Second Department Addresses Standard to Determine Dispute Over Property Subject to Post-Judgment Collection

On February 11, 2015, the Second Department issued a decision in Born to Build, LLC v. Saleh, 2015 NY Slip Op. 01232, analyzing the standard for a proceeding pursuant to CPLR 5239 to determine disputed rights in property or a debt subject to post-judgment collection.

In Born to Build, nonparty Kamel Saleh moved to "vacate certain executions and void certain levies upon" "real property located in Manhattan, Long Island City, and Astoria." The trial court denied the motion. The Second Department reversed, explaining:

Pursuant to CPLR 5239, any interested person may commence a special proceeding against the judgment creditor or other person with whom a dispute exists to determine rights in the property or debt. The court may vacate the execution or order, void the levy, direct the disposition of the property or debt, or direct that damages be awarded and, if necessary, may hold a hearing to determine the proper disposition. As the party seeking relief, it is the petitioner's burden to proffer evidence demonstrating that the property was not subject to the lien identified in the notice of sheriff's sale.

At the hearing, Kamel presented mortgage documents relating to the purchase of the LIC property, as well as documents identifying him as the principal of the LLC which held legal title to that property and his own personal guaranty for the $1.45 million mortgage loan for that property. Accordingly, Kamel met his burden of demonstrating that the LIC property was not subject to execution. The plaintiff failed to refute this showing by proffering credible evidence establishing that Ibrahim had any interest in that property, instead relying primarily on hearsay statements regarding Ibrahim's alleged and unsupported claims of ownership which, contrary to the plaintiff's contention, were not admissible pursuant to any hearsay exception. Accordingly, the Supreme Court should have granted that branch of Kamel's motion which was, in effect, to vacate the execution and void the levy relating to the LIC property.

(Internal quotations and citations omitted).