Matter of Balanoff v. Niosi

• Decision Date: 07 February 2005
• Docket Number: 2003-09048.
• Citation: 16 A.D.3d 53,2005 NY Slip Op 01014,791 N.Y.S.2d 553
• Parties: In the Matter of GILBERT L. BALANOFF, Appellant, v. PHILIP NIOSI et al., Respondents.
• Court: New York Supreme Court — Appellate Division

16 A.D.3d 53

791 N.Y.S.2d 553

2005 NY Slip Op 01014

In the Matter of GILBERT L. BALANOFF, Appellant, v. PHILIP NIOSI et al., Respondents.

2003-09048.

Appellate Division of the Supreme Court of the State of New York, Second Department.

February 7, 2005.

Appeal from a judgment of the Supreme Court, Nassau County (Bruce R. Cozzens, J.), entered September 12, 2003 in a proceeding to enforce a money judgment. The judgment dismissed the petition and vacated any previously issued restraining order.

Gilbert L. Balanoff, Mineola, appellant pro se.

Wachtel & Masyr, LLP, New York City (Evan Weintraub of counsel), for respondents.

OPINION OF THE COURT

CRANE, J.

Introduction

This appeal presents an opportunity for this Court to clarify the procedure for enforcing a judgment against an award of maintenance. This procedure differs from those applicable to other types of collection efforts because it harmonizes the judgment creditor's right to reach these funds with the public policy of protecting the recipients of such funds, though they be judgment debtors.

Factual and Procedural Background

The respondent Philip Niosi and his former wife, Danise Ditroia, were divorced pursuant to a judgment entered in the Supreme Court, Suffolk County. The judgment of divorce incorporated the terms of a duly-binding separation agreement which provided, inter alia, that Niosi would make monthly maintenance payments to Ditroia. Upon Niosi's failure to make these payments, the Supreme Court, Suffolk County, entered an income execution for support directing Niosi's employer, the respondent Prospective Computer Analysts, Inc. (hereinafter Prospective Computer), to deduct the maintenance payments from Niosi's income and to pay them over to Ditroia on a monthly basis.

Subsequently, in July 2002, the petitioner obtained a judgment against Ditroia on her default in Supreme Court, Nassau County, for unpaid legal services. In an attempt to satisfy the judgment, the petitioner served the respondents, Niosi and Prospective Computer, with restraining notices alleging that the respondents were in possession of property in which the petitioner had an interest, to wit, Ditroia's monthly maintenance payments. When the respondents refused to pay the petitioner, he commenced this proceeding to enforce the restraining notices in Supreme Court, Nassau County, on notice to Ditroia.

The Supreme Court held that the respondents did not violate the restraining notices because their payment of Ditroia's monthly maintenance was exempt from restraint pursuant to CPLR 5205 (d) (3). The court further stated that any determination of the extent to which the maintenance was not exempt should be made by the court that issued the award (i.e. the Supreme Court, Suffolk County). On this basis, the court, inter alia, dismissed the petition and vacated the previously-issued restraining notices.

On appeal, the petitioner argues that the Supreme Court, Nassau County, should have enforced the restraining notices in the proceeding because Ditroia failed to claim her exemption and prove the amount of her reasonable requirements upon notice of this proceeding. Under the circumstances of this case, the petitioner's contention is lacking in merit. A review of the relevant enforcement statutes contained in CPLR article 52, in conjunction with an examination of their legislative history, reveals that the petitioner took the wrong initial steps in his attempt to enforce his money judgment against Ditroia's award of maintenance. As discussed more fully below, Ditroia's burden to claim and prove her exemption would not be triggered until the petitioner submits a proper application for an installment payment order to reach the amount of Ditroia's maintenance in excess of her reasonable requirements.

Exempt Property

In general, CPLR 5205 enumerates the kinds of personal property that are exempt from application to the satisfaction of money judgments. For instance, CPLR 5205 (a) provides exemptions for personal tangible goods, such as stoves kept in the judgment debtor's dwelling house (see CPLR 5205 [a] [1]), the family bible and family pictures (see CPLR 5205 [a] [2]), and "necessary working tools . . . not exceeding six hundred dollars in value" (CPLR 5205 [a] [7]). CPLR 5205 (d) further provides that certain types of income are exempt from application to the satisfaction of a money judgment, including, inter alia, 90% of a judgment debtor's earnings for personal services (see CPLR 5205 [d] [2]), and payments made pursuant to an award in a matrimonial action for the support of a former wife, where the former wife is a judgment debtor (see CPLR 5205 [d] [3]). These provisions derive from various sections of the Civil Practice Act (see Legislative Studies and Reports, McKinney's Cons Laws of NY, Book 7B, CPLR 5205, at 136-138 [1997]).

