Sphere 3D Corp. v. Gryphon Digital Mining, Inc.

Background

Gryphon filed a pre-motion letter seeking to file a motion for pre-judgment attachment on its counterclaim. A pre-judgment attachment is a court process that can secure property before a final judgment. Gryphon relied on Federal Rule of Civil Procedure 64 and New York Civil Practice Law and Rules sections 6201(1) and 6212. The proposed attachment was based on Sphere 3D’s status as a foreign corporation that was not qualified to do business in New York.

Gryphon sought to shorten the normal response date under the court’s local rules. The court noted that Gryphon could instead have proceeded by a proposed order requiring Sphere 3D to show why the requested relief should not be granted, which would have avoided the need for a pre-motion letter.

Change in Sphere 3D’s Registration

While the matter was pending, Sphere 3D registered to do business in New York. Sphere 3D argued that New York Civil Practice Law and Rules section 6201(1) therefore no longer provided a basis for attachment.

The court considered New York decisions addressing whether a corporation’s later registration affects an attachment request. It concluded that the ground for attachment must exist when the court enters an attachment order. The court found this consistent with another federal case in which attachment was denied because registration occurred after the attachment motion was filed but before an attachment order was issued.

Ruling

Because no order of attachment had been entered and the grounds for attachment did not presently exist, the court declined to enter a schedule for Gryphon’s proposed motion to attach. The order did not itself enter an attachment order or decide the merits of Gryphon’s counterclaim.