Case Update (5 Dec 2024): Barboza v. Jiron; NY action for conversion stayed pending Costa Rican divorce court’s determination of jurisdiction over funds
Barboza and Jiron were married in Costa Rica in 2015. Prior to the date of marriage, Barboza/Husband inherited money from several family trusts that he shared with his mother and brother. After the marriage, he dissolved his portion of the trusts and transferred more than ten million dollars to accounts in New York. In 2020, Jiron/Wife asked Barboza to leave the family home, and, in 2022, Barboza filed for divorce in Costa Rica. That divorce action is still pending. During the marriage, Barboza had transferred funds to Jiron, and, in the divorce, he requested (initially) half of those funds back. Jiron argued that the funds were a gift, and not to be divided in the divorce (i.e., her separate property). Barboza then argued that the funds were his sole property (from inheritance) and that his Wife has since hidden the funds from him. On August 7, 2024, the Husband filed suit in the U.S. District Court for the Southern District of New York for conversion and an accounting of the disputed funds. The Wife filed to dismiss the complaint, arguing international comity and forum non conveniens.
In determining whether to dismiss the New York suit on the basis of comity, the Court examined a non-exhaustive list of factors. The first factor, the similarity between the two pending lawsuits, weighed in favor of granting a stay pending the Costa Rican court’s determination of whether the funds sought in the case are marital or otherwise subject to Costa Rican jurisdiction. The two suits are not necessarily one and the same, but the Costa Rican court’s conclusions will permit an underlying dispute as to the nature of the funds and whether the Costa Rican court will divide those funds, to be resolved first. This ruling will be at least instructive, but could be largely dispositive. The second factor, the adequacy of the foreign forum, weighs in favor of a stay to allow the NY court to await a determination of the divorce court’s jurisdiction, and thus, its authority to award a remedy (i.e., potentially the return of funds to Barboza). As to the third factor, prejudice and convenience, the Court noted that it should proceed expeditiously, out of concern that the funds in a NY account were being depleted, but there are no allegations of Jiron’s mismanagement of the funds, and no explanation for Barboza’s concern that the funds were being depleted. Further, it appears the Costa Rican courts should reach some decision in 6 months. As to the fourth factor, the connection to the USA and Costa Rica, the court also concluded that a stay is appropriate. The Costa Rican court’s determination of whether the assets are separate or marital is important, and if the divorce court concludes it lacks authority over the funds, then proceeding in the NY Court will make sense, as the funds, witnesses, and defendant are located here.
Therefore, the NY Court concluded it should stay the action in NY and permit the first-filed Costa Rican divorce lawsuit determine jurisdiction over the funds that the Husband seeks in NY. Therefore, the case is not dismissed, and Jiron’s alternative request for a stay was granted.
As to Jiron’s second, forum non conveniens, argument, she has not demonstrated that, if the Costa Rican court concludes that the disputed funds are separate property, the Costa Rican court has authority to conduct an action for conversion or accounting. In fact, no one has presented evidence for or against the amenability of the Costa Rican courts to the tort claims of conversion at issue before the NY Court. Therefore, this argument is denied without prejudice, subject to renewal following the Costa Rican court’s determination of jurisdiction.
