throbber
Case 1:14-cv-01088-RRM-PK Document 167 Filed 09/13/17 Page 1 of 4 PageID #: 4576
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`UNITED STATES DISTRICT COURT
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`EASTERN DISTRICT OF NEW YORK
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`TRUSTEES OF THE LOCAL 8A-28A
`WELFARE FUND; and 401(k) RETIREMENT
`FUND,
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`Plaintiffs,
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`-against-
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`AMERICAN GROUP ADMINISTRATORS;
`LLOYD GOLDSTEIN; HECTOR LOPEZ;
`and FRANCIS MAZZELLA,
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`Defendants.
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`ROSLYNN R. MAUSKOPF, United States District Judge.
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`MEMORANDUM AND ORDER
` 14-CV-1088 (RRM) (PK)
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`Plaintiffs Trustees of the Local 8A-28A Welfare Fund and the 401(k) Retirement Fund
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`(collectively, the “Plaintiffs”) have moved for pre-judgment relief pursuant to Federal Rule of
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`Civil Procedure 64 and New York C.P.L.R. § 5229. Specifically, the Plaintiffs seek an Order to
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`Show Cause in an effort to: (1) restrain and enjoin defendant Hector Lopez from transferring
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`assets with the same effect as if a restraining notice had been served after entry of judgment
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`under CPLR § 5222; and (2) compel Lopez to produce documents and appear for a deposition
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`regarding his finances and assets. For the reasons set forth below, the Plaintiffs’ motion is
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`denied.
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`Rule 64, which permits courts to grant certain provisional remedies in accordance with
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`state law, states:
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`During the course of an action, all remedies providing for the seizure of person or
`property for the purposes of securing satisfaction of the judgment ultimately to be
`entered in the action are available under the circumstances and in the manner
`provided by the law of the state in which the district court is held . . . . The
`remedies thus available include arrest, attachment, garnishment, replevin,
`sequestration, and other corresponding or equivalent remedies, however
`designated . . . .
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`Case 1:14-cv-01088-RRM-PK Document 167 Filed 09/13/17 Page 2 of 4 PageID #: 4577
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`CPLR § 5229 is one of those remedies, and it provides: “In any court, before a judgment is
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`entered, upon motion of the party in whose favor a verdict or decision has been rendered, the
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`trial judge may order examination of the adverse party and order him restrained with the same
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`effect as if a restraining notice had been served upon him after judgment.”
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`A grant of relief under § 5229 is within the discretion of the court. Loew v. Kolb, No. 03-
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`CV-5064 (RCC), 2003 WL 22077454, at *2 (S.D.N.Y. Sept. 8, 2003); Sequa Capital Corp. v.
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`Nave, 921 F. Supp. 1072, 1076 (S.D.N.Y. 1996). However, as the statute dictates, a key
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`prerequisite to obtaining relief under § 5229 is the receipt of a favorable verdict. See Loew, 2003
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`WL 22077454, at *2; Sequa, 921 F. Supp. at 1076; Perez v. Lorimer LLC, 84 A.D.3d 911, 923
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`(Sup. Ct., Kings Co. 2011).1
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`While the Plaintiffs point to the entry of default judgment against Lopez, it is far from
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`clear that such a favorable verdict has issued. There remain outstanding issues as to the scope of
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`Lopez’s liability for any well-pleaded claims brought in this action, including whether he is
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`individually and/or jointly and severally liable, and if so, for what amount. The magistrate judge
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`has yet to conduct an inquest on damages. As such, the posture of this case is markedly different
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`than those in which a “favorable verdict” has entered and the provisional remedy under § 5229
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`has been employed. See Leser v. US. Bank Nat. Ass’n, No. 09-CV-2362 (KAM) (MDG), 2013
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`WL 867153, at *1 (E.D.N.Y. Feb. 21, 2013), report and recommendation adopted, No. 09-CV-
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`1 Another factor that courts consider in the context of § 5229 applications is whether there is a danger that an
`adverse party will dispose of his assets. However, the moving party need not make a particular showing as to
`dissipation. See, e.g., Coley v. Vannguard Urban Improvement Ass’n, Inc., No. 12-CV-5565 (PKC) (RER), 2016
`WL 7217641 (E.D.N.Y. Dec. 13, 2016) (citing Gallegos v. Elite Model Mgmt. Corp., 768 N.Y.S.2d 134, 135 (Sup.
