PLEASE TAKE NOTICE that (i) respondent Elena Borokhovich and. (ii) judgment debtor Gennady Borokhovich do hereby appeal to the
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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X ARON GRINSHPUN, SAM ZELTSER, : Index No /2016 ZELIG ZELTSER and THREE STAR CAPITAL, LLC, : Petitioners, : NOTICE OF APPEAL -against- : ELENA BOROKHOVICH, Respondent : PINCZEWSKI & SHPELFOGEL, P.C. and MITCHELL B. SHPELFOGEL, Stakeholders GENNADY (a/k/a Eugene) BOROKHOVICH, : Judgment Debtor : X PLEASE TAKE NOTICE that (i) respondent Elena Borokhovich and (ii) judgment debtor Gennady Borokhovich do hereby appeal to the Appellate Division, First Department, from the twin orders of the Supreme Court, New York County (O Neill-Levy, J.S.C.), i.e., (A) the decision and order dated January 11, 2017, entered by the Clerk of this Court on January 12, 2017, granting petitioners, inter alia, (i) a hearing before a Special Referee to determine what portion of the insurance proceeds belongs to Mr. Borokhovich, and (ii) broad discovery, and (B) the order dated January 13, 2017, and entered by the Clerk of this Court on January 17, 2017, continuing the temporary restraining order, both served with a notice of entry on January 17, (OVER) 1 of 16
2 Dated: New York, New York February 16, 2017 KROL & O'CONNOR Attorneys for Respondent Elena Borokhovich & Judgment Debtor Gennady Borokhovich 320 West 81 st Street New York, N.Y (212) By: /s/ Igor Krol TO: MELVIN BERFOND, ESQ. Attorney for Petitioners 277 Broadway, Suite 810 New York, New York (212) of 16
3 PRE-ARGUMENT STATEMENT PURSUANT TO 22 NYCRR Title of Action: Grinshpun et al v. Borokhovich, et al 2. Full Names of the Parties: A. Respondent-Appellant: Elena Borokhovich B. Petitioners-Respondents: Aron Grinshpun, Sam Zeltser, Zelig Zeltser and Three Star Capital, LLC C. Stakeholders: Pinczewski & Shpelfogel, P.C., and Mitchell B. Shpelfogel, Esq. D. Judgment Debtor-Appellant: Gennady Borokhovich 3. Counsel for Respondent-Appellant & Judgment Debtor- Appellant: Igor Krol, Krol & O Connor, 320 West 81st St., New York, N.Y (212) Counsel for Petitioners-Respondents: Melvin Berfond, 277 Broadway, Suite 810, New York, NY (212) This appeal is taken from the Supreme Court of the State of New York, County of New York. 6. This appeal is taken from the twin orders of the Supreme Court, New York County (O Neill-Levy, J.S.C.), i.e., (A) the decision and order, dated January 11, 2017, entered by the clerk of this Court on January 12, 2017, granting petitioners, inter alia, (i) a hearing before a Special Referee to determine what portion of the insurance proceeds belongs to Mr. Borokhovich, and (ii) broad discovery, and (B) the order, dated January 13, 2017, 3 3 of 16
4 and entered by the Clerk of this Court on January 17, 2017, continuing the temporary restraining order, both served with a notice of entry on January 17, On November 9, 2011, the court below (Oing, J.S.C.) entered a default judgment in the amount of $2,162,000, plus interest, against Gennady Borokhovich ( Gennady), not his wife, Elena Borokhovich ( Elena ). See Grinshpun v. Borokhovich, Index No /2010 ( Action I ). There is no judgment against Elena. Armed with the default judgment, petitioners commenced two (2) fraudulent conveyances actions later consolidated by Justice Singh, against, among others, Mr. & Mrs. Borokhovich. Grinshpun v. Borokhovich, Index No /2012 ( Actions II & III ). There, petitioners asserted that the transfer by Mr. & Mrs. Borokhovich of their interests in the marital residence to Elena Borokhovich, must be set aside as a fraudulent conveyance. Petitioners also commenced a turnover proceeding requiring Elena to turn over the insurance proceeds due from a fire at the marital residence on the theory that, if and when the transfer, supra, is set aside, (i) Gennady may be entitled to unspecified portion of insurance proceeds or, if he is not, (ii) petitioners may have a better claim thereto than Elena. Grinshpun v. Borokhovich, Index No /15. The court below dismissed this proceeding as premature. Decision & Order, dated March 28, of 16
5 Following Elena s settlement with the insurance company in August 2016, petitioners commenced yet another turnover proceeding against Elena as respondent, Pinczewski & Shpelfogel, P.C., and Mitchell Shpelfogel, Esq., as stakeholders, 1 and Gennady as judgment debtor, seeking, by an order to show cause, the turnover to them of the $179,000 in insurance proceeds held by Pinczewski & Shpelfogel, P.C., a temporary restraining order ( TRO ) granted as a part of the order to show cause, and a preliminary injunction. See Petition dated September 20, 2016, 24. The Borokhovichs cross-moved to dismiss the petition. On September 29, 2016, the court below scheduled a hearing for October 6, Following the hearing held on October 6, 2016, extensive briefing and oral argument, the court below reserved its decision. On January 11, 2017, the court below decided the motion brought by petitioners order to show cause. Decision dated January 11, Even though petitioners did not seek any discovery or a hearing on any supposedly disputed facts, the court below nonetheless granted petitioners a hearing to determine what portion of the proceeds is from contents that were owned by Gennady and a broad discovery, 2 id., p.5, referred the issue, supra, to a special referee, ibid, made no findings as to whether a preliminary 1 Petitioners changed the caption on the notice of entry to list Pinczewski & Shpelfogel, P.C., and Mitchell Shpelfogel, Esq., as respondents. 2 The court below granted discovery sua sponte. But see CPLR of 16
