Nat'l Union Fire Ins. Co. of Pittsburgh v. Reichman

221 A.D.3d 69

199 N.Y.S.3d 526

In the Matter of NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, appellant,

v.Allen REICHMAN, respondent.

2021–08937

Index No. 54594/21

Supreme Court, Appellate Division, Second Department, New York.

Argued—March 31, 2023

November 1, 2023

McElroy, Deutsch, Mulvaney & Carpenter, LLP, New York, NY (Scott A. Levin, A. Augustus LaSala, and Matthew A. Lipman, pro hac vice, of counsel), for appellant.

Law Offices of Louis M. Spizzirro, P.C., Yonkers, NY (Amedeo Calandriello of counsel), for respondent.

ANGELA G. IANNACCI, J.P., LINDA CHRISTOPHER, WILLIAM G. FORD, JANICE A. TAYLOR, JJ.

OPINION & ORDER

CHRISTOPHER, J.

This appeal provides an opportunity to examine 18 USC § 3664(m)(1)(B) of the Mandatory Victims Restitution Act of 1996 (hereinafter the MVRA), wherein we determine that a crime victim named in a restitution order who has obtained an abstract of judgment and, as in this case, has docketed and recorded that abstract in accordance with the rules of this state may enforce that lien pursuant to this state's laws. For the reasons that follow, we hold that section 3664(m)(1)(B) provides a mechanism by which a private victim may enforce such a lien, and that the Supreme Court erred when it, inter alia, determined that the victim was limited to only recording the abstract of judgment as a lien and dismissed the petition of National Union Fire Insurance Company of Pittsburgh, PA (hereinafter National Union), in effect, pursuant to CPLR 404(a) and 3211(a)(7) for failure to state a cause of action.

Factual and Procedural History

On September 27, 2012, the United States of America indicted Allen Reichman, among others, charging Reichman with wire fraud and other offenses related to an alleged scheme to defraud Reichman's then employer, Oppenheimer & Co., Inc. (hereinafter Oppenheimer), and other entities. The indictment alleged that Reichman, along with others, fraudulently induced Oppenheimer to extend a $30 million loan to an entity to acquire an insolvent Oklahoma insurance company. Reichman received commission payments after the sale.

On July 15, 2015, Reichman pleaded guilty to one count of conspiracy to commit wire fraud in violation of 18 USC §§ 371 and 1349. Pursuant to an amended judgment dated August 5, 2015, Reichman was sentenced to 21 months of imprisonment and ordered to pay $10 million in restitution to Oppenheimer. In a section entitled "Special instructions regarding the payment of criminal monetary penalties," the following schedule of payments was set forth:

"1. A $10,000 payment to Oppenheimer in advance of [Reichman's] surrender. 2. Payments of $500 per month to Oppenheimer until [Reichman] surrenders. 3. Payments of the greater of $500 per month if [Reichman] is employed; $250 per month if he is not employed; or 10% of his gross wages, after he completes his sentence of incarceration, until his restitution is paid in full."

On September 14, 2020, the restitution order was amended to substitute National Union as the sole and direct restitution payee. National Union obtained an abstract of judgment (hereinafter the judgment) of the restitution order from the Clerk of the United States District Court for the Southern District of New York, which National Union docketed and recorded with the Westchester County Clerk on March 4, 2021. According to National Union, as of April 14, 2021, $12,750 had been paid toward satisfying the judgment, and $9,987,250 remained unpaid.

By petition dated April 14, 2021, National Union commenced this enforcement proceeding pursuant to CPLR 5206(e) to compel the sale of Reichman's interest in a home and to direct that the proceeds from the sale less the homestead exemption be applied to the principal balance in the amount of $9,987,250 remaining on the judgment. Reichman moved, in effect, pursuant to CPLR 404(a) and 3211(a)(1), (3), and (7) to dismiss the petition, arguing, inter alia, that 18 USC § 3664(m)(1)(B) does not provide a private right of enforcement for the crime victims named in restitution orders, which are not civil judgments. Therefore, Reichman argued, National Union did not have standing to commence this proceeding and the petition failed to state a cause of action. Reichman also argued that the petition should be dismissed because the plain language of the restitution order clearly set forth that payments are to be made pursuant to a payment schedule.

