CBO LLC v. SARAH AZRAK SARAH JOY AZRAK 2020 FAMILY TRUST (2026)

The following papers were read on Defendants' motion, pursuant to 22 NYCRR § 130- 1.1, for an order (i) imposing sanctions upon Plaintiff CBO Funding LLC and its counsel, Berkovitch & Bouskila, PLLC; (ii) awarding Defendants their attorneys' fees and costs; and (iii) granting such other and further relief as the Court deems just and proper:

PAPERS NUMBERED

Notice of Motion (NYSCEF Doc. No. 80) 1

Affirmation of Muriel Raggi, Esq., in Support (NYSCEF Doc. No. 81) 2

Memorandum of Law in Opposition (NYSCEF Doc. No. 87) 3

Reply Affirmation of Muriel Raggi, Esq. (NYSCEF Doc. No. 95) 4

Letter of KOR Law LLP dated July 24, 2026 (NYSCEF Doc. No. 97) 5

Upon the foregoing papers, and upon all prior proceedings had herein, Defendants Ruben Azrak, Sarah Azrak, and the Sarah Joy Azrak 2020 Family Trust move for an order finding the conduct of Plaintiff CBO Funding LLC ("Plaintiff" or "CBO") and its counsel frivolous within the meaning of 22 NYCRR § 130-1.1, imposing sanctions, and awarding attorneys' fees and costs. Plaintiff opposes and asks that it be awarded the costs and fees it incurred in responding. For the reasons that follow, the motion is denied in its entirety, and Plaintiff's request is denied as well.

I. BACKGROUND AND PROCEDURAL POSTURE

This is a post-judgment enforcement action. Plaintiff holds a money judgment against Defendant Ruben Azrak in the sum of $6,235,421.67, entered September 4, 2024, in a separate action in this Court (CBO Funding LLC v. BT Supplies West, Inc., Index No. 035315/2022). The Complaint, filed May 15, 2025, alleges that on or about January 1, 2021, Ruben Azrak conveyed forty-nine of his seventy shares of Reva Holding Corp.—an entity that owns real property at 785 Flushing Avenue, Brooklyn, New York—to his spouse, Defendant Sarah Azrak, without consideration, and that on or about October 1, 2021, those shares were conveyed to the Sarah Joy Azrak 2020 Family Trust, of which Ruben Azrak is trustee. A gift tax return filed in Sarah Azrak's name valued the transferred shares at $5,873,690.

By Order dated October 14, 2025, the Court denied Plaintiff's unopposed motion for a default judgment, concluding that Plaintiff had not established entitlement to relief even in the absence of opposition. See NYSCEF Doc. No. 23. Defendants thereafter moved to dismiss the Complaint. By Decision and Order dated June 5, 2026, and entered June 8, 2026 (the "Decision"; NYSCEF Doc. No. 85), the Court granted that motion and dismissed the Complaint in its entirety, with prejudice, upon two independent grounds: that venue was improperly laid in Rockland County, and that the Complaint fails to state a cause of action under Civil Practice Law and Rules § 3211(a)(7), measured against Civil Practice Law and Rules § 3013 and, as to the claims sounding in actual fraud, Civil Practice Law and Rules § 3016(b). By a separate Decision and Order, the Court has denied Plaintiff's motion for leave to reargue the Decision (Motion Sequence No. 8).

Defendants filed the present motion on May 6, 2026—a month before the Decision issued (see NYSCEF Doc. Nos. 80, 81). The supporting affirmation identifies five categories of conduct said to be frivolous: the commencement and maintenance of an action Defendants contend was never supported by a factual basis; the designation of venue in Rockland County; three applications for injunctive relief; a letter submission made after the motion to dismiss was fully submitted; and a reply on the injunction motion filed after that motion's return date. Plaintiff opposed on July 9, 2026 (see NYSCEF Doc. No. 87), and Defendants replied on July 15, 2026 (see NYSCEF Doc. No. 95).

