CSX Transp., Inc. v. Emjay Envtl. Recycling, Ltd., 12-CV-1865(JS)(AKT)

• Decision Date: 02 November 2016
• Docket Number: 12-CV-1865(JS)(AKT)
• Parties: CSX TRANSPORTATION, INC., Plaintiff, v. EMJAY ENVIRONMENTAL RECYCLING, LTD., Defendant, and ISLAND RAIL TERMINAL, INC., MAGGIO SANITATION SERVICE, INC., and EASTERN RESOURCE RECYCLING, INC., Garnishees subject to restraining notices.
• Court: U.S. District Court — Eastern District of New York

CSX TRANSPORTATION, INC., Plaintiff, v. EMJAY ENVIRONMENTAL RECYCLING, LTD., Defendant,andISLAND RAIL TERMINAL, INC., MAGGIO SANITATION SERVICE, INC., andEASTERN RESOURCE RECYCLING, INC., Garnishees subject to restraining notices.

12-CV-1865(JS)(AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

November 2, 2016

MEMORANDUM & ORDER

APPEARANCES

For Plaintiff:

Christopher Merrick, Esq.

Benjamin Mann, Esq.

Eric C. Palombo, Esq.

Keenan Cohen & Howard PC

One Pitcairn Place, Suite 2400

165 Township Line Road

Jenkintown, PA 19046

John Joseph Morris, Esq.

Kelly, Rode & Kelly, LLP

330 Old Country Road

Mineola, NY 11501

For Defendant:

Brian Lee Gardner, Esq.

Cole Schotz Meisel Forman & Leonard P.A.

900 Third Avenue, 16th Floor

New York, NY 10022

For Garnishees:

Jarrett M. Behar, Esq.

Sinnreich Kosakoff & Messina LLP

267 Carleton Avenue, Suite 301

Central Islip, NY 11722

SEYBERT, District Judge:

On September 25, 2014, the Court entered an amended judgment against Defendant Emjay Environmental Recycling, Ltd. ("Emjay") and in favor of Plaintiff CSX Transportation, Inc. ("CSX") for $1,056,444.15. (See Am. J., Docket Entry 79.) Prior to the entry of the judgment, Emjay sold its assets to three garnishees--Island Rail Terminal, Inc., Maggio Sanitation Service, Inc., and Eastern Resource Recycling, Inc. (collectively, the "Garnishees")--for $3,572,011.52. (See generally Contract, Docket Entry 81-3¹.) CSX then served the Garnishees with restraining notices, which prohibited the sale, transfer, or assignment of the Garnishees' debt to Emjay before CSX's judgment had been satisfied (the "Restraining Notices"). (See Ex. C, Restraining Notices, Docket Entry 81-4, at 2, 10, 18; Contract at 34; June 4, 2015 Ltr., Behar Decl. Ex. H, Docket Entry 82-8, at 2.) Nevertheless, the Garnishees negotiated a settlement agreement for two lawsuits consolidated in Suffolk County Supreme Court (the "State Court") involving Emjay and three of its judgment creditors: Environmental Logistics Services ("ELS"), Matthew Crescimanni ("Crescimanni"), and Sullivan Gardner ("SG"). (Behar Decl., Docket Entry 82, ¶¶ 3, 6-7, 22; see generally Ex. B, Feb. 26, 2015 Stip. and Order, Docket Entry 82-2.)

On February 25, 2016, the Court granted CSX's motion for a turnover order requiring the Garnishees to satisfy the judgment (the "Turnover Order"). (Turnover Order, Docket Entry 91.) If the settlement funds had already been distributed, the Court invited CSX to apply for a judgment against the Garnishees for violating the Restraining Notices. (Turnover Order at 15.)

Two motions are pending before the Court: (1) CSX's motion to enforce a judgment against the Garnishees (See Mot. to Enforce J., Docket Entry 92) and (2) the Garnishees' motion for reconsideration of the Turnover Order (See Mot. for Recons., Docket Entry 93). For the following reasons, the Court GRANTS CSX's motion and DENIES the Garnishees' motion.

BACKGROUND

The Court assumes familiarity with the facts and prior proceedings, which are referenced only as necessary to explain the Court's decision. To recap, the Restraining Notices prohibited "any sale, assignment, transfer, or interference with any property" in which the Garnishees had an interest "except upon direction of the sheriff or pursuant to an order of the court." (Restraining Notices at 3 (quoting NY CPLR § 5222(b) (McKinney 2009)).) Neither the sheriff nor the Court modified or vacated these Restraining Notices. However, the Garnishees entered into a settlement agreement for two actions consolidated in State Court relating to Emjay. (Behar Decl. ¶¶ 3, 6, 22.) CSX, which was nota party to this consolidated action, initially chose to participate in settlement discussions but later opted out. (Behar Decl. ¶¶ 14, 16-17, 19-21.)

Based on defenses, counterclaims, and any prior payments, the parties reached a $2.2 million settlement, which was approved by the State Court. (See Behar Decl. Ex. B, Feb. 26, 2015 Stip. & Order, Docket Entry 82-2.) After accounting for ELS, Crescimanni, and SG's respective settlements, the Garnishees issued a check to CSX for $8,015.03, which "represent[ed] the remainder of the proceeds after the court-ordered payments ... were distributed" of the Garnishees' debt to Emjay. (Behar Decl. ¶ 28; see also Behar Decl. Ex. J, Check, Docket Entry 82-10, at 3.)

What occurred before and after the State Court settlement is crucial. Here are the highlights:

• November 7, 2013: ELS receives a judgment against Emjay for $1,238,807.03. (Feb. 26, 2015 Stip. & Order at 8.)

