AirTourist Holdings, LLC v. HSBC Bank USA, N.A.

Background

The opinion addresses three related actions brought by AirTourist Holdings, Jason Chen, and Edgar Park, who were described as stockholders or former officers of Travana, Inc. The petitioners had obtained an arbitration award against individuals and entities including HNA Group, Charles Mobus, and Tan Xiangdong. The arbitration award was later reflected in a second amended judgment issued by a federal court in California on July 26, 2021.

The petitioners sought orders requiring Citibank, JPMorgan Chase, and HSBC to turn over funds belonging to Mobus or Tan. At a November 17, 2021 hearing, the court granted the turnover requests but denied the petitioners’ requests for attorneys’ fees incurred in enforcing the judgment. Mobus appeared through counsel to oppose the request concerning him; Tan and the banks did not appear. The petitioners then moved for reconsideration of the fee decision in all three actions. Mobus opposed reconsideration in his action, while Tan did not file an opposition.

Reconsideration standard

The court explained that reconsideration is an extraordinary remedy granted sparingly. Under Federal Rules of Civil Procedure 59(e) and 60(b)(1), and the relevant local rule, reconsideration may be appropriate when there is an intervening change in controlling law, new evidence, or a need to correct a clear legal or factual error or prevent manifest injustice. It is not a vehicle for presenting the same arguments again or taking a second opportunity to litigate an issue.

Court’s analysis

The petitioners argued that the court had overlooked alleged disobedience of the California judgment, possible willful disregard of a court order, and bad-faith conduct by Mobus and Tan. The court rejected those arguments as repetitions of arguments previously considered. It also stated that the petitioners identified no new facts, change in controlling law, or significantly different legal authority. The court noted that the petitioners had not previously argued that Tan acted in bad faith and that this new argument was not proper on reconsideration.

The court further stated that it had considered the facts in the petitioners’ declarations and briefs. At the earlier hearing, it had exercised caution before using its inherent power—the court’s authority to address bad-faith conduct or willful disobedience—and had declined to find that Mobus or Tan acted in bad faith or willfully disobeyed a court order.

As an alternative, the court considered the petitioners’ arguments on the merits and again found them insufficient. The arbitration award did not award attorneys’ fees. Although it quoted an arbitration agreement under which a prevailing party could potentially receive fees, the arbitrators found that the petitioners had succeeded on only a very small percentage of their damages claims, did not treat them as the prevailing party, and left costs where they fell. The judgment itself imposed liability and interest but did not require payment in a specified manner or on a particular schedule, and did not direct the defendants to take a specific action.

Regarding Mobus, the petitioners argued that his $250,000 contribution to Benedetto Gartland & Co., Inc., a company he wholly owned, was a fraudulent transfer intended to evade the judgment. The court found the evidence insufficient to establish fraud. It noted that the transfer was made under a written agreement describing six purposes for the contribution, and that Mobus said the transaction had been under negotiation before the judgment and was necessary to continue operating his principal source of income.

Regarding Tan, the court found that his failure to pay the judgment alone did not justify shifting attorneys’ fees. The court also noted that Tan had not opposed the turnover requests and that the judgment against him had been fully satisfied when the court issued the turnover order in his action.

Disposition

Judge Alvin K. Hellerstein denied the petitioners’ motions for reconsideration. The court concluded that neither Tan nor Mobus was required to pay attorneys’ fees connected with the petitioners’ efforts to enforce the judgment. The clerk was directed to terminate the specified docket entries in the three related actions.