II. THE STANDARD GOVERNING AN AWARD UNDER 22 NYCRR PART 130

Part 130 is a narrow exception to the rule that each litigant bears its own costs. Section 130-1.1(a) permits the court, "in its discretion," to award "costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct," and, in addition to or in lieu of costs, to impose financial sanctions.

"Frivolous" is defined, and defined exhaustively, in § 130-1.1(c). Conduct is frivolous if "it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law"; if "it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another"; or if "it asserts material factual statements that are false."

Two features of that definition govern this motion. The first is the word "completely." A position that is weak, or unsuccessful, or mistaken is not for that reason frivolous. A claim may be "apparently lacking in legal merit" and still not be "so egregious as to constitute 'frivolous conduct' within the meaning of 22 NYCRR 130-1.1" (Parametric Capital Mgmt., LLC v. Lacher, 26 AD3d 175, 175 [1st Dept 2006]). The second is that the remaining two clauses are directed at purpose and at truth—at conduct undertaken to harass, and at statements that are false. Each requires a showing. Neither is established by pointing to an adverse ruling and inviting the Court to infer backward from it.

The Rule further directs that "[i]n determining whether the conduct undertaken was frivolous, the court shall consider, among other issues, the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party." 22 NYCRR § 130-1.1[c]; See Mascia v Maresco, 39 AD3d 504, 505 [2d Dept 2007]; See also Keyspan Generation, LLC v Nassau County, 118 AD3d 949, 954 [2d Dept 2014].

Even where the definition is satisfied, relief remains discretionary: "[t]he decision whether to impose costs or sanctions against a party for frivolous conduct, and the amount of any such costs or sanctions, is generally entrusted to the court's sound discretion." Strunk v New York State Bd. of Elections, 126 AD3d 779, 781 [2d Dept 2015]. And no award may be made except "upon a written decision setting forth the conduct on which the award or imposition is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount awarded or imposed to be appropriate." 22 NYCRR § 130-1.2.

The restraint these provisions impose is deliberate. Sanctions exist to deter abuse of the judicial process, not to tax a litigant for having lost. Courts "must be careful to avoid the imposition of sanctions in cases where the [party] asserts colorable, albeit unpersuasive, arguments in good faith and without an intent to harass or injure." Gordon Group Invs., LLC v Kugler, 127 AD3d 592, 594-595 [1st Dept 2015]. Applied loosely, Part 130 would deter the good-faith assertion of claims that ultimately fail—which is to say, a great many claims, brought by litigants who were entitled to bring them.

III. THE DISMISSAL OF THE COMPLAINT DOES NOT ESTABLISH FRIVOLOUS CONDUCT

A. Legal Insufficiency and Frivolousness Are Distinct Inquiries

Defendants' central submission, pressed most forcefully in reply, is that the Decision has confirmed their motion: the Court dismissed every cause of action with prejudice, held the Complaint legally insufficient throughout, and found that Plaintiff "candidly admits it does not know whether those facts exist at all." From this the Defendants reason that the action was objectively baseless when commenced and objectively baseless when maintained.

Defendants acknowledge, correctly, that they "do not contend that dismissal automatically establishes frivolous conduct; it does not." NYSCEF Doc. No. 95 ¶ 20. That concession is sound, and it carries further than Defendants allow.

A motion under Civil Practice Law and Rules § 3211(a)(7) tests a pleading. It asks whether the facts alleged, accepted as true and afforded every favorable inference, fit within a cognizable legal theory. A complaint may fail that test because its draftsman alleged too little, or alleged inconsistently, or failed to plead an element with the particularity Civil Practice Law and Rules § 3016(b) demands. None of those failures speaks to whether the pleader had a genuine grievance or a good-faith basis for asserting it. The Decision held that this Complaint did not state a claim. It did not hold—and was not asked to hold—that the transfers the Complaint described never occurred, or that Plaintiff invented them.

