Greater Chautauqua Fed. Credit Union v. Marks

• Decision Date: 28 April 2022
• Docket Number: 1:22-cv-2753 (MKV)
• Citation: 600 F.Supp.3d 405
• Parties: GREATER CHAUTAUQUA FEDERAL CREDIT UNION, individually and on behalf of all others similarly situated, Boulevard Federal Credit Union, individually and on behalf of all others similarly situated, Greater Niagara Federal Credit Union, individually and on behalf of all others similarly situated, Plaintiffs, v. Hon. Lawrence K. MARKS, in his official capacity as Chief Administrative Judge of the Courts, Sheriff James B. Quattrone, in his official capacity as Sheriff of Chautauqua County, New York, Sheriff John C. Garcia, in his official capacity as Sheriff of Erie County, New York, Sheriff Michael J. Filicetti, in his official capacity as Sheriff of Niagara County, New York, and Letitia James, in her official capacity as Attorney General of the State of New York, Defendants.
• Court: U.S. District Court — Southern District of New York

600 F.Supp.3d 405

GREATER CHAUTAUQUA FEDERAL CREDIT UNION, individually and on behalf of all others similarly situated, Boulevard Federal Credit Union, individually and on behalf of all others similarly situated, Greater Niagara Federal Credit Union, individually and on behalf of all others similarly situated, Plaintiffs,

v.Hon. Lawrence K. MARKS, in his official capacity as Chief Administrative Judge of the Courts, Sheriff James B. Quattrone, in his official capacity as Sheriff of Chautauqua County, New York, Sheriff John C. Garcia, in his official capacity as Sheriff of Erie County, New York, Sheriff Michael J. Filicetti, in his official capacity as Sheriff of Niagara County, New York, and Letitia James, in her official capacity as Attorney General of the State of New York, Defendants.

1:22-cv-2753 (MKV)

United States District Court, S.D. New York.

Signed April 28, 2022

Elizabeth Rinehart, Mitchell Mirviss, Venable LLP, Baltimore, MD, Emily Seiderman West, Kan Min Nawaday, Venable LLP, New York, NY, for Plaintiffs.

Michael Adam Berg, Office of the Attorney General, New York, NY, for Defendant Hon. Lawrence K. Marks.

Daniel A. Spitzer, Hodgson Russ Andrews Woods & Goody, LLP, Buffalo, NY, for Defendants Sheriff James B. Quattrone, Sheriff John C. Garcia, Sheriff Michael J. Filicetti.

Ester Murdukhayeva, Mark Stephen Grube, New York State Office of the Attorney General Appeals & Opinions, New York, NY, for Defendant Letitia James.

OPINION AND ORDER GRANTING PRELIMINARY INJUNCTION

MARY KAY VYSKOCIL, United States District Judge:

For more than forty years, interest on money judgments in New York has accrued at the rate of nine percent per year. Last December, Governor Kathy Hochul signed into law the Fair Consumer Judgment Interest Act, N.Y. Leg. 2021-2022 Reg. Sess., S.5724A § 1, A6474A § 1 (the "Amendment"), which reduces the interest rate on money judgments for consumer debt to two percent per year. The Amendment applies both prospectively and retroactively to judgments unsatisfied at the time the law goes into effect at the end of this month.

Plaintiffs, New York credit unions, are judgment creditors who, as of the beginning of April 2022, collectively are due over a million dollars in post-judgment interest on unpaid judgments for consumer debt. Plaintiffs challenge the retroactive applicability of the Amendment as an unconstitutional taking in violation of the Fifth Amendment, and as violative of their substantive due process rights guaranteed under the Fourteenth Amendment, pursuant to 42 U.S.C. § 1983. Plaintiffs seek a preliminary injunction prohibiting the Defendants, state officials in their official capacity, from implementing or enforcing the retroactive applicability of the Amendment.

After receiving briefing from all parties, on April 20, 2022, the Court held a hearing on the requested emergency relief. For the foregoing reasons, Plaintiffs’ request for a preliminary injunction is denied with respect to Defendant Judge Marks, and granted with respect to the sheriff Defendants.¹

BACKGROUND

In considering a motion for a preliminary injunction, the Court may rely on affidavits, depositions, and sworn testimony. See Mullins v. City of New York , 626 F.3d 47, 51-52 (2d Cir. 2010). Federal Rule of Evidence 201 also authorizes the Court to "judicially notice a fact that is not subject to reasonable dispute because it (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." The Court considers at this stage the Parties’ pleadings and affidavits submitted in connection with the pending motion,² and the New York Civil Practice Law and Rules.

