24-423-cv Citibank, N.A. v. Aralpa Holdings Limited Partnership
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 24th day of January, two thousand twenty-five.
PRESENT: JOSÉ A. CABRANES, REENA RAGGI, MARIA ARAÚJO KAHN, Circuit Judges. __________________________________________
CITIBANK, N.A,
Plaintiff-Appellee,
ONE57 36B, LLC, ARALPA MIAMI INVESTMENTS, LLC,
Appellants,
v. 24-423-cv
ARALPA HOLDINGS LIMITED PARTNERSHIP, RODRIGO LEBOIS MATEOS, Defendants-Appellants. ___________________________________________
FOR APPELLANTS: DANIEL J. SAVAL (Lara Levinson, on the brief), Kobre & Kim LLP, New York, NY.
FOR APPELLEE: ADAM M. KAUFF (Jonathan Perrelle, on the brief), Kauff Laton Miller LLP, New York, NY.
Appeal from a February 2, 2024 writ and order of the United States District Court
for the Southern District of New York (Jennifer L. Rochon, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the writ and order are AFFIRMED.
Defendants-Appellants Aralpa Holdings Limited Partnership (“AHLP”) and
Rodrigo Lebois Mateos (“Lebois”) appeal from a writ of execution and turnover order
entered in favor of Plaintiff-Appellee Citibank, N.A. (“Citibank”) following AHLP’s
default on a $35 million dollar credit facility it obtained from Citibank (the “Note”), for
which Lebois provided a personal guaranty (the “Guaranty”). In granting the writ of
execution, the district court permitted Citibank to reverse-pierce the veil of two entities
that Lebois controlled, Appellants One57 36B, LLC (“One57”), which held real property
located in New York (the “New York Property”), and Aralpa Miami Investments, LLC
(“Aralpa Miami”), which possessed the proceeds from the sale of a property located on
Fisher Island, Florida (the “Miami Property”). 2 On appeal, Appellants argue that the district court erred by: (1) applying New
York law rather than Georgia law to Citibank’s reverse-veil-piercing claim; (2) finding
that Citibank met its burden to reverse-pierce the corporate veil as to One57 and Aralpa
Miami; and (3) failing to require Citibank to reverse-pierce the veil of every entity within
AHLP’s corporate structure. We are not persuaded. We assume the parties’ familiarity
with the underlying facts, the procedural history, and the issues on appeal, to which we
refer only as necessary to explain our decision to affirm.
DISCUSSION
This Court reviews de novo the district court’s choice-of-law determination, see
Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir. 1998), as well as its reverse-veil-piercing
analysis, see Freeman v. Complex Computing Co., 119 F.3d 1044, 1051 (2d Cir. 1997). Insofar
as the parties dispute whether the district court’s grant of a writ of execution and turnover
order is properly reviewed for abuse of discretion or de novo, compare Levinson v. Kuwait
Fin. House (Malaysia) Berhad, 44 F.4th 91, 95 (2d Cir. 2022) (reviewing “grant of a writ of
execution for abuse of discretion”), with HBE Leasing Corp. v. Frank, 48 F.3d 623, 633 (2d
Cir. 1995) (reviewing de novo grant of summary relief in C.P.L.R. § 5225(b) proceeding),
3 we need not determine which standard of review applies here because Plaintiff prevails
under either standard.
I. New York Law Applies
New York choice of law rules apply to this diversity case filed in the Southern
District of New York. See Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155,
157 (2d Cir. 2012) (per curiam). One57 is incorporated in New York and there is no
dispute that New York law governs efforts to reverse-pierce its corporate veil. The parties
dispute whether New York or Georgia substantive law should apply to reverse-veil-
piercing for Aralpa Miami because New York recognizes reverse-veil-piercing while
Georgia does not. Compare Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d
Cir. 1997) (noting that New York law recognizes reverse-veil-piercing), with Acree v.
McMahan, 585 S.E.2d 873, 881 (Ga. 2003) (concluding that Georgia law does not allow
reverse-veil-piercing).
New York choice of law principles provide that “generally, ‘the law of the state of
incorporation determines when the corporate form will be disregarded and liability will
be imposed on shareholders.’” Fillmore E. BS Fin. Subsidiary LLC v. Capmark Bank, 552 F.
