Opinion
Index No. 159582/2021
05-04-2023
NWJ Judgments LLC and MLF3 NWJ LLC, Petitioners, v. Jekogian Family Trust, BBJ Family Irrevocable Trust, Nickolas W. Jekogian III, Heather Jekogian, and Nickolas Jekogian, Jr., Respondents.
Zeichner Ellman & Krause LLP, New York, NY (Nathan Schwed and Jantra Van Roy of counsel), for petitioners. David C. Nevins, P.C., Jericho, NY (David C. Nevins of counsel), for respondents. Bernard D'Orazio & Associates, P.C., New York, NY (Bernard D'Orazio of counsel), for nonparty Gregg E. Bienstock.
Unpublished Opinion
Zeichner Ellman & Krause LLP, New York, NY (Nathan Schwed and Jantra Van Roy of counsel), for petitioners.
David C. Nevins, P.C., Jericho, NY (David C. Nevins of counsel), for respondents.
Bernard D'Orazio & Associates, P.C., New York, NY (Bernard D'Orazio of counsel), for nonparty Gregg E. Bienstock.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 45 were read on this motion for AWARD OF POUNDAGE.
In this turnover proceeding, nonparty Gregg E. Bienstock, a New York City marshal, moves under CPLR 8012 (b) for an award of poundage fees and expenses (plus attorney fees) on recoveries obtained by petitioners-judgment creditors that followed levies by the marshal on assets of respondents-judgment debtors. The marshal's request for poundage of $259,525.25 and attorney fees is granted; the marshal's request for expenses is granted in part and denied in part. Petitioners and respondents shall each pay 50% of the poundage/fees awarded to the marshal.
BACKGROUND
In March 2021, petitioners, NWJ Judgments LLC and MLF3 NWJ LLC, obtained judgments in two related cases against the various Jekogian respondents. The judgments totaled approximately $4.7 million, plus 9% post-judgment interest under CPLR 5003. (See NYSCEF No. 30.)
Respondents are two trusts, the Jekogian Family Trust and the BBJ Family Irrevocable Trust; Nickolas W. Jekogian III, both individually and in trust-related capacities; and Heather Jekogian and Nickolas Jekogian, Jr., each in trust-related capacities. (See NYSCEF No. 1 at ¶¶ 5-9.)
On April 7, 2021, to enforce the judgments, petitioners' attorney delivered property executions to the marshal. In May 2021, the marshal levied on respondents' liquid funds and property interests to satisfy the MLF judgment; in June 2021, the marshal levied on those funds and property interests to satisfy the NWJ judgment. (See NYSCEF No. 25 at ¶ 8; NYSCEF Nos. 4, 5 [levies].) The marshal recovered $56,631.97 in liquid funds from his bank levies.
Between June 2021 and September 2021, respondents made four partial payments on the MLF3 judgment, totaling approximately $2.1 million. (See NYSCEF No. 30.) The payments were made directly to petitioner.
In October 2021, petitioners brought this turnover proceeding against respondents, seeking cash or assets sufficient to satisfy the outstanding balance on the two judgments. (See NYSCEF No. 1.) In November 2021, after bringing the turnover proceeding, petitioners informed the marshal of respondents' $2.1 million in payments made to petitioners. (See NYSCEF No. 40 at ¶ 7.)
While the turnover request was pending before the court, respondents made two further payments on the MLF3 judgment, again directly to petitioner, totaling approximately $1.97 million. (See NYSCEF No. 30.)
On August 4, 2022, this ourt issued an order on the turnover petition, directing the Jekogian Family Trust and its trustees to pay all outstanding amounts on the judgments within 30 days, or otherwise turn over their interests in various assets for purposes of execution sales sufficient to satisfy the judgments and the marshal's poundage, fees, and expenses. (See NWJ Judgments LLC v Jekogian Family Trust, 2022 NY Slip Op 50712[U], at *2-3 [Sup Ct, NY County Aug. 4, 2022].)
Following the court's order, respondents made two further payments directly to petitioners, on August 25, 2022 and September 14, 2022, totaling $1.12 million (all but $50,000 of which went to the NWJ judgment). Those two payments left approximately $2500 left on the MLF judgment, and did not leave any outstanding balance on the NWJ judgment. None of the payments made by respondent, however, included amounts to cover the marshal's poundage. Although petitioners acknowledged the receipt of payments on the judgments, petitioners refused to issue a satisfaction of judgments until respondents pay the poundage or unless the court declares that no poundage is due. (See NYSCEF No. 40 at ¶ 9.)
