The following e-filed documents, listed by NYSCEF document number (Motion 010) 237, 238, 239, 240, 241, 243, 244, 245, 246, 247, 248, 249, 250, 251, 253, 254 were read on this motion to QUASH SUBPOENA, FIX CONDITIONS.
This action arises from plaintiffs $30 million loan to defendant GDC 138 E 50 LLC (GDC) for investment into a condominium development project in Midtown Manhattan. In motion sequence number 010, 50 Lex Development LLC (50 Lex) moves for an order to quash the subpoena duces tecum issued to it, to vacate the accompanying restraining notice, and, pursuant to Rule 130-1.1 of the Rules of the Chief Administrator, to award it all reasonable attorneys fees and costs. Plaintiff opposes the motion. For the reasons set forth herein, the motion is denied in its entirety.
On September 26, 2022, plaintiff served a subpoena duces tecum on 50 Lex, demanding [a]ny and all of 50 Lexs records relating to any bank account maintained in the name of 50 Lex, in addition to its assets, liabilities, income, or other means of satisfying the judgment, for a period of time from June 1, 2017 through the date of the notice; and restraining 50 Lex from using funds by which 50 Lex was indebted to GDC (Lieberman affirmation, exhibit B).
The courts reasoning in its decisions on motion sequence numbers 008 and 009 applies with equal force to this motion to the extent that, pursuant to CPLR 3101, plaintiff may seek information necessary to determine whether the judgment debtor[ ] . . . transferred any assets so as to defraud the judgment creditor (Berisha v Tosca Cafe, Inc., 202 AD3d 531, 532 [1st Dept 2022]; see also ICD Grp., Inc. v Israel Foreign Trade Co. (USA) Inc., 224 AD2d 293, 294 [1st Dept 1996], citing generally Siegel, Practice Commentaries, McKinneys Cons Laws of NY, Book 7B, CPLR C5223:2 at 214). 50 Lex fails to demonstrate that plaintiffs subpoena seeks irrelevant information or is otherwise improper. Indeed, plaintiff seeks information eminently relevant to the collection of the judgment. To the extent that 50 Lex argues that the requests are overbroad, it is its burden to show the court what documents and records are irrelevant, and it has not done so (see Ledonne v Orsid Realty Corp., 83 AD3d 598 [1st Dept 2011]).
For the same reason, 50 Lexs request to vacate the restraining notice in the subpoena is denied. A determination of whether a party is bound by a CPLR 5222 (b) restraint requires an examination of the relationship between the judgment debtor and the specific property involved (MacArthur I, Inc. v Fields, 188 AD3d 493, 494-495 [1st Dept 2020]). Here, the restraining notice is sustained under the same theory that GDC fraudulently conveyed plaintiffs funds to 50 Lex for no apparent consideration and in order to frustrate plaintiffs right to levy execution on its judgment (Blue Giant Equipment Corp. v Tec-Ser, Inc., 92 AD2d 630, 631 [3d Dept 1983]; Belesis v Lowery, 2017 WL 3641709, *2-3 [SD NY July, 31, 2017]).
50 Lex argues that, by plaintiffs own admission, 50 Lex has transferred those funds to other entities and therefore lacks possession as contemplated in CPLR 5222. However, 50 Lex may not evade plaintiffs continuing interest in those funds by repeatedly transferring those funds to other entities, also for no demonstrated consideration (id.). CPLR 5225 (b) furnishes a mechanism for obtaining a money judgment against the recipient of a fraudulent conveyance who has, in the interim, spent or dissipated the property conveyed (Rockefeller v Statement Services, Corp., 204 AD3d 922, 925 [2d Dept 2022], citing Matter of Federal Deposit Ins. Corp. v Conte, 202 AD2d 845, 846 [1994] and Federal Deposit Ins. Corp. v Heilbrun, 167 AD2d 294, 294 [1st Dept 1990] [A personal judgment against the transferee of a fraudulent conveyance may be obtained where the transferee has made it impossible to return the property to the creditor by, for example, disposing of wrongfully conveyed property or depreciating it.]).
Likewise, 50 Lex fails to demonstrate that sanctions are warranted. As the court has explained herein, plaintiffs subpoena has merit in law (22 NYCRR 130-1.1 [c] [1]).
Accordingly, it is
ORDERED that 50 Lexs motion is denied in its entirety; and it is further
ORDERED that 50 Lex shall respond and comply with the terms of the subpoena within 30 days of receipt of notice of entry of this order.
DATE June 18, 2024
ROBERT R. REED, J.S.C.
Robert R. Reed, J.