Firm Wins Appellate Decision Affirming Motion for Summary Judgment on Fraudulent Conveyance Claims

In July 2009, the Firm obtained a money judgment of over $2.6 million for three of its clients upon confirmation of an arbitration award. The judgment, which was later affirmed on appeal, was based on an earlier FINRA arbitration award that the Firm obtained against the broker and the brokerage firms that employed her. As part of its efforts to enforce the judgment, the Firm filed an action in the Supreme Court of the State of New York seeking to set aside the broker’s conveyance of a Manhattan condominium valued at $1.175 million to her son shortly before the judgment was issued. The complaint alleged five causes of action under the New York Debtor and Creditor Law, New York Estates Powers and Trust Law and New York Common Law. On November 9, 2012, the Supreme Court granted summary judgment in favor of the Firm’s clients on, among other things, their first cause of action to set aside the transfer of the condominium as a fraudulent conveyance under Debtor and Creditor Law §§ 273-a and 278. The broker and her son appealed.

The appeal was argued in May, 2013. On January 7, 2014, the Appellate Division, First Department, issued a 22-page unanimous decision and order affirming the Supreme Court’s judgment that set aside the transfer. In upholding the Firm’s victory in the trial court, the Appellate Division stated that the broker’s “conveyance of the subject Manhattan condominium apartment to her son was but one of a series of transactions undertaken as part of an ‘asset protection plan’ devised with the assistance of counsel immediately after the arbitration award was rendered against her. The emptying of a brokerage account, the purchase of Florida real estate claimed as a homestead and the transfer of the subject apartment held in fee simple demonstrate not merely a series of transactions coincidental to estate planning, as her affidavit intimates, but a concerted effort to place her assets beyond the reach of impending judgment creditors.” The Appellate Division also concluded that the record developed by the Firm in the trial court “amply demonstrates” that the broker’s transfer of the condominium to her son “was made in the absence of good faith.”

The Appellate Division’s decision is reported at 113 A.D.3d 135, 978 N.Y.S.2d 135 (1st Dept. 2014) and is available at www.nycourts.gov/reporter/3dseries/2014/2014_00080.htm.