Court Opinion

ID: 9954329
Source: CourtListenerOpinion
Date Created: 2024-03-25 21:11:33.350396+00
Date Added: 2024-06-11T08:12:01.943281
License: Public Domain

Law Firm of Alexander D. Tripp, P.C. v Goldman
                   Sachs Group, Inc.
               2024 NY Slip Op 30882(U)
                     March 18, 2024
           Supreme Court, New York County
        Docket Number: Index No. 652157/2022
                Judge: Nancy M. Bannon
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                                                                                                                     INDEX NO. 652157/2022
  NYSCEF DOC. NO. 74                                                                                           RECEIVED NYSCEF: 03/18/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. NANCY M. BANNON                                            PART                              42
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          652157/2022
             LAW FIRM OF ALEXANDER D. TRIPP, P.C.,
                                                                                                 MOTION DATE
                                                         Petitioner,
                                                                                                 MOTION SEQ. NO.         001
                                                -v–

             GOLDMAN SACHS GROUP, INC., CITIBANK, N.A.,                                            DECISION + ORDER ON
             and JOHN LEOPOLDO FIORILLA,                                                                 MOTION
                                                         Respondents.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1, 2, 3, 4, 5, 6, 7, 8,
            9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27, 28, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44,
            45, 46, 61, 62, 63, 64, 65, 66, 67
            were read on this motion to/for                                                 TURNOVER PROCEEDING                    .

                                                                  I.        BACKGROUND
                      In this turnover proceeding pursuant to CPLR article 52, the petitioner, Law Firm of
            Alexander D. Tripp, P.C., seeks an order directing respondent Goldman Sachs Group, Inc.
            (Goldman) to turn over up to $131,859.35 from assets held in accounts at Goldman to satisfy a
            money judgment entered against respondent judgment debtor John Leopoldo Fiorilla, (Fiorilla)
            and in favor of the petitioner. A judgment in that amount was entered on August 24, 2020, in a
            breach of contract action commenced in this court by the petitioner against Fiorilla seeking
            payment of attorney’s’ fees. 1

                      1
                          In the breach of contract action, Law Firm of Alexander D. Tripp, P.C. v John Leopoldo Fiorilla
            (654991-2019), the court (King, J.), by an order dated March 11, 2022, granted a motion by the plaintiff
            law firm to serve an additional restraining notice upon “Citigroup Global Markets, Inc., Citibank, N.A.” and,
            by an order dated March 29, 2022, denied a motion by defendant Fiorilla to quash a subpoena served on
            him by the plaintiff law firm and to modify a restraining notice served on Citibank, N.A. Moving by an
            Order to Show Cause in that action, dated June 7, 2022, Fiorilla’s former wife, Annie Borelli Fiorilla di
            Santa Croce, sought an order barring the law firm from removing any funds from the 713 account on the
            ground that the funds are exempt from restraint or attachment as belonging to an irrevocable trust from
            which Fiorilla pays child support. By an order dated July 6, 2022, the court (King, J.) denied the
            application without prejudice to renew after the conclusion of the instant turnover proceeding.

             652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.                          Page 1 of 8
             ET AL
             Motion No. 001

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  NYSCEF DOC. NO. 74                                                                          RECEIVED NYSCEF: 03/18/2024

                   The petitioner served Goldman and respondent Citibank, N.A., with information
            subpoenas and restraining notices dated September 10, 2020. On September 16, 2020,
            counsel for Fiorilla e-mailed the petitioner stating that his client paid child support from two of
            the Goldman accounts and demanding that the restraints or sanctions would be sought
            pursuant to CPLR 5222. On September 17, 2020, Goldman responded by faxed letter
            identifying three open accounts, specifically “two open accounts in which the judgment debtor
            may have or had a beneficial ownership interest and a third open account of which the judgment
            debtor is trustee but of which is not primary beneficiary.”

