FILED: NEW YORK COUNTY CLERK 08/23/ :12 PM INDEX NO /2016 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 08/23/2016

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1 FILED: NEW YORK COUNTY CLERK 08/23/ :12 PM INDEX NO /2016 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 08/23/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK CAPITAL ONE EQUIPMENT FINANCE CORP., v. Plaintiff, PATTON R. CORRIGAN, MICHAEL LEVINE, LAUREN CORRIGAN, PATTON M. CORRIGAN, MARJORIE LEVINE, TAXI APAQUOGUE LLC, EATERY TAXI CORP., YELLOW CAB PARTNERS LLC, and JOHN DOES 1-10, Index No /2016 (Scarpulla, J.S.C.) Defendants. MEMORANDUM OF LAW IN SUPPORT OF MICHAEL LEVINE, MARJORIE LEVINE, TAXI APAQUOGUE LLC, AND EATERY TAXI CORP. S MOTION TO DISMISS OR STAY Steven F. Molo Robert K. Kry Michelle J. Parthum MOLO LAMKEN LLP 540 Madison Avenue New York, New York (212) (telephone) (212) (facsimile) rkry@mololamken.com Attorneys for Michael Levine, Marjorie Levine, Taxi Apaquogue LLC and Eatery Taxi Corp. August 23, of 28

2 TABLE OF CONTENTS Page PRELIMINARY STATEMENT...1 BACKGROUND...2 I. History of the Litigation...2 II. Capital One s Fraudulent Conveyance Action...7 ARGUMENT...8 I. The Fraudulent Conveyance Action Should Be Dismissed...8 A. The Complaint s Allegations Are Foreclosed by Documentary Evidence Showing That Mr. Levine Faced No Probable Liability on His Guarantee...8 B. The Complaint s Allegations Are Conclusory...12 C. Counts 21 and 22 Fail To Allege Any Ownership in the Allegedly Transferred Property...14 D. Counts 23 and 24 Are Impermissibly Vague...15 II. The Fraudulent Conveyance Claims Against the Levines Should Be Stayed Pending Resolution of the Preexisting Actions...16 A. The Actions Involve Common Parties and Questions of Law and Fact, and the Preexisting Actions May Entirely Dispose of the Fraudulent Conveyance Action...17 B. Allowing the Fraudulent Conveyance Action To Proceed Would Be Extremely Disruptive to the Proceedings in the Preexisting Actions...19 C. Capital One Will Suffer No Prejudice from a Stay...22 D. Allowing the Fraudulent Conveyance Action To Proceed Would Waste Time and Judicial Resources...23 CONCLUSION...24 i 2 of 28

3 TABLE OF AUTHORITIES Page(s) CASES 501 Fifth Ave. Co. LLC v. Alvona LLC, 110 A.D.3d 494 (1st Dep t 2003)...13 Asher v. Abbott Labs., 307 A.D.2d 211 (1st Dep t 2003)...16, 23 Barnes v. Hodge, 118 A.D.3d 633 (1st Dep t 2014)...13 Belopolsky v. Renew Data Corp., 41 A.D.3d 322 (1st Dep t 2007)...16, 17, 18 Cantor Fitzgerald & Co. v. 8an Capital Partners Master Fund, 132 A.D.3d 402 (1st Dep t 2015)...14 Chase Nat l Bank of City of N.Y. v. U.S. Trust Co. of N.Y., 236 A.D. 500 (1st Dep t 1932)...9 Chen v. Yeung, 33 Misc. 3d 886 (Sup. Ct. N.Y. Cnty. 2011)...18, 19 FDIC v. Porco, 75 N.Y.2d 840 (1990)...14 Gasser v. Infanti Int l, Inc., 353 F. Supp. 2d 342 (E.D.N.Y. 2005)...18 Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314 (2002)...8 HT Capital Advisors, LLC v. Optical Res. Grp., Inc., 276 A.D.2d 420 (1st Dep t 2000)...13 Jones v. Voskresenskaya, 125 A.D.3d 532 (1st Dep t 2015)...13 Kakushadze v. Gorton, 34 Misc. 3d 148(A), 2012 WL (1st Dep t App. Term Feb. 16, 2012)...17 Lippe v. Bairnco Corp., 249 F. Supp. 2d 357 (S.D.N.Y. 2003)...9 NAMA Holdings, LLC v. Greenberg Traurig, LLP, 62 A.D.3d 578 (1st Dep t 2009)...21, 23 OneBeacon Am. Ins. Co. v. Colgate-Palmolive Co., 96 A.D.3d 541 (1st Dep t 2012)...23 Pac. Emp rs Ins. Co. v. Troy Belting & Supply Co., No. 1:11-CV-912, 2015 WL (N.D.N.Y. Mar. 17, 2015)...20 ii 3 of 28

4 Ray v. Ray, 108 A.D.3d 449 (1st Dep t 2013)...14, 15 S&M Heating Corp. v. Macaluso, 37 Misc. 3d 1231(A), 2012 WL (Sup. Ct. Suffolk Cnty. Dec. 13, 2012)...15 Shelly v. Doe, 173 Misc. 2d 200 (Sup. Ct. St. Lawrence Cnty. 1997)...18 SSA Holdings LLC v. Kaplan, 120 A.D.3d 1111 (1st Dep t 2014)...17 Staten Island Sav. Bank v. Reddington, 260 A.D.2d 365 (2d Dep t 1999)...9 Syllman v. Calleo Dev. Corp., 290 A.D.2d 209 (1st Dep t 2002)...15 Telebrands Corp. v. HM Imp. USA Corp., No. 09-CV-3492, 2010 WL (E.D.N.Y. Mar. 3, 2010)...20 Uptown Healthcare Mgmt., Inc. v. Rivkin Radler LLP, 116 A.D.3d 631 (1st Dep t 2014)...16, 18, 19 Vincent v. Money Store, No. 11 Civ. 7685, 2012 WL (S.D.N.Y. Dec. 20, 2012)...20 Yellow Grp. LLC v. Uber Techs., Inc., No. 12-cv-7967 (N.D. Ill.)...12 STATUTES AND RULES N.Y. Debt. & Cred. Law N.Y. Debt. & Cred. Law , 15 N.Y. Debt. & Cred. Law C.P.L.R. 203(a)...22 C.P.L.R C.P.L.R. 3016(b)...14, 15 C.P.L.R. 3211(a)(1)...8 OTHER AUTHORITIES 30 N.Y. Jur. 2d Creditors Rights 319 (2d ed. 2016) N.Y. Jur. 2d Creditors Rights 325 (2d ed. 2016)...9 iii 4 of 28

