Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 1 of 27
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`UNITED STATES OF AMERICA,
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` - against -
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`Plaintiff,
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`PREVEZON HOLDINGS LTD., et al.,
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`Defendants,
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` - and -
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`ALL RIGHT, TITLE AND INTEREST IN THE REAL
`PROPERTY AND APPURTENANCES KNOWN AS
`THE 20 PINE STREET CONDOMINIUM, 20 PINE
`STREET, NEW YORK, NEW YORK 10005, UNIT 1816,
`et al.,
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`13 Civ. 6326 (WHP)
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Defendants in Rem.
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`MEMORANDUM OF LAW OF THE UNITED STATES OF AMERICA
`IN SUPPORT OF MOTION TO ENFORCE SETTLEMENT AGREEMENT
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`
`JOON H. KIM
`Acting United States Attorney
`Southern District of New York
`One St. Andrew’s Plaza
`New York, New York 10007
`
`Paul M. Monteleoni
`Cristine I. Phillips
`Tara M. La Morte
`Assistant United States Attorneys
`- Of Counsel -
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`Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 2 of 27
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`TABLE OF CONTENTS
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`INTRODUCTION......................................................................................................................... 1
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`RELEVANT FACTS .................................................................................................................... 2
`
`A.
`B.
`C.
`D.
`
`The Complaint and the Restrained Properties ............................................ 2
`The 2015 Settlement Negotiations .............................................................. 4
`The 2017 Settlement Negotiations and Settlement Agreement .................. 7
`The Netherlands Release and New Seizure ................................................ 9
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`ARGUMENT ............................................................................................................................... 10
`
`I.
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`PREVEZON’S PAYMENT WAS DUE ON OCTOBER 31, 2017 ..................... 10
`
`A.
`B.
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`C.
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`2.
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`Legal Standard .......................................................................................... 10
`The Settlement Unambiguously Requires Payment after the Release from
`the Restraint Imposed in this Case ............................................................ 13
`1.
`The Releasing Language Refers to “Release” in Terms of the
`Restraint Imposed in This Case .................................................... 13
`The Structure of the Agreement Compels the Conclusion that the
`Term “Release” in the Payment Language Refers to the Restraint
`Imposed in this Case ..................................................................... 16
`Reading the Term Release to Refer to Independent Restraints
`Creates Absurd Results ................................................................. 19
`The Drafting History Makes Clear that Prevezon Bore the Risk the
`Netherlands Would Seize the AFI Europe Debt ....................................... 19
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`3.
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`II.
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`PREVEZON MUST PAY PREJUDGMENT INTEREST ................................... 22
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`CONCLUSION ........................................................................................................................... 23
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`TABLE OF AUTHORITIES
`
`
`
`Federal Cases
`
`Alt. Thinking Sys., Inc. v. Simon & Schuster, Inc., 853 F. Supp. 791 (S.D.N.Y. 1994) ............... 20
`Bank of N.Y. Trust, N.A. v. Franklin Advisers, Inc., 674 F. Supp. 2d 458 (S.D.N.Y. 2009) ........ 12
`Brown v. City of N.Y., No. 2009 Civ. 1809 (RJD)(MDG), 2012 WL 628496 (E.D.N.Y. Sept. 8,
`2012) ......................................................................................................................................... 11
`Chesapeake Energy Corp. v. Bank of N.Y. Mellon Trust Co., 773 F.3d 110 (2d Cir. 2014) ........ 12
`Elecs. & Telecomms. Research Inst. v. Acacia (“ETRI”), No. 15 Civ. 3419 (VSB), 2017 WL
`2389699 (S.D.N.Y. June 1, 2017) ....................................................................................... 11, 12
`Galli v. Metz, 973 F.2d 145 (2d Cir. 1992)............................................................................. 12, 17
`Golden Pacific Bancorp v. FDIC, 273 F.3d 509 (2d Cir. 2001) .................................................. 20
`GPIF-I Equity Co., Ltd. v. HDG Mansur Inv. Services, Inc., No. 13 Civ. 547 (CM), 2013 WL
`3989041 (S.D.N.Y. Aug. 1, 2013) ................................................................................ 13, 17, 18
`Greenough v. Hufford, No. 12 Civ. 8836 (JPO) (SN), 2013 WL 4534997 (S.D.N.Y. Aug. 27,
`2013) ......................................................................................................................................... 18
`Hendrickson v. United States, 791 F.3d 354 (2d Cir. 2015) ......................................................... 11
`InterDigital Commc’ns. Corp. v. Nokia Corp., 407 F. Supp. 2d 522 (S.D.N.Y. 2005) ......... 12, 13
`K. Bell & Assoc., Inc. v. Lloyd’s Underwriters, 97 F.3d 632 (2d Cir. 1996) ............................... 12
`Kasperek v. City Wire Works, Inc., No. 03 Civ. 3986 (RML), 2009 WL 691945 (E.D.N.Y. Mar.
