TD Bank, N.A. v South Shore Motor Group, Inc.

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[*1] TD Bank, N.A. v South Shore Motor Group, Inc. 2012 NY Slip Op 50986(U) Decided on April 27, 2012 Supreme Court, Nassau County Asarch, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 27, 2012
Supreme Court, Nassau County

TD Bank, N.A. successor by merger to Commerce Bank, N.A., a National Banking Association, Plaintiff/Judgment-Creditor,


South Shore Motor Group, Inc. and Frederick Ippolito, individually, Defendants/Judgment-Debtors.


Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP

Attorneys for Plaintiff

Kenneth C. Henry, Jr., P.C.

Attorneys for Defendant

Klein & Vizzi, LLP

Attorneys for Solivia Powersports, LLC

Joel K. Asarch, J.

The motion by plaintiff/judgment-creditor TD Bank, N.A. (TD Bank) pursuant to CPLR 5225, inter alia, to direct defendant judgment-debtor South Shore Motor Group, Inc. (South Shore) and guarantor Frederick Ippolito [FN1], individually, to turn over and pay to the judgment-creditor the sum of $92,052.41, plus interest; to appoint a receiver to operate, administer and account for the judgment debtor's interest in various alleged alter ego entities, to wit: South Shore Motorsports, LLC, South Shore Motor Group, Inc., Crazy Freddy's Motorsports, Inc., Motor Sports Distribution, Inc., Solivia Powersports, LLC and Island Powersports (collectively referred to as Sunrise Highway Entities)[FN2], and to attach property of the judgment debtor, is determined as hereinafter provided.

The application by plaintiff/judgment-creditor TD Bank to hold defendants/judgment-debtors in contempt for non-compliance with subpoenas served herein and the directive of the Court, is determined as hereinafter provided.


Under a stipulation of settlement in this matter dated February 24, 2010, the corporate defendant and defendant guarantor (Frederick Ippolito, the Chairman and/or Chief Executive Officer of South Shore) agreed to pay to plaintiff the liquidated sum of $80, 023.48 on or before February 20, 2013 pursuant to certain terms and conditions. Upon defendants' default [FN3], judgment was entered on June 22, 2010 in favor of the plaintiff/judgment-creditor and against the defendants/judgment-[*2]debtors in the amount of $92,050.41, less the sum of $1,000 paid by judgment debtors.

No payment having been received in the name of the judgment-debtor, plaintiff seeks a turnover of assets of defendant South Shore and defendant Frederick Ippolito, and money in the possession of various non-parties, i.e., the Sunrise Highway entities. Plaintiff TD Bank contends that the Sunrise Entities have sufficient assets to satisfy the debt at issue. In this regard, plaintiff references another action (Index No. 3328/10), brought by Banc of America Leasing Capital, LLC, as assignee of General Electric Capital Corporation against South Shore Motorsports, LLC, d/b/a South Shore Motorsports, LLC, Dana Ippolito, Denise L. Raimondi, James J. Raimondi and Frederick Ippolito, in which payments have been remitted to Banc of America by various Sunrise Entities. Plaintiff TD Bank alleges that, despite its good faith effort to obtain information relevant to the satisfaction of judgment herein, the efforts by the judgment-debtor to defraud creditors, and hinder plaintiff from collecting on its judgment, have impaired and impeded the plaintiff's rights and remedies.

In support of its application, plaintiff TD Bank alleges that defendant Frederick Ippolito, whom plaintiff claims operates and controls the Sunrise Entities, has sufficient assets in these entities to satisfy the debt due and owing the judgment-creditor. When served with a property execution by the Nassau County Sheriff's Department, however, on or about September 14, 2010, defendant guarantor Frederick Ippolito purportedly stated that his corporation was South Shore Motorsports, LLC and that he might have to file bankruptcy as he had no money to pay the judgment. In his affidavit, defendant Frederick Ippolito attests that he has "no bank accounts, virtually no assets, [his] wages are being garnished" and he transferred his house to Solivia Bay Family Limited partnership in September, 2009 for tax planning purposes.

Defendant Frederick Ippolito has failed to produce documentation requested under a subpoena duces tecum dated September 9, 2011 and failed to appear for post-judgment deposition on October 17, 2011, to which plaintiff TD Bank alleges defendant's counsel agreed.


The Court has broad discretionary power under CPLR Article 52 to control and regulate the enforcement of a money judgment in order to prevent unreasonable annoyance, expense, embarrassment, disadvantage or other prejudice. Gryphon Dom. VI, LLC v APP Intl. Fin. Co., 58 AD3d 498 [1st Dept 2009].

