Office Create Corporation v. Planet Entertainment, LLC

Background

Office Create Corporation obtained an arbitration award exceeding $23 million against Planet Entertainment, LLC, and Steve Grossman, who were held jointly and individually responsible for the award. The court confirmed the award, denied Grossman and Planet’s request to vacate it, and entered judgment.

To enforce the judgment, Office Create restrained several Merrill Lynch accounts in which it claimed Grossman had an interest. Two accounts were identified as cash-management accounts, and five were identified as retirement cash-management accounts. Grossman submitted an exemption claim asserting that all seven accounts were protected because they contained pension or retirement-account payments. Office Create objected and asked the court to declare the accounts nonexempt and direct release of the funds toward the judgment.

In an earlier order, the court granted in part and denied in part Office Create’s objection. It granted the objection as to the cash-management accounts and denied it as to the retirement accounts. The earlier ruling addressed New York Civil Practice Law and Rules § 5205(c)(5), which provides an exception to some retirement-asset exemptions for certain additions made during a specified look-back period or treated as voidable transactions. The court concluded that the provision was preempted by the Employee Retirement Income Security Act (ERISA), after treating Grossman’s preemption argument as conceded because Office Create had not addressed it in its briefing. The court also rejected Office Create’s argument that the retirement plan covered only Grossman and his wife, citing documents showing additional participants.

Motion for Reconsideration

Office Create asked the court to reconsider the retirement-account ruling. It argued that the court should have addressed first whether funds had been improperly transferred from corporate and personal accounts into the retirement accounts during the look-back period to frustrate enforcement of the judgment. In Office Create’s view, such transfers could be challenged without deciding ERISA preemption.

The court rejected that reasoning. It explained that the alleged fraudulent-transfer theory arose from § 5205(c)(5) itself. If that provision was preempted by ERISA, then it did not matter whether the transfers occurred during the look-back period or could be treated as voidable transactions, because the statutory exception would not apply.

The court also emphasized that Office Create had not addressed ERISA preemption in its original written briefing. Office Create had argued only that the retirement accounts were not ERISA-qualified plans because they supposedly covered only Grossman and his wife. The court had rejected that argument based on evidence of additional plan participants. Office Create’s later reliance on a previously uncited case did not justify reconsideration, and the court declined to consider that new argument in this procedural posture.

Legal Standard

Reconsideration is an extraordinary remedy. It generally requires the moving party to identify an intervening change in controlling law, newly available evidence, or a clear error or manifest injustice. It is not a vehicle for presenting new theories or rearguing issues that were already addressed.

Disposition

The court denied Office Create’s motion for reconsideration. It denied as moot Office Create’s request for oral argument and denied the respondents’ request for costs. The court directed the parties to appear for a telephone status conference about Office Create’s separate request for a hearing concerning the account funds. The Clerk was directed to terminate the reconsideration motion.