Supreme Court, New York County, August 18, 2017

Kim & Bae, P.C., Fort Lee, New Jersey (Alan Poliner of counsel), for defendants.

Steptoe & Johnson LLP, New York City (Charles A. Michael of counsel), for plaintiff.

I. Introduction

In a decision dated June 17, 2016 (2016 NY Slip Op 31497[U] [Sup Ct, NY County 2016]), the court granted plaintiff's motion to extend its time to serve its summons and complaint on defendants another 120 days beyond the 120 days permitted by CPLR 306-b after plaintiff commenced this action November 12, 2015, until July 8, 2016. Defendants now move to dismiss the action based on plaintiff's failure to serve defendants as required by applicable law before expiration of that extended deadline. (CPLR 306-b, 3211 [a] [8].) Plaintiff claims that it served defendant Jung at 205 West 76th Street, New York, New York, June 14, 2016, and that, while the extension for service was granted based on delays inherent in serving defendants in the Republic of Korea, the decision did not limit plaintiff to serving defendants there. If the court concludes that any service after the original 120 days was limited to serving defendants in the Republic of Korea, then plaintiff cross-moves to extend further its time to serve Jung. (CPLR 306-b.) In any event, plaintiff also cross-moves to extend further its time to serve defendant Choi, Jung's husband, and to serve him by alternative means. (CPLR 306-b, 308 [5].)

II. Defendants' Motion to Dismiss the Action against Jung

The court's prior decision did not limit plaintiff to serving defendants in the Republic of Korea, as long as plaintiff effected service by July 8, 2016. Defendants challenge only the service in New York, rather than the Republic of Korea, and not the adequacy of the means by which plaintiff effected service on Jung at her dwelling place in New York under CPLR 308 (2) before July 8, 2016. Therefore the court denies defendants' motion to dismiss the action against Jung. (CPLR 308 [2]; 3211 [a] [8].)

III. Plaintiff's Cross Motion to Extend Further its Time to Serve Choi

Plaintiff already sought, and the court already denied, a further extension of time to serve Choi because plaintiff did not{**59 Misc 3d at 444} show any diligent efforts to complete service on defendants as [*2]promptly as possible. (Slate v Schiavone Constr. Co., 4 NY3d 816, 817 [2005]; Cassini v Advance Publs., Inc., 125 AD3d 467, 468 [1st Dept 2015]; Khedouri v Equinox, 73 AD3d 532, 532 [1st Dept 2010]; Johnson v Concourse Vil., Inc., 69 AD3d 410, 410 [1st Dept 2010]; see Frank v Garcia, 84 AD3d 654, 654 [1st Dept 2011].) First, plaintiff conceded that it did nothing to serve defendants for 82 days, until February 2, 2016. Second, plaintiff did nothing, itself or through the foreign services business Crowe & Associates that plaintiff retained or another agent, to advise the Central Authority, the body authorized to serve foreign pleadings in the Republic of Korea, regarding the deadline for service or to urge the Central Authority to complete service on defendants as promptly as possible.

The court granted plaintiff one extension of another 120 days because plaintiff satisfied all the other factors under the alternative standard for extending plaintiff's time: that an extension would serve the interests of justice. (Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 105-106 [2001]; Nicodene v Byblos Rest., Inc., 98 AD3d 445, 446 [1st Dept 2012]; Henneberry v Borstein, 91 AD3d 493, 496 [1st Dept 2012]; Lippett v Education Alliance, 14 AD3d 430, 431 [1st Dept 2005].) The court granted this relief, however, upon the explicit expectation that, during the extension of time granted, plaintiff undertake and persist with efforts to monitor and advise the Central Authority in its attempts at service to the extent possible.

