Columbia Capital v Cuervo

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Download PDF Columbia Capital v Cuervo 2012 NY Slip Op 31912(U) June 28, 2012 Sup Ct, Suffolk County Docket Number: 15487-2005 Judge: Peter H. Mayer Republished from New York State Unified Court System's E-Courts Service. Search E-Courts ( for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] INDEX N0.15487-2002 SUPREME COURT - STATE OF NEW YORK 1.,4.S. PART 17 - SUFFOLK COUNTY PK E S E N T: Hon. PETER H. MAYER Justice of the Supreme Court MOTION DATE 3-6-12 ADJ. DA'.^EMot. Seq. # 007 - MG X COLlJMBIA CAPITAL, Plaintiff(s), : : : - against - : : : : DKGO CUERVO, NEW YORK STATE COMMISSIONER OF TAXATION & FINANCE, : LAURA CRUZ, : : Defendant(s). : X Chrktopher J. Panny, Esq. Attorneys for Plaintiff 76 Court Street Brooklyn, New York 1 1201 Lester & Associates, P.C. Attorney for Defendant Cuervo 600 Old Country Road Garden City, New York I1530 Franlk M. Rlaffei, Jr., Esq. Jakubowski, Robertson, Maffei, Goldsmith dk Tartaglia, LLP Receiver 969 Jericho Turnpike St. James, h e w York 101 18 Upon the reading and filing of the following papers in this matter: (1) Order to Show Cause by counsel for the receiver, signed February 2 1. 201 2 (Mayer, J.), and supporting papers; and now UPON DUE DELIBERATION AND CONSIDERATION BY THE COURT of the foregoing papers. the motion is decided as follows: it is ORDERED AND ADJUDGED that Diego Cuervo is guilty of a contempt of court, by his refusal to comply with the provisions of this Court's Order dated June 22, 201 1 ; and it is further ORDERED AND ADJUDGED that said Diego Cuervo pay a fine of $26,400.00 dollars 011or he6x-e JUIY25. 2012 or be imprisoned in the Suffolk County Correctional Facility until the fine is paid or until a period of forty-five (45) days after the commitment of defendant to jail shall have expired; arid it is furl her ORDERED that the fine is to be paid to the order of the Receiver; and it is further ORDERED that the defendant is directed to be present at 9:3C am on July 25, 2012 in Pari 17 of [* 2] Columbia Capifd v Citervo Index Xo. 1548 7-2005 Pr1ge 2 the Supreme Court. Suffolk County. Riverhead, New York for purposes of execution of sentence; and it is further ORDERED that failure to be present at said time. date and p l x e will result in the issuance of a warrant of arrest for the defendant. â The action underlying this proceeding was brought to foreclose it mortgage on a parcel of real estate known as 1224 Suffolk Ave. Brentwood, New York. By Order ofthe Cclurt dated June 22,201 1, Mr. Frank Malâ fei. Esq. Was appointed Receiver for the benefit of the Plaintiff. The plaintiff is owner and holder of a certain mortgage on the real estate. The defendant, Diego Cuervo, is the owner, mortgagor and landlord of the said property. This proceeding was brought by the court appointed receiver of real property which is the subject of this litigation to hold the defendant, Diego Cuervo in Civil Contempt pursuant to Section 753 through 756 of the Judiciary Law. The receiver seeks an order imposing a fine, iriprisonment or both for the alleged fails-e of the defendant to comply with the provisions of this Courtâ s Order dated June 22, 201 1. Among other things the order â directed that the defendant and their agents, officers, employees, and contractors deliver and attorn to the receiver all rents lists, shareholder lists, unexpired and expired leases, proprietary leases, agreements, contracts, recognition agreements, corpor&e by-laws, correspondence, notice reg1 stration statements, tenants securities, shareholders, escrows, and ljsts of current rent or other monies, arrear, relating to space in the mortgaged premises; ... and further enjoining and restraining the defendant and their agents, officers, employees and attorneys from (111collecting the rents of said mortgaged preinises;(ii) interfering in any manner with the mortgaged premises or its possession, or with the Receiverâ s management thereof â . On September 6,201 1 the Receiver caused a â Notice to Attorn to Receiverâ to be served upon the defcndant through his attorney. On December 2, 20 1 1 and December 20, 20 1 1 the Receiver caused Notices to attorn to Reâ ceiver to be served upon the tenants. The Court heard oral argument from the parties on March 12, 2012 and as a result thereof set the matter for hearing on April 5,20 12. Evidence on the hearing was taken on April 5,201 2 and May 14,2012. Pursuant to the Courtâ s order of March 12 , the defendant was ordered to appear on April 5 , 20 12 with for thc period from September 6, 201 1 to present, all documents related to the premises located at 1224 Suffolk Avenue Hrentwood, New York, including but not limitec to the following: written and oral rem and lease agreements; names of all occupants: income and expenses: bank records; rent receipts and expenses.