a) is treated like a summary judgment motion.” Axginc Corp. v. Plaza Automall, Ltd., 2021 WL 1030228, at *7 (E.D.N.Y. Mar. 2, 2021) (“Axginc II”), adopted, 2021 WL 1026497 (E.D.N.Y. Mar. 17, 2021).
As to this point, TIHC argues that MLB's motion is procedurally deficient because MLB has not filed a statement of undisputed facts pursuant to S.D.N.Y. Local Rule 56.1, see TIHC Opp. Mem. at 4. We reject this argument. While the turnover motion is governed by the summary judgment standard, the motion itself arises under Rule 69, not Rule 56. Local Civil Rule 56.1 applies only to a “motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.” While it would have been helpful to have the statement required by that rule, the motion is not procedurally defective without it.
Rule 56(a) of the Federal Rules of Civil Procedure provides that a court shall grant summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether a genuine issue of material fact exists, “[t]he evidence of the non-movant is to be believed,” and the court must draw “all justifiable inferences” in favor of the nonmoving party. Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-159 (1970)); accord Morales v. Quintel Ent., Inc., 249 F.3d 115, 121 (2d Cir. 2001) (“[A]ll reasonable inferences must be drawn against the party whose motion is under consideration.”).
If it is determined that there are disputed issues of fact, “[j]udgment creditors seeking relief under Rule 69(a) are not entitled to demand a trial by jury to resolve disputed issues of fact, but non-party respondents are entitled to make such a demand.” Cortes v. Juquila Mexican Cuisine Corp., 2022 WL 970726, at *5 (E.D.N.Y. Mar. 31, 2022); accord Axginc II, 2021 WL 1030228, at *7.
III. MOTION FOR TURNOVER
We discuss each claim for turnover separately.
A. Dominican Accounts
MLB seeks turnover of bank accounts in the Dominican Republic (collectively, the “Dominican Accounts”) in Telemicro's name, which include two accounts at Banesco Banco Multiple SA. See Thema Invoices, annexed as Exhibit 14B to Simonson Decl., filed May 31, 2022 (Docket # 124-15) (payments made by Telemicro from account ending in -1394); Standard Charter Wire Records, annexed as Exhibit 17 to Simonson Decl., filed May 31, 2022 (Docket # 124-18) (payments made by Telemicro from account ending in -0610). Two other accounts are held at Banco Multiple Caribe, see JPMorgan Wire Data, annexed as Exhibit 18 to Simonson Decl., filed May 31, 2022 (Docket # 124-19) (payments from account ending in -0635), and Banco de Reservas de la Republica Dominicana. See Payment to Bell Textron, annexed as Exhibit 16 to Simonson Decl., filed May 31, 2022 (Docket # 124-17) (payments made from account ending in -9002). The current balance of these accounts is unknown to MLB. MLB Mem. at 14.
N.Y.C.P.L.R. § 5225(a) allows a judgment creditor to seek an order for turnover of any funds or personal property of which “the judgment debtor is in possession or custody.” Such an order may extend to overseas bank accounts controlled by the judgment debtor. See Gryphon Domestic VI, LLC v. APP Int'l Fin. Co., B.V., 836 N.Y.S.2d 4, 9-10 (1st Dep't 2007) (court with personal jurisdiction may order the judgment debtor to turn over out-of-state assets under §5225(a)) (citing Miller v. Doniger, 814 N.Y.S.2d 141 (1st Dep't 2006); Starbare II Partners L.P. v. Sloan, 629 N.Y.S.2d 23, 23 (1st Dep't 1995)). Because it has not opposed the motion for turnover, Telemicro has offered no argument as to why § 5225(a) does not apply to these accounts. Thus, the motion should be granted with respect to the Dominican Accounts and Telemicro should be ordered to turn over the funds to MLB up to the point the judgment is satisfied.
TIHC has challenged the adequacy of service on Telemicro even though Telemicro has not responded to the motion and thus has made no such challenge. See TIHC Opp. Mem. at 3. Because “[c]o-defendants do not have standing to assert improper service claims on behalf of other defendants,” Madu, Edozie & Madu, P.C. v. SocketWorks Ltd. Nig., 265 F.R.D. 106, 114 (S.D.N.Y. 2010) (citing Farrell v. Burke, 449 F.3d 470, 494 (2d Cir. 2006)), the court need not address this argument. For what it is worth, it is obvious that Telemicro has notice of the petition in light of the close connection between TIHC and Telemicro.
B. Bell 407 Helicopter
MLB seeks turnover of a Bell 407 helicopter, tail number N876AC, which is registered to Intersouth, Inc. See FAA Registration, annexed as Exhibit 23 to Simonson Decl., filed May 31, 2022 (Docket # 124-24) (listing Intersouth, Inc. as owner of record). While Telemicro is not named on the registration, Telemicro maintains the helicopter, see Bell Textron Response to Information Subpoena, annexed as Exhibit 21 to Simonson Decl., filed May 31, 2022 (Docket # 124-22), at ¶¶ 2, 7 (Telemicro shipped parts to Bell Textron for “inspection, repair, and overhaul”); receives parts for the helicopter, see Bill of Lading, annexed as Exhibit 22 to Simonson Decl., filed May 31, 2022 (Docket # 124-23) (Telemicro employee received parts as consignee); and pays for its repair, see Bell Textron Response to Subpoena ¶ 2 (Telemicro paid for helicopter repairs).
Although MLB's briefing identifies the helicopter as a “Bell 707,” both the FAA Registration and Bell Textron responses identify the helicopter as a Bell 407. See FAA Registration at 1; Bell Textron Responses to Subpoena ¶ 2.
By its text, N.Y.C.P.L.R. § 5225(a) extends to personal property as well as funds. MLB has provided evidence that the Bell 407 helicopter in fact belongs to Telemicro. MLB Mem. at 15. Telemicro has not responded to the petition and thus has not contested the application of section 5225(a) to this property. Accordingly, the motion should be granted with respect to the Bell 407 helicopter, and Telemicro should be ordered to turn over the helicopter to MLB.
C. Distribution Agreement
In 2012, TIHC entered into a licensing contract (“Distribution Agreement”) with Thema, a Florida-based broadcast company. Maribeth Gomez Decl. ¶ 13-15. On December 6, 2016, TIHC entered a Signal Transmission Distribution Contract with Thema. See Signal Distribution Agreement (English Translation) (Docket # 97-4). This contract amended the Distribution Agreement between the two parties to include transmission rights to Dominican baseball in return for an additional fee. Maribeth Gomez Decl. ¶ 22. On December 7, 2016, Maribeth Gomez, who is the owner of TIHC, see id. ¶ 2, sent a letter to Thema authorizing Thema to transfer funds owed under the Distribution Agreement directly to Telemicro. Letter from Maribeth Gomez to Thema, dated Dec. 7, 2016 (Docket # 124-12), at 4. Each subsequent payment from Thema was made by Thema directly to Telemicro. See Thema Responses to Subpoena ¶ 4 (Docket # 124-13).