`12, 2009) ................................................................................................................................... 22
`Mastrovincenzo v. City of N.Y., 435 F.3d 78 (2d Cir. 2006) .................................................. 13, 19
`Meetings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714 (2d Cir. 1974) ................................ 11
`Motion Picture Projectionists v. RKO Century Warner Theatres, Inc., No. 97 Civ. 4758 (RPP),
`1998 WL 477966 (S.D.N.Y. Aug. 14, 1998) ............................................................................ 20
`Powell v. Omnicom, 497 F.3d 124 (2d Cir. 2007) ........................................................................ 11
`Process America, Inc. v. Cynergy Holdings, LLC, No. 12 Civ. 772 (BMC), 2014 WL 3844626
`(E.D.N.Y. Apr. 30, 2014) ......................................................................................................... 21
`Ramnarain v. City of N.Y., 474 F. Supp. 2d 443 (E.D.N.Y. 2007) ......................................... 11, 22
`United States v. U.S. Currency in the Sum of $660,200.00, More or Less, 423 F. Supp. 2d 14
`(E.D.N.Y. 2006) ........................................................................................................................ 11
`Ursa Minor Ltd. v. Aon Financial Products, Inc., No. 00 Civ. 2474 (AGS), 2000 WL 1010278
`(S.D.N.Y. July 21, 2000) .............................................................................................. 12, 13, 17
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`State Cases
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`Fourth Branch Assocs. v. Niagara Mohawk Power Corp., 302 A.D.2d 780 (3d Dep’t 2003) .... 12
`Rentways, Inc. v. O’Neill Milk & Cream Co., 308 N.Y. 342 (1955) ............................................ 17
`State Statutes
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`N.Y. C.P.L.R. 5001 ................................................................................................................. 22, 23
`N.Y. C.P.L.R. 5004 ....................................................................................................................... 22
`
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`ii
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`Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 5 of 27
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`INTRODUCTION
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`On May 12, 2017, days before trial, Prevezon Holdings Ltd. (together with its
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`codefendants, “Prevezon”) agreed to pay the Government $5,896,333.65, or three times the
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`amount of money that the Government had alleged it had laundered, and to other terms favorable
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`to the Government. One of those terms was that Prevezon agreed to bear the risk that the
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`Kingdom of the Netherlands (the “Netherlands”), a sovereign nation that had restrained a debt
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`owed to Prevezon (the “AFI Europe Debt”) at the Government’s request, would seize that debt
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`independently based on alleged violations of Dutch law. That risk having come to pass,
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`Prevezon now balks, seeking to rewrite the agreement it signed.
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`This Court should hold Prevezon to the bargain it struck. The settlement agreement
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`entered in this case on May 15, 2017, D.I. 716 (the “Settlement Agreement”)1 provides that
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`Prevezon’s payment of $5,896,333.65 was “due within 15 business days of the release by the
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`Government of the Netherlands of the AFI Europe Debt.” Settlement Agreement ¶ 4. The entire
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`agreement makes clear that this “release” refers to the release of the restraint the Netherlands
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`imposed at the Government’s request—the only release that the settlement provided that the
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`Government would request, and the only release that relates to the action being settled. That
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`release occurred on October 10, 2017, triggering Prevezon’s obligation to pay by October 31,
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`2017.
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`Unhappy with the results of the agreement it entered, Prevezon now apparently contends
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`that the “release” in that agreement means the return of the AFI Europe Debt to Prevezon. That
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`contention should be rejected. Such an interpretation is not only inconsistent with the terms of
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`1 Citations to “D.I.” refer to docket items in this case. Citations to “Monteleoni Decl.” refer to
`the Declaration of Paul M. Monteleoni filed herewith.
