Opinion
Index No. 159582/2021
08-04-2022
NWJ Judgments LLC and MLF3 NWJ LLC, Petitioners, v. Jekogian Family Trust, BBJ FAMILY IRREVOCABLE TRUST, NICKOLAS JEKOGIAN III, HEATHER JEKOGIAN, and NICKOLAS JEKOGIAN, Jr., Respondents.
Zeichner Ellman & Krause LLP, New York, NY (Jantra Van Roy and Nathan Schwed of counsel), for petitioners. David C. Nevins, P.C., Jericho, NY (David C. Nevins of counsel), for respondents.
Unpublished Opinion
Zeichner Ellman & Krause LLP, New York, NY (Jantra Van Roy and Nathan Schwed of counsel), for petitioners.
David C. Nevins, P.C., Jericho, NY (David C. Nevins of counsel), for respondents.
Gerald Lebovits, J.
In this CPLR 5225 turnover proceeding, petitioners NWJ Judgments LLC (NWJ) and MLF3 NWJ LLC (MLF3) seek to collect on money judgments entered by the New York County Clerk in two related actions. (See Index No. 162057/2018, NWJ Judgments LLC v Jekogian Family Trust, NYSCEF No. 150 [judgment]; Index No. 651880/2018, MLF3 NWJ LLC v Jekogian Family Trust, NYSCEF No. 233 [judgment].)
Those judgments were entered in March 2021 in favor of NWJ and MLF3 against respondents Jekogian Family Trust, Nickolas W. Jekogian III (in his capacity as trustee of the Jekogian Family Trust), and Heather Jekogian (in her capacity as trustee of the Jekogian Family Trust). (Id.) In February 2022, this court also held that numerous transfers made by Nickolas W. Jekogian III (acting in his individual capacity) into respondent BBJ Family Irrevocable Trust were fraudulent conveyances and ordered those transfers set aside. (Index No. 162057/2018, NYSCEF No. 208 [order in NWJ action]; Index No. 651880/2018, NYSCEF No. 289 [order in MLF3 action].)
The March 2021 judgments totaled approximately $4.7 million, plus 9% post-judgment interest under CPLR 5003. (See Index No. 162057/2018, NYSCEF No. 150 [ NWJ judgment]; Index No. 651880/2018, NYSCEF No. 233 [ MLF3 judgment].) Petitioners levied in 2021 on those judgments under CPLR 5232. (See NYSCEF Nos. 4, 5.) Respondents represent-and petitioners do not dispute-that they have paid approximately $3.1 million toward that aggregate judgment amount. Thus, depending on when respondents made payments toward the judgments made, approximately $1.8 million to $2.1 million of the total amount of the judgments-plus-interest remains outstanding.
Petitioners now seek to collect sufficient assets held by respondents to satisfy the amounts remaining on the judgments. Petitioners have brought this proceeding against the judgment debtors under the March 2021 judgment, against Nickolas W. Jekogian III (individually and as grantor of the BBJ Trust), against Nickolas Jekogian, Jr. (as grantor of the Jekogian Family Trust and as trustee of the BBJ Trust), and against the BBJ Trust itself. Petitioners seek a turnover order under CPLR 5225 against respondents to secure assets of the Jekogian Family Trust and BBJ Trust sufficient to satisfy the amounts outstanding on the March 2021 judgments.
Petitioners' request for a turnover order is granted in part and denied in part.
DISCUSSION
Petitioners bring this special proceeding under CPLR 5225. Section (a) of that statute provides that on proper notice to the judgment debtor, "where it is shown that the judgment debtor is in possession or custody of money or other personal property in which he has an interest, the court shall order that the judgment debtor pay" so much of the money or property "as is sufficient to satisfy the judgment[] to the judgment creditor." If the "amount to be so paid is insufficient to satisfy the judgment," the court shall order the judgment debtor "to deliver any other personal property, or so much of it as is of sufficient value to satisfy the judgment, to a designated sheriff." (Id.)
Here, the judgment debtors are the Jekogian Family Trust and Nicholas W. Jekogian III and his sister Heather Jekogian in their capacities as trustees of that trust. Petitioners have established, through submission of a spreadsheet provided in discovery that reflects the Jekogian Family Trust's ownership interests in numerous real-estate-related entities, that the Jekogian Family Trust is in possession or custody of personal property sufficient to satisfy the judgments. That some or all of these interests might be located outside New York State is irrelevant, given this court's personal jurisdiction over the judgment debtors. (See Gryphon Domestic VI, LLC v APP Intern. Finance Co., B.V., 41 A.D.3d 25, 31 [1st Dept 2007].)
Given this evidence-provided by the judgment debtors themselves-there is no merit to respondents' suggestion that petitioners failed to establish that respondents have ownership interests in entities sufficient to satisfy the judgment. (See NYSCEF No. 13 at ¶¶ 20-22 [affirmation in opposition to petition].)