MLB seeks an order requiring TIHC to turn over its “right to payment under” the Distribution Agreement that TIHC has with Thema and any addenda thereto. Pet. Mot. at 2. MLB moves under N.Y.C.P.L.R. § 5225(a), see MLB Mem. at 25, arguing that TIHC is a “mere nominee,” and that Telemicro is the true beneficiary of the Distribution Agreement, MLB Reply at 8. Section 5225(a) allows a claim to be brought only against the judgment debtor, however. Because TIHC is not the judgment debtor, the court cannot order turnover against TIHC directly under section 5225(a). Therefore, MLB must prove that Telemicro, not TIHC, possesses the property rights under the Distribution Agreement. MLB argues that TIHC has “instructed Thema to pay all amounts owed to TIHC directly to Telemicro instead” and observes that “TIHC's invoices to Thema each instruct payment to be made to a bank account . . . belonging to Telemicro.” MLB Mem. at 12.
It is true that, although the Distribution Agreement and its addenda are contracts between Thema and TIHC, TIHC has directed Thema to make certain payments under those contracts directly to Telemicro. See Letter from Maribeth Gomez to Thema at 4. TIHC argues that it has “no property interest” in these payments. TIHC Opp. Mem. at 11. We read this to mean that TIHC does not contest Telemicro's sole possession of the right to payment. In light of this fact, the court should order Telemicro to turn over its right to payment under the Distribution Agreement and the corollary payment order.
To the extent MLB seeks turnover of the funds themselves, rather than the right to receive payment, N.Y.C.P.L.R. § 5225(b) (which MLB does not rely on) allows a judgment debtor to obtain an order for turnover of property in the control of a third party. The section requires, however, that the third party in question have “possession or custody” of the funds. Section 5225(b) requires actual possession, not merely constructive possession. See Commw. N. Mariana Is. v. Canadian Imperial Bank of Com., 21 N.Y.3d 55, 63 (Ct. App. 2013) (“[A] section 5225(b) turnover order cannot be issued against a garnishee lacking actual possession or custody of a judgment debtor's assets or property.”). In this case, the funds are paid directly to Telemicro by Thema, see Thema Responses to Subpoena ¶ 4, as MLB concedes, see MLB Reply at 2. Thema is not named as a nonparty garnishee, however, and according to MLB, the named garnishee, TIHC, never takes actual possession of the funds. Id. (“TIHC does not even receive payments from Thema[,] but instead instructs Thema to pay Telemicro.”). MLB does not allege that there are any payments under either the Distribution Agreement or its addenda which are made to TIHC, rather than directly to Telemicro. Thus, the motion for turnover must be denied with respect to TIHC inasmuch as the motion seeks funds not in its possession or custody.
D. Chase Account
MLB argues that it is entitled to turnover of the Chase Account. MLB Mem. at 22. As noted, the law governing turnover from third parties requires MLB to prove first that Telemicro “has an interest” in the funds held in the Chase Account. Beauvais, 942 F.2d at 840-41. Second, MLB must demonstrate either that Telemicro “is entitled to the possession” of the Chase Account or that MLB's “rights to the property are superior to those of the party in whose possession it is.” Id. We examine each element in turn.
1. Whether Telemicro Has An Interest in the Chase Account
MLB proceeds on a theory that Telemicro's interest in the Chase Account can be established by demonstrating that Telemicro “actually controls” the account, notwithstanding TIHC's nominal ownership. MLB Mem. at 23.
Under New York law, “[w]hen a party holds funds in a bank account, possession is established, and the presumption of ownership follows.” Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70, 86 (2d Cir. 2002) (citing Kolodziejczyk v. Wing, 689 N.Y.S.2d 825, 82 (4th Dep't 1999)). However, in a motion for turnover, a court “must look past” possession and “must recognize any property rights in that money which belong to other parties.” Id. at 86 n.16 Thus, as explained by the Second Circuit in Karaha Bodas Co., the presumption of ownership “may be rebutted by evidence that the [judgment debtor] actually controlled the disputed funds.” Id. at 86; accord City of New York v. Venkataram, 2011 WL 2899092, at *5 n.6 (S.D.N.Y. July 13, 2011).
The “actual control” test derives from the principle that under § 5225, “[i]t is not necessary that the judgment debtor have legal title to the property [sought to be turned over]; a beneficial interest is sufficient.” Pacific Alliance Asia Opportunity Fund, L.P. v. Kwok Ho Wan, 2022 WL 406636, at *4 (N.Y. Sup. Ct. Feb. 9, 2022) (quoting Weinstein, Korn & Miller, New York Civil Practice, CPLR ¶ 5225.09). New York courts have found that a judgment debtor “has an interest” in an account “[w]here . . . the evidence demonstrates that a judgment debtor regularly has used another's bank account as a ‘recipient' of the debtor's personal assets or as a source for payment of the debtor's expenses.” Bingham v. Zolt, 231 A.D.2d 479, 479 (1st Dep't 1996) (emphasis added); accord Bravado Infl Grp. Merch. Servs., Inc. v. United States Tennis Assoc., Inc., 179 A.D.3d 914, 915 (2d Dep't 2020) (finding that the judgment debtor “had ‘an interest' in the funds, inasmuch as they were used to satisfy [judgment debtor's] obligations to vendors and licensees”).
Although, as TIHC observes, Bingham addresses a restraining notice available under N.Y.C.P.L.R. § 5222 rather than turnover under § 5225, TIHC Opp. Mem. at 5, an analysis under § 5222 necessarily considers the judgment debtor's interest in funds --- the very issue that must be determined in a proceeding under § 5225. See N.Y.C.P.L.R. § 5222(b) (“A restraining notice served upon a person other than the judgment debtor or obligor is effective only if, at the time of service, he or she owes a debt to the judgment debtor or obligor[,] or he or she is in the possession or custody of property in which he or she knows or has reason to believe the judgment debtor or obligor has an interest.”).
Thus, in Allstate Ins. Co. v. Mirvis, 2018 WL 4921631 (E.D.N.Y. Sept. 4, 2018), the court explained that “if the [c]ourt finds that [the judgment debtor] had actual control over the [relevant accounts], the [c]ourt may compel the nominal account holders who are ‘in possession or custody of the money' to turnover the [j]udgment [d]ebtor's property.” Id. In Allstate, the judgment creditors presented evidence that the judgment debtor had prepared over three-quarters of the checks and deposit slips associated with the relevant accounts, see id., and that frequent transactions were made from the accounts to pay the judgment debtor and third-parties with whom he had dealings, see id. at *12. Based on these facts, the court found that the accounts were “actually controlled” by the debtor and turnover was required. Id. at *13-14.
