Motion-Secondary: Adam Katz In His Capacity As Trustee Of ADAM KATZ 2012 REVOCABLE TRUST v. Equiniti Trust Company a/k/a EQ SHAREOWNER SERVICES a/k/a EQ BY EQUINITI

On December 23, 2021 a Motion-Secondary was filed involving a dispute between Adam Katz In His Capacity As Trustee Of Adam Katz 2012 Revocable Trust, and Equiniti Trust Company A K A Eq Shareowner Services A K A Eq By Equiniti, for Commercial Division - Contract in the District Court of Nassau County.

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NYSCEF DOC. NO. 61 RECEIVED NYSCEF: 01/10/2023

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
--------------------------------------------------------------------X Index No.: 616069/2021
ADAM KATZ, in his capacity as Trustee for the ADAM (Murphy, J.)
KATZ 2012 REVOCABLE TRUST,
Motion Seq. No. 5
Plaintiff,
AFFIDAVIT OF GREG S.
- against – ZUCKER, ESQ. IN SUPPORT
OF MOTION TO REARGUE
EQUINITI TRUST COMPANY a/k/a EQ BY EQUINITI
a/k/a EQ SHAREOWNER SERVICES, Return Date:
January 31, 2023
Defendant.
--------------------------------------------------------------------X
STATE OF NEW YORK )
) ss:
COUNTY OF NASSAU )

GREG S. ZUCKER, being duly sworn, deposes and states:

1. I am a partner in the law firm of Westerman Ball Ederer Miller Zucker & Sharfstein,

LLP, counsel for plaintiff Adam Katz (“Plaintiff”), in his capacity as Trustee for the Adam Katz

2012 Revocable Trust (the “Trust”). I respectfully submit this affidavit in support of Plaintiff’s

motion seeking an Order: (i) granting Plaintiff leave to reargue the Court’s decision dated

December 2, 2022 (the “Decision”, NYSCEF Doc. 58); and (ii) upon reargument, vacating the

Decision and denying defendant’s motion to dismiss the Second Amended Verified Complaint

(the “Second Amended Complaint”).

PRELIMINARY STATEMENT

2. The Trust owns 51,003 shares (the “Shares”) of Paltalk, Inc. (“Paltalk”). Defendant

Equiniti Trust Company a/k/a EQ by Equiniti a/k/a EQ Shareholder Services (“EQ”) is the transfer

agent for the Shares. Like millions of shareholders throughout the country, the Trust held the

Shares in a brokerage account (first with UBS and then with Morgan Stanley), and the Trust

received brokerage statements on a regular basis. The physical certificates for the Shares were

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kept in a locked vault at all relevant times. The Trust had no reason to believe there were any

issues with the Shares at all, much less that they would be deemed to be abandoned.

3. On September 30, 2021, at the Trust’s direction, Morgan Stanley placed a sale

transaction for the Shares at a price of $9.18 per Share, for a total of $468,207.54. To effectuate

that transaction, Morgan Stanley contacted EQ and requested that EQ remove the restrictive

legends that were on the Shares’ certificates. At that time, EQ informed Morgan Stanley that EQ

had caused the Shares to be escheated to the State of New York in August 2021, purportedly

because EQ had deemed the Shares to be abandoned.

4. The escheatment was later reversed, but the damage had been done. By the time

the escheatment was reversed, the Shares had lost most of their value (to date, the value of the

Shares has decreased by over $390,000), and the Trust lost the benefit of the bargain of the sale

transaction that was placed.

5. The wrongful escheatment of the Shares (and the loss of the Trust’s bargain)

occurred because EQ violated New York law in multiple respects, as set forth in Plaintiff’s Second

Amended Complaint.1

6. In the Decision, the Court dismissed the Second Amended Complaint in its

entirety.2 We understand that reargument is an extraordinary remedy, but, respectfully, itis

