Opinion
No. 656190/2017 MOTION SEQ. No. 011; 012
12-19-2023
AC PENGUIN PRES TIGE CORP., Judgment-Creditor, v. TWO THOUSAND FIFTEEN ARTISANAL LLC, 2015 ARTISANAL HOLDINGS, LLC, SARID DRORY, and STEPHANIE SCHULMAN, Judgment-Debtor.
Unpublished Opinion
DECISION + ORDER ON MOTION
HON. VERNA L. SAUNDERS, JSC JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 011) 242, 243, 244,245, 246,247, 248. 249, 250, 251,252, 253, 254, 255, 256. 257, 258, 259, 260, 261, 262, 275. 281,285. 286, 289, 290, 291,292, 293, 294, 295, 296, 297, 298, 300 were read on this motion to/for POST JUDGMENT RELIEF .
The following e-filed documents, listed by NYSCEF document number (Motion 012) 276,277,278, 279.280, 282. 287 were read on this motion to/for EXTEND TIME .
This action concerns the recovery of a $253,392.59 default judgment ("judgment"), plus interest, which was entered against defendants on February 21,2019 (NYSCEF Doc. No. 244, Judgment). Petitioner claims that non-party HighBrook Investment Management, L.P. ("HighBrook"), Schulman's previous employer, is in possession of Schulman's bonus of $436,000.00 which is sufficient to satisfy the judgment and interest accrued, the amount due being at least $349,994.52. Petitioner notified HighBrook about the judgment against Schulman and, as a result, HighBrook has temporarily withheld payment of the $436,000.00 since the parties have asserted divergent and competing positions regarding the proper treatment of the bonus (NYSCEF Doc. No. 245, HighBrook's letter to parties). Petitioner delivered an income execution to the Marshal for garnishment of Schulman's wages and other income.
In Mot. Seq. Oil, petitioner moves, by Order to Show Cause ("OSC") pursuant to CPLR 5226, seeking an order directing Schulman to instruct HighBrook to deliver a sufficient portion of the $436,000.00 to satisfy the debt owed to petitioner in a lump sum. Petitioner further contends that should Schulman fail or refuse to do so within seven (7) days of this court's order, the order of the court directing the turnover should be deemed as Schulman's signed directive (NYSCEF Doc. No. 261, memo in support, pg 12). Lastly, petitioner articulates that no portion of the bonus is required for Schulman's and her dependents' basic necessities because Schulman has no dependents and testified that she has no car, and that she appears to have virtually no necessary expenses.
In opposition, Schulman argues that even though the $436,000.00 remains in the possession of Highbrook's attorneys, Goodwin Procter, LLP ("Goodwin Procter"), neither Highbrook nor Goodwin Procter are parties to this litigation and, therefore, that the court lacks jurisdiction over them. According to Schulman, the proper procedure is to implead Highbrook and/or Goodwin Procter into this action before the court can exercise power to order Goodwin Procter to turn money over to petitioner. (NYSCEF Doc. No. 290, opposition, pg 10). Furthermore, Schulman contends that, since petitioner is asking for the monies to be turned over in a lump sum, CPLR. 5226 is inapplicable because the statute specifically references payments made in installments. In furtherance of this point, Schulman set forth that CPLR 5226 is inapplicable for the additional reason that it is not alleged that Schulman is receiving or will receive the money and that Goodwin Procter is in possession of the money for Highbrook and does not intend to pay it to her absent an order or stipulation. Lastly, she asserts that the $436,000.00 is necessary' for her expenses because she has been unable to find a job since she left Highbrook; that she has other judgments and debts that she is currently working to pay down pursuant to active repayment programs; and that, as head of household, she is responsible for the expenses of her partner who is not working, suffers from disability, and is completely dependent on her (id., at pg 14).