5 Michael Levine, Marjorie Levine, Taxi Apaquogue LLC, and Eatery Taxi Corp. (the Levines ) respectfully submit this memorandum of law in support of their motion to dismiss the Complaint ( Compl., attached as Kry Aff. Ex. A (Doc. No. 2)) or to stay Capital One s fraudulent conveyance action pending resolution of the two preexisting actions. PRELIMINARY STATEMENT For more than a year, Capital One has done everything in its power to derail the lawsuit that Transit Funding Associates LLC ( TFA ) and its guarantors filed over Capital One s badfaith refusal to fund TFA s credit facility. Capital One first attempted to short-circuit the suit by filing a motion for summary judgment in lieu of complaint seeking to enforce its guarantees against the individual guarantors. It then sought a total stay of discovery while it moved to dismiss the claims. Next, it moved to appoint a receiver over TFA s assets. Then, it conducted a protracted forensic examination into the guarantors finances by holding out the false hope of mediation and then, incredibly, sent TFA the bill. After that, Capital One filed a so-called emergency motion for a temporary restraining order to attach Mr. Levine and Mr. Corrigan s assets based on changes in net worth that Capital One has known about for two years. At every turn, Capital One has done whatever it can to avoid responsibility for its serious misconduct and to prevent TFA and its guarantors from having their day in court. This fraudulent conveyance action is merely Capital One s latest attempt to prevent the Court from hearing TFA s claims on the merits. The action lacks merit for multiple reasons. Documentary evidence makes clear that Mr. Levine faced no probable liability on his guarantee at the time of the transfers a necessary showing that Capital One must make to prove he was insolvent. The allegations are also conclusory and, in many cases, hopelessly vague or otherwise deficient. The action therefore lacks merit and should be dismissed. 1 5 of 28

6 Even if the Court concludes that dismissal is not appropriate, it should at least stay the claims against the Levines pending resolution of the preexisting actions. The entire premise of the fraudulent conveyance action is the claims at issue in the preexisting actions. Unless Mr. Levine is personally liable on his guarantee to Capital One, the validity of any transfers he may have made is beside the point certainly insofar as the bank is concerned. And as this Court made clear in denying Capital One s motion for summary judgment, Mr. Levine s liability on his guarantee cannot be resolved until TFA s claims against Capital One have been adjudicated. In those circumstances, it makes no sense to proceed with the fraudulent conveyance action while the preexisting actions are still pending. Quite the contrary: Proceeding with this new action now would seriously disrupt the existing discovery schedule, delay proceedings for months, and deny TFA its day in court. The Court should therefore stay the claims against the Levines pending resolution of the principal actions. A stay would preserve Capital One s ability to assert these claims if it ultimately prevails in the preexisting actions. But it would prevent this suit from being used as a strategic tool to impede TFA s ability to seek relief. BACKGROUND I. HISTORY OF THE LITIGATION On May 19, 2015, TFA and its guarantors filed suit against Capital One in Illinois for freezing TFA s credit facility in bad faith in the middle of its term. Transit Funding Assocs. LLC v. Capital One Equip. Fin. Corp., No L 5103 (Ill. Cir. Ct.). Capital One responded by filing a motion for summary judgment in lieu of complaint against Mr. Levine and Mr. Corrigan in this Court on May 27, 2015, seeking to hold them personally liable on their guarantees. Capital One Taxi Medallion Fin. v. Corrigan, No /2015, Doc. No. 2. After TFA s Illinois action was dismissed based on a broad reading of the forum selection clause in the Loan 2 6 of 28

7 and Security Agreement, TFA refiled its claims in this Court on June 30, Transit Funding Assocs. LLC v. Capital One Equip. Fin. Corp., No /2015. Capital One then moved to dismiss TFA s action. No /2015, Doc. No. 18. It also sought a blanket stay of discovery pending resolution of that motion. No /2015, Doc. No. 16. This Court did not grant the stay. On November 13, 2015, Capital One moved to appoint a temporary receiver over TFA and its assets. No /2015, Doc. No. 95. The parties spent several months briefing that motion, and Capital One withdrew the motion in January 2016 only after TFA agreed to an Information Rights Agreement giving the bank various powers to inspect its books and records. No /2015, Doc. No The Court heard argument on Capital One s motions to dismiss and for summary judgment on January 21, 2016, and recommended that the parties mediate the dispute. Capital One advised that it was not averse to mediation but would need to obtain and review financial information from the guarantors first. No /2015, Doc. No. 41. Even though prejudgment asset discovery is normally not allowed, the guarantors agreed to that request. Over the ensuing months, the guarantors voluntarily submitted to an extensive forensic examination of both their personal and business assets and provided thousands of pages of information to Capital One. No /2015, Doc. No. 135 & Exs. A-C. Throughout that process undertaken at substantial cost the guarantors repeatedly asked Capital One to provide dates when it would be available for mediation. Id. Capital One refused, each time demanding more information which the guarantors dutifully continued to provide. Id. Then, on May 23, Capital One made the outrageous demand that the guarantors pay half of the fees that Capital One s consultants had charged it for reviewing the guarantors financial information. Doc. No. 135 Ex. D. 3 7 of 28

