Upon the foregoing cited papers, the Decision/Order on these motions are as follows:

The receiver appointed in this commercial foreclosure proceeding moves to punish plaintiff for contempt for refusing to advance funds pursuant to the so-ordered stipulation entered into by the parties hereto dated October 22, 2014; to fine plaintiff; to issue a warrant for the incarceration of the members of the plaintiff corporation; to grant attorneys fees for this application; and to refund defendant any monies paid from the proceeds of the sale of the property which are attributed to the legal fees incurred from the instant motion for contempt. Plaintiff and defendant both move to vacate said stipulation.

JP Morgan Chase Bank commenced this mortgage foreclosure proceeding by the filing of a summons and verified complaint on December 11, 2008. In her answer, defendant denied having defaulted on said mortgage and asserted several affirmative defenses. On December 30, 2009, JP Morgan Chase Bank assigned the mortgage to plaintiff. Plaintiff was awarded summary judgment on liability. A referee was appointed to ascertain and compute the amounts due to plaintiff and a receiver was appointed to collect rents and manage the building. Thereafter, defendant agreed, with plaintiff's consent, to sell the property to a third party, with a closing to occur no later than November 17, 2014, time being of the essence.

On October 22, 2014, the parties to this action and/or their attorneys, as well as the receiver's attorney, entered into a stipulation which provided, in pertinent part, that if the closing took place by the "closing date" (which at that time was scheduled for November 17, 2014), the seller shall pay $74,739.40 to the receiver to pay outstanding bills; that the receiver pay himself $7,467.58 as his commission; and that the receiver's counsel be paid $68,053.75 for legal services rendered up until September 30, 2014. The stipulation also provided that if the closing did not take place by the "closing date," the receiver's accounting would serve as an approved "interim accounting" from January 24, 2014 through September 30, 2014; that plaintiff would pay the receiver $74,739.40 by November 17, 2014; and that the receiver would be authorized to pay himself and his attorney the above stated amounts. The closing did not take place on November 17th. On December 24, 2014, the Court granted plaintiff's motion to confirm the referee's report and for a Judgment of Foreclosure and Sale. The closing on the private sale of the property ultimately took place on February 4, 2015 and the underlying mortgage was satisfied. By order dated February 13, 2015, the receiver's management rights and duties were terminated. Thereafter, the receiver moved by order to show cause to settle and approve the receiver's final accounting.^[FN1]

The receiver also made the instant motion to hold plaintiff in contempt for the refusal to pay the funds pursuant to the stipulation. Plaintiff moved to vacate the stipulation on the basis of fraud, illegality, and misconduct by the receiver. Defendant moved to vacate the stipulation pursuant to CPLR §2221 upon the grounds that the stipulation was procured by fraud, duress and misrepresentation by the receiver, and that it violates CPLR §8004.

In support of their respective motions to vacate the stipulation, plaintiff and defendant argue that the stipulation was illegal and is, therefore, unenforceable. They claim that the statutory maximum commission payable to a receiver is 5% of the gross receipts and expenditures and do not include the bills which the receiver accrued but did not pay. They also claim that the receiver's counsel fraudulently produced an interim accounting by reporting, through the property manager, that the receiver had a positive cash balance of $2,611.09, when in fact, there were unpaid and unreported invoices which caused an operating deficiency. The stipulation provided for payment of the "outstanding bills" in the amount of $74,739.40, which included payment of the receiver's counsel's "bill" in the amount of $68,053.75 (in addition to the $18,441.75 which was already paid to the receiver's counsel). Defendant claims that the receiver's counsel committed fraud since the September 30, 2014 accounting reflected the total attorneys fees as $18,441.75 and there was no mention of the $68,053.75 "bill."

In opposition to the motions to vacate, the receiver's counsel argues that the receiver's commission was properly calculated based upon the agreed upon disbursements, which included the money needed to satisfy the anticipated shortfall in the receiver's account after paying the outstanding expenses. He argues that pursuant to CPLR §8004, since the receiver received $82,079.91 in income and incurred an additional $67,271.82 in expenses, the 5% should be based upon the total amount of $149,351.73. He argues that even if the receiver's commissions were calculated incorrectly, the commissions can be reduced, but such an erroneous calculation is not a basis to invalidate the entire stipulation. Additionally, the receiver's counsel maintains that the additional legal bills showing the open balance due was given to all parties during the negotiations which led to the stipulation being signed.

