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Current Developments in the Commercial Divisions of the
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Posted: August 28, 2016

An Interested Person May be Allowed to Intervene in Special Proceeding to Recover Debt

On August 19, 2016, Justice Kornreich of the New York County Commercial Division issued a decision in Wimbledon Financing Master Fund, Ltd. v. Bergstein, 2016 NY Slip Op. 31574(U), discussing the standard for intervention in a special proceeding to turn over funds to satisfy a judgment:

Under CPLR 1012, a non-party shall be permitted to intervene when the proposed intervenor’s rights are not adequately represented by the parties and will be prejudiced absent intervention. Under CPLR 1013, a court may permit intervention when the person’s claim and the main action have a common question of law or fact. CPLR 5227, moreover, provides that the court may permit any adverse claimant to intervene in the proceeding and may determine his rights in accordance with CPLR 5239, which states that, in an Article 52 proceeding, the court may permit any interested person to intervene.

The Second Department has held that CPLR 5227, which applies to intervention in a special proceeding seeking payment of debt owed to a judgment creditor, pre-empts the general intervention provisions set forth in CPLR 1012 and 1013. The Fourth Department recently issued a similar holding. The parties do not cite a First Department case to the contrary and, thus, this court is bound by this appellate standard.

(Internal quotations and citations omitted) (emphasis added).

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