8 Apparently, Capital One never had any serious intent to mediate. Two days later, at 11:00 p.m. on May 25, 2016, Capital One filed an emergency motion for a TRO and prejudgment attachment of Mr. Levine and Mr. Corrigan s assets, noticing the hearing for the following morning. No /2015, Doc. Nos The Court denied the TRO without prejudice but set an evidentiary hearing on June 7. At that hearing for which the guarantors again spent substantial time and effort preparing the Court heard from Mr. Levine and Mr. Corrigan about the basis for Capital One s claims. The evidence made clear that, far from being an emergency, the facts that formed the basis for Capital One s motion had been known to the bank for almost two years but the bank never did anything with the information throughout that entire period. Kry Aff. Ex. B at 32:18-35:14, 71:7-77:16, 86:19-87:20. The Court then authorized Capital One to take limited asset discovery but advised that, to the extent there had not been a change, a substantial change, in the guarantors net worth since their last financial statements provided to Capital One, Capital One should withdraw its motion. Kry Aff. Ex. B at 87:3-11. Capital One served interrogatories, and the guarantors spent more time responding. Finally, Capital One withdrew its motion. No /2015, Doc. No On July 11, 2016, the parties participated in mediation. Perhaps not surprisingly, that mediation did not resolve the dispute. On July 15, 2016, this Court issued rulings on Capital One s motion to dismiss and motion for summary judgment. With respect to TFA s action, the Court held that the claims for breach of contract, breach of the implied covenant, negligent impairment of collateral, and declaratory relief should all proceed. No /2015, Doc. No. 62 at 3-6, 13-14, With respect to the guarantor action, the Court held that, because a valid defense to [the] Borrower s obligations under the Loan Documents to payment of its liabilities is what is being determined in the TFA Action, the Guarantors liabilities under the Guarantees are enmeshed with TFA s 4 8 of 28

9 defenses to the default and therefore could not be resolved on summary judgment. No /2015, Doc. No. 217 at 5. The Court thus denied that motion as well. Notwithstanding Capital One s various efforts to avoid litigating TFA s claims on the merits, TFA and its guarantors have attempted diligently to pursue those claims. The parties served requests for production on September 8, 2015 and responses on October 1, No /2015, Doc. No. 24. The parties served interrogatories on April 1, 2016 and responses on May 2. No /2015, Doc. No. 42. In connection with that discovery, TFA reviewed over 64,000 of its own documents and produced over 14,000 documents in response to Capital One s demands, at tremendous cost and effort. The deadline for completing document production passed long ago on May 18, No /2015, Doc. No Capital One has dragged out that discovery process as well. For example, even though Capital One s competing collaboration with Uber is a key issue in this case, by the time of the document production deadline, Capital One had produced just one involving any of its Uber-related custodians, and had not produced even a single with any Uber employee. After TFA complained, Capital One produced nearly 5,800 documents from its Uber custodians in July 2016 two months after the production deadline. Capital One has never offered any satisfactory explanation for that belated production. Despite Capital One s intransigence, TFA has uncovered substantial evidence supporting its claims. For example, numerous internal s confirm that, far from exercising discretion in good faith in making advances under TFA s credit line, Capital One made a blanket decision to the line partway through its term. See, e.g., Kry Aff. Ex. C at 1 (COF_TFA ) ( (emphasis added)); Kry Aff. Ex. D (COF_TFA ) ( 5 9 of 28

10 (emphasis added)); Kry Aff. Ex. E (COF_TFA ) (May 2, from Jason Burbank asking senior management, do you just want to keep everything the same with the line being frozen (emphasis added)). Capital One s s also confirm that the bank acted arbitrarily in refusing to allow TFA to liquidate its medallion collateral and post the cash proceeds as security instead. Upon learning of the proposal, Kry Aff. Ex. F at 2 (COF_TFA ) (emphasis added). Discovery has also unearthed evidence that these actions were part of Capital One s plan all along. Documents show that Capital One Kry Aff. Ex. G at 4 (COF_TFA ) (emphasis added). That same presentation also states that Capital One. Id. at 7 (emphasis added). Finally, discovery has also substantiated TFA s allegation that Capital One decided to abandon the taxi medallion business so it could partner with Uber instead. that Capital One,. Kry Aff. Ex. H (COF_TFA ). And a subsequent document shows 6 10 of 28

11 Kry Aff. Ex. I at 6 (COF_TFA ) (emphasis added). On July 13, 2016, the Court s clerk directed that TFA could begin deposing key bank witnesses during the week of August 8. No /2015, Doc. No. 60. Just two days later, however, Capital One filed this new fraudulent conveyance action against Mr. Levine, his wife Marjorie Levine, and certain related entities. Kry Aff. Ex. A. II. CAPITAL ONE S FRAUDULENT CONVEYANCE ACTION Capital One s latest action asserts twenty-four causes of action against Mr. Levine over transfers he allegedly made to avoid liability on his personal guarantee of TFA s loan. Compl The transfers that Capital One challenges in this latest lawsuit are the exact same transfers that Capital One invoked when it brought its unsuccessful emergency TRO and attachment motion a few months ago. Counts 1 through 20, for example, seek to avoid various transfers of real estate or real estate holding companies from Mr. Levine to his wife around the end of Compl Those same transfers were front and center in Capital One s attachment motion and the subsequent attachment hearing. No /2015, Doc. No ; Kry Aff. Ex. B at 42:13-44:21. This Court ultimately denied relief after the evidence showed that Capital One had been aware of those transfers since at least October 1, 2014, but had never done anything upon learning about them. Kry Aff. Ex. B at 71:7-77:16, 86:19-87:20. Counts 21 and 22 challenge sales of medallions, largely in 2012 and Compl Those medallion sales were also addressed in the attachment motion and hearing. No /2015, Doc. No ; Kry Aff. Ex. B at 57:9-13, 69:9-15. The evidence showed that the medallions had not been owned by Mr. Levine at all, but instead had been owned. Id. When the medallion holding entities 7 11 of 28