TIHC argues that Allstate does not apply because “the Allstate discussion [of ‘actual control'] was not dispositive” because “earlier in the opinion, the Court had found already that the petitioner prevailed on a Beauvais analysis.” TIHC Opp. Mem. at 4-5. In fact, Allstate applied the “actual control” analysis as an alternative basis on which to allow turnover. See Allstate, 2018 WL 4921631, at *11.
Thus, our inquiry is as to whether Telemicro “actually controls” the funds in the Chase Account, using them to its own benefit as the owner would, rather than simply benefitting from TIHC's own use of the account.
a. Evidence of Actual Control
In support of its argument that Telemicro “actually controls” the Chase Account, MLB provides evidence that falls into two categories. First, MLB provides evidence of payments made from the Chase Account at the direction and for the benefit of Telemicro. Second, MLB provides evidence that TIHC does not control its own business operations and is instead controlled by Telemicro. We discuss each in turn.
i. Payments
MLB points to evidence indicating that TIHC habitually paid invoices from the Chase Account to third parties on behalf of Telemicro. As just one example, TIHC paid $3,951.90 to a company called Intergroup, based on an invoice which had been issued to Telemicro. See Intergroup Invoice, annexed as Exhibit 8 to Simonson Decl., filed May 31, 2022 (Docket # 1248) (invoice for $3,951.90 addressed to Telemicro and marked paid on July 1, 2021); JPM Account Statement Excerpts, annexed as Exhibit 6 to Simonson Decl., filed May 31, 2022 (Docket # 124-6), at *24 (payment of $3,951.90 to Intergroup on July 1, 2021). This payment was made at the direction of Telemicro's owner, Ivette Gomez, see Deposition of Maribeth Gomez, annexed as Exhibit 2 to Declaration of Leif T. Simonson, filed Nov. 2, 2022 (Docket # 160-2) (“Maribeth Gomez Dep.”), at 88:15-19, who instructed TIHC's administrator to “proceed with the payment.” See Emails from Ivette Gomez, annexed as Exhibit 9 to Simonson Decl., filed May 31, 2022 (Docket # 124-9), at *16. As another example, TIHC paid a bill of $1,837 to a company called Overon America to satisfy an invoice received by Telemicro. See JPM Account Statement Excerpts at *23; Overon Invoice, annexed as Exhibit 10 to Simonson Decl., filed May 31, 2022 (Docket # 124-10). Again, the owner of Telemicro sent TIHC's administrator this invoice, which TIHC then fulfilled. Deposition of Mayerlin Rosario, annexed as Exhibit 2 to Simonson Decl., filed May 31, 2022 (Docket # 124-2) (“Rosario Dep.”), at 98:1899:6.
The TIHC administrator, Mayerlin Rosario, see Rosario Dep. at 23:18-20, testified that TIHC made similar payments on behalf of Telemicro regularly and testified that TIHC's CEO, Maribeth Gomez, “would just tell [her] which invoices to pay” to Telemicro. Rosario Dep. at 82:3-83:11. Mallelyn Gomez, who filled the same role at TIHC before Rosario, see Deposition of Mallelyn Gomez, annexed as Exhibit 1 to Simonson Decl., filed May 31, 2022 (Docket # 1241) (“Mallelyn Gomez Dep.”), at 25:2-14, testified that she would often receive emails from Josefina Adames, the “admin” at Telemicro, id. at 17:4-5, directing her to make payments from the Chase Account, and that she did not “consult with anyone else at [TIHC]” before rendering payment. Id. at 115:12-20; 116:5-24. Maribeth Gomez testified that many of these payments were made without any fee, not as part of any “verbal agreement” but instead “as a courtesy” for Maribeth Gomez's sister, Ivette Gomez, who is the owner of Telemicro. Maribeth Gomez Dep. at 55:2-22; see id. at 88:15-19. By TIHC's own accounting, it paid over $800,000 worth of invoices on behalf of Telemicro between 2012 and 2021. See Maribeth Gomez Decl. ¶ 29; Maribeth Gomez Dep. at 162:8-163:15.
TIHC also made payments directly to Telemicro's nominal owner, Ivette Gomez. See Maribeth Gomez Dep. at 141:5-142:1. Maribeth Gomez claimed that some portion of these payments were in fulfillment of an alleged agreement with Telemicro, see id. at 142:2-5, and testified that TIHC never paid Telemicro directly and always paid Ivette Gomez instead. Id. at 142:6-16. She also testified that there was “[n]o particular reason” for this arrangement. Id. At 141:22-142:1.
The TIHC employees who were deposed testified that some invoice payments made on behalf of Telemicro were nominally in service of a “verbal agreement” between Telemicro and TIHC. Maribeth Gomez Dep. at 42:16-22; Rosario Dep. at 82:22-83:3; Mallelyn Gomez Dep. at 122:11-19. Maribeth Gomez stated that under the agreement, TIHC “would pay the amount of [$]3,000 and some third party . . . invoices” in return for programming content. Maribeth Gomez Dep. at 42:18-22. Maribeth Gomez testified, however, that other than the $3,000 monthly fee and a recurring “satellite” payment, “[w]hen [TIHC] . . . paid [Telemicro's] expenses . . . it was not because [they] were receiving digital content,” but instead was “a courtesy.” Maribeth Gomez Dep. at 97:21-99:1. TIHC made these “courtesy” payments “because [Telemicro] doesn't have an account in the United States to make those payments.” See Maribeth Gomez Dep. at 57:15-58:2 (“Q: “[W]ould [TIHC] sometimes make payments to [a third party] on behalf of [Telemicro]? A: Yes. Q: As to each of those payments, would you have had a conversation with your sister about making those payments? A: Yes. Q: And why did she ask [TIHC] to make those payments? A: Because she doesn't have an account in the United States to make those payments. So she will ask me to do them for her.”).
Rosario - the employee of TIHC who made the payments to and for Telemicro - testified that she has no idea how the payment amounts under the verbal agreement are determined. See Rosario Dep. at 20:3-7 (“Q: The amounts that Maribeth Gomez was instructing you to pay either to [Telemicro] or towards invoices, do you know how she determined that amount? A: No, I don't know.”). Maribeth Gomez's own testimony, however, reflects that Rosario and not Maribeth Gomez was responsible for TIHC's finances. See Maribeth Gomez Dep. at 95:18-96:2 (“[Rosario] can tell me, for example, ‘oh, this is due to payment,” [and] I'll be, ‘okay.' And she'll tell me, when money comes in, ‘I'm going to pay this and this.' And I'll be, ‘okay.'”).
