Opinion
27367/02.
Decided November 5, 2004.
The plaintiff moves for an order pursuant to CPLR 5229 to restrain defendant from transferring, mortgaging, assigning, leasing, renting and/or encumbrancing in any way, all of his personal and/or real property, including but not limited to certain real property known as 2173 Homecrest Avenue, Brooklyn, NY, Block 7345, Lot 49 and 2320 East 22nd Street, Brooklyn, NY, Block 7405, Lot 112.
Upon a review of the pleadings herein and further after having heard oral argument by counsel for respective parties and considered the applicable case law, the Court grants plaintiff's motion for relief under CPLR 5229 to the extent of ordering a hearing to examine the defendant's assets and latest financial activities and providing the plaintiff an opportunity to sustain the burden of showing the necessity of the relief of restraint.
The plaintiff contends that jury verdict in the total amount of $200,000.00 (two hundred thousand dollars) establishes a sufficient basis to issue an order restraining the defendant from transferring or disposing of his personal and/or real property.
The defendant opposes the application on the following grounds: that the plaintiff has not satisfied the prerequisites to obtaining such relief, and that there is a strong likelihood that the verdict will be vacated and will not proceed to judgment.
The defendant further contends that the case law requires the plaintiff to demonstrate that he has transferred and disposed of assets specifically to avoid satisfying judgment.
In his supporting affidavit, the defendant cites Gallegos v. Elite Model Management Corporation, 1 Misc 3d 200 (2003), and Kaminsky v. Kahn, 46 Misc 2d 131(1965). He alleges that failure by the plaintiff to demonstrate his transfers and disposal of assets in order to avoid satisfaction of judgment should preclude the court from granting a restraining order.
Second, the defendant citing Unex Limited v. Arsygrain Int'l. Corp., 102 Misc 2d 810 (1979), contends that a potentially meritorious CPLR 4404(a) motion to reduce damages or set aside verdict would make the CPLR 5229 relief an inappropriate remedy. The defendant argues that the court should deny the plaintiff's motion since the court reserved decision on the CPLR 4404(a) motion and there is a strong likelihood that his motion will be granted for one of the following reasons: 1) insufficient evidence to support the jury's award or 2) intention to make a bad faith claim against the insurance company.
Statement of Facts
On July 19th, 2004, the trial of the above-captioned matter was concluded. The jury rendered a verdict in favor of the plaintiff and determined that the plaintiff had sustained a serious injury within the meaning of the Insurance Law. Further, the jury awarded plaintiff the sum of $75,000.00 (seventy-five thousand dollars) for past pain and suffering and the sum of $125,000.00 (one hundred twenty-five thousand dollars) for future pain and suffering.
The plaintiff moved the court pursuant to CPLR 5229 to restrain the defendant from transferring and/or disposing of his assets. The defendant opposes this motion. In addition, the defendant states he is pursuing another motion to reduce damages or set aside the jury's verdict according to CPLR 4404(a).
Discussion
CPLR 5229 provides:
"In any court, before a judgment is entered, upon motion of the party in whose favor a verdict or decision has been rendered, the trial judge may order examination of the adverse party and order him restrained with the same effect as if a restraining notice had been served upon him after judgment."
CPLR 5229 permits the post-judgment enforcement remedy of examination and restraint prior to the entry of a final judgment. Weinstein-Korn-Miller, NYCP ¶ 5229.01. The only statutory requirement is that an application for CPLR 5229 relief be made by the prevailing party. Sequa Capital Corp. v. Nave, 921 F Supp 1072,1076. (SD NY 1996). It is in the trial court's discretion whether to grant the injunctive relief in light of the purpose of statute: to prevent an adverse party from disposing of assets in order to avoid judgment. Weinstein-Korn-Miller, NYCP ¶ 5229.01, 5229.04, citing Gallegos v. Elite Model Management Corporation, at 201. Research of CPLR 5229 reveals little precedent. It has been invoked in only a few cases to date. Gallegos v. Elite Model Mgt. Corp., at 202.
In Kaminsky v. Kahn, the court granted CPLR 5229 relief, reasoning that regardless of the possibility of a reversal of the interlocutory judgment rendered against the adverse party, CPLR 5229 relief was justified where the adverse party was disposing certain of his assets by alleged gifts and sales. Gallegos v. Elite Model Management Corporation, at 202. Similarly, in Gallegos v. Elite Model Mgt. Corp., the court granted CPLR 5229 relief to the plaintiff by determining that there was a real danger that the defendant would dispose of or divert assets to avoid a potential judgment on the bases of defendant's inconsistent financial statements and transfers of the assets. Finally, in Sequa v. Nave, the court granted the plaintiff's application for CPLR 5229 relief subsequent to granting its motion for summary judgment, holding that under the circumstances such relief was justified when the adverse party was shown to have transferred assets during the pendency of the motion. Gallegos v. Elite Model Management Corporation, at 202, 203.
At the same time, in Unex Ltd. v. Arsygrain, the court pointed out that CPLR 5229 relief would not be available to the movant when the prevailing party had not made a sufficient showing that the award may be rendered uncollectible because the adverse party was either in financial distress or danger existed that he would dissipate his assets in order to avoid judgment. Gallegos v. Elite Model Management Corporation, Id at 202.
The plaintiff in this case had no opportunity to make a showing that the defendant made transfers or attempted to dispose of assets to avoid satisfaction of the judgment since the verdict was returned fairly recently providing insufficient time to review his actions. At the same time, the defendant correctly points out that since he has cooperated fully through the course of litigation, he deserves an opportunity to prove his continuing good faith to the Court.
Further, in Unex Limited v. Arsygrain Intl Corp., the court suggested that a CPLR 5229 relief may not be appropriate where decision on a post-trial motion vacating the verdict is reserved or if the trial judge believes a challenge to the verdict has merit.
CPLR 4404(a) provides:
"After a trial of a cause of action or issue triable of right by a jury, upon the motion of any party or on its own initiative, the court may set aside a verdict or any judgment entered thereon and direct that judgment be entered in favor of a party entitled to judgment as a matter of law or it may order a new trial of a cause of action or separable issue where the verdict is contrary to the weight of the evidence, in the interest of justice or where the jury cannot agree after being kept together for as long as is deemed reasonable by the court."
A potentially meritorious CPLR 4404(a) motion may lead to the denial of an application for examination and restraints primarily because the utility of obtaining such relief would seem questionable if the verdict will not proceed in the normal course to judgment. Gallegos v. Elite Model Management Corporation, at 202.
The Court in this case has not yet made a decision on the CPLR 4404(a) motion. An oral argument is scheduled for November 23, 2004, and it would be premature to decide whether the verdict will be vacated without first reviewing all the submissions of the respective parties.
Under the present circumstances the Court possesses insufficient information to make a final determination. Therefore, an examination of the defendant's assets will be held to determine whether the plaintiff can sustain his burden of proving the necessity of the relief of restraint of defendant's property.
Conclusion
Accordingly, it is ordered that the motion for relief under CPLR 5229 is granted to the extent of holding a hearing to examine the defendant's assets and provide plaintiff with an opportunity to establish his right to relief within the meaning of the statute on November 23, 2004.
This shall constitute the decision and order of the Court.