Articles Posted in Pre-Judgment Remedies

Collecting from a debtor who does not reside within New York State and who may not otherwise be subject to the “long-arm” jurisdiction of New York courts (especially after the U.S. Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014)) can be made much easier if the creditor can identify a specific asset in New York, such as a bank account. Under Article 62 of New York’s Civil Practice Law and Rules (“CPLR”), a creditor-plaintiff can simultaneously file a summons and complaint to collect from the debtor-defendant and move the court for what is known as an order of attachment, which allows the plaintiff to have a Sheriff seize the asset pending the outcome of the law suit. The attachment procedure can be a very effective tool for preserving a debtor’s asset as security throughout the law suit and to prevent the asset’s disappearance once the debtor becomes aware of the law suit. Also, under the proper circumstance, the asset itself provides a means to obtain jurisdiction over a foreign defendant, commonly referred to as in rem jurisdiction.

CPLR Section 6201 sets forth the basis upon which an order of attachment can be obtained:

An order of attachment may be granted in any action, except a matrimonial action, where the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants, when:
1. the defendant is a nondomiciliary residing without the state, or is a foreign corporation not qualified to do business in the state….

In order to obtain a pre-judgment order of attachment, in its moving papers, the creditor-plaintiff must establish the following elements under CPLR 6212 (a):

a. That there is a cause of action and that the action is one in which plaintiff would be entitled to a money judgment;
b. That it is probable that plaintiff will succeed on the merits;
c. That one or more of the grounds for the attachment set forth in CPLR 6201 exist; and
d. That the amount demanded from the defendant exceeds all counterclaims known to plaintiff. Continue reading

Equipment lessors often face the following unfortunate scenario: the lessee defaults and stops making payment under the equipment lease, but remains in possession and uses the equipment while not paying. Under Article 71 of New York’s Civil Practice Law and Rules (“CPLR”), where an equipment lessor sues to remedy a lease payment default, the equipment lessor can make a pre-trial application to the court for the equipment to be removed from the lessee’s premises and eventually turned over to the lessor, pending the outcome of the case. The remedy is known as an Order of Seizure and is an important litigation weapon for an equipment lessor who is looking to preserve the lessor’s collateral and to prevent the insult to injury of the lessee who refuses to pay and wants to keep using the equipment.

Known in other jurisdictions as replevin, New York’s pre-trial remedy of Order of Seizure is different because its purpose is not to restore possession of the property to the person from whom it was wrongfully taken. Rather, the Order of Seizure is a means to hold and protect the property until the action is determined at trial.

Article 71 is applicable only to chattels and includes all specific personal property such as goods and equipment. It also includes certificates of stock, bonds, notes, or other securities and obligations. Continue reading