12 sold those medallions, a significant portion of the proceeds was used to pay down debts to Capital One. No /2015, Doc. No. 170 at 8, 10 & Doc. No Other proceeds were paid out to the ultimate owners in this case,. Kry Aff. Ex. B at 57:9-13, 69:9-15. Capital One s Complaint does not explain why there would be anything untoward or improper about distributing sale proceeds to the ultimate owners of the entities. Finally, Counts 23 and 24 of the new action are so vague that it is impossible to tell what transfers they are even challenging. Compl Those counts assert that Mr. Levine dramatically diminished the assets on [his] books and infer that he must have made transfers of tens of millions in cash and assets to John Does Id , Capital One made that same speculative argument in its attachment motion too. No /2015, Doc. No. 151 at 6. But Capital One s Complaint still offers no clue about when these supposed transfers occurred or to whom they were made. And it still offers no reason to believe that the reductions in net worth on the financial statements resulted from transfers of assets as opposed to simply loss in value of the existing assets Mr. Levine owned. ARGUMENT I. THE FRAUDULENT CONVEYANCE ACTION SHOULD BE DISMISSED Capital One s latest action lacks merit and should be dismissed for multiple reasons. A. The Complaint s Allegations Are Foreclosed by Documentary Evidence Showing That Mr. Levine Faced No Probable Liability on His Guarantee Under C.P.L.R. 3211(a)(1), an action should be dismissed if a defense is founded upon documentary evidence. That provision applies where the documentary evidence utterly refutes plaintiff s factual allegations, conclusively establishing a defense as a matter of law. Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 (2002). That is the situation here of 28

13 Under New York law, [a] person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured. N.Y. Debt. & Cred. Law 271 (emphasis added). That term probable liability has particular significance in the context of a contingent liability like a guarantee. [T]he mere existence of a contingent debt, without more, is insufficient to support a finding that such a debt represented a probable liability within the meaning of Debtor and Creditor Law 271. Staten Island Sav. Bank v. Reddington, 260 A.D.2d 365, 366 (2d Dep t 1999) (emphasis added). In order to give meaning... to the word probable as it modifies liability in Debtor and Creditor Law 271,... some evidence must be proffered as to the probability, at the time of the challenged conveyance, that a contingent liability will be imposed and, if so, in what amount. Id. (emphasis added); see also Chase Nat l Bank of City of N.Y. v. U.S. Trust Co. of N.Y., 236 A.D. 500, 503 (1st Dep t 1932) (including guarantees in solvency calculation only because the likelihood that [the defendant] would be called upon in a few weeks to make good his guaranties was manifest ); Lippe v. Bairnco Corp., 249 F. Supp. 2d 357, 380 (S.D.N.Y. 2003); 30 N.Y. Jur. 2d Creditors Rights 325 (2d ed. 2016). Documentary evidence conclusively refutes any suggestion that Mr. Levine faced probable liability on his guarantee at the time of the transfers. For one thing, that evidence shows that TFA s loan portfolio was nearly 100% performing and that the collateral securing the facility far exceeded the outstanding balance on the loan. Under the Loan and Security Agreement, TFA was required to submit monthly borrowing base certificates to Capital One so the bank could assess its loan portfolio and the value of the medallion collateral securing the facility. Kry Aff. Ex. J 5.17(a)(i). Each borrowing base certificate showed the portion of the portfolio that was performing as well as the value of the medallions securing the individual medallion loans of 28

14 Those certificates prove that TFA s credit facility was far over-collateralized at the time of the alleged transfers. For example, as of December 31, 2013 the date of most of the alleged transfers TFA had a portfolio of 337 medallion loans, of which 99.9% were performing. See Kry Aff. Ex. K at 1 (TFA_ ). Each of those 337 loans was secured by at least one medallion, which had a value on that date of $342,284. Id. at 2. 1 TFA thus had medallion collateral of at least $115.3 million securing the Capital One credit facility, which at the time had an outstanding balance of only $79.7 million. Id. at 1-2. In addition to that medallion collateral on the loan portfolio, the Loan and Security Agreement also granted Capital One a security interest in 48 other medallions owned by certain LLC guarantors. Kry Aff. Ex. J 2.4.1(c)(v) & 1.1 ( Capital Base definition). Based on the same publicly reported medallion value, the guarantors additional medallions were worth approximately $16 million at the time. TFA thus had more than enough collateral to fully repay the credit facility. Mr. Levine did not face any probable liability on his guarantee at all. Indeed, as late as August 31, 2014 eight months after the last alleged transfer TFA had a portfolio of 229 medallion loans, of which 99.8% were performing, secured by medallions worth $328,693 each. See Kry Aff. Ex. L at 1-2 (TFA_ ). That medallion collateral of $75.3 million plus another $15 million from the LLC guarantors medallions was more than sufficient to fully repay the $57.2 million balance on the credit facility. Id. That TFA had collateral far in excess of its debt to Capital One and continued to operate with an almost 100% 1 The medallion valuation appears in the upper-right-hand corner of the second page of each borrowing base certificate. See, e.g., Kry Aff. Ex. K at 2 (TFA_ ). The Loan and Security Agreement requires those valuations to be based on the three (3) month moving average of average monthly sale prices for a Medallion as reported by the City of Chicago Department of Business Affairs and Consumer Protection. Kry Aff. Ex. J at 3, of 28