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`Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 6 of 27
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`the entire agreement, but would also lead to absurd results. If Prevezon’s payment is not due
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`until Prevezon obtains the debt from the Netherlands, this case could stay open—and Prevezon’s
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`U.S. assets could stay frozen—for years. Indeed, if the Netherlands is ultimately successful in
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`confiscating the AFI Europe Debt, such a release release would never happen, requiring the case
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`to stay open, and Prevezon’s other assets to remain frozen, until the end of time. This absurd
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`result is not what the Settlement Agreement provides.
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`Moreover, the drafting history shows that Prevezon explicitly contemplated the
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`possibility that the Netherlands would not allow it to reclaim the debt. Indeed, during settlement
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`negotiations in 2015 and again in 2017, Prevezon repeatedly requested various protections for
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`Prevezon in the event that the Netherlands announced or manifested its intent to retain the AFI
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`Europe Debt following its release of the U.S.-requested restraint. But, tellingly, the Government
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`removed all such provisions from its final settlement offer and Prevezon accepted that offer and
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`agreed to the final settlement without any such protections. Having agreed to bear the risk that
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`the Netherlands would seize the AFI Europe Debt, and having avoided trial in this case as a
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`result of that agreement, Prevezon cannot now try to rewrite the deal. The Court should require
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`Prevezon to make the payment required by the Settlement Agreement with accrued interest.
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`RELEVANT FACTS
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`The Complaint and the Restrained Properties
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`A.
`As set forth in the Second Amended Complaint, the Government sought forfeiture of
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`property and the imposition of civil money laundering penalties against Prevezon for laundering
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`a small portion of the proceeds of an elaborate Russian tax fraud scheme (the “Russian Treasury
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`Fraud”). In 2007, a Russian criminal organization defrauded Russian taxpayers of approximately
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`$230 million by stealing the identities of three companies held by the Hermitage Fund (the
`2
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`“Fund”), manufacturing false liabilities against them, and claiming tax refunds on that basis. See
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`D.I. 381 ¶¶ 18-45. These stolen funds were then moved through a vast network of shell
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`companies, and a small portion—approximately $1.96 million—was ultimately transferred to
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`defendant Prevezon Holdings. See D.I. 381 ¶¶ 75-128. Prevezon then laundered these funds into
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`European real estate and invested money derived from these funds in various pieces of New
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`York real estate in additional money laundering transactions. See D.I. 381 ¶¶ 105-10, 129-42.
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`The AFI Europe Debt—a debt of 3,068,946 euros owed by the Dutch company AFI
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`Europe N.V. to Prevezon Holdings—was covered by the Government’s restraint imposed on
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`Prevezon’s assets in the original Protective Order entered on September 11, 2013. D.I. 2. On
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`January 22, 2014, law enforcement authorities in the Netherlands, at the request of the
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`Government, gave effect to the Protective Order by freezing the AFI Europe Debt. That restraint
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`was continued when the Protective Order was replaced by the Amended Protective Order, D.I.
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`173, which named the AFI Europe Debt as one of Prevezon’s assets to be restrained.
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`Since the first Amended Complaint in November of 2014, the basic economics of this
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`case have been unchanged: the Government sought forfeiture of slightly less than $14 million in
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`Prevezon’s property (all located in the U.S. except the AFI Europe Debt), which it alleged was
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`involved in the money laundering conduct, and a commensurate amount of civil money
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`laundering penalties, all based on Prevezon’s laundering of approximately $1.96 million.2 Since
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`Prevezon is not known to have any other assets in the U.S., the approximately $14 million in
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`2 Although the overall Russian Treasury Fraud involved approximately $230 million, Prevezon
`was only ever alleged to have received approximately $1.96 million of crime proceeds from it.
`See, e.g., D.I. 708 at 2. Prevezon’s $14 million in property was used in the laundering of this
`$1.96 million, rendering it forfeitable in the event the Government fully prevailed at trial, but the
`underlying crime proceeds were only $1.96 million.
`3
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`restrained property effectively represented the Government’s likely maximum recovery.
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`The 2015 Settlement Negotiations
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`B.
`The Government engaged in settlement discussions with Prevezon between March and
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`June of 2015 before commencing discovery in earnest. During this period, the Government
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`made settlement offers in the range of $1,965,444.55 to $2 million—that is, offers to settle the
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`case for approximately 100% of the money Prevezon was alleged to have laundered—in an
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`attempt to obviate a complex discovery process posing unusual burdens and risks.
