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Wimbledon Fin. Master Fund, Ltd. v. Bergstein

Supreme Court, Appellate Division, First Department, New York.
Jun 4, 2019
173 A.D.3d 401 (N.Y. App. Div. 2019)

Opinion

9217 9218N Index 150584/16

06-04-2019

IN RE WIMBLEDON FINANCING MASTER FUND, LTD., Petitioner–Respondent–Appellant, v. David BERGSTEIN, et al., Respondents. Steven J. Katzman, et al., Nonparty Appellants–Respondents.

Hubell & Associates LLC, New York (Barry A. Cozier of counsel), for appellants-respondents. Kaplan Rice LLP, New York (Joseph A. Matteo of counsel), for respondent-appellant.


Hubell & Associates LLC, New York (Barry A. Cozier of counsel), for appellants-respondents.

Kaplan Rice LLP, New York (Joseph A. Matteo of counsel), for respondent-appellant.

Acosta, P.J., Friedman, Manzanet–Daniels, Gesmer, Singh, JJ.

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered May 10, 2018, which, to the extent appealed from, granted petitioner's motion to hold nonparties Steven Katzman and Bienert, Miller & Katzman PLC (BMK) in civil contempt for willful neglect of restraining notices served on respondents Bergstein and Graybox, ordered Katzman and BMK to pay petitioner's attorneys' fees in connection with the motion, ordered Katzman to attach a copy of the May 10, 2018 (the order) order to all motions for pro hac vice admission in New York for the next five years and to notify the court in a related California action of the order, and denied petitioner's request for monetary sanctions in the amount of funds paid in violation of the restraining notices, unanimously modified, on the law, to vacate so much of the order as directed Katzman to attach a copy of the order to all motions for pro hac vice admission in New York for the next five years, and otherwise affirmed, without costs. Appeal from order, same court and Justice, entered April 20, 2018, which directed Katzman to disclose "if, when and how" he became aware of the restraining notices, unanimously dismissed, without costs, as taken from a nonappealable order.

The motion court providently exercised its discretion in finding that Katzman was sufficiently aware of the restraining notices to be held, along with his firm, in civil contempt for wilful neglect of the notices (see Kanbar v. Quad Cinema Corp., 151 Misc.2d 439, 441, 581 N.Y.S.2d 260 [App. Term, 1st Dept. 1991], affd as modified 195 A.D.2d 412, 600 N.Y.S.2d 702 [1st Dept. 1993] ; see also Security Trust Co. of Rochester v. Magar Homes, 92 A.D.2d 714, 715, 461 N.Y.S.2d 103 [4th Dept. 1983] ["In order to satisfy due process requirements, a sanction for violation of CPLR 5222 may be imposed only after proof of knowledge, actual or constructive, of the restraining notice"] ). CPLR 5251 provides contempt as a remedy for disobedience of a restraining notice, whereas the procedure for the contempt punishment, is not supplied by the CPLR, but by Judiciary Law § 753 (see Richard C. Reilly, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5251:1).

Katzman admitted that he received and reviewed copies of the notices, which were emailed to him 10 minutes after they were received by co-counsel Sills Cummis & Gross P.C., on July 21, 2017. Although the notices did not specify the settlement proceeds that were placed in BMK's escrow account, Katzman was sufficiently aware that Bergstein and Graybox "directly derived the benefits" of the transfer of those funds and thus had "sufficient interest in the funds ... that the restraining notice applied to them" ( Matter of Two Sams Assoc., LLC v. Schaeffer & Krongold LLP, 2006 N.Y. Slip Op. 30848[U], *2, 2006 WL 8209668, at *6, [Sup. Ct., N.Y. County 2006] ).

Further, "[a] restraining notice may be employed against contingent property interests, including trusts that are managed by independent trustees with full control over disbursements to the judgment debtor" ( Amtrust N. Am., Inc. v. Preferred Contrs. Ins. Co. Risk Retention Group, LLC, 2016 WL 6208288, *6, 2016 U.S. Dist LEXIS 145705 [S.D.N.Y. 2016] ). Katzman and BMK cite no authority in support of their contention that the California action has a superior interest in the settlement proceeds.

The court appropriately limited the contempt sanction to petitioner's attorneys' fees (see e.g. 1319 Third Ave. Realty Corp. v. Chateaubriant Rest. Dev. Co., LLC, 57 A.D.3d 340, 341, 870 N.Y.S.2d 249 [1st Dept. 2008] ). We reject Katzman's contention that the court impermissibly engaged in attorney discipline by ordering him to give notification of the contempt order to the California court presiding over the aforementioned related action pending in that state. However, while we understand the court's concern in directing Katzman to attach a copy of the contempt order to any motion for his pro hac vice admission that may be made for the next five years (see Code of Judicial Conduct, Canon 1 [ 22 NYCRR § 100.1 ] ["A Judge Shall Uphold the Integrity and Independence of the Judiciary"] ), whether to require such action is a matter of attorney discipline committed to the Attorney Grievance Committee of each department of the Appellate Division (see Matter of Erdheim [Selkowe], 51 A.D.2d 705, 380 N.Y.S.2d 20 [1st Dept. 1976] ). Accordingly, we modify the order under review to delete that requirement. The April 20, 2018 order is not appealable as of right, and Katzman and BMK did not seek permission to appeal (see CPLR 5701[a], [c] ; Sommer v. Kaufman, 41 A.D.2d 520, 339 N.Y.S.2d 997 [1st Dept. 1973] ).


Summaries of

Wimbledon Fin. Master Fund, Ltd. v. Bergstein

Supreme Court, Appellate Division, First Department, New York.
Jun 4, 2019
173 A.D.3d 401 (N.Y. App. Div. 2019)
Case details for

Wimbledon Fin. Master Fund, Ltd. v. Bergstein

Case Details

Full title:In re Wimbledon Financing Master Fund, Ltd.…

Court:Supreme Court, Appellate Division, First Department, New York.

Date published: Jun 4, 2019

Citations

173 A.D.3d 401 (N.Y. App. Div. 2019)
103 N.Y.S.3d 378
2019 N.Y. Slip Op. 4320

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