United States District Court, S.D. New York
BASIL SIMON, in his capacity as Receiver for FutureNet Group, Inc Plaintiff,
GTR SOURCE, LLC et al., Defendants.
MEMORANDUM ORDER & OPINION
G. KOELTL UNITED STATES DISTRICT JUDGE
plaintiff Basil Simon, in his capacity as Receiver for
judgment debtor FutureNet Group, Inc.
(“FutureNet”), has alleged claims for wrongful
execution, conversion, and trespass to chattels against
judgment creditor GTR Source, LLC (“GTR”) and New
York City Marshal Stephen Biegel (the “Marshal”),
the latter of whom executed a state levy on property
belonging to FutureNet. The plaintiff alleges that the
Marshal had no jurisdiction to levy on FutureNet's assets
outside New York City. Jurisdiction in this case is based on
complete diversity of citizenship among the parties pursuant
to 28 U.S.C. § 1332.
Receiver now moves for summary judgment granting its
requested relief; the Marshal and GTR cross-move for summary
judgment denying the Receiver's requested relief and
seeking to dismiss the case. GTR also moves for
attorney's fees and costs under a contract entered into
between FutureNet and GTR.
standard for granting summary judgment is well established.
“The Court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986); Gallo v.
Prudential Residential Servs., Ltd. P'ship, 22 F.3d
1219, 1223 (2d Cir. 1994). “[T]he trial court's
task at the summary judgment motion stage of the litigation
is carefully limited to discerning whether there are any
genuine issues of material fact to be tried, not to deciding
them. Its duty, in short, is confined at this point to
issue-finding; it does not extend to issue-resolution.”
Gallo, 22 F.3d at 1224. The moving party bears the
initial burden of “informing the district court of the
basis for its motion” and identifying the matter that
“it believes demonstrate[s] the absence of a genuine
issue of material fact.” Celotex, 477 U.S. at
323. The substantive law governing the case will identify
those facts which are material and “[o]nly disputes
over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
determining whether summary judgment is appropriate, a court
must resolve all ambiguities and draw all reasonable
inferences against the moving party. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986). Summary judgment is improper if there is any evidence
in the record from any source from which a reasonable
inference could be drawn in favor of the nonmoving party.
See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37
(2d Cir. 1994). If the moving party meets its burden, the
nonmoving party must produce evidence in the record and
“may not rely simply on conclusory statements or on
contentions that the affidavits supporting the motion are not
credible.” Ying Jing Gan v. City of New York,
996 F.2d 522, 532 (2d Cir. 1993); see also Scotto v.
Almenas, 143 F.3d 105, 114-15 (2d Cir. 1998).
“When there are cross motions for summary judgment, the
Court must assess each of the motions and determine whether
either party is entitled to judgment as a matter of
law.” Andy Warhol Found. for the Visual Arts, Inc.
v. Goldsmith, 382 F.Supp.3d 312, 317 (S.D.N.Y. 2019).
following facts are undisputed unless otherwise noted.
is a Michigan corporation that provides infrastructure
services for construction, technology, perimeter security and
energy/environment projects to both government and commercial
customers. Pl. 56.1 Stmt. ¶¶ 1-2. Around November
13, 2017, FutureNet and GTR entered into an agreement in
which GTR would advance FutureNet $200, 000 in exchange for
$291, 800 in future FutureNet accounts receivable.
Id. at ¶¶ 4-5. FutureNet made payments
under the agreement until February 2018, at which point
FutureNet had paid GTR around $195, 000. Id. at
¶ 6. Then, in February 2018, GTR declared a default
under the agreement and filed an affidavit of confession of
judgment in the New York State Supreme Court, Orange County.
