Petitioner Doubet, LLC (Doubet) moves for an order pursuant to CPLR 5225(b) and 5227 directing 455 Central Park West LLC, 455 Central Park West, Inc., MCL Companies of Chicago, Inc., and Daniel McLean (collectively, the McLean Respondents) to turn over to it the sum of $2,427,911.00, plus interest and attorneys' fees pursuant to New York Debtor and Creditor Law §§ 276 and 276-a. The McLean Respondents cross-move, pursuant to CPLR 3212, for summary judgment dismissing the petition.

As the facts are recited in detail in previous decisions in this proceeding as well as in a prior proceeding under Index No. 108238/06, they will only be repeated briefly herein. The dispute herein has a long history in Nassau County as well as here. In July 2000, Doubet was assigned three judgments entered in 1990 in Nassau County against Douglas F. Palermo (Palermo) in favor of Morris Silver (Silver), Doubet's principal. On February 19, 2003, Doubet served restraining notices on the respondents, which stated that there was a total of $2,537,436.81 owing by Palermo on said judgments. These notices were extended many times by the Supreme Court, Nassau County.

In brief, the basis for Doubet's claim is that the payment in July 2004 by the McLean Respondents to Palermo or his nominees of an advisory fee on the sale of condominium units in a building known as 455 Central Park West was in violation of the restraining notices (Columbia Transaction). Doubet also claims that there were other transactions, namely the South Boston Project and River East Chicago, involving the payments of monies by the McLean Respondents to Palermo in violation of the restraining notices. In response to these claims, the McLean Respondents assert that, because the advisory fees were contingent and not owed at the time of service of the restraining notices, the notices were ineffective and unenforceable under CPLR 5222 (b).

On August 28, 2007, I denied Doubet's application seeking an order directing the respondents to turn over the said monies and dismissed the proceeding against all respondents, on the grounds [*2]that the restraining notices were not effective at the time they were served as the alleged debt was contingent on a closing of the Columbia Transaction. Doubet then moved for reargument, which I granted on February 15, 2008 based on the recent decision in JPMorgan Chase Bank, N.A. v Motorola, Inc., 47 AD3d 293 (1st Dept 2007), finding that a triable question existed as to whether the McLean Respondents' contractual obligations to pay Palermo advisory fees were a "debt" under CPLR 5201 (a), or "property" under CPLR 5201 (b)^[FN1].

It is relevant to determine whether the fees were "debt" or "property" in order to determine whether the restraining notices were effective at the time of service. "A special proceeding for turnover is the procedural device provided by article 52 for enforcement of a judgment against an asset of the judgment debtor in the possession or custody of a third person." JPMorgan Chase Bank, N.A. v Motorola, Inc., supra at 301. CPLR article 52 sets forth two broad categories of assets against which a money judgment may be enforced: (1) a "debt" that is owed to the judgment debtor (CPLR 5201 [a]), and (2) "property" in which the judgment debtor has an interest (CPLR 5201 [b]). Specifically, CPLR 5201 provides:

(a) A money judgment may be enforced against any debt, which is past due or which is yet to become due, certainly or upon demand of the judgment debtor, whether it was incurred within or without the state, to or from a resident or non-resident, unless it is exempt from application to the satisfaction of the judgment. A debt may consist of a cause of action which could be assigned or transferred accruing within or without the state.

(b) A money judgment may be enforced against any property which could be assigned or transferred, whether it consists of a present or future right or interest and whether or not it is vested, unless it is exempt from application to the satisfaction of the judgment.

One mechanism to assist in the enforcement of a money judgment, especially when the assets at issue are in the hands of a third party, is a restraining notice. CPLR 5222 (b) states, in part:

A restraining notice served upon a person other than the judgment debtor or obligor is effective only if, at the time of service, he or she owes a debt to the judgment debtor or obligor or he or she is in the possession or custody of property in which he or she knows or has reason to believe the judgment debtor or obligor has an interest.

Since the advisory fees were not past due, due upon demand, or certain to become due, they could not be considered a "debt" under CPLR 5201 (a). However, as stated above in JP Morgan, [*3]a contingent future debt is subject to a levy as "property" if the interest is assignable or transferrable. Here, the Advisory Service Agreement Amendments, entered into by Palermo and Daniel McLean for the Columbia Transaction, indicate that those fee agreements were assignable as the parties bound by the agreements included "successors and assigns." See Notice of Petition, Exhibits 28 & 29. Thus, these advisory fees were "property" under CPLR 5201 (b), and as a result, the restraining notices were effective when served in February 2003.

