Opinion
507156/2013
11-15-2016
Brett Wynkoop and KATHLEEN KESKE, Plaintiff(s), v. 622A President Street Owners Corp., KYLE TAYLOR, HILARY TAYLOR AND RAJEEV Subramnyam, Defendant(s). KYLE TAYLOR, and RAJEEV Subramnyam, suing in the right of 622A PRESIDENT STREET OWNERS CORP. Counterclaim-Plaintiff(s), BRETT WYNKOOP and KATHLEEN KESKE, and JAMES BORLAND Counterclaim-Defendant(s), and 622A PRESIDENT STREET OWNERS CORP.
Attorney for Plaintiff Anthony Hilton, Esq. 141 East 89th Street New York, New York 10128 (646) 573-4131 Attorney for Defendants Taylor and Subramanyam Mandel Bhandari 80 Pine Street, 33rd Floor New York, New York 10005 (212) 269-5600 Attorney for Defendant 622A President Street Owners Corp. Fromartz Law Offices 32 Court Street Brooklyn, New York 11201
Attorney for Plaintiff Anthony Hilton, Esq. 141 East 89th Street New York, New York 10128 (646) 573-4131 Attorney for Defendants Taylor and Subramanyam Mandel Bhandari 80 Pine Street, 33rd Floor New York, New York 10005 (212) 269-5600 Attorney for Defendant 622A President Street Owners Corp. Fromartz Law Offices 32 Court Street Brooklyn, New York 11201 Francois A. Rivera, J.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the joint motion of the defendants Kyle Taylor (hereinafter K. Taylor), Hilary Taylor (hereinafter H. Taylor) and Raveev Subramanyam (hereinafter Subramanyam), filed on December 23, 2015, under motion sequence number fifteen for an order pursuant to Judiciary Law 753 to punish Brett Wynkoop (hereinafter Wynkoop), and Kathleen Keske (hereinafter Keske) for civil contempt (hereinafter the contempt motion).
Movants have withdrawn the application as against Keske.
BACKGROUND
The background is set forth in a decision and order dated February 11, 2016, by this Court entitled Wynkoop v 622a President Street Owners Corp, 2016 WL 540691 (N.Y.Sup. 2016). The gravamen of the action is that the parties who are shareholders in a cooperative apartment allege improper governance of the cooperative.
The background and underlying dispute is also elaborated in an unpublished decision dated November 7, 2014 issued by the Hon. David I. Schmidt.
At issue for the instant decision and order is the plaintiff's compliance with an order in the instant action that is dated April 13, 2015 by Justice David I. Schmidt (hereinafter the April 13, 2015 order) which ordered, among other things, Wynkoop to add a defendant as a signatory to 622A President Street Owners Corp.'s (hereinafter 622A) corporate account and to immediately pay Subramyan $10,000.00.
By order dated July 7, 2015, the plaintiff's opposition to the contempt motion was disregarded due to the non-appearance of the plaintiffs. By order dated September 15, 2015, a hearing to determine the contempt motion was scheduled and this Court held that the automatic stay provision of CPLR 5519 was inapplicable to the instant action. A hearing was held in Part 52 on November 17, 2015 and January 12, 2016 to determine if Wynkoop was in contempt of the April 13, 2015 order. Subramanyam and Wynkoop testified. The parties were afforded an opportunity to submit proposed findings of fact and did so.
FINDINGS OF FACT
The April 13, 2015 order required the plaintiff to immediately add one of the defendants as a co-signatory of the 622A corporate bank account. The order also required that "Wynkoop and/or 622A" to refund $10,000.00 to Subramanyam. The $10,000.00 payment was to be refunded "immediately" from the 622A corporate account and if there was any balance it was to be paid from the funds being held on deposit by the clerk of the court under index number 6548/2012.
The additional signatory was to be chosen by the defendants.
Subramanyam was the first witness and testified to numerous conflicts between the parties. The relevant testimony includes the following salient facts. He owns a certain percentage of shares in the corporate defendant 622A. He has not been paid the $10,000.00 as of the time of the hearing. He was not added as a signatory to 622A's account. His testimony was silent as to whether he had notified Wynkoop as to the which defendant would be added to 622A's account. However on November 14, 2015 Taylor was added as a signatory.
Wynkoop testified to the following salient facts. He was also aware of the April 13, 2015 order and the requirements set forth therein. The defendants did not notify him which defendant they chose to be the additional signatory. However, he attempted to comply with the order by asking the bank employees for a form to add a signatory. He met with the defendants on November 14, 2015, three days before the contempt hearing at TD bank and Taylor was added as a signatory.