15 performing portfolio eight months after the alleged transfers refutes any suggestion of probable liability on the guarantee. Capital One s allegations of insolvency are also foreclosed by the contemporaneous offers TFA received from a publicly traded competitor to acquire its business. On August 14, 2013, Andrew Murstein of Medallion Financial Corporation offered to merge TFA into Medallion Financial at a price of twice TFA s book value, and also proposed an alternative transaction with an earn-out and other consideration worth as much as $120 million. Kry Aff. Ex. M (TFA_ & TFA_ ). Then, on February 19, 2014 a month after the last of the alleged transfers Mr. Murstein offered to acquire TFA s entire loan portfolio at par. Kry Aff. Ex. N (TFA_ ). Any one of those transactions would have enabled TFA to satisfy its entire liability to Capital One. Mr. Levine could not have faced probable liability on his guarantee when TFA could have paid off its entire debt simply by accepting those offers. Those offers also completely negate any plausible suggestion of fraudulent intent: It would have been wholly irrational for Mr. Levine to turn down those lucrative deals without even exploring the opportunities if he had any inkling that his contingent liability might materialize and he might be held liable for TFA s debts. Capital One s theory that Uber s arrival on the scene somehow inevitably doomed TFA s business is likewise foreclosed by documentary evidence. City of Chicago records show that, Uber notwithstanding, medallion prices stayed above $300,000 from 2012 through the fall of 2014, and even as late as November 2014 were still around $300,000. Kry Aff. Ex. O (TFA_ , TFA_ , TFA_ ). Capital One s internal documents show that Kry Aff. Ex. P at 1 (COF_TFA ) of 28

16 (emphasis added). And in January 2015 long after the alleged transfers Capital One referred to the Kry Aff. Ex. G at 2, 6 (COF_TFA ) (emphasis added). Capital One s Complaint points to a 2012 lawsuit brought by Yellow Group LLC and other taxi affiliates of Mr. Levine. Compl. 9. But that was a Lanham Act suit. It alleged that Uber had falsely creat[ed] the impression that Uber is associated with Plaintiffs and wrongfully... portrayed Plaintiffs as Uber s partner. Yellow Grp. LLC v. Uber Techs., Inc., No. 12-cv-7967, Dkt. No. 1 2 (N.D. Ill. filed Oct. 4, 2012) (Kry Aff. Ex. Q). That action had nothing whatsoever to do with any threat to TFA s existence. The documentary evidence thus conclusively shows that, as of the date of the alleged transfers and for at least eight months beyond, TFA was a thriving business with medallion collateral that far exceeded what would have been necessary to repay its obligations to Capital One. Mr. Levine did not face any probable liability on his personal guarantee. He was not insolvent on the date of the transfers or rendered insolvent thereby. Nor was he left with unreasonably small capital or rendered incapable of satisfying his obligations. Finally, the documentary evidence renders wholly conclusory and implausible Capital One s allegation that Mr. Levine engaged in the alleged transfers to hinder, delay, or defraud Capital One. There was nothing to defraud because, as the documentary evidence makes clear, there was no probable liability on the guarantee or even remote prospect that TFA would default. B. The Complaint s Allegations Are Conclusory The Complaint is also deficient because its allegations of insolvency and fraudulent intent are wholly conclusory. [C]onclusory allegations claims consisting of bare legal conclusions of 28

17 with no factual specificity are insufficient to survive a motion to dismiss. Barnes v. Hodge, 118 A.D.3d 633, 633 (1st Dep t 2014); see also Jones v. Voskresenskaya, 125 A.D.3d 532, 534 (1st Dep t 2015) (affirming dismissal where allegations supporting this cause of action are vague, speculative and unsupported by any facts ); 501 Fifth Ave. Co. LLC v. Alvona LLC, 110 A.D.3d 494, 494 (1st Dep t 2013) (affirming dismissal where allegations were wholly conclusory and consist of no more than a recitation of the elements of the claim ); HT Capital Advisors, LLC v. Optical Res. Grp., Inc., 276 A.D.2d 420, 420 (1st Dep t 2000) ( [V]ague and conclusory allegations and expression of hope that discovery, if and when conducted, might provide some factual support for [a] cause of action provide an insufficient basis for failing to dismiss a patently defective cause of action. (alterations omitted)). Capital One s allegations are replete with threadbare recitals of the statutory language repeated robotically throughout the Complaint: This conveyance was made at a time when Mr. Levine was insolvent or such conveyance rendered him insolvent ; After this conveyance, Mr. Levine was left with unreasonably small capital ; When making the conveyance, Mr. Levine intended or believed that he would incur debts beyond his ability to pay as they mature ; Mr. Levine made the conveyance... with actual intent to hinder, delay or defraud Capital One. Compl , 130, , 154, , 172, , 189, , 206, , 223, , 240, , 257, , 274, , 291, , 306, , 322. Nowhere does the Complaint allege any facts to support those allegations. For example, while the Complaint asserts that Mr. Levine was insolvent and had unreasonably small capital when he made the disputed transfers around the end of 2013, it contains no factual allegations whatsoever about Mr. Levine s assets and liabilities at the time. It asserts that [b]etween December 2012 and September 2014 i.e., eight months after the transfers Mr. Levine s total assets precipitously declined by 81% from approximately of 28

