Turkish Brothers’ $388M Award Fight Sent Back To State Court

By Kelly Zegers

Law360 (February 11, 2020, 7:37 PM EST) — A Florida federal judge has let a Turkish company go back to state court as it seeks to enforce a $338 million arbitral award, finding that two Turkish businessmen’s removal to federal court last year was untimely.

U.S. District Judge Rodney Smith said brothers Mustafa and Sefa Çevik’s time-barred removal of the case was an attempt to seek a different ruling after a Florida state court confirmed the arbitral award that stemmed from a soured chromium ore mining license deal with the company, Turchrome Krom Madencili Sanay Ve Dis Ticaret Ltd. Sirketi Turkey.

In determining the Çevik brothers’ removal was untimely and granting the company’s motion to remand, the judge applied a previous court’s ruling on an international arbitral awards convention that found a party couldn’t willingly proceed with discovery and trial in state court only to remove “when the first bite of what appears to be a ripe apple turns extremely sour.”

In this case, the brothers were trying to take a “second bite at the apple,” Judge Smith said.

“It could not be clearer from defendants’ motions filed in the instant case that this is exactly what defendants are trying to do; after receiving an adverse ruling from the state court when the state court confirmed the arbitral award, defendants are now trying to obtain a different ruling in this court — first through removal and then through their motions to dismiss,” the judge said.

The award in question had been issued to Turchrome in arbitration against Mustafa Çevik, which Turchrome initiated after yields at chromium ore sites failed to meet expectations. The arbitration took place in Paris under the auspices of the International Chamber of Commerce.

The suit, which accuses Mustafa Çevik of fraudulently transferring certain real estate to Sefa in an effort to avoid paying the award, claims the two brothers have numerous assets in South Florida that could be used to enforce the award, including real estate, at least one business, and a Mercedes and a Range Rover.

The federal judge’s ruling was in step with Turchrome’s contention that the Turkish businessmen failed to remove the case because the convention’s phrase “before the trial thereof” meant that trial begins when both sides present an argument on an issue of law or fact, according to court documents.

The brothers called that interpretation “aggressive,” arguing that removal is timely as long as it happens before the state court has adjudicated on the merits of all of a plaintiff’s claims or dismissed the entire suit, the judge said.

The judge acknowledged the businessmen’s reading of the existing case law on “before the trial” wasn’t unreasonable because there’s not a lot of case law on it.

The Florida state court confirmed the arbitral award in May last year, according to court records. The brothers had moved to dismiss Turchrome’s motion to confirm the award.

“The unfavorable ruling was not on just any claim; it was on the l[i]nchpin claim because the fraudulent transfer claims are dependent on confirmation of the arbitral award,” the judge said.

Because of his finding on the timeliness issue, the federal judge said the court wouldn’t address Turchrome’s waiver argument. Turchrome had asserted the businessmen waived their rights to remove by litigating the case in state court before removal.

The judge denied Turchrome’s motion for costs, according to the order.

Representatives for the parties did not immediately respond to requests for comment Tuesday.

Turchrome Krom Madencili Sanay Ve Dis Ticaret Ltd. Sirketi Turkey is represented in state court by Leyza B. Florin, Bruno de Camargo and Edward H. Davis Jr. of Sequor Law PA and Matthew D. McGill of Gibson Dunn & Crutcher LLP.

Mustafa Çevik, Sefa Çevik and Charisma Marble LLC are represented by Aliette D. Rodz and Kristin Drecktrah Paz of Shutts & Bowen LLP.

The case was Turchrome Krom Madencili Sanay Ve Dis Ticaret Ltd. Sirketi Turkey v. Cevik et al., case number 1:19-cv-22910, in the U.S. District Court for the Southern District of Florida.

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