Opinion
No. 2151/11.
2012-07-17
Elizabeth PERRY, Plaintiff, v. Jeffrey R. PERRY, Defendant.
Cohen Clair Lans Greifer & Thorpe LLP by Robert Stephan Cohen, Esq., New York City, Attorneys for Defendant Jeffrey R. Perry. Davidoff Hutcher & Citron LLP by Leslie F. Barbara, Esq., New York City, Attorneys for Plaintiff Elizabeth Perry.
Cohen Clair Lans Greifer & Thorpe LLP by Robert Stephan Cohen, Esq., New York City, Attorneys for Defendant Jeffrey R. Perry. Davidoff Hutcher & Citron LLP by Leslie F. Barbara, Esq., New York City, Attorneys for Plaintiff Elizabeth Perry.
Kathleen Hannon, Esq., Scarsdale, Attorney for the Children 6 Standish Drive.
ALAN D. SCHEINKMAN, J.
In this matrimonial action, Defendant Jeffrey R. Perry moves for an order enjoining and restraining Plaintiff Elizabeth Perry from filing any future action against him in any jurisdiction without first obtaining prior judicial approval. Plaintiff opposes the motion.
On the present record before the Court, it is undisputed that Plaintiff has engaged in inappropriate litigation behavior, including, but not limited to, her refusal to comply with court orders to produce documents and submit to an examination before trial, the secretion of assets (such as millions of dollars of cash assets), and apparently illicit acquisition of documents and computer files belonging to Defendant. In its recent Bench Decision on the issues of custody and visitation, the Court commented on Plaintiff's tendency to be secretive and evasive.
The present motion was prompted by Plaintiff's transmission to Defendant, after the parties had spoken regarding settlement, of an unsigned, haphazardly redacted and truncated letter regarding a potential lawsuit by Plaintiff against Defendant. The document is addressed to Plaintiff and seems to be from an undisclosed attorney writing to “confirm” an understanding with Plaintiff and to “recommend” the filing of a civil RICO action against Defendant in the United States District Court for the Southern District of New York, White Plains Courthouse. The document suggests that the litigation would be based on Defendant's failure to fully disclose his income and assets on his Statement of Net Worth. Defendant avers that this document was received by facsimile from a number known to be Plaintiff's.
Defendant alleges that, at the outset of this case, Plaintiff's then-attorney (she has had some 11 different attorneys in the 19 months this matrimonial action has been pending) made similar allegations regarding his disclosure of assets and income. Defendant attests to having provided tens of thousands of pages of documents to Plaintiff. In contrast, as he notes, Plaintiff has refused to provide any documents and has refused to appear for deposition.
Plaintiff intercepted some nine boxes of files intended for Defendant and hid them. She apparently orchestrated the hacking of Defendant's computer, including privileged matter. Defendant alleges that, in order to circumvent a restraint imposed by this Court, Plaintiff put the housekeeper in a disguise and directed her to take a taxi to a storage unit in order to remove a suitcase full of jewelry. Plaintiff is also claimed to have emptied a money market account of $5 million and removed valuable furniture, artwork and mirrors from the marital residence. Further, recent bank information indicates that of the approximately $11.5 million held in a particular Chase account of Plaintiff in April 2012, there is only just over $1 million left. Defendant also notes that, after representing to this Court that she had no funds to retain counsel, Plaintiff managed to pay $50,000 to her present counsel upon retention.
Defendant recites that Plaintiff attempted to involve the police when he entered the former marital residence in Scarsdale in order to convince his daughter, Julia, to go with him on a planned vacation trip to Australia. As this Court noted in the Custody and Access Decision, while Defendant's entry into the home was likely a violation of an order requiring him to remain in the driveway, Plaintiff's absence from the home—she was in Florida—was also likely a violation of the order, which required her to be inside the residence. While Plaintiff's effort to involve the police was not wholly successful (she did get Homeland Security officials to briefly detain Defendant and the children upon return to this country), she obtained an ex parte Family Court temporary order of protection, which she used to derail Defendant's access to the children for a time.
Defendant also notes that in April 2012, after this Court directed that Defendant have custody of the children, an anonymous caller complained to Child Protective Services that the children were being held against their will at Defendant's residence. This claim was investigated and found to be unfounded. Defendant suggests that Plaintiff was the anonymous caller.
Defendant requests that this Court enjoin Plaintiff from filing any future actions against him, in any jurisdiction, without prior judicial approval.
Plaintiff opposes the application. Of moment, no affidavit from Plaintiff is submitted. Instead, Plaintiff's present counsel submits an affirmation in which she asserts that she and her firm have “parachuted into a firefight” and have been “bombarded” by this motion and multiple letters demanding financial information that counsel represents she does not have.
