Source: http://barnespc.com/news-attachment-premised-foreign-confession.php
Timestamp: 2019-04-19 10:23:12+00:00

Document:
You are contacted by Vermont based counsel for a small business which recently entered Confessed Judgment in Vermont against a New York business for its failure to satisfy certain promissory notes. The Vermont client wants to quickly domesticate the judgment in light of rumors that the New York based business may shut down in short order. Mindful that Article 62 of the CPLR may apply to found an efficient attachment of the New York Corporation’s assets, you ask for more information and are advised as follows.
AA Corporation, a Vermont Corporation, sold its business to a New York entity, DD Corporation, resulting in an Asset Purchase Agreement which is secured by a Confessed Judgment Promissory Note. DD was represented by counsel during the negotiation, drafting and execution of the APA and, incident thereto, DD, for consideration, voluntarily and knowingly waived its right to prejudgment notice and hearing prior to the entry of a Confession of Judgment and likewise submitted to in personam jurisdiction in Vermont, irrevocably waiving any basis to dispute Vermont’s jurisdiction. After DD failed to make an installment payment due to AA, counsel for AA sent DD and its counsel a Notice to Cure, followed by a Notice of an Event of Default. After no payment was made, AA’s counsel confessed judgment against DD in AA’s favor in the Clerk’s Office of the local County in Vermont under the terms of the Confessed Judgment Provision of DD’s Confessed Judgment Promissory Note to AA.
In that light, AA may have a basis for seeking an immediate attachment. CPLR § 6211(a) permits plaintiff to proceed with an ex parte application for an order of attachment “before or after service of a summons and at any time prior to judgment.” CPLR § 6212(a) provides that plaintiff bears the burden of establishing four prongs to demonstrate entitlement to an order of attachment: (1) a cause of action exists against the defendants; (2) it is probable that plaintiff will succeed on the merits; (3) one of the five grounds for an attachment specified in CPLR § 6201 is applicable; and (4) the amount demanded from the defendants exceeds all counterclaims known to the plaintiff.
The Complaint against DD will undoubtedly allege breach of contract.ii To sustain an attachment, plaintiff in a breach of contract action must demonstrate evidentiary facts making out a prima facie case.iii In determining whether plaintiff has sustained the burden of stating a prima facie case in support of the complaint upon which the attachment is based, the court must give the plaintiff the benefit of all the legitimate inferences that can be drawn from the stated facts.iv A well crafted, detailed and documented client affidavit will serve as the keystone for a Court’s attachment order to the extent that the same will establish that DD failed to satisfy its payment obligations despite due notice of default, that the sums remain outstanding and that corresponding judgments have been entered in Vermont.
With the foregoing factual background, the plaintiff has established that a cause of action exists and it is probable that plaintiff will succeed on the merits. See Considar, Inc. v. Redi Corp. Establishmentv (evidence that principal terms of oral agreement were confirmed in signed memorandum, together with seller's undisputed lack of performance, established probability of buyer's success on merits of breach of contract claim, as required for buyer to obtain attachment order); Philipp Bros. Division of Engelhard Minerals & Chemicals Corp. v. El Salto, S.A.vi (in breach of contract action brought by sugar buyer against sugar seller wherein buyer sought to confirm ex parte attachment and sought preliminary injunction, record established that buyer sufficiently demonstrated its intention, willingness and ability to purchase the sugar it contracted to buy and that seller terminated agreement for reasons not authorized by written contract, thus establishing buyer's likelihood of succeeding on merits as required to confirm the ex parte attachment and to issue the preliminary injunction).
5. the cause of action is based on a judgment, decree or order of a court of the United States or of any other court which is entitled to full faith and credit in this state, or on a judgment which qualifies for recognition under the provisions of article 53.
Because the plaintiff’s New York action is based upon a judgment from Vermont it is per se entitled to found a New York action.
This subsection [CPLR § 6201(5)] is utilized by plaintiffs who want to commence an action to enforce a foreign judgment against a defendant in New York. Upon an application by the plaintiff, the Court will determine whether the foreign judgment that remains unsatisfied is likely to be recognized in New York.
Duplicating the language utilized in CPLR § 6201(5), CPLR § 5401 defines a "foreign judgment" as “any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit in this state …”.
While a cognovit judgment may not be entitled to full faith and credit if it fails to satisfy due process considerations, a confession of judgment which satisfies due process standards is entitled to recognition and enforcement in New York.
While an outright "cognovit" instrument (not seen much today) may not be entitled to full faith and credit at all for example, and hence not entitled to New York recognition through any procedure (CPLR 5401 or otherwise), a confession of judgment not guilty of the cognovit's offenses may satisfy due process and, while not being allowed mere registration under CPLR 5401, nevertheless be entitled to full faith and credit and hence New York enforcement through one of the other means.
i Leo K. Barnes Jr., a member of Barnes & Barnes, P.C., can be reached at “lkb@barnespc.com”.
ii As an aside, CPLR § 5406 provides an unimpaired right for plaintiff to proceed pursuant to CPLR § 3213 to enforce the sister-state judgment.
iii Lepow v. Cervo Export Corp., 82 N.Y.S.2d 423 (N.Y. Sup. Ct. 1948).
iv National Bank & Trust Co. of North America, Ltd. v. J. L. M. Intern., Inc., 421 F.Supp. 1269 (S.D.N.Y. 1976).
v 238 A.D.2d 111, 655 N.Y.S.2d 40 (1st Dep’t 1997).
vi 487 F.Supp. 91 (S.D.N.Y. 1980).
vii Siegel, David D, Supplemental Practice Commentaries, C5406:1.
viii 101 A.D.2d 846, 475 N.Y.S.2d 878 (2nd Dep’t 1984).
ix See, e.g., National Union Fire Ins. Co. v. Worley, 257 A.D.2d 228, 231, 690 N.Y.S.2d 57, 59 (1st Dep’t 1999).
x 189 A.D.2d 703, 592 N.Y.S.2d 720 (1st Dep’t 1993).
xi Despite compliance with the foregoing statutory and common law criteria for an attachment, the decision whether to execute the Order still lies within the sound discretion of the Court. Because the provisional remedy is such a drastic measure, it is incumbent upon movant to demonstrate to the Court that equity warrants the Order of Attachment. Again, a detailed and well documented affidavit is imperative.
xii Margolies v. Encounter, Inc., 42 N.Y.2d 475, 398 N.Y.S.2d 877 (1977).
xiii Lelekakis v. Kamamis, 303 A.D.2d 380, 755 N.Y.S.2d 665 (2nd Dep’t 2003).
xiv 7th Sense, Inc. v. Liu, 220 A.D.2d 215, 631 N.Y.S.2d 835 (1st Dep’t 1995).

References: § 6211
 § 6212
 § 6201
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 § 6201
 § 6201
 § 5401
 § 5406
 § 3213
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