As discussed in greater detail in this court's order issued on July 11, 2019 in motion sequence no. 1 (see NYSCEF No. 116), petitioners, Norma and Michael Knopf, obtained a money judgment against non-party Pursuit Holdings, LLC (Pursuit), the hedge fund of non-party Michael H. Sanford.^[FN1]

This turnover proceeding concerns $50,000 in proceeds from the sale of Pursuit's real property. Sanford directed that the $50,000 in sale proceeds be transferred to respondent Esposito Partners PLLC (respondent Frank Esposito's law firm) notwithstanding the Appellate Division, First Department's October 25, 2015, order directing that all such sale proceeds be put into escrow. Esposito then retained the $50,000 notwithstanding the First Department's February 25, 2016, order directing that all remaining sale proceeds be put into escrow.

This court therefore held that Esposito should be required to turn over the $50,000 (plus interest at the statutory rate). (See NYSCEF No. 116, at 5-8.) But because Pursuit is now in bankruptcy, this court directed that Esposito should pay over the money to Pursuit's bankruptcy [*2]Trustee (Deborah J. Piazza, Esq.), rather than to the Knopfs. (See id. at 4, 7-8.) The court gave Esposito 30 days to turn over the money to the Trustee, running from service of notice of entry. (Id. at 8.) Counsel for the Knopfs, Eric W. Berry, Esq., served notice of entry on July 11, 2019. (See NYSCEF No. 117.)

On July 13, 2019, this court received an email from Esposito (with copies to other counsel). Esposito stated that he was traveling and out of the country, and that he had just learned that Berry, acting on behalf of the Knopfs, had served a CPLR 5222 restraining notice on Esposito's bank. As a result, Esposito wrote, the bank had restrained $100,000 of funds in the savings account that Esposito shared with his wife, preventing him even from complying with this court's July 11 order. Esposito asked this court to direct Berry to withdraw the restraining notice.

Berry sent the court and counsel a short responsive email, contesting Esposito's suggestion that the restraining notice was improper and should be withdrawn; and Esposito in turn sent a brief reply.

This court concludes under CPLR 5240 that Berry must withdraw the restraining notice he issued to Esposito's bank — and other restraining notices Berry issued to enforce the turnover order, if any.

As an initial matter, Berry is correct that CPLR 5101 permits a party to use a restraining notice to enforce a turnover order. CPLR 5101 provides that a "money judgment and an order directing the payment of money . . . may be enforced as prescribed in [CPLR] article fifty-two," such as a restraining notice under CPLR 5222. A turnover order may therefore be enforced by the same means as a money judgment. (See Wanger v. Zeh, 26 AD2d 729, 729 [3d Dept 1966] [noting that the CPLR and caselaw treat an "order directing the payment of money" as equivalent to a money judgment for enforcement purposes].)

That a restraining notice is a permissible means to enforce a turnover order, though, does not mean that Berry, as counsel for the Knopfs, could properly issue a restraining notice here. Although the Knopfs brought this proceeding, this court concluded in its July 11 order that the Knopfs were not the most appropriate party to receive the funds at issue. Instead, this court held, the money should go to Pursuit's Trustee in the federal bankruptcy proceeding, to be disbursed according to federal bankruptcy law. And though the Knopfs may submit a claim in the federal bankruptcy proceeding with respect to those funds (see NYSCEF No. 116, at 3), it would still be for the Trustee to determine under federal law what share of the money, if any, should properly go to the Knopfs.

Since this court's turnover order determined that the money at issue should go to and be controlled by the Trustee, not the Knopfs, it is the Trustee rather than the Knopfs who may use means such as restraining notices to enforce the order.

Additionally, as Esposito points out, the turnover order gave him 30 days from service of notice of entry to pay the $50,000 plus interest at issue. (See NYSCEF No. 116, at 8.) The restraining notice, however, if left undisturbed, would in practice require Esposito to pay over the money well before the end of that 30-day period in order to regain the use of his savings account— thus affording Esposito fewer rights than provided for under this court's order.

Berry suggests that it would be a "typical and appropriate outcome" to reach a three-way agreement among the Trustee, Esposito, and his bank, under which the restraining notice would be released in exchange for Esposito paying over the money to the Trustee. But Berry does not [*3]identify any exigency that would necessitate (or justify) constraining Esposito to enter into such an agreement prior to the expiration of the deadline set by this court — particularly because the Trustee could seek under CPLR 5251 to hold Esposito in contempt were he to fail to comply with the terms of the turnover order.

Finally, Berry is correct to note in his responsive email that ordinarily a request for relief from restraining notices must be made by motion. This court may, however, in its discretion, direct Berry sua sponte to withdraw the restraining notice at issue. (See CPLR 5240.) Taking into account the notice's infirmities discussed above, and Esposito's uncontested representation that he is currently traveling internationally with limited access to email, this court concludes on its own motion that the restraining notice should be withdrawn.

Accordingly, it is

ORDERED that counsel for the Knopfs shall, by 10:00 A.M. Eastern Daylight Time on July 17, 2019, withdraw any restraining notice that he issued to enforce this court's turnover order issued on July 11, 2019.