1986 WL 6496 (S.D.N.Y.)

Only the Westlaw citation is currently available.

United States District Court, S.D. New York.

GUILLERMO E.W. BROWNE, Plaintiff,

v.

PRENTICE DRY GOODS, INC., Formerly Known As DUMONT HANDKERCHIEFS, INC., Defendant.

No. 84 CIV. 8081 (PKL).

June 5, 1986.

COUNSEL:  STEBBINGS & SKYDELL 310 Madison Avenue New York, New York 10017, FOR PLAINTIFF; Gelacio M. Cordero, Esq. Of Counsel.

GOODKIND, WECHSLER, LABATON & RUDOFF 122 East 42nd Street New York, New York 10168, FOR DEFENDANT; Marc H. Fryburg, Esq. Of Counsel.

OPINION

JUDGE:  LEISURE, District Judge:

[*1]  This matter is before the Court on plaintiff’s motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons stated herein, the motion is granted.

Factual Background

Briefly stated the facts are as follows. In or around August 1980, Mario Jorge Aleman (‘Aleman’), an Argentine citizen, ordered handkerchiefs from defendant Prentice Dry Goods, Inc. (‘Prentice’), then doing business under the name of Dumont Handkerchiefs, Inc. (‘Dumont’). The agreed price was $287,135.40. Upon delivery of the handkerchiefs, Aleman paid $120,322.17, leaving a balance due of $166,813.23. After Aleman’s checks in that amount did not clear due to insufficient funds, Dumont commenced an action against Aleman in New York County Supreme Court to recover the $166,813.23. On March 5, 1981, Aleman executed an affidavit of confession of judgment authorizing entry of judgment against him in New York in the full amount due.

In 1982, Dumont commenced an action in Argentina to recover from Aleman the outstanding balance. Plaintiff Guillermo E.W. Browne, an Argentine attorney, represented Aleman in the Argentine action. On September 29, 1982, judgment was rendered in the Argentine action in favor of Aleman. This judgment was affirmed on appeal on March 25, 1983. Pursuant to Argentine law, the prevailing party is awarded, as part of his costs, attorneys’ fees. The total legal fees and costs awarded by the Argentine courts to Browne in connection with his representation of Aleman, including the costs of appeal and execution of judgment, aggregated U.S. $39,069.76 in amount. See Rogatory Letters Issued by the National Court of First Instance in the Commercial Court Nr. 4, Secretariat nr. 7, Buenos Aires, Argentina, dated Dec. 29, 1983, attached as Exhibit 5 to the Affidavit of Guillermo E.W. Browne, sworn to Jan. 7, 1986

This action, commenced on October 31, 1984, seeks recovery of the amount awarded to Browne for the legal fees and costs awarded to him by the Argentine courts by reason of his successful representation of Aleman. This Court has jurisdiction over the subject matter of this lawsuit on the basis of the diversity of citizenship of the parties and the requisite amount in controversy.

Prentice opposes the grant of summary judgment on two grounds. First, the Argentine judgment is not entitled to recognition on the grounds that Dumont/Prentice was not afforded a fair opportunity to present its case in the Argentine courts. This amounts to a denial of defendant’s right to due process of law. See N.Y.C.P.L.R. § 5304(a)(1) (non-recognition of foreign judgment rendered under system that does not comport with due process requirements). Defendant further claims that the Argentine judgment is not entitled to recognition on the basis that the practice of awarding attorney’s fees to the prevailing party in a lawsuit is repugnant to the public policy of the State of New York. See N.Y.C.P.L.R. § 5304(b)(4) (non-recognition of foreign judgment where cause of action is repugnant to the public policy of New York State).

[*2]  Section 5304(a)(1) provides that a foreign country judgment is not conclusive if the judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law. Defendant argues that at the time its Argentine lawsuit was pending, Argentina was governed by a military dictatorship which kidnapped and murdered many of its citizens. Furthermore, at the time, there was prejudice against Americans due to the American opposition to the Argentine position in the Faulklands War. Under these circumstances, defendant claims it was unable to enforce its rights in Argentina despite Aleman’s admission to liability evidenced by the affidavit of confession of judgment in the New York action.

In opposition to this argument, plaintiff has submitted an Amicus Affidavit of Wayne S. Smith, the Director of Argentine Studies at Johns Hopkins University, School of Advanced International Studies. Plaintiff apparently proffers Mr. Smith as an expert on Argentine government and politics. According to Mr. Smith, the Argentine judiciary functions independently of the other parts of the Argentine government with respect to the adjudication of civil commercial matters. Moreover, the Argentine judiciary traditionally has operated in accordance with procedures compatible with American notions of due process of law with respect to the adjudication of civil commercial matters. Mr. Smith is unaware of any claims by Americans who were a party to civil commercial litigation in Argentina to the effect that such party was denied due process of law by the Argentine judiciary by reason of alleged anti-American sentiment occasioned by the Faulklands War.