The McLean Respondents, relying on cases dealing with attachment under CPLR article 62, argue that, even if the advisory fees were "property," such would be unattachable as out-of-state property. However, this is not an application for an attachment, but rather a turnover proceeding, pursuant to CPLR 5225 (b). In the recent Court of Appeals case, Koehler v Bank of Bermuda Limited, 12 NY3d 533 (2009), the court distinguished between the enforcement of money judgments under article 52, and attachments under article 62. Specifically, the court stated (p. 537):

Enforcement proceedings and attachment proceedings, while similar in many ways, differ fundamentally in respect to a court's jurisdiction. While prejudgment attachment is typically based on jurisdiction over property, postjudgment enforcement requires only jurisdiction over persons.

The court noted that "CPLR article 52 contains no express territorial limitation barring the entry of a turnover order that requires a garnishee to transfer money or property into New York from another state or country." Id. at 539. Further, the Court cited Gryphon Dom. VI, LLC v APP Intl. Fin. Co., B.V. (41 AD3d 25 [1st Dept 2007]), which "expressly held that judgment debtors can be ordered to turn over out-of-state assets under CPLR article 52." (p. 539), and concluded that "a New York court with personal jurisdiction over a defendant may order him to turn over out-of-state property regardless of whether the defendant is a judgment debtor or a garnishee." (p. 541)

Thus, since the McLean Respondents do not dispute that this court has personal jurisdiction over them, it is irrelevant whether or not the "property" subject to this turnover proceeding was located in New York.

The McLean Respondents also argue that enforcement of the restraining notices is barred by Doubet's unclean hands. They allege that Doubet's principal, Morris Silver, was asked by Palermo to serve as trustee of the trusts for his children and that Silver breached his fiduciary duty as trustee by passing Palermo's financial information to Silver's attorney in order to prepare the restraining notices. However, any fiduciary duty of Silver was owed to Palermo's two children, who were the beneficiaries of the trusts that Silver was allegedly the trustee of. "The doctrine of unclean hands is only available when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct." Weiss v Mayflower Doughnut Corp., 1 NY2d 310, 316 (1956). See also, Sankel v Spector, 33 AD3d 167, 171-172 (1st Dept 2006); Restatement (Second) of Trusts § 170. It cannot be argued that the McLean Respondents were injured by an alleged breach of fiduciary duty where they were not owed a duty.

While there is no issue of fact as to whether the restraining notices were effective when served in February 2003, there are other issues of fact which prevent this court from granting summary judgment at this juncture. First, Daniel McLean asserts that the McLean Respondents were not served with the restraining notices or extensions of those notices. There is sufficient evidence that the McLean Respondents were properly served with the original restraining notices in February 2003, but an issue of fact remains as to whether they were served with the first one-year extension [*4]of the restraining notices in February 2004. Mr. McLean denies receipt of the extensions, and Doubet does not offer the return receipt requested green cards, as it did for the original restraining notices. Doubet includes a letter allegedly written in February 2004, with an annexed list of entities served with the extensions, but there is no proof of certified mailing. This is relevant, because the Columbia Transaction took place in July 2004, and if the McLean Respondents were not aware of the extension, they cannot be liable for violating the restraining notices in July 2004.

Second, in addition to the advisory fees from the Columbia Transaction, Doubet also seeks to recover additional fees from the South Boston Project and the River East Chicago transactions. In regard to these matters, there are issues of fact as to whether the entities that paid the monies were listed on the restraining notices, as well as what entities made the payments, and whether those entities were subject to the restraining notices.

Doubet seeks attorneys' fees, pursuant to New York Debtor and Creditor Law §§ 276 and 276-a, based on the allegation that the McLean Respondents aided and abetted Palermo in fraudently transferring his assets. However, since issues of fact exist, especially as to whether the McLean Respondents received notice of the extension of the restraining notices allegedly served in February 2004, it is premature for this court to determine whether Doubet is entitled to such relief.

Accordingly, it is

ORDERED that petitioner Doubet, LLC's motion for summary judgment is denied; and it is further

ORDERED that the cross-motion of respondents 455 Central Park West LLC, 455 Central Park West, Inc., MCL Companies of Chicago, Inc., and Daniel E. McLean's cross motion for summary judgment is denied; and it is further

ORDERED that the parties are directed to appear for a status conference in ths part on November 18, 2009.

Dated: October 13, 2009

J.S.C.