On December 16, 2021, the Court of Appeals issued a decision in Plymouth Venture Partners, II, L.P. v. GTR Source, LLC, 2021 NY Slip Op. 07055, holding that a failure to follow the judgment collection procedures in CPLR Article 52 does not give rise to a claim in tort, explaining:
The enactment of CPLR article 52 effected sweeping changes of both substance and procedure in the law relating to the satisfaction of money judgments. The statute regulates the methods of enforcement and satisfaction of money judgments by, for example, exempting certain property, establishing liens and priority rules among creditors, imposing technical requirements for enforcement devices, and providing a flexible array of procedures for relief from violations of the statute. Section 5232 (a) governs the process of levy by service of execution, and specifically provides that service of a copy of the execution upon the garnishee shall not be made by delivery to a person authorized to receive service of summons solely by a designation filed pursuant to a provision of law other than rule 318, and CPLR 318 in turn sets out the requirements for designation of an agent for service of process.
General provisions that permit any interested person—including a judgment debtor—to secure remedies for wrongs arising under the statutory scheme are set out in CPLR 5239 and 5240. CPLR 5239 provides that prior to the application of property or debt by a sheriff or receiver to the satisfaction of a judgment, any interested person may commence a special proceeding against the judgment creditor or other person with whom a dispute exists to determine rights in the property or debt. In such a proceeding, the court may vacate the execution or order, void the levy, direct the disposition of the property or debt, or direct that damages be awarded. Section 5240 in turn lays out the court’s power to, at any time, on its own initiative or the motion of any interested person, and upon such notice as it may require, make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure. Intended to replace myriad provisions of the Civil Practice Act which often led to conflicting results, CPLR 5240 grants the courts broad discretionary power to control and regulate the enforcement of a money judgment under article 52 to prevent ‘unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts. In other words, this provision centers in one place the pervasive judicial power to right, on a case by case basis, any wrong in connection with any of the numerous Article 52 procedures. Accordingly, CPLR 5240 provides courts with the ability to craft flexible and equitable responses to claims that arise with respect to enforcement of valid money judgments.
FutureNet asserts that it was not required to seek relief under CPLR 5240 and that it may, instead, seek to recover for defendants’ alleged failure to strictly follow the procedures of CPLR 5232 through a tort action. Our holding in Cruz that a later-enacted provision of article 52—the Exempt Income Protection Act of 2008—does not provide an independent vehicle through which judgment debtors may seek damages for violations of that provision provides a useful framework for addressing this issue. Indeed, in Cruz, we described the provisions in CPLR article 52 as permitting the commencement of special proceedings whereby creditors, debtors and any interested person can adjudicate disputes over the ownership of income or property and empowering the court to make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure. We reasoned that the fact that significant enforcement mechanisms are built into CPLR article 52—and in fact, predated the EIPA—militates against recognition through implication of a new type of claim falling outside the statutory scheme and we deemed those existing enforcement mechanisms exclusive. We also rejected any claim of a preexisting right to bring a plenary action, noting that plaintiffs have not cited any persuasive pre-EIPA precedent in which a New York court recognized an account holder’s right to sue a depository bank for a violation of CPLR article 52 outside the special proceedings provided for in that statute, and that permitting a party to seek relief for violation of the statute in a plenary action in some other court would essentially read the venue provisions out of the statute.
That article 52 provides avenues for relief from unlawful restraint against a judgment creditor formed a significant part of our analysis. Moreover, in Cruz we acknowledged that relief under CPLR 5240 is available even after the assets have been transferred to the judgment creditor, and the court could reverse the transfer by issuing an order denying the execution and directing restitution by the judgment creditor. As we established in Cruz, provided relief is sought in the appropriate forum in a timely manner, the judgment creditor is not entitled to retain funds secured in error. This, of course, holds true beyond the application of the EIPA requirements—CPLR 5240 provides a venue in which judgment debtors can seek redress for violations of article 52, even after assets have been turned over to the judgment creditor.
Our lower courts understand CPLR 5240 to provide this valuable avenue of relief for judgment debtors, using their equitable power under this provision in myriad ways . . . .
While FutureNet attempts to characterize its causes of action as tort claims, at bottom, FutureNet seeks to recover for alleged violations of the procedural requirements of article 52 and, as we determined in Cruz, permitting an action based solely on the violation of requirements established by article 52 to proceed outside the mechanisms provided by article 52 would be inconsistent with the relevant statutory framework. FutureNet justifies removal of this case from the reach of article 52 by making a largely irrelevant distinction between void and voidable process, relying primarily on nineteenth-century cases from this Court. But as with the plaintiffs in Cruz, FutureNet fails to provide any persuasive authority for its claim of a preexisting right to bring a tort action in these circumstances. Day v Bach, decided in 1881, predates enactment of the CPLR by 81 years—of course, as a result, it is silent as to the appropriate forum or methods of redress for violations of article 52. Nor does Day, or indeed any other case cited by FutureNet, involve freestanding tort claims brought in a different court than that issuing the relevant judgment. Day concerns an effort to overturn an attachment; both Tausend v Handlear and V. Loewer’s Gambrinus Brewing Co v Lithauer involve efforts to overturn judgments; and Fischer v Langbein involves an allegation of wrongful imprisonment. Indeed, the novelty of FutureNet’s claims explains the uncertainty in the federal courts that led to certification. Rather than engage in a void versus voidable debate here, we hold that an article 52 proceeding is the correct vehicle for resolving claims based on collection efforts that are alleged to violate article 52—a determination we have made with respect to other statutes with internal enforcement provisions.
Policy considerations also counsel this outcome. Our legislature provided the avenues for relief it deemed warranted in article 52, and empowering a judgment debtor to evade these proceedings, which are, at bottom, designed to protect debtors from improper collection efforts, would eviscerate the purpose of article 52. An article 52 proceeding, brought as it must be within a reasonable time, also serves to limit the injury that might be inflicted by improper use of the enforcement process, for example by making funds available for payroll that might otherwise be seized. Indeed, here FutureNet was aware of the restraining notices and the intent to levy the funds, and although the company objected to the restraint in communications with the judgment creditors, it brought an action solely aimed at overturning the judgment and did not independently challenge the levy at a time when any claimed errors in the executions could potentially have been remedied by the court. FutureNet could also have pursued relief under CPLR 5240 following the execution—our holding in Cruz made clear that such an action is permitted even after assets have been transferred to a creditor. FutureNet chose instead to pursue challenges to the validity of the underlying judgments and then, after those challenges failed, endeavored to convert its claims into common law torts.
. . .
To hold otherwise—to permit allegations of noncompliance with article 52 in the course of enforcing valid judgments to be recast into common law tort claims—is not workable. Instead, the better course, and the one we follow today, is to require that such claims be brought pursuant to article 52.
(Internal quotations and citations omitted).