â â l â Iâ hc defendant appeared on April 5 and testified. He did not bring any of the ordered materials to court. ?â he tenants of the subject parcel testified on May 14, 2012. [* 3] Columbia Capital v Ciiervo I I I ~ Châ o. I548 7-2005 S Page 3 The essence ofthe Receiverâ s claim was that the tenants continu(-d to pay rent to the landlord during and after both the defendant and the tenants received the notice t:, attorn served by the Receiver. Morleover, neither the defendant nor his agents or employees ever delivered any rent lists, unexpired or expired leases. corporate by-laws etc. There was no factual dispute by the defendant concerning his awareness of the Noiice To Attorn or this Courtâ s order of June 22, 201 1. I n his testimony the defendant denied receiving any rents from any of the tenants after service of the Notice to Attorn. He claimed he did take rents from the tenants before the Notice to Attorn was served but never after. He further claimed he had no records of any past rental receipts, no leases, and no bank records relating to any of the tenants. When he did take rents he took it in cash. If he gave a receipt, he did iâ t keep copies of any. He maintained that he himself still engages in the business of the buying and selling of cars at the same address but has no business bank account from which to operate this business. He stated he had one at one time but his present recollection was that it was closed. He has no bank records relating to this account. All of his business was done in cash. On May 14 three tenants testified that they were indeed tenant!; at 1224 Suffolk Avenue anld paid reni for the space. All three claimed they paid their rent each month, particularly after the Notice to Attorn was served, to the defendantâ s father, Luis Cuervo. The only exception to this testimony came from Mr. Jovel Mayan who stated that he gave rent to Diego Cuervo at various times. Specifically, he stated that either at the end of March or April of 2012 he paid his rent at the office with both Luis and Diego Cuervo present. He remembers complaining to Diego Cuervo about the hot we.ter as he had not had any for about two years and that the defendant responded that he would do what he (couldto get it fixed. The evidence also disclosed the existence of a purported lease that appears to be entered into between one of the tenants, Ms. Sandra Ruiz and Diego Cuervo, the defendant, on or about November, 20 1 1. Diego Cuervo, when confronted with this lease, denied that the signature was his and denied entering the lease. â This testimony contrasted with Ms. Sandra Ruiz who said the.t she felt this was the lease she was operating under but she did not see Diego sign it as it was brought to her by the defendantâ s father Luis Cucrvo. Notably, when seeing Diegoâ s name on the signature line she asked why his name was there. Luis responded that the property was in Diegoâ s name but he, Luis, was in charge of everything. All three tenants testified that they paid rent in cash and that they rarely, if ever, got a receipt. Spccifically, Mr. Alandro Buruca testified that he paid nine hundred dollars a month in 201 1 to the d e h d a n t â s father and one thousand dollars a month in January and February of 2012 to the defendantâ s father before paying the Receiver in March. Sandra Ruiz testified that her original lease agreement called for one thousand eight hundred dollars in security with the same amount due each and every month as rent. She complained of hot water problems as well and thought her lease of November 201 1 reduced her rent to one thousand dollars a month. Not with standing the lease. she paid lone thousand eight hundred dollars for the balance of 20 1 1 and one thousand seven hundred from January to May of 20 12, the excess over one tho isand dollars allegedly being used to help with repairs to the (demisedpremises, including the hot water. Ms Ruiz stated that this arrangement continued after she began payin,: the receiver one thousand dollars a month in March and continued to pay the defendantâ s father seven hundred dollars on through May â for repiirsâ . The defendant also never tendered the original security for the Ruiz lease despite the order mandating sam e Scction 753 of the Judiciary Law reads, in pertinent part: [* 4] Colirntbia Capital v Cuervo Iitde-v NO. I548 7-2005 Page 4 â A Court ofrecord has the power to punish. by fine and imprisonment. or either, a neglect or violation ofdutjr. or other misconduct by which a right or remedy o f a party to a ciiil action or special proceeding, pending in the court m q be defeated. impaired. impeded, or pre-iudiced. in any of the following cases: ... 