A party seeking to frustrate the recognition and enforcement of a foreign judgment has the burden of establishing the basis for non-recognition. Overmyer v. Eliot Realty, 83 Misc.2d 694, 371 N.Y.S.2d 246, 258 (Sup. Ct. Westchester Co. 1975) (sister state). This burden must be considered in connected with the obligations imposed upon a party opposing a motion for summary judgment. Under Fed. R. Civ. P. 56(e), ‘an adverse party may not rest upon the mere allegations or denials of his pleading, but his response … must set forth specific facts showing that there is a genuine issue for trial.’ Summary judgment will not be denied solely on the basis of ‘conclusory allegations or denials made by the opposting party.’ JSP Agency, Inc. v. American Sugar Refining Co., 752 F.2d 56, 59 (2d Cir. 1985). ‘Rather, he must bring to the district court’s attention some affirmative indication that his version of relevant events is not fanciful.’ Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980). If the moving party carries its preliminary burden of demonstrating that there is no genuine issue as to any material fact, the opposing party may not defeat the motion unless it produces ’significant probative evidence tending to support [its position].’ United States v. Pent-R-Books, Inc., 538 F.2d 519, 529 (2d Cir. 1976), cert. denied, 430 U.S. 906 (1977) (quotation omitted).

[*3]  In this case, defendant does not dispute the fact of the adverse Argentine judgment nor the amount of the award for attorney’s fees and costs. Defendant offers the mere conclusory statement that by reason of the political turbulence experienced by Argentina under the military government, defendant was incapable of receiving a fair hearing under Argentine law. The only evidence proffered by defendant in support of this defense consists of three newspaper articles from the New York Times that describe the crimes of Argentina’s former military rulers and the kidnappings of the children of the military regime’s political opponents. None of the articles describe in any way the operations of the Argentine civil courts and whether they were adversely affected by the political turmoil that beset Argentina at the time.

Defendant’s assertions that the Argentine judicial system was incapable of supplying a forum for a fair adjudication of its dispute with Aleman is belied by the fact that defendant commenced the Argentine action. Moreover, defendant’s unsubstantiated theory that the Argentine system of civil law denied Dumont due process of law is controverted by the Smith affidavit, which declares that aside from the allegations in this case, no such argument has ever been made previously. These considerations lead this Court to conclude that defendant has failed to meet its burden of presenting ’such facts as would be admissible in evidence,' Rule 56(e), sufficient to establish that there is a genuine issue for trial with respect to defendant’s due process argument. Accordingly, defendant’s affirmative defense that it was denied due process of law is rejected.

Defendant next argues that enforcement of the Argentine judgment in New York would contravene established New York public policy, which requires each party to a commercial action to bear its own attorneys’ fees unless there is an explicit agreement or statute to the contrary. Accordingly, under N.Y.C.P.L.R. § 5304(b)(4), the Argentine judgment need not be recognized. While it is true that under the so-called ‘American Rule’ [FN1] attorneys’ fees are not awarded to the successful litigant, this does not mean that an award of attorneys’ fees under the ‘English Rule,’ followed by Argentina, is repugnant to the policy of New York State.

A Second Circuit panel recently considered a similar issue with respect to the enforcement of a German default judgment that included an award of attorneys’ fees computed under the German legal fees statute. Ackerman v. Levine, No. 85-7553 (2d Cir. April 7, 1986) (Pierce, J.). The Court held that mere variance with local public policy is not sufficient to decline enforcement. Id., slip op. at 2571, citing Loucks v. Standard Oil Co., 224 N.Y. 99, 110-11 (Cardozo, J.) (‘We are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home.’). Indeed, there are numerous instances in the American legal system when attorneys’ fees may be awarded to the successful party. See, e.g., Fed. R. Civ. P. 11 (bad faith); 42 U.S.C. § 1988 (civil rights); 42 U.S.C. § 2000a-3(b) (discrimination in public accommodations); 42 U.S.C. § 20000e-5(k) (employment discrimination); 42 U.S.C. § 3612(c) (housing discrimination); 15 U.S.C. § 15 (antitrust); 15 U.S.C. §§ 77k(e), 78i(e) & r(a) (securities). On occasion, New York courts have permitted attorneys’ fees awards under statute-based billing systems. See, e.g., In re Anninger’s Estate, 35 Misc.2d 493, 230 N.Y.S.2d 910 (Sup. Ct. N.Y. Co. 1962) (approving fees of 10% of net recovery from Foreign Claims Settlement Commission, even if there had been no agreement on the fee, where statute so provided). See also Ackerman v. Levine, slip op. at 2570-76; Compania Mexicana Rediodifusora Franteriza v. Spann, 41 F. Supp. 907 (N.D. Tex. 1941), aff'd sub nom, Spann v. Compania Mexicana Radiodifusors Fronteria, 131 F.2d 609 (5th Cir. 1942).

[*4]  Moreover, recognition of the attorneys’ fees award against defendant in this action is consistent with the fact that Dumont commenced the legal proceedings against Aleman in Argentina. Dumont thereby invoked the law of that nation and clearly would have benefited from Argentine law had Dumont prevailed in that action. Ackerman,slip op. at 2575. Defendant is thus "in the quite unenviable position of trying to take the good without the bad, the sweet without the bitter." Id. quoting Spann, 131 F.2d at 611. Accordingly, defendant’s argument that recognition of the Argentine judgment for attorneys’ fees would be repugnant to the policy of New York State is rejected.

Conclusion

The motion of plaintiff Guillermo E.W. Browne pursuant to Fed. R. Civ. P. 56 for an order granting him summary judgment is granted. Defendant has failed to establish material questions of fact with respect to its defenses that it did not receive a fair trial in Argentina and that recognition by this Court of an award of attorneys’ fees by a foreign tribunal would be repugnant to the policy of New York State.

Judgment shall be entered in favor of plaintiff and against the defendant in the full amount set forth in the Rogatory Letters issued by the Argentine courts, U.S. $39,069.76, together with interest thereon from December 29, 1983.

SO ORDERED.

FN1 See generally Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975).