WILMINGTON TRUST v. AMERICAN EQUITIES LLC COLGATE RENTALS CORP (2024)

Sills Cummis & Gross, P.C., New York (Jaimee Katz Sussner of counsel), for Steven J. Smith, respondent.

Order, Supreme Court, New York County (Francis A. Kahn, III, J.), entered August 31, 2023, which, to the extent appealed from as limited by the briefs, held defendants American Equities, LLC, United Group LLC, Shapour (Paul) Sohayegh, and Roni Movahedian in civil contempt and ordered that they pay $184,746.34 to the receiver appointed in this action, unanimously affirmed, with costs.

‘ building, the court authorized the receiver “to take charge and enter into possession of the property,” to collect rents, and to pay building expenses.  The order also “enjoined and restrained” defendants “from collecting the rents, license fees and other charges of said premises [and] from interfering in any manner with the property or its possession,” and ordered defendants to “turn over to the Temporary Receiver all rents collected from and after the date of” the order.  Following this order, defendants received payments from tenants of at least $296,245.84 that defendants did not remit to the receiver.  The court credited defendants for having used much of this money to pay for various building-related expenses.  However, among the amounts that the court did not credit were $160,427.77 in expenses for which defendants did not furnish proof of payment.

Supreme Court did not improvidently exercise its discretion in declining to credit defendants for these expenses.  During the June 20, 2023 oral argument on the receiver's contempt motion, the court directed defendants to give the receiver “as much information as [defendants] have” concerning their expenses.  Although the court did not specify exactly the evidence it sought, the court's instruction would have included evidence concerning proof of payment, and during an August 2, 2023 hearing, defendants offered to submit this evidence within the week, thus demonstrating that they had the evidence or could easily obtain it.  Without proof that defendants paid $160,427.77 in expenses, the court was entitled to find that the receiver was prejudiced, and thus entitled to indemnification, in this amount (see Matter of McCormick v. Axelrod, 59 N.Y.2d 574, 583 [1983];  see also People ex rel. Golden v Golden, 57 A.D.2d 807, 807 [1st Dept 1977] ).

Nor did the court abuse its discretion in declining to entertain evidence submitted after August 2, 2023 (see e.g. O'Neil v. GEICO, 30 AD3d 390, 391 [2d Dept 2006] ).  Although the court did not specify a date by which defendants needed to furnish their evidence, the court set a follow-up conference date of July 6, 2023, after its directive to produce all the information defendants had (see Plachte v. Bancroft Inc., 3 A.D.2d 437, 438 [1st Dept 1957] ).  The court made clear the weight of its instruction to furnish this information and the consequences of disobeying a contempt order.  Defendants failed to timely comply with the order, resulting in their contempt.