Now, plaintiff only further demonstrates its lack of diligence. In May 2016, plaintiff produced a new address for defendants in the Republic of Korea. Thus, from February 2016, when plaintiff finally undertook to serve them there, to May 2016, when plaintiff through Crowe & Associates and the Central Authority were attempting to serve defendants at an address from which they had moved in 2014, plaintiff knew their new address. Second, even if plaintiff did not learn defendants' new address until May 2016, plaintiff never explains why the source from which plaintiff obtained the new 2014 address was not available to plaintiff when it first investigated defendants preparatory to its action against them and instead used a 2011 address at which to attempt service.

Finally, even if defendants did not move to this new address until May 2016, the attempts that the Central Authority made to serve them at the address provided were not reasonably calculated to find anyone there. The attempts were all on a{**59 Misc 3d at 445} weekday in the middle of the morning, when persons normally are away from home at work. Thus, even if defendants did not reside at the address, the Central Authority found no one who at least might have advised it that defendants did not reside there. Plaintiff does not demonstrate that it (1) ever, until its cross motion, sought to ascertain the days and times the Central Authority was attempting service or (2) ever, at any time, advised, let alone urged, the Central Authority to attempt service on weekends or at different times of day. Although plaintiff complains that the Central Authority was not forthcoming regarding its progress in serving Choi, plaintiff does not indicate that it encountered any difficulty communicating to the Central Authority or that plaintiff asked the Central Authority about the days and times of its attempts. For all these reasons, the court denies plaintiff's cross motion to extend further its time to serve Choi. (CPLR 306-b.)

IV. Plaintiff's Cross Motion to Serve Choi by Alternative Means

Having denied plaintiff a further extension of time, the court turns to the question of whether the court still may authorize service that plaintiff already has effected on Choi by alternative means. (CPLR 308 [5].) Defendants maintain that the Hague Service Convention prohibits alternative service otherwise permissible under CPLR 308 (5).

"The present Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad." (Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, Nov. 15, 1965, 20 UST 361, 362 [1969].) The "Convention pre-empts inconsistent methods of service prescribed by state law in all cases to which it applies." (Volkswagenwerk Aktiengesellschaft v Schlunk, 486 US 694, 699 [1988]; see US Const art VI.) Thus, "[o]nce a central authority receives a request . . . it must serve the documents by a method prescribed by the internal law of the receiving state or by a method designated by the [*3]requester and compatible with that law." (Volkswagenwerk Aktiengesellschaft v Schlunk, 486 US at 699.) Plaintiff does not show that the alternative methods it seeks to use, service via Choi's attorney or via email, or any other alternative to CPLR 308 (1), (2), or (4) is "a method prescribed by the internal law of the receiving state," the Republic of Korea, or "compatible with that law." (Volkswagenwerk Aktiengesellschaft v Schlunk, 486 US at 699.)

Whether "there is occasion for service abroad" (id. at 704), and whether "recourse to the Convention's means of service" is{**59 Misc 3d at 446}mandatory, however, is "dependent on the forum's internal law." (Id. at 705.) Thus the internal law of the forum state, New York, determines whether the method of service requires transmittal of documents abroad and whether the Hague Convention applies. (Id. at 700-701.) A "method prescribed by the internal law of the receiving state," the Republic of Korea, or "compatible with that law" (id. at 699), is required only when the Central Authority is to serve the documents in the Republic of Korea.

In particular, where service on an agent in New York is valid and complete under state law and the Federal Constitution's due process guarantees, the Hague Convention is not implicated. (Id. at 707; LTD Trading Enters. v Vignatelli, 176 AD2d 571, 571 [1st Dept 1991]; Born To Build, LLC v Saleh, 139 AD3d 654, 655 [2d Dept 2016]; see Rego v Thom Rock Realty Co., 201 AD2d 270, 270 [1st Dept 1994].) Under New York law, service by email on foreign defendants is also a permissible means of service, consistent with due process and not prohibited by the Hague Convention, where the methods prescribed by or compatible with the law of defendants' country have proved ineffective. (Alfred E. Mann Living Trust v ETIRC Aviation S.A.R.L., 78 AD3d 137, 141-142 [1st Dept 2010]; Safadjou v Mohammadi, 105 AD3d 1423, 1425 [4th Dept 2013].)

