Opinion
F-XXXX-09/18V
06-06-2019
Matter of D.T. v. P.B.
Thomas R. Babilon, Esq., of counsel to the Hiscock Legal Aid Society, Syracuse, New York for the Respondent; D.T., Pro Se Petitioner
Thomas R. Babilon, Esq., of counsel to the Hiscock Legal Aid Society, Syracuse, New York for the Respondent; D.T., Pro Se Petitioner Michael L. Hanuszczak, J.
On April 16, 2019, the attorney for P.B. (hereinafter referred to as 'Respondent') filed a "Notice of Motion to Vacate a Restraining Order" with affirmations in support of the relief being requested. An Affidavit of Service was filed with the Court, indicating appropriate service of the motion on D.T. (hereinafter referred to as 'Petitioner'). The motion seeks to vacate the Restraining Order that was issued by this Court on March 27, 2019, at the request of the Petitioner, that restrained the Respondent from "taking any action to receive disbursed funds or to hypothecate any funds due to him from General Motors LLC" (hereinafter referred to as 'General Motors') and that "should any funds be disbursed, they would be held in escrow by Respondent's counsel."
Counsel first asserts that the Petitioner should have commenced her request as a special proceeding and that the Respondent had not been given any notice prior to the March 27, 2019 appearance. Counsel further asserts that §454 of the Family Court Act does not provide the Court with the authority to restrain the funds due the Respondent. Specifically, the attorney for the Respondent claims that §454 of the Family Court Act is only applicable when "a respondent is brought before the Court for failure to obey any lawful order of support" (Family Ct Act § 454). Furthermore, counsel claims that a proceeding to enforce a money judgment cannot be heard in Family Court but must be filed in Supreme Court, or County Court when available, pursuant to NY CPLR § 5221.
The Court heard additional oral argument on the Respondent's motion to vacate on May 22, 2019, and June 6, 2019. Respondent's counsel argued that Family Court Act Section 457 was inapplicable as there must be "tangible property" for sequestration to occur and also that the funds in question were not located in New York State. Respondent also argued that enforcement of a Family Court judgement must be filed in Supreme Court and a restraining order is not an available option.
The pro se Petitioner opposed Respondent's motion and argued that this Court has the jurisdiction and the authority to issue a restraining order on said funds.
BACKGROUND
On September 14, 2018, the Support Magistrate found that the Respondent willfully violated the underlying order of support based upon the requisite prima facie evidence that Respondent had willfully failed to provide child support to the Petitioner. The matter was subsequently referred to this Court in accordance with Section 439-a of the Family Court Act. The Respondent filed an objection to the Support Magistrate's decision on November 20, 2018, which was denied by this Court on January 24, 2019 (D.T. v P.B., 62 Misc 3d 1214(A) [2019]). On January 28, 2019, this Court confirmed the willful finding of the Support Magistrate and ordered a Pre-Sentence Report be prepared by the Onondaga County Probation Department. The Probation Department notified the Court by letter dated March 21, 2019, that they were unable to complete the Pre-Sentencing Report as the Respondent had failed to attend the scheduled interview in Syracuse and had relocated to Florida, where he currently resides. On March 27, 2019, the Petitioner requested that this Court prohibit the Respondent from transferring or disbursing funds possibly available to him from a bankruptcy proceeding involving General Motors and that said funds be held in escrow by Respondent's counsel. The Onondaga County Office of Child Support Enforcement provided a certified report indicating that the child support arrears totaled $122,064.76 as of September 17, 2018. A subsequent report reflected that the Respondent had arrears totaling $136,796.96 as of April 23, 2019. This Court executed the Restraining Order on April 1, 2019.
On May 22, 2019, the return date for the Respondent's motion to vacate the restraining order, the Petitioner provided documentation concerning the bankruptcy proceeding. This documentation indicated that the Respondent, who had previously operated a General Motors dealership, had executed a "wind-down" agreement with General Motors that would have terminated Respondent's automotive dealership no later than October 31, 2010. The agreement provided that after termination, and for so long as the Respondent had complied with the terms set forth in the agreement, he would receive funds in the amount of $128,163.00. The Respondent informed General Motors in March of 2010 that he no longer wanted to participate in the wind-down agreement, but rather requested reinstatement as a car dealer. Both parties subsequently executed a Letter of Intent that had indicated dealership reinstatement as the goal. General Motors provided the Respondent with conditions with which the dealership could be reinstated and provided a sixty-day window to comply. General Motors informed the Respondent in a letter dated July 16, 2010, that due to the Respondent not complying with the Letter of Intent, the terms of the wind-down agreement would continue to govern the termination of the auto dealership.