1
EQ’s wrongdoing also violated SEC regulations governing transfer agents. Among other things,
17 C.F.R. § 240.17Ad-12(a)(1) states, in relevant part, that “[a]ny registered transfer agent that has
custody or possession of any funds or securities related to its transfer agent activities shall assure
that … [a]ll such securities are held in safekeeping and are handled, in light of all facts and
circumstances, in a manner reasonably free from risk of theft, loss or destruction.” (emphasis
added).
2
The papers in connection with EQ’s motion to dismiss were all electronically filed with the Court
as follows: (i) EQ’s motion to dismiss and supporting papers were e-filed as NYSCEF Docs. 44,
45, 46, and 47; (ii) Plaintiff’s papers in opposition were e-filed as NYSCEF Docs. 48, 49, 50, 51,
52, 53, 54, 55, and 56; and (iii) EQ’s reply papers were e-filed as NYSCEF Doc. 57. Accordingly,

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warranted here. As detailed below, the Decision was premised on the Court’s misapprehension of

three sections of the Abandoned Property Law.

7. Section 501(2)(a) provides that shares may only be deemed abandoned if, for three

successive years: “(i) all amounts, if any, payable or distributable thereon or with respect thereto

have remained unpaid to or unclaimed by such resident, and (ii) no written communication has

been received from such resident by the holder.” (emphasis added). The statute is clear: in order

for shares to properly be deemed abandoned, both prongs must be met.

8. Thus, to sufficiently allege that EQ improperly deemed the Shares to be abandoned,

all Plaintiff had to do was plead that one of the two abandonment prongs in Section 501(2)(a) was

not present. That is exactly what Plaintiff did. In the first cause of action, Plaintiff expressly

alleged that EQ violated Section 501(2)(a) of the Abandoned Property Law by declaring the Shares

to be abandoned even though “no amounts payable or distributable with respect to the Shares

have remained unpaid to or unclaimed by the Trust for three successive years.” Second

Amended Complaint, ¶ 32 (emphasis added). That was sufficient to allege that the Shares were

not properly deemed to be abandoned pursuant to Section 501(2)(a).

9. The Court, however, incorrectly read Section 501(2)(a) to require that Plaintiff also

plead and prove that the Trust had sent written communications to EQ during the three-year period

before the Shares were escheated. The statute does not say that.

those papers are all properly before the Court on this motion and should be considered as part of
the record on any appeal. See Nationstar Mortg., LLC v. Bailey, 175 A.D.3d 697, 698 (2d Dep’t
2019) (prior motion papers properly before the trial court since “defendants made reference to the
electronic docket numbers for the prior motions”); CPLR 2214(c).

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10. In the second cause of action, Plaintiff alleged that EQ also violated the notice

requirements set forth in Section 1422 when it failed to give the Trust sufficient notice (as required

by statute) that the Shares were in danger of being escheated.

11. EQ claims that on March 3, 2021, it sent a letter to the Trust instructing the Trust

to contact EQ, by April 7, 2021, to avoid the escheatment of the Shares. NYSCEF Doc. 49

(October 26, 2021 email from Andrea Severson of EQ to me attaching that letter). But that single

letter was not sufficient. Section 1422 of the Abandoned Property Law requires that a second

notice letter be sent to a shareholder by certified mail if the shareholder does not respond to the

first letter – unless the first letter is returned to the sender as “undeliverable.” There is no

evidence that occurred here.3

12. On the contrary, the address to which EQ purportedly sent its letter is occupied by

an active business that regularly receives and processes mail. It is virtually impossible that a letter

sent to that address would be returned as undeliverable. We have repeatedly requested that EQ

provide evidence (such as a returned envelope) that its March 3, 2021 letter was returned as

undeliverable. EQ has never done so. Clearly, if such evidence existed, EQ would have

promptly provided it.

3
We believe that the Trust is not the only victim of EQ’s wrongdoing. Apparently, EQ has
wrongfully caused other Paltalk shareholders to have their shares escheated as well. The letter that
EQ claims it sent to the Trust strongly implies that EQ has a pattern of violating the Abandoned
Property Law. EQ’s letter (which appears to be a boilerplate form that it sends out to all of the
shareholders it deals with) stated that shares will be deemed abandoned if EQ does not receive a
communication from the shareholder within the relevant timeframe under each state’s laws.
NYSCEF Doc. 49. The letter did not mention the additional requirement under Section 501(2)(a)
of the Abandoned Property Law (the statute that EQ claims governs here) that funds owed to the
shareholder related to the shares must be unclaimed for three years before shares can be declared
abandoned – again, that never happened here. In addition, EQ’s letter did not state that a second
letter would be sent if EQ did not hear back from the Trust, as Section 1422 requires. Id.