Petitioners have thus established prima facie their entitlement to a CPLR 5225 (a) turnover order with respect to the Jekogian Family Trust. In opposition, respondents argue-somewhat contradictorily-that the turnover order sought by petitioners is "overreaching and unjustified because it seeks to have assets turned over which exceed the balance of the judgment amount," and also that "the shares and interest[s]" that petitioners seek to have turned over "do not have a fixed amount on which this Court could make a determination on what shares should be turned over to satisfy the judgment." (NYSCEF No. 13 at ¶¶ 18, 23.)
This court takes respondents' point that inequity could result if this court were to force them to "turn[] over shares of... limited liability companies" to petitioners and then let petitioners "pick and choose which limited liability company's shares it wants to take in order [to] satisfy the judgment." (Id. at ¶ 24.) But that potential inequity stems from a combination of (i) the judgment debtors' continuing failure to satisfy fully the March 2021 judgments; and (ii) the difficulty of ascertaining the number of shares and interests that, when turned over to petitioners or sold by the city marshal, will cover the amounts remaining on those judgments. The practical difficulties resulting from these considerations are not a reason to deny the turnover petition, as respondents would have it.
That said, before resorting to the marshal's sale sought by petitioners, the judgment debtors should have a final opportunity to avoid the need for a sale by paying the $2 million or so that remains outstanding on the judgments. If, however, the judgment debtors do not make the necessary payments within 30 days, this court will require them under CPLR 5225 (a) and CPLR 5240 to turn over to the city marshal all property interests owned by the Jekogian Family Trust, to be sold at auction under CPLR 5233 until the judgments are satisfied.
Petitioners have also requested that this court enter an order directing these respondents to execute any appropriate instruments required to facilitate turnover. (See NYSCEF No. 1 at 17-18 [petition].) But petitioners have not provided any basis for this court to conclude that execution of such additional instruments might be required. This portion of the petition, as it pertains to the assets of the Jekogian Family Trust, is denied without prejudice.
As this court understands it, the assets held by the Jekogian Family Trust are amply sufficient to satisfy the outstanding judgments, even taking into account any auction-related discount in value. The branch of the turnover petition seeking turnover of assets held by the BBJ Family Irrevocable Trust-against which no money judgment currently lies-is therefore denied as academic.
Respondents contend that this court lacks jurisdiction over the BBJ Trust because petitioners failed to satisfy the requirements of CPLR 5222-a and CPLR 5232 (g). (See NYSCEF No. 13 at ¶¶ 8-12.) Those statutory provisions, though, apply only to levies made "against a natural person's account at a banking institution." Respondents do not provide any basis to conclude that the assets of the BBJ Trust are held in such an account.
Accordingly, it is
ORDERED that the branch of the petition seeking turnover under CPLR 5225 of assets held by respondent Jekogian Family Trust is granted to the following extent, and otherwise denied:
(i) Respondents Jekogian Family Trust, Nickolas W. Jekogian III (in his capacity as trustee of the Jekogian Family Trust) and Heather Jekogian (in her capacity as trustee of the Jekogian Family Trust) shall, within 30 days of service of a copy of this order with notice of its entry, pay to petitioners under CPLR 5232 all outstanding amounts on the money judgments entered on March 18, 2021 (in Index No. 651880/2018), and on March 22, 2021 (in Index No. 162057/2018), plus all post-judgment interest accrued as of the date of service of notice of entry;
(ii) If the respondents named in subparagraph (i) do not make the payments ordered in that subparagraph, these respondents and respondent Nickolas Jekogian, Jr. (in his capacity as grantor of the Jekogian Family Trust) shall, within 45 days of service of notice of entry, turn over to the New York City Marshal all stock certificates, membership certificates, instruments and all other indicia of ownership of the membership, shareholder, and partnership interests owned by the Jekogian Family Trust, by respondent Nickolas Jekogian, Jr. (in his capacity as grantor of that trust), or by respondents Nickolas W. Jekogian III and Heather Jekogian (in their capacities as trustees of that trust), for purposes of execution sales sufficient to satisfy the judgments (including post-judgment interest accrued as of service of notice of entry) and the Marshal's poundage, fees, and expenses;
and it is further
ORDERED that should turnover of the property interests described in the first decretal paragraph be required under the terms of that paragraph, following turnover the Marshal is authorized to sell those property interests at public auction under CPLR 5233 to the extent necessary to satisfy petitioners' judgments and the marshal's poundage, fees, and expenses, with distribution of any auction proceeds to be made consistent with CPLR 5234; and it is further
ORDERED that the branch of the petition seeking turnover under CPLR 5225 of assets held by respondent BBJ Family Irrevocable Trust is denied as academic; and it is further
ORDERED that petitioners shall serve a copy of this order with notice of its entry on all parties and on the City Marshal.