According to the documentation supplied by the Petitioner, the Respondent's wind-down agreement concluded on October 31, 2010, and the Respondent was informed of the termination by letter dated November 3, 2010. The Respondent was owed a remaining balance of $96,122.25 after an initial payment of $32,040.75. As of this date, the remaining balance due from the wind-down agreement has not yet been disbursed due to the Respondent's failure to comply with the terms of the agreement.
Upon review of the affirmations submitted and at the conclusion of the oral arguments on June 6, 2019, the Court denied the Respondent's motion to vacate the Restraining Order and stated that a written decision regarding the motion would be issued.
The Court also issued a warrant of arrest for the Respondent on that date due to his non-appearance before the Court in order to be sentenced. STANDARD OF LAW — JURISDICTION
Family Court Act Section 457, states that:
"If an order of support is made under this article and the respondent has failed to obey it and either leaves or threatens to leave the state, the court on application may issue an
order of sequestration of his property within the state, providing that such property may be taken, sequestered and applied in like manner as is provided in section four hundred twenty-nine".
Article 4 of the Family Court Act provides a variety of remedies to ensure compliance with an order of support. Such remedies may include entering a money judgment, deducting income, suspending driving privileges and various other forms of relief. Section 454 specifically allows for sequestration as a remedy (Family Ct Act § 454(2)(d)).
Prior to a sequestration order taking effect, the following conditions must be met: First, the Respondent must have failed to obey an order of support. It is not necessary for a willful violation to be found prior to an order of sequestration, only that there was prima facie proof that the Respondent had failed to obey a lawful order (Badenhop v Badenhop, 84 AD2d 773, 773 [1981]). Second, the Respondent must have either threatened to or actually have left the state. Finally, there must be an amount of arrears set before sequestration can be ordered (Lombardo v Lombardo, 37 AD2d 993, 994 [1971]). Family Court Act Section 429 provides additional authority for the Court to order sequestration. The pertinent part of this section provides:
"Where in a proceeding under this article it appears to the court that the respondent is not within the state, or cannot be found therein, or is concealing himself or herself therein, so that process cannot be personally served upon the respondent, the court may at any time and from time to time make any order or orders without notice directing the sequestration of his or her property, both real and personal and whether tangible or intangible, within the state, and may appoint a receiver thereof, or by injunction or otherwise take the same into its possession and control."
Family Court Act Section 457 references Section 429 as the procedure through which the Respondent's property may be sequestered. Family Court Act § 429 also sets forth the various purposes for which sequestration may be applicable, including but not limited to the education of the children, support of the spouse, or paying for Petitioner's counsel fees (Maneri v Maneri, 54 AD2d 716, 716 [1976]). The types of property that courts have sequestered have been tangible property such as real estate as well as intangible property such as funds in a bank account (Zagoreos v Zagoreos, 81 AD2d 890, 891 [1991]). Other intangible properties that have been sequestered have included property such as promissory notes (Hunter v Hunter, 41 AD2d 772 [1973]).
FINDINGS BY THE COURT
Authority Under Family Court Act Section 454
Family Court Act Section 454 specifically includes sequestration as a remedy after a willful violation of support is found (Family Court Act § 454(2)(d)). Here, the Court issued a restraining order as the mechanism to sequester Respondent's interest in any funds realized from the wind-down agreement with General Motors. On January 28, 2019, this Court confirmed the willful violation of support previously made by the Support Magistrate. The Respondent's contention that only County Court or Supreme Court has the authority to issue a restraining order is similarly unavailing, as § 457 and § 429 of the Family Court Act authorize sequestration as a remedy.
Order of Sequestration on Failure to Obey Support Order-Family Court Act Section 457
This Court's confirmation of the Support Magistrate's finding on January 28, 2019 of a willful violation of child support fulfills the first condition needed for sequestration of Respondent's property. With respect to the second prerequisite, that the Respondent must have left the state, the Probation Department notified this Court in a letter dated March 21, 2019, that the Respondent no longer resided in New York, but relocated to Florida. Finally, The Onondaga County Office of Child Support Enforcement provided reports indicating that child support arrears totaled $122,064.76 as of September 17, 2018 and a subsequent summary reflected that the Respondent had arrears totaling $136,796.96 as of April 23, 2019.
