FILED: NEW YORK COUNTY CLERK 09/09/ :47 PM INDEX NO /2016 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 09/09/2016

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1 FILED: NEW YORK COUNTY CLERK 09/09/ :47 PM INDEX NO /2016 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 09/09/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: Part 61 Index No E NAXOS ART INC. Plaintiff, v. AFFIRMATION IN OPPOSITION TO PLAINTIFF'S MOTION FOR CIVIL CONTEMPT NICHOLAS ZOULLAS, Defendant. RANNYLIN STEPHANIE DALLEY, an attorney licensed to practice law before the courts of the State of New York, hereby affirms the following pursuant to CPLR 2106: 1. I am the attorney for Defendant, NICHOLAS ZOULLAS, in this commercial action, and I respectfully submit this affirmation in opposition to Plaintiff s motion to hold Mr. Zoullas in civil contempt of court orders and for sanctions under CPLR 3126 [ Penalties for refusal to comply with order or to disclose ] and Judiciary Law Section 753 [ Power of courts to punish for civil contempt ]. 2. Contrary to Plaintiff s arguments, Mr. Zoullas is personally not in willful contempt for failure to uphold the terms and conditions of two court orders dated June 27, 2016, and July 28, 2016, which were lawfully entered into by the parties. Compelling counter-arguments ensue regarding Mr. Zoullas's reasonable excuse that briefly stalled his compliance with the court orders. I. FACTS 3. Mr. Zoullas states in his affidavit that he is the lawful owner and custodian of artworks 1 of 7

2 that subject to this litigation. See Zoullas Aff. at 1. Plaintiff is based in the British Virgin Islands and holds artwork for purposes of long-term investment by way of shares held in a trust. Id. at 2. Mr. Anthony Cashen is the director of Naxos Art Inc. Id. 4. As the lawful custodian of artwork, Mr. Zoullas holds them in various accessible domestic locations in New York City, Long Island, and Lantana, Florida. In his capacity as custodian, he is the only one who has control over the movement of the artwork. Id. at 9. Mr. Zoullas has been Plaintiff s custodian since December 16, Id. 5. In the past, Mr. Zoullas has released and retrieved requested artwork to Plaintiff, without hesitation or without protest. Id. at Around the time both parties convened in Lantana, FL., on or about August 17, 2016, unforeseeable variables arose that thwarted Mr. Zoullas's genuine attempt to turn over the art work according the Court s, which involved Ms. Stacy Cliett, Mr. Zoullas's caretaker and contact person in Lantana. This temporary impediment was not of his own volition, as he directed Ms. Cliett to provide to co-counsel and I the location of the art. Id. at Based on these unforeseeable variables, co-counsel and I have made and continue to make good-faith efforts to recalibrate the temporary state that was created through no fault of Mr. Zoullas own. Id. at 12. More specifically, co-counsel hired a private investigator to track down Ms. Stacy Cliett and the missing artwork. Id. 8. On or about September 9, 2016, I, along with my co-counsel, Mr. Farinella, are in Lantana. We have ommenced holdover proceedings against Ms. Cliett in an effort to regain possession of Mr. Zoullas Florida home. Id. at 12. Additionally, we are conferring with the private investigator this weekend to discuss his findings. These proactive steps are prima facie proof that Mr. Zoullas has every intention to continue compliance with the two orders by 2 2 of 7