`Ct. 2003)). The Plaintiffs claim that Lopez is financially unstable and therefore likely to dissipate his assets because
`he had no income during the period of time that he recently spent in jail and is now availing himself of a 50%
`distribution from his retirement plan – one that he presumably is entitled to withdraw. (See Pls.’ Mem. (Doc. No.
`163-3) at 5–6.) The Plaintiffs’ conclusion in this regard is fairly speculative, and the Plaintiffs do not cite any cases
`where Courts have been swayed by similar circumstances.
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`Case 1:14-cv-01088-RRM-PK Document 167 Filed 09/13/17 Page 3 of 4 PageID #: 4578
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`2362 (KAM) (MDG), 2013 WL 867151 (E.D.N.Y. Mar. 7, 2013) (granting pre-judgment relief
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`where there had been a jury verdict of $38 million and the only remaining action was the “fairly
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`ministerial task” of calculating interest); Berg v. Au Café, Inc., 2009 WL 1905143 (Sup. Ct.,
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`N.Y. Co. 2009) (granting pre-judgment relief where $150,000 judgment was approved but entry
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`was held in abeyance to determine attorney’s fees); Gallegos, 768 N.Y.S.2d at 135 (granting
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`§ 5229 relief where jury awarded $2,673,590 in compensatory damages and $2,600,000 in
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`punitive damages); Laruffa v. Yui Ming Lau, 798 N.Y.S.2d 710 (Sup. Ct. 2004) (granting § 5229
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`relief in the form of a hearing to examine the defendant’s assets and establish whether an asset
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`freeze was necessary); Safeco Ins. Co. of Am. v. M.E.S., Inc., No. 10-CV-2798 (PKC) (VMS),
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`2017 WL 1194730, at *1, 34–35 (E.D.N.Y. Mar. 30, 2017) (discussing availability of § 5229
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`relief pending resolution of final judgment where party flouted court’s prior collateral security
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`orders, withheld indemnification payments, and dissipated assets).2
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`Moreover, neither in their papers in support of the default judgment motion, nor in the
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`instant application seeking relief under CPLR § 5229 do the Plaintiffs provide any legal or
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`evidentiary support as to the potential judgment that likely will issue against Lopez. They cite
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`Lopez’s guilty plea in a parallel criminal proceeding – which resulted in a restitution order of
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`$698,000.00 – as a basis for concluding that he will be liable for at least that amount in this
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`litigation. (Pls.’ Mem. at 5.) Yet they provide no explanation as to why the guilty verdict in the
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`criminal proceeding is conclusive as to liability and damages in this separate, civil proceeding.
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`Moreover, they assert that “of the $2,353,603.85 amount demanded, $2,233,740.00 constitutes
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`damages resulting from Lopez’s [alleged] schemes.” (Id. at 5.) While the Plaintiffs supply a
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`2 There is another issue that may be relevant here. CPLR § 5205 exempts certain property from the reach of § 5229,
`including property and payments related to qualified retirement accounts as described in the statute. Thus, New
`York law may protect from restraint some or all of the funds that the Plaintiffs seek to restrain – an issue not
`addressed in the Plaintiffs’ application.
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`3
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`Case 1:14-cv-01088-RRM-PK Document 167 Filed 09/13/17 Page 4 of 4 PageID #: 4579
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`breakdown of the latter figure into the amounts they allege were involved in four separate
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`schemes, (Statement of Damages (Doc. No. 163-2) at 50), they supply no basis to conclude that
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`the Court is likely to find that their demand will result in a damages award in those amounts, or
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`in any amount – let alone why there is a difference between their demand and Lopez’s potential
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`liability.
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`Thus, at this juncture, without the necessary inquest, it is far from certain that a monetary
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`judgment in the amount or in excess of that sought to be restrained will enter against Lopez in
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`this case. Cf. 6 Weinstein, Korn & Miller, New York Civil Practice ¶ 5229.04 (1995) (“The trial
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`judge ought not to grant relief pursuant to CPLR 5229 if it appears that the decision or verdict
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`might not proceed to judgment.”).
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`For these reasons, the Court declines to exercise its discretion under § 5229 based on this
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`application, and denies the requested relief, (Pls.’ Mot. (Doc. No. 163)), without prejudice.
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`The parties shall proceed to complete the inquest on damages before the assigned
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`magistrate judge.
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`Dated: Brooklyn, New York
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`September 13, 2017
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`SO ORDERED.
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`Roslynn R. Mauskopf
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`ROSLYNN R. MAUSKOPF
`United States District Judge
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