I. NEW YORK JUDGMENTS AND INTEREST RATES

This matter involves post-judgment interest accrued on money judgments under New York law. Compl. ¶ 30; Pls. Mem. at 2. The entry of judgments is governed by the New York Civil Practice Law and Rules, which provides that a "judgment is entered when, after it has been signed by the clerk, it is filed by him." N.Y. C.P.L.R. § 5016(a). Thereafter, the clerk of the court records the judgment in a "judgment-book," which the clerk maintains. N.Y. C.P.L.R. § 9702(1) ; David D. Siegel, New York Practice § 418 (6th ed. 2018). The judgment becomes enforceable at the time of entry. See Siegel, New York Practice § 485. The New York Civil Practice Law and Rules further provide that "[e]very money judgment shall bear interest from the date of its entry [and] [e]very order directing the payment of money which has been docketed as a judgment shall bear interest from the date of such docketing." N.Y. C.P.L.R. § 5003.³ Since 1981, the New York Legislature has determined that interest should accrue at nine percent per year. See N.Y. C.P.L.R. § 5004 ; 1981 N.Y. Laws, ch. 258, § 2; Siegel, New York Practice § 412 ("[I]n 1981, the [interest] rate was raised to 9%, where it still stands now.").

A judgment creditor—the party to whom a money judgment is owed—can seek in a myriad different ways to enforce a judgment once entered: the judgment may be executed against the debtor's real or personal property, N.Y. C.P.L.R. §§ 5202, 5230 ; the debtor's income may be garnished, N.Y. C.P.L.R. § 5231 ; or an installation payment order may be entered by a court of competent jurisdiction, N.Y. C.P.L.R. § 5226. The judgment creditor may pick whichever method of enforcement he or she wishes. See Siegel, New York Practice §§ 485, 494. Where the judgment creditor elects to satisfy the debt out of the real or personal property of the debtor, an execution of the judgment must be issued. See N.Y. C.P.L.R. § 5230. That execution "may be issued from the supreme court, county court or a family court, in the county in which the judgment was first docketed, by the clerk of the court or the attorney for the judgment creditor as officer of the court". N.Y. C.P.L.R. § 5230(b). The execution is then issued "to the sheriffs of one or more counties of the state," who serve as enforcement officers for the courts. Id. ; Siegel, New York Practice § 495 ( C.P.L.R. § 5230 "which, by its address to the ‘sheriff’ as the enforcement officer, manifests its preoccupation with the supreme court and the county courts, for both of which the sheriff acts as the enforcement official."). The execution must contain, inter alia , "the date that the judgment or order was entered, the court in which it was entered, the amount of the judgment or order and the amount due thereon and it shall specify the names of the parties in whose favor and against whom the judgment or order was entered." N.Y. C.P.L.R. § 5230(a).

II. THE AMENDMENT

On December 31, 2021, Governor Kathy Hochul signed into law the Fair Consumer Judgment Interest Act. N.Y. Leg. 2021-2022 Reg. Sess., S5724A § 1, A6474A § 1. That law retains the now-familiar nine percent post-judgment interest rate, except where the judgment derives from "an action arising out of a consumer debt where a natural person is a defendant."⁴ Amendment § 1. With respect to a judgment that arises out of a consumer debt action, the Amendment provides that:

the annual rate of interest ... shall be two per centum per annum (i) on a judgment or accrued claim for judgments entered on or after the effective date of the chapter of laws of two thousand twenty-one which amended this section, and (ii) for interest upon a judgment pursuant to section five thousand three of this article from the date of the entry of judgment on any part of a judgment entered before the effective date of the chapter of the laws ... which amended this section that is unpaid as of such effective date.

Amendment § 1. The Amendment specifies that its effective date is April 30, 2022. Amendment § 7. In sum, as of April 30, 2022, the Amendment lowers the post-judgment interest rate on consumer debt—both prospectively and retroactively with respect to unsatisfied judgments —from nine percent to two percent per year.

The Amendment also imposes new obligations with respect to executions and their issuances. Following the effective date of the Amendment, an execution must state "the applicable interest rate and the date as of which the new interest rate applies if the interest rate for consumer debt ... applies." Amendment § 4(a). For executions that are "ongoing"—that is, unsatisfied as of the effective date—"the judgment creditor shall issue an amended execution within sixty days of the effective date of the chapter of the laws ... which amended this subdivision, effective as of the date of the rate change." Amendment § 4(a). Where the interest rate on an execution is "ongoing," the Amendment provides that "the clerk of the court of the supreme court, county court or a family court, in the county in which the judgment was first docketed, or the attorney for the judgment creditor as officer of the court, shall be authorized to issue an amended execution to the sheriffs of one or more counties of the state and shall issue an amended execution within sixty days of the effective date of the chapter of the laws ... which amended this subdivision, effective as of the date of the rate change." Amendment § 4(b). Where the execution is an income execution subject to the interest rate change, the sheriff "shall [ ] promptly return[ ] to the debtor" "any money collected in excess of the judgment amount." Amendment § 5(k).

III. THE PARTIES

Plaintiffs Greater Chautauqua Federal Credit Union ("GCFCU"), Boulevard Federal Credit Union ("BFCU"), Greater Niagara Federal Credit Union ("GNFCU") are credit unions located in western New York. Compl. ¶¶ 16-18. All Plaintiffs "offer consumer lending products including home and auto loans, and personal loans used for individual or family purposes." Mem. at 5; Zasucha Decl. ¶¶ 6, 14; Heim Decl. ¶¶ 6, 12; Haaksma Decl. ¶¶ 6, 12. As a result of their consumer-facing business, Plaintiffs each possess unsatisfied consumer debt judgments. Compl. ¶¶ 16-18; Zasucha ...