Preview
FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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GEORGE GAO, TSUEI YEN GAO and FENG YU
GAO, Index No.
Petitioner, PETITION
- against -
ETHAN CHEN LIANG, and ETHAN LIANG 117
EAST 57TH STREET #29A LLC
Respondents.
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Petitioners George Gao, Tsuei Yen Gao and Feng Yu Gao, (“Petitioners”) by and through
their attorneys DGW Kramer LLP, pursuant to Article 52 of the CPLR, and/or the Limited
Liability Company Law, hereby petition the Court for relief as outlined as follows:
PARTIES AND VENUE
1. Petitioners George Gao (“George”), Tsuei Yen Gao (“Tracy”) and Feng Yu Gao (“Feng”)
are all residents of New York County, and are judgment creditors.
2. Respondent Ethan Chen Liang (“Liang”) reside at 35 Montgomery Street, Apt. 20G.
and is a judgment debtor.
3. Respondent Ethan Liang 117 East 57th Street #29A LLC (“Company”) is a New York
Limited Liability Company, with Liang as its sole member.
4. All parties to this action are in this jurisdiction and therefore are subject to the
jurisdiction of this Court.
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ISSUANCE OF THE UNDERLYING JUDGMENT
5. Petitioners commenced an action against Liang in May of 2018, before this Court, in the
matter of Gao, et. al. v. Liang, et. al., Index No.: 154921/2018.
6. Petitioners were the victims of a fraud perpetrated by Liang and his mother Helen Chen
(“Chen”) where Liang and Chen defrauded Petitioners of their life savings. Liang and Chen
convinced Petitioners to place all of their money and assets into a “trust” on the Petitioner’s behalf.
But in reality, Liang and Chen stole all of the Petitioners’ assets so as to enrich themselves.
7. Following a multi-day jury trial, a jury ruled unanimously in favor of Petitioners against
both Liang and Chen, finding in favor of Petitioners on both Petitioners’ causes of action for fraud
and for breach of fiduciary duty.
8. The jury awarded compensatory damages and punitive damages in consideration of the
egregiousness of the defendants’ conduct.
9. A money judgment was thereafter issued against Liang and Chen in the amount of
$473,178.56, jointly and severally, and also against Liang additionally for $185,000 in punitive
damages, for a total award against Liang for $658,178.56.
10. A copy of that judgment is annexed herein as Exhibit A.
LIANG’S OWNERSHIP OF THE COMPANY
11. The Company is owned by Liang.
12. Attached as Exhibit B are certified records of the Company, including its Articles of
Organization which identifies Ethan Liang as its member.
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LEVYING OF MEMBERSHIP INTEREST
13. Petitioner seeks to levy Liang’s ownership interest in the Company.
14. Pursuant to CPLR § 5225(a), “where it is shown that the judgment debtor is in
possession or custody of money or other personal property in which he has an interest, the court
shall order that the judgment debtor pay the money, or so much of it as is sufficient to satisfy the
judgment, to the judgment creditor and, if the amount to be so paid is insufficient to satisfy the
judgment, to deliver any other personal property, or so much of it as is of sufficient value to satisfy
the judgment, to a designated sheriff.”
15. CPLR § 5240 further permits the Court to “make an order denying, limiting,
conditioning, regulating, extending or modifying the use of any enforcement procedure.”
16. Membership interest in an LLC is personal property that “may be levied in satisfaction
of a judgment.” Coscia v Eljamal, 48 Misc 3d 361, 366 [Sup Ct, Westchester County 2015]; see
also Hirtenstein v Largotta, 2011 NY Slip Op 32177[U], *4 [Sup Ct, NY County 2011]
17. For example, in Hirtenstein, Hirtenstein brought a motion pursuant to CPLR § 5225(a)
for the purposes of satisfying an outstanding money judgment against Largotta. Hirtenstein and
Largotta each held a 50% ownership interest in 49 East Houston LLC. This Court granted
Hirtenstein’s motion and directed Largotta to “deliver documents representing his interest in 49
East Houston LLC” and in other LLCs, “so that plaintiff may effectuate the turnover of defendant’s
property and ultimately enforce its Judgment.”
18. In Kassover v Prism Ventures Partners, LLC, 2017 NY Slip Op 31933[U], *2 [Sup Ct,
NY County 2017], a judgment was entered against defendant GCC Realty Company, LLC
(“GCC”). GCC owned numerous entities through which it owned property. Plaintiff there sought
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to, and obtained, a levy of GCC’s 100% membership interest in all of the entities that it owned,
for purposes of satisfaction of the plaintiffs’ judgment against GCC.
