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An appeals court in Manhattan yesterday urged the state Legislature to consider amending a law that allows courts no latitude in awarding fees to court-appointed receivers. A 4-1 majority of an Appellate Division, First Department, panel issued the plea in a ruling upholding, with reservation, a minimal award for a receiver who spent 396 hours working on a contentious dissolution of nine corporations. The receiver, Dudley Gaffin, was able to forge a settlement between various factions and prevent a judicial sale of eight properties on Manhattan’s West Side. But under Business Corporation Law �1217, Mr. Gaffin was awarded just $5,783 for his work � roughly 1.5 percent of the $378,000 in funds that were received and disbursed. The payment amounts to less than $15 an hour. Though the panel was clearly sympathetic to Mr. Gaffin’s predicament, it ruled that it was bound by a strict law that such awards could amount to little more than 1 percent of “the sums received and disbursed.” “The remedy lies not with the courts but with the Legislature,” Justice Peter Tom wrote for the majority in Application of Jakubowicz , 5875N. “We strongly urge that consideration be given to amending Business Corporation Law �1217 to afford a court discretion to affix a receiver’s commission based upon the value of the services rendered in those cases where, as here, dissolution and the consequent disposition of corporate property are not effectuated (particularly as the result of a negotiated settlement), subject to limitation by reference to a percentage of the total assets administered.” Justices Richard T. Andrias, George D. Marlow and John W. Sweeny concurred with Justice Tom. Bit in a dissent, Justice Betty Weinberg Ellerin wrote that the compensation was “manifestly unfair” and not reflective of Mr. Gaffin’s “extraordinary efforts.” She said the court had deviated from a strict interpretation of Business Corporation Law �1217 in the past, citing State of New York v. Chatsworth Realty Corp., 284 AD2d 260. The majority, however, said the Chatsworthruling instead rested on the doctrine of laches. In Chatsworth, the court ruled that a defendant corporation had “inexcusably slept upon its rights” in failing to challenge a receiver’s request for an award under Civil Practice Law And Rules �8004. Mr. Gaffin’s efforts were also lauded by the trial court judge, Supreme Court Justice Nicholas Figueroa. In applying for compensation, Mr. Gaffin argued that he should be awarded $150,000, or 1 percent of the fair market value of the eight properties ($15 million). The business partners, who owned an electrical contracting business, objected. One claimed Mr. Gaffin delayed the proceedings by his attempt to mediate a settlement. Though Justice Figueroa disregarded those claims of misconduct as “unfounded and speculative,” he found that he said he could not award a fee based on the value of a receiver’s services. Mr. Gaffin represented himself, along with Ronald Yang. Igor Krol of Krol & O’Connor and Lawrence M. Rosenstock of Blank Rome represented the two members of the dissolved partnership. � Tom Perrotta can be reached at [email protected] .

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