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`During the 2015 settlement negotiations, counsel for Prevezon repeatedly communicated
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`to counsel for the Government its concern that the Netherlands might not allow the transfer of
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`the AFI Europe Debt to Prevezon, and repeatedly requested specific language to provide
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`protections to Prevezon against this risk (the “Protective Language”). See Monteleoni Decl. ¶ 4.3
`
`• On May 4, 2015, Prevezon’s counsel requested language that would have put the
`burden on the Government to “obtain” the release of the debt. Monteleoni Decl. Ex.
`1 ¶ 2.b (“The Government shall obtain the release of all property of Defendants
`currently frozen in the Netherlands and any other properties that are or may be
`restrained as a result of this Lawsuit and the Amended Protective Order.”).
`• On May 20, 2015, Prevezon’s counsel requested language that would have vacated
`the settlement “if the Government of Netherlands does not release the AFI Europe
`Debt unconditionally.” Monteleoni Decl. Ex. 2 ¶ 2.2 (“[T]his Lawsuit shall not be
`suspended and the trial date shall not be continued until the Government of
`Netherlands releases the AFI Europe Debt unconditionally, and if the Government of
`Netherlands does not release the AFI Europe Debt unconditionally within thirty (30)
`days of this Agreement, the Agreement shall be null and void and without any further
`legal effect . . . .”).
`• On May 22, 2015, the Government proposed language that would have allowed either
`party to vacate the settlement if the Netherlands stated its intent to continue to restrain
`the AFI Europe Debt or if the debt was not released within 120 days. Monteleoni
`Decl. Ex. 3 ¶ 11 (“Should the Government of the Netherlands issue an order or
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`3 These 2015 requests by Prevezon for particular settlement terms did not all represent offers to
`settle on those terms. Indeed, Prevezon’s counsel often requested particular terms without
`committing that Prevezon itself would accept those terms.
`4
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`statement setting forth its intention to continue the restraint of the AFI Europe Debt,
`or if 120 days have elapsed from the entry of this Stipulation and Order and the AFI
`Europe Debt has not been released, upon motion by either party, this Stipulation and
`Order shall be void . . . .”). This language was continued in Government settlement
`offers on May 24, 2015, Monteleoni Decl. Ex. 4 ¶ 11; id. Ex. 5 ¶ 11; and revised
`Government settlement offers on June 2, 2015, id. Ex. 6 ¶ 11; and June 9, 2015, id.
`Ex. 7 ¶ 12.
`• Prevezon’s counsel requested on June 9, 2015, Monteleoni Decl. Ex. 8 ¶ 12; and June
`10, 2015, Monteleoni Decl. Ex. 9 ¶ 12, that the Government settle the case on terms
`including similar language.
`On June 10, 2015, the Government made a final pre-discovery settlement offer to
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`Prevezon. That offer, which was ultimately rejected by Prevezon, was structured in a fashion
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`similar to the ultimate Settlement Agreement, but with several differences including the
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`Protective Language. As relevant here, the June 10, 2015 offer had three key provisions:
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`1. A paragraph requiring the Government to make a request to the Netherlands to
`lift the U.S.-requested restraint on the AFI Europe Debt and modifying the
`Amended Protective Order to allow the release of the AFI Europe Debt (the
`“Releasing Language”);
`2. A paragraph requiring Prevezon to make a settlement payment 15 business
`days after the release of the AFI Europe Debt (the “Payment Language”); and
`3. A paragraph containing Protective Language similar to that contained in
`previous proposals.
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`The Releasing Language first described the Government’s obligation to request that the
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`Netherlands lift its restraint on the AFI Europe Debt—an obligation carefully limited to the U.S.-
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`requested restraint—and then provided that the Amended Protective Order would be deemed
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`modified to permit the release of the AFI Europe Debt:
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`Upon entry of the Stipulation and Order, the Government
`3.
`shall inform the Government of the Netherlands that this matter
`has been resolved and that the Government withdraws any request
`for the Government of Netherlands to continue to restrain the AFI
`Europe Debt, and shall request that the Government of the
`Netherlands lift the restraint of the AFI Europe Debt that had been
`implemented at the request of the United States, and the Amended
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`Protective Order shall be deemed modified to allow the release of
`the AFI Europe Debt.
