Opinion ID: 770881
Heading Depth: 2
Heading Rank: 3

Heading: The State Court Appeal and Its Aftermath

Text: 10 Oral argument in the state court appeal took place in January 1997. At argument, Kornstein asserted, consistent with his brief, that Burstin, and not necessarily Luckey Platt, should be awarded the state court judgment. Luckey Platt was not separately represented in the appeal. In May 1997, the Appellate Division essentially affirmed the state trial court, with a slight modification by which $91,000 (about 1% of the judgment) was shifted from Burstin to Luckey Platt. 11 Burstin then attempted to enforce the judgment against Kalka. Burstin retained an attorney in Israel, Avigdor Klagsbald, to search for assets Kalka owned in that country. Klagsbald located shares of stock and real property owned by Kalka, but was unable to seize them because the New York judgment was not yet final due to an attempt to mount a subsequent appeal. Upon discovering that Kalka was planning to sell his stock, Klagsbald decided to bring an action in Israel on the New York judgment to enjoin Kalka's planned stock sale. Klagsbald turned to Kornstein for information regarding the state court judgment and the New York court system, and Kornstein obliged with information and various documents. Kornstein also prepared an affidavit to be used in the Israeli proceeding. 12 Klagsbald succeeded in enjoining Kalka from selling his stock, and also obtained an attachment with respect to Kalka's real estate in Israel. As a result, over $16 million of Kalka's assets were frozen. Kalka thereupon decided to enter into a settlement with Burstin through Klagsbald in January 1998, pursuant to which Kalka agreed to pay the full amount of the judgment-over nine million dollars-to Burstin. 13 Soon thereafter, in February 1998, Luckey Platt's Chapter 11 proceeding was converted into a Chapter 7 liquidation, and Kittay was appointed trustee. Kittay moved, and the Bankruptcy Court ordered, that Burstin's settlement with Kalka should be deposited into escrow, pursuant to the Bankruptcy Court's retention order. Several months passed, however, without the settlement being placed in the escrow account, due to various ministerial obstacles and other delays. During that time, Kornstein engaged in discussions with Klestadt and Burstin regarding the possibility of dismissing Luckey Platt's bankruptcy case so as to avoid the effect of the escrow order. Ultimately, no action was taken to dismiss the bankruptcy case, but, as it turns out, the proceeds of the Israeli settlement were never placed in the escrow account. In August 1999, Kittay entered into a settlement with Burstin pursuant to which Luckey Platt was paid $687,500 out of the nine million dollars recovered from Kalka. In an application for approval of the settlement, Kittay wrote that the settlement amount is not merely substantial in its own right but also a very good deal for the estate in view of all the circumstances of this case and that this is still an excellent settlement for the estate and its creditors. The settlement was approved by the Bankruptcy Court.