15‐3852‐cv Sherry v. U.S. Bank National Association UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 7th day of October, two thousand sixteen.

PRESENT: DENNY CHIN, SUSAN L. CARNEY, Circuit Judges, RICHARD M. BERMAN, District Judge.*

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DENNIS J. SHERRY, Receiver‐Appellant,

JDM LONG ISLAND LLC, Plaintiff,

PEOPLE OF THE STATE OF NEW YORK, JDM LONG ISLAND LLC, BAGNATO REALTY SERVICES, LLC, DBA NAI LONG ISLAND, JOHN DOE, PEOPLE OF THE STATE OF NEW YORK, VILLAGE OF HEMPSTEAD,

* Judge Richard M. Berman, of the United States District Court for the Southern District of New York, sitting by designation. MARY ROE, EAST COAST PETROLEUM, INC., XYZ CORPORATION, Counter‐Defendants,

v. 15‐3852‐cv

U.S. BANK NATIONAL ASSOCIATION, as Trustee, as successor‐in‐interest to Bank of America, N.A, as successor trustee for the registered holders of LBUBS Commercial Mortgage Trust 2006C7, Commercial Mortgage PassThrough, AKA Bank of America, N.A., Defendant‐Counter‐Claimant‐Appellee.

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FOR RECEIVER‐APPELLANT: RICHARD JORDAN EISENBERG, Meyer, Suozzi, English & Klein, P.C., Garden City, New York.

FOR DEFENDANT‐COUNTER‐ CHRISTOPHER COSTELLO, Winston & CLAIMANT‐APPELLEE: Strawn LLP, New York, New York.

Appeal from the United States District Court for the Eastern District of

New York (Seybert, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the memorandum and order of the district court is

AFFIRMED.

Receiver‐appellant Dennis J. Sherry appeals from a November 2, 2015

memorandum and order of the United States District Court for the Eastern District of

New York denying his application for payment of commissions for his work as receiver

in a commercial property foreclosure. We assume the partiesʹ familiarity with the

underlying facts, the procedural history of the case, and the issues on appeal.

2 The district court appointed Sherry receiver on May 18, 2011 in this

foreclosure of an office building in Hempstead, New York. The court entered judgment

in favor of U.S. Bank on its foreclosure claim, the remaining claims were settled, the

property was sold, and, on October 20, 2015, the court confirmed and ratified the sale.

The district court terminated the receivership by order entered October 4,

2013, and Sherry filed an application for commissions on December 10, 2013, seeking

some $454,435 in compensation. The application was opposed, and lengthy

proceedings ensued over the course of almost the next two years, including a two‐day

evidentiary hearing, that culminated in the district courtʹs decision denying Sherryʹs

application in its entirety.

Section 8004(a) of the New York Civil Practice Law and Rules (ʺCPLRʺ)

entitles a receiver to ʺsuch commissions, not exceeding five per cent upon the sums

received and disbursed by him, as the court by which he is appointed allows.ʺ

(a).1 Where there are no funds remaining in the receiverʹs hands at the

termination of the receivership, the court ʺmay fix the compensation of the receiver and

the fees of his attorney, in accordance with the respective services rendered, and may

direct the party who moved for the appointment of the receiver to pay such sums.ʺ

(b). ʺIt is fundamental law that a receiver is required to render

1 Both parties applied New York law in their briefs before the district court and again on appeal. Such ʺimplied consent . . . is sufficient to establish choice of law.ʺ Krumme v. WestPoint Stevens Inc.,

(2d Cir. 2000) (quoting Tehran–Berkeley Civil & Environmental Engʹrs v. Tippetts–Abbett–McCarthy–Stratton,

, 242 (2d Cir. 1989)).

3 services in order to earn his commissions,ʺ and ʺ[i]t is the receiverʹs burden to justify his

account.ʺ Indep. Props. Co. v. Mast Prop. Invʹrs, Inc.,

(3d Depʹt

1989).