                  (1) Account # -599 -The John Leopoldo Fiorilla di Santa Croce Revocable Trust
                      U/A DTD 6/24/03 John Leopoldo Fiorilla Di Santa Croce, TTE. - $91.67.
                  (2) Account # -684 – The John Leopoldo Fiorilla di Santa Croce Revocable Trust
                      U/A DTD 6/24/03 John Leopoldo Fiorilla Di Santa Croce, TTE. Held by GSCO
                      on behalf of GSI -$0.00.
                  (3) Account # -713 - The Giovanni Maria Fiorilla di Santa Croce 2006 Trust DTD
                      8/16/06 John Leopoldo Fiorilla di Santa Croce, TEE. - $58,548.41.

                  Goldman’s counsel’s letter further states “Judgment Debtor has an alternative investment
            as of the Date of Service with Mezzanine Partners 2006/Distressed Managers (Concentrated)
            Access LLC (“Mezzanine Partners”), which is held away from GSCO and is a private equity
            interest subject to the terms and conditions of the Fund’s agreement(s) provided by its
            investors. Mezzanine Partners is reported in account number -599 and has a current market
            value of $33,830.48. Please note that we have no practicable method for identifying beneficial
            owners whose names are not included in the title of the account.”

                    On May 5, 2022, the petitioner received an exemption notice from Fiorilla dated April 22,
            2022, on which he states that an account at Goldman contains the following types(s) of funds:
            “child support” and “spousal support or maintenance (alimony)”. He does not specify which
            account and provides no address as required, listing only his attorney’s office in Somers, N.Y.
            Notably, Fiorilla claimed the identical exemption in regard to a Citibank account. However, this
            proceeding was discontinued as against respondent Citibank by stipulation dated July 6, 2022.

             652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.         Page 2 of 8
             ET AL
             Motion No. 001

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                   In response, the petitioner informed Fiorilla’s counsel that it would be objecting to the
            exemption notice. In an affidavit objecting, Alexander Tripp outlines the procedural background
            as set forth herein, and states that he has a reasonable belief that none of Fiorilla’s funds at
            Goldman and Citibank are exempt as only the recipient of child support or maintenance, the
            payee, can claim the exemption, not the payor. Tripp further asserts that the exemption notices
            are untimely as having been filed 18 months after service of the restraining notices, and after
            “bad-faith delay tactics” by Fiorilla in sending the first notices to an incorrect address for counsel
            and making a baseless motion to quash. As such, the response received from the banks in
            2020 was stale.

                   Also in May 2022, petitioner notified Fiorilla’s counsel by email that Fiorilla never
            responded to an information subpoena served on August 28, 2020, and the court in the breach
            of contract case had recently denied his motion to quash that subpoena. Fiorilla’s counsel
            responded by email stating that his client was outside the U.S. and cannot return as he faces
            civil arrest, without explaining further. The petitioner alleges that the warrant arose from Fiorilla’s
            failure to satisfy one or more other unrelated judgments. The petitioner further alleges that
            Fiorilla is the managing partner of a venture capital firm in Milan and Dubai and is presently
            subject to arrest in New York for civil contempt in a matter entitled Citigroup Global Markets, Inc.
            v Fiorilla, Index No. 653017-2013, a case arising from an investment in a hedge fund, in which
            the petitioner represented Fiorilla and was awarded attorney’s fees.

                   In this proceeding, commenced on May 9, 2022, in an effort to collect on the judgment,
            the petitioner claims that Fiorilla has submitted baseless and untimely exemption notices upon
            which he claims that pursuant to CPLR 5205(d)(3), one of the Goldman accounts (713) was
            exempt from restraints or attachment as it is the account from which he pays child support to his
            former wife, non-party Annie Borelli Fiorilla di Santa Croce (Borelli). In an order to show cause
            dated May 31, 2022, the court granted a temporary restraining order enjoining respondents
            Fiorilla and Goldman Sachs from transferring, encumbering, impairing or assigning “any funds
            or shares in the custody of Goldman… in which Fiorilla has an interest.”