`Monteleoni Decl. Ex. 10 ¶ 3.
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`The Payment Language, next, required Prevezon to make the payment (in this offer a $2
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`million settlement payment) within 15 business days of the release:
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`For the purpose of settlement only, [in personam Defendant
`4.
`to be named] will make a payment to the United States consisting
`of $2,000,000 in United States currency (the “Payment”). The
`Payment shall be due within 15 business days of the release by the
`Government of the Netherlands of the AFI Europe Debt and shall
`be made by electronic funds transfer pursuant to written
`instructions to be provided by the United States Attorney’s Office
`for the Southern District of New York. Upon receipt, the Payment
`shall be deposited into the U.S. Treasury pursuant to the
`Miscellaneous Receipts Act, 31 U.S.C. § 3302, which authorizes
`deposits of public money into the U.S. Treasury.
`Monteleoni Decl. Ex. 10 ¶ 4.
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`Finally, the June 10, 2015 offer contained a version of the Protective Language similar to
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`the parties’ previous discussions, which would have allowed the vacatur of the settlement
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`agreement and the resumption of the case if the Netherlands stated or manifested an intent to
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`continue the restraint of the AFI Europe Debt:
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`Should the Government of the Netherlands issue an order
`12.
`or statement setting forth its intention to continue the restraint of
`the AFI Europe Debt, or if 120 days have elapsed from the entry of
`this Stipulation and Order and the AFI Europe Debt has not been
`released, upon motion by any Party hereto, this Stipulation and
`Order shall be void, the Action shall resume, and the Court shall
`schedule trial as soon as convenient for the Court on a date no
`sooner than 120 days from the resumption of the Action.
`Monteleoni Decl. Ex. 10 ¶ 12. As noted above, Prevezon rejected the Government’s June 10,
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`2015 offer.
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`The 2017 Settlement Negotiations and Settlement Agreement
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`C.
`Prevezon initiated new settlement discussions in early 2017. After the disqualification of
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`Baker & Hostetler LLP as prior counsel for Prevezon, Prevezon not only hired new trial counsel
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`from Quinn Emanuel Urquhart & Sullivan LLP, but also contacted the Government through a
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`separately-retained settlement counsel, Michael D. Hess of Dorf & Nelson LLP.
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`Hess called and met with the Government on multiple occasions beginning on February
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`22, 2017. On April 11, 2017, Hess sent a proposed settlement agreement including a
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`“$850,00[0]” payment by Prevezon, and Protective Language that would have, in the event that
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`the Netherlands continued to restrain the AFI Europe Debt, effectively obligated the Government
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`to assist Prevezon’s attempts to recover the AFI Europe Debt. Monteleoni Decl. Ex. 11 ¶ 14
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`(“Should the Government of the Netherlands issue an order or statement setting forth its
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`intention to continue the restraint of the AFI Europe Debt, the Government shall cooperate with
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`the in personam Defendants and Claimants to obtain release of the Restrained Property.”). The
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`Government rejected this request.
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`Hess continued to contact the Government seeking settlement during the lead-up to trial,
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`and Prevezon retained a second settlement counsel, Louis J. Freeh of Freeh Group International
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`Solutions, to continue negotiations. On May 10, 2017, Prevezon proposed a new settlement
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`agreement including a payment of 10% of the Restrained Properties, or approximately $1.4
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`million, and similar Protective Language to that contained in the April 11 proposal. Monteleoni
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`Decl. Ex. 12 ¶ 9 (“Should the Government of the Netherlands or Switzerland issue an order or
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`statement setting forth its intention to continue the restraint of the AFI Europe Debt or other
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`Restrained Properties, the Government shall cooperate with the in personam Defendants and
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`Claimants to obtain release of the Restrained Properties.”). The Government rejected this
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`request as well.
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`Several hours after this May 10, 2017 proposal, the Court denied the defendants’ motion
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`for summary judgment in its entirety. D.I. 708. On the morning of May 12, 2017, following an
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`in-person settlement meeting on May 11, the Government made its first and only settlement offer
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`since Prevezon’s rejection of the Government’s 2015 offer.
