Key Points

  • Real property is not subject to turnover under CPLR 5225(a), which relates solely to personal property.
  • Koehler v. Bank of Bermuda and Hotel 71 Mezz Lender v. Falor involved out-of-state personal property and do not permit turnover of real property located outside New York.
  • Under CPLR 5205(c), pension money still held in trust is exempt from collection, but money the debtor voluntarily withdrew from the pension is not.
  • A bare denial of service does not rebut an affidavit of service, and filing a notice of appearance without preserving the defense in an answer or CPLR 3211 motion waives it under CPLR 320(b).
  • Unobjected-to invoices supported the account stated claim, and the retainer's written-modification clause defeated any claimed oral modification under General Obligations Law Section 15-301(1).

A New York appeals court held Tuesday that the state's turnover statute does not reach real estate. The ruling removed land in the Dominican Republic that a client purportedly owned from a Brooklyn law firm's effort to collect unpaid legal fees.

A unanimous four-justice panel of the Appellate Division, First Department, also held that pension money still held in trust is exempt from collection. The panel narrowed on both points a turnover order that a Kings County judge had granted to the firm, Jesus M. Zeno, P.C. It otherwise ruled for the firm, leaving intact a default judgment against the client, Meglis Grullon, and the appointment of a receiver.

The decision limits what judgment creditors can obtain through CPLR 5225(a). The panel held that "real property does not fall within the categories of property subject to turnover under CPLR 5225(a), which relates solely to personal property." It also rejected the firm's argument that a Court of Appeals decision allowed turnover of real property located outside New York.

The decision, issued Nov. 10 and unsigned, came from Justices Webber, who presided, Moulton, González and Chan. It modified an order of Justice Saul Stein of Supreme Court, Kings County, entered June 2, 2025, and otherwise affirmed it. The Appellate Division, Second Department, transferred the appeal to the First Department by an order dated Dec. 12, 2025.

The fee dispute grew out of Grullon's divorce case. The firm obtained a money judgment against her by default, dated Feb. 22, 2024. Justice Stein later denied Grullon's motion to vacate that judgment and granted the firm's motion for turnover of her assets and for a receiver.

The firm's turnover request included what the panel described as "unspecified real property purportedly owned by defendant and located in the Dominican Republic." Citing its own 2007 decision in Gryphon Dom. VI, LLC v. APP Intern. Fin. Co., B.V., the panel held that the statute does not cover land.

The firm had argued that under Koehler v. Bank of Bermuda Ltd., a 2009 Court of Appeals decision, "a judgment debtor or third party in control of a debtor's assets may be ordered to produce real property located outside the State of New York." The panel rejected that argument, writing that "Koehler related to out-of-state stocks, which are personal property."

The panel distinguished a second Court of Appeals decision, Hotel 71 Mezz Lender LLC v. Falor, decided in 2010, on the same ground. That case, the panel wrote, involved collection efforts against "intangible personal property," including "defendants' ownership/membership interests in various out-of-state business entities."

On the pension, the panel held that CPLR 5205(c)(1) and (2) "expressly exclude monies held in trust, including pensions, from those assets which may be applied to satisfy a judgment."

The exemption does not cover, the panel wrote, "the monies defendant has voluntarily withdrawn from her pension, which are no longer held in trust." Still, the panel held, "the order must reflect that under CPLR 5205(c), her pension remains exempt from collection efforts."

Grullon fared worse on her bid to undo the default judgment. She had moved under CPLR 317 and 5015(a)(1) to vacate her default and argued that she was never properly served. The panel held that "her bare denial of proper service is insufficient to challenge the sworn statements in the affidavit of service."

The panel also found that Grullon had given up the service defense. She filed a notice of appearance without first raising the defense in an answer or in a pre-answer motion under CPLR 3211. Under CPLR 320(b), the panel held, that filing waived the defense.

The panel then turned to whether Grullon had a meritorious defense. "Even if proper service were in question, which it is not for the reasons stated above, defendant's affidavit failed to establish a meritorious defense to the action for the purposes of vacating her default," the panel wrote.

The firm's claim rested on an account stated. The firm submitted detailed monthly invoices addressed to Grullon and affidavits stating that she received them. The firm also offered an affidavit from the divorce case in which Grullon acknowledged that she had incurred at least $52,000 in fees as of that date.

Grullon's failure to make a timely and specific objection to the bills, the panel wrote, quoting a 2021 First Department decision, was "insufficient to rebut any inference of an agreement to pay the stated amount." Grullon asserted that she had objected orally at some point by asking for more time to pay an unspecified amount at the end of the case. The panel held that the assertion "does not constitute a meritorious defense."

Any oral change to the fee arrangement also failed under the retainer agreement itself, the panel held. Paragraph 7 of that agreement required any modification to be in writing and signed by the client. The panel cited General Obligations Law Section 15-301(1), under which such an agreement "cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of the change is sought."

Grullon was represented by Emeka Nwokoro of Nwokoro & Associates, P.C. The firm was represented by Jesus M. Zeno of Jesus M. Zeno, P.C.

The decision modifies Justice Stein's order, on the law, to exclude from turnover the pension money that remains in trust and the Dominican Republic property, and it awards no costs. The money judgment, the receivership and the rest of the turnover order stand, including as to pension money Grullon has already withdrawn. The decision is uncorrected and subject to revision before publication in the Official Reports.