Kitson & Kitson v. City of Yonkers

10 A.D.3d 21, 778 N.Y.S.2d 503, 2004 N.Y. App. Div. LEXIS 7522
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 1, 2004
StatusPublished
Cited by4 cases

This text of 10 A.D.3d 21 (Kitson & Kitson v. City of Yonkers) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kitson & Kitson v. City of Yonkers, 10 A.D.3d 21, 778 N.Y.S.2d 503, 2004 N.Y. App. Div. LEXIS 7522 (N.Y. Ct. App. 2004).

Opinion

OPINION OF THE COURT

Goldstein, J.

This case involves the claims of competing creditors to $160,000 which the debtor, Peter G. McKiernan (hereinafter the debtor) received in settlement of a federal civil rights action against the City of Yonkers and Vincent Starkey, a City of Yonkers police officer. The creditors in issue on this appeal are (1) the debtor’s former wife, Mary Joan McKiernan, and the debtor’s minor child, (2) the former wife’s divorce attorneys, Kitson, Kitson & Bisesto, LLP (hereinafter Kitson), and (3) the debtor’s attorney Lawrence H. Bloom, who in 1998 assumed the debtor’s defense against the former wife’s efforts, inter alia, to [23]*23enforce her judgments against him in the divorce action. At issue here is the priority of their claims pursuant to CPLR article 52.

On September 25, 1996, the debtor stipulated in open court in his divorce action to pay 10% of the “net recovery” from the civil rights action to his wife, and 15% to his son in trust. Net recovery was defined as “after the normal disbursements for the lawsuit, the payment of the attorney’s fees and any remaining sums that are paid to anybody.” The Supreme Court in the divorce action characterized “net recovery” as “disbursements, the photocopies of documents, physician fees, whatever is an out-of-pocket expense, serving subpoenas, filing fee, that will be taken from the top.” The debtor’s attorney characterized “net recovery” as “the normal and customary costs involved.”

The debtor also agreed to pay Mrs. McKiernan an additional $130,000, consisting of $56,000 in equitable distribution, $15,000 in maintenance arrears, and $59,000 in child support arrears. On June 3, 1997, judgment was entered in Mrs. McKiernan’s favor against the debtor for the $130,000. A judgment was also entered against the debtor in favor of Kitson for $120,500 in counsel fees incurred by Mrs. McKiernan in the divorce action.

Pursuant to the terms of the stipulation, the debtor’s payments under the $130,000 judgment were allocated to child support arrears first. Mrs. McKiernan acknowledges that she was paid $43,000 pursuant to the judgment, which reduced the child support arrears from $59,000 to $16,000.

In 1998 the debtor retained Lawrence H. Bloom to defend against Mrs. McKiernan’s application to hold him in contempt, inter alia, of the 1996 stipulation of settlement. The debtor executed a confession of judgment for $67,990.50 in legal fees owed to Bloom, which was docketed on February 29, 2000.

On December 12, 2000, a jury in the federal civil rights action returned a verdict of $250,000 in compensatory damages and $1,000 in punitive damages. Shortly thereafter, Kitson served restraining notices on the garnishee pursuant to CPLR 5222 on behalf of Mrs. McKiernan for the $130,000 judgment and on its own behalf for the $120,500 judgment. Kitson delivered executions to the Sheriff pursuant to CPLR 5232 (a) to enforce its own judgment for $120,500 on December 22, 2000, and again on March 20, 2001.

On May 1, 2001, the damages verdict in the federal civil rights action was set aside by the federal court. On or about June 27, [24]*242001, Kitson served new restraining notices on behalf of Mrs. McKiernan and on its own behalf. Kitson also delivered another execution pursuant to CPLR 5232 (a) to the Sheriff to enforce its own judgment for $120,500. The Sheriff levied on the execution on July 6, 2001, by serving the garnishee.

On August 8, 2001, the debtor and the City of Yonkers agreed to settle the civil rights action for $160,000. On or about September 28, 2001, Kitson delivered new executions to the Sheriff for the $120,500 judgment in its favor. The Sheriff levied on October 2, 2001.

Mrs. McKiernan claims an execution was delivered on her behalf in October 2001. In November 2001 Bloom sought to enforce the confession of judgment against the debtor for $67,990.50 by serving restraining notices pursuant to CPLR 5222. On or about November 6, 2001, Bloom delivered an execution to the Sheriff against the City of Yonkers which was levied on November 16, 2001.

On or about November 26, 2001, Kitson delivered further executions to the Sheriff on its own behalf which were levied on December 4, 2001. On or about November 28, 2001, Kitson commenced a turnover proceeding pursuant to CPLR 5225 and CPLR 5227 to recover its $120,500. By notice of motion dated December 27, 2001, Bloom cross-moved for leave to intervene in that proceeding and to enforce the confession of judgment.

In December 2001 Mrs. McKiernan submitted an affidavit asking for leave to intervene in the turnover proceeding brought by Kitson. Her attorney asked that the “funds be divided equally between Mr. Kitson’s firm and Mrs. McKiernan in order to partially reduce both debts.” In April 2002 the debtor moved for leave to intervene and for relief pursuant to CPLR 5239 in the nature of interpleader.

In May 2002 Bloom delivered to the Sheriff a separate execution against Officer Starkey. On or about July 19, 2002, Bloom commenced a separate turnover proceeding to perfect his interests in the settlement and sought consolidation of the two proceedings.

The Supreme Court consolidated the two proceedings and granted leave to intervene to, among others, the debtor and Bloom. The Supreme Court determined that the rights of Mrs. McKiernan to 10% of the debtor’s net recovery and the rights of her minor child to 15% of the net recovery “takes priority over any liens of judgment creditors.” With respect to the liens of [25]*25the judgment creditors, the Supreme Court determined that Kitson had priority over Bloom on the ground that it had “[v]alid restraining notices and executions in place for almost a year at the time Bloom first filed a restraining notice or execution.” The Supreme Court further determined that Mrs. McKiernan had waived her priority rights in favor of Kitson. The Supreme Court determined that Mrs. McKiernan could not waive her child’s rights, as a result of which 15% of the net recovery was awarded to the child in trust. The remaining proceeds were divided equally between Mrs. McKiernan and Kitson pursuant to their agreement.

We agree with the Supreme Court that Mrs. McKiernan and her minor child, as transferees in 1996 of a total of 25% of the net recovery, had priority over all subsequent levies with respect to that portion of the net recovery (see CPLR 5202 [a] [1]). However, while it is true that Kitson repeatedly delivered restraining notices and executions before Bloom delivered his restraining notice and execution against the City of Yonkers, that did not give Kitson priority.

CPLR 5222 (c) provides that leave of the court is required to serve “more than one restraining notice upon the same person with respect to the same judgment or order.” A restraining notice may also be extended upon motion pursuant to CPLR 5240, which authorizes a court to “at any time” extend or modify the use of any enforcement procedure. Kitson’s service of multiple restraining notices without leave of the court was improper. In any event, service of a restraining notice pursuant to CPLR 5222 gives no priority over other creditors (see Aspen Indus, v Marine Midland Bank, 52 NY2d 575 [1981]; Princeton Bank & Trust Co. v Berley, 57 AD2d 348 [1977]; City of New York v Panzirer, 23 AD2d 158, 160 [1965]).

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Cite This Page — Counsel Stack

Bluebook (online)
10 A.D.3d 21, 778 N.Y.S.2d 503, 2004 N.Y. App. Div. LEXIS 7522, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kitson-kitson-v-city-of-yonkers-nyappdiv-2004.