Keawsri v. Ramen-ya Inc.

Background

The judgment creditors moved under Federal Rule of Civil Procedure 69 and New York enforcement statutes to collect a judgment against Ramen-Ya Inc., Yasuko Negita, Masahiko Negita, and Miho Maki. The court had awarded the judgment creditors $687,825.81 in damages and penalties and $1,110,807.82 in attorneys’ fees and costs, plus post-judgment interest, against the judgment debtors jointly and severally. The Clerk entered judgment on August 10, 2022. The judgment debtors had not paid any part of it.

Investment Accounts

The creditors presented evidence that Yasuko and Masahiko maintained Merrill Lynch investment accounts ending in 3453 and 3454, respectively, containing cash and other assets collectively valued at $218,000. Rule 69 generally requires federal judgment-enforcement procedures to follow the law of the state where the federal court is located. Under New York Civil Practice Law and Rules § 5225(a), a court may order a judgment debtor to pay money or deliver personal property in the debtor’s possession or custody to satisfy a judgment.

The judgment debtors argued that New York’s protections for certain retirement accounts prevented turnover. The court rejected that argument because the record did not show that the funds had been deposited before the statutory 90-day period preceding the filing of the case. The court therefore held that the exemption did not apply and ordered Yasuko and Masahiko to turn over the funds in the Merrill accounts.

New Jersey Real Property

The creditors also sought an order requiring Yasuko to transfer her real property at 309 Knickerbocker Road, Tenafly, New Jersey, to the United States Marshal for the District of New Jersey so it could be sold and the proceeds applied to the judgment. The judgment debtors argued that the New York court lacked authority over the property and that relief should instead be sought in the District of New Jersey, where the judgment had been domesticated. They also referred to possible liens, mortgages, and a possible New Jersey homestead exemption.

The court ruled that § 5225(a) applies to money and personal property, not to real property or a deed. It also declined to use New York Civil Practice Law and Rules § 5240—which allows courts to regulate enforcement procedures—to bypass § 5225(a)’s limits. The request for a turnover order concerning the New Jersey property was denied, without prejudice to the creditors presenting a different valid basis for such an order.

Remaining Balance and Priority

The creditors asked the court to require Yasuko and Masahiko to pay whatever portion of the judgment remained unpaid after the Merrill accounts were used. The court denied that request because a turnover order must identify the particular property being sought; a blanket order requiring turnover of all assets was not appropriate. The court stated that the creditors could seek contempt sanctions if the judgment debtors failed to comply with post-judgment discovery.

The court also denied the request for priority over other creditors as not ripe for consideration. The creditors had not identified a particular creditor claiming priority over any of the judgment debtors’ property, and the judgment debtors represented that there was no competing turnover order concerning the investment accounts.

Disposition

Judge Liman concluded that the motion to enforce the judgment was granted in part and denied in part. The Clerk of Court was directed to close docket entry 583.