Court Opinion

ID: 5804570
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:34:41.062722+00
Date Added: 2024-06-11T08:42:40.898351
License: Public Domain

Nardelli, J.
dissents in a memorandum as follows: The proposed complaint by the intervenor alleges that $5,500,000 of insurance proceeds were deposited into an account maintained by 1419 Tower LP on May 12, 2008, and that defendant in this action, Christopher Martorella, is the “principal and controlling person” of 1419 Tower. The complaint further alleges that $2,000,000 of that deposit was then transferred to a checking account belonging to 1419 Tower on May 23, 2008, and, in turn, a transfer of $2,000,000 was made from that checking account to an escrow account belonging to an attorney representing Martorella in this matter. None of these facts are disputed. Further, defendant Martorella himself admits that on May 23, 2008, his counsel deposited $2,000,000 with the Clerk of Supreme Court, New York County “for the purpose of providing security to [plaintiff] Jane Gladstein regarding the judgment she docketed on April 28, 2008.” Martorella claims that the transfer of $2,000,000 from 1419 Tower to his attorney’s escrow account was to reimburse him for loans he had made to 1419 Tower totaling over $8,000,000, but there is no documentation offered.
If, indeed, Martorella had loaned money to 1419 Tower, it presumably would be free to transfer money to him. That is an issue, however, this Court need not, or should not, decide at this juncture. The only issue presented on this appeal is whether iStar FM Loan LLC should be permitted to intervene. While the bona tides of its dispute with 1419 Tower are the subject of an action in Pennsylvania, iStar certainly has presented in its proposed intervenor complaint a scenario in which significant *468factual issues exist as to whether the funds now on deposit with the Clerk of the Court were actually converted by Martorella.
CPLR 1012 (a) (3) permits intervention as of right “[w]hen the action involves the disposition or distribution of . . . property and the person may be affected adversely by the judgment.” The issue here is entitlement to the $2,000,000. Certainly, iStar will be adversely affected if the money is released to Gladstein before there has been a determination as to whether it has an interest in the funds. Denial of the request to intervene is tantamount to a determination on the merits that it has no interest in the money, and that Martorella’s claim that he was owed money by iStar is beyond question. On this record, I am unable to draw such a conclusion.
As the motion court observed, iStar simply seeks to have the $2,000,000 remain where it is pending a final adjudication of the rights of all parties. The action in Pennsylvania will determine the dispute between iStar and 1419 Tower, including, presumably, whether there was a conversion of corporate funds. The courts of this state will still have the ultimate say as to who has a superior claim to the money on deposit, but that issue can better be resolved after iStar is permitted to intervene.
Although I agree with the majority’s conclusion that iStar’s legal rights are not affected by the judgment obtained by Gladstein against Martorella, ultimately, the determinative issue will not be the consequences derived from obtaining a judgment. Rather, it will be whether iStar has an entitlement to funds that may have been converted to its detriment, regardless of any judgment obtained by Gladstein.
Additionally, the majority’s conclusion, presumably as a matter of law, that the $2,000,000 does not constitute identifiable proceeds under UCC 9-315 is perplexing, since the $2,000,000 that was ultimatély deposited in the court can readily be traced back to the proceeds of the insurance settlement. Finally, the conclusion that UCC 9-332 is relevant is also perplexing since Gladstein is not yet a transferee who has received the $2,000,000. She is, at this stage, only a judgment creditor with regard to the $2,000,000, and a judgment debtor has deposited money in court in an effort to secure a judgment. Whether Gladstein ultimately prevails in her claim will be dispositive of whether she actually becomes a transferee of the money at the heart of this litigation. Until that time, however, Gladstein remains a claimant. [Prior Case History: 2009 NY Slip Op 3186KU).]