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13. Nevertheless, the Court dismissed the second cause of action based solely on its

finding that Plaintiff had failed to allege that the Shares had not been abandoned (which, as

mentioned, was incorrect). But the notice requirements in Section 1422 apply regardless of

whether property was correctly deemed abandoned. Indeed, the very purpose of that statute is

to put the owner of allegedly abandoned property on notice that its property is in danger of being

escheated to the State of New York.

14. Finally, the Court held that Plaintiff’s claims were barred by Section 1404(3),

which bars claims for damages arising out of the delivery of “abandoned property” to the State

“pursuant to this chapter.”

15. The Court held that the statute applied because Plaintiff had purportedly failed to

allege that the Shares were not abandoned (which, again, was incorrect). In addition, the Court

ignored the statute’s express requirement that delivery be made “pursuant to this chapter.”

Because EQ failed to comply with the notice requirements in Section 1422, its delivery of the

Shares to the State was not made “pursuant to” the Abandoned Property Law.

16. If the Decision is not vacated, the consequences will be significant. Going forward,

transfer agents will be able to declare property to be abandoned without any basis for doing so –

and then wrongfully cause that property to be escheated to the State – and the victimized property

owner will be left without any recourse. That is not and should not be the law.

17. For all of these reasons, the Decision should be vacated, and the Second Amended

Complaint should be reinstated.

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LEGAL ARGUMENT

POINT I

LEGAL STANDARDS

A. Standard On A Motion To Reargue

18. “Motions for reargument are addressed to the sound discretion of the court that

decided the original motion and may be granted upon a showing that the court overlooked or

misapprehended the facts or law.” Bank of New York Mellon v. Mor, 201 A.D.3d 691, 694 (2d

Dep’t 2022) (citing CPLR 2221(d)(2)). See also LaSalle Bank Nat'l Ass'n v. Lawrence, 186 A.D.3d

1507, 1508 (2d Dep’t 2020) (reargument properly granted since trial court misinterpreted statute).

That is exactly the situation here.

B. Motion To Dismiss Standard

19. On a motion to dismiss pursuant to CPLR 3211(a)(7), the Court must “accept the

facts as alleged in the complaint as true, accord plaintiff[] the benefit of every possible favorable

inference, and determine only whether the facts as alleged fit within any cognizable legal theory.”

Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994). Based on this standard, the Second Amended

Complaint should not have been dismissed.

POINT II

THE FIRST CAUSE OF ACTION, FOR
NEGLIGENCE, SHOULD NOT HAVE BEEN DISMISSED

20. The first cause of action asserted that EQ acted negligently and unlawfully when it

deemed the Shares to be abandoned and caused the Shares to be escheated to the State. The Court

held that this claim was barred by Section 501(2)(a) of the Abandoned Property Law. That holding

was incorrect.

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A. The Court Misapprehended Section 501(2)(a) Of The Abandoned Property Law

21. In the Decision, the Court acknowledged that the Second Amended Complaint

alleged all of the elements of negligence.4 Decision at 4. However, the Court stated that a “cause

of action sounding in negligence for escheatment of property to the state cannot be maintained

where a plaintiff has not set forth allegations that property was not considered abandoned as that

term is defined pursuant to Abandoned Property Law § 501(2).” Decision at 7.

22. As mentioned, Section 501(2)(a) states that shares may only be “deemed abandoned

where, for three successive years: (i) all amounts, if any, payable or distributable thereon or with

respect thereto have remained unpaid to or unclaimed by such resident, and (ii) no written

communication has been received from such resident by the holder.” (emphasis added).5 If either

prong is not met, the property cannot be deemed abandoned. Plaintiff sufficiently pleaded that the

Shares were not abandoned under the statute. Second Amended Complaint, ¶¶ 30-33.