In response to Wynkoop's inquiries he was informed that the proper procedure for adding an additional signatory was for the signatory and the proposed additional signatory to appear in the bank together and in the presence of the bank employee execute certain documents.
Wynkoop testified to the following regarding the payment of $10,000.00 to Subramnyam. After the order was issued he was traveling in and out of New York state for business unrelated to the instant action. It was difficult for him to issue checks during that time, although he did issue a check which was related to the litigation. On May 10, 2015 the defendants filed and served a notice of appeal of the April 13, 2015 order. On May 11, 2015 the plaintiffs filed and served a cross appeal of the April 13, 2015 order. Antony Hilton, Esq., counsel for Wynkoop, advised him that due to the appeal being filed an automatic stay pursuant to CPLR 5519 was applicable to the action. Counsel further advised him that he should not pay the $10,000.00 to Subramnyam but rather to the Clerk of the Court as an undertaking. Wynkoop attempted to deposit a $10,000.00 check to Commissioner Nancy T. Sunshine, the Clerk of Kings County and Commissioner of Jurors. Commissioner Sunshine refused to accept the check as there was no court order directing such action. Accordingly, on June 2, 2015, he deposited an undertaking of $10,000.00 with the Kings County Clerk's Office pursuant to CPLR 5519.
LAW AND APPLICATION
"A motion to punish a party for civil contempt is addressed to the sound discretion of the court, and the movant bears the burden of proving the contempt by clear and convincing evidence" (Matter of Hughes v Kameneva, 96 AD3d 845, 846 [2d Dept 2012]; see Educational Reading Aids Corp. v Young, 175 AD2d 152 [2d Dept 1991]) (emphasis added). In Matter of McCormick v Axelrod (59 NY2d 574), the Court of Appeals held that the civil contempt must be proved "with reasonable certainty" (Id. at 583). The "reasonable certainty" standard requires "a quantum of proof... greater than a preponderance of evidence but less than proof beyond a reasonable doubt. .. akin to the clear and convincing evidence standard" (Kihl v Pfeffer, 47 AD3d 154, 163-164 [2d Dept 2007]).
In addressing the elements of civil contempt which must be proved by clear and convincing evidence, a Court must be guided by the statutory source of judicial authority to punish for contempt, set forth in Judiciary Law §750, et seq. The section applicable to civil contempt permits a court "to punish, by fine and imprisonment, or either, a neglect or violation of duty, or other misconduct, by which a right or remedy of a party to a civil action or special proceeding, pending in the court may be defeated, impaired, impeded, or prejudiced," in various circumstances including, as relevant here, "any other disobedience to a lawful mandate of the court" (Judiciary Law § 753[A][3]).
Notably, for civil contempt, there must be a finding that a "right or remedy of a party to a civil action or special proceeding, pending in the court may be defeated, impaired, impeded, or prejudiced" (Judiciary Law § 753[A]). "To prevail on a motion to punish a party for civil contempt, the movant must demonstrate that the party charged with contempt willfully violated a clear and unequivocal mandate of a court's order, with knowledge of that order's terms, thereby prejudicing the movant's rights" (Sitiss v Baron, 107 AJD3d 690, 690-691 [emphasis added; internal quotation marks omitted]; see e.g. GMCK Realty, LLC v Mihalalos, 95 AD3d 947, 949 [2d Dept 2012]; Collins v Telcoa Inti. Corp., 86 AD3d 549, 549 [2d Dept 2011] [the violation must be "willful and deliberate"]; McGrath v McGrath, 85 AD3d 742 [2d Dept 2011]; Rubin v Rubin 78 AD3d 812, 813 [2d Dept 2010]; Katz v Katz, 73 AD3d 1134, 1134 [2d Dept 2010] ["the movant must establish that the alleged violation was willful"]; see also Town Bd. of Town of Southhampton v R.K.B. Realty, LLC, 91 AD3d at 629 [2d Dept 2012][noting that the difference between civil and criminal contempt is "the degree of willfulness of the subject conduct" (internal quotation marks omitted)]). The element of prejudice to a party's rights is essential to civil contempt which aims to vindicate the rights of a private party to litigation (see McCain v Dinkins, 84 NY2d2 16, 226; Town Bd. of Town of Southampton, 91 AD3d 628; Dalessio v Kressler, 6 AD3d 57,65-66 [2d Dept 2004]).
