SHORT FORM ORDER :XA- Present: SUPREME COURT - STATE OF NEW YORK COUNTY OF NASSAU - PART 4 HON. UTE WOLFF LALLY Justice MOl), MD MAUREEN J. DELANEY Motion Sequence #1, #2 Submitted August 26, 2010 Plaintiff, -against- INDEX NO: 21905/09 MATTHEW P. DELANEY, MARY J. DELANEY a/kla MARY JEAN DELANEY a/kla MARY JANINE DELANEY, CATHERINE LA GRECA, as Trustee of the MARY JEAN DELANEY REVOCABLE TRUST, WELLS FARGO BANK,, and WASHINGTON MUTUAL BANK, Defendants. The following papers were read on this motion for summary judgment: Notice of Motion and Affs... Notice of Cross-motion and Affs... Affs in Reply...... 10&11 Memorandum of Law... This motion by the plaintiff Maureen J. Delaney for an order pursuant to CPLR 3212 and Debtor and Creditor Law 9 273-a, 276, 276-a, granting summary judgment in her favor setting aside certain bargain and sale deeds dated August 16, 2006 and December, 2007 to premises known as 650 Park Avenue, Manhasset, New York and upon doing, declaring the subject premises to be the property of "Matthew P. Delaney and Mary
J. Delaney, husband and wife ; and for further relief: (1) permitting the plaintiff to execute upon the Delaney defendants' interest in excess of the $50 000. 00 homestead exception pursuant to CPLR 5206(a), 5236; and (2) granting to the plaintiff a default judgment as against codefendant Matthew P. Delaney pursuant to CPLR 3215 and this cross motion by the defendants Matthew P. Delaney, Mary J. Delaney, and Catherine LaGreca, as Trustee of the Mary Jean Delaney Revocable Trust, for an order pursuant to CPLR 3211 (a)1. and 7. dismissing the first and second causes of action insofar as asserted against them, are disposed of as follows: In 1997, the defendant Matthew P. Delaney, persuaded his mother, the plaintiff Maureen J. Delaney, to mortgage her then, lien-free, Levittown residence and thereafter lend him the sum of $88,0000. 00 so that he could purchase certain real property located in Woodbury, New York. In exchange, Matthew allegedly promised Maureen that he would not only make the mortgage payments himself, but also pay certain carrying costs associated with his mother s residence. The above-described mortgage/loan transaction was thereafter completed and Matthew acquired the property in December of 1997. Although Matthew initially made the mortgage payments as promised, he ceased doing so in September of 2005. In response his mother commenced an action against him in June of 2006, and ultimately obtained a money judgment in the sum of $178,764.05 which was entered in October of 2009. That judgment remains unsatisfied. In August of 2006, only two months after Maureen commenced her action against Matthew on the loan agreement, Matthew and his wife, codefendant Mary T. Delaney,
conveyed their then Webster Avenue, Manhasset marital residence to a third party for the sum of approximately $993 600. 00. The bargain and sale deed by which the Webster Avenue residence was conveyed describes both the Delaney defendants as sellers and as husband and wife the 2006 deed refers to the Delaneys as joint transferees (tenants by the entirety), describing them as "Matthew J. Delaney and Mary Jane Delaney, his wife (see generally, EPTL ~ 6-2(b)). However, within days of conveying the Webster Avenue residence, and while Maureen s mortgage/loan action against Matthew was stil pending, Mary acquired title to the parties' new marital residence in her name only. The new residence, also located in Manhasset at 650 Park Avenue, was allegedly purchased for the stated price of $1. millon. The records submitted by the plaintiff indicate that a mortgage in the sum of $900 000. 00 was obtained in connection with Mary s purchase of the Park Avenue residence. There is no dispute that Mary and Matthew now reside as husband and wife in the newly acquired Manhasset home titled in Mary s name only. According to Matthew, Mary s acquisition of the parties' new marital residence in her name only, was not an attempt to insulate that asset from Matthew s creditors. This is because Matthew allegedly conveyed his interest in the Webster Avenue residence to Mary almost two years earlier, in December of 2004. More particularly, Matthew contends that some two years prior to Mary s acquisition of the Park Avenue residence, he asked Mary to co-sign or guarantee a $300 000. business line of credit he required in order to start a new business. In exchange, Mary orally agreed to jointly guarantee a December, 2004 "secured promissory note" executed
