Plymouth Venture Partners, II, L.P. v. GTR Source, LLC; Cap. Merch. Servs.,, No. 20-118 (2d Cir. 2022)
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Plaintiff, as a receiver for debtor FutureNet Group, Inc., sued FutureNet’s judgment creditors – GTR Source, LLC (“GTR”) and Capital Merchant Services, LLC (“CMS”) – and the New York City Marshal for allegedly violating New York’s procedural rules when they executed state-court judgments against FutureNet. In the action against GTR and the Marshal, the district court dismissed Plaintiff’s claims, concluding principally that FutureNet would not suffer any injury even if the executions and levies were procedurally defective, since the seized property was used to satisfy valid underlying judgments. In a similar action against CMS, the district court dismissed the suit based on issue preclusion, finding that Plaintiff’s claims hinged on the same question of law at the heart of the GTR case. The district court also held that, absent preclusion, dismissal was appropriate because FutureNet suffered no damages. Plaintiff was subsequently replaced by two of FutureNet’s senior creditors, Plymouth Venture Partners, II, L.P. and Plymouth Management Company, which now challenge both district-court decisions.
Now guided by the New York Court of Appeals’s decision that Article 52 of the CPLR is a judgment debtor’s exclusive avenue for relief from a procedurally defective execution and levy, the Second Circuit affirmed the district courts’ judgments dismissing Plaintiffs’ actions. The court explained that the New York Court of Appeals unequivocally held that a judgment debtor must “bring an appropriate action pursuant to CPLR 12 Article 52” for relief from a procedurally defective execution and levy. Here, FutureNet has not done so. Thus, the court affirmed the district court’s dismissal.
This opinion or order relates to an opinion or order originally issued on February 23, 2021.
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