Posadas De Puerto Rico, Inc. v. Gruberman

226 A.D.2d 249, 641 N.Y.S.2d 615, 1996 N.Y. App. Div. LEXIS 4001
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 23, 1996
StatusPublished
Cited by4 cases

This text of 226 A.D.2d 249 (Posadas De Puerto Rico, Inc. v. Gruberman) 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
Posadas De Puerto Rico, Inc. v. Gruberman, 226 A.D.2d 249, 641 N.Y.S.2d 615, 1996 N.Y. App. Div. LEXIS 4001 (N.Y. Ct. App. 1996).

Opinion

Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 7, 1994, which, inter alia, denied plaintiff’s cross-motion for further discovery and denied plaintiff’s motion and cross-motion to vacate the default judgment, unanimously affirmed, with costs. Order and judgment (one paper) of the same court and Justice, entered September 1,1995 which, inter alia, (1) dismissed plaintiff’s turnover proceeding against Bank [250]*250Leumi-Israel, (2) entered judgment against Bank Leumi-New York for $2,122.72 on deposit in the name of defendant Gruberman at Bank Leumi-New York and, (3) vacated and set aside the order of attachment dated May 9, 1991, unanimously affirmed, with costs.

In this action, plaintiff hotel and casino, a corporation operating under the laws of Puerto Rico and doing business in that jurisdiction, seeks to recover a gambling debt of $500,000 and hotel charges of $31,000 from defendant Mauricio H. Gruberman, a citizen of Brazil and resident of Argentina. It is plaintiff’s position that it extended credit of $500,000 to defendant based solely upon a telephone call to a party alleged to be an employee of Bank Leumi Trust Company of New York (Leumi-New York), a New York banking corporation. The action was commenced by order to show cause dated February 8, 1991 for an order of attachment, signed May 9, 1991, with respect to a bank account maintained by defendant at LeumiNew York. Defendant has not appeared in the action.

By letter dated March 8, 1991, Leumi-New York advised counsel for plaintiff that the account contained $2,122.72 and requested that he call the bank as it had not "received any correspondence from your office regarding deposition [szc] of these monies.” An order of attachment was subsequently signed on May 9, 1991. However, no money was remitted to plaintiff by Leumi-New York because, on June 6, 1991, the bank was served with an order to show cause in an action entitled Mirage-Casino Hotel v Gruberman, also seeking an order of attachment. As alleged in the affidavit of the bank’s deputy general counsel dated June 3, 1993 and conceded in plaintiff’s brief, the plaintiff in that action is represented by the same attorney as plaintiff herein.

It is plaintiff’s theory, supported by the allegations of its employees, that defendant maintained substantial funds, if not in Leumi-New York, then in Bank Leumi le-Israel, B.M. (LeumiIsrael), a banking corporation organized and operating under the laws of Israel, which is licensed to operate an agency in New York. On August 28, 1991, plaintiff obtained an order from Supreme Court (Harold Baer, Jr., J.) pursuant to CPLR 6220 directing the banks to produce a knowledgeable witness together with any records relating to accounts in which defendant Gruberman was known to have an interest. The order also extended the time in which to commence a proceeding to compel payment pursuant to CPLR 6214 (d) to February 28, 1992, thereby continuing the levy by court order (see, CPLR 6214 [e]; Seider v Roth, 28 AD2d 698). In January 1992, plaintiff [251]*251conducted the deposition of lian Sarig, head of Leumi-New York’s International Customer Service Department, who testified that Leumi-New York’s records contain no information that any assets or accounts were maintained at Leumi-Israel by defendant Gruberman.

In February, 1992, plaintiff brought, by way of order to show cause, a second motion to produce books and records pertaining to credit inquiries concerning defendant, to depose the Leumi-New York employee claimed to have given plaintiff’s collections’ manager a credit reference for defendant and to extend the time to commence a CPLR 6214 (d) proceeding to February 28, 1993. It is not altogether clear why the special proceeding, assuming it was necessary, could not have been brought within the statutory 90-day time limit because this matter does not appear to involve any complex or novel question (Seider v Roth, supra; see also, Seider v Roth, 17 NY2d 111, overruled Rush v Savchuk, 444 US 320). Supreme Court (Peter Tom, J.) denied the motion insofar as it sought to compel the deposition, noting, "Plaintiff has an alternative motive * * * other than locating the assets of defendant Gruberman.” On appeal from so much of the order as denied further discovery, this Court affirmed the ruling, declining "to stay the action pending resolution of a related fraud action plaintiff had brought against [Leumi-Israel]” (Posados De Puerto Rico v Gruberman, 203 AD2d 117, 118).

In a memorandum decision dated May 13,1994, culminating in the order subject to appeal, Supreme Court (Richard B. Lowe, III, J.) denied plaintiff’s third request for discovery. The court noted that, on January 31, 1992, plaintiff filed a default judgment in " 'the attached sum of $2,172.72’ held at Bank Leumi-New York”, entry of which "cuts off all further discovery in aid of attachment.” The exact circumstances of the filing of the default judgment were unknown because, as the court stated, "the County Clerk’s file of this action, apparently, is missing”. Reflecting the observations made by the court upon the previous discovery order, the decision continues: "Once again, the plaintiff seeks to pursue its claims against the garnishees in the guise of the attachment action against Gruberman. Enough is enough. Discovery is at an end.” Plaintiff’s application to extend its time to commence a special proceeding yet another two years was denied, as was its request to vacate the default judgment entered some 17 months earlier. The banks’ cross-motion for an order directing them to deliver the attached funds to plaintiff in full satisfaction of the levy was likewise denied, and plaintiff was directed to commence a [252]*252turnover proceeding within 45 days after service of the order with notice of entry.

In accordance with the order entered July 7, 1994, plaintiff mailed a petition and notice of petition to counsel for each bank. The petition demands judgment compelling the banks to pay to the Sheriff any amount to become due to defendant and subject to payment at any branch of either and requiring them to serve upon the Sheriff a statement in accordance with CPLR 6219. The banks responded by moving to dismiss the petition: (1) as to Leumi-Israel, in its entirety, on the grounds that it holds no property subject to the attachment levy; and, (2) as to Leumi-New York, to the extent that the petition seeks more than the $2,122.72 on deposit in defendant’s account at the time of attachment.

In its memorandum decision, culminating in the judgment (denominated order and judgment) subject to appeal, Supreme Court held that "Leumi-Israel is clearly a separate legal entity from Leumi-New York and is therefore not subject to levy under the Order of Attachment”. Finding "unsupported” the allegation that plaintiff would not have extended credit to defendant had it not received verbal assurance from Leumi-New York that he maintained sufficient funds to cover the credit extended, the court found no basis upon which to depart "from the general rule that a garnishee bank is liable only to the extent of the assets belonging to the judgment debtor that were on deposit when his account was attached” (citing Bata Shoe Co. v Silvestre Segarra e Hijos, S. A., 58 AD2d 133, 134). The judgment dismissed the proceeding as to Leumi-Israel, entered judgment against Leumi-New York in the amount of $2,122.72 on deposit in the name of defendant, otherwise dismissed the proceeding as to Leumi-New York, and "annulled, vacated and set aside” the order of attachment.

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Bluebook (online)
226 A.D.2d 249, 641 N.Y.S.2d 615, 1996 N.Y. App. Div. LEXIS 4001, Counsel Stack Legal Research, https://law.counselstack.com/opinion/posadas-de-puerto-rico-inc-v-gruberman-nyappdiv-1996.