Pre-Judgment Attachment in New York
A prejudgment attachment in New York provides a creditor with a claim against a debtor in Manhattan, Brooklyn, Queens or other parts of New York City or New York State a way to increase the likelihood of recovery on its claim. An attachment is a court ordered giving of security to a plaintiff in a lawsuit which has the effect of a lien against a defendant’s property. The lien serves the purpose of making an unsecured claim a claim secured by property so that any judgment obtained by plaintiff in the action can be readily enforced. An attachment is an effective method to increase the likelihood of recovery on a judgment later obtained in the case. However, to be effective the defendant must have unencumbered real or personal property against which it can be attached (i.e., property with equity not already subject to pre-existing liens or mortgages) since the attachment lien will not prime and will come after pre-existing liens or mortgages.
In New York the remedy of a prejudgment attachment is statutory. To be eligible for an attachment the grounds for attachment in Civil Procedure Law & Rules (CPLR) 6202(1) through 6202(5) must be met.
Grounds for prejudment include: that the defendant is a foreign corporation not qualified to do business in New York (CPLR 6202(1)); the defendant with intent to defraud creditors or frustrate enforcement of a judgment that might be rendered in plaintiff’s favor, has assigned, disposed of, encumbered or secreted property, or removed property from the state or is about to do so (CPLR 6202(3)); or the cause of action is based on a judgment, or order of a court of the U.S. or another court which is entitled to full faith and credit in New York or a foreign country judgment which qualifies for recognition in New York. (CPLR 6202(5)).
To obtain an attachment plaintiff must submit an affidavit establishing that there is a cause of action against defendant, that it is probable that plaintiff will succeed on the merits (which requires proof stronger than the mere allegations needed for a complaint), that one or more statutory grounds for attachment are met, and that the amount demanded exceeds all known counterclaims.
In addition, the plaintiff must post an attachment bond, called an undertaking in New York, in an amount of not less than $500 as fixed by the court, for the purpose of making defendant whole for all costs and damages, including reasonable attorneys’ fees, which may be sustained by the reason of the attachment if defendant recovers judgment or it is finally decided that plaintiff was not entitled to an attachment. Typically the court will require an undertaking in an amount equal to or greater than the amount of the attachment. New York law further requires that the surety company or bonding company that issues the attachment bond must be authorized to execute the undertaking within the state of New York.
An order of attachment may be obtained on an ex parte basis (without notice to defendant being attached). However, if an attachment is granted on an ex parte basis the plaintiff must move within five (5) days after levy on notice to the defendant, garnishee and sheriff for an order confirming attachment.
One danger of an ex parte attachment is that if it is later determined that plaintiff was not entitled to an attachment the plaintiff can be held liable for all costs and damages, including reasonable attorneys’ fees, which defendant sustained by the reason of the attachment. For this reason if there is any uncertainty as to the identity of the defendant, or whether there is a proper basis for an attachment, it may be preferable to proceed on notice rather than ex parte even though the element of surprise will be lost so that any challenges as to whether there is a proper basis for an attachment can be raised and decided before the attachment is issued. While this will not eliminate liability for wrongful attachment, as least plaintiff will be better able to evaluate the risks associated with pursuing an attachment and can abandon the attachment application if necessary.
If the attachment is with respect to real estate the sheriff effects levy by recording the attachment order with the county clerk in the county. If defendant owns real property in more than one county then recording in more than one county may be needed. However, if the attachment is with respect to personal property, such as inventory, the sheriff can either take the property into possession or effect the attachment in place by notice. To effect an attachment by taking property into possession the plaintiff will need to obtain an order authorizing the sheriff to enter locked premises if defendant does not voluntarily provide access. The plaintiff will also need to make arrangements at its own expense for a locksmith to meet the sheriff at the property and unlock the premises and for a moving and storage company to load and move off the portable personal property.
The attorneys at Starr & Starr, PLLC, have experience in pursuing prejudgment attachments against defendants in Manhattan (New York County) and other parts of New York City and State. Please feel free to contact us at (888) 867-8165 or by email at firstname.lastname@example.org for additional information.