3. A party to the action or special proceeding. an attorney. counselor, or other person, for the non-payment o f a sum of money ...or for any other disobedience to a lawful mandate of the court.â â â To sustain a finding of civil contempt, a court must find that the alleged contemnor violated a lawful order of the court, clearly expressing an unequivocal mandate, of which that party had knowledge and that as a result of the violation a right of a party to the litigation was prejudiced. It is not necessary that the disobedience be deliberate or willful; rather, the mere act ofâ disobedience regardless of motive, is sufficient if such disobedience defeats, impairs, impedes, or prejudices the rights of a party. (Incorporated Village oJâ Plandome Manor 11. ,John Ioannou 54 AD3d 365; 862 NYS2d 592 [2â dDept. 20081). The order eljoined the defendant and his agentâ s, employees, and contractors from collecting the rents or interfering with the mortgaged premises in any way. An agent is a party who acts on behalf of the principal wi1.h the latterâ s express, implied, or apparent authority in the transaction of some business or the management of some affairs on the principalâ s account. The agent is a substitute or deputy appointed by the principal with power to do things which the principal majâ or can do and primarily to bring about business relations between the principal and third persons. ((Time Warner City Cable v. Adelphi University, 27 AD3d 551, 813 NYS2d 114[2nd Dept. 20061). It is also well settled that an agentâ s authority may be actual or apparent. Actual authority exists when an agent has the power â to do an act or to conduct a transaction on account of the principal which, with respect to the principal. he is privileged to do because of the principalâ s manifestation to him.â (Forest ParkCooperative. Inc. V. Coinmonwealth Land Title Insurunce Comp., 201 1 N.Y. Misc. LEXIS 2422, May 19, 201 1 citing Minskoff v. American Exp. Travel Related Swvices Co. 98 F3rd 703 [1996] quoting Restatement (Second) of Agency, Sec. 7 comment a [1958]). Actual agency may be express or implied. ExFress authority is the authority distinctly, plainly expressed, orally or in writing while implied autlhority exists when verbal or other acts by a principal reasonably give the appearance of authority to the agent. (See 99 Commercial St., Inc. V. Goldberg, 81 1 F Supp 900 119931). Apparent authority arises when a principal places an agent in a position where it appears that the agent has certain powers that the agent may or may not possess. Ifa third person holds the reasonable belief that the agcnt was acting within the scope of the agentâ s authority and changes position in reliance on the agentâ s act, the principal is estopped to deny that the agentâ s act was authorized. (2A NY Jurispruclence, Second Edition, Agency and Independent Contractors, Cohen \ . Utica First Ins. Comp., 436 F. Supp 2â , 5 17 [E.D.N.Y. 20061 applying New York Law). Further, all acts of the agent that are within the apparent scope of the authority conferred on the agent while no actual aulhority to do these acts has been conferred are hinding on the principal. (2 A N Y Jurisprudence, Second Edition, Agency and Independent Contractors, supia.) In this case, Mr. Buruca, one of the tenants testified that he used to pay his rent to the defendant, [* 5] Colimzbin Cnpifnl Cuervo Ittcies NO. I548 7-2005 Page 5 Diego Cuervo pursuant to his lease agreement but then changec to paying the defendantâ s father. Luis. He stated that Luis told him to pay him and to stop paying Diego. $7 Ms. Kuiz testified that, as of November 201 1. she thought she was operating under the new lease thal had Diego Cuervoâ s signature on it. but paid Luis because Luis told her the building was in Diegoâ s name but that he was in charge. Mr. Jovcl Mayan testified that although he pays cash rent to Ihe defendantâ s father, he sees the dekndant every time he pays the rent which nearly always lakes place in the car dealership that the defendant runs. Further. he stated that, at times, he hands the rent direcl ly to Diego Cuervo, the defendant. He also stated that he complained directly to the defendant about the lack of hot water at the car dealership which is the defendantâ s business. The defendant replied that he knew that the boiler was out of order and he would see if he could get it fixed. On the Courtâ s questions, he stated that he paid the rent to one of both individuals. either Luis or Diego while he was complaining to Diego about the hot water. Both Mr. Cuervo and the defendant were standing together during this conversation. The totality ofthe evidence shows that, based on the actions of the defendant, Luis Cuervo had the implied and/or apparent authority to act on behalf of his son in collecting the rents relevant to this property. The evidence also shows clear defiance of this Courtâ s June 22 order