• November 13, 2013: SG receives a judgment against Emjay for $294,318.82. (Feb. 26, 2015 Stip. & Order at 8.)

• July 24, 2014: Crescimanni receives a judgment against Emjay for $402,013.83. (Feb. 26, 2015 Stip. & Order at 8.)

• September 25, 2014: CSX receives a judgment against Emjay for $1,056,444.15. (See Am. J.)

• November 7, 2014: Crescimanni serves a property execution² for his judgment. (Mot. for Recons. Ex. A, Prop. Executions to Garnishees, Docket Entry 93-2, at 16.)

• November 12, 2014: CSX served the Garnishees with the Restraining Notices. (See Restraining Notices.)

• February 26, 2015: The State Court approves the $2.2 million settlement. (See Feb. 26, 2015 Stip. & Order.)

• March 10, 2015: ELS serves a property execution for its judgment. (Prop. Executions to Garnishees at 11-15.)

• June 12, 2015: CSX requests a turnover order. (SeeTurnover Mot., Docket Entry 81.)

• July 9, 2015: CSX serves property executions for its judgment. (July 14, 2015 Ltr., Docket Entry 86, at 1.)

Following these events, the Court entered the Turnover Order, which required the Garnishees to satisfy CSX's judgment. See CSX Transp., Inc. v. Emjay Envtl. Recycling, Ltd., No. 12-CV-1865, 2016 WL 755630, at *5 (E.D.N.Y. Feb. 25, 2016). In pertinent part, the Court concluded that if the Garnishees violated the Restraining Notices, they were liable for the judgment. Id. ("[T]he amount of the unsatisfied judgment is $1,056,444.15, and the Garnishees would have had that amount available if they did not violate the Restraining Notices."). CSX has now applied for a judgment against the Garnishees. (See Mot. to Enforce J.)

The Garnishees have asked the Court to reconsider its Turnover Order, presenting four bases for error. (See Mot. for Recons.) First, the Court failed to apply New York law on priorityof judgments. (Garnishees' Br., Docket Entry 93-1, at 2-5.) Second, the Court incorrectly found that CSX suffered damages. (Garnishees' Br. at 5-8.) Third, the Court misinterpreted the language of New York Civil Practice Law and Rules ("CPLR") Section 5222. (Garnishees' Br. at 8-9.) Fourth, the Court violated the Garnishees' due process rights by failing to hold any hearings or require admissible evidence in deciding the Turnover Order. (Garnishees' Br. at 9-12.)

As discussed below, however, the Garnishees have not cited any controlling law or factual matters that the Court overlooked. Thus, the Garnishees' motion for reconsideration is denied, and the Court adheres to its prior ruling. The Court grants CSX's request to enforce a $1,056,444.15 judgment against the Garnishees for their violation of the Restraining Notices.

DISCUSSION

I. Motion for Reconsideration

A. Legal Standard

A motion for reconsideration is appropriate when the moving party believes that the Court overlooked important "'matters or controlling decisions'" that would have influenced the prior decision. Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y. 1999) (quoting Local Civil Rule 6.3). In that regard, reconsideration is not a proper tool to repackage arguments and issues already considered by the Court in decidingthe original motion. United States v. Gross, No. 98-CR-0159, 2002 WL 32096592, at *4 (E.D.N.Y. Dec. 5, 2002). Nor is it proper to raise new arguments and issues. Lehmuller v. Inc. Vill. of Sag Harbor, 982 F. Supp. 132, 135 (E.D.N.Y. 1997) (collecting cases). In other words, reconsideration "will generally be denied unless the moving party can point to controlling decisions or data that . . . might reasonably be expected to alter the conclusion reached by the court." Davidson v. Scully, 172 F. Supp. 2d 458, 461 (S.D.N.Y. 2001); see also Schrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (recognizing that the standard for reconsideration is "strict" (collecting cases)).

B. Priority

First, the Garnishees argue that the Turnover Order contravened New York law on priority. (See Garnishees' Br. at 2-5.) To support this stance, they assert that the Court misapplied the Second Circuit's decision in Beauvais v. Allegiance Securities, Inc., 942 F.2d 838, 840-41 (2d Cir. 1991).

Under Beauvais, the Court analyzed whether "money in the Garnishees' possession should be turned over to CSX." CSX Transp., 2016 WL 755630, at *4 (citing Beauvais, 942 F.2d at 840-41). To obtain its turnover order, CSX needed to show, among other things, one of two conditions: "(1) '[Emjay] is entitled to the possession of such property,' or (2) '[CSX's] rights to the property are superior to those of the [Garnishees].'" Id. (quoting Beauvais,942 F.2d at 840 (internal quotation marks omitted)). Without reaching the priority condition, the Court found that Emjay was entitled to the debt owed by the Garnishees. Id. ("Here, the Garnishees owe Emjay $3.5 million based on certain promissory notes and guaranties--funds that would ostensibly be paid to CSX by Emjay to satisfy the judgment."). And the Court, through the Restraining Notices, prohibited "any sale, assignment, transfer, or interference with any property" in which the Garnishees had an interest "except upon direction of the sheriff or pursuant to an order of the court." (Restraining Notices at 3 (quoting N.Y. C.P.L.R. § 5222(b)).) Neither the sheriff nor the Court dissolved this obligation, so the funds should have been available.³ Cf. Dussault v. Republic of Arg., 616 F. App'x 26, 28 (2d Cir. 2015) (summary order) (injunction imposed by district court); Beauvais, 942 F.2d at 841 (...