Tuqui Tuqui Dominicana, S.R.L. v. Cabrera Castillo

Background

Plaintiffs Tuqui Tuqui Dominicana, S.R.L. and Simeon R. Carcia Rodriguez alleged that they sold 150,000 shares of Constructora Saicorp S.R.L. stock to Jose Felix Cabrera Castillo for $2,000,000 under a 2017 stock purchase agreement. Castillo paid $1,000,000 when the agreement was signed. The second $1,000,000 payment was due within seven months. Castillo later gave plaintiffs a $1,000,000 check drawn on Latin Events LLC’s account, but the bank refused payment because the account lacked sufficient funds.

Plaintiffs sued Castillo for breach of contract and sued Castillo and Latin Events for fraud. Defendants did not appear, and the court entered a default judgment for $1,000,000 plus interest at 2% per month beginning May 3, 2018. Defendants later appeared through counsel while plaintiffs pursued discovery and other efforts to collect the judgment.

Defendants’ Motion to Vacate the Default Judgment

Defendants moved under Federal Rule of Civil Procedure 60(b)(3), (4), and (6) to vacate the judgment. Rule 60(b)(3) permits relief for fraud that prevented a party from fully and fairly presenting its case; Rule 60(b)(4) applies when a judgment is void; and Rule 60(b)(6) permits relief for another reason that justifies it, but requires extraordinary circumstances.

Under Rule 60(b)(3), defendants argued that plaintiffs brought the case to help avoid plaintiffs’ tax liabilities to the Dominican Republic government. The court rejected this argument because defendants did not show that the alleged conduct prevented them from defending the case. The court also found that defendants’ only supporting document was in Spanish, lacked a certified English translation, and was not accompanied by a legal explanation of its significance. The court therefore held that defendants had not provided the clear and convincing evidence required for relief under Rule 60(b)(3).

Under Rule 60(b)(4), Castillo argued that the judgment against him was void because he was not properly served. The parties agreed that service occurred by delivering the summons and complaint to Mr. Diaz, a Latin Events manager, at Tipico Dominicano Restaurant. Applying New York law, the court held that the restaurant was Castillo’s “actual place of business” because defendants conceded that he owned it and conducted business-related activities there. Service on Diaz therefore was legally sufficient. The court denied relief under Rule 60(b)(4).

Under Rule 60(b)(6), the court considered whether the default was willful, whether defendants had a potentially valid defense, and whether setting aside the judgment would prejudice plaintiffs. The court found that Castillo’s disregard of the case after receiving a copy of the default judgment was deliberate and willful. The court also found that defendants had not shown a meritorious defense because their supporting document was untranslated and its meaning was unclear, and because it was not clear that plaintiffs’ alleged tax liabilities would defend against the fraud claim. The court did not decide whether vacating the judgment would prejudice plaintiffs because willfulness and the lack of a meritorious defense independently supported denial. The court also found no extraordinary circumstances warranting relief.

Plaintiffs’ Collection-Related Motion

Plaintiffs moved for contempt findings against defendants and Miosotis Cabrera, orders requiring depositions of defendants and nonparties, and permission to add Miosotis Cabrera as a defendant for supplemental collection proceedings.

The court declined to hold defendants or Miosotis Cabrera in contempt because no court order had required compliance with the subpoenas. Although the court expressed willingness to order depositions of defendants and La Casa del Mofongo, it denied that request as presented because the COVID-19 pandemic could limit availability and directed plaintiffs first to confer with defendants and Mofongo about dates and the format of the depositions.

The court denied the request concerning Miosotis Cabrera’s deposition because she had not been properly served. The court explained that, because the record indicated she resided in Connecticut, Federal Rule of Civil Procedure 45 applied and required personal service; mailing the notice was insufficient. The court also denied the request to add her as a defendant for collection purposes because plaintiffs cited no authority allowing a nonparty to be joined as a defendant solely for post-judgment collection. That denial was without prejudice to plaintiffs using other appropriate collection procedures.

Disposition

Judge Naomi Reich Buchwald denied defendants’ motion to vacate the default judgment. The court denied plaintiffs’ motion concerning the supplemental proceedings without prejudice. The order resolved docket entries 31 and 37.