The opinion of the court was delivered by: Siragusa, J.
This case is before the Court on a motion by Pembrook Pines Mass Media, N.A., Corp. ("Pembrook") and Robert J. Pfuntner, filed on September 5, 2012, ECF No. 74, seeking,
Orders: (i) pursuant to Rule 69(a)(1) of the Federal Rules of Civil Procedure ("FRCP") and § 5240 of the New York Civil Practice Law and Rules ("CPLR"), staying the pending sale of Pembrook's radio station assets (the "Asset Sale") currently being conducted by receiver Richard A. Foreman & Associates (the "Receiver") on the ground that the Defendants are prepared to redeem the assets proposed to be sold by paying in full the Federal Court Judgment (defined below), plus accrued interest, and paying the amount of the Bank's attorneys fees and expenses that may be awarded by this Court;
(ii) pursuant to Rule 60(a) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1961, fixing the amount of post-judgment interest due under the Federal Court Judgment; (iii) pursuant to FRCP 67(a) and CPLR §§ 5020 and 5021, authorizing the Defendants to deposit the Federal Court Judgment amount, plus interest and allowed attorneys fees with the Court Clerk, if necessary, and directing plaintiff Citizens & Northern Bank (the "Bank") to execute and deliver a satisfaction of judgment to the Defendants with respect to the Federal Court Judgment; (iv) pursuant FRCP 66 and CPLR § 5228, discharging the Receiver in this case; and (v) granting such other and further relief the Court deems just and proper.
Hill Aff. ¶ 2, Sept. 5, 2012, ECF No. 74. For the reasons stated below, the application is granted in part.*fn1
Citizen's and Northern Bank ("the Bank") filed its complaint against Pembrook and Robert J. Pfuntner (collectively "Borrowers") on July 30, 2009. In the complaint, the Bank alleged facts supporting diversity jurisdiction and claimed that Pembrook and Pfuntner had defaulted on loans the Bank made to them. On March 15, 2010, the Clerk entered a default against the Borrowers. Subsequently, the Bank moved for a default judgment. Default Judgment, July 29, 2010, ECF No. 5. The Court ordered the Clerk to enter judgment for the Bank against both defendants in the amount of $233,479.35, plus interest from March 12, 2010, through the date the judgment was entered, at a rate of $25.38 per day. Decision and Order, Sept. 7, 2010, ECF No. 6.
On July 20, 2011, the Bank and the Borrowers signed a Forbearance Agreement which, by its terms, terminated on January 31, 2012 or upon breach or default by the Borrowers, whichever occurred earlier. In early January 2012, the Bank, in accordance with Federal Rule of Civil Procedure 69(a), sought the appointment of a Receiver pursuant to section 5228 of the New York Civil Procedure Law and Rules, Motion to Appoint Receiver, Jan. 4, 2011, ECF No. 9. In an affidavit filed in support of the Bank's motion, William H. Baaki, Esq., stated that the Borrowers owned and operated radio stations and held licenses from the Federal Communications Commission ("FCC"), and that Pembrook was still generating revenue from its operation of the radio stations. Baaki Aff. ¶¶ 5--6. Further, Mr. Baaki stated that since the radio station licenses were unique properties, the execution of the judgment against the assets would not achieve as high a value as a private sale conducted by a Receiver, who was knowledgeable about the sale of FCC broadcast licenses and could ensure compliance with FCC rules pertaining to the sale of those licenses. Id. ¶ 11.
In regard to the Bank's application for a Receiver, the Court issued an Order to Show Cause, which was personally served on Pembrook and on Pfuntner on February 11, 2011. At the Show Cause hearing on February 18, 2011, Mr. Baaki appeared for the Bank and no one appeared for either of the defendants. Consequently, on March 1, 2012, ECF No. 21, the Court appointed Richard A. Foreman as Receiver over Pembrook ("Receiver Order"). The appointing order also restrained anyone but Mr. Foreman from filing a bankruptcy petition on behalf of Pembrook ("the Bankruptcy Injunction").
On March 8, 2012, Pembrook filed a Chapter 11 voluntary petition in the Bankruptcy Court, Western District of New York. In re Pembrook Pines Mass Media, N.A., Corp., No. 2-12-20379-PRW (Bk. W.D.N.Y. Mar. 8, 2012). The Bank moved to dismiss the petition based upon the terms of the Court's Order containing the Bankruptcy Injunction. On March 16, 2012, the Honorable Michael J. Kaplan suspended the proceedings in the Bankruptcy case, pursuant to Section 305(a) of the Bankruptcy Code, and relieved the Bank of the automatic stay, "in recognition of the Order Appointing Receiver." entered in this case. Order Granting in Part Motion of Citizens & Northern Bank for an Order (A) Dismissing the Chapter 11 Case, or, in the Alternative, (B) Providing Relief from the Automatic Stay, or, in the Alternative, (C) Providing Adequate Protection and Continuing the Receivership, In re Pembrook Pines Mass Media, N.A., Corp., No. 12-20379 (Bk. W.D.N.Y. Mar. 16, 2012). This Court subsequently held that only the Receiver was authorized to file a Bankruptcy petition on Pembrook's behalf. Decision and Order, Apr. 3, 2012, ECF No. 38.
The Receiver has proceeded with obtaining bids for the radio station properties, and has entered into leases for the land on which the radio stations and the transmitting antennae are located, since the land was owned by Pfuntner and no leases had been put in place. The Court held oral argument on this motion on September 14, 2012, and heard from the Receiver and his two counsel, and counsel for the parties. Defendants argue that by offering to pay the debt in full, including interest and reasonable attorney's fees (to be determined by the Court), they are entitled to a satisfaction of judgment and the closure of this case.*fn2 Plaintiff, on the other hand, argues that because Defendants owe other debts than the one specifically mentioned in the complaint in this action, the Receiver should be empowered to go forward with the asset sale, which they estimate would net approximately $600,000 in proceeds to be used to pay off not only this debt, but to pay towards Defendants' remaining debts, including more than one million dollars to Plaintiff. Plaintiff commenced a foreclosure action in State court and that court appointed a referee to sell the property, after which the State court will determine whether there remains a deficiency to be reduced to judgment. Finally, Plaintiff has filed a motion with this Court asking for an order extending the Receiver's commission to cover the State judgment as well as the default judgment entered here in Federal court.
Federal Rule of Civil Procedure 69 provides the procedures for collection of judgments. It states in ...