The court may approve an alternative method, whether service on an agent in New York or service by email, only if plaintiff shows that the alternative method is reasonably calculated to apprise Choi of this action and that he is likely to receive the transmitted information. (Alfred E. Mann Living Trust v ETIRC Aviation S.A.R.L., 78 AD3d at 142; Safadjou v Mohammadi, 105 AD3d at 1424-1425.) Plaintiff meets this test.

Shortly after plaintiff commenced this action and served defendants' attorney, Choi filed an affirmation demonstrating his awareness that he is a defendant in this action and his understanding of the claims against him here: that they involve the same issues as in litigation against him in Korea and that the claims here lack merit for the reasons he explains. Plaintiff thus demonstrates that Choi has received the information in the summons and complaint and that service via Choi's attorney has apprised Choi of this action and thus comports with due process and New York law. (Alfred E. Mann Living Trust v ETIRC Aviation S.A.R.L., 78 AD3d at 142; Born To Build, LLC v Saleh, 139 AD3d at 656; Safadjou v Mohammadi, 105 AD3d{**59 Misc 3d at 447} at 1425; Esposito v Ruggerio, 193 AD2d 713, 714 [2d Dept 1993].)

Choi nevertheless avoided disclosing to plaintiff his dwelling place, place of business, or other whereabouts. (Esposito v Ruggerio, 193 AD2d at 713.) Plaintiff retained a foreign services business that, through the Central Authority in the Republic of Korea, was unable to serve him despite repeated attempts over an extended period. (LTD Trading Enters. v Vignatelli, 176 AD2d at 571; Born To Build, LLC v Saleh, 139 AD3d at 655-656; Rego v Thom Rock Realty Co., 201 AD2d at 270.)

The same factors that previously mandated an extension of time to serve Choi in the interests of justice also mandate an alternative method of service in the interests of elemental fairness. (See Safadjou v Mohammadi, 105 AD3d at 1424.) When plaintiff served Choi via his attorney, the statutes of limitations applicable to plaintiff's claims had not expired. In sum, plaintiff's failure to serve Choi pursuant to CPLR 308 (1), (2), or (4) or pursuant to the Hague Convention up to now has not deprived him of full notice of this action shortly after it was commenced and before any statute of limitations expired.

Nor has Choi shown any other prejudice from this alternative method of service. He has vigorously defended against this action and failed to specify any lost rights, change of position, [*4]or expense due to plaintiff's service through his attorney.

Plaintiff, on the other hand, has presented evidence that its claims against Choi as the transferor of a fraudulent conveyance, for no consideration, to avoid his debts to plaintiff, are meritorious under various provisions of Debtor and Creditor Law §§ 273-276, even taking into consideration the facts defendants present. Any weaknesses defendants may have identified in plaintiff's claims at best raise factual issues, which only dictate that the action be determined based on its merits rather than on Choi's avoidance of service.

All these factors warrant authorization of service pursuant to CPLR 308 (5) via defendant Choi's attorney that plaintiff effected well within the 120 days permitted by CPLR 306-b. Therefore the court grants plaintiff's cross motion to the extent of permitting service on Choi by that alternative means. (CPLR 308 [5]; Volkswagenwerk Aktiengesellschaft v Schlunk, 486 US at 707; Alfred E. Mann Living Trust v ETIRC Aviation S.A.R.L., 78 AD3d at 142; LTD Trading Enters. v Vignatelli, 176 AD2d at 571; Born To Build, LLC v Saleh, 139 AD3d at 656.){**59 Misc 3d at 448}

V. The Attachment

In the event that the court denied defendants' motion to dismiss the complaint, as now has occurred, defendants previously cross-moved, in opposition to plaintiff's motion to convert to a prejudgment attachment the temporary restraining order limiting defendant Jung's encumbrances on her real property in New York, to vacate the temporary restraint that the court imposed. The court based that restraint on plaintiff's showing of meritorious claims that Choi, for no consideration, fraudulently conveyed funds to Jung to purchase that property.