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`The Government’s May 12, 2017 offer was similar to its June 10, 2015 offer but with
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`several significant changes. In particular:
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`•
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`• The Releasing Language was substantially identical, with minor restyling edits. See
`Monteleoni Decl. Ex. 13 (May 12, 2017 morning offer), id. Ex. 14 ¶ 3 (comparison of
`June 10, 2015 offer and May 12, 2017 morning offer).
`Instead of requiring Prevezon to pay $2 million (i.e., just over the value of the money
`that Prevezon laundered), the Payment Language required Prevezon to pay
`$5,896,333.65 (i.e., three times the value of the money that Prevezon laundered). See
`Monteleoni Decl. Ex. 14 ¶ 4 (comparison of June 10, 2015 offer and May 12, 2017
`morning offer).4
`Instead of providing for a contingency whereby the parties could cancel the
`agreement if the Netherlands stated or manifested an intent to retain the property, or
`any of the Protective Language versions requested by Prevezon, it deleted the
`Protective Language entirely. See Monteleoni Decl. Ex. 14 at 17 (comparison of June
`10, 2015 and May 12, 2017 morning offer).5
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`Prevezon requested several changes to this offer, but did not request the reinsertion of the deleted
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`•
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`paragraph or any other Protective Language. The Government rejected Prevezon’s requested
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`changes, with the exception of minor stylistic edits. See Monteleoni Decl. Ex. 15 (comparison of
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`May 12, 2017 morning offer and final). After review by Prevezon’s trial counsel and principals
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`4 By comparison, Hermitage Capital Management Ltd. and William Browder, when they initially
`reported Prevezon’s suspected money laundering to U.S. authorities, argued that the authorities
`should forfeit only approximately $2 million, or approximately 2.4 times the amount Prevezon
`was then believed to have laundered. See D.I. 281-4 at 1, 3; see also D.I. 281-1 at 10-13, 15-16.
`5 The other changes between the June 10, 2015 offer and the May 12, 2017 morning offer were
`largely stylistic and clarifying, and generally served to make the offer less favorable to Prevezon.
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`in addition to Prevezon’s settlement counsel, Prevezon signed the final Settlement Agreement on
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`the evening of May 12, 2017, D.I. 715, and the Court approved it on May 15, 2017, D.I. 716.
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`The Netherlands Release and New Seizure
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`D.
`The Netherlands has recently complied with the Government’s request to release the
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`funds, but has simultaneously seized the funds pursuant to its own investigation.
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`On May 16, 2017, Hermitage Capital Management Ltd. (“Hermitage”), a victim of the
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`Russian Treasury Fraud and the entity that initially reported this crime to U.S. law enforcement,
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`filed a complaint with the Netherlands based upon similar subject matter to this case. The
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`Government learned of this investigation on May 24, 2017, on which date Netherlands officials
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`advised the Government that they were considering seizing the AFI Europe Debt in connection
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`with their independent investigation, but had not yet decided whether or not to do so.
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`Monteleoni Decl. ¶ 6.
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`On June 1, 2017, pursuant to the Releasing Language of the Settlement Agreement, the
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`Government transmitted a request to the Netherlands that “inform[ed] the Government of the
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`Netherlands that this matter has been resolved and that the [U.S.] Government withdraws any
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`request for the Government of the Netherlands to continue to restrain the AFI Europe Debt,”
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`Settlement Agreement ¶ 3, “request[ed] that the Government of the Netherlands lift the restraint
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`of the AFI Europe Debt that had been implemented at the request of the United States,” id., and
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`informed the Government of the Netherlands that the Amended Protective Order was “deemed
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`modified to allow the release of the AFI Europe Debt,” id. The Government requested expedited
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`execution. Monteleoni Decl. ¶ 7.
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`During the pendency of the Government’s request, the Government met with Netherlands
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`law enforcement officials on July 19 and 20, 2017 regarding their investigation. At that meeting,
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`the Government reiterated its request for the Netherlands to release the AFI Europe Debt. The
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`Government also provided the officials, at their request, with information regarding the facts
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`underlying this action, though not information it was prevented from disclosing by the
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`confidentiality order or by any other rule. The meeting concluded with the officials advising the
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`Government that they would decide how to proceed with respect to the AFI Europe Debt by the
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`end of September. Monteleoni Decl. ¶ 9.