That distinction is the whole of the first clause of § 130-1.1(c). The question is no longer whether Plaintiff's pleading was sufficient; the Court has answered that, and the answer was no. The question is whether Plaintiff's position was "completely without merit in law" and incapable of support by "a reasonable argument"—a materially different and considerably more demanding inquiry. See Muro-Light v. Farley, 95 AD3d 846, 848 [2d Dept 2012] [sanctions improvidently imposed where "the instant action was not frivolous"]; See Keyspan Generation, 118 AD3d at 954. "The fact that the court took a different view of the evidence is not grounds for sanctions." Talos Capital Designated Activity Co. v. 257 Church Holdings LLC, 226 AD3d 414, 414 [1st Dept 2024].

B. The Record Discloses a Colorable Basis for the Action

Several facts are not in dispute on this motion. A judgment of $6,235,421.67 was entered against Ruben Azrak in September 2024 and remains wholly unsatisfied. Months after executing guaranties of the underlying debt, Ruben Azrak conveyed forty-nine of his seventy shares of Reva Holding Corp. to his spouse. Those shares were then conveyed to a trust of which he is the trustee. A gift tax return filed in connection with the transfers valued the shares at $5,873,690. Sarah Azrak testified under oath that she paid nothing for them.

Defendants do not deny these facts. Their position is that the Complaint pleaded them inadequately, and as to that the Court agreed. But a creditor holding an unsatisfied multimillion-dollar judgment, who learns that the debtor conveyed a multimillion-dollar interest to his spouse for no consideration and thence into a trust the debtor himself controls, does not act without a reasonable basis in bringing an action to set those transfers aside. The legal theory is a recognized one. The transfers are documented. The absence of consideration is confirmed by the transferee's own sworn testimony.

That Plaintiff failed to translate this material into a legally sufficient pleading is why the Complaint was dismissed. It is not a basis for finding that the action was completely without merit in law within the meaning of § 130-1.1(c)(1). The gap between a grievance that is real and a pleading that is adequate is the space in which most motions to dismiss are decided; it is not the space in which sanctions are imposed.

C. The Civil Practice Law and Rules § 3211(d) Application Was the Invocation of a Statutory Device

Defendants place particular weight on the Decision's observation that Plaintiff "candidly admits it does not know whether those facts exist at all," treating it as a confession that the action was filed without any factual foundation. See NYSCEF Doc. No. 95 ¶ 8.

The observation was made, and it supported the denial of pre-dismissal disclosure. Civil Practice Law and Rules § 3211(d) exists precisely because a party may hold a colorable claim and still lack access to proof of particular elements, most often because that proof lies with the adversary. To invoke the provision is to use a device the Legislature supplied for that situation. An unsuccessful invocation establishes that the movant did not satisfy the statute's requirements. It does not establish that the action was a fishing expedition within the meaning of Part 130.

Defendants' syllogism—a request for disclosure is an admission that facts are lacking, and an admission that facts are lacking establishes frivolous conduct—proves a great deal more than Defendants intend. It would convert every unsuccessful Civil Practice Law and Rules § 3211(d) application into a predicate for sanctions and would place a litigant who candidly identifies what discovery would develop in a worse position than one who says nothing. Part 130 does not reach that far, and the Court declines to extend it there.

IV. THE VENUE DESIGNATION DOES NOT ESTABLISH A FALSE MATERIAL STATEMENT

Defendants frame the venue designation as a question of candor rather than error, pointing to the Decision's findings that Plaintiff asserted a Rockland County principal office through a conclusory one-sentence affirmation while its own prior sworn filings identified a Bronx address, and that counsel's characterization of those filings as error was neither persuasive nor sufficient. See NYSCEF Doc. No. 95 ¶ 10.

Those findings resolved the venue branch of the motion to dismiss. They do not establish frivolous conduct. Section 130-1.1(c)(3) reaches the assertion of "material factual statements that are false," and this Court will not apply that clause on inference alone. A party may fail to carry its burden on venue, and its explanation may be found wanting, without it following that the designation was knowingly false when it was made. Defendants have submitted no evidence of knowing falsity, and the Decision contains no such finding. A finding that a showing is unpersuasive and a finding that a representation is false are not the same finding, and the second does not follow from the first.