23. In the Second Amended Complaint, Plaintiff expressly alleged, among other things,

that “no amounts payable or distributable with respect to the Shares have remained unpaid

4
“The elements of … negligence are the existence of a duty that the defendant owed to the plaintiff,
a breach of that duty, and that the breach of that duty was a proximate cause of the plaintiff's
injuries.” RD Legal Funding Partners, LP v. Worby Groner Edelman & Napoli Bern, LLP, 195
A.D.3d 968, 971 (2d Dep’t 2021).
5
In its motion to dismiss the original Complaint, EQ argued that it was not a “holder” of the Shares
as that term is used in the Abandoned Property Law. That argument was incorrect and belied by
EQ’s own claims. For example, EQ claimed that, on March 3, 2021, it sent a notice letter to the
Trust, purportedly to comply with the notice requirements for “holders” of shares, as set forth in
Section 1422. Clearly, EQ knew and understood that it was obligated to comply with Section
1422’s requirements. Why else would EQ claim to have sent a notice letter to the Trust? EQ
abandoned that argument in its motions to dismiss the Amended Complaint and the Second
Amended Complaint.

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to or unclaimed by the Trust for three successive years.” Second Amended Complaint, ¶ 32

(emphasis added).6

24. Indeed, the Court acknowledged that “plaintiff does allege that no amounts payable

or distributable with respect to the shares have remained unpaid to or unclaimed by the Trust”

during the three-year period before the Shares were escheated to the State of New York. Decision

at 6. Nevertheless, the Court stated that “there is no allegation about written communication sent

by the Trust and the statute requires both in order for the shares to not be considered abandoned.”

Id. (emphasis added).

25. Thus, the Court read Section 501(2)(a) to require Plaintiff to plead that both prongs

were not established in order to sufficiently allege that the Shares were improperly deemed

abandoned.

26. Respectfully, the statute says the exact opposite. As discussed, Section 501(2)(a)

states that shares can only be deemed abandoned if there are amounts that remained unclaimed or

unpaid “and” there is no written communication from the shareholder for three successive years.

Abandoned Property Law § 501(2)(a) (emphasis added).

27. The statute’s use of the word “and” is critical and means that shares may only be

declared abandoned if both prongs of Section 501(a)(2)(a) are established. See Stolper v.

Barbarita, 285 A.D. 130, 131 (1st Dep’t 1954) (“The [statutory] requirement is in the conjunctive

and both elements must be satisfied.”); Harris v. Henry Cheney Hammer Corp., 221 A.D. 199,

200 (3d Dep’t 1927) (“The [statutory] language is in the conjunctive, and … both elements must

6
Plaintiff further alleged that “[t]he Shares were also not abandoned because the Shares were in
the Trust’s brokerage accounts – first with UBS and later with Morgan Stanley – and the
certificates were being held in [a] locked vault.” Id., ¶ 34.

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be present.”); People v. Cutten, 182 Misc. 2d 531, 535 (Allegheny County Ct. 1999) (“[T]he two

requisite elements, ‘possession’ and ‘intent to consume’, are in the conjunctive, not the disjunctive:

both elements must be proved.”). Cf. Technicon Elecs. Corp. v. Am. Home Assur. Co., 74 N.Y.2d

66, 75 (1989) (“Since the exception is expressed in the conjunctive, both requirements must be

met for the exception to become operative.”).

28. Here, the Court expressly recognized that the Second Amended Complaint

sufficiently alleged that one of the abandonment prongs was not met – that no amounts payable or

distributable with respect to the shares have remained unpaid to or unclaimed by the Trust.

Decision at 6. That is dispositive.

29. Accordingly, the Court’s dismissal of the first cause of action was erroneous and

should be reversed.

B. EQ’s Interpretation Of Section 501(2) Is Incorrect

30. EQ argued in its motion to dismiss and will likely argue in opposition to this motion

that: (a) the inclusion of the phrase “if any” in Section 501(2)(a)(i) means that “if no payments

were to be made in connection with the shares, then shares are deemed abandoned if there has been

no written communication with the shareholder for three successive years”; and (b) therefore,

according to EQ, Plaintiff was required to specifically plead “either (1) he had written

communication with EQ within the applicable three years; or (2) distributable payments were made

in connection with the Shares within the applicable three years, and Plaintiff received those

payments.” EQ Mem (NYSCEF Doc. No. 45) at 6. EQ’s argument fails for multiple reasons.

31. The most logical and straightforward reading of “if any” in Section 501(2)(a)(i) is

that if no payments remained unclaimed for three years, then shares cannot be deemed abandoned,

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regardless of whether the owner of the shares (the Trust) communicated with the holder of the

shares (EQ).