The award of commissions and fees pursuant to Section 8004 of the CPLR

and the amount of any such award are subject to the appointing courtʹs discretion. See

Kaufman Props. & Assocs., LLC v. 2 Court St., LLC,

(3d Depʹt 2008)

(concluding that New York Supreme Court did not abuse its discretion by approving

receiverʹs accounting); Key Bank of New York v. Anton,

(2d Depʹt

1997) (ʺA receiver is not entitled to the statutory maximum as of right; the court has

discretion to award a lower percentage.ʺ).

We review discretionary determinations of the district court for abuse of

discretion. See Zervos v. Verizon New York, Inc.,

, 168‐69 (2d Cir. 2001)

(ʺWhen a district court is vested with discretion as to a certain matter, it is not required

by law to make a particular decision. Rather, the district court is empowered to make a

decision ‐‐ of its choosing ‐‐ that falls within a range of permissible decisions.ʺ). ʺAn

abuse of discretion may consist of an erroneous view of the law, a clearly erroneous

assessment of the facts, or a decision that cannot be located with the range of

permissible decisions.ʺ Grullon v. City of New Haven,

(2d Cir. 2013)

(quoting Anderson News, L.L.C. v. Am. Media, Inc.,

(2d Cir. 2012)).

4 On appeal, Sherry argues that the district court erred by (1) failing to take

into account the complete record of his efforts as receiver and (2) concluding that his

specific actions with regard to the property justified the denial of a commission. We

disagree. As discussed below, the district court properly considered the record and did

not abuse its discretion when it declined to award Sherry a commission.

First, there is no evidence that the district court disregarded the record in

making its determination. In fact, the district court gave Sherry multiple opportunities

to supplement his application and considered the additional information that Sherry

provided in its ultimate decision to deny him a commission. The district court denied,

without prejudice, Sherryʹs first commission application because he failed to file

required monthly reports detailing his activities. Sherry renewed his motion for a

commission after filing the requisite monthly reports. Upon review of those reports, the

district court determined in a detailed memorandum and order issued November 21,

2014 that the records submitted with the application were ʺtoo sparse,ʺ and

subsequently held a two‐day hearing to determine whether certain services provided by

the managing agent CBRE Group Inc. (ʺCBREʺ), Sherryʹs former employer, were

duplicative of Sherryʹs and whether Sherry violated a provision of his appointment

order that prohibited him from ʺincurring obligations in excess of the monies in his

hands without further order of the court or written consent of the Lender.ʺ Supp. App.

at 116, 119. Following the hearing, the district court gave both parties the opportunity

5 to file post‐hearing briefs. Accordingly, it is clear from the record that the district court

afforded Sherry ample opportunity to justify his requested commissions, and the

district courtʹs decision to deny his motion was the result of careful consideration of the

record before it.

Second, we find no abuse of discretion in the district courtʹs well‐reasoned

conclusion that Sherry was not entitled to a commission, whether Sherryʹs entitlement is

analyzed under Section 8004(a) or 8004(b) of the CPLR. The district courtʹs decision was

based principally on three findings made by the district court following the hearing.

To begin, the district court found that Sherry approved, without district

court authorization, the payment of salaries to individual employees of CBRE totaling

$455,039.01. The district court found their services to be duplicative of services that

CBRE was to provide for a court‐authorized fixed fee, pursuant to the district courtʹs

order appointing CBRE managing agent.

Further, the district court found that Sherry incurred ʺobligations in excess

of the monies in his hands without further order of the Court or written consent of the

Lender,ʺ in violation of his appointment order, when he entered into a contract with a

construction company to perform tenant‐requested improvements on the property.

App. at 26; Special App. at 12‐13. These factual findings were not clearly erroneous and

were well supported by evidence presented at the hearing.

6 Finally, the district court found that Sherry failed to meet his burden to

justify a commission because he ʺstruggled to articulate his role as the Receiverʺ and his

purported responsibilities were also duplicative of work provided by CBRE. Special

App. at 13. This conclusion was based, in part, on the district courtʹs assessment of

Sherryʹs testimony regarding his role.

Based on our review of the record, we conclude that the district court

acted well within its discretion when it determined that Sherry was not entitled to any

compensation.

We have considered all of Sherryʹs additional arguments and find them to

be without merit. For the reasons stated herein, the memorandum and order of the

district court is AFFIRMED.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk

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