and the notices to attorn served by the receiver. Moreover, the March or April rent tendered by Mr. Mayan was, tendered to both the defendant and his father under circumstances where Mr. Mayan relied enough on the defendantâ s status with respect to this property to complain to him about the hot water and the defkndantâ s knowledge of the boiler sufficient to show a level of dominion and control over the property, while at the very same moment, tendering his renl. This is direct evidence of the defendantâ s defiance of the .June order and the Notice to Attorn. The Court also concludes that the defendantâ s testimory giveri in open Court on April 5 , 2012 is totdly lacking in credibility. He is in the car dealership busine,js, located at the same address, but has no business checking account. He didnâ t bring any records either to the receiver pursuant to this Courtâ s order of .lune 22, 201 1 or the court pursuant the subsequent order setting the matter down for a contempt hearing. Notably, his testimony was that the tenants didnâ t pay hirn any rent for more than a year, conveniently coinciding with this Courtâ s Order. Just as importantly, however, the defendant never mentioned anything about his fatherâ s involvement with these properties. The Court also notes the reluctance of the tenantâ s to testify. Although they denied coercion by the defimdant or his father, their demeanor and insistence that all rent payrnents were in cash with no receipts giwn clearly show they are, to some degree, under the control of the defendant who, the Court concludes, concocted a methodology to get around this Courtâ s order and continue to prejudice the plaintiff by not remitting rent proceeds to the receiver as mandated by the order. Rather, the defendant simply circumvented this Courtâ s order by employing an agent, or alter ego, to collect the rent. The Receiver was employed to, among other things, collect the rent so it could be used to pay the inoi-tgage. thc holder ofwhich is the plaintiff. To the extent that rents were paid to the defendant, through his father or otherwise, after the notice to attorn was received by the defendant, the plaintiff has been prejudiced. Tli~is. Court finds, the element of prejudice to the plaintiff has been shown. Specifically, the tenant Buruca paid nine hundred dollars a month from the service of the notice to attorn on the defendant on September 6,20 1 1 and one thousand dollars a month for January and February of 20 12. Since these rents [* 6] Columbia Capital v Cirervo ltrde-u No. 1548 7-2005 Page 6 \\er: paid after the notice to attorn was served, the Court finds the plaintiff has been prejudiced to the extent these funds were not tendered to the receiver for his benefit. Ms. Ruiz paid a total of twelve thousand seven hundred dollar:; from September of 201 1 through and including May of 2012. The receiver was deprived of the use of these funds for the benefit of plaintiff thus prejudicing the plaintiffs rights in this amount. The defendant also lever tendered the original security of one thousand eight hundred dollars given by Ms. Ruiz. The prejudice :o the plaintiff from Ms. Ruiz totals foui-teen thousand five hundred dollars. Finally, Mr. Mayan paid nine hundred dollars a month fi*omSeptember 201 1 through March 2012 for 1total of six thousand seven hundred dollars thus prejudicing the plaintiff in this amount. Thus, the plaintiff has been deprived of the benefit of twenty si Y thousand four hundred doIlars in rental proceeds that, had they been tendered to the receiver pursuant to this Courtâ s order of June 22: 20 1 1 and the Notice to attorn served on September 6,201 1 on the defendant would have been available to plaintiff for Durposes of paying down the balance on the mortgage as well as taxes and other expenses required to maintain the property. The Court finds, by clear and convincing evidence, that the defendantâ s actions were calculated to, and actually did defeat, impair, impede and prejudice the rights of the plaintiff herein and, therefore.,finds the defendant in contempt of this Courtâ s Order of June 22, 20â 11. The Court directs that the defendant pay a fine of twenty six thousand four hundred dollars on or before July 25, 2012 or be imprisoned in the Suffolk County Correctional Facility until the fine is paid or the expiration of 45 days, whichever occurs earlier. The fine is to be paid to the order of the Receiver. The defendant is directed to be present at 9:30 am on July 251, 2012 in Part 17 for purposes of exextion of sentence. Failure to be present at the above ordered time, date and place will result in the issuance of a warrant of arrest for the defendant. â This constitutes the Order of the Court. Dated: June 28, 2012 PElTER H. MAYER, J.S.C. I ] FINAL DISPOSITION [X 3 J . NON FINAL DISPOSITION