CPLR §8004 provides, in pertinent part, that:

a. Generally. A receiver, except where otherwise prescribed by statute, is entitled to such commissions, not exceeding five per cent upon the sums received and disbursed by him, as the court by which he is appointed allows...

b. Allowance where funds depleted. If, at the termination of a receivership, there are no funds in the hands of the receiver, the court, upon application of the receiver, may fix the compensation of the receiver and the fees of his attorney, in accordance with the respective services rendered, and may direct the party who moved for the appointment of [*2]the receiver to pay such sums, in addition to the necessary expenditures incurred by the receiver...

"As a general rule, commissions are only to be paid out of the funds in the receiver's hands at the termination of the receivership." Amusement Distribs., Inc. v. Oz Forum, Inc., 113 AD2d 855 (2d Dept 1985). Where receipts have been collected by a receiver, the maximum amount a court can award as compensation to the receiver, in the exercise of its discretion, is five percent of the funds "received and disbursed" during the receivership. CPLR §8004(a). See Amusement Distribs., Inc. v. Oz Forum, Inc., 113 AD2d at 855, supra.; Friesch—Groningsche Hypotheekbank Realty Credit Corp. v. Semerjian, 232 AD2d 448 (2d Dept 1993); JDM Long Island, LLC v. U.S. Bank Nat. Ass'n, Slip Copy, 2014 WL 6632644 (EDNY). However, "in addition to the statutory commission, a receiver is entitled to be reimbursed for expenditures made by him which are necessary to preserve the receivership property and which are authorized by the order appointing him." Hirsch v. Peekskill Ranch, Inc., 100 AD2d 863 (2d Dept 1984.)

The Court finds that the maximum amount the receiver may be paid is 5% of the amounts received and disbursed. This includes the bills necessary to preserve the property, which were authorized by the order appointing the receiver. Since the order appointing the receiver allowed for reasonable legal fees to be paid from the funds collected, the receiver is entitled to a 5% commission on the paid attorney's bill. Although the parties cannot stipulate to pay the receiver a percentage in excess of the allowable statutory percentage, they can and did agree that the receiver was to pay his attorney the amount of $68,053.75. Since the funds to pay that "bill" passes through the receiver's hands, it may be considered when calculating his commission.

Defendant alleges that she was under duress and ultimately forced to sign the stipulation in question. She maintains that she refused to sign the stipulation on October 9, 2014 and that the receiver's attorney began threatening her on that day. She alleges that the attorney told her he was pursuing a contempt motion against her and that he would make sure she went to jail unless she signed the stipulation. Defendant claims that the meeting ended when the police were called. In her affidavit, defendant stated that when the parties appeared before this Court on October 22, 2014, "I became afraid that the receiver's attorney might indeed have the power as he alleges to make me lose my home and have me arrested. As a result, I became very afraid and had no choice but to sign the stipulation."

The receiver's attorney maintains that defendant was represented by two separate attorneys who reviewed the documents regarding the income, disbursements and outstanding obligations provided by the receiver. Therefore, the signing of the stipulation was of her own free will and after consultation with and upon advice of her attorneys.

"Stipulations entered into in open court are favored by the courts and are to be set aside only where there is cause sufficient to invalidate a contract such as fraud, duress, collusion, or [*3]mistake." Dubi v. Skiros Corp., 66 AD3d 954 (2d Dept 2009), quoting Feuer v Darkanot, 36 AD3d 753 (2d Dept 2007). See Hallock v. State of New York, 64 NY2d 224, 230 (1984). "Stipulations of settlement are judicially favored, will not lightly be set aside, and are to be enforced with rigor and without a searching examination into their substance as long as they are clear, final and the product of mutual accord." Yan Ping Liang v. Wei Xuan Gau, 118 AD3d 696, 697 (2d Dept 2014), quoting Peralta v. All Weather Tire Sales & Serv. Inc, 58 AD3d 822, 822 (2d Dept 2009), quoting Bonnette v. Long Is. Coll. Hosp., 3 NY3d 281, 286 (2004.)