The only basis on which defendants have opposed the attachment and sought to vacate the temporary restraint other than plaintiff's failure to serve them, however, is that an attachment or restraint would prevent Jung from using her real property, an apartment in which she resides, as security for a loan or prevent her from selling the property if she wanted to move from the apartment. Yet neither Jung nor anyone else with personal knowledge attests, and no other admissible evidence supports, her desire to secure a loan or to sell the apartment, a residential condominium unit, or the claimed impediment to either objective.

In fact the original restraint and any prospective attachment applies to only $1,830,000 of the equity in that property: the amount plaintiff showed that Choi, for no consideration, fraudulently conveyed to Jung March 4, 2010, to purchase that property. The restraint or attachment would not restrict her use of the remaining equity in the condominium unit, which she purchased for $4,395,396. If she seeks to sell the apartment, she may seek plaintiff's or the court's permission to do so on the condition that she deposit $1,830,000 of the sale proceeds into the court or an escrow account, for example. Finally, were Jung actually to demonstrate plaintiff's liability for her injury from the restraint or attachment, plaintiff has provided security of $91,500 to cover any such injury. (See CPLR 6212 [b]; 6312 [b]; 6313 [c].)

By assigning or disposing of the $1,830,000 Choi conveyed to Jung for no consideration, to purchase the condominium unit, Jung has frustrated the enforcement of a judgment in plaintiff's favor in the event plaintiff prevails on any of its claims against either Choi or Jung here. (CPLR 6201 [3]; Hotel 71 Mezz Lender LLC v Falor, 14 NY3d 303, 311-312 [2010]; Koehler v Bank of Bermuda Ltd., 12 NY3d 533, 538 [2009]; VisionChina Media Inc. v Shareholder Representative Servs., LLC, 109 AD3d 49,{**59 Misc 3d at 449} 60-61 [1st Dept 2013].) These claims include not only demonstrated violations of Debtor and Creditor Law §§ 273-276, but also enforcement of any judgments obtained against Choi in the litigation between plaintiff and him in the Republic of Korea where plaintiff already has prevailed in the trial court. (CPLR 6212 [a]; VisionChina Media Inc. v Shareholder Representative Servs., LLC, 109 AD3d at 59.)

A claim under Debtor and Creditor Law § 273 requires a showing that a conveyance by or to defendants (1) was without fair consideration and (2) depleted the debtor defendant Choi of his assets. (172 Van Duzer Realty Corp. v 878 Educ., LLC, 142 AD3d 814, 818 [1st Dept 2016]; 2406-12 Amsterdam Assoc. LLC v Alianza LLC, 136 AD3d 512, 513 [1st Dept 2016]; American Media, Inc. v Bainbridge & Knight Labs., LLC, 135 AD3d 477, 478 [1st Dept 2016]; 320 W. 13th St., [*5]LLC v Wolf Shevack, Inc., 85 AD3d 629, 629 [1st Dept 2011].) Plaintiff's showing that Choi, while owing plaintiff approximately $60,000,000, which now has evolved into approximately $85,000,000 in judgments obtained in the Republic of Korea, transferred $1,830,000 to his wife, defendant Jung, without consideration, satisfies Debtor and Creditor Law § 273.

Choi insists that he was solvent when he transferred the funds to his wife March 4, 2010, but his persistent failure to pay his massive debts, transformed into judgments against him, belies his claim. If his assets truly exceeded his liabilities many times over as he claims, surely he would have repaid the debts to stop the mounting interest and plaintiff's eventual entry and enforcement of the judgments. Moreover, in the litigation between plaintiff and Choi in the Republic of Korea, the court already has found that his debts exceeded his liabilities when he transferred the funds to Jung.

