TRI PART: 21 NASSAU COUNTY

Transcription

1 .... SUPREME COURT - STATE OF NEW YORK Present: HON. ARTHU M. DIAMOND Justice Supreme Court x SEBASTIA LATTUGA TRI PART: 21 NASSAU COUNTY -against- CLAUDIO D' CHIUTIIS, PAULINE CHIUTIIS-LATTUGA, CD AUTOS, INC., ALL ISLAND MOTORS, CORP. AND P&C Motors, LLC Defendant x The following papers having been read on this motion: Plaintiff, INDEX NO: /07 MOTIQN SEQ. NO: 02 SUBMIT DATE:1I29/08 Notice of Motion... 1 Opposition Rep Iy The plaintiff and defendant Pauline D' Chiutiis- Lattga wer maried on December 27, Defendant' s father, co-defendant Claudio D' Chiutiis has been the pwnerofvarous companies that own and operate successful automobile dealerships in the County of Nassau. On Januar Claudio D' Chiutiis sold, transferred and conveyed 100% of the issued outstanding shares of stock in defendant CD Auto to defendant Pauline D' Chiutiss-Lattga for a purchase price of$i 4000 with $ to be paid as a down payment and the balance in 60 equal monthly installments of $ secured by 60 promissory notes. Plaintiff claims in th complaint. that he provided the fuding to defendant Pauline D'Chiutiss-Lattuga to purchase said company and to make the installment payments. In retur, plaintiff claims that defendant, Pauline D' Chiutiss-Lattga promised and agreed that her shares of CD Auto, and the other corporate defendants, All Island Motors Corp, and P&C Motors, LLC would be jointly owned by the two of them. Plaintiff claims that he gave a total of$ to the defendant Pauline D' Chiutiss-Lattuga which were paid to Claudio D' Chiutiis. Plaintiff claims that defendant Pauline D' Chiutiss-Lattga and co-defendant Claudio D' Chiutiis entered into similar agreements concerning the stock of All Island Motors, and

2 P&C Motors. According to plaintiffs complaint, on or about June , the defendant-wife Pauline D' Chiutiss-Lattuga, intentionally defaulted in payments on the promissory notes, and transferred the stocks of the defendant corporations to Claudio D' Chiutiss, thereby relinquishing control and ownership without consideration in order to deprive plaintiff of the assets. Defendantwife, Pauline D' Chiutiss-Lattuga, commenced a matrimonial actiqn against the plaintiff seeking a divorce on Januar 5, In the context of that matrmonial action, defendant states that she does not have ownership in the corporate defendants' CD Auto, All Island Motors, and P&C Motors for purposes of determining equitable distribution. Plaintiff has commenced this instant action claiming that h,e has a a constrctive trst over the defendant corporations, and has moved to set aside the conveyances alleging that it was fraudulent under Aricle 10 of the Debtor Creditor Law. Defendants, Claudio D' Chiutiss, CD Auto, All Island Motors, and P&C Motors had moved for an order dismissing the complaint in its entirety pursuant to CPLR (a) (1), a defense based upon documentar evidence, and for failure to state a cause of actiqj? under CPLR (a) (7). The court issued an order dated November granting dismis al of the first, second, thrd and fourth causes of action, and denying dismissal of the remaining cau es of action. Likewise, co-defendant Pauline D' Chiuttis- Lattga, the wife of plaintiff, has now moved for an order to dismiss the complaint upon the same grounds. In a defense based upon documentar evidence, the documentar evidence presented by defendants must "utterly refu " the plaintiff s allegations and establish a defense as a matter oflaw. (Goshen v. Mutual Life Ins. Co. OfN Y. 98 N.Y.2d 314). The docwnentary evidence must be such that it resolves all factual issues as a matter of law and definitively disposes of plaintiffs claim (Teiter v. Max J Pollack Sons 288 A.D.2d 302 J. In deciding a motion to dismiss for failure to state a cause of action, the complaint is to be liberally construed, and the cour is required to view every allegation of the complaint as true, and resolve all inferences in favor of plaintiff regardless of whether plaintiff wil ultimately prevail on the merits. Each cause of action set forth in the complaint must contain factual allegations, and not legal conclusions, establishing elements of same. (Arnav Indus., Inc. Retirement Trust v. Brown Raysman, Milstein, Felder Steiner, LLP 96 N. Y.2d 300; Grand Realty Co. V. City of White Plains 125 A. 2d 639).

