What Happens If I Win A Lawsuit In Manhattan And The Defendant Fails To Pay The Judgment?

If you win a lawsuit in Manhattan, Manhattan, and the defendant does not pay the judgment, you need to enforce your money judgment by turning your judgment into an actual financial recovery.

The first step is to enter the judgment. If the judgment is not entered correctly, a judgment creditor (that is, a litigant in whose favor a money judgment is issued) can lose priority as against other judgments and other creditors. N.Y. C.P.L.R. 5016 provides that the judgment is not entered until the court clerk signs the judgment and it is recorded in a ‘judgment book’ maintained by the clerk. It’s important that you check the local rules of the court to find out what, if any, documents you need to submit to the court, in what format you must submit the documents, and by what means of transmission you must submit the documents.

Once the judgment is entered, the judgment creditor must serve, on the judgment debtor (that is, the litigant against whom a money judgment is entered), a copy of the judgment with a notice of entry of the judgment.

Winning and obtaining a judgment in Manhattan gives you the right to enforce your money judgment. That victory, however, is only the beginning of the enforcement process. Once you obtain a judgment, the next crucial step is finding the assets that can be used to satisfy the judgment.

Except in cases that settle, it’s rare that the judgment debtor simply hands over, to the judgment creditor, a check for the judgment amount.

Fortunately, the New York Civil Practice Law and Rules give broad leeway to the judgment creditor to gain information about the judgment debtor’s assets.

The judgment creditor may serve a subpoena upon any person who the judgment creditor reasonably believes has property or information regarding the judgment debtor’s assets. The judgment creditor may compel disclosure of all matter relevant to the satisfaction of the judgment. The subpoena must specify the litigants in the action, the date of the judgment, the court in which it was entered, the amount of the judgment, and the amount owed. Typically, the lawyer for the judgment creditor issues the subpoena. The judgment creditor’s lawyer often serves the subpoena with a restraining notice.

There are several categories of subpoenas. A subpoena ad testificandum requires a person to appear for a deposition (that is, to answer questions under oath) at a specified time and place. A subpoena duces tecum requires the production of books and papers.

The simplest subpoena is an information subpoena. An information subpoena is a set of questions sent to a person and requiring answers, in writing and under oath, within seven days after receipt.

The information subpoena is cost-effective. However, the judgment creditor must certify that he, she, or it has a reasonable belief that the person receiving the subpoena has in his or her possession information about the judgment creditor that will assist the judgment debtor in collecting the judgment.

If a judgment debtor does not respond to a subpoena, the judgment creditor can obtain the court’s assistance. Specifically, the judgment debtor can seek an order to show cause why the court should not hold the judgment debtor or witness in contempt of court.

In addition to searching for assets, the judgment creditor has the right to serve restraining notices to make sure that neither the debtor nor any other litigant transfers or misappropriates the debtor’s property, once judgment is entered.

The restraining notice is simple and effective. It freezes the judgment debtor’s assets immediately. Because the restraining notice renders the judgment debtor unable to access his liquid funds, the restraining notice often obtains a prompt response and action from the judgment debtor. Restraining notices can be sent to the judgment debtor and to people likely in possession of the debtor’s assets. A restraining notice can be served either in the manner in which a summons is served, or by first class mail, return receipt requested.

Once you have determined where the judgment debtor’s assets are, there are several means to obtain those assets to recover on your judgment. One means is through the courts.

Specifically, where a judgment creditor can show that the judgment debtor possesses or has custody of money or other personal property in which he has an interest, the judgment creditor can move to have the judgment debtor pay the money or deliver the personal property to satisfy a judgment.

A second means by which you may obtain the judgment creditor’s assets to satisfy a judgment is through an income execution.

A judgment creditor has a statutory right to seek an income execution in order to reach 10 percent of the judgment debtor’s earnings to satisfy the judgment.

If the judgment creditor wishes to execute on more than 10 percent of the judgment debtor’s earnings, the judgment creditor can apply to the court for an order directing that the judgment debtor make specified installment payments to the judgment creditor.

An income execution is only available, however, when the judgment debtor makes more than 30 times the federal minimum wage or more than 30 times the Manhattan minimum wage, whichever is greater.

An income execution is often informally called a wage garnishment.

If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the Manhattan, NYC area, call Manhattan Business Litigation Attorney David S. Rich at (347) 970-5550.

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