The marshal now moves under CPLR 8012 (b) for payment of $259,525.25 in poundage, plus interest, expenses, and attorney fees. Petitioners and respondents cross-move, each seeking to hold the other side liable for poundage, and the attorney's fees and costs. (See NYSCEF No. 34 and NYSCEF No. 39.) Petitioners also ask for permission to withhold satisfactions of the judgments until they have been reimbursed by the respondents for poundage payments to the marshal. (See NYSCEF No. 39 at 1.)
DISCUSSION
I. Whether the Marshal is Entitled to Poundage
Poundage is a commission in a form of a set percentage awarded to a marshal who recovers money "pursuant to a levy or execution of attachment." (CPLR 8012 [b]; s ee also Solow Mgt. Corp. v. Tanger, 10 N.Y.3d 326, 330 [2008] [holding that the provisions of CPLR 8012 [b] [1] apply to marshals, as well as sheriffs].
CPLR 8012 (b) (1) provides that to be entitled to an award of poundage fees, a marshal must actually collect or obtain money. Three exceptions, however, allow a poundage fee when the collection process was commenced but not completed. The first two exceptions are statutory; they apply when "a settlement is made after a levy by virtue of service of an execution" (CPLR 8012 [b] [2]); or when an "execution is vacated or set aside" (CPLR 8012 [b] [3]; see also Personeni v. Aquino, 6 N.Y.2d 35, 37-38 [1959]). A third, judicially created, exception "applies when there has been affirmative interference with the collection process, thus preventing a marshal from actually collecting the levied assets." (Solow, 10 N.Y.3d at 330; accord Nash v Port Auth. of New York & New Jersey, 192 A.D.3d 482, 485 [1st Dept 2021].)
Here, the marshal rests his claim to poundage on two grounds: (i) the parties settled after the marshal levied by service of an execution; and (ii) petitioners affirmatively interfered when they accepted payment directly from respondents. This court concludes that the marshal is entitled to poundage fees because that the parties affirmatively interfered with the collection process.
A. Settlement After a Levy
A CPLR 8012 (b) (2) post-levy settlement occurs when the judgment debtor pays the amount of the outstanding judgment directly to the judgment creditor. (See Kurtzman v Bergstol, 62 A.D.3d 757, 758 [2d Dept 2009] ["If payment by the debtor is made directly to the creditor after a sheriff levies, the payment constitutes a settlement, and the sheriff will be entitled to poundage."]; Cabrera v Hirth, 87 A.D.3d 844, 847 [1st Dept 2011] [holding that the marshal is entitled to poundage "where enforcement of the underlying judgment was settled with payment by the debtor defendants' insurance carriers directly to the creditor plaintiff after the Marshal had levied certain accounts"].)
Movant has established that he executed on respondents' assets on May 13, 2021, and June 22, 2021. (See NYSCEF Nos. 4, 5.) After those levies, respondents paid directly to petitioners just over $4 million. Following entry of this court's August 2022 order, respondents paid directly to petitioners a further $1.12 million. (See NYSCEF No. 26 at ¶ 7; NYSCEF No. 30.)
The marshal argues that these payments, which covered all but $2500 of the judgment amounts, constituted a settlement for purposes of CPLR 8012 (b) (2). (See NYSCEF No. 25 at 7.) This court is uncertain whether the marshal's argument is correct. The parties did not reach any written agreement resolving petitioner's claims and providing for payment. And the cases that have found payment of the judgment amount, standing alone, to constitute a settlement have most commonly involved a payment in full, rather than the kind of repeated, partial payments over an 18-month period made by respondents here. (See e.g. Nash, 192 A.D.3d 482 at 484; DePasquale v Estate of DePasquale, 89 A.D.3d 672, 673 [2d Dept 2011]; cf. Cabrera v Hirth, 87 A.D.3d at 846 [holding that a settlement had occurred when defendants' two insurers each paid their share of the full settlement amount over the course of a month].)
B. Interference with Collection
This court need not, however, definitively determine whether respondents' payments to petitioners constitute a settlement for purposes of CPLR 8012 (b) (2). The circumstances under which those payments occurred constitute an affirmative attempt by the parties to interfere with the marshal's collection process.
Respondents made, and petitioners accepted, eight payments over eighteen months to cover the amount of the judgments-none of which went through the marshal or set aside amounts to cover the marshal's poundage. The circumstances of these direct payments constituted affirmative interference with the marshal's collection process, as a result of which the marshal is entitled to poundage on the aggregate amount of the payments. (See Nash, 192 A.D.3d at 485-486; Cabrera, 87 A.D.3d 844, 848-849 [1st Dept 2011]; Alberton Developers, Inc. v All Trade Enterprises, Inc., 2013 NY Slip Op 30851[U], at *3 [Sup Ct, Queens County Mar. 19, 2013].)