CPLR Article 52 is a post-judgment enforcement mechanism which authorizes a judgment- creditor to file a motion against a judgment-debtor to compel turnover of assets or, when the property sought is not in possession of the judgment-debtor itself, to commence a special proceeding against a garnishee which holds the assets. CPLR 5225(a) supplies a judgment-creditor with the device known as a delivery or turnover order. The key to the reach of a turnover order is personal jurisdiction over a particular defendant. Koehler v Bank of Bermuda, Ltd., 12 NY3d 533, 537 [2009].

With respect to garnishees, CPLR 5225(b) permits a Court to issue a judgment ordering a party to deliver the property in which the judgment-debtor has an interest, or to convert it to money for payment of the debt.

By virtue of the judgment held by plaintiff TD Bank against defendant South Shore and Frederick Ippolito, any monies due the judgment-debtors from, or in possession of third parties, including receivables and ownership interests, constitute property which is subject to the lien of the [*3]judgment and execution thereon. Jackson Hewitt Inc. v Adams, 22 Misc 3d 1126(A) (N.Y.Sup. 2009). CPLR 5201 sets forth two broad categories of assets against which a money judgment may be enforced: (a) a debt that is owed to the judgment debtor; and (b) property in which the judgment- debtor has an interest.

Pursuant to CPLR 5225(b), however, plaintiff TD Bank was required to commence a special proceeding against any alleged garnishee to reach assets belonging to the judgment-debtor but held by the garnishee. "[W]here it is shown that the judgment debtor is entitled to possession of such property . . ., the court shall require such person to pay the money, or so much of it as is sufficient to satisfy the judgment, to the judgment creditor." CPLR 5225(b). The requirement that the judgment-creditor proceed against the garnishee, rather than by a device operating on the property alone, recognizes the possibility that the garnishee, or a fourth party, may assert its own interests in the property. Koehler v Bank of Bermuda, Ltd., supra, at p. 538. CPLR 5225(b) requires that a special proceeding be brought by the judgment-creditor against the non-party's garnishees.

Here, none of the Sunrise entities in which defendant Frederick Ippolito has a purported interest, or Solivia Powersports, LLC [FN4] have been brought within the jurisdiction of the Court. There is, therefore, no basis to order a turnover with respect to said entities at this juncture.

By virtue of the judgment held by plaintiff TD Bank against defendants, plaintiff is entitled to an order directing the defendants herein to turn over the monies in their possession due and owing plaintiff under the judgment.

In contrast to Article 52, an Article 62 attachment proceeding operates only against property providing a means by which a creditor effects the prejudgment seizure of a debtor's property. It is a harsh remedy in derogation of common law. Courts have strictly construed the attachment statute in favor of those against whom it may be employed. Kornblum v Kornblum, 34 AD3d 748 [2nd Dept 2006]. The property is held by the sheriff so as to apply the property to the creditor's judgment, should the creditor prevail in court. Attachment simply keeps the debtor away from his property, to be held by the sheriff, so as to apply the property to the creditor's judgment if the creditor should prevail in court. Hotel 71 Mezz Lender LLC v Falor, 14 NY3d 303, 311 [2010]. CPLR 6201(3) requires that a party seeking an order of attachment establish that the defendant has assigned, disposed of, encumbered or secreted property or removed it from the state or is about to do so; and such action was taken with the intent to defraud creditors or to frustrate enforcement of plaintiff's judgment. Corsi v Vroman, 37 AD3d 397 [2nd Dept 2007]. The mere removal, assignment or other disposition of property is not grounds for attachment. Federal Ins. Co. v Persaud, 2012 WL 274598, 2012 NY Slip Op. 30177(U) (NY Sup. 2011).

Plaintiff TD Bank has failed to make the requisite showing under CPLR 6201 to warrant attachment of the assets at issue herein. Moreover, the request is procedurally improper in that plaintiff has already obtained a judgment against defendants. Koehler v Bank of Bermuda, Ltd., supra, at p. 538.

The appointment of a temporary receiver (CPLR 6401) of the business and assets of the defendant corporation is an extreme remedy resulting in the taking and withholding of possession [*4]of property from a party without an adjudication on the merits. Vardaris Tech, Inc. v Paleros Inc., 49 AD3d 631, 632 [2nd Dept 2008], quoting Schachner v Sikowitz, 94 AD2d 709 [2nd Dept 1983] (quotation marks omitted). Such relief will only be granted where the movant makes a clear evidentiary showing that property is in danger of being removed from the state, lost, materially injured or destroyed. Lee v 183 Port Richmond Ave. Realty, 303 AD2d 379, 380 [2nd Dept 2003]. No such showing has been made here sufficient to support the requested relief.


Judgment-debtors Frederick Ippolito and South Shore, having failed to produce documents or appear for a judgment-debtors' examination on October 17, 2011, in compliance with a purported voluntary agreement [FN5], plaintiff TD Bank seeks to hold defendant judgment debtors in contempt pursuant to CPLR 5251, which provides that "refusal or willful neglect of any person to obey a subpoena . . . shall each be punishable as a contempt of court."