The structure of the CPLR reinforces the conclusion. Improper venue is not a jurisdictional defect; the Supreme Court's jurisdiction is statewide, and "[a] mere defect of venue . . . is not a dismissal ground in New York practice" but ordinarily results in a transfer to the proper county. Knight v New York & Presbyt. Hosp., 42 NY3d 699, 703-704 [2024]; See Civil Practice Law and Rules §§ 510, 511. The Legislature has provided a remedy for a misplaced venue, and that remedy is a change of the place of trial.

V. THE APPLICATIONS FOR INJUNCTIVE RELIEF WERE UNSUCCESSFUL AND NOT FRIVOLOUS

Plaintiff made three applications for injunctive relief in this action. Two were resolved without Defendants filing opposition—one the Court declined to sign, and one, having been signed, Plaintiff withdrew. The third, seeking a permanent injunction, remained pending until the dismissal rendered it academic.

Defendants' criticisms of those applications are substantial, and the Court does not minimize them. A permanent injunction is ultimate relief, ordinarily unavailable before adjudication on the merits. The harm Plaintiff identified—difficulty collecting a money judgment—is economic, and economic loss compensable in damages is not ordinarily irreparable harm. The relief sought would have reached property of persons against whom Plaintiff holds no judgment, and it duplicated machinery that Civil Practice Law and Rules § Article 52 already supplies.

All of this establishes that the applications were unlikely to succeed. None of it establishes that they were frivolous. A judgment creditor who alleges that assets have been fraudulently conveyed and seeks to restrain their further dissipation pending adjudication invokes a familiar form of provisional relief. That Plaintiff sought it in an overbroad form, or asked for the wrong species of injunction, or should have proceeded under article 52 instead, describes advocacy that missed its mark. Colorable arguments "asserted in good faith and without an intent to harass or injure" are not sanctionable merely because they do not persuade. See Gordon Group Invs., 127 AD3d at 594-595.

Two further considerations point the same way. First, the Court's declination to sign an order to show cause is an exercise of its gatekeeping function. It is not an adjudication that the application was frivolous, and the Court will not convert it into one after the fact. Second, § 130-1.1(c) directs the Court's attention to "whether or not the conduct was continued when its lack of legal or factual basis was apparent." Plaintiff did not persist. Two of the three applications were resolved before Defendants were put to the burden of opposing them at all, one of them because Plaintiff withdrew it. Abandoning a position is the opposite of the persistence the Rule identifies as aggravating, and this factor accordingly tells against sanctions rather than in favor of them.

VI. THE IRREGULAR SUBMISSIONS DO NOT CONSTITUTE FRIVOLOUS CONDUCT

Two submissions remain. The first is Plaintiff's letter of May 4, 2026, which transmitted the transcript of Sarah Azrak's deposition after the motion to dismiss had been fully submitted. See NYSCEF Doc. Nos. 69, 70. The second is a reply on the injunction motion, filed after that motion's return date without leave. See NYSCEF Doc. Nos. 72, 73, 74.

Both were irregular. Papers submitted after a motion has been submitted, without leave, are ordinarily not considered, and this Part's rules so provide. But the remedy for an unauthorized submission is that the court declines to consider it. A court retains complete control of its own record, and the orderly administration of motion practice does not depend upon the sanctioning power.

Irregularity and frivolousness are not the same thing. Section 130-1.1(c) supplies three definitions, and an unauthorized filing satisfies none of them unless it is completely without merit in law, made primarily to delay or to harass, or false. Neither submission delayed the resolution of anything: the motion to dismiss was decided, and the injunction motion was rendered academic by that determination. Neither is shown to have been made to harass. The May 4 letter transmitted a deposition transcript that Plaintiff plainly believed the Court ought to see, and asked that it be considered. It was an attempt to supply the Court with evidence, not an effort to burden an adversary.