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`On October 10, 2017, the Netherlands released the AFI Europe Debt from the U.S.-
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`requested restraint, but seized it in connection with their own investigation. The Government
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`informed Prevezon of this action on October 10. See Monteleoni Decl. ¶¶ 10-11 & Ex. 16. On
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`October 27, 2017, counsel for Prevezon sent an email requesting an extension of the October 31,
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`2017 payment deadline.6 The Government did not consent to the extension, and Prevezon let
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`October 31, 2017 come and go without paying.
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`ARGUMENT
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`I.
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`PREVEZON’S PAYMENT WAS DUE ON OCTOBER 31, 2017
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`Legal Standard
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`A.
`“A district court has the power to enforce summarily, on motion, a settlement agreement
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`reached in a case that was pending before it.” Meetings & Expositions, Inc. v. Tandy Corp., 490
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`
`6 In their October 27, 2017 email, counsel for Prevezon also claimed that Prevezon’s owner
`Denis Katsyv had “in good faith believed” that the release of the AFI Europe Debt would have
`been for the benefit of the Government, not of Prevezon, because it would—he claims to have
`believed—have been “automatically transferred to the Government’s account.” Monteleoni
`Decl. Ex. 17.
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`
`
`10
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`Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 15 of 27
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`F.2d 714, 717 (2d Cir. 1974).7 Indeed, it has “not only the power but the duty” to do so. Id.8
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`Although the Second Circuit has left open the question whether the settlement of federal
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`claims is governed by state law or federal common law, New York law and federal common law
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`are materially indistinguishable regarding many aspects of settlement agreements, and the
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`Second Circuit has used them “interchangeably.” Powell v. Omnicom, 497 F.3d 124, 129 n.1 (2d
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`Cir. 2007). Courts within the Second Circuit routinely apply New York law to the interpretation
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`of settlement agreements, and even though the Second Circuit has not definitively decided the
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`issue, “[i]n practice . . . the circuit court and various district courts regularly apply New York law
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`in analyzing whether a settlement agreement should be enforced, even in federal-question cases.”
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`Brown v. City of N.Y., No. 2009 Civ. 1809 (RJD)(MDG), 2012 WL 628496, at *2 (E.D.N.Y.
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`Sept. 8, 2012) (internal quotation marks omitted). Similarly, New York law also applies to the
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`award of prejudgment interest under a settlement agreement. See, e.g., Ramnarain v. City of
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`N.Y., 474 F. Supp. 2d 443, 447 (E.D.N.Y. 2007) (awarding prejudgment interest under N.Y.
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`C.P.L.R. § 5001 in federal question case).
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`New York law provides that “‘the initial interpretation of a contract ‘is a matter of law for
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`the court to decide.’” Elecs. & Telecomms. Research Inst. v. Acacia (“ETRI”), No. 15 Civ. 3419
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`(VSB), 2017 WL 2389699, at *5 (S.D.N.Y. June 1, 2017) (quoting K. Bell & Assoc., Inc. v.
`
`
`7 Although the Federal Rules of Civil Procedure do not list a motion titled a motion to enforce,
`courts will routinely rule upon and grant such motions, which arise under the court’s inherent
`powers. See United States v. U.S. Currency in the Sum of $660,200.00, More or Less, 423 F.
`Supp. 2d 14, 25-26 (E.D.N.Y. 2006); see also Hendrickson v. United States, 791 F.3d 354, 357
`n.1 (2d Cir. 2015).
`8 In situations where a case has been fully dismissed, the district court will not have ancillary
`jurisdiction to enforce the settlement agreement unless the dismissal order provides that the court
`retains such jurisdiction or it incorporates the settlement agreement. Hendrickson, 791 F.3d at
`358. This situation does not arise here, where the case has not yet been dismissed.
`11
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`Case 1:13-cv-06326-WHP Document 744 Filed 11/15/17 Page 16 of 27
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`Lloyd’s Underwriters, 97 F.3d 632, 637 (2d Cir. 1996)). The threshold question is whether or
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`not it is ambiguous, which occurs if its terms “‘could suggest more than one meaning when
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`viewed objectively by a reasonably intelligent person who has examined the context of the entire
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`integrated agreement and who is cognizant of the customs, practices, usages and terminology as
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`generally understood in the particular trade or business.’” ETRI, 2017 WL 2389699, at *5
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`(quoting Chesapeake Energy Corp. v. Ban