by "the Great Eastern Bank" as lender, and Matthew s company, New Age Marketing, LLC as borrower. There is no documentary evidence in the record memorializing the existence of the foregoing oral agreement. In November, 2006, and then in October 2007, Matthew obtained additional loans and/or new lines of credit funding from a Cathay Bank on behalf of New Age Marketing, Inc. These debts are evidenced by, inter alia a November 2006 "revolving note" and a 2007 "consolidated, adjustable rate mortgage " the repayment of which both Mary and Matthew guaranteed. According to Matthew, the 2006 Cathay transaction "extended" the 2004 Great Eastern line of credit in some fashion to $500 000., after which in October 2007 that new debt "then became a mortgage" on the Jericho business property he had originally acquired with the loan proceeds he obtained from his mother. It is unclear whether the proceeds obtained from the subsequenttransactions were utilized to pay down or discharge the 2004 "Great Eastern" loan. Significantly, in December of 2007, Mary Delaney, as the alleged sole record owner of the ParkAvenue residence, then conveyed the home to codefendant Catherine LaGreca (Mary s mother) as Trustee of the Mary Jean Delaney Revocable Trust (the "Delaney Trust"). The Delaney defendants contend the property was not transferred to further distance it from Maureen s reach as a creditor, but allegedly to preserve the asset for their children in the event "something happened to" Mary. Specifically, the Delaney defendants claim that since they were having marital problems at the time, and because Matthew himself was going through unstated difficulties and personal struggles, Matthew could not be "trusted with ownership of the house in the
event Mary passed away In light of the foregoing transfers, Maureen commenced the within action as against inter alia, Matthew, Mary and the Delaney trust alleg ing that the foregoing sale transactions were fraudulent within the meaning of the New York Debtor and Creditor Law (see Debtor and Creditor Law ~~ 273-a; 276, 276-a). The plaintiff seeks relief inter alia setting aside the deeds by which Mary acquired the Park Avenue residence in her name only and the subsequent deed pursuant to which she then conveyed the property to the Delaney Trust, and for a further declaration that as a consequence, the ownership of the new home is therefore vested in Mary and Matthew as tenants by the entirety. The Delaney Trust and Mary J. Delaney have separately answered and denied the material allegations of the complaint. As to Matthew Delaney, he apparently failed to timely appear and/or answerthe complaint, although defense counsel contends that the plaintiff' attorney agreed by written stipulation dated April 8, 2010, to accept Matthew s notice of appearance and his answer. Notably, there is a signed letter in the record by which plaintiff' s counsel agreed to "withdraw the default portion of your motion" and which recites that Matthew s notice of appearance and answer were attached to the stipulation. The plaintiff now moves for summary judgment on her underlying Debtor and Creditor causes of action (first and second causes of action) and also for a default judgment as against Matthew Delaney. Specifically, the plaintiff contends inter alia that the August 2006 conveyance to Mary and Mary s 2007 transfer to the Delaney Trust were without consideration and are each fraudulent as to her, and that both deeds should be
sets aside as a consequence (see Debtor and Creditor Law, 9 278(1)(a), (bd. The defendants oppose the application and cross move pursuant to CPLR 3211 (a) 7. for an order dismissing the verified complaint insofar as asserted against them, for the failure to state a cause of action. Upon the papers submitted the plaintiff' s motion should be granted to the extent indicated below. The cross motion to dismiss the complaint is denied. Preliminarily, the record contains the April 8, 2010, letter by which plaintiffs counsel expressly agreed to withdraw that branch of her motion which is for a default judgment as against codefendant Matthew Delaney. Plaintiffs counsel has not determinatively addressed the letter, which he himself executed, in either his main or reply submissions. Accordingly, that branch of the motion which is for a default judgment as against Matthew Delaney, is denied. With respect to the plaintiffs fraudulent conveyance cause of action, Debtor and Creditor Law ~ 273-a provides in relevant part that "(e)very conveyance made without fair consideration when the person making it is a defendant in an action for money damages * * * is fraudulent as to the plaintiff in that action without regard to the actual intent of the defendant. if, after final judgment for the plaintiff, the defendant fails to satisfy the judgment." In order to "prevail under Debtor and Creditor Law 9 273-a, a plaintiff must demonstrate that the alleged transferor was "a defendant in an action for money damages (or had a judgment docketed against him) at the time of the underlying conveyances, that the resulting judgments remained unsatisfied and that the underlying conveyances were