                   The petitioner initially sought an order directing that Goldman and Citibank turn over
            “any fund in which Fiorilla has an interest, in a sum sufficient to satisfy the judgment against
            Fiorilla, including but not limited to the funds and accounts set forth in exhibits E and G to the
            petition, including Fiorilla’s shares in “Mezzanine Partners”, with interest and costs.” As

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             Motion No. 001

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  NYSCEF DOC. NO. 74                                                                             RECEIVED NYSCEF: 03/18/2024

            Goldman had reported that the 684 account had a zero balance, in its reply affirmation dated
            July 8, 2022, the petitioner sought an order directing a transfer of the other two accounts (1)
            $20,249.26, in the 599 account, and that the account otherwise remain subject to the restraining
            notice, and (2) $65,004.41 in the 713 account.

                      Respondent Fiorilla did not file any opposition to the petition.

                      Respondent Goldman opposes the petition by affirmation of counsel, alleging that it held
            no accounts in the name of the judgment debtor, but only the three accounts previously
            identified by Goldman in response to the information subpoena. Goldman noted that, in any
            event, the accounts have little or no funds (representing that the 599 had $20,249.64 as of May
            31, 2022) and that Fiorilla was claiming that the 713 account was exempt from restraints or
            attachment. Goldman states that it takes no position and defers to the court’s determination as
            to ownership of the 713 account. Goldman noted that all three accounts are serviced out of the
            Goldman Sachs Investor Services Private Wealth Management office of Goldman Sachs & Co,
            LLC (GSCO).

                      Goldman’s counsel noted that the documentation for the 713 account includes a 2006
            indenture establishing an irrevocable trust, with a deposit of $10.00, with Annie Borelli as the
            donor, Fiorilla as the trustee and the “donors’ son” as the “income beneficiary” of the trust. In
            regard to the “Mezzanine Partners LLC Ownership Interest”, counsel stated that the 599
            account statements is subject to the terms and conditions of that fund’s investor agreements
            such that neither Goldman nor GSCO had actual possession or custody of the judgment
            debtor’s Mezzanine LLC Interest, and neither can turn such interest over to the petitioner in
            connection with this proceeding. Counsel further asserts that, in any event, an ownership
            interest in a limited liability company is not subject to turnover under CPLR 5225(b), since the
            member’s interest is limited to a share of the profits and losses, not the membership itself.2

                      In further opposition, Goldman submitted an affidavit of Rhiannon D. Commisso, a Vice-
            President at The Ayco Company. L.P. d/b/a Goldman Sachs Ayco Personal Financial

            2
              Non-party Borelli, an attorney, also submits papers in opposition, but without leave of court, similarly
            claiming that the funds in the 713 account cannot be reached by her former husband’s creditors. Borelli
            represents that Fiorilla has been non-compliant with child support obligations and requests the court to
            direct Goldman to wire funds from the accounts directly to her personal checking account so she can pay
            the children’s school tuition, which order would be improper in this proceeding.
                652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.          Page 4 of 8
                ET AL
                Motion No. 001

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            Management (Ayco) in which she recounts Goldman’s response to the information subpoena
            and provides a brokerage account statement dated May 31, 2022, showing a balance of
            $65,004.41. She states that, as to the 713 account, Fiorilla, as trustee, is an “authorized
            person” on the account and Borelli is an “agent ... authorized to view the account.” As to the
            599 account, Commisso repeats the comments made by Goldman’s counsel.

                    By the Order to Show Cause dated May 31, 2022, this court issued a Temporary
            Restraining prohibiting Goldman and Fiorilla from transferring, encumbering, impairing,
            removing, depleting or assigning any funds or shares in the custody of Goldman in which Fiorilla
            has an interest. The turnover petition is now granted.

                                                    II.     DISCUSSION
                    CPLR article 52 governs the “Enforcement of Money Judgments.” Section 5222
            provides the procedures for serving restraining notices and section 5222-a provides the
            procedures for claiming exemptions. Section 5240 authorizes the court to make an order
            “denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement
            procedure.” Section 5225 provides the procedures for the “payment or delivery of property of a
            judgment debtor.” This proceeding is brought under CPLR 5225(b) which provides, in relevant
            part, that:

                    “Upon a special proceeding commenced by the judgment creditor, against a person in
                    possession or custody of money or other personal property in which the judgment
                    creditor has an interest, or against a person who is a transferee of money or other
                    personal property from the judgment debtor, where it is shown that the judgment debtor
                    is entitled to the possession of such property or that the judgment creditor’s rights to the
                    property are superior to those of the transferee, the court shall require such person to
                    pay the money, or so much of it as is sufficient to satisfy the judgment, to the judgment
                    creditor and, if the amount to be paid is insufficient to satisfy the judgment, to deliver any
                    other personal property, or so much of it as is of sufficient value to satisfy the judgment,
                    to a designated sheriff.”