TURNING OVER OF MEMBERSHIP INTEREST
19. As an alternative, Petitioners seek to be conferred all rights that Liang has as a member
in the Company until the judgment is satisfied, including the right to manage any distributions of
assets, pursuant to the Limited Liability Company Law § 607.
20. Whether this Court applies Article 52 of the CPLR or the Limited Liability Company
Law is up to the discretion of the Court. See Matter of Sirotkin v Jordan, LLC, 141 AD3d 670, 672
[2d Dept 2016] (“CPLR 5240 and Limited Liability Company Law § 607 give the court discretion,
in an appropriate case, to issue a charging order instead of, inter alia, an order assigning or turning
over the judgment debtor's membership interest in an LLC to the judgment creditor.”)
21. CPLR § 5240 permits the Court to “make an order denying, limiting, conditioning,
regulating, extending or modifying the use of any enforcement procedure.”
22. Pursuant to Limited Liability Company Law §§ 607(a) and 603(a)(3), Petitioners as
judgment creditors are entitled to an assignment of Liang’s membership interest.
23. Where, as is the case here, when the judgment debtor has sole and exclusive control of
the LLC, and the LLC lacks independence from the judgment debtor, the creditor should also have
all rights as the judgment debtor including the right to liquidate assets and declare distributions.
See Am. Honda Fin. Corp. v Route. 57 Dev., LLC, 2016 US Dist LEXIS 26127, at *41 [NDNY
Mar. 1, 2016, No. 7:13-CV-0260 (GTS/ATB)] (Where the Court held that the petitioner was
entitled to be “conferred all rights that Simao [judgment debtor] has as a member” because Simao
“wholly owns the LLCs, is in sole and exclusive control of them, and is permitted to dispose of
assets and to declare distributions without input from any other member”).
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24. This rule is required in part because the Limited Liability Company Law § 603 states
that “a member ceases to be a member and to have the power to exercise any rights or powers of
a member upon assignment of all of his or her membership interest.” Without granting Petitioner
the rights, such charge would leave the LLC unable to operate or perform any functions.
25. This rule is also consistent with Limited Liability Company Law § 604(a) which states
that an assignee may not become a member “without the vote or written consent of at least a
majority in interest of the members, other than the member who assigned or proposes to assign
such membership interest.” With no other members, the Petitioners would by default have the
consent of a “majority” to become members of the Company.
26. Without conferring upon Petitioners the power to liquidate assets and declare
contributions under these circumstances, a spiteful judgment debtor would have no reason to
cooperate in the satisfaction of judgment and can instead for example simply cease all management
of the Property, allow the Property to enter into a state of neglect, refuse to sell or rent out the
Property, and allow for the asset to dissipate, preventing partial satisfaction of the judgment. ]
CONCLUSION
27. Wherefore Petitioners respectfully ask for one of the reliefs as requested above.
WHEREFORE, Petitioners respectfully request that this court enter a judgment as follows:
a) An Order directing Respondent ETHAN LIANG 117 EAST 57TH STREET #29A LLC
to turnover forthwith, to the Sheriff for auction Ethan Chen Liang’s membership interest in
ETHAN LIANG 117 EAST 57TH STREET #29A LLC, along with any documents required to
effectuate the Sheriff’s sale of the ownership interest, and apply the proceeds of the sale to the
satisfaction of the judgment obtained by Petitioners against Ethan Chen Liang; and/or;
b) Ordered that Petitioners shall be assigned Ethan Chen Liang’s membership interest in the
distributions and allocation of profits and loss of ETHAN LIANG 117 EAST 57TH STREET
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#29A LLC, until Petitioner’s judgment plus interest is satisfied, and for Petitioners to have all
rights which Ethan Chen Liang has as the sole member of ETHAN LIANG 117 EAST 57TH
STREET #29A LLC including the right to liquidate assets and to declare distributions and access
to all of the company’s books and records.
And/or any further legal and equitable relief as this Court deems necessary, just, and proper.
