Drip Capital, Inc. v. SGM Socher Inc. (Sept. 10, 2025)

Case details
Full caption
New York v. SGM SOCHER INC
Country
United States
Jurisdiction
New York (NY)
Court
New York Court of Appeals
Decided
Sept. 10, 2025
Disposition
Motion Granted
Drip Capital, Inc. v. SGM Socher Inc., 2026 WL 1279092 (2026) WESTLAW   © 2026 Thomson Reuters. No claim to original U.S. Government Works.12026 WL 1279092 (N.Y.Sup.) (Trial Order)Supreme Court, New York,Commercial Division.New York CountyDRIP CAPITAL, INC., Plaintiff,v.SGM SOCHER INC., Yosef Greenwald, MYS Distributors LLC, MYS DistributorsNJ LLC, YSG Holdings LLC, SL Atlanta LLC, LS Inv LLC, Defendants.No. 651061/2025.May 1, 2026.*1 Editor's Note: This decision contains discussion of citation references that are incorrect or do notactually exist. These invalid citations appeared in the original court opinion and have been preserved aswritten since they are part of the official record. Any links to these invalid citations have been removed.PART 54MOTION SEQ. NO. 002Decision * Order on Motion * X-MotionHon. Jennifer G. Schecter, J.S.C.The following e-filed documents, listed by NYSCEF document number (Motion 002) 30, 31, 32, 33, 34, 35, 36, 37, 38, 39,40, 41, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74 wereread on this motion to/for TURNOVER PROCEEDING.In the summer of 2025, the parties notified the court that they had reached a settlement of this action. Disputes then aroseabout whether they had an enforceable agreement and about other related issues such as defendants' capacity and their counsel'sauthority. After conferencing these issues, it appeared there were serious questions about the validity of defendants' positionsthat they would need to address with a proper record. Defendants, however, ultimately did not respond to plaintiff's motion toenforce the settlement agreement, which was granted without opposition by order dated September 10, 2025 (Dkt. 25). Judgmentwas entered on November 20, 2025 (Dkt. 28).On March 10, 2026, plaintiff moved to compel turnover of defendant Yosef Greenwald's membership interests in certain LLCsand to appoint a receiver to collect and liquidate these interests. Defendants oppose the motion and cross-move to vacate thejudgment.The cross-motion is baseless. It raises the very same issues—Greenwald's condition and the authority of counsel to bind him—that prior counsel told the court would be addressed in opposition to plaintiff's motion to enforce the settlement agreement.Yet, defendants did not oppose the motion or request more time to do so based on these issues. They simply defaulted on themotion. Their new counsel does not provide a reasonable excuse for defaulting or explain why more time was not requestedif it was needed. To the extent they blame prior counsel and make accusations about his conduct, the record belies the notionthat Greenwald lacked the capacity to direct litigation by other counsel at that time, and thus the suggestion that there was anexcusable default is simply not credible (see Dkt. 74 at 5-8; see also id. at 12 n 2). Also unavailing is prior counsel's avermentthat “the default resulted from a breakdown in the attorney-client relationship and my failure to properly structure and verify that
Drip Capital, Inc. v. SGM Socher Inc., 2026 WL 1279092 (2026) WESTLAW   © 2026 Thomson Reuters. No claim to original U.S. Government Works.2relationship” (Dkt. 47 at 4). If there really was a breakdown that prevented counsel from filing opposition to the motion, ratherthan a strategic decision to ignore the motion that can be imputed to the client, counsel would have made a motion to withdrawand requested a stay pending retention of replacement counsel (see Bardwil v Bardwil, 208 AD3d 1087, 1088 [1st Dept 2022]).Indeed, defendants do not explain why they waited seven months after the court granted plaintiff's motion to take any action.They only did so on this cross-motion when finally faced with repercussions. Defendants have been litigating matters in otherforums for months so they surely could have promptly filed a motion to vacate long ago. The only reasonable inference on thisrecord is that they sought to delay as long as possible. Absent a reasonable excuse for defaulting there is no basis to vacate thejudgment (4CS Ltd. v Kahiri Diamonds Ltd., 230 AD3d 1022 [1st Dept 2024]).