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Sunday, October 26, 2008

Court of Appeals Holds Rule 202.48 Does Not Apply to Order Granted as Result of Unnecessary Motion Which Results in Order Granting Same Relief Previou

In Farkas v Farkas, — NY3d —, 10/24/2008 N.Y.L.J. 27, (col. 3) the Court of Appeals held that Rule 202.48 cannot deprive a party of a judgment where it has been improperly or unnecessarily invoked in the first place. The 'settle' or 'submit' trigger for the 60-day limitation of Rule 202.48(a) does not purport to govern the flow of the entry process, which is a ministerial recording function that is separate and distinct from the procedure of obtaining the court's signature on a proposed judgment. The trial court’s 1996 decision found that the e husband seriously dissipated marital assets; and that, although the wife was entitled to $100,000 per year in lifetime spousal maintenance, the husband would likely never pay, condemning her to 'the role of sleuth and detective, always in court.' Supreme Court granted the wife the parties' $3.2 million cooperative apartment in Manhattan; all furniture, furnishings, antiques and works of art; all jewelry, collectibles and personal property she owned or had in her possession including stocks, bonds, equities, cash accounts and funds of any description; 50 percent of any interest or shares the husband might own in Alexander's Department Store, the family business; and 100 percent of any remaining IRA, KEOGH or other retirement plan or annuity of which the husband was the owner or beneficiary. The 1996 decision also addressed a debt the parties owed to Chemical Bank. Supreme Court required the husband either to pay all sums due to Chemical Bank and deliver to the wife a satisfaction of the debt and stipulation of discontinuance with prejudice of the foreclosure action; or, alternatively, to pay one-half of the sums due to Chemical Bank and deliver to the wife a stipulation of discontinuance with prejudice of a replevin action that the husband's mother had commenced against the wife. 'In the event that [the husband] fails to comply with one of these alternatives within 45 days,' the Court opined, '[the wife] may enter a money judgment against [the husband] for the total amount due and owing to Chemical Bank'. The Court ended its 1996 decision with the instruction to '[s]ettle judgment.' Supreme Court's subsequent judgment (the 1996 judgment) indicated that the husband had not complied with either alternative for discharging his obligation with respect to the Chemical Bank debt, and included the following decretal paragraph:
'ORDERED, ADJUDGED, and DECREED, [the husband] is directed to pay in full all sums due to Chemical Bank, including interest, penalties, legal fees and other costs and to deliver to [the wife] or her attorneys...evidence of satisfaction of the debt and a stipulation of discontinuance with prejudice of the action brought by Chemical Bank. In lieu thereof, at his option [the husband] may pay one-half of all sums due to Chemical Bank and deliver a discontinuance with prejudice of the action for replevin brought by [the husband's mother] against [the wife]. In the event that [the husband] fails to comply with either option within 30 days from the date hereof, [the wife] shall be entitled to enter a money judgment against [the husband] for the total amount due and owing to Chemical Bank without further order '.
The husband appealed and the Appellate Division affirmed (Farkas v. Farkas, 251 AD2d 4 [1st Dept 1998]).
An amended judgment of divorce entered on April 14, 1999 (the 1999 amended judgment), repeated the 1996 judgment's provision regarding the debt to Chemical Bank. In June 2000, the wife sought an 'Order...[p]ursuant to the Order [sic] of this Court dated July 17, 1996, entering a Final Judgment against [the husband] for the sum of $984,401.17, representing the principal sum due Chemical Bank, with interest and penalties. In a 2000 decision and order, Supreme Court granted the wife's application 'for a money judgment in her favor against [the husband] in the sum of $984,401.17 in respect of the Chemical Bank foreclosure action and restated, in its entirety, the relevant decretal paragraph from the 1999 amended judgment, italicizing the final sentence, presumably for emphasis. At the end of the 2000 decision and order the fifth paragraph provided as follows:
'ORDERED that [the wife's] application...for a money judgment in her favor against [the husband] in the sum of $984,401.17 in respect of the Chemical Bank foreclosure action, in addition to the bank's attorneys' fees, is granted and [the wife] may settle the judgment thereon. Upon [the wife's] suggestion, such judgment shall contain language staying execution thereon pending determination or other disposition of the Chemical Bank foreclosure action' .
