Gliklad v. Deripaska
2017 NYSlipOp 50549(U)
| N.Y. Sup. Ct. | Apr 25, 2017Background
- In 2003 Gliklad and Cherney executed a $270 million promissory note; Gliklad sued in New York in 2009 and obtained summary judgment against Cherney (judgment later amended to ~$385M).
- Cherney separately sued Deripaska in London; they settled by an English settlement agreement (2012) under which Deripaska agreed to pay Cherney and to assist Cherney in the New York litigation (e.g., gather documents, contact witnesses, meet with counsel).
- Justice Schweitzer entered a turnover order (2014) asserting Gliklad’s right to debts owed to Cherney from Deripaska; Gliklad alleges Cherney failed to pass two $25M installments to him.
- Gliklad filed a CPLR 5201/5227 special proceeding (2015) seeking turnover of settlement payments and moved for summary judgment asserting personal jurisdiction over Deripaska: (1) general jurisdiction under CPLR 301 by piercing the corporate veil/alter-ego of a NY corporation; and (2) specific (long-arm) jurisdiction under CPLR 302(a)(1) based on Deripaska’s overseas acts that affected the New York litigation.
- Deripaska opposed, denied domicile in New York, disputed alter-ego allegations concerning Basic Element, and argued his actions (taken in Russia/England at Cherney’s behest) did not purposefully avail him of New York.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Deripaska domiciled in NY for general jurisdiction (CPLR 301 / Daimler)? | Deripaska owns Manhattan properties and thus is "at home" in NY. | He is domiciled in Russia, holds only Russian passports, lives in Krasnodar, votes/taxes in Russia, and visits NY rarely. | Not domiciled in NY; no general jurisdiction under CPLR 301. |
| Can the court pierce the corporate veil to treat Deripaska as the alter ego of Basic Element and assert general jurisdiction? | Basic Element is a NY corporation controlled by Deripaska; his business dealings and use of the NY office show domination and commingling. | Basic Element’s sworn witnesses deny domination; no showing Basic Element committed a wrong to Gliklad or was party/beneficiary to the English settlement. | Veil-piercing to obtain jurisdiction denied: no domination used to perpetrate a wrong against Gliklad. |
| Does Deripaska transact business in NY or contract to supply goods/services in NY under CPLR 302(a)(1) (long-arm) by assisting Cherney? | Deripaska purposefully injected himself into the NY litigation by coordinating witnesses, shipping documents to NY, meeting with counsel, and funding legal assistance. | His actions occurred in Russia and England at Cherney’s initiative; documents shipped to NY were incidental; no emails/calls to NY counsel; agreement had no NY performance clause. | No specific jurisdiction: actions were incidental/foreign; shipment of documents alone is insufficient to confer CPLR 302(a)(1) jurisdiction. |
| Should service on Deripaska’s NY counsel be authorized and should Deripaska get an extension to answer? | Service on NY counsel requested upon jurisdiction finding. | Opposed and sought 60-day extension to answer. | Requests denied as moot (court dismissed petition). |
Key Cases Cited
- International Shoe Co. v. State of Wash., 326 U.S. 310 (U.S. 1945) (due-process standard for personal jurisdiction: defendant must have minimum contacts such that suit does not offend traditional notions of fair play and substantial justice)
- Daimler AG v. Bauman, 134 S. Ct. 746 (U.S. 2014) (limits general jurisdiction; for individuals the paradigm forum is domicile)
- Matter of Morris v. New York State Dept. of Taxation and Fin., 82 N.Y.2d 135 (N.Y. 1993) (requirements to pierce the corporate veil: complete domination plus wrongful use causing injury)
- Etra v. Matta, 61 N.Y.2d 455 (N.Y. 1984) (the goods-or-services prong of CPLR 302(a)(1) does not cover incidental provision of goods in another state)
- Deutsche Bank v. Mont. State Board of Investments, 7 N.Y.3d 65 (N.Y. 2006) (defendant who purposefully projects himself into NY business transactions may be subject to CPLR 302(a)(1))