App’x 13, 15 (2d Cir. 2014) (summary order) (quoting Fletcher v. Atex, Inc., 68 F.3d 1451,
1456 (2d Cir. 1995)); Sweeney, Cohn, Stahl & Vaccaro v. Kane, 773 N.Y.S.2d 420, 423 (2d Dep’t
2004) (“Ordinarily, the state of incorporation has the greatest interest in determining the
extent of insulation that will be afforded to shareholders of corporations incorporated
4 under its laws”). This presumption may be rebutted, however, “by showing that the
transaction at issue has a more significant relationship with another jurisdiction.” In re
Bernard L. Madoff Inv. Sec. LLC, 583 B.R. 829, 845 (Bankr. S.D.N.Y. 2018); see, e.g.¸ Cortland
St. Recovery Corp. v. Bonderman, 187 N.Y.S.3d 602, 605 (1st Dep’t 2023) (holding that
“[e]ven though the judgment debtors were incorporated in Luxembourg, creating a
presumption that Luxembourg law governs, the circumstances here militate in favor of
applying New York law.”); Serio v. Ardra Ins. Co., 761 N.Y.S.2d 1 (2d Dep’t 2003) (finding
that “[a]lthough incorporated in Bermuda, [the company’s] contacts with that jurisdiction
were minimal. It was not authorized to sell insurance in Bermuda or to do business with
Bermuda residents. It was controlled . . . from New York and all the transactions
complained of occurred in New York.”); UBS Sec. LLC v. Highland Cap. Mgmt., L.P., 924
N.Y.S.2d 312 (N.Y. Sup. Ct. 2011) (applying New York law because the state of
incorporation, the Cayman Islands, had no relation to the veil piercing claim), aff’d in
relevant part, 940 N.Y.S.2d 74 (1st Dep’t 2012).
Here, although Aralpa Miami was incorporated in Georgia, the corporation
otherwise has no meaningful connection there. In urging otherwise, Appellants note that
Aralpa Miami maintains a registered office and agent in Georgia. These contacts, by
themselves, do not demonstrate a meaningful connection to the state because Georgia
law requires a limited liability corporation to maintain a registered office and agent
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24-423-cv Citibank, N.A. v. Aralpa Holdings Limited Partnership
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 24th day of January, two thousand twenty-five.
PRESENT: JOSÉ A. CABRANES, REENA RAGGI, MARIA ARAÚJO KAHN, Circuit Judges. __________________________________________
CITIBANK, N.A,
Plaintiff-Appellee,
ONE57 36B, LLC, ARALPA MIAMI INVESTMENTS, LLC,
Appellants,
v. 24-423-cv
ARALPA HOLDINGS LIMITED PARTNERSHIP, RODRIGO LEBOIS MATEOS, Defendants-Appellants. ___________________________________________
FOR APPELLANTS: DANIEL J. SAVAL (Lara Levinson, on the brief), Kobre & Kim LLP, New York, NY.
FOR APPELLEE: ADAM M. KAUFF (Jonathan Perrelle, on the brief), Kauff Laton Miller LLP, New York, NY.
Appeal from a February 2, 2024 writ and order of the United States District Court
for the Southern District of New York (Jennifer L. Rochon, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the writ and order are AFFIRMED.
Defendants-Appellants Aralpa Holdings Limited Partnership (“AHLP”) and
Rodrigo Lebois Mateos (“Lebois”) appeal from a writ of execution and turnover order
entered in favor of Plaintiff-Appellee Citibank, N.A. (“Citibank”) following AHLP’s
default on a $35 million dollar credit facility it obtained from Citibank (the “Note”), for
which Lebois provided a personal guaranty (the “Guaranty”). In granting the writ of
execution, the district court permitted Citibank to reverse-pierce the veil of two entities
that Lebois controlled, Appellants One57 36B, LLC (“One57”), which held real property
located in New York (the “New York Property”), and Aralpa Miami Investments, LLC
(“Aralpa Miami”), which possessed the proceeds from the sale of a property located on
Fisher Island, Florida (the “Miami Property”). 2 On appeal, Appellants argue that the district court erred by: (1) applying New
York law rather than Georgia law to Citibank’s reverse-veil-piercing claim; (2) finding
that Citibank met its burden to reverse-pierce the corporate veil as to One57 and Aralpa
Miami; and (3) failing to require Citibank to reverse-pierce the veil of every entity within
AHLP’s corporate structure. We are not persuaded. We assume the parties’ familiarity
with the underlying facts, the procedural history, and the issues on appeal, to which we
refer only as necessary to explain our decision to affirm.
