Court Grants Civil Contempt for Failure to Cooperate with Court-Appointed Receiver

On March 11, 2024, Justice Andrea Masley of the New York County Commercial Division, issued a decision in Bernstein-Deitcher v Gurwitz, 2024 NY Slip Op 30819(U), granting the motion by the Court-appointed receiver to hold the Defendant in civil contempt for lack of compliance with the Court’s prior order requiring the turnover and sale of certain shares of stock to satisfy an unpaid judgment. The Court held that contempt was appropriate despite Defendants’ compliance with certain aspects of that order after the receiver had moved for contempt. The Court explained:

Defendant denies contempt because everything that the receiver requested was either provided before or after the motion was filed. However, the receiver did not get the stock certificate until October 2023. (NYSCEF __ , tr __ .) It was due 10 days after the receiver qualified on January 12, 2023. (NYSCEF 146, Schrero aff ,is; NYSCEF 128, Supplemental Order at 3 [mot. seq. no. 004].) The Supplemental Order directed Charidy to put the receiver in control of the shares or issue a stock certificate. (NYSCEF 128, Supplemental Order at 2-3 [mot. seq. no. 004].) Charidy did neither. Moreover, making a notation in Carta was also useless since it could be removed by Charidy at anytime and at will. The court rejects defendant's objection that the Supplemental Order was not clear on this issue; it was crystal clear. Likewise, defendant's reliance on the electronic share book at Carta is rejected. At no time was the receiver in control. Defendant's objections are undermined by the fact that defendant understood precisely what the receiver needed to do her job to sell the shares.

The court agrees with defendant that plaintiff has no role to play in the sale of the Charidy shares. However, defendant failed to object to the receiver's proposed order. Accordingly, the court has modified the Supplemental Order which will issue separately from this decision.

The court rejects defendant's objection that the receiver is impatient. Plaintiff holds a January 2021 judgment which defendant has failed to pay. The shares should have been sold by now but for defendant's delays.

The court finds defendant in contempt and responsible for Chairdy's resistance too. The receiver's request, pursuant to Judiciary Law §773, for a $250 fine for failure to comply with this court's December 21, 2022 Supplemental Order is granted. If defendant fails to comply with this order within 14 days of service with notice of entry delivered by email to defendant's attorney and US mail to defendant, defendant shall be fined $250 daily. If defendant fails to cooperate with the receiver's reasonable requests necessary to satisfy her responsibilities as receiver, defendant shall be fined an additional $250 per day.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning receivership or motions for contempt