Plaintiff's counsel does not refute any of the factual assertions made by Defendant, such as the transmission of the letter to Defendant by Plaintiff regarding a potential RICO suit, and acknowledges that counsel had been discussing settlement. She represents that her firm had nothing to do with any letter regarding a potential RICO claim. While disclaiming that her office has any “present intent” to file a RICO claim by Plaintiff against Defendant, counsel urges that there is no reason, should Plaintiff possess a valid claim, for this Court to impede or impair Plaintiff from presenting that valid claim. Counsel then proceeds to a legal argument (which should have been reserved for a memorandum of law, rather than counsel placing herself in the unseemly position of affirming under penalty of perjury to the truthfulness of her legal arguments). In the legal argument, Plaintiff's counsel asserts that Plaintiff has not been shown to have engaged in repeatedly frivolous litigation or motion practice such that Defendant's request should be granted. In particular, counsel argues that this court lacks jurisdiction to restrain a party from proceeding in federal court. As to this latter point, counsel notes that “even if Plaintiff did intend to file a federal RICO lawsuit, federal courts have consistently imposed Federal Rule of Civil Procedure 11 Sanctions against litigants who commenced RICO lawsuits which were later found to be baseless.”
Several times counsel disclaimed any present intention on the part of her office to file a federal RICO suit. In at least one instance she disclaimed any present interest on the part of Plaintiff herself to a file such a suit:
Based on the foregoing, this Court is without jurisdiction to enjoin my client from filing a federal RICO lawsuit. Were my client to file a federal RICO lawsuit (which she does not intend to do at this time), the federal courts would be more than adequately prepared to dismiss any baseless claims and to sanction the party deemed to have brought the frivolous lawsuit.
Timing is everything. Defendant's application was initiated by Order to Show Cause signed by this Court on June 26, 2012. The Court struck from the Order to Show Cause the requested temporary restraining order that would have prohibited Plaintiff from commencing any lawsuits without prior judicial permission pending the return date. Plaintiff's attorney signed the opposition affirmation on Friday, July 6, 2012. On Monday, July 9, 2012, Plaintiff filed a civil RICO action in the federal court in White Plains, with Plaintiff using the services of different attorneys than those appearing for her in this action. It is evident that Plaintiff's state court attorneys had no idea what Plaintiff's federal court attorneys, and Plaintiff herself, were up to.
In the complaint in the federal action, of which the Court takes judicial notice, Plaintiff alleges that Defendant has submitted a false net worth statement in order to hide millions of dollars from her. Plaintiff alleges that certain specific accounts and shares were intentionally omitted by Defendant in his net worth statement. Plaintiff asserts that she is entitled to an equitable distribution of these assets under New York law and that the value of the assets is substantial, well over $1 million. She claims that Defendant has kept these assets concealed from her and from this Court.
The Court is constrained to deny Defendant's application for an injunction against the institution of additional lawsuits and, in particular, against the institution (or now continuance) of litigation in the federal court.
In General Atomic Company v. Felter (434 U.S. 12 [1977] ), the United States Supreme Court held that a state court is without authority to enjoin parties before it from instituting new or additional litigation in federal court, even if the federal suit raises the same issues and events as were raised in state court and the federal suit is being brought for purposes of harassment. The Supreme Court stated that under Donovan v. Dallas (377 U.S. 408 [1964] ), “it is not within the power of state courts to bar litigants from filing and prosecuting in personam actions in the federal courts” (434 U.S. at 12). Prior to the Supreme Court's ruling in General Atomic Company, the state courts distinguished Donovan on two grounds: (a) Donovan applied only where the federal litigation had already been commenced and did not bar injunctions against prospective actions; and (b) Donovan did not bar injunctions against actions instituted for purposes of harassment. The Supreme Court found these distinctions unpersuasive:
The right to pursue federal remedies and take advantage of federal procedures and defenses in federal actions may no more be restricted by a state court here than in Donovan [ v. Dallas, 377 U.S. 408 (1964) ]. Federal courts are fully capable of preventing their misuse for purposes of harassment (434 U.S. at 18–19).
Significantly, the Supreme Court restated the principle enunciated in Donovan that “the right to litigate in federal court is granted by Congress and, consequently cannot be taken away by a state' “ (434 U.S. at 16,quoting Donovan, 377 U.S. at 413).
General Atomic Company and Donovan are the law of the land and have been followed by the state courts in New York, including the Appellate Division, Second Department, whose decisions are also binding on this Court ( see Jamaica Hospital v. Blum, 68 A.D.2d 1, 6 [2d Dept 1979] [Lazer, J] ).
This being said, and while the merit of Plaintiff's federal action is for the federal court, the Court makes a number of observations.
