No tort claim for unauthorized use of CPLR article 52 judgment enforcement devices (Plymouth Venture Partners v. GTR Source).

The question in this appeal, certified from the U.S. Court of Appeals for the Second Circuit, was whether New York law recognized a tort claim for damages from the allegedly unlawful use of judgment enforcement mechanisms set out in CPLR article 52. In a 4-3 decision (Garcia, J.), the Court held that article 52 provided the exclusive remedy for alleged unlawful use of its enforcement devices. Judge Wilson issued a dissenting opinion, and Judge Fahey issued a separate dissenting opinion in which Judge Rivera joined.

CPLR article 52 establishes rules governing the satisfaction of money judgments. It creates procedural rules, including rules for service of a notice of execution (CPLR 5232), and authorizes a special proceeding to obtain relief from an allegedly unlawful restraint (CPLR 5240). In this case–which was actually two cases that were consolidated in the Second Circuit–a receiver established to oversee a debtor claimed that two creditors violated article 52 when the creditors served allegedly improper executions on a third-party bank that held assets owned by the debtor. The receiver filed a federal court action in New York asserting tort claims against the creditors on the theory that the debtor’s property had been seized unlawfully in violation of article 52. The Second Circuit found unresolved questions about the availability of a state-law tort remedy under the circumstances and certified two questions to the Court of Appeals: (i) whether a party could experience “cognizable damages” from the unlawful use of CPLR article 52 procedures if the assets seized as a result were used to satisfy a valid money judgment, and (ii) whether a debtor may file a claim for tort damages without first having pursued relief in a special proceeding under article 52.

The majority held that the special proceeding authorized by article 52 was the only remedy for alleged violations of article 52, and that a tort remedy was accordingly not available for the receiver. Quoting Professor Seigel’s commentary, the majority explained that the article 52 special proceeding was created to confer on a reviewing court the “pervasive judicial power to right, on a case by case basis, any wrong in connection with any of the numerous Article 52 procedures.” In the majority’s view, recognizing a free-standing tort remedy would “eviscerate” the legislative policy reflected in the creation of a single remedy and would be “unworkable.”

Judge Fahey, joined by Judge Rivera, would have answered the first certified question in the negative without addressing the broader question of tort law answered by the majority. That is, regardless of whether a tort remedy would be available, Judges Fahey and Rivera would have held that a party cannot assert cognizable damages if the allegedly illegally seized assets were used to satisfy a valid money judgment and the damages sought were limited solely to the value of that seized property.

Like Judges Fahey and Rivera, Judge Wilson would have answered the first certified question without addressing the broader question of tort law, although he would have left open the possibility that a party could assert cognizable damages flowing from an allegedly illegal seizure in certain circumstances. Judge Wilson would also have answered the second certified question in the negative. In his view, there was nothing in article 52 that purported to make the special proceeding authorized there a prerequisite to filing a plenary action asserting tort claims based on the alleged violation of article 52.