18 $154,417,650 to $28,647,930. Compl. 71. But that allegation says nothing about Mr. Levine s solvency at the time of the transfer, as the statute requires. Even as to September 2014, the allegation does not suggest that Mr. Levine was insolvent: It shows that he had tens of millions of dollars of personal assets in addition to TFA s well-performing and overcollateralized loan portfolio available to satisfy any debt to Capital One. The pleadings are especially deficient on the counts that allege actual fraud under Debtor & Creditor Law 276. Claims under 276 must be pleaded with the particularity required under CPLR 3016(b). Ray v. Ray, 108 A.D.3d 449, 451 (1st Dep t 2013). The Complaint s conclusory fraud allegations come nowhere close to satisfying that standard. C. Counts 21 and 22 Fail To Allege Any Ownership in the Allegedly Transferred Property Counts 21 and 22 should also be dismissed because they do not allege that Mr. Levine owned the transferred property. Under New York law, a fraudulent conveyance requires that the defendant have had some sort of ownership or other beneficial interest in the transferred property. See Cantor Fitzgerald & Co. v. 8an Capital Partners Master Fund, 132 A.D.3d 402, 402 (1st Dep t 2015) (dismissing fraudulent conveyance claim that fail[ed] to allege, in anything other than conclusory fashion, that [the defendant] benefitted from the transfer ); 30 N.Y. Jur. 2d Creditors Rights 319 (2d ed. 2016) ( The fraudulent conveyance statutes comprehend any property which is in the debtor s name, or the title to which would be vested in him if the conveyance were to be set aside.... ). [A] creditor has no cause of action against a party who merely assists a debtor in transferring assets. FDIC v. Porco, 75 N.Y.2d 840, (1990). Counts 21 and 22 allege that Mr. Levine caused entities he controlled to sell medallions. Compl. 296, 304. But there is no allegation that Mr. Levine owned those medallions, had any interest in the entities that owned them, or even benefitted from the sales in of 28

19 any way. To the contrary, as Mr. Levine testified at the attachment hearing, the ultimate owners of the Chicago medallion holding companies were. Kry Aff. Ex. B at 57:9-13, 69: Even if Mr. Levine somehow caused those entities to sell medallions and distribute the proceeds to, that would not be a fraudulent conveyance by Mr. Levine. It would not affect his ability to satisfy his debts in the slightest. Accordingly, Counts 21 and 22 fail to state a claim and should be dismissed. D. Counts 23 and 24 Are Impermissibly Vague Finally, Counts 23 and 24 should be dismissed because they are hopelessly vague and indeterminate. Where a plaintiff does not identify any particular transaction that he seeks to avoid; nor does he identify any transaction alleged to be fraudulent, merely alleging that, by reason of certain unspecified transfers, he has been damaged in a certain amount, the complaint lacks the requisite specificity with respect to the claimed fraudulent transfer of funds. Syllman v. Calleo Dev. Corp., 290 A.D.2d 209, 210 (1st Dep t 2002); see also S&M Heating Corp. v. Macaluso, 37 Misc. 3d 1231(A), 2012 WL , at *3 (Sup. Ct. Suffolk Cnty. Dec. 13, 2012) ( A fraudulent transfer cause of action must identify the alleged transfers at issue and cannot simply allude generally to alleged transfers that may have taken place. ). That is the case here. Counts 23 and 24 allege that Mr. Levine diminished the assets on [his] books by making transfers of tens of millions in cash and assets to John Does Compl , There are no allegations identifying any particular transfers, dates, or amounts. The counts fail to allege even the recipients of the transfers. That Mr. Levine s assets diminished does not imply there were any transfers at all, as opposed to a mere reduction in value of his existing assets. The deficiency is all the more egregious for Count 24, which alleges actual fraud under Debtor & Creditor Law 276 and therefore must be pleaded with the particularity required under CPLR 3016(b). Ray, 108 A.D.3d at of 28

20 II. THE FRAUDULENT CONVEYANCE CLAIMS AGAINST THE LEVINES SHOULD BE STAYED PENDING RESOLUTION OF THE PREEXISTING ACTIONS In any event, this Court should stay further proceedings on Capital One s fraudulent conveyance claims against the Levines pending resolution of the preexisting actions already pending before the Court. C.P.L.R provides that, [e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just. A proper case to stay an action pending resolution of another action exists where there [a]re overlapping issues and common questions of law and fact and the determination of the prior action may dispose of or limit issues which are involved in the subsequent action, regardless of whether there is a complete identity of parties between the two actions. Belopolsky v. Renew Data Corp., 41 A.D.3d 322, 322 (1st Dep t 2007); see also Uptown Healthcare Mgmt., Inc. v. Rivkin Radler LLP, 116 A.D.3d 631, 631 (1st Dep t 2014) (affirming stay where, [a]lthough there is not complete identity of parties and claims in the instant action and [another action], there is a common question of law and fact ). Courts consider several factors in deciding whether to stay an action in favor of another action: (i) whether the action to be stayed was commenced after the actions that would proceed; (ii) how far discovery has progressed in the existing action; (iii) whether the defendants in the actions are the same; (iv) whether there is substantial overlap between the issues raised in the two proceedings ; (v) whether the preexisting action would dispose of the issues raised in the new action; (vi) the risk of duplication of effort and waste of judicial resources; and (vii) whether plaintiffs would suffer any prejudice from a stay. Asher v. Abbott Labs., 307 A.D.2d 211, (1st Dep t 2003) (staying action pending resolution of preexisting action). Courts have been particularly willing to grant a stay where determination of the prior action may dispose of or limit issues which are involved in the subsequent action. Belopolsky, 41 A.D.3d at 322; see of 28

21 also SSA Holdings LLC v. Kaplan, 120 A.D.3d 1111, 1111 (1st Dep t 2014) (affirming stay of action seeking declaratory judgment that defendants were not entitled to distributions after date of firm s dissolution, where date of dissolution would be determined in another action); Kakushadze v. Gorton, 34 Misc. 3d 148(A), 2012 WL , at *3 (1st Dep t App. Term Feb. 16, 2012) (affirming stay in favor of arbitration where an arbitral finding that corporation did not fraudulently induce contract would presumptively bar the claims in the new action). Those principles strongly support a stay here. A. The Actions Involve Common Parties and Questions of Law and Fact, and the Preexisting Actions May Entirely Dispose of the Fraudulent Conveyance Action The claims against the Levines should be stayed because resolution of the preexisting actions could dispose of or limit issues which are involved in the subsequent action. Belopolsky, 41 A.D.3d at 323. In the fraudulent conveyance action, Capital One seeks a judgment sufficient to satisfy Capital One for all amounts owed resulting from TFA s default under the 2012 loan agreement. Compl. 16. That claim begs the question of what amounts, if any, are owed to Capital One resulting from TFA s default under the 2012 loan agreement. That question cannot be answered until the preexisting actions have been resolved. As this Court noted in denying Capital One s motion for summary judgment in lieu of complaint, the guarantees include express provisions that limit the guarantors liability to the extent that there is a final adjudication by a court of competent jurisdiction of a valid defense to Borrower s obligations under the Loan Documents to payment of its liabilities. No /2015, Doc. No. 217 at 4. Because a valid defense to Borrower s obligations under the Loan Documents to payment of its liabilities is what is being determined in the TFA Action, the Court explained, Guarantors liabilities under the Guarantees are enmeshed with TFA s defenses to the default. Id. If the Court determines that TFA has valid defenses under the Loan of 28