In Mot. Seq. 012, petitioner moves, by OSC, pursuant to CPLR 5232 and 5240, seeking an order extending time to perfect a levy and execution upon any interests of Schulman in personal property not capable of delivery, or upon any debt owed to her, held by Highbrook or any of its agents or affiliates, including without limitation her interest in the $436,000.00 held by Highbrook. Petitioner argues that granting its request for the standard time of 90-days to perfect the levy is appropriate because its security interest in the $436,000.00 would be protected and it would vitiate the need to bring a separate action against Highbrook. With regard to service, petitioner asserts that it should be allowed to effectuate service upon Highbrook's counsel via e-mail. Lastly, petitioner contends that since Schulman has been evading service and concealing her address and her counsel has represented that he is not yet authorized to accept service on Schulman's behalf, the court should likewise grant its request for alternative service upon her by e-mail. This application is unopposed.
Both motions are hereby consolidated for disposition.
CPLR 5225(c) provides, in pertinent part: "The court may order any person to execute and deliver any document necessary to effect payment or delivery."
CPLR 5226 provides, in pertinent part: "Upon motion of the judgment creditor, upon notice to the judgment debtor, where it is shown that the judgment debtor is receiving or will receive money from any source, or is attempting to impede the judgment creditor by rendering services without adequate compensation, the court shall order that the judgment debtor make specified installment payments to the judgment creditor... In fixing the amount of the payments, the court shall take into consideration the reasonable requirements of the judgment debtor and his dependents, any payments required to be made by him or deducted from the money he would otherwise receive in satisfaction of other judgments and wage assignments, the amount due on the judgment, and the amount being or to be received, or. if the judgment debtor is attempting to impede the judgment creditor by rendering services without adequate compensation, the reasonable value of the services rendered."
CPLR 5205(d)(2) provides, in pertinent part: "The following personal property is exempt from application to the satisfaction of a money judgment, except such part as a court determines to be unnecessary for the reasonable requirements of the judgment debtor and his dependents: ninety per cent of the earnings of the judgment debtor for his personal services rendered within sixty days before, and at any time after, an income execution is delivered to the sheriff or a motion is made to secure the application of the judgment debtor's earnings to the satisfaction of the judgment."
Upon consideration of the arguments advanced, contrary to Schulman's assertion, the money in question is not beyond the reach of the court to direct Schulman to pay petitioner from all assets in which she has an interest to the extent necessary' to satisfy the judgment. "In order to direct the turnover of property not in the possession of the judgment debtor, a special proceeding is required" (CPLR 5225[b]). An order for execution or delivery of documents under CPLR 5225(c) may only be issued against a party whose debt liability has been established, or against that party's garnishee or transferee (see Muhl v Ardra Ins. Co., 246 A.D.2d 413. 413 [1st Dept 1998], citing Weinstein-Korn-Miller, NY Civ Prac P 5225.21]). It has been ably held that CPLR 5225 applies to "money or other personal property in which the judgment debtor has an interest" (Gryphon Dom. VI, LLC v APP Inti. Fin. Co., B. V., 41 A.D.3d 25, 36 [1st Dept 2007].) As the debt sought is undisputed, and it has been demonstrated that Schulman has an interest in the $436,000.00 amount, though not currently in her possession, the court has the authority to order Schulman to direct Highbrook and/or Highbrook's attorney, Goodwin Procter, to deliver sufficient portion of the $436,000.00 amount to satisfy the judgment. Even though petitioner appears to seek a lump sum portion of the $436,000.00 amount to satisfy the judgment in contravention of the CPLR 5226 provision that payments be made in installments, petitioner also prayed for any such other, further, and different relief as the court may grant (NYSCEF Doc. No. 275, order to show cause). Hence, payments of the portion of the $436,000.00 petitioner seeks shall be made in installments. Furthermore, CPLR 5226 provides that "[i]n fixing the amount of the payments, the court shall take into consideration the reasonable requirements of the judgment debtor and his dependents, any payments required to be made by him or deducted from the money he would otherwise receive in satisfaction of other judgments and wage assignments, the amount due on the judgment, and the amount being or to be received." "The test is what the judgment debtor can reasonably afford to pay. taking into consideration his needs, those of his dependents, and other inroads on his income from other obligations" (Kaufman v Kaufman, 29 A.D.2d 922, 922 [1st Dept 1968].) "CPLR 5226 does not contain a limit on the amount of an installment payment order" (Allstar Capital, Inc. v Curry, 2010 NY Slip Op 20188[U]**2 [Sup Ct, NY 2010]). Despite claiming that the entire $436,000.00 is necessary to paying for her rent, high medical insurance premiums, job search costs, internet, and groceries, Schulman does not provide any proof of such financial obligations to meet the requisite burden (see Lowy v Bohker, 383 F.Supp.2d 606, 615 [SDNY 2005]; see also Grand Pac. Fin. Corp, v 97-111 Hale, LLC, 2015 NY Slip Op 3OOI3[U]**17 [Sup Ct, NY County 2015]). Therefore, petitioner is entitled to sufficient portions of the $436,000.00 to satisfy the judgment.