There is “no written documentation” of the purported contract between TIHC and Telemicro under which TIHC claims the payments for the benefit of Telemicro were made. Rosario Dep. at 145:20-146:4. Rosario, TIHC's corporate representative, could not provide any explanation of how payment amounts were determined under the agreement, see Id. at 20:3-7, 155:16-156:5, and was not certain before being deposed that the contract even existed. Thus, when speaking to Maribeth Gomez after the first day of her deposition, Rosario “asked [Maribeth] if in fact a contract exists” between Telemicro and TIHC. See id. at 145:11-23. Mallelyn Gomez of TIHC testified that she “[hadn't] seen the contract between [Telemicro and TIHC],” and that she “[didn't] know who signed it,” although she nonetheless “believe[d] there is a contract.” Mallelyn Gomez Dep. at 23:4-24. When MLB deposed Maribeth Gomez, she could not remember when or where the agreement was entered into, other than that it was negotiated somewhere in Santo Domingo in the Dominican Republic. Maribeth Gomez Dep. at 43:5-44:16. Maribeth Gomez claims that TIHC stopped making payments to Telemicro in January 2022 because TIHC had discovered that it overpaid Telemicro under this agreement, see Maribeth Gomez Decl. ¶¶ 29-31, but Maribeth Gomez could not explain how this occurred. See Maribeth Gomez Dep. at 49:17-50:13. Notably, Maribeth Gomez testified inconsistently as to whether she had personally negotiated the verbal agreement, initially stating that she had entered into the agreement, id. at 43:2-44:10; see also Maribeth Gomez Decl. ¶ 10 (“I negotiated the TIHC-Telemicro Contract”), while later testifying that the unwritten contract “began with [her] uncle,” and she “just continued it.” Id. at 119:6-15.
Mallelyn Gomez testified that while TIHC purportedly failed to meet its obligations to Telemicro under the verbal agreement “very often,” Mallelyn Gomez Dep. at 130:20-131:4, she had no memory of keeping ledgers relating to shortfalls on these payments, id. at 137:4-138:3, and that it was “most likely” that TIHC never received an accounting of the amount owed to Telemicro. See Mallelyn Gomez Dep. at 138:4-24. She testified that, in her time at TIHC, Telemicro never sent a notice of late payment when TIHC failed to meet its obligations. Id. at 144:2-145:1. Maribeth Gomez testified that, despite a six-figure debt she now claims Telemicro owes TIHC due to the alleged overpayments, TIHC has no “plan for collecting on that money.” Maribeth Gomez Dep. at 150:5-16.
MLB also provides evidence indicating that TIHC would issue checks on behalf of Telemicro to family members of a man named Juan Ramon Gomez Diaz, again with no discernable oversight by TIHC. Gomez Diaz is the father of both TIHC's CEO, Maribeth Gomez, see Maribeth Gomez Decl. ¶ 5, and Telemicro's CEO, Ivette Gomez, see id. ¶ 4. MLB also provides evidence that he controls Telemicro. Mallelyn Gomez testified to her understanding that Gomez Diaz “owns Telemicro in the Dominican Republic.” Mallelyn Gomez Dep. at 105:22-24. Patrick Rivet, the CEO of Thema, testified that he negotiated Thema's broadcasting contracts with Gomez Diaz, and that Gomez Diaz “was making all decisions on behalf of Telemicro . . . for purposes of renegotiating that agreement.” Deposition of Patrick Rivet, annexed as Exhibit 2 to Simonson Decl., filed May 31, 2022 (Docket # 124-3) (“Rivet Dep.”), at 27:9-13.
MLB also presents testimony from another individual, who stated that “Telemicro is a synonym of Gomez Diaz,” although MLB does not explain the deponent's connection to either Gomez Diaz or Telemicro. Deposition of Juan Vidal Cedeno, annexed as Exhibit 5 to Simonson Decl., filed May 31, 2022 (Docket # 124-5), at 41:3-10.
In one case, MLB identifies checks made out to Danny Gomez, the nephew of Gomez Diaz, who testified that the checks were intended for his mother, Gomez Diaz's sister. Danny Gomez Dep., annexed as Exhibit 7 to Simonson Decl., filed May 31, 2022 (Docket # 124-7) at 45:19-47:15; 46:24-47:15; JPM Account Statement Excerpts at *25-26. Neither Danny Gomez nor his mother holds any role at TIHC. Danny Gomez Dep. at 53:2-14, 59:21-24. The payments to Gomez Diaz family members include payments from the Chase Account to Danny Gomez, Maria Gomez, Luis Gomez, Elena Gomez, and Andy Alexander Gomez. See Mallelyn Gomez Dep. at 127:6-128:2. None of the individuals to whom payments were made have been shown to be people to whom TIHC owes a debt, and none are TIHC employees. Id. at 127:24128:2. These family payments were often labeled as having been authorized by Gomez Diaz, id. at 123:12-127:19, and were normally communicated through a person named Josefina Adames. See Mallelyn Gomez Dep. at 101:6-10. Adames has no role at TIHC, Rosario Dep. at 186:3-9, but rather works for Telemicro as an “admin.” Mallelyn Gomez Dep. at 17:4-5.
Rosario, TIHC's designated corporate representative, could not explain why payments were made to relatives of Gomez Diaz. Rosario Dep. at 77:2-8, 79:12-19. When asked about family payments, Mallelyn Gomez believed that they were related to the verbal agreement between TIHC and Telemicro. Mallelyn Gomez Dep. at 122:3-19. But TIHC's CEO, Maribeth Gomez, did not provide any business explanation for these payments, instead stating that the payments were “for personal reasons,” or as a “gift.” Maribeth Gomez Dep. at 138:17-20; 140:1-141:4. She did not explain why some of these payments appear to have been authorized by Juan Ramon Gomez Diaz.
The only evidence provided by TIHC relating to the invoices and family payments is a declaration sworn by Maribeth Gomez. See Maribeth Gomez Decl. The declaration repeats the claim that TIHC's payments on behalf of Telemicro were the result of a verbal agreement, id. ¶¶ 9, 26, and describes them as “accounting offsets.” Id. ¶ 27. The declaration contains a claim that, in 2021, long after this suit was filed, “TIHC discovered that it had overpaid Telemicro” and “stopped making payments.” Id. ¶¶ 29-30. The declaration is rife with conclusory statements, and the only documentation it attaches is TIHC's certificate of incorporation, see Certificate of Incorporation, annexed as Exhibit 1 to Marines Decl. (Docket # 132-1), which gives no information as to TIHC's actual operation. To the extent that the statements in Maribeth Gomez's affidavit are conclusory, we disregard them. See Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (“mere conclusory allegations or denials cannot by themselves create a genuine issue of material fact where none would otherwise exist”).
ii. General Control
As we have already described to some degree, MLB has also presented evidence that Telemicro, rather than TIHC, has decision-making authority regarding the Chase Account and TIHC's business generally.
