Opinion
Index No. 653436/2022 Motion Seq. No. 006
01-05-2024
DB AURARIA LLC, Plaintiff, v. PATRICK NELSON, NELSON PARTNERS, LLC Defendant.
Unpublished Opinion
PRESENT: HON. MELISSA A. CRANE JUSTICE
DECISION + ORDER ON MOTION
Melissa A. Crane, Judge
The following e-filed documents, listed by NYSCEF document number (Motion 006) 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141 were read on this motion to/for CONTEMPT_.
Upon the foregoing documents, it is
Plaintiff holds a judgment against defendants in excess of $57 million dollars. Plaintiff has moved for contempt contending that defendants transferred money in violation of restraining notices plaintiff served previously.
Today at the last minute, one business day before the oral argument on this motion, defendants asked for an adjournment of this motion for contempt because they are allegedly switching attorneys. Given the suspicious timing, this is an obvious delay tactic. However, because the record alone is sufficient to decide this motion, the court simply took the motion on submission and renders the following decision.
On July 18, 2023, defendants were served with a restraining notice. However, defendants' bank records have revealed that defendants continued to make transfers after that date in violation of the express terms of the restraining notices.
Nelson Partners certainly made transfers. For example, in July 2023, after the Restraining Notices were served, Nelson Partners transferred out over $210,000 to third parties (see Affirmation of Jonathan W. Jordan ["Jordan Aff."], Exs. F, J [EDOCS 95, 101, and 105]). In August 2023, Nelson Partners made: (a) payments totaling over $145,350 to Mr. Nelson's personal Chase Bank credit card, (b) wire transfers to Nelson Partners subsidiaries totaling $219,000, and (c) a $150,000 payment to Mr. Nelson's personal checking account (Jordan Aff, Ex. G [EDOC 102], J [EDOC 105]).
In September 2023, Nelson Partners withdrew $791,000. Where this money ended up is unclear from the bank statement (Jordan Aff. Ex. H EDOC 103), but it appears to have been transferred for the benefit of Mr. Nelson himself. Mr. Nelson, in his November 10, 2023 deposition, testified that he made this $791,000 transfer to pay off a debt in connection with his new $8 million bid on a piece of property (Jordan Aff, Ex. M, EDOC 108, p. 434). According to Mr. Nelson, he had Nelson Partners bid $8 million on the piece of property, because he "had somebody else who was willing to pay about 7.2" and they "ended up buying the property for the difference of my 791 minus - 8 million minus the 791."
In October 2023, Nelson Partners transferred $32,589 to pay "Loan NP to Daniel Pay Mortgage" which apparently is a mortgage on rental vacation property one of its affiliates owns (Jordan Aff, Exs. I [EDOC 104], J [EDOC 105]).
As for Mr. Nelson himself, in August 2023, the month following service of the restraining notice, he transferred at least $60,584 from one personal bank account to pay a $17,000-a-month mortgage on a $5.5 million home and personal credit card payments totaling $23,616.29. In September 2023, he transferred approximately $29,628.96 to pay credit cards, unknown Venmo and check recipients, and a credit card company. He made another $37,720.68 in payments from his personal account in October 2023 for a total of $127,933.83 after being served with the Restraining Notices. These payments included over $61,129 in mortgage payments; $36,800 in credit card payments; $960 payments for a golf trip; a $1,000 loan to a friend and $8,000 to a religious institution. (Jordan Aff., Exs. M [EDOC 108] at 425-26; O [EDOC 110]; P [EDOC 111]). In total, defendants made more than $2.72 million in transfers in violation of the Restraining Notices.
Defendants do not contest that these transfers occurred (see Affidavit of Patrick Nelson, sworn to December 15, 2023 [EDOC 128]). In their defense, defendants claim they are just trying to run a business, that otherwise they would be forced to declare bankruptcy, and that there would then be less money to pay creditors. Nelson also claims he spent his own money renovating the Colorado Auria property, that serves as collateral for plaintiffs loan, such that the collateral was actually enhanced and thus the transfer in violation of the restraining notice benefitted plaintiff in the end.
These arguments are irrelevant. Defendants have not raised a question of fact about whether they transferred restrained funds to pay other unsecured creditors instead of plaintiff. They did. Moreover, the documents also reflect that not all transfers were business in nature. The record reflects that defendants were well aware of the restraining notices. Thus, plaintiff has demonstrated that defendants refused to obey or willfully neglected the restraining notices (Kanbar v Quad Cinema Corp., 195 A.D.2d 412, 414 [1st Dept 1993] ["under CPLR 5251, a finding of contempt may be entered for the' [r]efusal or willful neglect' to obey a subpoena or a restraining order issued pursuant to the provisions of CPLR article 52 providing for the enforcement of money judgments"]).
Thus, defendants are in civil contempt based on the $2,723,050.35 transferred that violated the restraining notices and could have been used to help satisfy the judgment. The purpose of civil contempt is to induce compliance and remedy violations (McCormick v Axelrod, 59 N.Y.2d 574, 583[1983]). Plaintiff was prejudiced by losing the ability to collect these funds in partial satisfaction of the judgment. To remedy his contempt, defendants shall pay $2,723,050.35 to plaintiff (see Matter of Bravado Int'l. Group Merck Servs., Inc. v United States Tennis Assn. Inc., 179 A.D.3d 914, 916 [2d Dept 2020]). Defendants are also liable for plaintiffs reasonable attorneys' fees.
The branch of this motion seeking injunctive relief to enjoin further transfers is likewise granted, as the plaintiff has established, by clear and convincing evidence: (1) a likelihood of success on the merits, (2) irreparable injury if an injunction is not granted, and (3) a balance of equities in its favor (see CPLR 6301). The injunction shall remain in effect pending the defendants' satisfaction of the entire judgment entered against them.
The court has considered the parties' remaining contentions and finds them unavailing.
Accordingly, it is
ORDERED THAT Judgment Debtors PATRICK NELSON and NELSON PARTNERS, LLC are to comply immediately with the Restraining Notices, and further transfers of property from any accounts owned by Judgment Debtors PATRICK NELSON and/or NELSON PARTNERS, LLC, except to plaintiff to purge the contempt, are hereby enjoined; and it is further
ORDERED THAT plaintiffs motion to hold Judgment Debtors PATRICK NELSON and NELSON PARTNERS, LLC in civil contempt is GRANTED, the total amount necessary to purge that contempt is $2,723,050.35; and it is further
ORDERED THAT plaintiff shall serve a copy of this order with notice of entry upon defendants and Judgment Debtors PATRICK NELSON and NELSON PARTNERS, LLC, by efiling and per the CPLR within 10 days of the e-filed date of this order; and it is further
ORDERED THAT, unless Judgment Debtors PATRICK NELSON and NELSON PARTNERS, LLC purge themselves of this contempt within 30 days of service by paying $2,723,050.35, they shall be fined $1,000 per day and plaintiff shall be free to renew its request for the issuance of a warrant of arrest; and it is further
ORDERED THAT the parties are to appear for a conference at 10:00 a.m. on February 5, 2024 in Courtroom 248 at 60 Centre Street, New York, NY 10007. The parties must apprize court as to whether defendants have purged the contempt at this in-person conference; and it is further
ORDERED THAT plaintiffs fee application in connection with this motion shall be filed by January 22, 2024, objections to plaintiffs fee application shall be filed by February 20, 2024, and plaintiff shall notify the court by email, cc'ing all counsel, when its fee application is fully submitted.