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Simon v. GTR Source, LLC

United States District Court, S.D. New York

December 26, 2019

BASIL SIMON, in his capacity as Receiver for FutureNet Group, Inc Plaintiff,
GTR SOURCE, LLC et al., Defendants.



         The 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.

         The 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.


         The 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).

         In 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).


         The following facts are undisputed unless otherwise noted.

         FutureNet 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.

         On 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.

         On 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.

         On 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).

         On 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 the Complaint.


         The 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 ...

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