The opinion of the court was delivered by: WEXLER
This is a proceeding brought pursuant to Rule 69(a) of the Federal Rules of Civil Procedure and N.Y.C.P.L.R. Sections 5225, 5227, and 5239, to enforce a judgment.
In September 1981 respondent Community National Bank learned that one of its depositors, respondent Steven D'Ambra, acting in conjunction with an officer of the Bank, had deposited checks issued by various insurance companies on the basis of fraudulent insurance claims made by D'Ambra and persons in association with him. On October 14, 1981, D'Ambra executed an agreement with the Bank. The Agreement recited that D'Ambra acknowledged that he was not entitled to the proceeds of the checks and that the Bank might suffer damages as a result of claims made by the insurance companies. The agreement provided that the Bank would pay interest on D'Ambra's accounts, and that "[n]o money shall be withdrawn from any of the above-named accounts until after the Statute of Limitations has expired for any civil suit. All funds which are on deposit at CNB in the above-named accounts on the date of this agreement shall be held by CNB in the accounts as collateral security to indemnify CNB for any loss it may incur as a result of any claims which may be made by any party including but not limited to, any insurance company, bank or individual." The agreement was modified on September 15, 1982 to enable D'Ambra to deposit additional funds to bring the total funds to at least $200,000, to be evidenced by two Certificates of Deposit for at least $100,000 each, all such funds to be subject to the security interest. Certificates of Deposit bear high interest. The Bank retained physical possession of the Certificates.
Independently of the above mentioned agreement, D'Ambra owes the bank $20,602.00 in outstanding loans.
On or about April 21, 1983 the respondent insurers commenced an action in New York Supreme Court, New York County, naming D'Ambra and the Bank as defendants, alleging that D'Ambra induced the respondent insurers to issue checks on the basis of fraudulent insurance claims, demanding a money judgment against D'Ambra, alleging that D'Ambra's accounts at the Bank contain proceeds of these checks, and demanding that the Bank be declared a constructive trustee on behalf of the insurers for the funds in the accounts. No claim was made at the time that the Bank had injured the insurers, and no claim against the Bank for money damages was made (except for costs and attorney fees).
On March 15, 1984 the New York Supreme Court, New York County, granted respondent insurers an order of attachment directing the sheriff to levy upon the property of and debts owing to Steven D'Ambra. On March 19, 1984 the respondent insurers delivered this order to the sheriff of Richmond County. On or about March 21, 1984 the sheriff levied upon D'Ambra's accounts at the Bank, by serving the order upon the Bank.
On or about June 19, 1984 the levy lapsed by virtue of N.Y.C.P.L.R. Section 6214(e), which provides that "[A]t the expiration of ninety days after a levy is made by service of the order of attachment, or of such further time as the court, upon motion of the plaintiff on notice to the parties to the action, has provided, the levy shall be void except as to property or debts which the sheriff has taken into his actual custody, collected or received or as to which a proceeding under subdivision (d) has been commenced." Subdivision (d), it should be noted, deals with proceedings to compel the garnishee to transfer property or pay debts to the sheriff.
On June 21, 1984 we entered a money judgment in favor of petitioner against D'Ambra. Petitioner was a victim of D'Ambra's fraud.
On June 22, 1984 the respondent insurers moved before the New York Supreme Court for an order extending their levy nunc pro tunc from June 19, 1984 to June 19, 1985. On June 29, 1984, while said motion was still pending, the respondent insurers delivered an additional copy of the original order of attachment (dated March 15, 1984) to the sheriff of Richmond County. On July 2, 1984 the sheriff delivered this copy of the original order to the Bank, thereby purportedly levying a second time upon D'Ambra's accounts.
On July 2, 1984 petitioner filed a transcript of this Court's judgment in petitioner's favor with the County Clerk of Richmond County, who then docketed the transcript. On July 3, 1984 petitioner delivered a writ of execution, signed by petitioner's attorney, and issued in the name of this Court and bearing the civil docket number of this Court's judgment (CV 83-2213), to the sheriff of Richmond County. On July 5, 1984 an under sheriff of Richmond County contacted petitioner and stated that the name on the execution should be changed to that of the New York Supreme Court, Richmond County. An agent of the petitioner then changed the name (not the docket number) by hand.Also on July 5, 1984, either before or after said change was made, the New York Supreme Court issued an order extending the respondent insurers' levy nunc pro tunc from June 19, 1984 to December 19, 1984. On July 6, 1984 the sheriff served petitioner's execution on the Bank.
On August 3, 1984 the respondent insurers amended their complaint in state court to assert a claim against the Bank for money damages.