Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

FEDERAL HOME LOAN MORTG. CORP. v. SPARK TARRYTOWN

October 7, 1993

FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff,
v.
SPARK TARRYTOWN, INC., PEOPLE OF THE STATE OF NEW YORK, TOWN OF MOUNT PLEASANT, VILLAGE OF NORTH TARRYTOWN, and JOHN DOES NOS. 1 TO 20, Defendants. VILLAGE OF NORTH TARRYTOWN, Third Party Plaintiff, v. LARRY RUSH, Third Party Defendant.



The opinion of the court was delivered by: VINCENT L. BRODERICK

 VINCENT L. BRODERICK, U.S.D.J.

 I

 On May 27, 1993, I directed entry of a default judgment against third party defendant Larry Rush ("Rush") on the third party complaint of the Village of North Tarrytown (the "Village") in this case involving foreclosure by the Federal Home Loan Mortgage Corporation ("FHLMC") against Spark Tarrytown, Inc. ("Spark Tarrytown") and potentially competing lienholders. FHLMC v. Spark Tarrytown, 822 F. Supp.137 (SDNY 1993). *fn1"

 The third party complaint alleged that Rush, as a principal in Spark Tarrytown, (1) abused the Bankruptcy Code by the filing of and manner of proceeding under an improper and subsequently vacated petition pursuant to Chapter 11 of that Code, (2) appropriated property and rents of Spark Tarrytown, (3) refused to provide necessary documents and (4) failed to pay water rents. The third party complaint states that a $ 25,000 fine was imposed on Spark Tarrytown and Rush for building violations and that $ 10,000 in engineering fees incurred by the Village to investigate infractions on Spark Tarrytown's property.

 On August 10, 1993 United States Magistrate Judge Mark D. Fox filed his Report and Recommendation in response to my reference of this matter to him for an inquest to ascertain the Village's damages. Judge Fox found that Rush had converted in excess of $ 40,000 of Spark Tarrytown's money (Report at 5). He recommends that judgment be entered against Rush for $ 8,402.46 consisting of water and legal bills.

 II

 The Village has objected to the Magistrate Judge's report, seeking payment of the $ 25,000 fine and the $ 40,000 found to have been converted by Rush. Rush, although served with both the Report and Recommendation and the Village's objections, has filed no submissions.

 I adopt the Report and Recommendation of Judge Fox, direct that judgment be entered in favor of the Village against Rush for $ 8,402.46 and find that the Village retains its remedies with respect to the fine and engineering fees unaffected by events in this litigation.

 III

 Amounts diverted by Rush from Spark Tarrytown, estimated by the Magistrate Judge at $ 40,000 are in the first instance, at least, assets of Spark Tarrytown. The Village cannot claim these funds initially alleged to be due from Spark Tarrytown in its third party complaint, without having asserted claims against Spark Tarrytown in this litigation, whether or not based in part on a prior Village court determination. The Village, in other words, cannot ask that the corporate veil be pierced until it obtains a ruling in this court based on prior litigation or otherwise that Spark Tarrytown owes the sums involved to the Village.

 Funds obtained by Spark Tarrytown are subject to an initial claim by Spark Tarrytown's receiver for use in paying its immediate obligations for maintenance of the premises involved. Any remaining funds are subject to claims of FHLMC if necessary to pay any unpaid portion of its loan after the sale of Spark Tarrytown's property.

 The Magistrate Judge's Report and Recommendation which I have adopted does not rule that Spark Tarrytown cannot recover any funds wrongfully obtained by Rush or others which belong to it. The only ruling made is that the Village cannot obtain such funds from Rush based on the present third party complaint. Spark Tarrytown's receiver may wish to consider filing a claim against Rush for any funds belonging to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.