3 compelling Ms. Cliett to conform and cooperate with him, hence with the respective court orders. II. PLAINTIFF'S APPLICATION FOR CIVIL CONTEMPT SHOULD BE CATEGORICALLY DENIED BECAUSE ALL FOUR ELEMENTS OF CONTEMPT HAVE NOT BEEN MET 9. Civil contempt requires proof with reasonable certainty. N.A. Development Co. Ltd. v. Jones, 99 AD2d 238, 242 (App Div, 1st Dept 1984); Matter of Hynes v. Hartman, 63 AD2d 1, 3-4 (App Div, 1st Dept 1978). 10. To prevail on an application to punish for civil contempt, four elements must be met: [1] it must be determined that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect; [2] it must appear, with reasonable certainty, that the order has been disobeyed; [3] the party to be held in contempt must have had knowledge of the court's order; and [4] prejudice to the right of a party to the litigation must be shown. El-Dehdan v. El-Dehdan, 26 NY3d 19, 29 (App Ct 2015); McCormick v. Axelrod, 59 NY2d 574, 583 (App Ct 1983) Here, the all four elements for civil contempt have not been met because although [1] there are unambiguous directives and terms of the orders; [2] Plaintiff has not shown with reasonable certainty that Mr. Zoullas committed civil contempt; [3] Mr. Zoullas knows and acknowledges both orders; and [4] Plaintiff suffers no prejudice because Mr. Zoullas, like Plaintiff, also has expenses directly related to this matter, which is standard practice in litigation. More importantly, Mr. Zoullas, like Plaintiff, also has no access to the remaining 210 artwork. Accordingly, the four elements of civil contempt have not been met. 12. The party seeking contempt against his/her adversary bears the burden of proving the civil contempt by clear and convincing evidence that the adversary willfully and deliberately 1 To meet the 'prejudice' element, it is sufficient to allege and prove that the contemnor's actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party. Incorporated Village of Plandome Manor v. Ioannou, 54 AD3d 365, 366 (App Div, 2d Dept 2008). 3 3 of 7

4 violated a clear and unequivocal mandate of the court. Whitfield v. Bailey, 91 AD3d 491, 492 (App Div, 1st Dept 2012); see also Usina Costa Pinto, S.A. v. Sanco Sav. Corp. Ltd., 174 AD2d 487, 488 (App Div, 1st Dept 1991) (where it is well established that contempt is a drastic remedy which should not be granted absent a clear right to such relief). 13. Plaintiff is aware that at the time the parties convened in Lantana, FL, on or about August 17, 2016, Ms. Stacy Cliett blocked access to the premises on her own accord. See Zoullas Aff. at 9. Although Ms. Cliett is the designated caretaker in Lantana, FL, she is not employed by Mr. Zoullas in his role as custodian, and is thus not under his direction with respect to the artwork. Id. 11. He therefore did not orchestrate with Ms. Cliett in the movement of the artwork. 14. Based on Ms. Cliett's actions that stymied both parties' efforts to retrieve the artwork, counsel s herein hired a private investigator to find Ms. Cliett and the artwork. Id. at Consequently, there has been no proof that shows concealment or a consistent pattern of defiance and contempt by Mr. Zoullas, as evidenced by the hiring of a private investigator, as well as his willingness to give reasonable access to his Lantana home and Lantana storage to both parties. Plaintiff s counsel is aware that Mr. Zoullas s cooperation was thwarted by unforeseen events, which is only a temporary impasse and does not serve as grounds to severely punish both parties Additionally, although 'willfulness' is not a requirement for civil contempt, all that needs to be shown is that the contemnor must have a consciousness that shows an awareness of the act that is other than "unwitting conduct." El-Dehdan, 26 NY3d at 35. Furthermore, the level of willfulness determines whether the supposed contempt is civil or criminal. N.A. Development Co. Ltd. v. Jones, 99 AD2d at See Nicyper Aff. at 36, 68. Plaintiff, through counsel, has not shown with reasonable certainty, of any willfulness by Mr. Zoullas to conceal artwork or refusal to comply with the two subject orders. 4 4 of 7