To find a party in civil contempt of court pursuant to Judiciary Law § 753, the applicant must demonstrate, by clear and convincing evidence, (1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct (Savas v Bruen, 139 AD3d 736 [2nd Dept 2016][internal citations omitted]). Once the movant establishes a knowing failure to comply with a clear and unequivocal mandate, the burden shifts to the alleged contemnor to refute the movant's showing, or to offer evidence of a defense, such as an inability to comply with the order (Id.) A hearing is required if the papers in opposition raise a factual dispute as to the elements of civil contempt, or the existence of a defense (Savas v Bruen, 139 AD3d 736 [2nd Dept 2016][internal citations omitted]). CPLR 5519
Wynkoop testified that he was not in contempt of the April 13, 2015 order because he was relying on the automatic stay provision contained within CPLR 5519 (a)(2). The statute provides: (a) Stay without court order. Service upon the adverse party of a notice of appeal or an affidavit of intention to move for permission to appeal stays all proceedings to enforce the judgment or order appealed from pending the appeal or determination on the motion for permission to appeal where: 2. the judgment or order directs the payment of a sum of money, and an undertaking in that sum is given that if the judgment or order appealed from, or any part of it, is affirmed, or the appeal is dismissed, the appellant or moving party shall pay the amount directed to be paid by the judgment or order, or the part of it as to which the judgment or order is affirmed (see CPLR 5519 [a][2]).
"CPLR 5519 governs the stay on appeal. This is a stay designed to prevent the winner of the judgment or order below from enforcing it while the loser prosecutes an appeal. If there were no provision for such a stay, a judgment, such as one for money only, could be collected by a victorious plaintiff by use of the enforcement devices of Article 52 notwithstanding that an appellate court might then overturn the judgment and dismiss the plaintiff's action. That would in turn necessitate restitution (see CPLR 5523), but there would be no guarantee that the plaintiff, having collected the judgment, would not have squandered the proceeds. If the plaintiff should be insolvent, the defendant's restitution judgment would be valueless. A stay of enforcement avoids that prospect (see, Practice Commentaries by Richard C. Reilly, CPLR 5519:1, Book 7B see also Agai v Liberty Mut. Agency Corp., 118 AD3d 830, 832 [2nd Dept 2014]). Wynkoop's Actions In the instant action the alleged contempt is due to the failure of Wynkoop to comply with two directives contained in the April 13, 2015 order. The first requirement was to add one of the defendants as a signatory to 622A's bank account. In order for Wynkoop to comply with this portion of the order, the defendants first had to choose which defendant would be added as a signatory. Defendants failed to offer any evidence that they had selected which defendant would be added to the account. Wynkoop also testified that he was not notified of which defendant was to be added to the account. Furthermore, Wynkoop did attempt to comply with the directive by inquiring as to the procedure of adding a signatory. In light of the foregoing the defendants have not established by clear and convincing evidence that Wynkoop "willfully violated a clear and unequivocal mandate of a court's order, with knowledge of that order's terms, thereby prejudicing the movant's rights." Furthermore, the defendants failed to testify or submit any evidence that the failure to add a defendant as a signatory prejudiced the defendants in any way.
The defendants also assert that Wynkoop should be held in contempt for failing immediately pay $10,000.00 to Subranayam. The evidence adduced at the hearing established that less than thirty (30) days after the April 13, 2015 order was entered both sides filed and served notices to appeal the order. Thereafter, again less than thirty (30) days later Wynkoop filed the undertaking with the Clerk of the Court pursuant to CPLR 5519 on advice of counsel. During the interim thirty (30) days between the filing of the appeal and the undertaking Wynkoop erroneously attempted to deposit a check in an attempt to comply with CPLR 5519. Only three months later this Court held that CPLR 5519 is inapplicable.
Accordingly, the defendants have failed to establish that Wynkoop willfully violated a clear and unequivocal mandate of a court's order, with knowledge of that order's terms, thereby prejudicing the movant's rights. While the Court ruled that CPLR 5519 did not automatically stay the action it is not unreasonable for Wynkoop to have acted according to his counsel's advice and the reading of the statute.
Accordingly, the defendants have failed to establish that Wynkoop should be held in contempt of court for failing to comply with the April 13, 2015 order.
CONCLUSION
Kyle Taylor, Hilary Taylor and Raveev Subramanyam's motion for an order pursuant to Judiciary Law 753 to punish Brett Wynkoop and Kathleen Keske for civil contempt is granted only to the extent that a hearing was held however denied as to the relief requested.
The foregoing constitutes the decision and order of this Court. Enter:
J.S.C.