First, Plaintiff's allegation that Defendant submitted a false net worth statement is ironic given (a) Plaintiff's complete and utter failure to cooperate in disclosure, refusal to produce documents, refusal to be deposed, and continuing refusal to provide any accounting for the millions of dollars of assets in her possession; and (b) the total absence of any allegation, much less evidence, that Defendant's net worth statement in this case is false.
Second, this Court, on May 30, 2012, after giving Plaintiff repeated opportunities to comply with her disclosure obligations, issued an order: (a) precluding Plaintiff from testifying at the financial trial (except as called by Defendant on his behalf); and (b) precluding Plaintiff from using or relying in any way any document requested by Defendant's counsel but not produced prior to May 16, 2012 at the financial trial. Given that Plaintiff did not produce any documents, under the terms of this Court's order, Plaintiff may not use any documents at trial. Hence, it seems highly unlikely that Plaintiff will be able to establish before this Court that Defendant's net worth statement was false.
Third, if items were left off the net worth statement by Defendant but he did provide documents regarding those items, it may well be that any error in the net worth statement is non-prejudicial and subject to amendment.
Fourth, Defendant has denied before this Court that his net worth statement was false. The financial trial in this case is scheduled to take place two months from now. It seems unlikely that the federal action will be determined by then. If the Court were to decide that the net worth statement is not false, it would seem at least plausible that this finding would have collateral estoppel effect in the federal court ( see Creed Taylor, Inc. v. CBS, Inc., 718 F Supp 1171 [SD N.Y.1989] ).
Fifth, it is well settled as part of New York state matrimonial law that penalizing one party in the distribution of assets from a marital estate is appropriate where the party's egregious economic misconduct has prevented the court from making an equitable determination ( see, e.g., Maharam v. Maharam, 245 A.D.2d 94 [1st Dept 1997] ). Thus, even if turns out that Defendant did hide $1 million in assets, it is possible that Plaintiff may not receive any share of those assets if she hid $10 to $12 million in assets.
Sixth, the expense of funds by Plaintiff on the pursuit of the federal litigation may negatively impact on her claims to equitable distribution and the compelled expenditure of funds by Defendant in defending the federal litigation may impact on his claims to an equitable distribution in his favor.
Seventh, any injury to Defendant's future employment prospects caused by any adverse publicity following from the institution of the federal lawsuit may also be relevant to the issues of equitable distribution.
Further, and without intending to tread too deeply or firmly into matters before the federal court, this Court makes the additional observation that, at the present time, it is anyone's guess as to what portion, if any, of any allegedly secreted assets Plaintiff is entitled to. As Judge Spatt pointed out in Rosner v. Rosner (766 F Supp 2d 422, 426 [ED N.Y.2011] ), in words seemingly applicable here, “[t]o the extent that the plaintiff is entitled to any of the allegedly hidden assets, the extent of her rights depends on the resolution of the pending state matrimonial action....”
The Court suggests that Plaintiff focus on the main event and defer the satellite litigation until a later date, if ever.
While the Court could enjoin Plaintiff from the commencement of any further state court litigation, the Court does not believe that the only other litigation commenced by Plaintiff—the Family Court proceeding—was so frivolous as to warrant the drastic relief of denying Plaintiff the right to freely petition the courts for redress of grievances. While this Court has dismissed the Family Court petition, both because its allegations were found to be untrue and because its allegations were not legally sufficient to make out a case for harassment in either the first or second degree, it remains that Defendant did technically violate a prior order of this Court, entering the former marital residence in order to retrieve his 15 year old child for a vacation. Though Plaintiff used this petty incident to turn a molehill into a mountain, the commencement of the Family Court proceeding was not so lacking in merit, and has not been so repeated in kind, as to warrant the granting of the relief requested ( cf. Matter of Mueller v. Mueller, 96 AD3d 948 [2d Dept 2012] [over three years, wife obtained six ex parte temporary orders of protection without sustaining any of the allegations against the husband] ).
CONCLUSION
The Court has considered the following papers in connection with this motion:
1) Order to Show Cause issued June 26, 2012; affidavit of Jeffrey R. Perry, sworn to June 26, 2012, together with the exhibits annexed thereto; affirmation of Robert Stephan Cohen, Esq., dated June 26, 2012;
2) Defendant's Memorandum of Law, dated June 26, 2012; and
3) Affirmation of Leslie F. Barbara, Esq. sworn to July 6, 2012.
Based upon the papers aforesaid and for the reasons stated, it is hereby
ORDERED that the motion by Defendant Jeffrey R. Perry for an order enjoining and restraining Plaintiff Elizabeth Perry from filing any future action against said Defendant in any jurisdiction without first obtaining prior judicial approval is denied.
This constitutes the Decision and Order of the Court.