5 17. Here, Defendant can prove "unwitting conduct" because Ms. Cliett did not privy him whatsoever of her intentions to move the artwork. See Zoullas Aff. at 11. Accordingly, Mr. Zoullas is not liable for civil contempt as a matter of law, as disputed facts exist, and especially since it is also in his best interests as custodian of the artwork to fully cooperate with the two court orders. In short, the four elements of civil contempt were not met, as it was Ms. Cliett herself, and not Mr. Zoullas, who unilaterally transferred the artwork. III. SANCTIONS ARE ALSO UNWARRANTED BECAUSE THERE IS NO SHOWING OF NON-COMPLIANCE BY MR. ZOULLAS 18. Regarding sanctions, under Judiciary Law 744 [ Length of imprisonment and periodic review of proceedings ], imprisonment is not warranted whatsoever, as long as the would-be offender...[s]hall perform the act or duty required to be performed. 19. Moreover, Plaintiff s counsel misplaces reliance on 317 W. 87 Assocs. v. Dannenberg, 159 AD2d 245, (App Div, 1st Dept 1990) because here, Plaintiff has not put forth any proof of undisputed untruthfulness that would justify sanctions against Mr. Zoullas. See Nicyper Aff. at 71. Accordingly, where the failure to disclose is neither willful nor contumacious, non-compliance does not warrant preclusion or striking of a party's pleadings. Palmenta v. Columbia University, 266 AD2d 90, 91 (App Div, 1st Dept 1999). 20. Here, Mr. Zoullas, as custodian of the artwork, fully understands and appreciates the necessity to aid with enforcement of the two court orders. He is also very much aware that being sanctioned is a serious matter that is punishable. He therefore intends to perform the act of retrieving the requested artwork and turn them over to Plaintiff, pursuant to the two court orders, as long as there is also forced or voluntary cooperation from Ms. Stacy Cliett solely sparked by Mr. Zoullas vigorous efforts. 21. Thus, the "extraordinary" power to impose wholly punitive sanctions for civil contempt 5 5 of 7

6 should be exercised only very cautiously and where the necessity is clear. Conforti v. Goradia, 234 AD2d 237, 239 (App Div, 1st Dept 1996); N.A. Development Co. v. Jones, 99 AD2d at 242. Here, the necessity is far from clear because as stressed earlier, Ms. Cliett's actions and behavior were entirely taken on her own and without any direction or guidance from Mr. Zoullas. See Zoullas Aff. at 9. IV. CONCLUSION 22. Accordingly, Mr. Zoullas fully understands the legal consequences of failing to comply with the two court orders and ensures this Court that he intends to avoid any and all contemptuous behavior arising from the unforeseeable interference that has caused a temporary impediment to enforce the two orders. 23. More importantly, Plaintiff has not shown that Mr. Zoullas is in civil contempt with reasonable certainty, based on disputed facts and based on Plaintiff's acknowledgment that Ms. Cliett refused entrance. See Nicyper Aff. at 36. Such circumstances constitute reasonable excuse on Mr. Zoullas's part, through no fault of his own. 24. Alternatively, Mr. Zoullas, through counsel, respectfully requests this Court to grant Mr. Zoullas until Thursday, September 15, 2016, so that he can properly pursue his actions against Ms. Cliett which in turn will help him fully comply with the two court orders. WHEREFORE, it is respectfully requested that Plaintiff's motion to hold Mr. Zoullas in civil contempt of two court orders and for sanctions be denied in its entirety, or in the alternative, Mr. Zoullas, through counsel, respectfully requests this Court to allow counsel time to pursue the legal recourse we have commenced or which will be imminently commenced against Cliett and Stephens, together with such other and further relief as this Court deems just and proper. 6 6 of 7

7 Dated: September 9, 2016 New York, NY Respectfully submitted, /s/rannylin Stephanie Dalley Rannylin Stephanie Dalley Attorney for Respondent R.S. Dalley, PLLC 260 Madison Avenue, 8th Floor New York, NY of 7

FILED: NEW YORK COUNTY CLERK 07/07/ :54 PM INDEX NO /2016 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 07/07/2016

FILED: NEW YORK COUNTY CLERK 07/07/2016 11:54 PM INDEX NO. 653223/2016 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 07/07/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: Part 61 NAXOS ART INC.,