The Court observes, without criticism of either side, that procedural irregularity in these motions has not been one-sided. Defendants' own affirmation records that their opposition to the injunction motion was filed "only 24 hours and one minute late" (NYSCEF Doc. No. 81 ¶ 67), and Defendants have submitted a letter on the present motion after it was fully submitted and without leave (NYSCEF Doc. No. 97)—the same species of irregularity they ask the Court to sanction. The observation is not offered as a finding against Defendants, whose lapses the Court regards as equally unremarkable. It is offered because it illustrates the governing point: late and unauthorized submissions are a recurring incident of contested motion practice, and were each one sanctionable, Part 130 would swallow the ordinary conduct of litigation.

VII. THE VOLUME OF MOTIONS, THE RELATED ACTION, AND THE MOTION TO REARGUE

Defendants urge the Court to consider the conduct cumulatively rather than item by item. The Court has done so. Three additional matters are advanced in support of the cumulative view, and none alters the analysis.

First, they rely on the volume of motion practice. A motion count is not a measure of frivolousness. Of the motions then filed, three were Defendants' own, and another was Plaintiff's unopposed default application. A contested post-judgment fraudulent-conveyance action commenced in May 2025 and dismissed in June 2026 is not, on these figures, protracted litigation.

Second, the Defendants ask the Court to consider the related action. Defendants refer to a notice issued in CBO Funding LLC v. BT Supplies West, Inc., Index No. 035315/2022, stating that the court in that action "may consider permitting Defendants' counsel to seek appropriate sanctions," while expressly disclaiming any request for relief based on conduct there and offering the reference solely to show that the conduct here is not inadvertent. See NYSCEF Doc. No. 81 ¶ 83. So limited, the reference carries no weight. No court has found sanctionable conduct in that action. A statement that a court may consider permitting a future application is not a finding of anything, and an unadjudicated possibility in another proceeding cannot establish a pattern here. Part 130 authorizes a court to address frivolous conduct in the proceeding before it (cf. Talos, 226 AD3d at 414 [imposition of sanctions for conduct before the appellate court "was not within Supreme Court's authority"]), and the Court confines its attention to this record.

Third, the defendants advance the issue of the motion to reargue. In reply, Defendants point to Plaintiff's subsequent motion for leave to reargue as a continuation of the same course of conduct, while acknowledging that they "do not contend that seeking reargument is, standing alone, sanctionable." See NYSCEF Doc. No. 95 ¶ 23. The acknowledgment is correct. A motion under Civil Practice Law and Rules § 2221(d) is an authorized procedural step, and Plaintiff's was timely made. The Court has denied that motion by separate Decision and Order of even date, for the reasons stated there. The denial of a motion is not a finding that making it was frivolous—a principle that governs the present motion as surely as it governs that one.

VIII. THE POST-SUBMISSION LETTER OF JULY 24, 2026

After this motion was submitted, Defendants filed a letter advising that, notwithstanding Plaintiff's representation in opposition that "[a]n appeal from that dismissal has been filed," no notice of appeal appeared on the docket as of July 24, 2026, and that the time to appeal had expired on July 22, 2026. See NYSCEF Doc. No. 97; See also NYSCEF Doc. No. 87 at 4, 12-13.

The Court declines to rest any determination upon that letter, for three reasons, each of which would suffice standing alone. First, the letter is itself a post-submission submission, made by correspondence and without leave. Having asked the Court to sanction Plaintiff for filings of precisely that character, Defendants are not well positioned to ask the Court to act upon one of their own. Second, § 130-1.1(d) permits an award of costs or the imposition of sanctions only "after a reasonable opportunity to be heard." Plaintiff has had no opportunity to respond to the letter. The Court will not make a finding that a party and its counsel made a false statement to the Court upon a submission the party has never been permitted to answer.

Third, and in any event, the representation is not material to this motion. Whether Plaintiff did or did not take an appeal from the Decision has no bearing on whether the commencement of this action, the venue designation, the applications for injunctive relief, or the challenged submissions were frivolous when they were made. Section 130-1.1(c)(3) reaches material factual statements that are false; a statement immaterial to the question presented supplies no predicate. The Court makes no finding concerning the representation.

