Second Circuit – Judgment execution: Plymouth Venture Partners II L.P. v. GTR Source LLC; Cap. Merch. Servs.

United States Court of Appeals for the Second Circuit

Judgment execution

Violation of procedure – Tort action

Plymouth Venture Partners II L.P. v. GTR Source LLC; Cap. Merch. Servs.

20-118; 20-850

Judges Walker, Sack, and Sullivan

Background: A receiver for a debtor sued a judgment creditor for violation procedural rules when they executed state-court judgments against the debtor. The district court dismissed the claims concluding that the debtor would not suffer any injury even if the executions and levies were procedurally defective, since the seized property was used to satisfy valid underlying judgments. In a similar action, the findings on appeal hinged on the same question of law. The district court held that, absent preclusion, dismissal was appropriate because the debtor suffered no damages.

Ruling: The Second Circuit certified two questions to the New York State Court of Appeals. The court asked whether a judgment debtor suffers cognizable damages in tort when its property is seized pursuant to a levy by service of execution that does not comply with the procedural requirements of the New York Civil Practice Law and Rules, even though the seized property is applied to a valid money judgment. Also, whether the judgment debtor can, under these circumstances, bring a tort claim against either the judgment creditor or the marshal without first seeking relief under section 5240 of the CPLR.

Shane R. Heskin, of White and Williams for the plaintiffs-appellants; Ryan K. Cummings, of Hodgson Russ, Andrew P. Schriever, of Cuddy and Feder, and Christopher R. Murray, of Stein Adler Dabah & Zeldkowitz, for the defendants-appellees.