the next case on the calendar is c s x transportation the island real terminal may please the court my name is jarrett bihari i'm the attorney for appellants majo sanitation eastern resource recycling and island rail terminal article fifty two of the c p l are was meant to provide an easy mechanical procedure for dealing with assets of judgment benatar that are in the hands of third parties the district court decision did in extreme violence on both procedural and substantive grounds to article fifty two specifically or honors with respect to the procedural  improprieties this court specifically has declined to rule as to whether or not you can proceed by motion on an article fifty two turnover motion i guess it's time we do right well your honor i think actually there are substantive grounds that if the court wanted to it could substance substantively reversed the district court without getting to that point largely on the issue of priority and damages however even even if the court didn't rule on that there's there's two points there what is in the alliance bond ca is if we sent it back for the district court to rule on the issues of priority and damages we would be assuming that the district court had appropriate procedural was an approved appropriate procedural posture to do that but your honor what i'm suggesting is that i think there's enough in the in the record for this court to say in reviewing issues of priority the fact that c s x was clearly last in line and there was insufficient funds to satisfy their judgment even have to reach that issue are they clearly west in line or are they clearly third  line they're clearly last in line your honor due to the fact that the state court issued a turnover order in february of two thousand and fifteen directing that three judgment creditors be paid including two that had already issued sheriff levies and c s xs levy from the marshall didn't come until and actually that specific section says you can pay money pursuant to a restraining notice if you are directed by the sheriff or in or an order of the court so it would seem to not make sense that i can pay money to or that subject to assure a notice of sheriff directs me to it but if it's an order of the court it has to be the court that issued the restraining orders that also does violence to the sack and would it would it not disrupt things of if another court to come along in order the release of funds the first order of restrained absolutely not to judge jan first of all a section fifty two forty of the c p l are specifically gives courts broad discretion to modify limit change any sort of enforcement procedure under article fifty two of the c are and second of all this gets back to the legislative history and the case law of article fifty two where the new york state legislature was trying to do a very mechanical easy to follow structure for setting the priority of judgment creditor's there's two ways that you set taining or turnover order and the case law under article fifty two specifically contemplates a situation judge and where someone applies to a court for a turnover order they're waiting on that decision in the meantime a second judgment creditor identifies the same asset in the hands of a third party belonging to the judgment debtor and simply gets the ministerial step of getting a levy that creditor just by going to the sheriff has now obtained priority over the judgment creditor that went to a court and asked for a court order that's the mechanical way that that statute applies is getting that levy allowed the second creditor to a new or a restraining notice issued by the first court just as livingston because you're not ordering it you're paying it as directed by the sheriff which the c p l are specifically allows so that's the and that's the that's the structure they set up the legislature wanted to make it easy on third parties holding assets of judgment debtors they've done nothing wrong other than they may only debt to the judgment creditors who have a simple simple mechanical process to do that and for example you could have an asset of a judgment that her and you could have restraining notices for multiple courts if you take that very very narrow reading which i don't supported by the text of fifty to forty because it does a sheriff or a court order it also doesn't say marshall which is what you get when you have a federal judgment so that's that's another problem with that interpretation you can have judgments from six different counties across new york state and judgments from the southern district in the eastern district in the northern district now myself as an independent third party i now have to go to all those courts and seek leave to release the asset no i get to look at the order of the levies and the turnover orders and i  pay them out and according to that priority until my fund is is is complete and that's that's what happened here we the judge in the garnish she's had no preference among any of the judgment press they only had the preference as to finality so what did they do they were in a court proceeding the two creditors that your judgment creditors that had levied against them had come into that proceeding one of them actually said hey please intervene so we can get finality   s x was invited to participate they were invited by the by the attorney for n j the judgment that it or to intervene they declined to do so they they knew all along where this was going that we were going to get an order from the court seeking to turn the same token once you a subtle state court case before you release the funds should you not gone back into federal court to make sure that you weren't violating the restraining order by releasing the subtle and well your honor we had an order of the court directing us to pay the funds which is appropriate under fifty to forty that's what that's what it says you can't pay the funds unless you have your directed by the sheriff or stand but would it not have made some sense to go back into the the  specifically allows c s x to intervene in the state court proceeding while we're doing that again we're just we're not the judgment or we're just a third party that has an asset so the united states say in the state court proceeding that it's the position allowing this to proceed by motion is we didn't get a hearing this court in h b leasing corp did acknowledge that even if you're going to proceed by motion it has to follow the summary judgment standard they submitted no evidence inadmissible form they proceeded just by brief there was no hearing that was held undisputed facts is h b e leasing corp and other decisions of this court require and i can tell you as as the only attorney involved before the district court that was involved in the state court proceedings we absolutely involved inform justice emerson and that in fact if the ex had served a restraining order they had no claim to the pool of funds held by the third parties at all so there was no reason that they would be participating in the state court litigation that was determining these priorities unless they had served a restraining order so that that argument that inference that the district court made shows the prejudice that accrued to us that there was a negligent made entirely good faith but a negligent failure to go back to the district court order of the court and again i don't think the new york state legislature was requiring innocent third parties that happen to be holding assets belonging to a judgment debtor to have to go to however many courts they receive restraining orders from to seek permission to release the funds in order of the priority that the new york state legislature has specifically in mechanically required be sent out in order even if you were even if we were to disagree with you about that and i'm not saying we are but if we were your second position would be there clearly disputed issues of fact as to the damages flowing from the violation of the restraining notice because the other creditors had higher priority that's exactly right just livingston and that gets to due process argument as well unless there are any other questions thank you very much me please my name is jeffrey cohn to be have pelee c s x transportation the the law with respect