United States Securities and Exchange Commission v. Borland et al

Filing 86

ORDER DENYING RECONSIDERATION OF ORDER RELATING TO LIENS FILED WITH THE SUFFOLK COUNTY CLERK: The motion for reconsideration is DENIED. SO ORDERED. (Signed by Judge P. Kevin Castel on 10/2/2024) (vfr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
Plaintiff,
v.
BRENT BORLAND, BORLAND CAPITAL
GROUP, LLC, and BELIZE
INFRASTRUCTURE FUND I, LLC
Defendants, and
CANYON ACQUISITIONS, LLC, and
ALANA LaTORRA BORLAND,
Relief Defendants.

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18-cv-4352 (PKC)

ORDER DENYING RECONSIDERATION OF ORDER RELATING TO LIENS FILED
WITH THE SUFFOLK COUNTY CLERK
CASTEL, Senior District Judge:
Copper Leaf, LLC (“Copper Leaf”) has timely moved for reconsideration of the
Court’s Order of August 30, 2024. (ECF 72.) It argues that because it is a judgment creditor of
Brent Borland, who has registered its judgment with the County Clerk of Suffolk County, and
Brent Borland has an unrecorded beneficial interest in certain real property in Sag Harbor, Suffolk
County, it has a valid lien in that property.
Copper Leaf’s position is unsupported by New York law, which is premised upon its
real property recording system. Copper Leaf does not dispute that title to the property is held by
“Alana Marie LaTorra Borland, as Trustee of the 43 N. Haven Way Revocable Trust” and that the
judgment in its favor is in the name of “Brent Borland.” The Court adheres to its conclusion that
“[n]o valid lien was created [by Copper Leaf] in the real property for which ‘Alana Marie LaTorra

Borland, as Trustee of the 43 N. Haven Way Revocable Trust’ is the owner of record, i.e., 43 North
Haven Way, Sag Harbor, NY.” (ECF 71 ¶ 8.)
Insofar as the record before this Court demonstrates, Copper Leaf obtained a valid
and enforceable judgment against Brent Borland in this District. Copper Leaf , LLC v. Brent
Borland, et al., 18 cv 6377 (LTS). In accordance with the provision of N.Y. CPLR § 5018(b),
Copper Leaf duly filed a transcript of the judgment with the County Clerk of Suffolk County on
March 12, 2019, and an updated transcript of judgment on November 10, 2020. (ECF 52-3.) In
accordance with New York law, upon filing the judgments with the County Clerk, they became
liens against real property in the County held in title by Brent Borland. (ECF 71 ¶ 5.) They did not
become a lien in property held in the name of “Alana Marie LaTorra Borland, as Trustee of the 43
N. Haven Way Revocable Trust.”
The Appellate Division, Second Department, has explained how New York’s lien
law works: “A judgment is not docketed against any particular property, but solely against a name,
and if that name is incorrectly set forth, a purchaser in good faith should not be the one to suffer;
but rather the creditor, who should see to it that the docketing is in the correct name of the debtor, if
it is to be notice to subsequent purchasers.” We Buy Now, LLC v. Cadlerock Joint Venture, LP, 46
A.D.3d 549, 549 (2d Dep’t 2007) (quoting Grygorewicz v. Domestic & Foreign Disc. Corp., 179
Misc. 1017, 1018 (N.Y. Sup. Ct. Kings County 1943)).
The Court assumes for the purpose of this discussion that Copper Leaf could
establish that the transfer of the property to the trust was a fraudulent conveyance or that Brent
Borland is the true beneficial owner of the property. It does not change the result. Copper Leaf
may be able to proceed against the trustee and obtain a valid judgment against “Alana Marie
LaTorra Borland, as Trustee of the 43 N. Haven Way Revocable Trust” and when such a judgment
is recorded it would then become be a lien on property owned by “Alana Marie LaTorra Borland,
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as Trustee of the 43 N. Haven Way Revocable Trust.”
Title was transferred to the trust on September 6, 2017 (ECF 52-1), before Copper
Leaf filed suit against Brent Borland and before it registered its judgment with the County Clerk on
March 12, 2019. So far as the record before this Court appears, Copper Leaf has not asserted a
fraudulent conveyance claim or any other type of claim against “Alana Marie LaTorra Borland, as
Trustee of the 43 N. Haven Way Revocable Trust.” Copper Leaf brought the action leading to the
judgment against Brent Borland, a second individual and a Florida-based limited liability company.
Neither Alana Borland nor the trust was named in that action.
Copper Leaf endeavors to thread the needle by drawing a distinction between the
right to enforce the lien against a purchaser versus enforcing it against Brent Borland. But the
Liquidating Agent has an offer to purchase the property for which it seeks judicial approval.
Inherent in Copper Leaf’s argument is the assertion of priority over the rights of a subsequent
purchaser for value. This would appear to throw New York lien law on its head. See Fischer v.
Chabbott, 178 A.D.3d 923, 925 (2d Dep’t 2019) (“Because the judgments were not docketed under
the correct surname, no valid lien against Julius’s interest in the subject property was created.”).
Notably, Fisher was a direct but unsuccessful attempt by the judgment creditor to assert the lien
against the judgement debtor. See also Smith v. Ralph Dinapoli Landscaping, Inc., 111 A.D.3d
841, 842 (2d Dep’t 2013) (“[T]he petitioners’ submissions demonstrated that the judgment obtained
by the appellant was not docketed under the correct surname of a title owner of the subject
property. Therefore, no valid lien against the subject real property was created.”). Of course,
Copper Leaf’s defect is a more fundamental than a misspelling. It obtained a good, valid judgment
against Brent Borland but not against the titleholder, “Alana Marie LaTorra Borland, as Trustee of
the 43 N. Haven Way Revocable Trust.”
The Court acknowledges dictum in In re Luftman, 245 F. Supp. 723, 724-25
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(S.D.N.Y. 1965), arguably supportive of Copper Leaf’s claim, including the statement that “[u]nder
New York law, docketing a money judgment with the county clerk creates a lien on all real
property located in that county in which the judgment debtor has an interest.” (emphasis added.)
But the facts of the case do not support the Copper Leaf’s overreading of New York law. In
Luftman, the judgment debtor fraudulently conveyed the property to his mother. Id. at 724. One of
two judgment creditors was successful in setting aside the fraudulent transfer, which now meant the
property was owned by the prior record title owner, the judgment debtor. Id. The Court concluded
that because a previously docketed judgment would be a lien on later obtained property, this
judgment creditor had a valid lien against property owned by the judgment debtor once the
fraudulent sale was set aside. Id. at 724-25. The second judgment creditor also relied upon his
recorded judgment that preceded the fraudulent conveyance. Id. The Court’s unremarkable
holding was that the first judgment debtor had priority over the second judgment debtor. Id.
The Court adheres to its Order of August 30, 2024, and, in particular, to its
conclusion that “Copper Leaf has no valid enforceable lien on the real property at 43 North Haven
Way, Sag Harbor, NY.” (ECF 71 ¶ 11.)
The motion for reconsideration is DENIED.
SO ORDERED.
New York, New York
October 2, 2024

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