In response, National Union contended, inter alia, that under section 3664(m)(1)(B) of the MVRA, a crime victim is permitted to docket a restitution order as a civil lien, which is then fully enforceable in a manner provided for under New York law. Moreover, National Union argued that its lien, unlike a complaint, may not be dismissed pursuant to CPLR 3211(a)(7). National Union also argued that the payment schedule set forth in the restitution order does not preclude it from enforcing its lien against Reichman's property.

In an order and judgment dated October 13, 2021, the Supreme Court granted Reichman's motion, in effect, pursuant to CPLR 404(a) and 3211(a) to dismiss the petition on the ground that it failed to state a cause of action, denied the petition, and dismissed the proceeding. In discussing section 3664(m)(1) of the MVRA, the court stated that the government's right to enforce a criminal restitution judgment pursuant to 18 USC § 3664(m)(1)(A) is expansive, while a victim's rights under 18 USC § 3664(m)(1)(B) are limited. The court, relying on the decision of the Appellate Division, First Department, in ( Matter of Mikhlov v. Festinger, 173 A.D.3d 130, 102 N.Y.S.3d 170 ), wrote that " ‘subsection B limits enforcement for victims to obtaining a lien. Thus, Congress set a "negative implication" that all other enforcement mechanisms, including the enforcement of an abstract judgment in a separate court proceeding, are unavailable to private victims’ ( Mikhlov v. Festinger, 173 A.D.3d 130, 135, 102 N.Y.S.3d 170 [1st Dept. 2019], quoting Schultz v. United States, 594 F.3d 1120, 1123 [9th Cir. 2010] )." The court reasoned that,

"[b]ased upon the ‘negative implication’ set by Congress regarding enforcement mechanisms of restitution orders by private victims, the text of subsection B, which expressly limits a victim's right to recording the abstract judgment as a lien, the federal government's expansive rights to enforce a restitution order, and the terms of the federal court's restitution order herein which provides for a schedule of payments and directs that restitution payments be made to the United States District Court Clerk who will then distribute same to [National Union], the court finds that the petition fails to state a claim upon which relief may be granted" (citations omitted).

National Union appeals.

Discussion

The enforcement of federal criminal restitution orders is addressed in 18 USC § 3664(m) of the MVRA. Pursuant to 18 USC § 3664(m)(1) :

"(A)(i) An order of restitution may be enforced by the United States in the manner provided for in subchapter C of chapter 227 and subchapter B of chapter 229 of this title;¹ or

"(ii) by all other available and reasonable means.

"(B) At the request of a victim named in a restitution order, the clerk of the court shall issue an abstract of judgment certifying that a judgment has been entered in favor of such victim in the amount specified in the restitution order. Upon registering, recording, docketing, or indexing such abstract in accordance with the rules and requirements relating to judgments of the court of the State where the district court is located, the abstract of judgment shall be a lien on the property of the defendant located in such State in the same manner and to the same extent and under the same conditions as a judgment of a court of general jurisdiction in that State."

At issue here is the interpretation of 18 USC § 3664(m)(1)(B), the statutory provision that sets forth the enforcement mechanism available to victims of crimes named in restitution orders. "In interpreting a statute, a court ‘must give effect to the unambiguously expressed intent of Congress’ " (Natural Resources Defense Council, Inc. v. United States Food & Drug Admin., 884 F.Supp.2d 127, 141 [S.D.N.Y.], quoting Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 ). Courts may "look to the general purpose of Congress in enacting the statute and to its legislative history" ( United States v. Braxtonbrown–Smith, 278 F.3d 1348, 1352 [D.C. Cir.] ). Moreover, "[i]t is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme" ( Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 ).

"Statutory construction ... is a holistic endeavor. The meaning of a particular section in a statute can be understood in context with and by reference to the whole statutory scheme, by appreciating how sections relate to one another. In other words, the preferred meaning of a statutory provision is one that is consonant with the rest of the statute" ( Auburn Hous. Auth. v. Martinez, 277 F.3d 138, 144 [2d Cir.] [citations and internal quotation marks omitted]).

Further, "[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant" ( Corley v. United States, 556 U.S. 303, 314, 129 S.Ct. 1558, 173 L.Ed.2d 443 [internal quotation marks omitted]).

Reichman argues that the plain language of 18 USC § 3664(m)(1)(B) unambiguously does not authorize a victim to enforce a restitution order beyond obtaining a lien on a defendant's property, while National Union contends that the statute unambiguously authorizes the enforcement of that lien.

Legislative History

The predecessor of the MVRA, the Victim and Witness Protection Act of 1982 (hereinafter the VWPA), included a victim restitution...