Next, the court grants that portion of petitioner's motion (Mot. Seq. 012) seeking an order giving it a 90-day extension to perfect a levy and execution upon any interests of Schulman in personal property not capable of delivery, or upon any debt owed to her, held by Highbrook or any of its agents or affiliates. It has been held that "[u]nder CPLR 5232(a), an execution expires after 90 days, unless the court grants an extension" (Matter of Dontzin Nagy &Fleissig LLP v HC2 Holdings, Inc., 212 A.D.3d 499, 500 [1st Dept 2023].) To the extent petitioner argues that it should be allowed to effectuate service upon Schulman via e-mail premised on the notion that she has been evading service, and that her counsel has represented that he is not authorized to consent to accepting service on Schulman's behalf, the court agrees. This court granted in a previous order that petitioner serve Schulman via e-mail (NYSCEF Doc. No. 280). As is the case here, it has been found that alternate service using electronic means is appropriate where defendants' physical location is unknown and physical service is impracticable (see LCXAG v 1.274M U.S. Dollar Coin, 2022 NY Slip Op 32834[U], *6 [Sup Ct, NY County 2022]). However, the court denies that branch of Mot. Seq. 012 seeking an order directing petitioner to serve Goodwin Procter the decision and order of this court via e-mail only insofar as petitioner has not demonstrated that it cannot effectuate service in accordance with CPLR. 5513(d). All other arguments have been considered and are either without merit or need not be addressed. Accordingly, it is hereby
ORDERED that, as to Mot. Seq. Oil, within twenty (20) days after service of this decision and order, defendant Stephanie Schulman shall direct Highbrook Investment Management, L.P to deliver to New York City Marshal Martin Bienstock (or, alternatively, petitioner's counsel) the amount of $349,994.52 of the $436,000.00 held by Goodwin Procter, LLP, in two (2) equal installments until the amount has been paid in full to petitioner, the first payment being due on February 15, 2024 and the second payment being due on March 15, 2024; and it is further
ORDERED that the branch of Mot. Seq. 012 seeking to serve defendant Stephanie Schulman by e-mail is granted, and petitioner shall serve this decision and order upon HighBrook Investment Management, L.P. and Goodwin Procter, LLP pursuant to CPLR 5513(d); and it is further
ORDERED that that branch of Mot. Seq. 012 seeking a 90-day extension to perfect a levy and execution upon any interests of Schulman held by Highbrook or any of its agents or affiliates is granted; and it is further
ORDERED that, within fifteen (15) days after this decision and order is uploaded to NYSCEF, counsel for petitioner shall serve a copy of this decision and order, with notice of entry, upon defendants, HighBrook Investment Management, L.P. and Goodwin Procter, LLP; and it is further
ORDERED that service upon the Clerk of the Court shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the "E-Filing" page on the court's website at the address www.nycourts. gov/supctmanh).
This constitutes the decision and order of this court.