32. EQ’s contrary interpretation of the statute – permitting shares to be abandoned (and

therefore, subject to being escheated) just because the owner of the shares did not write to the

holder for three years (even if no money owed to the owner of the shares was unclaimed) – would

produce results that are truly absurd.7

33. Most shareholders are not in regular communication with transfer agents about their

shares or their portfolios. In fact, if money is not due and owing to the shareholder and the shares

are not being sold or transferred, what possible reason would the shareholder have to write to a

transfer agent?

34. Plaintiff previously submitted to the Court affidavits from Eric Wanatick (who

handles all of the Trust’s financial matters) and Kara Jenny (who is Paltalk’s Chief Financial

Officer). Wanatick Aff. (NYSCEF Doc. 50); Jenny Aff. (NYSCEF Doc. 51).8 Neither of those

people (both of whom are sophisticated financial professionals) believed that the Shares were

abandoned at any point.

35. Mr. Wanatick explained that “[a]t all relevant times, my understanding was that

the Shares were active, and the Trust received brokerage statements that referenced the

7
“[I]t is well settled that courts should construe [a statute] to avoid objectionable, unreasonable or
absurd consequences.” Long v. State, 7 N.Y.3d 269, 273 (2006). The Court of Appeals has
instructed that the rule that statutes should be interpreted based on the ordinary meaning of their
language “is not to be mechanically applied when an absurd or futile result would ensue, especially
one at variance with the policy and purpose of the legislation.” Matter of Jose R., 83 N.Y.2d 388,
393 (1994). See also N.Y. Stat. Law § 145 (“A construction which would make a statute absurd
will be rejected.”).
8
These affidavits were properly submitted in opposition to EQ’s motion to dismiss. See
Houtenbos v. Fordune Ass'n, Inc., 200 A.D.3d 662 (2d Dep’t 2021).

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Shares on a regular basis,” Wanatick Aff., ¶ 4 (emphasis added). Ms. Jenny stated that “Paltalk

has seen no indication that the Trust ever intended to abandon the Shares.” Jenny Aff., ¶ 4

(emphasis added).9

36. Given that the Shares were active and were held in brokerage accounts, and that the

Trust regularly received brokerage statements, why would the Trust ever need to write to EQ about

the Shares?

37. EQ’s interpretation of Section 501(2)(a) is also inconsistent with the strict standard

for abandonment of property under New York law.

38. “The abandonment of property is the relinquishing of all title, possession, or claim

to or of it – a virtual intentional throwing away of it. It is not presumed. Proof supporting it must

be direct or affirmative or reasonably beget the exclusive inference of the throwing away.” Foulke

v. New York Consol. R. Co., 228 N.Y. 269, 273 (1920) (emphasis added). “Under New York law,

to prove abandonment a party must show both an owner's intent and an affirmative act or omission

establishing that intent.” Alloul v. City of New York, No. 09 CIV 7726, 2010 WL 5297215, at *5

(S.D.N.Y. Dec. 21, 2010). See also Route 22 Assocs. v. Cipes, 204 A.D.2d 705, 706 (2d Dep’t

1994) (nonuse of an easement is not sufficient to abandon it – a party must establish both an intent

to abandon and an overt act in furtherance of such intent).

39. A shareholder letting money owed to it remain unclaimed and not communicating

with a transfer agent for three years is compelling evidence that the shareholder intends to abandon

shares. By contrast, a shareholder simply failing to write to a transfer agent can hardly be

9
Contrary to EQ’s contentions, these statements by Mr. Wanatick (that the Trust received
brokerage statements referencing the Shares and that he understood that the Shares were active at
all relevant times) and Ms. Jenny (that Paltalk saw no indication that the Trust intended to abandon
the Shares) were not “legal conclusions” in any sense. EQ Reply Mem. (NYSCEF Doc. 57) at 5.

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construed as expressing an intent to abandon shares, especially where, as here, the shares were in

a brokerage account, and the shareholder was receiving brokerage account statements on a regular

basis.

40. At the very least, the issue of whether EQ correctly deemed the Shares to be

abandoned cannot be resolved on a motion to dismiss.

