Court Opinion

ID: 4413592
Source: CourtListenerOpinion
Date Created: 2019-07-03 15:00:12.135135+00
Date Added: 2024-06-11T12:32:45.686949
License: Public Domain

17‐3209
Pangea Capital Management, LLC v. Lakian

                      UNITED STATES COURT OF APPEALS
                           FOR THE SECOND CIRCUIT

                                  _______________

                                 August Term, 2018

  (Argued: September 18, 2018             Questions Certified: September 26, 2018
                                          Decided July 3, 2019)

                                 Docket No. 17‐3209
                                  _______________

                        PANGEA CAPITAL MANAGEMENT, LLC,

                                 Petitioner‐Appellant,

                                        – v. –

                                  JOHN R. LAKIAN,

                                Respondent‐Appellee,

                                  ANDREA LAKIAN,

                                 Intervenor‐Appellee.
                                  _______________

B e f o r e:

               KATZMANN, Chief Judge, CHIN and LOHIER, Circuit Judges.
                                 ______________
       Appeal from an order of the United States District Court for the Southern
District of New York (Kaplan, J.) granting in part and denying in part petitioner‐
appellant Pangea Capital Management, LLC’s motion for a writ of execution
upon the proceeds from the sale of a property previously owned by appellees
Andrea and John Lakian. Pangea, a judgment creditor of John Lakian, contends
that the district court erred in declining to award it the entirety of the proceeds,
arguing that its interest in the property took priority over the interest awarded to
Andrea in a divorce judgment. We certified the question to the New York Court
of Appeals, which held that Andrea’s interest vested upon entry of the divorce
judgment and did not render Andrea a judgment creditor of John. The judgment
of the district court is therefore AFFIRMED.
              _______________
             CAITLIN L. BRONNER (Dean G. Yuzek, on the brief), Ingram Yuzek
                   Gainen Carroll & Bertolotti, LLP, New York, NY, for Petitioner‐
                   Appellant.

             John R. Lakian, pro se.

             JUDITH R. RICHMAN (Joel Berger, on the brief), Sonnenfeld & Richman
                   LLP, New York, NY, for Intervenor‐Appellee.
             _______________

      PER CURIAM:

      As explained more fully in our prior opinion, see Pangea Capital Mgmt., LLC

v. Lakian, 906 F.3d 1 (2d Cir. 2018) (“Pangea I”), familiarity with which is here

presumed, this dispute is about the competing interests of intervenor‐appellee

Andrea Lakian (“Andrea”) and petitioner‐appellant Pangea Capital

Management, LLC (“Pangea”) in the proceeds of the sale of a house in Suffolk

County, New York. Title to that property had been held by a trust that listed

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Andrea and her husband John Lakian (“John”) as beneficiaries, each holding 50%

interests. When Andrea and John divorced, they stipulated that the property

would be sold, that Andrea would receive $75,000 and 62.5% of the net proceeds,

and that John would receive the balance. That stipulation was incorporated into a

divorce judgment entered by the New York Supreme Court. Soon thereafter

Pangea won an arbitration award against John, which was confirmed and

reduced to a judgment. Pangea docketed that judgment in Suffolk County.

      Under N.Y.C.P.L.R. 5203, when two or more judgment creditors attempt to

satisfy their judgments against a debtor’s real property, priority goes to the first

creditor to docket a judgment in the county where the property is located,

regardless of which judgment was entered first. Pangea contends that Andrea’s

divorce judgment rendered her a judgment creditor and that her claim to the

property is subordinate to Pangea’s because Pangea docketed its judgment first.

Andrea argues that her share of the trust corpus—62.5% plus $75,000—was fixed

and vested upon entry of the divorce judgment, so she is not a judgment creditor

of John and Pangea can collect only from John’s share of the sale proceeds.

      The district court (Kaplan, J.) held that Andrea’s interest in the property

vested upon entry of the judgment of divorce and that Pangea could execute only

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upon the share of the proceeds awarded to John in the divorce judgment, i.e.,

37.5% less $75,000. Because this appeal turned on a significant and unresolved

issue of New York state law, as relevant here, we certified the following question

to the New York Court of Appeals:

             If an entered divorce judgment grants a spouse an
             interest in real property pursuant to D.R.L. Section 236,
             and the spouse does not docket the divorce judgment in
             the county where the property is located, is the spouse’s
             interest subject to attachment by a subsequent judgment
             creditor that has docketed its judgment and seeks to
             execute against the property?

Pangea I, 906 F.3d at 11. The New York Court of Appeals accepted the certified

question, Pangea Capital Mgmt., LLC v. Lakian, 32 N.Y.3d 1050 (2018), and now has

answered in the negative, Pangea Capital Mgmt., LLC v. Lakian, No. 53, 2019 WL
2583109, at *1 (N.Y. June 25, 2019).

      In short, the New York Court of Appeals held that “legal rights to specific

marital property vest upon the judgment of divorce” and “the dissolution of a

marriage involving the division of marital assets does not render one ex‐spouse

the creditor of another.” Id. at *2. Instead, “the judgment of divorce was, as the

Federal District Court explained, ‘a final settling of accounts’ between marital

partners with an equitable interest in all marital property.” Id. at *4 (citing Pangea

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Capital Mgmt., LLC v. Lakian, 16‐cv‐0840, 2017 WL 4081911, at *23 (S.D.N.Y. Sept.

13, 2017)). “Thus, C.P.L.R. 5203(a), by its plain terms, has no application here,

and Pangea can claim no priority.” Id. at *3. This holding is binding on us and

dispositive of this case.

      Accordingly, the judgment of the district court is AFFIRMED.

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