Becker Secures Landmark Win in First-of-Its-Kind Case Against National Bank

In a case of first impression, Becker New York, PC recently obtained a summary judgment on behalf of its client—the owner, and commercial landlord, of two landmarked buildings in downtown Manhattan—against a large national bank who, it was determined, violated post-judgment restraining notices served on the Bank to secure payment of a $2.2 million money judgment the Building Owner had earlier obtained against a defaulting tenant, who had, unsuccessfully, claimed its breach was excused by Covid.

That same former tenant/Judgment-Debtor had outstanding loans with the Bank that were also in default; after the Building Owner had secured its Judgment, and after it served the Bank with post-judgment restraining notices, the Bank sued, and then settled with, the former tenant/Judgment-Debtor; applied the settlement payments to pay off its loan; claiming, as a secured creditor, it had priority over the Judgment.  The Building Owner sued.

The Supreme Court, New York County, granted the Building Owner summary judgment against the Bank, holding that the Bank’s right of setoff as a secured creditor was limited to cash “on account,” and, thus, “in its possession,” but that the Bank’s status as a secured creditor gave it no priority over the settlement payments later received from former tenant/Judgment-Debtors.  The Court further ruled that the Bank’s knowing violations of the restraining notices constituted a civil contempt, awarded the Building Owner compensatory and punitive damages, counsel fees, as well as sanctions for civil contempt, and ordered the issue of the amount of such damages and sanctions to be determined at a damages trial.

Jennifer Karnes and Mitchel Ochs were counsel to the Building Owner.