Dated: New York, New York
April 3, 2023 Respectfully Submitted,
DGW Kramer LLP
By: /s/ Jacob Chen
DGW Kramer LLP
Attorneys for Petitioners
One Rockefeller Plaza, 1060
New York, NY 10020
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Preview
FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ---------------------------------------------------------------------x GEORGE GAO, TSUEI YEN GAO and FENG YU GAO, Index No. Petitioner, PETITION - against - ETHAN CHEN LIANG, and ETHAN LIANG 117 EAST 57TH STREET #29A LLC Respondents. ---------------------------------------------------------------------x Petitioners George Gao, Tsuei Yen Gao and Feng Yu Gao, (“Petitioners”) by and through their attorneys DGW Kramer LLP, pursuant to Article 52 of the CPLR, and/or the Limited Liability Company Law, hereby petition the Court for relief as outlined as follows: PARTIES AND VENUE 1. Petitioners George Gao (“George”), Tsuei Yen Gao (“Tracy”) and Feng Yu Gao (“Feng”) are all residents of New York County, and are judgment creditors. 2. Respondent Ethan Chen Liang (“Liang”) reside at 35 Montgomery Street, Apt. 20G. and is a judgment debtor. 3. Respondent Ethan Liang 117 East 57th Street #29A LLC (“Company”) is a New York Limited Liability Company, with Liang as its sole member. 4. All parties to this action are in this jurisdiction and therefore are subject to the jurisdiction of this Court. -1- 1 of 6 FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 ISSUANCE OF THE UNDERLYING JUDGMENT 5. Petitioners commenced an action against Liang in May of 2018, before this Court, in the matter of Gao, et. al. v. Liang, et. al., Index No.: 154921/2018. 6. Petitioners were the victims of a fraud perpetrated by Liang and his mother Helen Chen (“Chen”) where Liang and Chen defrauded Petitioners of their life savings. Liang and Chen convinced Petitioners to place all of their money and assets into a “trust” on the Petitioner’s behalf. But in reality, Liang and Chen stole all of the Petitioners’ assets so as to enrich themselves. 7. Following a multi-day jury trial, a jury ruled unanimously in favor of Petitioners against both Liang and Chen, finding in favor of Petitioners on both Petitioners’ causes of action for fraud and for breach of fiduciary duty. 8. The jury awarded compensatory damages and punitive damages in consideration of the egregiousness of the defendants’ conduct. 9. A money judgment was thereafter issued against Liang and Chen in the amount of $473,178.56, jointly and severally, and also against Liang additionally for $185,000 in punitive damages, for a total award against Liang for $658,178.56. 10. A copy of that judgment is annexed herein as Exhibit A. LIANG’S OWNERSHIP OF THE COMPANY 11. The Company is owned by Liang. 12. Attached as Exhibit B are certified records of the Company, including its Articles of Organization which identifies Ethan Liang as its member. -2- 2 of 6 FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 LEVYING OF MEMBERSHIP INTEREST 13. Petitioner seeks to levy Liang’s ownership interest in the Company. 14. Pursuant to CPLR § 5225(a), “where it is shown that the judgment debtor is in possession or custody of money or other personal property in which he has an interest, the court shall order that the judgment debtor pay the money, or so much of it as is sufficient to satisfy the judgment, to the judgment creditor and, if the amount to be so paid is insufficient to satisfy the judgment, to deliver any other personal property, or so much of it as is of sufficient value to satisfy the judgment, to a designated sheriff.” 15. CPLR § 5240 further permits the Court to “make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure.” 16. Membership interest in an LLC is personal property that “may be levied in satisfaction of a judgment.” Coscia v Eljamal, 48 Misc 3d 361, 366 [Sup Ct, Westchester County 2015]; see also Hirtenstein v Largotta, 2011 NY Slip Op 32177[U], *4 [Sup Ct, NY County 2011] 17. For example, in Hirtenstein, Hirtenstein brought a motion pursuant to CPLR § 5225(a) for the purposes of satisfying an outstanding money judgment against Largotta. Hirtenstein and Largotta each held a 50% ownership interest in 49 East Houston LLC. This Court granted Hirtenstein’s motion and directed Largotta to “deliver documents representing his interest in 49 East Houston LLC” and in other LLCs, “so that plaintiff may effectuate the turnover of defendant’s property and ultimately enforce its Judgment.” 