Plaza Hotel Associates v. Wellington Associates, Inc.

• Citation: 84 Misc.2d 777,378 N.Y.S.2d 859
• Parties: PLAZA HOTEL ASSOCIATES and Hotel Corporation of America, Plaintiffs, v. WELLINGTON ASSOCIATES, INC., Defendant.
• Decision Date: 03 November 1975
• Court: New York Supreme Court

Page 859

378 N.Y.S.2d 859

84 Misc.2d 777

PLAZA HOTEL ASSOCIATES and Hotel Corporation of America, Plaintiffs, v. WELLINGTON ASSOCIATES, INC., Defendant.

Supreme Court, Special Term, New York County, Part I.

Nov. 3, 1975.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Edward N. Costikyan, New York City, of counsel), for plaintiffs.

Goldstein, Shames & Hyde, New York City (Edward Brodsky and Jeffrey I. Klein, New York City, of counsel), for movants.

ABRAHAM J. GELLINOFF, Justice:

Motions number 159 and 194 of September 26, 1975 are consolidated.

Wellington Associates, a partnership, moves for a protective order (CPLR 5240) vacating a restraining notice issued by plaintiff-judgment creditor to Chase Manhattan Bank affecting Wellington Associates' account (CPLR 5222). And, together with others, it moves to vacate subpoenas issued by plaintiff requiring appearance for examination in aid of satisfaction of the judgment obtained in this action (CPLR 5223).

Plaintiff brought the action against defendant Wellington Associates, Inc., a corporation, the then owner of a half interest in the land involved. The relief sought was the vacating of an appraisal of the value of the property, upon which was based the rent to be paid defendant by plaintiff, and an accounting for excess rental payments. This Court declared the appraisal invalid (55 Misc.2d 483, 285 N.Y.S.2d 941 (Sup.Ct.N.Y.Co.1967), Affd. 28 A.D.2d 1209, 285 N.Y.S.2d 267 (1st Dept.1967), Affd. 22 N.Y.2d 846, 293 N.Y.S.2d 108, 239 N.E.2d 736 (1968)), and the parties subsequently stipulated to an appraisal by the Court.

Ultimately, a valuation for the land was determined (73 Misc.2d 6, 340 N.Y.S.2d 796 (Sup.Ct.N.Y.Co.1973), Modified 46 A.D.2d 642, 360 N.Y.S.2d 433 (1st Dept.1974), Affd. 37 N.Y.2d 273, 372 N.Y.S.2d 35, 333 N.E.2d 346 (1975)), and a judgment rendered for plaintiff in the sum of $4,446,461.31 for overpayment of rent. The present motions arise from plaintiff's efforts to collect that judgment.

After entry of judgment, plaintiff discovered that the defendant corporation had long since disposed of the property which was the subject of the litigation, and that title to the property had shifted a number of times between various record owners, which, like the defendant corporation, are owned or wholly controlled by Sol Goldman and the late Alex DiLorenzo. Plaintiff served a restraining notice pursuant to CPLR 5222 upon Chase Manhattan Bank with respect to the account in the name of defendant corporation, only to discover that no such account existed. An account was maintained at Chase Manhattan, however, for Wellington Associates, the movant partnership, which, in a certificate of doing business filed May 1, 1968, was represented by Goldman and DiLorenzo to be 'the successor in interest to (defendant) Wellington Associates, Inc.'. Plaintiff thereupon issued the restraining notice here challenged, and, in aid of execution, served the subpoenas sought to be vacated.

CPLR 5222(b) authorizes a judgment creditor to serve a restraining notice upon one who, at the time of service

'owes a debt to the judgment debtor or * * * is in the possession or custody of property in which he knows or has reason to believe the judgment debtor has an interest, or if the judgment creditor has stated in the notice that a specified debt is owed by the person served to the judgment debtor or that the judgment debtor has an interest in specified property in the possession or custody of the person served. * * * Such a person is forbidden to make or suffer any sale, assignment or transfer of, or any interference with, any such property, or pay over or otherwise dispose of any such debt, to any person other than the sheriff, except upon direction of the sheriff or pursuant to an order of the court, until the expiration of one year after the notice is served upon him, or until the judgment is satisfied or vacated, whichever event first occurs.'

This authority to freeze assets of a judgment debtor was added to the arsenal of judgment creditors because of the 'great number of judgments which were never satisfied and those that were satisfied only after years of litigation involving great expenditures of time and money (see Advisory Committee Notes, 12 N.Y. Standard Civil (Practice) Service, p. 59). As a result, enforcement proceedings have undergone extensive changes, including the simplification of examination and restraining procedures which may be utilized without resorting to special proceedings' (Stathopoulos v. Seaways Corp., 66 Misc.2d 607, 609, 321 N.Y.S.2d 717, 719 (Civ.Ct.N.Y.Co.1971); see, Matter of Sumitomo Shoji New York, Inc. v. Chemical Bank, 47 Misc.2d 741, 745, 263 N.Y.S.2d 354, 358 (Sup.Ct.N.Y.Co.1965)).

The restraining notice may serve two purposes. First, it may be used independently of other enforcement devices, to prohibit the judgment debtor from disposing of assets, thereby encouraging him to satisfy the judgment (see, 'Legislative Studies and Reports' to CPLR 5222, McKinney's Consolidated Laws of New York, Vol. 7B, pp. 81, 82). Or, the restraining notice may be sued in conjunction with other enforcement devices, to 'maintain the status quo while the judgment creditor seeks a delivery, turnover, or receivership order in what were formerly called supplementary proceedings' (McLaughlin, 'Civil Practice', 17 Syracuse Law Review 331, 369--70 (1966)). Plaintiff here has apparently opted for the latter use, and seeks to impose a species of preliminary injunction while pursuing enforcement of its judgment pursuant to CPLR Article 52.

Movant partnership, however, urges that it is a stranger to this action, and that the assets frozen by plaintiff's restraining notice are assets of Wellington Associates, the partnership, not those of Wellington Associates, Inc., the defendant-judgment debtor. Plaintiff relies in its opposition upon movant's...