6 injunction may have been warranted, but simply continued the TRO in response to a letter request from petitioners counsel, without requiring a bond. Order dated January 13, The fate of the cross-motion is unclear. 8. On this record, Elena has no insurance proceeds in her possession or under her control. CPLR 5225(b) & In other words, she is neither a transferee nor a garnishee and has nothing to turn over to petitioners. According to petitioners, Gennady, Elena and her counsel in the insurance case, Pinczewski & Shpelfogel, P.C., would be entitled to a portion of the insurance proceeds. Alas, CPLR 5225(b) treats the property in a unified and complete manner it pointedly does not allow release when the interest is in any portion of the property, or some similar device for segregating parts of the property. See Lang v. State of New York, 696 N.Y.S.2d 3, 258 A.D.2d 165 (1 st Dept. 1999). Accordingly, the turnover proceeding is improper and ought to have been dismissed. See Memorandum of Law in Support of Cross-Motion, dated October 5, 2016, p.5. Furthermore, the broad discovery granted, sans request, to petitioners by the court below, would be an exercise in futility. Indeed, petitioners may well discover what Elena had asked the insurance company to pay for she submitted an itemized list of lost possessions to the insurance company - but they will not be 6 6 of 16
7 able to discover what the insurance company ultimately paid for. After all, Elena settled with the insurance company for a lot less than she asked the insurance company to pay. Put differently, neither Elena nor the insurance company can tell petitioners as to what specific items the insurance company did pay for. The court below appears to have also erred in continuing the TRO until further order of the court. Order, dated January 13, Cf. CPLR 6301 & The court below held the hearing on petitioners request for a preliminary injunction, but did not issue a preliminary injunction. On this record, the TRO went into effect on September 29, 2016, and ought to have expired upon the hearing on the petition, i.e., on October 6, If the court below meant to issue an injunction, the court below would have surely issued one and ordered petitioners to post a bond required by CPRL 6312(b) as a precondition thereto. The court below did neither, but simply continued the stay in apparent violation of New York law to the effect that a temporary restraining order expires with the hearing on the application for a preliminary injunction. See Carrabus v. Schneider, 111 F.Supp.2d 204 (E.D.N.Y. 2000). Even if Elena were a judgment debtor (she is not) petitioners would not be entitled to an injunction. Credit Agricole Indosuez v. Rossiyskiy Kredit Bank, 94 N.Y.2d 541, 708 N.Y.S.2d 26 (2000) (unsecured general creditor has no cognizable interest in debtor s 7 7 of 16
8 property until a judgment is obtained.) Credit Agricole bars the issuance of a preliminary injunction because petitioners seek to enjoin Elena (who is not a judgment debtor) from dissipating the insurance proceeds to secure a future money judgment they hope to obtain against Elena in the companion action. Finally, the U.S. District Court for the Eastern District of New York approved Elena s settlement with the insurance company, whereby Gennady had no further interest in the insurance proceeds, so that the entirety of the insurance proceeds belonged to Elena. Borokhovich v. Bankers Standard Insurance Company, 14-CV (JS)(SIL) (E.D.N.Y. 2014). Docket No. 39. See also Affirmation of Mitchell Shpelfogel, dated January 31, 2017, Ex. G (A copy of the Settlement Agreement). The decision of the court below appears to contravene the decision of the U.S. District Court for the Eastern District of New York. Dated: New York, New York February 16, 2017 Respectfully submitted, KROL & O CONNOR Attorneys for Respondent Elena Borokhovich & Judgment Debtor Gennady Borokhovich 320 West 81 st Street New York, New York (212) By: /s/ Igor Krol 8 8 of 16
9 FILED: NEW YORK COUNTY CLERK 01/12/ /16/ :05 04:54 PM INDEX NO /2016 NYSCEF DOC. NO RECEIVED NYSCEF: 01/12/ /16/ of 16 7
10 102 of 716
11 113 of 716
12 124 of 716
13 135 of 716
14 146 of 716
15 157 of 716
16 FILED: NEW YORK COUNTY CLERK 01/17/ /16/ :01 04:54 AM PM INDEX NO /2016 NYSCEF DOC. NO RECEIVED NYSCEF: 01/17/ /16/ of 16
FILED: NEW YORK COUNTY CLERK 08/29/ :37 PM INDEX NO /2012 NYSCEF DOC. NO. 354 RECEIVED NYSCEF: 08/29/2016
FILED: NEW YORK COUNTY CLERK 08/29/2016 12:37 PM INDEX NO. 651846/2012 NYSCEF DOC. NO. 354 RECEIVED NYSCEF: 08/29/2016 COUNTY OF NEW YORK ------------------------------------------------------------------X
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FILED: NEW YORK COUNTY CLERK 09/01/2015 10:51 AM INDEX NO. 651899/2015 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 09/01/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------------------------------x
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