AirTourist Holdings, LLC v. Citibank, N.A.

Background

The three related actions were brought by AirTourist Holdings, Jason Chen, and Edgar Park, who the opinion describes as stockholders or former officers of Travana, Inc. They had obtained an arbitration award and a later judgment against Charles Mobus, Tan Xiangdong, HNA Group, and others. The petitioners sought turnover orders requiring Citibank, JPMorgan Chase, and HSBC Bank USA to turn over funds belonging to Mobus or Tan.

At a November 17, 2021 hearing, the court granted the turnover applications and denied the petitioners’ requests for attorneys’ fees incurred in enforcing the judgment. The petitioners then filed motions for reconsideration in all three actions. Mobus opposed the motion in the Citibank action; Tan did not appear or oppose the motions.

Reconsideration standard

The court explained that reconsideration is an extraordinary remedy generally granted only when a party identifies an intervening change in controlling law, newly available evidence, or a clear error or manifest injustice. It is not a vehicle for repeating arguments already rejected or raising new arguments that could have been presented earlier.

Court’s reasoning

The court found that the petitioners had not identified new facts, a change in controlling law, or overlooked authority. Their arguments about disobedience of the California judgment, willful disregard of a court order, and bad faith were substantially the same arguments previously considered. The court also stated that the petitioners had not previously argued that Tan acted in bad faith, making that argument improper on reconsideration.

The court said it had considered the factual evidence concerning Mobus and Tan and had exercised caution before declining to find bad faith or willful noncompliance with a court order. The petitioners’ disagreement with that conclusion did not justify reconsideration.

Attorneys’ fees

The court alternatively addressed the fee arguments. Under the usual rule, each side pays its own attorneys’ fees unless a statute or contract provides otherwise. A court may use its inherent authority to award fees when a party acts in bad faith or willfully disobeys a court order, but the standard for doing so is demanding.

The court found that neither the arbitration award nor the judgment provided for attorneys’ fees connected to enforcing the judgment. The judgment imposed liability and interest but did not direct the judgment debtors to pay in a specified way or on a specific schedule. The arbitration award also made no fee award and stated that the tribunal would leave the arbitration costs where they fell.

As to Mobus, the court found that the evidence was insufficient to establish that his $250,000 contribution to Benedetto Gartland & Co., Inc. was fraudulent. The contribution was made under a written agreement, and Mobus maintained that it had been under negotiation before the judgment and was needed to continue operating his business. The court held that the circumstances identified by the petitioners did not establish fraud with the required degree of certainty.

As to Tan, the court held that his failure to pay the judgment was not by itself enough to justify shifting attorneys’ fees. The court also noted that Tan had not opposed the turnover requests and that the judgment against him was fully satisfied when the court issued the turnover order in one of the actions.

Disposition

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