Although defendants' counsel states that he does not remember agreeing to accept service of post-judgment deposition subpoenas, he does admit that he agreed to voluntarily produce defendant Frederick Ippolito for post-judgment deposition. He argues that plaintiff TD Bank's motion for contempt must be denied, however, on the grounds that plaintiff failed to make a prima facie showing that the subject subpoenas were properly served. Under the circumstances extant, defendant's challenges to the subpoenas duces tecum have been rendered moot by re-service of the subpoenas and counsel's consent to produce his client, defendant Frederick Ippolito.

Contempt is a drastic remedy which should not issue absent a clear right to such relief. Coronet Capital Co. v Spodek, 202 AD2d 20, 28 [1st Dept 1994]. A motion to punish a party for civil contempt is addressed to the sound discretion of the court. Chambers v Old Stone Hill Rd. Assoc., 66 AD3d 944, 946 [2nd Dept 2009]. In order to punish a judgment debtor for contemptuous conduct in reference to a CPLR Article 52 money judgment enforcement device, the judgment creditor must establish judgment debtor's refusal or willful neglect (CPLR 5251). To sustain a finding of civil contempt based on alleged violation of a court order, it is necessary to establish that a lawful order of the court was in effect, clearly expressing an unequivocal mandate. It must also appear, with reasonable certainty that the order has been disobeyed and that the party had knowledge of the mandate. Gray v Giarrizzo, 47 AD3d 765, 766 [2nd Dept 2008]; Paz v Long Is. R.R., 241 AD2d 486, 487 [2nd Dept 1997].

In supplementary proceedings to execute or collect upon a judgment, a contemnor's lack of cooperation does not render him liable for the entire amount of the uncollected judgment. Barclays Bank v Hughes, 306 AD2d 406, 407 [2nd Dept 2003].

A party moving for civil contempt bears the burden of establishing by clear and convincing evidence that the proposed contemnor knowingly violated a clear and unequivocal mandate of the court thereby prejudicing the rights of a party to the litigation. Gloveman Realty Corp. v Jefferys, 29 AD3d 858, 859 [2nd Dept 2006]. A subpoenaed witness must be shown to be in possession of, or have reasonable access to the information sought, in order for the subpoenaed witness to be held in civil contempt. Tener v Cremer, 89 AD3d 75, 78 [1st Dept 2011]. [*5]

In order to hold a party in contempt for disobedience of a subpoena, the subpoena must be "so ordered." See generally Siegel, New York Practice § 385, at p. 676 [5th ed.]. Here, there is no showing that the subject subpoenas were, in fact, so ordered or that defendant Frederick Ippolito or the corporate defendant disobeyed an unequivocal order of the court.

Provided that there is no bankruptcy stay in effect, defendant/judgment-debtor Frederick Ippolito is directed, however, to comply with the subpoena herein dated September 9, 2011 within 30 days of the date of the order hereon. The date once established shall have the same force and effect as if set down in this order. At least five days prior to the deposition, defendant shall produce the documents demanded in the subpoena duces tecum.

The foregoing constitutes the Decision and Order of the Court.

Dated: Mineola, New York

April 27, 2012



JOEL K. ASARCH, J.S.C. Footnotes

Footnote 1: At a conference held in this matter prior to submission of the motions, counsel for the defendants/judgment-debtors indicated that there might be a bankruptcy filing. However, the Court has received no notification of such a filing.

Footnote 2:Plaintiff alleges that the various Sunrise Entities, all related lines of business, are alter egos of the judgment debtor, are controlled by defendant Frederick Ippolito and operate from the same location at 4116 Sunrise Highway, Massapequa, New York. According to plaintiff TD Bank, defendant Frederick Ippolito is the Chairman and/or Chief Executive Office of Crazy Freddy's Motorsports, Inc. and Motor Sports Distribution, Inc.

Footnote 3:The stipulation provides that in the event of defendant's default and failure to cure,

"Plaintiff shall immediately file and enter a judgment against the

defendants in the Supreme Court of New York, Nassau County,

under Index No. 025596/09 in the amount of Eighty Two Thousand

Five Hundred and Thirty Two Dollars and Seventy Cents ($82,532.70)

plus default interest at the Prime Rate of Interest plus 5% per annum,

late fees, disbursements, costs, attorneys' fees in the liquidated

sum of Five Thousand Dollars ($5,000.00) and disbursements, giving

credit upon execution for any payment made herein.

Footnote 4:According to the attorney for Solivia Powersports, LLC, d/b/a Island Powersports, Solivia purchased the trade name Island Powersports from defendant South Shore Motorsports, LLC pursuant to an Asset Purchase Agreement dated October 15, 2010.

Footnote 5:During a court appearance on September 16, 2011, judgment debtors' counsel allegedly agreed to accept service of post judgment deposition subpoenas and to schedule the post judgment deposition of defendant Frederick Ippolito.