INDEX NO.401544/07

MOTION DATE10/3/11

MOTION SEQ. NO.006 [*2]

The following papers, numbered 1 to2were read on this motion to reargue

Notice of Motion; Affidavit — Exhibits A-B�No(s).1; 2

Memorandum of Law in Opposition�No(s).

Reply Memorandum in Further Support�No(s).

Upon the foregoing papers, it is ORDERED that petitioner's motion to reargue the Court's decision, order, and judgment dated July 6, 2011 is granted, and upon reargument, the Court adheres to its prior decision, order, and judgment.

The extensive factual background of this case was set forth in the Court's decision, order, and judgment dated July 6, 2011. (See Zingman Affirm. ,Ex A.) Petitioner, an assignee , sought, among other things, a turnover order against respondent 455 Central Park West, LLC, an entity that owed a debt to the judgment debtor, and against others, which were alleged alter egos of 455 Central Park West LLC. The petition alleged that, in violation of restraining notices served upon them, respondents paid or arranged to be paid the debt that respondents owed to the judgment debtor, which ought to have been restrained as intangible property of the judgment debtor.

By decision, order, and judgment, this Court found that respondent 455 Central Park West, LLC violated a restraining notice duly served upon it, entitling petitioner to recover the amount that would have been available to satisfy the judgments assigned to petitioner. Therefore, the Court awarded judgment in the amount of $1,546,816, plus costs, for the total amount of $1,565,401. The Court denied petitioner prejudgment interest, stating "petitioner cited no statute or case law under which it could recover prejudgment interest on the damages for violation of a restraining notice. Petitioner has not met its burden of demonstrating entitlement to prejudgment interest." (Id. at 30-31.)

Petitioner moves to reargue the Court's prior decision, order, and judgment to include prejudgment interest on the award of monetary damages from July 29, 2004 to the date of entry of judgment. Petitioner argues that it is entitled to prejudgment interest as a matter of right pursuant to CPLR 5001 (a). Respondents oppose the motion.

As the Court stated in its prior decision, order and judgment, "Interest awards in New York are purely a creature of statute.'" (Manufacturer's & Traders Trust Co. v Reliance Ins. Co., 8 NY3d 583, 588 [2007].) Given that petitioner did not cite any statute in support of its claim to prejudgment interest, it cannot be said that the Court overlooked CPLR 5001 (a). However, to the

extent that the petitioner argues that it was entitled to prejudgment interest as a matter of right under CPLR 5001 (a), reargument is granted.

CPLR 5001 (a) provides that

"Interest shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of, property, except that in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court's discretion."

Petitioner argues that prejudgment interest should have been awarded because a violation of the restraining notice constituted interference with "property to which it was entitled commencing from July 29, 2004, when it turned over to Palermo the funds subject to the [r]estraining [n]otices." (Zingman Affirm. ¶ 11.) However, petitioner's contention, namely, that it had a property interest in the subject of the restraining notice, is flawed.

As respondents indicate, the Court of Appeals has ruled that "service of a CPLR 5222 restraining notice confers no priority upon the judgment creditor in the form of a lien on the judgment debtor's property." (Aspen Indus. v Marine Midland Bank, 52 NY2d 575, 580 [1981].) Service of the restraining notice upon 455 Central Park West LLC therefore did not confer a lien upon petitioner on the subject of the restraining notice, more specifically, the amount of the broker fee that 455 Central Park West LLC owed to Palermo, the judgment debtor. Given that petitioner had no lien upon the broker fee, it follows that service of restraining notice did not confer upon petitioner any property interest in the property to be restrained.

Therefore, petitioner fails to demonstrate that it is entitled to prejudgment interest as a matter of right under CPLR 5001 (a).

"[S]ubstantial authority supports the view that CPLR 5001 (a) permits interest awards in all equitable actions, not just those based on breach of contract or interference with property." (Manufacturer's & Traders Trust Co., 8 NY3d at 588.) Here, petitioner argues that the equities favor an award of prejudgment interest because petitioner contends that the violation of the restraining notice was "deliberate and premeditated." (Zingman Affirm. ¶ 12.) Respondents argue that the money judgment awarded to petitioner for violation of the restraining was not equitable in nature, in that actions for money damages are not equitable in nature.Respondents also argue that petitioner has unclean hands, based on allegations previously advanced during this lawsuit, a defense which Justice Lehner had rejected.

Contrary to respondents' argument, the money judgment that petitioner was granted was not based on an action for a money judgment. Rather, the Court of Appeals recognized the right to a money judgment in a special proceeding for violation of a restraining notice in Aspen Industries, Inc. v Marine Midland Bank (52 NY2d 575, supra), without addressing whether such a proceeding was equitable in nature.

Even assuming that petitioner's judgment against respondent 455 Central Park West, LLC was based on an equitable claim, petitioner is not entitled to prejudgment interest under CPLR 5001 (a). "The purpose of interest is to require a person who owes money to pay compensation for the

advantage received from the use of that money over a period of time." (Manufacturer's & Traders Trust Co., 8 NY3d at 589. ) The award of prejudgment interest is not punitive. "A punitive award, on the other hand, is designed not to compensate the plaintiff, but to punish the defendant so as to deter similar conduct in the future." (Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5001:2.) In arguing that the prejudgment interest should be awarded based on the deliberateness of respondent's violation of the restraining notice, petitioner is arguing for prejudgment interest as a punitive award.

Prejudgment interest does not lie because petitioner was not entitled to use of the money that was restrained by the restraining notice. As discussed above, petitioner had no property interest in [*4]the broker fee merely by service of the restraining notice upon respondent 455 Central Park West, LLC.

Therefore, the Court adheres to its prior decision, order, and judgment, which did not award prejudgment interest to petitioner.

Dated:11/29/11/s/, J.S.C.

New York, New York