IX. THE APPLICATION FOR COSTS AND FEES IS UNSUPPORTED IN ANY EVENT

Because no frivolous conduct has been shown, the Court does not reach the amount of any award. It notes, however, that the application could not have been granted upon this record even had the predicate been established.

Section 130-1.1(a) authorizes costs "in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct," and § 130-1.2 requires that any award rest upon a written decision setting forth "the conduct on which the award or imposition is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount awarded or imposed to be appropriate."

The showing offered is an assertion that counsel's hourly rate is $550, that "[a]pproximately 49 hours have been expended," and that fees therefore "total approximately $26,950, exclusive of additional work." NYSCEF Doc. No. 81 ¶¶ 89-91. No contemporaneous time records accompany the affirmation. No task descriptions are supplied. And no allocation is attempted between the several categories of conduct said to be frivolous and the work Defendants would have undertaken in any event—chiefly, moving to dismiss a complaint they were fully entitled to challenge, and did challenge successfully. An award confined to expenses "resulting from" frivolous conduct cannot be derived from a single undifferentiated estimate. In reply, Defendants enlarge the request to encompass the fees incurred in replying and in opposing the reargument motion, to be fixed at an inquest. See NYSCEF Doc. No. 95 ¶¶ 28-29. An inquest presupposes a predicate finding of frivolous conduct. There is none here, and a hearing cannot supply one.

X. PLAINTIFF'S REQUEST FOR ITS OWN COSTS AND FEES IS ALSO DENIED

Plaintiff asks, in its opposing memorandum, that it be awarded the costs and fees incurred in opposing what it characterizes as a frivolous sanctions motion. See NYSCEF Doc. No. 87 at 5, 13. That request is denied.

It is denied, first, because affirmative relief is sought by notice of motion or cross motion, not by a request embedded in opposing papers. See Civil Practice Law and Rules § 2215; 22 NYCRR § 130-1.1[d]).

It is denied, more fundamentally, because the standard the Court has applied to Plaintiff applies with equal force to Defendants. Defendants identified pleading deficiencies that were real; this Court found them so and dismissed the Complaint upon them. They gave notice of their intention to seek relief under Part 130 before seeking it. Their motion asks the Court to draw from those deficiencies an inference the Court has declined to draw—but a motion that does not persuade is not for that reason frivolous. That proposition is the ground on which this Decision rests, and it does not run in one direction only.

CONCLUSION

The Court has considered the conduct Defendants identify, both item by item and as a whole, and in light of the circumstances in which it occurred, as § 130-1.1(c) requires. Plaintiff's action was dismissed because it was not adequately pleaded, not because it was baseless. Its venue designation was rejected, not shown to be knowingly false. Its applications for injunctive relief were unlikely to succeed, and two of the three were resolved before they burdened anyone. Its irregular submissions were properly disregarded when they were made. Taken separately or together, none of this constitutes frivolous conduct within the meaning of 22 NYCRR § 130-1.1(c); and were the question a closer one than it is, the Court would decline, in the exercise of the discretion § 130-1.1(a) confers, to impose sanctions or award fees upon this record.

The Court has considered the parties' remaining contentions and finds them to be without merit.

Accordingly, it is hereby

ORDERED that Defendants' motion, pursuant to 22 NYCRR § 130-1.1, for an order imposing sanctions upon Plaintiff CBO Funding LLC and Berkovitch & Bouskila, PLLC, and awarding Defendants' attorneys' fees and costs, is DENIED in its entirety; and it is further

ORDERED that Plaintiff's request, made in its opposing papers, for an award of the costs and attorneys' fees incurred in opposing the motion is DENIED; and it is further

ORDERED that Plaintiff shall serve a copy of this Decision and Order, with notice of entry, upon Defendants within twenty (20) days of the date hereof.

The foregoing constitutes the Decision and Order of this Court as to Motion Seq. No. 7.

Dated: September 22, 2026

New City, New York

ENTER:

John P. Collins, Jr., J.S.C.

John P. Collins, Jr., J.