Scher Law Firm, LLP v. DB Partners I, LLC

• Decision Date: 05 July 2012
• Citation: 2012 N.Y. Slip Op. 05427,97 A.D.3d 590,948 N.Y.S.2d 335
• Parties: In the Matter of SCHER LAW FIRM, LLP, etc., appellant, v. DB PARTNERS I, LLC, et al., respondents.
• Court: New York Supreme Court — Appellate Division

97 A.D.3d 590

948 N.Y.S.2d 335

2012 N.Y. Slip Op. 05427

In the Matter of SCHER LAW FIRM, LLP, etc., appellant,

v.DB PARTNERS I, LLC, et al., respondents.

Supreme Court, Appellate Division, Second Department, New York.

July 5, 2012.

Scher Law Firm, LLP, Carle Place, N.Y. (Austin Graff and Jonathan Scher of counsel), appellant pro se.

King & Spalding, LLP, New York, N.Y. (Richard T. Marooney, James P. Cusick, and Christina M. Conroy of counsel), for respondents RBC Capital Markets Corporation and Royal Bank of Canada.

DANIEL D. ANGIOLILLO, J.P., THOMAS A. DICKERSON, ARIEL E. BELEN, and L. PRISCILLA HALL, JJ.

In a turnover proceeding pursuant to CPLR 5225(b) to require DB Partners I, LLC, RBC Capital Markets Corporation, and Royal Bank of Canada to turn over to the petitioner the entire balance in the accounts in the name of DB Partners I, LLC, held by RBC Capital Markets Corporation and Royal Bank of Canada, the petitioner appeals (1) from a decision of the Supreme Court, Kings County (Demarest, J.), dated January 28, 2011, made after a nonjury trial, and (2) as limited by its brief, from so much of an order of the same court entered July 14, 2011, as, upon the decision, in effect, denied so much of the petition as sought to require the turnover of so much of the balance of the accounts as constituted collateral for a certain line of credit, and directed RBC Capital Markets Corporation to pay the sum of $2,080,719.99 to Royal Bank of Canada.

ORDERED that the appeal from the decision is dismissed, as no appeal lies from a decision ( see Schicchi v. J.A. Green Constr. Corp., 100 A.D.2d 509, 472 N.Y.S.2d 718); and it is further,

ORDERED that the order is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the respondent RBC Capital Markets Corporation and Royal Bank of Canada.

This dispute arose when Fred Deutsch, the president of Parklex Associates, Inc. (hereinafter the Parklex corporation), which was the general partner of Parklex Associates (hereinafter the partnership), sold the partnership's sole asset, a building in midtown Manhattan, for the sum of approximately $55,000,000 ( see Scher Law Firm v. DB Partners I LLC, 27 Misc.3d 1230[A], 2010 N.Y. Slip Op. 50975[U], 2010 WL 2219610 [2010] ). After the closing on May 8, 2006, Deutsch and the Parklex corporation distributed some of the sale proceeds to the other partners of the partnership (hereinafter collectively the claimants), and kept $32,300,000. Deutsch directed the transfer of $23,080,351.63 of those proceeds to an account in the name of FAL Associates, LLC, at JP Morgan Chase Private Banking.

The claimants commenced an action in the Supreme Court, Kings County, against Deutsch and his associates, alleging, inter alia, breach of fiduciary duty and conversion ( see Parklex Assoc. v. Parklex Assoc., 15 Misc.3d 1125 [A], 2007 N.Y. Slip Op. 50843[U], 2007 WL 1203616 [2007] ). On May 26, 2006, a temporary restraining order was issued enjoining the “secreting or wasting funds in any and all accounts used, maintained or in the name of” the partnership and the Parklex corporation. On June 29, 2006, the temporary restraining order was continued, enjoining the distribution of funds in “any and all accounts held or maintained in the name of Parklex Associates ... or Parklex Associates Corp. [sic] without further order of this Court.”

On June 23, 2006, Deutsch opened an account in the name of the Parklex corporation at RBC Dain Rauscher, later known as RBC Capital Markets Corporation (hereinafter RBC Capital), a wholly owned subsidiary of Royal Bank of Canada (hereinafter the Bank). On June 26, 2006, $6,104,173.86 was transferred into that account, and on June 27, 2006, Deutsch transferred $4,604,173.86 from that account into another account at RBC Capital in the name of Collateral Acquisition, LLC.

In July 2006, Deutsch opened an account in the name of DB Partners I, LLC (hereinafter DB Partners), at RBC Capital. Deutsch wire-transferred $20,035,823.80 of the $23,080,351.63 on deposit at JP Morgan Chase Private Banking into that account.

In the fall of 2006, the claimants subpoenaed RBC Capital's account information with respect to (1) $6,104,173.86 wire-transferred into the Parklex corporation's account on June 26, 2006, and (2) $4,604,173.86 wire-transferred from the Parklex corporation's account to the account of Collateral Acquisition, LLC, on June 27, 2006. RBC Capital complied with the first subpoena, and, after the motion of the Parklex corporation, inter alia, to quash the second subpoena was denied, RBC Capital complied with the second subpoena.

By agreement dated May 3, 2007, among DB Partners, RBC Capital, and the Bank, DB Partners pledged the funds in the account in its name at RBC Capital as collateral for a line of credit of $17,000,000 issued by the Bank. Thereafter, in July 2009, the petitioner, on behalf of the claimants, obtained a judgment by confession against Deutsch in the total sum of $15,574,599.

In September 2009, the petitioner, on behalf of the claimants, commenced the instant turnover proceeding pursuant to CPLR 5525(b) to require DB Partners, RBC Capital, and the Bank to turn over to the...