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LePatner & Associates, LLP v. Horowitz

February 18, 2009


The opinion of the court was delivered by: Marilyn Shafer, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Defendants Harvey Horowitz and Bernard Horowitz (the Horowitz brothers) move to vacate a default judgment on the ground of lack of personal jurisdiction, pursuant to CPLR 5015 (a) (4) and 305 (b), and to dismiss this action, or, in the alternative, for leave to serve an answer.

Plaintiff LePatner & Associates, LLP (LePatner LLP), a law firm, commenced this action on April 7, 2008, by filing a summons and complaint. In the complaint, LePatner LLP seeks to recover the sum of $187,107.61, together with interest, in unpaid legal fees and disbursements allegedly incurred by the Horowitz brothers and due plaintiff in prosecuting a lawsuit on their behalf (see Horowitz v The Sterling Acquisitions Group, L.L.C., Dist. Ct., SD NY, case No. 9010/05 CLB [the District Court action]). LePatner LLP asserts causes of action based on theories of account stated, breach of contract, quantum meruit, and unjust enrichment.

In the District Court action, LePatner LLP moved to be relieved as counsel and for a charging lien pursuant to Judiciary Law §475, on the ground that the Horowitz brothers had failed to pay the firm's invoices in full. By order dated July 25, 2007, the District Court granted the motion, relieving LePatner LLP as counsel and holding that a charging lien "was established and determined to exist upon the proceeds of any funds obtained by [the Horowitz brothers] in connection with this matter arising out of settlement, award, judgment or order, with the specific amount of such charging lien to be determined at a subsequent hearing or inquest conducted by the Court at a time and date to be fixed by the Court, unless otherwise adjudicated."

The Horowitz brothers retained new counsel and proceeded with the prosecution of the District Court action. Subsequently, the action settled upon payment by the Horowitz brothers to Sterling Acquisitions Group in exchange for the termination of Sterling's rights to the real property at issue in the action. No hearing or inquest to determine the amount of the lien was held, allegedly because the Horowitz brothers did not receive any funds in the settlement.

In the action at bar, LePatner LLP alleges that it properly effected service of a summons and complaint pursuant to CPLR 308 on the Horowitz brothers at their respective homes on April 24, 2008.

On July 24, 2008, following the Horowitz brothers' failure to appear or serve an answer in this action within 30 days after service of process, and upon LePatner LLP's motion, the County Clerk issued a default judgment against each defendant in the sum of $187,107.61, together with interest in the sum of $15,178.78.

On July 1, 2008, LePatner LLP served each defendant with a copy of the default judgment with notice of entry, a notice to judgment debtor or obligor, and a restraining notice to judgment debtor. LePatner LLP also caused an execution with notice to garnishee in the amount of $202,800.19, together with interest accruing from June 24, 2008, to be served on Provident Bank, where Bernard Horowitz maintained an account. By letter dated July 28, 2008, the Orange County Sheriff's Office advised Provident Bank that the total balance due was $214,872.62, including interest to July 28, 2008, poundage, and fees, and requested that checks payable to the Sheriff's Office be issued on Bernard Horowitz' account. As a result, Provident Bank froze the account, which contained approximately $30,000, and advised Bernard Horowitz that his assets were subject to execution and levy by the sheriff.

Upon receipt of the Provident Bank correspondence, the Horowitz brothers allegedly contacted their attorneys, who then discovered the existence of the default judgment issued in this action.

On August 19, 2008, LePatner LLP commenced a fraudulent conveyance action against Harvey Horowitz, Bernard Horowitz, Sura Horowitz (Harvey Horowitz's wife), and Martin Schwartz, apparently a business associate of the Horowitz brothers (see LePatner & Assocs., LLP v Horowitz, Sup Ct, Orange County, index No. 008999/08). In that action, LePatner LLP alleges that, on March 12, 2008, the Horowitz brothers fraudulently conveyed two parcels of real estate, including Harvey Horowitz's residence, for no consideration to Sura Horowitz and Martin Schwartz. LePatner LLP also alleges that, on June 11, 2008, the Horowitz brothers obtained a $256,215 mortgage on Bernard Horowitz's residence.

During pendency of the instant motion and in order to maintain the status quo, by stipulation so-ordered by the court on September 3, 2008, the parties agreed that LePatner LLP will cease all collection activity on the default judgment; that the restraint on bank funds levied on Bernard Horowitz's Provident Bank account will continue, pending further order of this court; that the Horowitz brothers are restrained and enjoined from the transfer or dissipation of their assets, other than in the regular course of business; and that the Horowitz brothers will retain at least $180,000 in unencumbered assets, in addition to the assets maintained in the Provident Bank account.

The Horowitz brothers now seek to vacate the default judgment on the ground that the court has not obtained personal jurisdiction over them. They deny receipt of process by personal service, substituted service, or the additional mailings allegedly performed by the process server and LePatner LLP's attorneys. They also contend that service is a nullity on the ground that, in the affidavits of service, the process server misidentified the papers that he served.

In opposition, LePatner LLP contends that the Horowitz brothers have not shown that service was improper, do not have a meritorious defense, and do not ...

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