3 The defendant' s motion for an order to dismiss the first c use of action alleging a constructive trust is denied. Plaintiff has set fort facts in the complaint, assuming they are true establishing the four elements of a constructive trust which are 1) a confidential or fiduciar relationship; 2) a promise; 3) a breach of that promise; and 4) defendants ' unjust enrichment as a result of his or her actions. (Potter v. Davis 275 A.D.2d 961). In regards to the second cause of action under DCL 9273, the third cause of action under DCL 9274, and the fourh cause of action under DCL 9275, allegin a constructive fraudulent conveyance of the stock of the corporations where the conveyancq i made without fair consideration by a person (1) who is insolvent or will be rendered insolvent (DCL 9273); or (2) who is engaged in a business for which capital is uneasonably small (DCL 9274), or (3) who believes he wil incur debts beyond his/her abilty to pay (DCL 9 75); those causes of actions are hereby dismissed pursuant to CPLR (a) (7). There are insufficient factual allegations specified in thes thee causes of actions to establish the requisite elements of that paricular cause of action to fraudulent conveyance. stablish a constrctive In the second cause of action, plaintiff has failed to alleg any facts showing that defendant Pauline D' Chiutiss-Lattuga was insolvent or rendered insolvent at the time of the conveyances. (Galgano v. Ortiz 287 A.D.2d 688). The third CaU1 y qf action fails to set forth facts that defendant Pauline D' Chiutiss-Lattga was engaged in a business for which capital is uneasonably small under DCL 9274, other than the legal conclusory statement as to such in the complaint. Also, the four cause of action fails to set forth facts showing that defendant Pauline Chiutiss-Lattuga made the conveyances intending or believing that she will incur debts beyond the abilty to pay as they mature pursuant to DCL However, the plaintiff has set forth a sufficient cause of aqtipn for an actual fraudulent" conveyance pursuant to DCL 9276 under the fifth cause of action of the complaint. Debtor and Creditor Law 9276 provides that "Every conveyance made and every obligation incured with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and futue creditors. (McKinney Cons. Laws ofn., Vol. 12, DCL 9276, at 352). The defendants' contention that the plaintiff is not a creditor is without merit. A creditor

4 is defined under section 270 of the Debtor and Creditor Law as "a person having any claim whether matured, or unmatured, liquidated, or unliquidated, absolute, fixed or contingent." (McKinney s Cons. Laws ofn., Vol. 12, DCL 9270, at 284) A pouse is a creditor to his/her spouse as to any present or futue support payments or equitable distribution of assets in a pending divorce even though the claim may be unatued and unliquidated at the time ofthe conveyance. (Kasinski v. Questel 99 A.D.2d 396, where transfer of martal residence by husband to girlfriend in contemplation of divorce was fraudulent under the Debtor and Creditor Law; Saldano v. Saldano, 66 A. 2d 839, whereby husband' s transfer pfthree parcels of real estate to his brothers in contemplation of divorce was fraudulent under th Debtor and Creditor Law since wife was a creditor of necessaries and future alimony award) The factual allegations set forth in the complaint, if tre, show an actual intent by the defendant to take par in a scheme to hinder, delay, or defraud plaintiff, as a creditor, pursuant to DCL 9276, from receiving his portion of the businesses, or a credit for same, as equitable distribution if defendant Pauline D' Chiutiss-Lattuga was the actu l owner or parial owner of said businesses during the mariage. Debtor and Creditor Law 276! unlike sections DCL and 9275, addresses actual fraud, and not constrctive fraud, and does not require proof of unfair consideration or insolvency. Due to the :diffculty of proving actual intent to hinder, delay, or defraud creditors, the pleader is allowed to rely on "badges offraud" to support his case, i.e. circumstances so commonly associated with fraudulent transfers that their presence gives rise to an inference of intent. (Wall Street Associates v. Brodsky, 257 A.D. d 526; See, AMP Services Ltd. v. Walanpatrias Foundation 34 AD.3d 231). Some ofthe circumstaces to be considered are (1) a close relationship between the paries to the alleged fraudulent transaction, (2) a questionable transfer not in the usual course of business; (3) inadequacy ofthe consideration;(4) transferor s knowledge ofthe creditors claim aid the inabilty to pay it; and (5) retention of control of the propert by the transferor after the conveyance. (Wall Street Associates v. Brodsky, at 529). Here, if the plaintiffs allegations in the complaint are proven tre at tral by clear and convincing evidence: the intentional default of the promissory notes by defendant Pauline Chiutiss-Lattuga, the conveyances of ownership of the corporations by the defendant Pauline Chiutiss-Lattuga to her father Claudio D' Chiutiss, the conveyances were made six months before the commencement of the matrimonial action made in anticipation of fiing divorce to

5 ,,. prevent plaintiff from recovering his share of the equitable distribution of these alleged marital assets, and defendant Pauline D' Chiutiss-Lattga has stil maintain d control of said entities with her co-defendant father, Claudio D' Chiutiss, are all circumstances constituting "badges of fraud. (See, Kasinski supra, at ). The documentation provided by defendant does not "utterly" refute plaintiff s claim as to establish a complete defense to this cause of action. The defendant's motion to dismiss the remaining causes of action pursuant to CPLR is denied in its entirety. Accordingly, the second, third, and fourh causes of action in the complaint are hereby dismissed as against the defendant Pauline D' Chiuttis-Lattuga. This constitutes the decision and order of this Cour. DATED: February To: Attorney for Plaintiff ANTHONY A. CAPETOLA, ESQ. Two Hilside Ave.. Bldg. C. Wiliston Park, NY (516) VIA FAX: (516) Attorney for Remaining Defendants JONATHAN M. CADER, ESQ. HESSION, BECKOFF & Cooper, LLP Stewart Avenue Suite 200 Garden City, New York (516) cqed \"f\r Attorney f()r Plaintiff JOHN A. P;\PPALARpp FARER f ;\PP ALA CARBONAR COUNi'l 200 East PQst Road Whte Plains, New York Attorney for Defendant Pauline Chiutis8-Lattuga VITO PALMIERI, ESQ. ALMIEJU & CASTIGLIONI, LLP 250 Mineola Boulevard Mineola, New York (516) uNTY.. CLERK' SQFFICE