Mallelyn Gomez, TIHC's former “admin slash accountant,” Mallelyn Gomez Dep. at 11:1-7, testified that Gomez Diaz authorized “essentially all payments” from the Chase Account, id. at 105:2-7. These authorizations were communicated through Josefina Adames, Telemicro's administrator. Id. at 105:2-15. Mallelyn Gomez testified that once she received instructions from Telemicro's administrator, she did not “consult with anyone else at [TIHC]” before making these payments. Mallelyn Gomez Dep. at 116:5-9. When asked why she did not consult with TIHC leadership, Mallelyn Gomez replied that it was her understanding that authorization from Gomez Diaz, as communicated by Adames, was “sufficient for [her] to make payments from [the Chase Account].” Id. at 116:10-24. Mallelyn Gomez herself reported to Adames, despite the fact that Adames holds no role at TIHC and was “physically located in the Dominican Republic.” See Mallelyn Gomez Dep. at 14:5-7; 16:24-17:24. Mallelyn Gomez understood that “all business decisions” of TIHC were to be authorized by Gomez Diaz - a circumstance that “was probably mentioned [her] first day or something,” though she did not specifically recall how she came to that understanding. Mallelyn Gomez Dep. at 103:8-25.
Rosario, TIHC's only current employee, testified that Maribeth Gomez directed her use of the Chase Account. Rosario Dep. at 195:13-14. However, Rosario identifies at least two transfers from the Chase Account to Gomez Diaz family members for which the memo line indicated that the payments had been authorized by Gomez Diaz. Id. at 78:4-80:10. In both cases, Rosario made out these payments on instructions from Maribeth Gomez, including as to the content of the memo line. Id. at 78:8-13; 79:20-80:10.She also identified other checks for which the memo line indicated that the payments were “authorized JR,” but, notwithstanding the fact that these are the first initials of Juan Ramon Gomez Diaz, Rosario testified that the letter J “[was] for July” and the letter R “maybe . . . was left over.” Id. at 194:14-195:19. Rosario did not know whether Maribeth Gomez required authorization for payments from Gomez Diaz. See id. at 195:15-19. MLB provides some of these checks themselves as evidence. See JPM Account Statement Excerpts at *25-28. Each of the checks provided bears a notation that reads in part “ATTH: JRGD.” Id. MLB also provides bank statements from between February 2020 and July 2021, in which at least fifteen transactions are accompanied by subject lines indicating that they were authorized by Ivette Gomez (Telemicro's owner), Josefina Adames (the Telemicro employee), or Juan Ramon Gomez Diaz. Id. at *17, 20-24.
TIHC suggests for the first time in the reply brief on its motion to quash that these authorizations represent cases where “Mr. Gomez Diaz agreed on behalf of Telemicro that an action TIHC planned to take comported with the two companies' contract.” TIHC Quash Reply at 3. Not only is this unsupported by any citation to evidence, it appears to contradict TIHC's suggestion that Gomez Diaz did not, in fact, communicate these authorizations. See TIHC Opp. Mem. at 9.
Testimony from Maribeth Gomez supports MLB's contention that TIHC does not control its own affairs. Maribeth Gomez testified to her belief that Gomez Diaz engaged initial counsel for TIHC when MLB's turnover motion was filed, see Maribeth Gomez Dep. at 150:19-151:10, and stated that she does not even know who engaged TIHC's current counsel, id. at 151:22152:22, even though she is the owner of TIHC. Maribeth Gomez could not recall any month in which she had spent as much as five hours running the company. See Maribeth Gomez Dep. at 30:7-10. She could not explain how TIHC transmits its content, whether it uses a signal distributor, or where its commercials are shown, and could not name a single advertiser for the company. See Maribeth Gomez Dep. at 86:24-89:18; 93:18-94:12.
MLB also provides the deposition of Patrick Rivet, CEO of Thema, who negotiated a broadcast distribution agreement for which TIHC was the nominal counterparty. Rivet Dep. at 25:11-23, 28:18-23. Rivet testified that he never met Maribeth Gomez, id. at 27:21-23, and instead negotiated the contract with Josefina Adames and Juan Ramon Gomez Diaz, id. at 26:1524, 27:9-20. Rivet testified that when he renegotiated the agreement, he again dealt with Gomez Diaz, and did not deal with Maribeth Gomez. Rivet Dep. at 42:7-15. Despite that, the agreement itself was signed by Maribeth Gomez on behalf of TIHC. See Second Addendum to the Signal Distribution Contract, annexed as Exhibit 15 to Simonson Decl., filed May 31, 2022 (Docket # 124-16).
Again, TIHC provides nothing but Maribeth Gomez's declaration to rebut MLB's evidence. See Maribeth Gomez Decl. This declaration makes the conclusory assertion that “TIHC does not receive orders, instructions, or commands from Telemicro or any other corporation or natural person.” Id. ¶ 7. And, as already noted, some of its statements relevant to Telemicro's control are contradicted by other evidence. For instance, it states that “[i]n late 2016, TIHC negotiated with Thema a modification to the Thema-TIHC Contract.” Id. ¶ 22. The testimony of Thema's CEO contradicts this, however, indicating that the modification was actually negotiated with a Telemicro employee. See Rivet Dep. at 42:7-15. As with its claims about the payments, TIHC's assertions about Telemicro's control over its affairs are not only conclusory but not accompanied by any documentary or other evidence.
b. Analysis
Under the summary judgment standard, a nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Thus, a nonmoving party may not avoid summary judgment by “rely[ing] on conclusory allegations or unsubstantiated speculation.” F.D.I.C. v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010) (quoting Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998)). For this reason, “a nonmoving party's self-serving statement, without direct or circumstantial evidence to support the charge, is insufficient to defeat a motion for summary judgment.” Walker v. Carter, 210 F.Supp.3d 487, 503 (S.D.N.Y. 2016).
The issue before the Court is whether Telemicro “actually controls” the Chase Account, such that it is the beneficial owner of the account. City of New York v. Venkataram, 2011 WL 2899092, at *5 n.6. Certainly, Maribeth Gomez, the owner of TIHC, has made the conclusory contention that the Chase Account is not controlled by Telemicro, see Maribeth Gomez Decl. ¶ 33, and that she operates TIHC “independently” and not on the basis of instructions from others, id. ¶ 7. But all other evidence in the record says otherwise, and the only documentation that TIHC provides to support Maribeth Gomez's testimony is TIHC's certificate of incorporation, see Certificate of Incorporation, which gives no information as to how TIHC is actually functioning.
