Commercial Division Blog

Posted: May 7, 2017 / Categories Commercial, Judgment and Collection, Injunctions Attachments and Other Preliminary Remedies

Even if Statutory Basis for Attachment Met, Must be Showing Judgment Will Not Be Paid

On April 21, 2017, Justice Friedman of the New York County Commercial Division issued a decision in Mascis Investment Partnership v. SG Capital Corp., 2017 NY Slip Op. 30813(U), holding that even where the statutory basis for an attachment is met, there must be a showing that there is a risk that the judgment will not be paid, explaining:

[E]ven where the statutory grounds for an attachment are met, the party seeking attachment must demonstrate an identifiable risk that the defendant will not be able to satisfy the judgment. The Courts' focus on the need for an attachment, in addition to the statutory requirements, is reflected in the legislative history of the attachment statute, which emphasizes that Courts should consider whether an attachment is actually needed in the case of a foreign corporation. The importance of need as a factor is also reflected in CPLR 6223(a), which requires that the Court vacate an attachment if it determines that the attachment is unnecessary to the security of the plaintiff.

As the Appellate Division of this Department has explained, the risk that the defendant will be unable to satisfy the judgment should be real, whether it is a defendant's financial position or past and present conduct. The court may consider the defendant's history of paying creditors, or a defendant's stated or indicated intent to dispose of assets. There must be more than a showing that the attachment would, in essence, be helpful. The mere fact that defendant is a non-domiciliary residing without the State of New York is not sufficient ground for granting an attachment. Attachment is a harsh remedy, and is construed narrowly in favor of the party against whom the remedy is invoked.

. . .

Here, plaintiffs do not submit any evidence of a risk that defendant will not be able to satisfy a judgment in their favor. Indeed, in their moving papers, plaintiffs do not attempt to
demonstrate such a risk, and merely assert that defendant, knowing that a claim is now being made against its account at JP Morgan, could easily transfer the contents of the account outside
the jurisdiction. . . . Although the liquidity of assets is a factor that may be considered in determining the need for an attachment, it is not, without more, sufficient to
support the attachment.

(Internal quotations and citations omitted) (emphasis added).