In order to vacate a stipulation on the ground of duress, the aggrieved party must demonstrate that "threats of an unlawful act compelled his or her performance of an act which he or she had the legal right to abstain from performing." Polito v. Polito, 121 AD2d 614, 615 lv denied 68 NY2d 981 (1986). "In order to prove legal duress a party must adduce proof that a wrongful threat precluded the exercise of his free will." Sontag v. Sontag, 114 AD2d 892, 894 lv denied 66 NY2d 554 (1986). "Generalized contentions that a party felt pressured by the court are insufficient." Dubi v Skiros Corp., 66 AD3d at 954, supra, quoting Desantis v Ariens Co., 17 AD3d 311 (2d Dept 2005).

The Court finds that defendant was not under duress when she entered into the stipulation. The purported "home" that defendant was allegedly afraid of losing is, in fact, a multiple unit apartment building.^[FN2] Defendant agreed to sell her "home" prior to entering into the stipulation which set the receiver's commission and his counsel's fees. Therefore, defendant could not have been afraid of losing her "home," since she had already agreed to sell the property in question. Moreover, defendant failed to demonstrate that she did not enter into the stipulation of her own free will. Although defendant claims that the receiver's counsel advised her that the Court would not "authorize the closing to proceed" without her first signing the stipulation, the stipulation was signed by two attorneys, both of whom represented and presumably advised her.

Defendant also argues that the stipulation should be vacated on the grounds that the receiver breached his fiduciary duties by hiring counsel and a property manager on February 3, 2014, even though the Court didn't authorize hiring either until February 28, 2014. Furthermore, defendant claims the receiver failed to comply with this Court's order prohibiting him from incurring obligations in excess of the account funds. Defendant also maintains that the receiver was dishonest and developed a fraudulent scheme by failing to provide monthly financial statements and failing to disclose the true amount of bills he was incurring.

Although the Court authorized the hiring of counsel in an order dated February 28, 2014, said counsel was entitled to bill for the work performed in preparing said order, which began on February 3, 2014. Counsel's billing records do not in and of themselves demonstrate that the receiver breached his fiduciary duties. Additionally, defendant fails to show that the receiver engaged in a "fraudulent scheme." The allegation that the receiver failed to file monthly accountings is not grounds for vacature of the stipulation. Defendant knew of the receiver's counsel's outstanding fee and agreed that plaintiff shall pay said amount, knowing that the [*4]monies collected were insufficient to satisfy his fee.^[FN3] Therefore, the Court finds that the stipulation is fully enforceable.

In support of the receiver's motion to hold plaintiff in civil contempt for failure to pay $74,739.40 pursuant to the stipulation, counsel argues that, under the terms of the stipulation, plaintiff should have forwarded the agreed upon amount to him regardless of whether the closing took place or not. In opposition, plaintiff argues that the stipulation should be vacated for the aforementioned reasons.

"A motion to punish a party for civil contempt is addressed to the sound discretion of the motion court." Chambers v. Old Stone Hill Road Associates, 66 AD3d 944,946 lv dismissed 14 NY3d 747 (2010). "To sustain a finding of either civil or criminal contempt based on an alleged violation of a court order it is necessary to establish that a lawful order of the court clearly expressing an unequivocal mandate was in effect," that "the order has been disobeyed," and that the charged party "had knowledge of the court's order. " Town of Southampton v. R.K.B. Realty, LLC, 91 AD3d 628, 629 (2d Dept 2012), quoting Department of Environmental Protection of City of New York v. Department of Environmental Conservation of State of NY, 70 NY2d 233 (1987). "The contempt must be proven by clear and convincing evidence." Penavic v. Penavic, 109 AD3d 648, 649 (2d Dept 2013).

Plaintiff acknowledges signing the stipulation and acknowledges it did not pay pursuant to its terms. Therefore, the motion to hold plaintiff in contempt is granted to the extent of compelling the plaintiff to pay the amount of $74,739.40 to the receiver within thirty days of service of a copy of this Decision/Order. The remainder of the relief sought in the contempt motion is hereby denied.

The foregoing shall constitute the Decision and Order of the Court.

DONALD SCOTT KURTZ

Justice, Supreme Court