As noted, there is overwhelming evidence showing that TIHC does not operate independently and, with respect to the Chase Account, takes direction from Telemicro and uses the account exclusively for the benefit of Telemicro (including Gomez Diaz and his family members). In fact, the record shows that TIHC writes checks to third parties who had invoiced Telemicro, and makes payouts to relatives of Telemicro's owner. TIHC argues that these are simply aspects of TIHC's business relationship with Telemicro, not evidence of Telemicro's interest in the account, essentially ascribing the conduct to a verbal agreement with Telemicro regarding distribution rights. See TIHC Opp. Mem. at 9-12. But without proof of the existence of specific contractual obligation, none of TIHC's behavior makes sense except that it is the result of Telemicro's bidding. Furthermore, TIHC allows Telemicro and the person who is the de facto controller of Telemicro, Gomez Diaz, to have the final say over TIHC business decisions. This includes the negotiation of contracts with third parties and “essentially all” payment from the Chase Account. Mallelyn Gomez Dep. at 105:2-7. TIHC provides no non-conclusory evidence to refute what MLB has presented.
TIHC urges the Court to disregard MLB's evidence, and argues that the witnesses cited by MLB - including TIHC's own 30(b)(6) representative - are not competent to testify. TIHC Opp. Mem. at 6-7. As to Rosario, TIHC argues that she is “not competent to testify” because she was questioned through an interpreter. Id. at 7-8. This argument is frivolous inasmuch as the Federal Rules of Evidence specifically contemplate the use of interpreters. See Fed. R. Evid. 604. TIHC argues that Rosario is incompetent also because “she is merely an administrative assistant with some bookkeeping duties.” TIHC Opp. Mem. at 8. This contention is similarly frivolous given that Rosario was TIHC's designated Rule 30(b)(6) representative for the deposition and TIHC even represented to the court after the deposition that Rosario was prepared for her deposition and “provided clear, direct and accurate responses” in her deposition testimony. See Letter from Henry E. Marines, filed Apr. 4, 2022 (Docket # 116), at *2. As to Mallelyn Gomez, TIHC argues that she “served not as an accountant, but as an administrative assistant” and “never kept a ledger.” TIHC Opp. Mem. at 7. TIHC asserts that she is not competent because she was unrepresented at her deposition, because she had left TIHC nearly two years before the deposition was taken, and because she was uncertain as to TIHC's exact leadership structure. Id. Regarding the first issue, Mallelyn Gomez testified that her duties included bookkeeping, see Mallelyn Gomez Dep. at 10:22-11:7, and TIHC offers no evidence to rebut this, TIHC Opp. Mem. at 7. Nor can we identify any reason why this would affect Mallelyn Gomez's ability to give testimony from personal knowledge. See Fed.R.Evid. 602. We also cannot find any reason why Mallelyn Gomez's competency to testify is affected by the two-year gap between her employment in the deposition. Finally, we note that there is no requirement in the Federal Rules that non-party witnesses be represented by counsel in order for testimony to be admissible. Thus, we consider the deposition evidence from Mallelyn Gomez as we would any other evidence. Finally, TIHC argues that testimony from Patrick Rivet should be discounted because he “does not know what, if any, role TIHC plays with regard to Telemicro.” TIHC Opp. Mem. at 9. Rivet's testimony, however, centered on his own experience negotiating a contract to which TIHC was a signatory. See Rivet Dep. at 41:3-42:23. We find no reason to disregard it simply because he does not have intimate knowledge of TIHC's operations.
With regard to the checks made out by TIHC to third parties in satisfaction of invoices to Telemicro, TIHC's entire explanation for these checks centers on its claim that it has an oral distribution agreement with Telemicro under which TIHC has exclusive license to distribute Telemicro programming outside of the Dominican Republic, including through third-party contracts like the agreements with Thema. Maribeth Gomez Decl. ¶¶ 10-27. Under this agreement, TIHC purportedly owes Telemicro a monthly fee in return for these distribution rights, which it pays in a variety of ways. Maribeth Gomez Dep. at 38:15-20; Maribeth Gomez Decl. ¶¶ 12, 26. However, as we have already noted, not only is there “no written documentation” of the contract between TIHC and Telemicro under which TIHC claims all of these transactions fall. Rosario Dep. at 145:20-146:4. TIHC's corporate representative --Rosario ---- could not provide details about how payments were determined under the agreement. See id. at 155:16-156:5. TIHC's CEO, Maribeth Gomez, at her deposition could provide no detail regarding the “verbal agreement” or its alleged modification, stating that she did not remember where it was signed, whether it was negotiated in person, when it was signed, or whether it was signed within the last five years. Maribeth Gomez Dep. at 43:5-44:16. She could not remember why it was later modified, what the modification was, or whether it was reduced to writing. Id. at 50:21-51:16.
Moreover, there is abundant evidence that TIHC and Telemicro did not treat their relationship as part of a bona fide contractual relationship. TIHC often failed to meet its supposed obligations to Telemicro, but Telemicro never made any effort to have TIHC pay these amounts. See Mallelyn Gomez Dep. at 131:5-138:24, 144:2-145:1. And despite the sum in excess of $600,000 TIHC claims it is now owed by Telemicro due to overpayments, TIHC has no “plan for collecting on that money.” Maribeth Gomez Dep. at 150:5-16. TIHC's contentions regarding a purported contractual relationship fail to explain the payments made from the Chase Account to Telemicro's debtors, which can only be explained by Telemicro's control over the account.
Despite Maribeth Gomez's conclusory statement that Telemicro has no control over TIHC's affairs or accounts, Maribeth Gomez Decl. ¶ 7, there is ample evidence to the contrary. Mallelyn Gomez testified that when she received instructions from Telemicro's administrator, Josefina Adames, she did not “consult with anyone else at [TIHC]” before making these payments because it was her understanding that authorization from Gomez Diaz [through Adames] was “sufficient for [her] to make payments from [the Chase Account].” Id. at 116:524. Rosario continued the practice of sending payments to third parties and Gomez Diaz family members, see Rosario Dep. at 78:4-80:10, the subject lines of many of which indicated or suggested that they were authorized by Juan Ramon Gomez Diaz or other parties at Telemicro. See JPM Account Statement Excerpts.