                    The petitioner properly sought to secure an order to turn over non-exempt funds in the
            subject accounts, and properly named and served the respondent bank in this proceeding. See
            Matter of Uni-Rty Corp. v New York Guangdong Fin., Inc., 117 AD3d 427 (1st Dept. 2014). The
            petitioner “has complied with its statutory obligations and is entitled to have its money judgment

             652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.         Page 5 of 8
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             Motion No. 001

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            satisfied.” Distressed Holdings, LLC v Ehrler, 113 AD3d 111, 119 (2nd Dept. 2013). The
            burden then shifts to the judgment debtor to establish an exemption.

                   CPLR 5222-a allows a judgment debtor to retain control over exempt funds. See Cruz v
            TD Bank, N.A., 22 NY3d 61 (2013); Jackson v Bank of America, N.A., 149 AD3d 815 (2nd Dept.
            2017); Distressed Holdings, LLC v Ehrler, supra. “[W]hen a judgment creditor seeks to restrain
            funds in a judgment debtor’s bank account, the judgment debtor has the burden of claiming and
            proving the applicability of an exemption because only he or she knows the source of the funds
            which may qualify for an exemption.” Balanoff v Niosi, 16 AD3d 53, 56 (2nd Dept. 2005)
            [judgment creditor sought to satisfy judgment from maintenance payments]; see also Swig v
            Prop. Asset Mgmt,,Svcs., LLC, 85 AD3d 427 (1st Dept. 2011); Vickers v Lavine, 56 AD2d 731
            (1st Dept. 1977). Moreover, “the judgment debtor bears the burden of proving his or her
            reasonable requirements.” Id at 57. The judgment debtor here, Fiorilla, did not meet this burden
            and, having failed to oppose this petition, does not proffer any argument to the contrary.

                   As correctly argued by the petitioner, Fiorilla submitted untimely exemption notices.
            Fiorilla’s exemption notice was not mailed within 20 days after the restraining notice, but after 1
            ½ years, on April 22, 2022. See CPLR 5222-a. In any event, they are without merit. CPLR
            5205, provides in relevant part:

                           “(d) Income Exemptions. The following personal property is exempt from
                   application to the satisfaction of a money judgment, except such part as a court
                   determines to be necessary for the reasonable requirements of the judgment
                   debtor and his dependents: .. (3) payments pursuant to an award in a
                   matrimonial action, for the support of a wife, where the wife is the judgment
                   debtor, or for the support of a child, where the child is the judgment debtor.

                  Fiorilla previously claimed that pursuant to CPLR 5205(d)(3), one of the Goldman
            accounts was exempt from restraints or attachment as it is the account into from which he pays
            child support to his former wife, non-party Borelli. Notably, he did not state if he used the
            account funds for additional purposes or how much was deposited. However, even if Fiorilla
            used the account to pay child support, the statute makes clear that only support payments
            received are exempt under the statute. See Ira E. Garr, P.C. v Kinberg, 7 AD3d 453 (1st Dept.
            2004). It is undisputed that Fiorilla is not receiving child support payments. Nor, as it seems,
            was he paying child support to Borelli from any account, at least not consistently. And neither

             652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.         Page 6 of 8
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             Motion No. 001

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            Borelli nor any child is a judgment debtor, only Fiorilla is the judgment debtor here. Finally, no
            showing was made that any amount was “necessary for the reasonable requirements of the
            judgment debtor and his dependents.” See Swig v Prop. Asset Mgmt. Svcs., LLC, 85 AD3d 427
            (1st Dept. 2011). To the extent Fiorilla remains non-compliant with his child support obligations,
            that is a matter to be pursued before the judge or court that issued the child support order, not in
            this proceeding.

