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12/18/92 FIRST SAVINGS BANK VIRGINIA v. BARCLAYS

December 18, 1992

FIRST SAVINGS BANK OF VIRGINIA, APPELLANT
v.
BARCLAYS BANK, S.A., APPELLEE; WATERGATE WEST INC., APPELLANT V. BARCLAYS BANK, S.A., APPELLEE



Appeals from the Superior Court of the District of Columbia; (Hon. Henry H. Kennedy, Jr., Trial Judge)

Before Steadman and Wagner, Associate Judges, and Pryor, Senior Judge.

The opinion of the court was delivered by: Steadman

STEADMAN, Associate Judge: This appeal involves competing claims of unpaid creditors to the interest of Basil and Laura Tsakos in a cooperative apartment located in the Watergate West apartment complex. Appellant First Savings Bank of Virginia ("First Savings") asserts a security interest in the apartment arising by virtue of a November 20, 1985 loan to the Tsakos for which they executed an agreement "pledging" their interest in the proprietary lease as collateral and giving First Savings possession of the proprietary lease document. Appellee Barclays Bank, S.A., ("Barclays") asserts a lien interest in the apartment based on a prejudgment attachment of the apartment on May 19, 1986 that was reduced to judgment on April 27, 1989. The trial court concluded that Barclays' lien took priority because First Savings failed to perfect its security interest in the apartment.

Appellant Watergate West, Inc. ("Watergate West"), the cooperative corporation that owns the building in which the Tsakos apartment is located, intervened in the trial court. On appeal, Watergate West challenges the validity of the prejudgment attachment and the denial of sanctions against Barclays for an alleged discovery violation. Watergate West also supports First Savings' position on the priority issue.

We affirm.

I

On December 8, 1981, the Tsakos became through assignment the owners of a ninety-nine year "Proprietary Lease and Occupancy Agreement" for Unit 602 in the Watergate West complex in the District of Columbia *fn1 and as a consequence thereof also became "members" in Watergate West, Inc. ("Watergate West"), a Delaware corporation, the cooperative entity which had executed the document. *fn2 Subsequently, in December 1984 and February 1985, Mr. and Mrs. Tsakos executed separate guarantees for a loan of 2.5 million Swiss francs by Barclays to the Tsakos' son Alexandre. Alexandre Tsakos defaulted on the loan, and Barclays brought actions on the guaranty in France and Switzerland as well as the District of Columbia.

Barclays commenced its action against the Tsakos in the District of Columbia on April 22, 1986, averring that the Tsakos were attempting to sell their cooperative apartment as part of their efforts to move their assets beyond the reach of Barclays, and obtained a prejudgment attachment pursuant to D.C. Code §§ 16-501, -533 (1989). *fn3 On November 10, 1987, a court in Paris rendered a judgment in favor of Barclays against the Tsakos for the then equivalent of approximately $2.5 million. On this basis, Barclays subsequently sought a judgment of condemnation here of the Tsakos' Watergate apartment. See id. § 16-524.

It was at this point that appellant First Savings sought involvement in this litigation. On December 1, 1988, First Savings moved to intervene in Barclays' suit against the Tsakos, claiming that it had perfected a security interest in the Tsakos' apartment by taking possession of the Tsakos' proprietary lease document no later than December 12, 1985. The trial court granted First Savings' motion to intervene for the limited purpose of participating in any proceedings involving the validity and priority of liens against the apartment and for the Disposition of the property. On April 27, 1989, the trial court ordered that the French judgment be enforced in this jurisdiction, gave judgment for Barclays for approximately $1.6 million, *fn4 and entered an order of condemnation of the Tsakos' apartment.

On May 30, 1989, three years after Barclays had first obtained a prejudgment attachment on the Tsakos' apartment, appellant Watergate West, Inc. filed a motion to intervene, for a stay, for reconsideration of the trial court's April 27, 1989 order, and for damages for wrongful attachment. In its motion, Watergate West asserted that Barclays' writ of attachment wrongfully attempted to attach the Tsakos' apartment, which was real estate owned by Watergate West, rather than the Tsakos' interest in the apartment. The trial court permitted Watergate West to intervene to participate in proceedings involving liens against the property attached and its Disposition, but concluded that the request for other relief was untimely because the May 19, 1986 writ of attachment ordered Watergate West to hold all property in its control belonging to the Tsakos, thereby giving Watergate West adequate opportunity to identify the subject of the writ. *fn5 Finally, on June 15, 1990, the trial court also denied First Savings' motion for partial summary judgment, ruling that Barclays' lien had priority over First Savings' unperfected security interest. It ordered that "Barclays is authorized to take all steps necessary to recover $1,620,138.10 *fn6 through the sale of the interest of Basil and Laura Tsakos in Unit 602." Both First Savings and Watergate West appeal. *fn7

II

We turn to a determination of the relative priorities of First Savings' security interest and Barclays' lien in the Tsakos' cooperative apartment interest.

A

Although cooperative apartments can take a variety of forms, the most common form is corporate, with the corporation owning the fee to the real estate and individual cooperative members holding shares of stock in the corporation and receiving ...


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