DISCUSSION
This Court reviews de novo the district court’s choice-of-law determination, see
Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir. 1998), as well as its reverse-veil-piercing
analysis, see Freeman v. Complex Computing Co., 119 F.3d 1044, 1051 (2d Cir. 1997). Insofar
as the parties dispute whether the district court’s grant of a writ of execution and turnover
order is properly reviewed for abuse of discretion or de novo, compare Levinson v. Kuwait
Fin. House (Malaysia) Berhad, 44 F.4th 91, 95 (2d Cir. 2022) (reviewing “grant of a writ of
execution for abuse of discretion”), with HBE Leasing Corp. v. Frank, 48 F.3d 623, 633 (2d
Cir. 1995) (reviewing de novo grant of summary relief in C.P.L.R. § 5225(b) proceeding),
3 we need not determine which standard of review applies here because Plaintiff prevails
under either standard.
I. New York Law Applies
New York choice of law rules apply to this diversity case filed in the Southern
District of New York. See Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155,
157 (2d Cir. 2012) (per curiam). One57 is incorporated in New York and there is no
dispute that New York law governs efforts to reverse-pierce its corporate veil. The parties
dispute whether New York or Georgia substantive law should apply to reverse-veil-
piercing for Aralpa Miami because New York recognizes reverse-veil-piercing while
Georgia does not. Compare Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d
Cir. 1997) (noting that New York law recognizes reverse-veil-piercing), with Acree v.
McMahan, 585 S.E.2d 873, 881 (Ga. 2003) (concluding that Georgia law does not allow
reverse-veil-piercing).
New York choice of law principles provide that “generally, ‘the law of the state of
incorporation determines when the corporate form will be disregarded and liability will
be imposed on shareholders.’” Fillmore E. BS Fin. Subsidiary LLC v. Capmark Bank, 552 F.
App’x 13, 15 (2d Cir. 2014) (summary order) (quoting Fletcher v. Atex, Inc., 68 F.3d 1451,
1456 (2d Cir. 1995)); Sweeney, Cohn, Stahl & Vaccaro v. Kane, 773 N.Y.S.2d 420, 423 (2d Dep’t
2004) (“Ordinarily, the state of incorporation has the greatest interest in determining the
extent of insulation that will be afforded to shareholders of corporations incorporated
4 under its laws”). This presumption may be rebutted, however, “by showing that the
transaction at issue has a more significant relationship with another jurisdiction.” In re
Bernard L. Madoff Inv. Sec. LLC, 583 B.R. 829, 845 (Bankr. S.D.N.Y. 2018); see, e.g.¸ Cortland
St. Recovery Corp. v. Bonderman, 187 N.Y.S.3d 602, 605 (1st Dep’t 2023) (holding that
“[e]ven though the judgment debtors were incorporated in Luxembourg, creating a
presumption that Luxembourg law governs, the circumstances here militate in favor of
applying New York law.”); Serio v. Ardra Ins. Co., 761 N.Y.S.2d 1 (2d Dep’t 2003) (finding
that “[a]lthough incorporated in Bermuda, [the company’s] contacts with that jurisdiction
were minimal. It was not authorized to sell insurance in Bermuda or to do business with
Bermuda residents. It was controlled . . . from New York and all the transactions
complained of occurred in New York.”); UBS Sec. LLC v. Highland Cap. Mgmt., L.P., 924
N.Y.S.2d 312 (N.Y. Sup. Ct. 2011) (applying New York law because the state of
incorporation, the Cayman Islands, had no relation to the veil piercing claim), aff’d in
relevant part, 940 N.Y.S.2d 74 (1st Dep’t 2012).
Here, although Aralpa Miami was incorporated in Georgia, the corporation
otherwise has no meaningful connection there. In urging otherwise, Appellants note that
Aralpa Miami maintains a registered office and agent in Georgia. These contacts, by
themselves, do not demonstrate a meaningful connection to the state because Georgia
law requires a limited liability corporation to maintain a registered office and agent
within the state. See Ga. Code Ann. § 14-11-209(a) (2016). Indeed, Aralpa Miami’s sole
5 business was operating the Miami Property, which it sold on February 21, 2023.
Meanwhile, New York clearly has the more significant relationship to this dispute. Both
the Note and the Guaranty were entered into with Citibank, which has its principal place
of business in New York. The contracts both contained New York choice-of-law and
venue clauses, and they appointed a New York-based agent to receive service of process.
And the judgment which Citibank seeks to execute upon was entered in New York.
