Justice Kornreich defends the integrity and reach of New York courts in GE Oil & Gas, Inc. v Turbine Generation Servs., L.L.C. 2016 NY Slip Op 50825(U) Decided on May 27, 2016
Supreme Court, New York County Kornreich, J. which is a high-level commercial case over the question of loan v. investment. Of interest to us is her sua sponte invocation of Judiciary Law § 487 in foot note 6. Here is a dire warning: ” Judiciary Law § 487 also prohibits attorneys from making knowingly false statements to deceive the court. As discussed at the May 18 oral argument, the TGS Parties’ claim in this court and in the Louisiana State Court Action that this court sua sponte dismissed their joint venture claim is false. The dismissal on March 30 was not a sua sponte dismissal without consideration of the merits or the allowance of an opportunity to brief the issues. Rather, the March 30 Order was issued because the joint venture claims were previously argued and ruled on, after extensive briefing, in connection with the summary judgment motion, and the claim was expressly rejected in the SJ Decision. Dismissal of the amended counterclaims in the March 30 Order was due to violation of an order contained in the SJ Decision. ”
Rather than go into the details of this loan v. investment, and forum selection issues, let’s just note that the court wrote: “An anti-suit injunction is warranted here. The TGS Parties’ commencement and continued maintenance of the Louisiana State Court Action is a clear violation of the parties’ forum selection clause. The issues in both cases are not merely duplicative and a waste of resources, but the risk of inconsistent judgments is very real. This court has considered the merits of the TGS Parties’ joint venture claims at length on three separate occasions (i.e., in the SJ Decision, and at the oral arguments on March 30 and May 18) and rejected them (as did Judge Doherty, the Louisiana federal judge). The issue had to be reached in the summary judgment decision because the TGS parties claimed the $25 million loan and guarantee, thoroughly papered by the counselled, sophisticated parties and signed by them, was really an investment in a joint venture. A judgment has been issued. Yet, the TGS Parties are seeking to collaterally challenge this court’s judgment in the Louisiana State Court Action by continuing to press the merits of the joint venture claim and by asking that court not to give res judicata or collateral estoppel effect to this court’s decision and judgment. Doing so not only violates the parties’ forum selection clause, it evinces an utter disregard for this court’s authority.
The court cannot allow the integrity of its judgment to be challenged. Litigants, such as the extremely sophisticated parties (aided by extremely sophisticated counsel) in this action, expressly agree to litigate in New York and apply New York law to their complex commercial disputes because this court is seen as capable of providing a level of certainty not found in other jurisdictions. The TGS Parties would see that certainty undermined.
Moreover, the TGS Parties violated the court’s March 30 Order by seeking to enjoin this action. Simply put, GEOG demonstrated by clear and convincing evidence that a lawful order of this court, clearly expressing an unequivocal mandate, was in effect; the TGS Parties had full knowledge of its terms and disobeyed it; and GEOG was prejudiced by their actions. See McCain v Dinkins, 84 NY2d 216, 226 (1994); Gottlieb v Gottlieb, 137 AD3d 614, 618 (1st Dept 2016); Lundgren v Lundgren, 127 AD3d 938, 939 (2d Dept 2015); Matter of Andrew B., 128 AD3d 1513, 1514 (4th Dept 2015); Hugh v Taylor, 121 AD3d 1363, 1364 (3d Dept 2014). That is contemptuous.”