18. In Kassover v Prism Ventures Partners, LLC, 2017 NY Slip Op 31933[U], *2 [Sup Ct, NY County 2017], a judgment was entered against defendant GCC Realty Company, LLC (“GCC”). GCC owned numerous entities through which it owned property. Plaintiff there sought -3- 3 of 6 FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 to, and obtained, a levy of GCC’s 100% membership interest in all of the entities that it owned, for purposes of satisfaction of the plaintiffs’ judgment against GCC. TURNING OVER OF MEMBERSHIP INTEREST 19. As an alternative, Petitioners seek to be conferred all rights that Liang has as a member in the Company until the judgment is satisfied, including the right to manage any distributions of assets, pursuant to the Limited Liability Company Law § 607. 20. Whether this Court applies Article 52 of the CPLR or the Limited Liability Company Law is up to the discretion of the Court. See Matter of Sirotkin v Jordan, LLC, 141 AD3d 670, 672 [2d Dept 2016] (“CPLR 5240 and Limited Liability Company Law § 607 give the court discretion, in an appropriate case, to issue a charging order instead of, inter alia, an order assigning or turning over the judgment debtor's membership interest in an LLC to the judgment creditor.”) 21. CPLR § 5240 permits the Court to “make an order denying, limiting, conditioning, regulating, extending or modifying the use of any enforcement procedure.” 22. Pursuant to Limited Liability Company Law §§ 607(a) and 603(a)(3), Petitioners as judgment creditors are entitled to an assignment of Liang’s membership interest. 23. Where, as is the case here, when the judgment debtor has sole and exclusive control of the LLC, and the LLC lacks independence from the judgment debtor, the creditor should also have all rights as the judgment debtor including the right to liquidate assets and declare distributions. See Am. Honda Fin. Corp. v Route. 57 Dev., LLC, 2016 US Dist LEXIS 26127, at *41 [NDNY Mar. 1, 2016, No. 7:13-CV-0260 (GTS/ATB)] (Where the Court held that the petitioner was entitled to be “conferred all rights that Simao [judgment debtor] has as a member” because Simao “wholly owns the LLCs, is in sole and exclusive control of them, and is permitted to dispose of assets and to declare distributions without input from any other member”). -4- 4 of 6 FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 24. This rule is required in part because the Limited Liability Company Law § 603 states that “a member ceases to be a member and to have the power to exercise any rights or powers of a member upon assignment of all of his or her membership interest.” Without granting Petitioner the rights, such charge would leave the LLC unable to operate or perform any functions. 25. This rule is also consistent with Limited Liability Company Law § 604(a) which states that an assignee may not become a member “without the vote or written consent of at least a majority in interest of the members, other than the member who assigned or proposes to assign such membership interest.” With no other members, the Petitioners would by default have the consent of a “majority” to become members of the Company. 26. Without conferring upon Petitioners the power to liquidate assets and declare contributions under these circumstances, a spiteful judgment debtor would have no reason to cooperate in the satisfaction of judgment and can instead for example simply cease all management of the Property, allow the Property to enter into a state of neglect, refuse to sell or rent out the Property, and allow for the asset to dissipate, preventing partial satisfaction of the judgment. ] CONCLUSION 27. Wherefore Petitioners respectfully ask for one of the reliefs as requested above. WHEREFORE, Petitioners respectfully request that this court enter a judgment as follows: a) An Order directing Respondent ETHAN LIANG 117 EAST 57TH STREET #29A LLC to turnover forthwith, to the Sheriff for auction Ethan Chen Liang’s membership interest in ETHAN LIANG 117 EAST 57TH STREET #29A LLC, along with any documents required to effectuate the Sheriff’s sale of the ownership interest, and apply the proceeds of the sale to the satisfaction of the judgment obtained by Petitioners against Ethan Chen Liang; and/or; b) Ordered that Petitioners shall be assigned Ethan Chen Liang’s membership interest in the distributions and allocation of profits and loss of ETHAN LIANG 117 EAST 57TH STREET -5- 5 of 6 FILED: NEW YORK COUNTY CLERK 04/03/2023 11:56 PM INDEX NO. 153053/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 04/03/2023 #29A LLC, until Petitioner’s judgment plus interest is satisfied, and for Petitioners to have all rights which Ethan Chen Liang has as the sole member of ETHAN LIANG 117 EAST 57TH STREET #29A LLC including the right to liquidate assets and to declare distributions and access to all of the company’s books and records. And/or any further legal and equitable relief as this Court deems necessary, just, and proper. Dated: New York, New York April 3, 2023 Respectfully Submitted, DGW Kramer LLP By: /s/ Jacob Chen DGW Kramer LLP Attorneys for Petitioners One Rockefeller Plaza, 1060 New York, NY 10020 -6- 6 of 6