Societe Generale Alsacienne de Banque, Zurich v. Flemingdon Development Corp.

Lieb Waldman (defendant) was the president, director, and sole shareholder of Flemingdon Development Corporation (Flemingdon) (defendant). Lieb had a bank account with Societe Generale Alsacienne de Banque, Zurich (SG) (plaintiff). When SG advised Lieb that his account was overdrawn, Lieb presented SG with a $350,000 check that was signed by Lieb and drawn on Flemingdon’s account with Chemical Bank (Chemical). Lieb knew that the Chemical account did not contain $350,000, but he allegedly believed there would be enough money in the account by the time SG presented the check to Chemical. The next week, SG learned that the Chemical account contained insufficient funds to cover the $350,000 check and that Chemical had closed the account due to the account’s persistent negative position. However, in the meantime, SG had honored payment orders against Lieb’s account in the aggregate amount of $350,000. In response to SG’s inquiry, Lieb stated that the $350,000 check bore the wrong account number and that SG should present the check to Chemical again. But when SG did so, Chemical replied that it had closed all Flemingdon’s accounts two weeks earlier. Lieb did not respond to SG’s further attempts to contact him. SG sued Flemingdon and Lieb in federal court for $350,000. SG obtained an ex parte order attaching Flemingdon’s account with the Bank of New York (BNY). That account contained approximately $300,000. Lieb unsuccessfully tried to extract the $300,000 from the BNY account when he learned about the attachment order. After Flemingdon and Lieb moved to dismiss the federal action, SG filed suit in state court against Flemingdon, Lieb, and Eva Waldman (Lieb’s wife) (defendant). At the same time, SG moved pursuant to, among other things, Civil Practice Law and Rules (CPLR) § 6201(3) for an order attaching Lieb, Eva, and Flemingdon’s property. Per SG, attachment was warranted due to SG’s intent to voluntarily dismiss its federal suit, Lieb’s fraud, and Lieb’s past and likely future efforts to prevent SG from collecting the $350,000. The supreme court denied SG’s attachment motion. SG appealed.