22 and Security Agreement, the guarantors would owe Capital One nothing, and Capital One would not be a creditor entitled to bring a fraudulent conveyance claim. If Mr. Levine does not actually owe anything to Capital One, the bank has no legitimate interest in litigating any transfers. Accordingly, this is precisely the sort of situation where resolution of the preexisting actions would dispose of or limit issues which are involved in the subsequent action. Belopolsky, 41 A.D.3d at Courts have not hesitated to grant stays in similar situations. In Uptown Healthcare, for example, the First Department affirmed an order staying an action for breach of a document destruction provision in a settlement agreement pending resolution of a separate action regarding the validity of that same provision. 116 A.D.3d at 631. The court observed that there was a common question of law and fact between the two actions because, if the court in the other action found that the document destruction clause was void, plaintiff will obviously have no claim in the case at bar for breach of that clause. Id. The court concluded that the duplication of effort, waste of judicial resources, and possibility of inconsistent rulings in the absence of a stay outweigh any prejudice to plaintiff resulting from the stay. Id. In Chen v. Yeung, 33 Misc. 3d 886 (Sup. Ct. N.Y. Cnty. 2011), the court granted a stay in circumstances virtually indistinguishable from those here. The plaintiffs in that case were in the 2 Throughout its Complaint, Capital One repeatedly asserts that its claims against the Defendants are matured, and it requests a judgment pursuant to Debtor & Creditor Law 278, which pertains only to the rights of creditors whose claims have matured. See, e.g., Compl. 117, 126, 295, 311, 323. But a claim is matured only when it has become absolutely due without contingency, although not necessarily liquidated nor presently payable. Shelly v. Doe, 173 Misc. 2d 200, 204 (Sup. Ct. St. Lawrence Cnty. 1997) (emphasis added); see also Gasser v. Infanti Int l, Inc., 353 F. Supp. 2d 342, 354 (E.D.N.Y. 2005) (same). The claims at issue in the fraudulent conveyance action are not matured, as the guarantors liability to Capital One is wholly contingent on the outcome of TFA s claims against the bank. Capital One s mischaracterization only underscores how thoroughly intertwined the fraudulent conveyance action is with the preexisting actions of 28

23 process of prosecuting a claim for violations of the Fair Labor Standards Act when they filed a separate action for fraudulent transfers, alleging that the defendants were divesting property to impede collection of a potential judgment. Id. at 888. Defendants moved to stay the fraudulent conveyance action, arguing that the entire basis for the [fraudulent conveyance] action is that defendants will be found liable to plaintiffs in the [preexisting] action. Id. at 889. The court agreed that the [preexisting] action will determine whether plaintiffs are indeed creditors of defendants, the basis for the [fraudulent conveyance] lawsuit. Id.at 892. Hence, the [preexisting] action determines whether plaintiffs have a cause of action in [the fraudulent conveyance action]. Id. As a result, the court stayed the fraudulent conveyance action pending the determination of defendants liability to plaintiffs in the action now pending. Id. Just as in Uptown Healthcare and Chen, the preexisting actions involve issues that, once resolved, will narrow if not wholly dispose of the issues presented by the fraudulent conveyance action. As a result, the fraudulent conveyance claims against the Levines should be stayed pending the resolution of the preexisting actions. B. Allowing the Fraudulent Conveyance Action To Proceed Would Be Extremely Disruptive to the Proceedings in the Preexisting Actions The fraudulent conveyance action would also significantly disrupt the proceedings in the preexisting actions if allowed to proceed. That also weighs heavily in favor of a stay. For one thing, the fraudulent conveyance action would be highly disruptive to the ongoing discovery in the preexisting actions. Discovery in the preexisting actions has progressed quite far. Document requests were served in September 2015; interrogatories were served in April 2016; and the deadline to complete document production passed months ago in May TFA has expended substantial time and resources in connection with that discovery, including reviewing over 64,000 of its documents and producing over 14,000 documents in response to of 28

24 Capital One s demands. The parties were on the eve of depositions when Capital One filed this latest lawsuit. If the fraudulent conveyance action were allowed to proceed, there would be an entirely new round of discovery that would significantly disrupt the schedule in the preexisting actions. The parties would have to engage in an entirely new round of document collection, search term formulation, and document review to respond to requests served in the fraudulent conveyance action. That review would be extremely costly, burdensome, and time-consuming, and would divert substantial resources that would otherwise be devoted to the claims against Capital One. That discovery would be completely pointless in the event the Court ultimately determines that Mr. Levine is not liable on his guarantee. That discovery would also be unfair because it would allow Capital One to obtain impermissible prejudgment asset discovery in the preexisting actions. It is a seminal rule that prejudgment discovery of financial condition is not warranted. Pac. Emp rs Ins. Co. v. Troy Belting & Supply Co., No. 1:11-CV-912, 2015 WL , at *4 (N.D.N.Y. Mar. 17, 2015) (emphasis added); see also Telebrands Corp. v. HM Imp. USA Corp., No. 09-CV-3492, 2010 WL , at *1 (E.D.N.Y. Mar. 3, 2010); Vincent v. Money Store, No. 11 Civ. 7685, 2012 WL , at *1 (S.D.N.Y. Dec. 20, 2012). Most of the discovery Capital One would seek in the fraudulent conveyance action would be impermissible asset discovery in the preexisting actions. Capital One should not be allowed to evade the restrictions on asset discovery in those actions simply by filing a new lawsuit. The fraudulent conveyance action would also be highly disruptive to the deposition schedule. As noted, depositions were just about to begin when Capital One filed this new action. Many of the witnesses in TFA s action would also likely be noticed for deposition in the fraudulent conveyance action. As a result, either witnesses will have to be deposed twice in the of 28

