A unanimous Appellate Division, Second Department, panel has ruled that a $2 million order of attachment granted against an out-of-state party in a shareholder dispute was unduly harsh, reversing a decision by Nassau County Commercial Division Justice Stephen Bucaria (See Profile). The order of attachment was granted against Richard Schwartz, majority shareholder of North American Enclosures Inc., a New York corporation. A minority shareholder, Norman Grafstein, alleged Schwartz misled him into exercising a buyout option to his disadvantage. In 2011, Bucaria entered a $2 million order of attachment against Schwartz, who lives in Florida. The merits of the case have not been decided.
An order of attachment, which may be granted pursuant CPLR 6201, allows a party’s assets to be seized either to satisfy a judgment or, as in Schwartz’s case, to freeze assets while a case is pending. The Second Department on Nov. 14 reversed the order of attachment, which it said was a “harsh remedy” not available under the circumstances. “Although the plaintiff established that the defendant Richard Schwartz was a nondomiciliary residing without the state…he failed to show a probability of success on the merits on his claims against that defendant,” the panel wrote. “Accordingly, the Supreme Court erred in granting the plaintiff’s motion pursuant to CPLR 6201(1) for an order of attachment against the real and personal property of the defendant Richard Schwartz in the sum of $2 million.”
