United States Securities and Exchange Commission v. Borland

Background

Copper Leaf, LLC moved for reconsideration, meaning it asked the court to revisit, its August 30, 2024 order concerning liens filed with the Suffolk County Clerk. Copper Leaf stated that it was a judgment creditor of Brent Borland, had registered its judgment with the county clerk, and believed Brent had an unrecorded beneficial interest in real property at 43 North Haven Way in Sag Harbor, New York.

Copper Leaf had obtained a judgment against Brent Borland in this District. It filed a transcript of that judgment with the Suffolk County Clerk on March 12, 2019, and an updated transcript on November 10, 2020. Under New York law, the filings created liens against real property in the county held in title by Brent Borland.

The property at issue, however, was titled to “Alana Marie LaTorra Borland, as Trustee of the 43 N. Haven Way Revocable Trust.” Neither Alana Borland nor the trust was named in the action that produced Copper Leaf’s judgment. Title had been transferred to the trust on September 6, 2017, before Copper Leaf filed that action and before it registered its judgment.

Court’s Analysis

The court held that New York’s judgment-lien system is based on the name in which property is recorded. Copper Leaf’s judgment was entered against Brent Borland, but the property was recorded in the name of Alana Marie LaTorra Borland as trustee. The judgment therefore created liens against property held in Brent Borland’s name, not against property held in the trust’s name.

The court assumed, for purposes of its discussion, that Copper Leaf might be able to establish that the transfer to the trust was fraudulent or that Brent Borland was the property’s true beneficial owner. It concluded that either possibility would not change the result. The court stated that Copper Leaf might be able to proceed against the trustee, obtain a judgment against the recorded titleholder, and create a lien by recording that judgment.

The court rejected Copper Leaf’s attempt to distinguish between enforcing the lien against a purchaser and enforcing it against Brent Borland. It explained that Copper Leaf’s position would effectively assert priority over a later purchaser for value, contrary to New York’s lien law. The court also found that Copper Leaf’s reliance on an earlier federal decision was misplaced because that decision involved a fraudulent transfer that had been set aside, leaving the judgment debtor as the record owner.

Ruling

Senior District Judge P. Castel adhered to the August 30, 2024 order, including the conclusion that “Copper Leaf has no valid enforceable lien” on the property at 43 North Haven Way. The court denied the motion for reconsideration.