41. For all of these reasons, the first cause of action should not have been dismissed.

POINT III

THE SECOND CAUSE OF ACTION, FOR
NEGLIGENCE, SHOULD NOT HAVE BEEN DISMISSED

42. The second cause of action is for negligence arising out of EQ’s failure to comply

with the requirements of Section 1422 of the Abandoned Property Law. As mentioned, that statute

sets forth notice requirements to ensure that shareholders are warned sufficiently in advance that

their shares are in danger of being escheated. This claim was properly stated and should not have

been dismissed.

A. EQ’s Statutory Duties

43. EQ’s duties are set forth in Sections 1422(1) and (2) of the Abandoned Property

Law, which state:

1. Any holder of unclaimed funds which is not otherwise required
to perform owner notification mailings under the provisions of this
chapter shall send, not less than ninety days prior to the
applicable reporting date for such unclaimed property, a
written notice by first-class mail to each person appearing to be
the owner of property listed in a report of abandoned property
required to be filed under the provisions of this chapter, at the
address of the owner as it appears on the books and records of
the holder; provided, however, that the foregoing requirements
shall not apply where (a) the holder does not have an address for the
owner; or (b) the holder can demonstrate that the only address that
the holder has pertaining to the owner is not the current address of
the owner.

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2. Where notice is required by subdivision one of this section, each
holder shall, with respect to property listed in such report whose
value is in excess of one thousand dollars, send a second written
notice to the owner by certified mail, return receipt requested
not less than sixty days prior to the applicable reporting date for
such unclaimed property, provided that no notice pursuant to this
subdivision shall be required where: (a) such holder has received a
claim from the owner of the property; or (b) the original mailing was
returned as undeliverable. (emphasis added).

44. Thus, the statute requires holders of potentially unclaimed property (such as EQ)

to: (i) notify the property owner by mail to the property owner’s correct address at least 90 days

prior to the date that the property could be escheated; and (ii) send a second notice to the property

owner (by certified mail/return receipt requested) at least 60 days prior to the date that the property

could be escheated, which never occurred here.

45. The requirement that a second notice be sent is excused only if: (i) the holder has

received a claim from the owner of the property; or (ii) the original mailing was returned as

undeliverable, which, again, never occurred here.

46. As discussed below, all of this was properly pleaded in the Second Amended

Complaint.

B. EQ Violated Section 1422 Of The Abandoned Property Law

47. The Second Amended Complaint contains the following allegations, all of which

must be accepted as true:

• “EQ alleges that on or around March 3, 2021, it sent a due diligence letter by first-
class mail to the Trust, which purportedly stated that the Trust needed to contact
EQ on or before April 7, 2021 to prevent the Shares from being escheated to the
State.” Second Amended Complaint, ¶ 44.

• “[T]he purported letter was addressed to the [Trust at] 7110 Republic Airport Ste
300, Farmingdale, NY 11735-3954.” Id., ¶ 45.

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• “During all relevant times: (i) 7110 Republic Airport Ste 300, Farmingdale, NY
11735-3954 was and is a valid address; and (ii) a business operated at that location,
received mail on a regular basis, and continues to do so.” Id., ¶ 46.

• “As such, there is no way that a letter sent to 7110 Republic Airport Ste 300,
Farmingdale, NY 11735-3954 would be returned to the sender as
“undeliverable.” Id., ¶ 47 (emphasis in original).

• “Despite multiple requests, EQ has never produced a returned envelope or any other
evidence that the letter was actually returned as undeliverable.” Id., ¶ 48.

• “Accordingly, the purported letter that EQ sent to the Trust on March 3, 2021 was
not returned to EQ as undeliverable.” Id., ¶ 49.

• “Nevertheless, … EQ wrongfully deemed the purported letter as ‘undeliverable,’
purportedly because EQ did not receive a response from the Trust.” Id., ¶ 50.

• “Because it improperly and negligently deemed the purported letter as
undeliverable, EQ wrongfully failed and/or refused to send a second notice to the
Trust by certified mail/return receipt requested at least 60 days prior to the date that
the Property could be escheated, as Section 1422 of the Abandoned Property Law
requires.” Id., ¶ 52.

• “EQ did not engage in any follow-up communications with the Trust or take any
steps to determine if the Trust had received the purported letter.” Id., ¶ 53.