                   While it is true that monies deposited in an irrevocable trust for another are beyond
            control of the depositor and are not subject to claims of depositor’s creditors, a revocable trust is
            subject to claims of the grantor’s creditors.” In Re Estate of King. 196 Misc 2d 250 (Surr Ct,
            Broome County 2003) quoting Vanderbilt Credit Corp. v Chase Manhattan Bank, 100 AD2d 544
            (2nd Dept. 1984). “A deposit by one person of his own money in his own name as trustee for
            another, standing alone, does not establish an irrevocable trust during the lifetime of the
            depositor. It is a tentative trust merely revocable at will, until the depositor dies or completes the
            gift in his lifetime by some unequivocal act or declaration, such as the delivery of the passbook
            or notice to the beneficiary.” Matter of Totten, 179 NY 122 (1904); see Silber v Lachs, 33 AD2d
            544 (1st Dept. 1969). The judgment debtor, Fiorilla, has not shown that any of the accounts are
            irrevocable trusts or otherwise exempt.

                   As previously stated, Goldman has asserted that Mezzanine Partners, a private equity
            interest “held away from GSCO”, was reported in the 599 account and that it had “no practicable
            method for identifying beneficial owners whose names are not included in the title of the
            account.” This account is identified only as “The John Leopoldo Fiorilla di Santa Croce
            Revocable Trust U/A DTD 6/24/03, John Leopoldo Fiorilla Di Santa Croce, TTE” such that these
            funds are presumed to be in Fiorilla’s control and subject to restraint. As Fiorilla has failed to
            demonstrate a basis for any exemption as to this account, this account is not shielded from his
            judgment creditors.

                                                    III.    CONCLUSION
                   Accordingly, and upon the foregoing papers, it is

                   ORDERED that the petition is granted and respondent Goldman Sachs Group, Inc. is
            directed, within 45 days of receipt of this order with notice of entry, to deliver to the petitioner,
            Law Firm of Alexander D. Tripp, P.C., all sums up to $131,859.35 11, plus interest at 9% per

             652157/2022 LAW FIRM OF ALEXANDER D. TRIPP, P.C. vs. GOLDMAN SACHS GROUP, INC.          Page 7 of 8
             ET AL
             Motion No. 001

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            annum from November 9, 2021, that it holds in the name of respondent judgment debtor John
            Leopoldo Fiorilla Di Santa Croce, by certified, bank, or treasurer’s check, payable to the
            petitioner, and it is further,

                    ORDERED that the temporary relief granted in the order to show cause dated May 31,
            2022, enjoining respondents John Leopoldo Fiorilla Di Santa Croce and Goldman Sachs Group,
            Inc. from transferring, encumbering, impairing or assigning “any funds or shares in the custody
            of Goldman… in which Fiorilla has an interest”, shall be vacated upon full compliance with the
            above directive, and it is further

                    ORDERED that the petitioner shall serve a copy of this order with notice of entry upon
            respondent Goldman Sachs Group, Inc. and the respondent judgment debtor, John Leopoldo
            Fiorilla Di Santa Croce or his counsel, by overnight mail service and regular mail, return receipt
            requested, within 15 days of this order, and it is further

                    ORDERED that, upon the stipulation dated July 6, 2022, the proceeding is discontinued
            as against respondent Citibank, N.A., without prejudice.

                    This constitutes the Decision and Order of the court.

                                                                                 N;:n~
                                                                                  HON. NANCY M. BANNON
                    3/18/2024                                                               $SIG$
                      DATE
             CHECK ONE:                 X    CASE DISPOSED                NON-FINAL DISPOSITION

                                                             □                                      □
                                        X    GRANTED             DENIED   GRANTED IN PART               OTHER

             APPLICATION:                    SETTLE ORDER                 SUBMIT ORDER

                                                                                                    □
             CHECK IF APPROPRIATE:           INCLUDES TRANSFER/REASSIGN   FIDUCIARY APPOINTMENT         REFERENCE

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             Motion No. 001

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