Id. at ¶ 7. On February 14, 2018, GTR obtained
a judgment in the state court proceeding against FutureNet
for $120, 154.92, which consisted of the unpaid balance of
the agreement, attorney's fees, and costs. Id.
at ¶¶ 8-9. On the same day, GTR, through its
attorney, served a restraining notice at a branch of Comerica
Bank in Detroit, Michigan, a bank at which FutureNet funds
were kept. Id. at ¶¶ 10-11. The
restraining notice directed that, pursuant to New York law,
Comerica, a Texas corporation with its principal place of
business in Texas and doing limited business in New York, was
forbidden from transferring any property belonging to
FutureNet. Id. at ¶¶ 12-13, 15-16, 19. At
the time the restraining notice was issued, FutureNet stated
in an email to GTR that the restraining notice was unlawful
because Comerica had no bank branches in New York, Comerica
was not subject to personal jurisdiction in New York,
FutureNet's account were maintained entirely in Michigan,
and the restraining notice interfered with superior UCC
rights of FutureNet's senior secured lenders.
Id. at ¶ 22.
February 26, 2018, GTR issued an Execution with Notice to
Garnishee that named Comerica as the garnishee and that
directed New York City Marshal Stephen Biegel to serve a
Notice and Levy and Demand on Comerica c/o Corporate
Creations Network, Inc., a corporation located in Nyack, New
York in Rockland County. Id. at ¶ 23. The Levy
directed Comerica to turn over to the Marshal all of
FutureNet's property in Comerica's control.
Id. at ¶ 28.
February 28, 2018, FutureNet moved in the open state court
proceeding in Orange County to vacate the judgment based on
alleged procedural and jurisdictional defects in the
affidavit of confession and also moved to strike all
enforcement devices. Id. at ¶ 29. On March 13,
2018, the state court denied FutureNet's application,
holding that FutureNet would need to pursue any requested
relief by a separate plenary action, and that
“Defendant's remaining contentions [were] without
merit.” GTR Source, LLC v. FutureNet Grp.,
Inc., 98 N.Y.S.3d 500(Table), at *6 (Sup. Ct. Mar. 13,
2018). The state court order denying FutureNet's
requested relief was “without prejudice to their
seeking relief by way of plenary action.” Id.
The next day, on March 14, 2018, a woman named Alona in the
New York City Marshal's office delivered an amended levy
by fax to a Comerica office in Detroit for the turnover of
$127, 082.29 in FutureNet assets. Pl.'s 56.1 Stmt.
¶¶ 32-36. Around March 21, 2018, Comerica issued a
check to Marshal Biegel at his New York office for $127,
082.29, satisfying FutureNet's judgment for $120, 154.92
and the Marshal's poundage fee, at which point GTR filed
a satisfaction of FutureNet's judgment in state court.
Id. at ¶¶ 37-42.
April 27, 2018, FutureNet's senior creditors commenced an
action against FutureNet in Michigan state court seeking,
among other things, the appointment of a receiver over
FutureNet's assets. Id. at ¶¶ 43-44.
Basil Simon was appointed receiver over all general
intangibles of FutureNet with the purpose of achieving return
for secured and unsecured creditors and equity owners of
FutureNet. Id. at ¶¶ 45-47. In his role as
the Receiver, Simon moved on August 24, 2018 in the New York
state court action in Orange County to vacate the judgment
against FutureNet; the Receiver also sought restitution of
the funds that were collected by the Marshal. Id. at
¶ 51. On November 26, 2018, the state court denied the
Receiver's motion on jurisdictional and procedural
grounds. GTR Source, LLC v. FutureNet Grp., Inc., 89
N.Y.S.3d 528, 541 (Sup. Ct. 2018).
February 25, 2019, the Receiver commenced this action by
filing a Complaint that asserted causes of action for
wrongful execution and restraint against GTR, wrongful
execution against the Marshal, conversion against both
defendants, and trespass to chattels against both defendants.
The Receiver then moved for summary judgment and the
defendants cross-moved for summary judgment and to dismiss
defendants argue that the Rooker-Feldman doctrine
bars this action. Because the Rooker-Feldman
doctrine concerns this Court's subject matter
jurisdiction, “the Court has an independent obligation
to assure itself that it has the subject matter jurisdiction
to decide the matter.” Grand Manor Health Related
Facility, Inc. v. Hamilton Equities Inc., 941 F.Supp.2d
406, 415 ...