CDR Créances S.A.S. v. Cohen, 23 N.Y.3d 307

Plaintiff CDR Créances S.A.S. seeks to recover proceeds from a loan for the Flatotel hotel project and alleges a long-running conspiracy to conceal funds and transfer assets.
Maurice Cohen and Leon Cohen are accused of perjury, witness tampering, and falsifying documents to hide ownership of defendant entities and diversion of loan proceeds.
French court and New York judgments established liability against EALC and related entities; subsequent U.S. litigation sought to domesticize and enforce those judgments.
Discovery and depositions reveal a scheme involving fictitious parties and forged documents, with a script urging witnesses to give false testimonies.
A U.S. District Court found clear and convincing evidence of fraud on the court by the Cohens, and struck pleadings with default judgments, subject to appellate review.
The Appellate Division affirmed the sanctions with one dissent; this Court grants review and partially affirms, modifying as to Sonia Cohen.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standard for fraud on the court	Clear and convincing evidence required to prove fraud on the court.	A lesser standard or credibility disputes should bar dismissal; need ‘conclusively demonstrated’ fraud.	Clear and convincing evidence required; proper to strike and default where proven.
Authority and standard to strike under CPLR 3126	Court has inherent power and CPLR 3126 to strike for egregious misconduct; standard should be clear and convincing.	Balance of deference to trier of fact; damages/dismissal require higher threshold or a hearing on facts.	Court may strike for fraud on the court based on clear and convincing evidence; damages affirmed without a hearing.
Sonia Cohen’s liability and default	All defendants committed fraud on the court; Sonia should be held to same standard.	Her conduct was less central and not evidence of same level of deception; credibility issues exist.	Modify to vacate the default judgment against Sonia Cohen; others affirmed.
Damages and need for a damages hearing	Damages should be determined by existing French judgments and documentary record.	Damages require factual and legal challenge and possibly a hearing.	No damages hearing required; judgment based on French judgments and submitted documents.

Aoude v Mobil Oil Corp., 892 F.2d 1115 (1st Cir. 1989) (fraud on the court requires a systematic scheme to undermine the process)
Kihl v Pfeffer, 94 N.Y.2d 118 (N.Y. 1999) (preservation of judicial integrity; court orders must be obeyed)
Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (U.S. 1944) (fraud on the court as a grave violation damaging the system)