Opinion
995/10.
Decided August 9, 2010.
Jenelle Jackson (Pro Se), Claimant.
Zeichner, Ellman Krause, LLP, New York, NY, Defendant's Counsel.
In this small claims action, claimant Jenelle Jackson ("plaintiff") seeks damages for defendant TD Bank's ("defendant") alleged failure to honor a restraining notice in connection with a small claim judgment that plaintiff obtained against Natalie Cora (referred to interchangeably as either "judgment debtor" or "debtor"). Defendant moves to dismiss the Notice of Claim and Summons pursuant to Civil Practice Law and Rules ("CPLR") § 3211(a)(1) and (7).
Defendant contends that plaintiff is not entitled to any recovery as a matter of law, because she failed to interpose a timely objection to the debtor's claim that the funds in her account were exempt unemployment benefits. Defendant claims the plaintiff's failure to act rendered the restraining notice void and thus, it was precluded from turning over any funds in compliance with the Marshal's notice of Levy and Demand on the debtor's account.
In opposition, plaintiff argues the defendant failed to honor the restraining notice issued on September 10, 2009 and allowed the debtor to deplete non-exempt funds in the account. Plaintiff maintains that the defendant twice sent her notice and copies of the judgment debtor's exemption claim form, and she submitted a rebuttal on each occasion. Plaintiff claims that she faxed rebuttal documents and even a decision on a motion filed by the debtor to the defendant's Levy Department on October 1, 2009 and December 4, 2009. Plaintiff maintains that the documents were faxed with the help of defendant's customer service personnel in its Harlem branch office.
Generally, when evaluating a motion to dismiss for failure to state a cause of action pursuant to CPLR § 3211(a)(7), the court must accept the facts alleged in the complaint as true and accord plaintiff the benefit of every possible favorable inference ( Leon v Martinez, 84 NY2d 83), and when dismissal is sought pursuant to CPLR § 3211(a)(1), the movant must submit documentary evidence that resolves all factual issues as a matter of law and conclusively disposes of the plaintiff's claim ( Elow v Svenningsen , 58 AD3d 674 ). However, in small claims matters, the court is tempered by Section 1804 of the Uniform City Court Act ("UCCA"), which directs the court to do "substantial justice" between the parties according to the rules of substantive law.
A judgment creditor can either enforce a small claim money judgment as set forth under Article 18 of the UCCA, or utilize the enforcement devices provided under Article 52 of the CPLR. In this case, the claimant chose to move under CPLR § 5222(b) for a restraining notice. CPLR § 5222(b) provides that a bank in possession or custody of property in which a judgment debtor has an interest, is forbidden from making or suffering any sale, assignment, transfer or interference with any such property, or paying over or otherwise disposing of any such debt to any person other than the sheriff. A restraining notice is not a mere notice but a form of process issued out of court intended to have the effect of an injunction (CPLR § 5222(b); Sumitomo Shoji New York, Inc. v Chemical Bank New York Trust Co., 47 Misc 2d 741, 746 [Sup Ct, New York County 1965]). Under CPLR § 5222(g) and § 5205(l), a banking institution is prohibited from restraining $2500 of certain statutorily exempt payments made electronically or by direct deposit into a judgment debtor's account, including unemployment benefits (CPLR § 5205(l)(2)).
As prescribed under CPLR § 5222-a(3), a banking institution must serve a copy of the restraining notice or execution, exemption notice and exemption claim forms upon the judgment debtor within two business days after receiving the documents. The judgment debtor must serve the completed exemption claim form upon the banking institution and judgment creditor within twenty days of receiving the notice and forms (CPLR 5222-a (c)(1)). When the bank receives an exemption claim form, CPLR 5222-a(c)(2) requires that the bank notify the judgment creditor that the restraint will be deemed void and that all funds in the debtor's account will be released eight days after the date postmarked on the envelope containing the exemption claim form, unless the judgment creditor interposes an objection within that time (CPLR 5222-a(c)(2), (3)).
Here, under strict application of the rule of law, the grounds for dismissal pursuant to CPLR 3211(a)(1) and (7) have not been met. Essentially, plaintiff seeks damages on the ground that the defendant should be held liable for failing to restrain the judgment debtor's account which, at the time, had sufficient funds to satisfy her money judgment.
The sequence of events giving rise to this action began approximately three months after plaintiff obtained a default judgment in her favor and against the judgment debtor in the amount of $4,520 on May 28, 2009. Defendant completed an information subpoena in connection with that judgment on August 31, 2009, indicating that it maintained an account in the judgment debtor's name with $7,461.58 on deposit. When the restraining notice issued, on September 10, 2009, the account had $4,411 on deposit. Defendant acknowledged receipt of the restraining notice in two notices that it sent to plaintiff on September 24, 2010 and November 23, 2009. The notices included a copy of the debtor's executed claim forms, and defendant also advised plaintiff that it would be required to release the restrained funds if she failed to take action within eight days of the date of the letter.
Meanwhile, between September 10, 2009 and September 17, 2009, defendant honored several of the judgment debtor's debit transactions and a $2500 withdrawal request, which depleted funds in the account to $0.00. Additionally, the judgment debtor moved by Order to Show Cause to vacate the underlying default judgment and lift the restraints on her bank account. By order dated September 30, 2009, Hon. Peter Sweeney denied the debtor's application and lifted all stays finding that the subject account contained non-exempt funds that had been commingled with unemployment benefits. Thereafter, on October 23, 2009, the New York City Marshal issued a Notice of Levy and Demand in connection with execution of the money judgment.
As outlined above, the court finds that the issues giving rise to this action culminated around the time of the restraining notice. As such, resolution of the factual issues presented in this matter and conclusive disposition of the plaintiff's claim requires, at the very least, documentary evidence showing that the defendant properly restrained the account in question. Nevertheless, defendant failed to proffer even a scintilla of evidence showing that it complied with the restraining notice. In fact, the defendant's moving papers are devoid of evidence demonstrating compliance with Article 52 at any time prior to the Marshal's Notice of Levy and Demand. Contrary to defendant's contentions, the defense that plaintiff failed to interpose a timely objection to the debtor's exemption claim is not dispositive on the issue of whether it can be held liable for negligently failing to comply with the September 10, 2009 restraining notice.
Furthermore, New York jurisprudence makes it clear that motion practice is discouraged in small claims actions ( Weiner v Tel Aviv Car and Limousine Serv. Ltd., 141 Misc 2d 339 [NYC Civ Ct 1988][tracing the history of the small claims part]), especially when, as is the case here, a small claim defendant seeks dismissal of the plaintiff's claim ( see Guggenheimer v Ginzburg, 43 NY2d 268).
In light of the foregoing, all other arguments and claims are without merit.
Based upon the preceding analyses, defendant's motion to dismiss is denied in its entirety. The matter is adjourned for trial in the Small Claims part of the Civil Court, Room 306, on September 30, 2010 at 6:15 p.m.
This constitutes the decision and order of the court.