Regarding these authorizations from Gomez Diaz, TIHC argues that there is a dispute of fact as to whether Gomez Diaz “own[s]” Telemicro and TIHC. See TIHC Opp. Mem. at iv. It is true that TIHC's representative, Rosario, could not identify Gomez Diaz's role at Telemicro. See Rosario Dep. at 31:9-12. But whether or not Gomez Diaz is the lawful owner of Telemicro is not the point. What matters is whether instructions from Gomez Diaz are in fact for the benefit of Telemicro. The only evidence as to Gomez Diaz's relationship to Telemicro suggests that he in fact controls the decisionmaking. Thus, Mallelyn Gomez testified to her understanding that “notwithstanding the fact that [Maribeth Gomez] is the owner of [TIHC], . . . all business decisions were to be authorized by . . . Gomez Diaz.” Id. at 103:8-12. Additional authorizations for payments were communicated by Telemicro's “admin,” Josefina Adames. SeeMallelyn Gomez Dep. at 14:5-7, 16:24-17:24, 101:17-102:3. All of this evidence suggests that Telemicro made decisions regarding withdrawals from the Chase Account independently, without contractual boundaries or oversight from TIHC.
There is additional supporting evidence for TIHC's lack of control over its own affairs. Maribeth Gomez, TIHC's CEO, demonstrated virtually no knowledge of her own business. Maribeth Gomez Dep. at 81:23-82:6, 86:24-88:25, 89:1-18; 93:18-94:12. She remembered no detail about the formation of either the contract on which TIHC relies for its argument that there exists an “arm's-length relationship” with Telemicro, Maribeth Gomez Dep. at 43:5-44:16, nor any detail regarding its supposed modification. Id. at 50:21-51:16. She believes that Gomez Diaz, the same man who authorized checks out of the Chase Account, retained counsel on TIHC's behalf. Maribeth Gomez Dep. at 150:19-151:10. She professed that she could not remember a single month in which she spent as many as five hours managing the company for which she is one of two workers. See Id. at 30:4-14. Patrick Rivet, who negotiated a contract ostensibly countersigned by Maribeth Gomez and TIHC, stated that he negotiated exclusively with Telemicro employees. Rivet Dep. at 26:15-27:23. This is powerful evidence that despite her role as CEO, Maribeth Gomez does not, as she conclusorily claims, “operate TIHC solely and independently.” See Maribeth Gomez Decl. ¶ 7.
Case law sheds light on whether this factual scenario is sufficient to show that Telemicro has an interest in the Chase Account. In Bingham v. Zolt, 231 A.D.2d 479 (1st Dep't 1996), the First Department held that that “[w]here . . . the evidence demonstrates that a judgment debtor regularly has used another's bank account as a ‘recipient' of the debtor's personal assets or as a source for payment of the debtor's expenses, the account may be restrained under the statute.” See Id. at 479. We recognize that where “plaintiff has presented no evidence that the [third-party's] bank accounts ever actually received money that belonged to the judgment debtor” and has only presented evidence that “accounts were used to pay for [debtor's] expenses,” courts have cautioned that “this could simply mean that the owners of the [account] chose to pay the debtor's legitimate bills and sacrifice their profit as a result” and that “it does not necessarily follow that . . . the debtor[] has any interest in those monies.” AXGINC Corp. v. Plaza Automall, Ltd., 2018 WL 4771886, at *5 (E.D.N.Y. Oct. 2, 2018) (“Axginc I”). Axginc I essentially held that mere payments to the judgment debtor do not by themselves show an interest in property and that a judgment creditor must demonstrate “a more substantial connection between the bank accounts and the assets of the judgment debtor.” Id. But this principle does not foreclose the possibility that a judgment debtor's interest may be established by evidence that it has used an account as a source for payment of debts where there are additional indicia of control that obviate concerns that the nominal account holder may simply be acting against their own financial best interest.
Here, as already described, there is ample evidence other than mere payment for Telemicro's benefit in the form of evidence that Telemicro or persons associated with it were directing how payments were to be made. Although TIHC urges the Court here to rely on Maribeth Gomez's pre-deposition affidavit that TIHC is not controlled by Telemicro, to do so would require that we disregard much of her deposition testimony. At her deposition, Maribeth Gomez testified that Telemicro was able to direct “courtesy” payments from the account at will. Maribeth Gomez Dep. at 55:2-22. She provided only the vaguest, most minimal detail about the agreement that supposedly controls these payments. Maribeth Gomez Dep. at 43:5-44:16, 50:21-51:16.
Further, Mallelyn Gomez testified that Telemicro employees passed along instructions regarding the account that were carried out by TIHC employees without approval from TIHC management. Mallelyn Gomez Dep. at 116:5-9. She testified that TIHC employees had to seek authorization from Gomez Diaz, via Telemicro's “admin” Adames, for “essentially all” disbursements from the Chase account. Id. at 103:8-12, 104:4-8, 104:23-105:15. She testified that Telemicro never sent late payment notices and she could not recall any effort by Telemicro to collect on the debts owed to it by TIHC. Mallelyn Gomez Dep. at 144:2-145:1. TIHC's CEO testified that the company has no plan to collect on debts it claims it is owed by Telemicro. Maribeth Gomez Dep. at 150:5-16. No reasonable jury, on hearing these facts, could fail to conclude that Telemicro actually controlled the Account.
As in Bingham, this represents a case in which “judgment debtor regularly has used another's bank account . . . as a source for payment of the debtor's expenses.” 231 A.D.2d at 479. We are not concerned, as the court in Axginc I was, that payments to third parties “could simply mean that [TIHC] chose to pay [Telemicro's] legitimate bills and sacrifice their profit as a result,” rather than that Telemicro “has any interest in those monies.” See 2018 WL 4771886, at *5. Here, the evidence is not limited to payments alone. The evidence shows that TIHC allowed itself to be used as the US-based bank account for Telemicro, with no business purpose or intention for repayment. TIHC did not take any steps to limit Telemicro's use of the Chase Account as a truly independent company might; instead, TIHC blindly executed payments on the say-so of Telemicro employees, and in fact sought approval from Gomez Diaz, through Telemicro's administrator, before issuing payments on its own behalf.
In sum, no reasonable jury could fail to find that Telemicro “has an interest” in the Chase account as a result of its “actual control” of that account.
