Johnson and co-counsel Anton Vialtsin, of San Diego’s Delicino & Vialtsin, argued that the Russian court never had personal jurisdiction over Yakovlev because he had never been properly notified; that he had never been afforded a chance to raise a defense; and that the Russian litigation “was incompatible with the requirements of due process of law.” Read More Here
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Judge Tosses Russian Bank’s Suit Seeking $30M from Former Tycoon
Greg Land, Daily Report
A California judge dismissed a Russian bank’s bid to enforce a $30 million judgment against the former co-owner of a chain of Russian stores selling toys and children’s clothing, who is now living under political asylum in the United States.
The court ruled on summary judgment that multinational Alfa-Bank, Russia’s largest bank, failed to properly notify Oleg Yakovlev that he was the subject of a Russian lawsuit and default judgment stemming from a guaranty he signed two years before he left Russia.
Yakovlev, who once co-owned a chain of Banana-Mama children’s stores in Moscow and St. Petersburg, fled the country with his two daughters in 2009 amid what his lawyer said were efforts by law enforcement agencies to shake him down for money and a cut of a planned sale of the business, which he described as similar to Toys R Us.
According to court filings, Yakovlev agreed to sign a surety agreement for an entity known as Trial Trading House for tens of millions of dollars and rubles. Alfa-Bank’s complaint said Yakovlev was “at certain times” both a shareholder and an employee of the company.
Yakovlev’s attorney, James Johnson of Knight Johnson, which has offices in Atlanta and Los Angeles, said his client’s reasons for signing the note were “unclear for a lot of reasons.”
“It wasn’t his money, he didn’t get it, but did sign the agreement,” Johnson said.
In late 2008, Trial Trading defaulted, according to the complaint. But a brief supporting Yakovlev’s summary judgment bid says that, between October 2008 and April 2009, he had several conversations with bank representatives “to discuss its demand that Yakovlev assign shares in his company, Banana-Mama (who is not the borrower) to plaintiff.”
At no point did the bank tell Yakovlev that Trial Trading had not met its obligations, nor was he informed that the bank intended to sue him, he said.
In April 2009, Yakovlev and his daughters flew to New York and applied for political asylum. Nineteen days later, Alfa-Bank sued him in Meschansky District Court in Moscow, claiming that Trial Trading had defaulted and Yakovlev had to repay the debt.
The bank sent multiple notices of its suit to Yakovlev’s former home and office. When he failed to appear, the court tried the case without him and in September 2009 awarded a judgment of $30,530,136.
In 2011, Trial Trading was declared bankrupt and liquidated, the bank’s complaint said.
Yakovlev said he knew nothing of the trial or judgment until October 2014, when Alfa-Bank sued him under the Uniform Foreign-Country Money Judgments Recognition Act, seeking to enforce the judgment in San Diego County Superior Court.
The complaint, filed by Robin Ball, Susan St. Denis and Michael Distefano of Chadbourne & Parke’s Los Angeles office, argued that Yakovlev had been properly informed of the suit under Russian law, that the court that entered the judgment had jurisdiction to hear the dispute, and that the judgment should be enforced under the UFMJRA.
Ball said the legal team is reviewing the ruling and declined to comment further.
Unlike some tycoons who have fled the Russian Republic with substantial fortunes stashed in foreign banks, Yakovlev is of limited means, Johnson said: his U.S. employment history includes working at The Gap and moonlighting as a Lyft driver.
Johnson and co-counsel Anton Vialtsin, of San Diego’s Delicino & Vialtsin, argued that the Russian court never had personal jurisdiction over Yakovlev because he had never been properly notified; that he had never been afforded a chance to raise a defense; and that the Russian litigation “was incompatible with the requirements of due process of law.” They said he was unaware of the Russian court’s actions until he was served.
“Imagine the shock of that moment,” they wrote. “And imagine the singular question that stands out from the other emotions running through your head: ‘Why was I never told about any of this?'”
Discovery was complicated, Johnson noted, particularly concerning issues of “whether Russian due process was compatible with U.S. and California notions of due process,” said Johnson.
Depositions of the bank’s witnesses had to be by video conference.
On June 10, the parties appeared for a hearing on dueling summary judgment motions before Judge Eddie Sturgeon. On Monday, he entered an order decreeing that, while Alfa-Bank had met its burden of showing that the Russian court had granted a judgment enforceable under the UFMJRA, Yakovlev had also met his burden of proving that the foreign court had no jurisdiction over him.
“There is no dispute defendant was not personally served in Russia, and … there was nothing in the surety agreement waiving his right to service of process,” Sturgeon wrote.
Evidence did show Yakovlev left Russia without notifying the bank, the judge wrote, and under Russian law “the failure to notify the bank of this change may be bad faith justifying a finding that Yakovlev should be held liable. However, the bank has failed to cite any case within the United States which allows this court to find effective service of process under the facts presented here.”
Johnson said he was gratified at the judge’s order, as well as for the opportunity to joust with lawyers from Chadbourne & Parke, “a global mega-firm with infinite resources.”
“This was a very well-litigated case,” he said.