*2 Plaintiff is therefore entitled to turnover of Greenwald's membership interests sufficient to satisfy the judgment (see 79Madison LLC v Ebrahimzadeh, 203 AD3d 589, 590-91 [1st Dept 2022]). The parties agree that Greenwald has significant networth but that his financial situation makes enforcement complicated. Nonetheless, the court declines to appoint a receiver atthis time (see Hotel 71 Mezz Lender LLC v Falor, 14 NY3d 303, 317 [2010] [“In deciding whether the appointment of receiver isjustified, courts have considered the (1) alternative remedies available to the creditor …; (2) the degree to which receivershipwill increase the likelihood of satisfaction …; and (3) the risk of fraud or insolvency if a receiver is not appointed”] [emphasisadded]; cf. Herman v Herman, 2018 WL 5017048, at *2 [Sup Ct, NY County Oct. 15, 2018], affd179 AD3d 594 [1st Dept2020]). Imposing a receivership over all of Greenwald's interests would be overkill.Defendants suggest that “if any enforcement relief is granted” it should be limited “to a single identified property with sufficientunencumbered equity to satisfy the Judgment” (Dkt. 46 at 26). The court will compel defendants to do what they suggest. Asset forth below, the parties shall confer to see if they can reach an agreement over which interest should be transferred. Themeet-and-confer process will permit the parties to address the implications of any pending claims on the property owned by theLLC. The court expects defendants to address this issue in good faith to avoid the need for more intrusive measures. However,in light of the history of this action and baseless arguments that have been proffered defendants are strongly cautioned thatif they fail to comply or engage in further frivolous conduct serious coercive sanctions may be imposed. The court also mayreconsider whether a receiver is necessary if it appears that the approach here is akin to what occurred in Herman. Hopefully,that will not be necessary.Finally, as a separate but no less serious matter, defense counsel included what appear to be AI hallucinations in the oppositionbrief (see Dkt. 74 at 16-17). He cites two cases (“Jones Wolf Realty v 2 E. 79th St. Corp.” and “Gildea v Sheridan”) that donot appear to exist (see Dkt. 46 at 15, 17). It is beyond cavil that doing so is frivolous and sanctionable (Deutsche Bank Natl.Trust Co. v LeTennier, 250 NYS3d 260, 265-69 [3d Dept 2026]). Defense counsel is ordered to show cause as set forth belowwhy sanctions should not be issued.Accordingly, it is ORDERED that• Plaintiff's motion is GRANTED IN PART to the extent that the parties shall promptly confer about which of Greenwald'sinterests listed on page two of plaintiff's moving brief (Dkt. 36 at 6) shall be turned over to plaintiff, and by May 6, 2026,such interest shall be transferred to plaintiff or the parties shall e-file and email the court a joint letter setting forth theirpositions on which interest the court should require to be transferred (Greenwald should assume the court would rule onthis issue expediently so regardless he should be prepared to effectuate the transfer next week).• Until such transfer occurs, defendants, their agents and anyone working on their behalf shall not take any action to interferewith, prevent, or make it more difficult to effectuate the transfer, including but not limited to taking any action that alters themembership or governance of the LLCs listed on page two of plaintiff's moving brief, and aside from the directives in thisorder, defendants shall not transfer, dissipate or encumber any assets of those LLCs absent plaintiff's prior written consent.*3 • Defendants' cross-motion to vacate the judgment and order enforcing the settlement agreement is DENIED.
Drip Capital, Inc. v. SGM Socher Inc., 2026 WL 1279092 (2026) WESTLAW   © 2026 Thomson Reuters. No claim to original U.S. Government Works.3• By May 11, 2026, Alexander Levkovich, Esq. shall show cause by e-filing and emailing the court an affirmation explainingwhy he should not be sanctioned in the amount of $3,000 due to citing AI hallucinated cases in the opposition brief.5/1/2026DATE<<signature>>JENNIFER G. SCHECTER, J.S.C.CHECK ONE: ☑ CASE DISPOSED NON-FINAL DISPOSITION GRANTED DENIED GRANTED IN PART OTHER End of Document© 2026 Thomson Reuters. No claim to original U.S. Government Works.
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