2. Telemicro's Entitlement to the Chase Account
The second element of Beauvais requires MLB to prove either that Telemicro is entitled to the Chase Account or that MLB's interest is superior to that of TIHC in order to obtain turnover under N.Y.C.P.L.R. § 5225(b). Beauvais, 942 F.2d at 840. Even where “[a] debtor obviously has an interest in its own money or property held by a third party, . . . that does not necessarily mean it is entitled to possession of that money or property.” Id. at 841. For a debtor to be “entitled” to funds, it “must be able to retrieve the disputed assets.” See Dussault v. Republic of Argentina, 616 Fed.Appx. 26, 27 (2d Cir. 2015) (summary opinion). In essence, “[t]he judgment creditor stands in the shoes of the judgment debtor, and if a given property, asset, interest, or deposit is unavailable to the debtor, it is unavailable to the creditor.” Id. at 2728 (quoting Swezey v. Merrill Lynch, 87 A.D.3d 119, 127-28 (1st Dep't 2011)). In other words, the gravamen of this test is whether the funds or property are “available” to the judgment debtor.
Here, MLB has demonstrated that Telemicro is able to freely direct funds from TIHC's Chase Account to third parties and itself and, as a result of its “actual control,” is necessarily the “beneficial” owner of those funds. MLB contends that, following Allstate, a finding that the judgment debtor had “actual control” of the account in question satisfies both elements of Beauvais. MLB Reply at 7 (citing 2018 WL 4921631, at *11). TIHC argues that this theory “collapse[s] the elements” of Beauvais and is thus inadequate to prove MLB's right to turnover. TIHC Opp. Mem. at 4-6. We agree with MLB. As was true in Allstate, we view a finding of “actual control” as satisfying both prongs of Beauvais. Indeed, Allstate acknowledged that “‘[o]nly after both steps of the [Beauvais] analysis are demonstrated,' may the court enter a Turnover Order.” Allstate, 2018 WL 4921631, at *5 (quoting Beauvais, 942 F.2d at 840-41). Thus, Allstate found that, as to one set of accounts where turnover was ordered, the inquiry revolved around whether the accounts were “actually controlled by [the debtor] and used for his benefit” and that it did not matter what the “source” of the funds were. Id. at *12. Here, although some of the funds in TIHC's account may derive from TIHC's purported business dealings, see Rosario Dep. at 119:25-122:10, Telemicro's continuing and unfettered use of that account to issue checks to satisfy its own debts and at its direction demonstrates MLB's entitlement to the funds.
A showing of “actual control” logically satisfies the requirements of Beauvais and §5225(b). As TIHC appears to recognize, see TIHC Opp. Mem. at 6, proof of “actual control” relates directly to the question of a judgment debtor's entitlement to the funds at issue. A company that can issue checks at will from an account to creditors is, in effect, able to access the funds in that account and benefit from their use. Indeed, following the rule that under § 5225 a judgment creditor essentially “stands in the shoes” of a debtor, see, e.g., Karaha Bodas Co., 313 F.3d at 83, a creditor in this position could simply order itself paid via the same process through which the debtor had previously paid third-parties. This amounts to the ability to “retrieve” the assets held by another, despite the other party's nominal possession of those assets.
Notwithstanding TIHC's argument that “Telemicro is not entitled to the possession of TIHC's [Chase] Account,” TIHC Opp. Mem. at 11, TIHC has not rebutted the abundant evidence presented by MLB that Telemicro controlled the use of the account and acted as its beneficial owner. The sole question, then, is whether Telemicro could direct the disbursement of funds to itself from the Chase Account. Although Maribeth Gomez states that it is no longer making payments to Telemicro due to the alleged overpayment, see Maribeth Gomez Decl. ¶ 30; Maribeth Gomez Dep. at 37:21-23, this evidence simply does not address the issue of Telemicro's ability to control the account.
Because Telemicro, through Gomez Diaz, has exerted control over “essentially all payments” from the Chase Account, Mallelyn Gomez Dep. at 105:5-11, and TIHC has made no effort to seek repayment, see Maribeth Gomez Dep. at 150:5-16, no reasonable jury could fail to conclude that Telemicro is “able to retrieve the disputed assets.” Dussault, 616 Fed.Appx. at 27. Thus, the motion to turn over the Chase account should be granted.
IV. MOTION TO QUASH RESTRAINING NOTICE
As part of its turnover proceedings, MLB issued a restraining notice to JPMorgan Chase regarding the Chase Account. See Restraining Notice. TIHC has moved to quash the restraining notice. See TIHC Quash Mem.
TIHC's first argument is that Telemicro has no interest in the restrained funds. TIHC Quash Mem. at 2-3. For the reasons already stated, we reject this argument.
TIHC also argues that MLB's restraining notice is “facially defective” because it “vaguely generalizes that Telemicro ‘has an interest, including but not limited to the balance' of TIHC's account” and “does not state that TIHC knows, or has any reason to know, that Telemicro has an interest in TIHC's [a]ccount.” TIHC Quash Mem. at 3. But TIHC points to no law or case dictating the form of the restraining order. Despite TIHC's assertion that CPLR § 5222(b) “call[s] for specification” as to the third party's knowledge, the section includes no such requirement for the form of notice. Here, MLB stated in the notice to Chase that “Judgment Debtor has an interest [in property] including, but not limited to the balance in the Telemicro Account.” See Restraining Not. We find that this satisfies section 5222(b)'s dictate that “[a] restraining notice served upon a person other than the judgment debtor or obligor is effective . . . if . . . the judgment creditor . . . has stated in the notice that . . . the judgment debtor or obligor has an interest in specified property in the possession or custody of the person served.” N.Y.C.P.L.R. § 5222(b). Thus, we reject TIHC's argument that the restraining notice is “facially defective.”
Finally, TIHC makes the briefest of arguments that enforcement of MLB's restraining notice “would violate TIHC's right to due process.” TIHC Quash Mem. at 3. While MLB gave copious arguments in opposition to this claim, MLB Quash Opp. at 23-25, TIHC's reply brief does not address any of MLB's arguments. TIHC's own argument is premised on its contention that a due process violation arises where a restraining notice allows a bank “to freeze the account of a third party . . . bearing no assets whatsoever of the judgment debtor” and where the statutory procedures had not been followed. TIHC Quash Mem. at 5. But neither of these circumstances exists here. As already noted, we have found that the Chase Account in fact holds assets controlled by Telemicro. Second, as just noted, the restraining notice in fact complies with the statute. Accordingly, the motion to quash should be denied.
V. CONCLUSION
For the reasons set forth above, MLB's motion for turnover (Docket # 122) should be granted in part and denied in part, and TIHC's motion to quash (Docket # 153) should be denied. The court should issue an order requiring Banesco Banco Multiple SA, Banco Multiple Caribe, and Banco de Reservas de la Republica Dominicana to turn over to MLB the Dominican Accounts belonging to Telemicro, requiring Telemicro to turn over its Bell 407 helicopter, requiring Telemicro to turn over its right to payment under the Distribution Agreement, and requiring JPMorgan Chase Bank to turn over to MLB the funds in the Chase Account.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Vyskocil. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).