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JDM Long Island, LLC v. U.S. Bank National Association

United States District Court, E.D. New York

November 21, 2014

JDM LONG ISLAND, LLC, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION, as successor trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2006-C7, Commercial Mortgage Pass-Through Certificates, Series 2006-C7, Defendant. U.S. BANK NATIONAL ASSOCIATION, as successor trustee for the registered holders of LB-UBS Commercial Mortgage Trust 2006-C7, Commercial Mortgage Pass-Through Certificates, Series 2006-C7, Counterclaim Plaintiff,
v.
TOWN OF HEMPSTEAD INDUSTRIAL DEVELOPMENT AGENCY; JDM LONG ISLAND, LLC; JOSEPH MOINIAN; DAVID MOINIAN; THE PEOPLE OF THE STATE OF NEW YORK, VILLAGE OF HEMPSTEAD; EAST COAST PETROLEUM, INC.; BAGNATO REALTY SERVICES, LLC (d/b/a NAI LONG ISLAND); THE PEOPLE OF THE STATE OF NEW YORK;

Christopher Clinton Costello, Esq., Winston & Strawn LLP, New York, NY. for Ellis Equities.

Abraham B. Krieger, Esq., Richard J. Eisenberg, Esq., Meyer, Suozzi, English & Klein, P.C., Garden City, NY. for the Receiver.

Alan M. Nelson, Esq., Lake Success, NY. for Ambrosino.

MEMORANDUM & ORDER

JOANNA SEYBERT, District Judge.

Presently before the Court are: (1) the Courtappointed Receiver's motion for approval and payment of a commission (Docket Entries 124, 155); (2) the Receiver's motion for approval and payment of attorneys' fees (Docket Entry 135); and (3) non-party Ambrosino Consultant Corporation's ("Ambrosino") motion for leave to sue the Receiver (Docket Entry 141). For the following reasons, the Receiver's motion for attorneys' fees is GRANTED IN PART and DENIED IN PART, and the Court RESERVES JUDGMENT on the Receiver's motion for a commission and Ambrosino's motion for leave to sue the Receiver pending a factual hearing.

BACKGROUND

The Court presumes familiarity with the facts of this case, and only recites brief background facts in this section. Additional facts relevant to the instant motions are set forth in further detail throughout the discussion section of this Memorandum and Order.

This foreclosure action involves mortgaged premises located at 175 Fulton Avenue and 20 Hilton Avenue in Hempstead, New York (the "Property"). Plaintiff JDM Long Island, LLC ("JDM"), the mortgagor, commenced this action on November 19, 2010 against Defendant U.S. Bank National Association ("U.S. Bank"), asserting claims for declaratory and injunctive relief in connection with JDM's alleged default under the mortgage. U.S. Bank removed the action to this Court on December 2, 2010 and, on February 23, 2011, U.S. Bank answered and filed a counterclaim against JDM and others seeking to foreclose on the Property.

On December 7, 2012, this Court granted partial summary judgment in U.S. Bank's favor on its foreclosure counterclaim and dismissed JDM's Complaint. (Docket Entry 100.) The remaining claims were subsequently settled and, on October 2, 2014, the Court ordered the foreclosure and sale of the Property at public auction. (Docket Entry 154.) The sale has not yet occurred but it is currently scheduled to take place next month on December 9, 2014.

On May 13, 2011, U.S. Bank filed a motion seeking the expedited appointment of a receiver to oversee the operation and maintenance of the Property. (Docket Entry 38.) Before the Court could hold a hearing on the motion, JDM and U.S. Bank filed a stipulation consenting to the appointment of Dennis J. Sherry as Receiver and a proposed order detailing his duties. (Docket Entry 41.) The Court so ordered the stipulation appointing the Receiver on May 18, 2011. (Docket Entry 43.)

On October 6, 2011, the Receiver moved for the appointments of: (1) his employer, CB Richard Ellis ("CBRE"), as managing agent of the Property; (2) CBRE as leasing agent of the Property; and (3) Meyer, Suozzi, English & Klein, P.C., ("Meyer Suozzi") as counsel to the Receiver. (Docket Entry 54.) After receiving no objections from JDM, U.S. Bank, or any of the other parties, the Court granted the Receiver's motion for the appointment of a managing agent, a leasing agent, and counsel. (Docket Entry 59.)

On October 3, 2013, JDM and U.S. Bank's assignee, Ellis Equities, LLC ("Ellis"), [1] filed a stipulation and proposed order discharging the Receiver (Docket Entry 121-1), which the Court subsequently so ordered on October 4, 2013 (Docket Entry 122). Pursuant to that order, the Receivership terminated on October 15, 2013.

The Receiver now moves for an order approving his accounting, fixing his commission, and granting attorneys' fees. (Docket Entries 124, 135, 155.) Ellis opposes the Receiver's motions. (Docket Entries 128, 137.) Additionally, non-party Ambrosino, a general contractor that the Receiver retained to perform certain improvements at the Property, moves for leave to sue the Receiver for breach of contract and unjust enrichment, seeking to recover payment for unpaid work. (Docket Entry 141.) These motions are currently pending before the Court.

DISCUSSION

I. The Receiver's Motion for a Commission

The Receiver seeks a total commission of $454, 435.69, which is five percent of $9, 088, 713.83, the amount that the Receiver claims the Court should use to calculate his commission. (Sherry's First Decl., Docket Entry 124, ¶ 19.) Ellis objects to the Receiver's request on several grounds. However, in order to fully understand the parties' respective positions, a brief review of the governing statute is necessary.

A. N.Y. C.P.L.R. § 8004

Section 8004 of the New York Civil Practice Law and Rules governs the compensation that a court-appointed receiver may receive for services rendered during a receivership. It is comprised of two subsections, which state:

(a) Generally. A receiver, except where otherwise prescribed by statute, is entitled to such commissions, not exceeding five per cent upon the sums received and disbursed by him, as the court by which he is appointed allows, but if in any case the commissions, so computed, do not amount to one hundred dollars, the court, may allow the receiver such a sum, ...

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