25 two actions, or the deposition schedule in the preexisting actions will have to be put off substantially likely by at least several months while the parties complete document review in the new action so the deposition schedules can be coordinated. Either outcome would be highly wasteful and disruptive. Capital One has no excuse for the timing of its latest suit. As the evidence at the attachment hearing made clear, Capital One has known about the reductions in assets and alleged transfers since at least October But it never did anything about them for years. There is no reason why Capital One could not have brought these claims at the outset of the suit, when discovery could have been coordinated with the existing actions. Capital One should not be rewarded for its dilatory conduct by allowing it to disrupt a discovery schedule that is already a year in progress. See NAMA Holdings, LLC v. Greenberg Traurig, LLP, 62 A.D.3d 578, 579 (1st Dep t 2009) (holding that stay should have been granted in light of advanced stage of arbitration that commenced a year prior to stayed action). Allowing the fraudulent conveyance action to proceed at this time would also seriously impair TFA and its guarantors ability to seek redress on their substantial claims against Capital One. From the inception of this litigation, Capital One has done whatever it could to frustrate TFA s ability to pursue those claims. It has filed a motion for summary judgment in lieu of complaint against the guarantors, moved for a temporary receiver over TFA s property, extracted extensive asset disclosures from the guarantors under the guise of mediation, and filed an emergency motion for attachment of all of the guarantors property. This fraudulent conveyance action is just the most recent tactic in that long history of delay and distraction. Capital One s transparent goal is to prevent the Court from ever considering the merits of TFA s claims by exhausting the guarantors limited resources. Capital One is a massive financial institution with essentially limitless resources to spend on this case through whatever of 28

26 creative means it can conjure up. Mr. Levine is not so lucky. The entire premise of TFA s action against Capital One is that the bank put his company out of business and destroyed a significant portion of his annual income by reneging on its promises under the Loan and Security Agreement. Mr. Levine no longer has the means to satisfy any judgment the bank may obtain as Capital One well knows. Compl. 13. Ironically, Capital One s tactics will force Mr. Levine to spend on litigation costs the remaining resources that Capital One purportedly seeks to prevent him from dissipating. Capital One should not be allowed to exploit the situation it has created by driving up the cost of this litigation to the point that it will no longer be sustainable. This Court has already determined that TFA and its guarantors have several well-pleaded causes of action that deserve to move forward. And discovery has already unearthed substantial evidence of Capital One s wrongdoing. TFA should not be denied its day in court by an endless pattern of harassing conduct that drives up litigation costs and distracts the proceedings from the merits of TFA s claims. C. Capital One Will Suffer No Prejudice from a Stay By contrast to that severe prejudice to the Levines, a stay will not prejudice Capital One at all. If this Court ultimately determines that Mr. Levine is liable on his guarantee, Capital One can pursue its fraudulent conveyance claims after judgment and will be in no worse position than it is today. Keeping this action on file but stayed, moreover, would avoid any risk that the mere passage of time would render Capital One s claims untimely. See C.P.L.R. 203(a) ( The time within which an action must be commenced... shall be computed from the time the cause of action accrued to the time the claim is interposed. ). Moreover, while Capital One seeks to undo various asset transfers that happened almost three years ago (and which Capital One has known about for almost as long), Capital One has no credible claim of any ongoing threat of dissipation. Capital One s emergency motion for of 28

27 attachment went nowhere, and even the supplemental discovery this Court authorized yielded no evidence of any recent or threatened transfers which is why Capital One ultimately withdrew the motion. No /2015, Doc. No Nothing in the Complaint suggests that any of Mr. Levine s assets have been transferred beyond his wife or their wholly owned companies. The assets are thus hardly out of reach should Capital One somehow ultimately prevail. Courts have stayed actions even in the face of some prejudice to the plaintiff. See, e.g., OneBeacon Am. Ins. Co. v. Colgate-Palmolive Co., 96 A.D.3d 541, 541 (1st Dep t 2012) (staying case in favor of related action despite plaintiff s arguments that it would be prejudiced). A fortiori, a stay is appropriate here, where there is no risk of prejudice at all. D. Allowing the Fraudulent Conveyance Action To Proceed Would Waste Time and Judicial Resources Finally, the fraudulent conveyance claims against the Levines should be stayed because they present a serious risk of wasting this Court s time and resources. Courts routinely stay actions in the interest of judicial economy. See, e.g., NAMA Holdings, 62 A.D.3d at 579; Asher, 307 A.D.2d at (stay would avoid duplication of effort and waste of judicial resources ); OneBeacon, 96 A.D.3d at 541 (same). Those concerns are especially acute here. As explained above, if TFA ultimately prevails in the preexisting actions, everything that will have transpired in the fraudulent conveyance action discovery, motion practice, and who knows how many court hearings will have been a complete waste of time. Those potential burdens cannot be overstated. This is no plain-vanilla fraudulent conveyance action. Capital One has alleged twenty-four causes of action. And unlike the typical fraudulent conveyance action where the defendant faces some well-defined liability on a loan, Mr. Levine was at most a contingent debtor whose probable liability depended not only on his own obligations but also on the probability that TFA would default on the underlying Loan and Security Agreement. Thus, if of 28