Petitioners contend that responsibility for this interference-and thus for payment of the marshal's poundage-should be laid at the feet of respondents. But petitioner MLF3 chose in the summer and fall of 2021 to accept $2.1 million in payments directly from respondents (see NYSCEF No. 30), without setting aside any amounts for the marshal's poundage, or informing respondents that slightly higher payments would be required to account for poundage. And MLF3 did not even tell the marshal that these payments had been made until November 2021, after settlement negotiations had broken down. (See NYSCEF No. 40 at ¶ 7.) Nor did MLF3 take any steps to ensure that the marshal would receive poundage from the ensuing $1.97 million in payments that respondents made to it between November 2021 and June 2022. (See NYSCEF No. 30.) Indeed, petitioners do not contend that MLF3 notified the marshal of those payments when they were made, either.
Petitioners argue that they sought to preserve the marshal's right to poundage by (i) insisting in fall 2021 that a settlement agreement would have to include payment of poundage; and (ii) refusing in October 2022 and thereafter to issue satisfactions of the judgments until poundage was covered. (NYSCEF No. 40 at ¶¶ 6, 9, 16, 18.) But after settlement negotiations broke down, petitioners took no action to assure the marshal's poundage, either through demanding then that respondents pay poundage or asking this court to require payment of poundage. And, by its own account, petitioners insisted on payment of poundage as a condition of judgment satisfactions only after the last 20% of the judgments had been paid in compliance with this court's August 2022 order, not earlier.
This court's August 2022 order, although it did not expressly require poundage, did not expressly or impliedly foreclose poundage, either. (See NWJ Judgments LLC, 2022 NY Slip Op 50712[U], at *2-3.)
In these circumstances, this court concludes that both petitioners and respondents must pay a share of the marshal's poundage, not just respondents.
II. Determining the Appropriate Amount of Poundage
The marshal seeks a payment of poundage in the amount of $259,525.25 on recoveries obtained by petitioners-judgment creditors.
In the City of New York, a marshal is entitled to a poundage fee based on 5% of the sum collected (CPLR 8012 [b] [1]), or, in the case of a settlement, 5% of the judgment or the settlement amount, whichever is less (CPLR 8012 [b] [2]). If the marshal's collection of money from the judgment debtor is brought about by a levy through serving an execution-as distinct from a levy through serving an order of attachment-no limit exists on the amount on which poundage shall be computed. (Compare CPLR 8012 [b] [2] [levy by execution], with CPLR 8012 [b] [3] [levy by attachment].)
Here, the marshal levied by executions, and the total amounts paid following the executions is $5,190,505. Five percent of that aggregate amount is $259,525.25, as requested by the marshal. (That some of the total amount of the two judgments was paid after this court ordered respondents to make payments does not oust the marshal's right to poundage on that increment of the total. See Morris v Morris, 43 Misc.2d 854, 855 [Sup Ct, NY County 1964].) The marshal is also entitled to interest on that poundage fee (as he requests, see NYSCEF No. 24). Interest runs from the date of the last payment by respondents, August 25, 2022 (see NYSCEF No. 30).
The marshal seeks approximately $6,800 in expenses. (See NYSCEF No. 24). The marshal's statutory entitlement to poundage and expenses must be strictly construed (Famous Pizza v Metss Kosher Pizza, 119 A.D.2d 721 [2d Dept. 1986]); and only some of the claimed expenses are provided for by CPLR 8012. The marshal's expenses request is granted only with respect to the claimed $1,050 in mileage fees, and otherwise denied.
The marshal also seeks an award of attorney fees. He is entitled to those fees under CPLR 8012 (b) (5). The amount of the fees shall be determined by a motion made on notice.
Finally, the schedule of payments made by respondents to petitioners appears to indicate that a balance of $2,543 remains outstanding on the MLF3 judgment. That amount, if it has not been paid already, must be paid by respondents to petitioners before respondents are entitled to a satisfaction of the MLF3 judgment. But the marshal has not requested poundage on that small remaining sum, so no further poundage will be awarded based on payment of the $2,543. (See NYSCEF No. 25 at ¶¶ 2, 13, 15; NYSCEF No. 30.)
Accordingly, it is
ORDERED that the marshal's motion for an award for poundage is granted in part and denied in part, and the marshal is awarded $259,525.25 in poundage, plus interest on that sum running at the statutory rate from August 25, 2022, plus $1,050 in expenses, with petitioners and respondents each to pay one-half of the total award; and it is further
ORDERED that upon respondents' payment of their share of the marshal's poundage award, and payment to petitioners of any remaining balance on the MLF3 judgment, petitioners shall within 14 days thereafter issue to respondents satisfactions of the judgments; and it is further
ORDERED that the marshal serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly; and it is further
ORDERED that the marshal may enter a supplemental judgment for the amount of his reasonable attorney fees, one-half of those fees to be paid by petitioners and one-half by respondents, with the amount of those fees to be determined by motion on notice.