SUPREME COURT : COUNTY OF CHAUTAUQUA
TRUSTEES OF THE NATIONAL AUTOMATIC
SPRINKLER INDUSTRY PENSION FUND,
WELFARE FUND, LOCAL 669 U.A. EDUCATION
FUND, AND SPRINKLER INDUSTRY SUPPLEMENT
-vs- Index #H-08090
CARLA SANDBERG BABCOCK;
FALARE SANDBERG; AND
E. JOSEPH GIROUX, JR.
(William E. Grande, Esq.
of Counsel) for Plaintiffs
BECKSTROM & PLUMB
(John K. Plumb, Esq. of
Counsel) for Defendants
DECISION AND ORDER
Plaintiff moves for Reconsideration of the following
holdings of this Court's Decision and Order of August 28,
3. A notice under BCL 630 reciting only the amount of
a judgment obtained against the corporation, plus
unspecified "post-judgment delinquencies", is
insufficient to hold shareholders responsible for
subsequent unstated delinquencies.
4. Plaintiffs may not amend their complaint to permit
an increase in damages to include the unspecified
post judgment delinquencies.
The Court interprets this Reconsideration Motion as
one to renew and/or reargue.
A motion to reargue is based on no new proof; it
simply seeks to convince the Court that it was wrong and
ought to change its mind. The motion to renew is based on
new or additional proof not used the first time around.
DAVID D. SIEGEL, NEW YORK PRACTICE, Sec. 254.
The Court may treat this application as a motion for
rehearing on additional papers. See GOLD v TRAVELERS INS.
Co. 263 AD 817.
On May 7, 1993, the Funds gave defendants notice under
Section BCL. After asserting an intention to pursue the
shareholders for the amount of pre-bankruptcy judgment for
delinquencies, the notice recited:
"PLEASE BE FURTHER ADVISED that the FUNDS intend to
hold you personally liable under Section 630 for all
post-judgment delinquencies for employee benefits plus
interest thereon and accompanying statutory
The question plaintiffs ask the Court to reconsider
is: to impose liability on the shareholders, should that
notice have recited the amount set out in the claim
plaintiff filed in bankruptcy court?
Both parties have submitted some additional proof;
defendants provided the Court with a Bankruptcy Court
Claims Register indicating plaintiff knew the amount due as
of June 15, 1993 because the Funds filed their claim for
$45,264.68 on that date; defendant attached a copy of the
Order of Hon. Beryl E. McGuire, U.S. Bankruptcy Judge,
requiring the debtor corporation to make an accounting to
the NASI funds of all hours worked by its employees from
On the earlier motion, defendants claimed the
statutory notices were insufficient because the notices did
not apprise them of the full liability for which plaintiffs
seek to hold them responsible, nor did the complaint give
them notice of liability beyond the judgment.
The Funds' BCL 630 notices recited the original
judgment of $5,292.74 and any "post-judgment
delinquencies". Defendants argued that such a notice does
not apprise the shareholders of a lawsuit seeking some
Holding that BCL 630 should be strictly construed in
favor of the shareholders because it is an exception to the
general limited liability role for shareholders, this Court
said the notice was nothing more than a recital of
liability imposed by Section 630; that it had no more
effect to impose specific liability than if the Funds had
served such a notice before there was any deficiency.
Yet, until distribution, if any, by bankruptcy court
of any funds collected by the bankruptcy trustee, plaintiff
could not have known as of either May 6, 1993, the date of
their notice to the shareholders, nor as of June 15, 1993,
the amount they would ultimately seek from the
Unlike the situation where an execution is returned
unsatisfied, the plaintiff could not have known the actual
amount of any claim against shareholders at the time
plaintiff's claim was filed in bankruptcy court; plaintiff
could not have determined the net amount until after the
$16,160.35 distribution to plaintiff of funds collected by
the trustee in bankruptcy.
Plaintiff's affidavit and memorandum in support of the
motion for reconsideration justify a rehearing on
additional papers; or a renewal of the motion.
The Court will hear arguments on the renewed motion on
the 18th day of December, 1995, at 1:00 o'clock in the
afternoon of that day. The Court will consider the papers
submitted on plaintiff's original motions for summary
judgment and leave to serve an amended complaint, and on
defendant's motion for leave to serve an amended answer.
Any additional affidavits, papers or briefs of law must be
filed with the Court no later than December 11, 1995.
THIS IS THE DECISION AND ORDER OF THIS COURT. NO
FURTHER ORDER SHALL BE NECESSARY.
Dated: November , 1995
Mayville, New York
Supreme Court Justice
To all Counsel:
Please take notice that a DECISION and ORDER of
which the within is a copy, is duly granted in the above
entitled action on the day of , 1995, and
duly entered in the office of the Clerk of the County of
Chautauqua on the same date.