As delineated further below, Choi's conveyance with the intent to evade his creditor amounts to a fraudulent conveyance regardless of whether his assets technically exceeded his liabilities. (E.g. Debtor and Creditor Law § 276.) The indisputable facts that Choi obviously knew of his debt to plaintiff, yet has not found the resources to pay the debt, and therefore knew that any transfer without consideration would be to plaintiff's detriment raise an inference of his fraudulent intent, further supporting plaintiff's claim under Debtor and Creditor Law § 273. (172 Van Duzer Realty Corp. v 878 Educ., LLC, 142 AD3d at 817-818; 2406-12 Amsterdam Assoc. LLC v Alianza LLC, 136 AD3d at 513; American Media, Inc. v Bainbridge &{**59 Misc 3d at 450} Knight Labs., LLC, 135 AD3d at 478; 320 W. 13th St., LLC v Wolf Shevack, Inc., 85 AD3d at 629; see Tap Holdings, LLC v Orix Fin. Corp., 109 AD3d 167, 176 [1st Dept 2013].) A claim pursuant to Debtor and Creditor Law § 273 does not require evidence of actual intent to defraud the creditor. (Atsco Ltd. v Swanson, 29 AD3d 465 [1st Dept 2006]; Wall St. Assoc. v Brodsky, 257 AD2d 526, 528 [1st Dept 1999]; Matter of Steele, 85 AD3d 1375, 1376-1377 [3d Dept 2011]; Fischer v Sadov Realty Corp., 34 AD3d 632, 633 [2d Dept 2006].)

A confluence of factors also raises an inference of Choi's fraudulent intent to support plaintiff's claim under Debtor and Creditor Law § 276. (320 W. 13th St., LLC v Wolf Shevack, Inc., 85 AD3d at 629; Atsco Ltd. v Swanson, 29 AD3d at 465-466; Shisgal v Brown, 21 AD3d 845, 847 [1st Dept 2005]; Wall St. Assoc. v Brodsky, 257 AD2d at 529.) (1) Choi and Jung maintained a close relationship. The conveyance from Choi to Jung was (2) irregular, out of the ordinary course of business, and without an explanation why the funds were used to purchase an asset owned solely by Jung and (3) lacked any consideration. Choi (4) obviously knew of his debt to plaintiff, but (5) failed to pay the debt.

The claimed fraudulent conveyance through which Choi transmitted funds to a bank in New York for the purchase of real property here constitutes a tortious act directed at New York sufficient to confer personal jurisdiction over him. (CPLR 302 [a] [2]; SPCA of Upstate N.Y., Inc. v American Working Collie Assn., 18 NY3d 400, 403 [2012]; CPC Intl. v McKesson Corp., 70 NY2d 268, 287 [1987]; CIBC Mellon Trust Co. v HSBC Guyerzeller Bank AG, 56 AD3d 307, 308-309 [1st Dept 2008].) Finally, since neither Choi nor Jung has claims against plaintiff, its claims exceed any potential counterclaims. (CPLR 6212 [a].) Consequently, the court vacates its temporary restraining order, but grants plaintiff's motion for an attachment lien and thus replaces the restraining order with an attachment lien in favor of plaintiff against Jung's real property in the amount of $1,830,000. (CPLR 6201 [3]; 6212 [a].)

VI. Conclusion

In sum, the court denies defendants' prior cross motion and subsequent motion to dismiss the action based on lack of personal jurisdiction over defendants. (CPLR 3211 [a] [8].) The court denies plaintiff's cross motion to extend further its time to serve defendant Choi (CPLR 306-b) but grants its cross motion insofar as it seeks to serve him by alternative means.{**59 Misc 3d at 451} (CPLR 308 [5].) The court grants defendants' prior cross motion to the extent of vacating the temporary restraining order, but also grants plaintiff's prior motion to convert that order to an attachment lien in favor of plaintiff against defendant Jung's real property at 205 West 76th Street, Unit PH2F, New York County, in the amount of $1,830,000. (CPLR 6201 [3]; 6212 [a].)