Summary Judgment; Personal Jurisdiction; Specific Jurisdiction; General Jurisdiction; Piercing the Corporate Veil; Alter Ego
By: Jared Gordon | Staff Writer
Plaintiff and Michael Cherney (“Cherney”) executed a $270 million promissory note in Russia. Plaintiff later commenced an action against Cherney in New York to enforce the note. A court awarded Plaintiff summary judgment in the amount of $385,469,699.49. While the aforementioned action was pending, Cherney commenced an unrelated lawsuit in England against Defendant arising from conduct in England and Russia; the action was settled between the parties and Defendant. The settlement required Defendant to pay Cherney $200 million over five years. Thereafter, the Court ordered that Plaintiff has the right to all debts and obligations due and owed to Cherney, including those debts of Defendant. Consequently, Plaintiff issued a restraining notice to Defendant, owner of Basic Element, Inc., a New York corporation. Plaintiff then commenced this proceeding for the turnover of the settlement payments Defendant owed to Cherney pursuant to their settlement agreement from the prior action. Plaintiff moved for summary judgment contending that: (1) under CPLR 301, Defendant was subject to general jurisdiction as the “alter ego” of Basic Element, Inc.; and (2) under CPLR 302(a)(1), Defendant was subject to specific jurisdiction because his “actions in Russia and England intended to prevent [Plaintiff] from prevailing in the underlying action against Cherney  and to hinder satisfaction of [Plaintiff’s] judgment against Cherney.” Defendant cross-moved pursuant to CPLR 3212 for summary judgment dismissing the petition with prejudice.
Plaintiff first argued that Defendant is subject to general jurisdiction because he owns rental properties in Manhattan and based on the doctrine of piercing the corporate veil as the alter ego of a New York corporation, Basic Element, Inc. Second, Plaintiff argued that Defendant is subject to specific jurisdiction because Defendant “purposely injected himself into New York.” Defendant refuted the above claims arguing that he is not subject to general jurisdiction because although he owns an income property in New York, it is not his domicile. Further, he argued that the Court cannot pierce the corporate veil because there was no “abuse of the corporate form to the detriment of third parties.” In addition, Defendant argued that he is not subject to specific jurisdiction because he did not intentionally project himself into New York.
The Court rejected Plaintiff’s first argument and held that Defendant was not subject to general jurisdiction because he was not domiciled in New York; rather, the Court found ample evidence that Defendant was domiciled in Russia. Further, the Court refused to exercise general jurisdiction by piercing the corporate veil of Basic Element, Inc. because there was no evidence Defendant “used the corporate form to defraud or harm” Plaintiff. Additionally, the Court rejected Plaintiff’s second argument and held that Defendant was not subject to specific jurisdiction in New York because there was “no factual basis for concluding that Defendant projected himself into New York” nor did Defendant “purposely project himself into the Plaintiff proceeding being litigated in New York.”
Gliklad v. Deripaska, Index No. 652641/2015, 4/25/17 (Singh, J.)