Sequestration of Respondent's Property-Family Court Act Section 429
The Respondent additionally argued that any funds realized from the wind-down agreement are intangible and therefore may not be sequestered. Property under Family Court Act Section 429 is defined as both tangible, intangible, real or personal. While the Respondent asserts that the property must be tangible, his argument is contrary to the plain language of the statute (Zagoreos v Zagoreos, 81 AD2d 890, 891 [1981]; Family Ct Act § 429).
Property outside the state of New York may be subjected to sequestration. In Alexander v Alexander 46 Misc 2d 523 [1965], the Court held that the Petitioner could reach Respondent's interest in both his pension and stock bonus plan through sequestration. The Respondent resided in Pennsylvania and his employer and the trustee of his pension were foreign corporations. However, the company offices were located in New York and thus Respondent's pension and stock bonus could be sequestered pursuant to New York Domestic Relations Law Section 233 (Id. at 524). The language of New York Domestic Relations Law Section 233 and Family Court Act Section 429 are analogous and this Court finds there is no legal basis precluding the Court from granting sequestration pursuant to Section 429 of the Family Court Act.
Although General Motors is headquartered in Michigan, it has offices located in New York. Secondly, the Chapter 11 Bankruptcy petition filed by General Motors which includes the Respondent's wind-down agreement, was filed in the Southern District of New York. The proceeding involving the motion to enforce the wind-down agreement between the Respondent and General Motors also took place in the Southern District of New York. Furthermore, the Respondent's automotive business which had been terminated as part of the wind-down agreement operated in New York State. Therefore, the Court finds there are significant contacts to New York State for it to sequester any funds that may be realized from the wind-down agreement between the Respondent and General Motors.
Fugitive Disentitlement Doctrine
The Court further finds that the fugitive disentitlement doctrine is applicable to this proceeding and thus is an additional basis upon which to dismiss the Respondent's motion to vacate. The fugitive disentitlement doctrine requires that there exist "a nexus between the appellant's fugitive status and the appellate proceedings" and that the appellant "frustrates enforcement of the civil judgment" (Allain v Oriola-Allain, 123 AD3d 138, 143 [2014]; Wechsler v Wechsler, 45 AD3d 470, 474 [2007]; Skiff-Murray v Murray, 305 AD2d 751, 753 [2003]). Furthermore, it is appropriate to apply the doctrine when "the appellant has willfully made himself or herself unavailable to obey a court's mandate in the event of affirmance" (see id. at 146, 118 AD3d). This Court has applied the fugitive disentitlement doctrine where a Respondent was found to have been in willful violation of a support order and a warrant was issued for his arrest (T.S. v E.L., 49 Misc 3d 542 [2015], affd sub nom. Shehatou v Louka, 118 AD3d 1357 [2014]).
The Respondent was present before this Court for the confirmation of the willful violation on January 28, 2019. Since then, the Respondent has not been present for proceedings on March 27, 2019, May 5, 2019, and June 6, 2019. This Court further notes that in a letter dated March 21, 2019, the Probation Department was unable to complete a Pre-Sentence Report as the Respondent moved to Florida, where he currently resides. This Court then issued a warrant for the Respondent's arrest on June 6, 2019 for having failed to appear for sentencing.
Conclusion
Family Court Act Sections 454, 457, and 429 provide the legal authority for this Court to sequester any funds the Respondent may receive or has received. The Court finds that any disbursement from the wind-down agreement is properly subject to sequestration as there are sufficient contacts in New York. The Court further finds that Respondent's motion to vacate should also be dismissed pursuant to the fugitive disentitlement doctrine. This Court has reviewed the additional claims made by the Respondent and finds that they are without merit in view of the Court's findings.
This Court further notes that this decision is limited to funds that are, or could be available, as a result of the wind-down agreement between General Motors and the Respondent.
NOW, after hearing oral arguments both from counsel for the Respondent and the pro se Petitioner and upon due deliberation of the submitted motion and responses before it; it is hereby
ORDERED, that the Respondent's motion to vacate the restraining order is denied and that the motion filed herein is dismissed;
The warrant review date for the warrant issued is scheduled for September 4, 2019 at 9:30 A.M. in Part 1 of Onondaga County Family Court.