In May 2005, 5 ½ years later, the wife served the husband with a notice of settlement and proposed judgment regarding the monies owed Chemical Bank. The proposed judgment stated that the wife and Chemical Bank had settled the foreclosure action for $750,000 in August 2003; the proposed judgment against the husband was in the principal amount of $750,000.
The husband opposed entry, citing 22 NYCRR 202.48 (Rule 202.48). Subdivision (a) states that 'Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted.' Subdivision (b) specifies that failure to submit the order or judgment as directed within the 60-day time frame constitutes an abandonment of the motion or action except upon 'good cause shown'.
Supreme Court thereafter signed a paper captioned 'Order/Judgment,' entered on June 20, 2005 which stated: 'IT IS HEREBY ORDERED, that [the wife's] application...is granted in that a Money Judgment is hereby granted in favor of [the wife]...against [the husband]...in the amount of $750,000.00 with interest from August 6, 2003, and that [the wife] shall have execution therefore.'
The Appellate Division, with two Justices dissenting, reversed the judgment on the law, vacated it, and dismissed the underlying claim as abandoned pursuant to Rule 202.48. It cited Brill v. City of New York (2 NY3d 648 [2004]) and Miceli v. State Farm Mut. Auto. Ins. Co. (3 NY3d 725,726 [2004]). The majority considered itself 'constrained to reverse and vacate' because the wife failed to provide any explanation for her untimely submission of the proposed judgment other than 'law office failure' (Farkas v. Farkas, 40 AD3d 207, 207, 211 [2007]). The majority acknowledged 'that there was arguably good cause for delaying settlement of the judgment until after the Chemical Bank foreclosure action was settled in August 2003,' but concluded that 'the record revealed no justification for the wife's failure to submit a judgment for an additional year and nine months thereafter' .
The Court of Appeals, in an opinion by Judge Read, reversed the Appellate Division's May 2007 order, and upheld its June 1998 order. The Court held that the 1996 judgment and the 1999 amended judgment were not subject to Rule 202.48's 60-day requirement. These judgments carried out the 1996 decision, which directed the parties to ‘settle judgment.' The decretal paragraph specifically addressing the Chemical Bank monies provided that the wife was 'entitled to enter a money judgment against the husband for the total amount due and owing to Chemical Bank without further order'. The Court held that this paragraph set out a 'simple judgment for a sum of money which speaks for itself,' and therefore fell outside the ambit of Rule 202.48 (citing Funk v. Barry, 89 NY2d 364, 367 [1996]). Judge Read pointed out that the Court emphasized in Funk, that the 'settle' or 'submit' trigger for the 60-day limitation of Rule 202.48(a) 'does not purport to govern the flow of the entry process, which is a ministerial recording function that is separate and distinct from the procedure of obtaining the court's signature on a proposed judgment'.
Judge Read noted that Supreme Court added the phrase 'without further order' to the typewritten text of the proposed counter-judgment submitted in 1996 in order to further drive home the point that no further court action was contemplated or required with respect to the monies owed Chemical Bank. Even though the wife was entitled to enter a judgment against the husband for the Chemical Bank monies, without a limitations period, under the plain terms of the 1999 amended judgment and Funk (which held that the Legislature has chosen not to place a time restriction on the completion of entry' ). the wife's attorney moved for an order to show cause allowing the wife to enter a judgment against the husband for the Chemical Bank monies. This unnecessary motion led to the discussion in the 2000 decision and order in which Supreme Court stated, for the third time, that the wife was entitled to the monies owed Chemical Bank without further order, and then unaccountably ordered the wife to 'settle...judgment' for this very relief. Rule 202.48 cannot deprive a party of a judgment where it has been improperly or unnecessarily invoked in the first place.