• “Because of the foregoing, the Trust was unaware that it had to contact EQ on or
before April 7, 2021 to prevent the Shares from being escheated.” Id., ¶ 54.

48. When I contacted EQ trying to find out what had happened to the Shares, Andrea

Severson of EQ claimed that EQ had sent a notice letter to the Trust on March 3, 2021, and she

emailed me a copy of the letter. NYSCEF Doc. 49. Clearly, EQ knew that it was obligated to

comply with Section 1422’s requirements.

49. Notably, Ms. Severson did not provide me with any documents or other evidence

(such as a returned envelope) showing that the notice letter had been returned as “undeliverable.”

That is because it did not happen.

50. Had EQ complied with its statutory duties and sent a second notice letter to the

Trust by certified mail (which would have ensured that the Trust received it), the Trust would have

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known that it had to contact EQ in order to prevent the escheatment of the Shares and would have

done so.

51. Because EQ failed to comply with its obligations, it wrongfully caused the Shares

to be escheated, which, in turn, caused the Trust’s sale of the Shares to be rescinded. As a result,

the Trust lost the benefit of its bargain and the profits that it would have gained from the sale of

the Shares.

C. The Court Misapprehended Section 1422

52. There is no dispute that the Second Amended Complaint sufficiently pleaded that

EQ violated its statutory duties under Section 1422. The Court, however, dismissed the second

cause of action purportedly because “while Abandoned Property Law § 1422 sets forth the

mailing requirements for notice to owners of record of unclaimed/abandoned property prior to

escheatment, … the [Second Amended Complaint] fails to set forth that the [S]hares were not in

fact abandoned as that term is defined.” Decision at 7. That holding was incorrect for multiple

reasons.

53. As discussed, Plaintiff did sufficiently allege that the Shares were not abandoned.

54. Regardless, even if the Shares were properly deemed abandoned (which, again,

they were not), EQ was still required to comply with the notice requirements in Section 1422.

Nothing in the statute says otherwise. On the contrary, Section 1422 provides that the required

notices must “advise the owner that the property to which the owner appears to be entitled will

be reported as abandoned property and will be remitted to the state comptroller unless such

property is claimed by an entitled party before the required remittance date.” Abandoned Property

Law § 1422(3) (emphasis added).

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FILED: NASSAU COUNTY CLERK 01/10/2023 02:15 PM INDEX NO. 616069/2021
NYSCEF DOC. NO. 61 RECEIVED NYSCEF: 01/10/2023

55. The entire purpose of Section 1422 is to notify owners of abandoned property that

their property is in danger of being escheated. If the statute did not apply when property was

properly declared abandoned, then it would be pointless.

56. That is why EQ’s improper designation of the Shares as abandoned and EQ’s failure

to abide by the notice requirements in Section 1422 were pleaded as two separate and distinct

claims.

57. For all of these reasons, the second cause of action should not have been dismissed.

POINT IV

EQ IS NOT IMMUNE FROM LIABILITY FOR ITS MISCONDUCT

58. EQ does not deny its conduct, or that its conduct caused the Trust to incur hundreds

of thousands of dollars in damages. Nevertheless, the Court found that Section 1404(3) of the

Case Info

Judge

Jerome C Murphy Track Judge’s New Case

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Document Filed Date

January 10, 2023

Case Filing Date

December 23, 2021

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Parties

Adam Katz IN HIS CAPACITY AS TRUSTEE OF ADAM KATZ 2012 REVOCABLE TRUST Plaintiff
EQUINITI TRUST COMPANY a/k/a EQ SHAREOWNER SERVICES a/k/a EQ BY EQUINITI Defendant
GELFAND, MICHAEL J Attorney for the Plaintiff
HARMON, MARK A Attorney for the Defendant
TESKE, ERIN NICOLE Attorney for the Defendant
ZUCKER, GREG S Attorney for the Plaintiff
GREG SUN Attorneys for Plaintiffs
DAVID LEE Attorney
DAVID BECKER Attorney

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Motion-Secondary: Adam Katz In His Capacity As Trustee Of ADAM KATZ 2012 REVOCABLE TRUST v. Equiniti Trust Company a/k/a EQ SHAREOWNER SERVICES a/k/a EQ BY EQUINITI

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