to restraining notice is is crystal clear and it was unquestionably violated in this case if we're going to have the court interpret section five two two two two provide that any court rather than the court issuing the restraining notice can lift that restraining notice it will result in absurd outcomes and that is what the district court found there is it would have been it would have been a simple process to go back to the district court to address that issue when we talk about culpability if we're looking at you know equity here i don't think we are but there's it's been colored with equitable flair of an innocent party the guards she's here aren't innocent parties with respect to what's going on here there was a clear service for personal jurisdiction purposes of the restraining notice the garnish she's could have done one of multiple things to write this situation so they would be violating the restraining notice which is akin to a court order or an injunction they could have moved to vacate the restraining notice under section five two to two they could have to modify under five to four zero they could move to joint c s ex into the state court actions under new york law one zero zero one and they could have done what happens in many instances when there's multiple claimants for a spot of money that's too small they could have interplay at the funds that happens every day put it in a pot the court decide when you put it in a pot you let the court decide notice has to go out all interested parties by inviting see a sex informally to use for court proceeding damages theory that with the violation of the of the of the restraining notice with respect to damages the evidence of record is a asset purchase agreement providing for a payment for three point five million  dollars and the and the settlement ok which was put into effect now that settlement was not agreed to by c s sexiest sex wasn't a party to any of that and the law associated with the restraining notices is crystal clear in  know they cannot sell transfer interfere with or or otherwise dispose of the funds so with respect to damages there was three point five million dollars due to  contested aspect of that three point five million dollars there was a five hundred thousand dollars alleged set off and allegations in a counterclaim of millions however the court in aspen which addressed the the way to stablish damages for  in this scenario for violating a restraining orders spoke only to set off that was a price that was prior to the the restraining orders it didn't speak to allegations or amorphous counterclaims it spoke only to set off of the counter claim and the facts of the kind of claim are not have not come to fruition to be to challenge that three point five million they don't that is that just allegations with respect to a reduction of the of the dollars discount that three point five million dollars the only case associated with that dealt would set off and that's five hundred thousand dollars or three million miles to five hundred thousand there's still money left in that scenario and these issues have been explored to hearing well with with respect to the the due process issue of the hearing and some of the amounts were disputed and it wasn't you know there's a lack of clarity as to the amount of the three point five million dollars issue whether or not that date is the court chose not to consider that date because the court determine there wasn't a good reason that wasn't brought up earlier in the proceedings but assuming that is that is that right was that date correct to say was that the actual da act with respect to having having a just outcome and here in the state in the federal proceeding it's unquestioned that the garnish she's were served they knew what was going on they made a conscious decision maybe there was a lot of banks to get it done because the principal was going to get some money from the settlement or the attorneys were to get some money from that settlement but that you can't disregard a federal court a restraining notice which is akin to an order so when we talk about equities here we believe government she's needed to act and that there was no there was no there was no subversion of any interest of justice it was just that there was a failure a negligent failure of the courts of recognized is actionable by damages well  let's say we agreed with all of that and still puzzled as to why it isn't the responsibility of the district court and maybe it was wrong for them not to come back to the district court but there's still a question of whether there were damaged is that flowed from that and doesn't that turn on sorting out what the actual priorities were because of the actual priorities were against your client and in particular in toto or as to some particular amount then to that extent there wouldn't be damage from the failure to go back to the district court right well i believe your honor when it when it comes to the turnover or i'm sorry the restraining is that the that the guards she is did not have superior rights to that through set off and that there's a three three point five million dollar pot that was available that c s x never agreed to consolidate down to two point two if it was three point five there would be enough money to supply the prior prior creditors as well as yes but that's a question as to whether the pot was three point five something less three point the record as it stands right now is not contesting that that three point five was not the there was the allegation of a counter claim but it is there was no admissible evidence on the record that compromised three point five the case settle for two point two that's that's  compromise that was a compromise however see a six was not included in that compromise they were not party to that compromise not consent to that compromise and there were could have been other tax was invited to participate and did participate for a while and then pulled out right  s x was c s x was invited but in the end had no obligation to participate and in the end chose not to and rested on the restraining notice as these other parties could have interplay the funds were easily joints e s x that easily could be done they chose not to they knew that they could have and they chose not to they violated the restraining notice negligently it's not intentional thank  priority one is sheriff's levy the second is an order directing payment to all three creditors which ate up all of the two point two million except for eight thousand dollars had priority over c s ex which for whatever reason waited until july of two thousand and fifteen to issue it levy against the two point two million dollars which the judge correctly noted was a product of not just a a settlement of a hotly contested claim but one done with court supervision and then so ordered by justice emerson in the new york state supreme court  there is actually a provision in article fifty two that allows a judgment creditor to try to force a third party that has an incoherent claim against a judgment debtor to litigate it if it's choosing not to so this is all about c s ex trying to put the burden back on the garnish she's for what it really could have easily solved by just issuing a marshall's levy early on but chose not to and it's my position and i think your honor should rule that the new york state legislature and acting article fifty two chose to make it easier on the garnishee isn't put the burden on the judgment creditor's not the other way around both the district court and mr cohen raise the specter of chaos that will accrue with if the court adopts the district court's ruling but nobody's specified what that chaos actually would be no one suggested that any court sitting in new york federal or state wouldn't sit down and analyze the priorities of the various levies and turn over orders and evaluating whether or not to direct a payment were restraining orders was issued by another court and go through the analysis and say ok you have priority or you don't have priority i'm directing payment i don't think anyone would be willing to suggest that courts won't do their job when confronted with an application to modify restraining orders from another or from another court thank you very much