Burden of Proving an Exemption

Traditionally, the judgment debtor bears the burden of claiming and proving the applicability of an exemption, but only when the exempt status of the property is unclear to the judgment creditor or a levying officer (see Matter of Livingston, 30 Misc 2d 71, 75-76 [1961], affd 14 AD2d 264 [1961]; Wilcox v Howe, 12 NYS 783, 783-785 [1891]; 11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5205.06, at 52-116). For example, the debtor has the burden of claiming and proving the applicability of an exemption under CPLR 5205 (a) (7) (former Civ Prac Act § 665 [7] [necessary working tools and implements]; see e.g. Gilewicz v Goldberg, 69 App Div 438, 439 [1902];¹ Tuckman v Hayward, 26 Misc 2d 45, 46 [1960]; Wilcox v Howe, supra). The judgment debtor has the burden of proving this exemption because he or she possesses the facts required to prove that the items are "necessary working tools" for his or her profession, which do not exceed $600 in value (see CPLR 5205 [a] [7]; 11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5205.06, supra). Neither the judgment creditor nor a levying officer may have knowledge of what kinds of tools a judgment debtor needs for his or her profession, nor how much they are worth (see Wilcox v Howe, supra). Accordingly, due to the qualified nature of the exemption, the judgment debtor has to claim and prove its applicability or risk waiving the exemption (see Gilewicz v Goldberg, supra at 439; Wilcox v Howe, supra; 11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5205.06, supra).

Similarly, when a judgment creditor seeks to restrain funds in a judgment debtor's bank account, the judgment debtor has the burden of claiming and proving the applicability of an exemption because only he or she knows the source of the funds which may qualify for an exemption (see Matter of Cole v Goldberger, Pedersen & Hochron, 95 Misc 2d 720, 730-731 [1978]; see also Frasca v General Motors Corp., Cadillac Motor Div., 228 AD2d 474 [1996]; Matter of Lesiak v Beneficial Commercial Corp., 101 AD2d 672, 672-673 [1984]; Matter of Sverd v Mostel, 283 App Div 128, 130-131 [1953]; Freeman v Freeman, 119 Misc 2d 775 [1983]). By contrast, if property or funds are easily identifiable as exempt, the judgment debtor does not have the burden of claiming the exemption in order to benefit from its application (see Matter of Livingston, supra at 75-76; Wilcox v Howe, supra; 11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5205.06, supra).

In the case at bar, it is clear that the petitioner sought to satisfy his money judgment with maintenance payments awarded for Ditroia's support in a matrimonial action. Indeed, the respondents were directed to pay Ditroia pursuant to an "income execution for support" entered in the Supreme Court, Suffolk County. The petitioner and the respondents knew the nature of these payments at the time the restraining notices were served. The restraining notices expressly stated that they applied to "Maintenance (alimony) payments." Moreover, in his petition, the petitioner acknowledged that he went through the file in the matrimonial action prior to serving the restraining notices. Accordingly, the exempt nature of Ditroia's maintenance payments was self-evident from the start (see CPLR 5205 [d] [3]).

Moreover, unlike funds in a bank account or personal goods subject to a monetary limitation, the exemption for maintenance under CPLR 5205 (d) (3) is only qualified by a condition subsequent dependent upon an application to the court. Like salary, wages, and other forms of income, an award of support in a matrimonial action is exempt "except such part as a court determines to be unnecessary for the reasonable requirements of the judgment debtor and his dependents" (CPLR 5205 [d] [emphasis added]). While it has generally been held that the judgment debtor bears the burden of proving his or her reasonable requirements (see Zadar Constr. & Woodworking v Charter Woodworking Corp., 158 AD2d 454 [1990]; Matter of Olson v Olson, 275 App Div 60, 64 [1949]; Camphill Special Schools v Prentice, 126 Misc 2d 707, 708 [1984]; Matter of Dickens v Director of Fin. of City of N.Y., 45 Misc 2d 882, 883 [1965]; Matter of Industrial Bank of Commerce v Kelly, 28 Misc 2d 889, 890 [1961]), the judgment creditor bears the initial burden of tendering and framing the issue upon his or her own motion (see Matter of Olson v Olson, supra at 62-64; Matter of Dickens v Director of Fin. of City of N.Y., supra at 883). The petitioner in the instant case did not make the appropriate application.

CPLR 5226: The Installment Payment Order

The normal device for reaching income in excess of the debtor's reasonable requirements is the installment payment order pursuant to CPLR 5226, not the restraining notice to which the petitioner resorted (see Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5205:2, at 135-136; 11 Weinstein-Korn-Miller, NY Civ Prac ¶ 5205.28, at 52-150). CPLR 5226 provides that, upon motion of the judgment creditor, the court shall order the judgment debtor to make specified installment payments to the judgment creditor where it is...