Accordingly, New York law—which allows reverse-veil-piercing—applies to this
dispute.
II. Citibank May Reverse-Pierce the Corporate Veil
To pierce the corporate veil, a party must show that “(1) the owners exercised
complete domination of the corporation in respect to the transaction attacked; and (2) that
such domination was used to commit a fraud or wrong against the plaintiff which
resulted in plaintiff’s injury.” Cortlandt St. Recovery Corp. v. Bonderman, 96 N.E.3d 191, 203
(N.Y. 2018) (internal quotation marks omitted). To demonstrate corporate domination, a
court may consider the following factors:
(1) the absence of the formalities and paraphernalia that are part and parcel of the corporate existence, i.e., issuance of stock, election of directors, keeping of corporate records and the like, (2) inadequate capitalization, (3) whether funds are put in and taken out of the corporation for personal rather than corporate purposes, (4) overlap in ownership, officers, directors, and personnel, (5) common office space, address and telephone numbers of corporate entities, (6) the amount of business discretion displayed by the allegedly dominated corporation, (7) whether the related corporations deal with the dominated corporation at arm[’]s length, (8) whether the corporations are treated as independent profit centers, (9) the payment or 6 guarantee of debts of the dominated corporation by other corporations in the group, and (10) whether the corporation in question had property that was used by other of the corporations as if it were its own.
Wm. Passalacqua Builders, Inc. v. Resnick Devs. S., Inc., 933 F.2d 131, 139 (2d Cir. 1991).
Every Passalacqua factor need not be present and no one factor is decisive. See N. Y. State
Elec. & Gas Corp. v. FirstEnergy Corp., 766 F.3d 212, 225 (2d Cir. 2014).
Multiple factors demonstrate that Lebois dominated One57 and Aralpa Miami.
Lebois listed both the New York and Miami Properties as his own assets on his personal
financial statements to obtain favorable terms and amendments for the Note and the
Guaranty. Both One57 and Aralpa Miami were inadequately capitalized. They carried
minimal balances in their bank accounts and relied upon Lebois to fund their operating
expenses through periodic transfers from his personal account. Relatedly, Lebois also
paid and guaranteed One57 and Aralpa Miami’s debts. Finally, both One57 and Aralpa
Miami used Lebois’s personal address as their own. In the aggregate, these uncontested
facts indicate that Citibank has met its burden of showing that Lebois dominated both
One57 and Aralpa Miami.
Moreover, evidence shows that Lebois used his domination of One57 and Aralpa
Miami to commit the “fraud or wrong” against Citibank. Cortlandt, 96 N.E.3d at 203.
Specifically, Lebois listed the New York and Miami Properties as his assets on personal
financial statements to induce Citibank to provide the Note and subsequent amendments
to it, only to disclaim any control of One57 and Aralpa Miami, and their assets, when
7 Citibank attempted to collect on its judgment. As the district court noted, and we agree,
“[t]his sort of judgment-proofing is a well-recognized ‘fraud or wrong’ that authorizes
piercing the veil.” Special App’x at 37; see, e.g., Godwin Realty Assocs. v. CATV Enterprises,
Inc., 712 N.Y.S.2d 39 (1st Dep’t 2000) (noting that “stripping of corporate assets by
shareholders to render the corporation judgment proof constitutes a fraud or wrong
justifying piercing the corporate veil.”)
Further, because the district court found that Citibank sought to reverse-pierce the
corporate veils of One57 and Aralpa Miami based on Lebois’s equitable ownership, it did
not err by declining to require Citibank to also pierce the veil of Aralpa Capital. See
Freeman v. Complex Computing Co., 119 F.3d 1044, 1051 (2d Cir. 1997) (“New York courts
have recognized for veil-piercing purposes the doctrine of equitable ownership, under
which an individual who exercises sufficient control over the corporation may be deemed
an ‘equitable owner[,’] notwithstanding the fact that the individual is not a shareholder
of the corporation.”); see also Berisha v. 4042 E. Tremont Café Corp., 199 N.Y.S.3d 38, 40 (1st
Dep’t 2023) (“Even if an individual is not a record owner of a corporation, he may
nonetheless be found to be an equitable owner and alter ego thereof if he dominated and
controlled it”) (alterations adopted) (internal quotation marks omitted).
* * *
8 We have considered Appellants’ remaining arguments and conclude that they are
without merit. For the reasons set forth above, the judgment of the district court is
AFFIRMED.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court