made without fair consideration (Murin v Estate of Schwalen 31 AD3d 1031, 1035 see Kreisler Borg Florman General Const. Co. Inc. v Tower LLC 58 AD3d 694, 696; Hirschhorn v Hirschhorn 294 AD2d 404, 405 see also, Cadle Co. v Organes Enterprises Inc. 29 AD 3d 927, 929; Kavanagh v Rubin 230 AD2d 892, 893; Durrant v Kelly, 186 AD2d 237; Spielvogel v Welborne 175 AD2d 830; Merman v Miler 82 AD2d 826, 827). It is well settled law that intra-family conveyances, and in particular, transfers from husband to wife, are "scrutinized carefully, " particularly where they are not adequately documented (Marine Midland Bank v Murkoff supra at p. 128; Prudential Farms of Nassau County v Morrs 286 AD2d 323, 324; First Fideliy Bank, N. A. v Manzo 250 AD2d 730 731; Kavanagh v Rubin, supra at p. 893; Apple Bank for Sav. v Contaratos 204 AD2d 375; Grumman Aerospace Corp. v Rice 199 AD2d 365, 367; AMEV Capital Corp. v Kirk 180 AD2d 775 776; Century 21 Const. Corp. v Rabolt 143 AD2d 873, 874; Polkowski v Mela 143 AD2d 260 see also, Steinberg v. Levine, 6 AD3d 620, 621; Durrant v Kelly, supra). Upon applying these principles to the facts presented, the Court agrees that the plaintiffs have prima facie demonstrated that the challenged conveyances were fraudulent within the meaning of Debtor and Creditor Law 9 273-a (see, Hirschhorn v Hirschhorn supra at p. 405; Prudential Farms of Nassau County v Morris, supra; Century 21 Const. Corp. v Rabolt, supra, at p. 874 see also, Kreisler Borg Florman General Const. Co. Inc. v Tower LLC, supra at p. 695; Spielvogel v Welborne, supra). More particularly, the plaintiff has established that the 2006 Webster Avenue conveyance to Mary during the pendency of Maureen s action was made without fair
consideration; that a judgment was previously docketed as against the defendant Matthew J. Delaney; and that he has to date failed to satisfy that judgment (Kavanagh v Rubin supra at p. 893; Durrant v Kelly, supra; Merman v Miler, supra, at p. 827 see also, Jos/in v Lopez, supra at p. 838; Hirschhorn v Hirschhorn, supra at p. 405). Although the defendants rely on a purported, oral agreement by which Matthew conveyed his interest in the Webster Avenue home to Mary, there is no contemporaneously generated, written documentation substantiating the existence of the alleged conveyance (Murin v Estate of Schwalen, supra; Butera v Wilow Woods, Inc., 210 AD2d 279; Bank of New York v Cherico 209 AD2d 914, 915; Scalia v Glielmi 200 AD2d 615; Rossignol v Silvernail 222 AD2d 939, 940; Spielvogel v. Welborne, supra; Century 21 Const. Corp. v Rabolt, supra at p. 874; Kleinfeld v Pedersen 116 AD2d 970). Courts have typically declined to credit factually attenuated, improbable accounts of transfers between family members, particularly where as here, the claims advanced are unsubstantiated by documentary evidence (see, Murin v Estate of Schwa/en, supra at p. 1035; Joslin v Lopez, supra at p. 838; Hirschhorn v Hirschhorn, supra at p. 405; Prudential Farms of Nassau County v Morris, supra; AMEV Capital Corp. v Kirk, supra pp. 776-777; Century 21 Const. Corp. v Rabolt, supra at p. 874; Bank v Murkoff supra, at pp. 127-128; Kleinfeld v Pedersen, supra; Merman v Miler, supra). Nor have the defendants produced closing statements and/or other probative documentary materials which support their claims with respect to the manner in which they used the Webster Avenue sale proceeds (see generally, Murin v Estate of Schwalen supra; First Fidelity Bank, N. A. v Manzo, supra; Kleinfeld v Pedersen, supra; Merman v
Miler, supra at p. 827). Similarly, the defendants' veiled, factual assertions with respect to business loans/mortgages Matthew obtained between 2004 and 2007 are conclusory and unsubstantiated by adequate documentary evidence in the record (Murin v Estate Schwalen, supra; Butera v Wilow Woods, Inc., supra; Merman v. Miler, supra at p. 827see also, First Fidelity Bank, N.A. v Manzo, supra; Scalia v Glielmi, supra; Spielvogel v Welborne, supra). Lastly, the defendants' obscure assertions regarding their martial difficulties and/or Matthew s personal issues, do not support the claim that Mary Delaney s 2007 conveyance to the Delaney Trust was a bona fide transaction as to the plaintiff and/or that it was supported by adequate consideration within the meaning of the Debtor and Creditor Law (Rampello v Cioffi, supra; Merman v Miler, supra; Butera v Wilow Woods, Inc., supra see also, Joslin v Lopez, supra at p. 828). Significantly, " unsubstantiated allegations cannot be regarded as a substitute for admissible proof' in opposition to a properly supported motion for summary judgment pursuant to the Debtor and Creditor Law (First Fideliy Bank, N.A. v Manzo, supra; Spielvogel v Welborne, supra; Rampello v Cioffi, supra; Bank of New York v Cherico supra; Scalia v Glielmi, supra; Merman v Miler, supra). Additionally, that branch of the plaintiff' s motion which is for summary judgment on her claims pursuant to Debtor and Creditor Law 9 276 should also be Northpark Associates, L.P. v Westcon, Inc. 34 AD3d 773). granted (e. g.
To set aside a conveyance as fraudulent pursuant to Debtor and Creditor Law 276, a plaintiff must show that the transfer was made with an intent to hinder, delay, or defraud the plaintiff' (Northpark Associates, L.P. v Westcon, Inc., supra, see generally, NPR, LLC v Met Fin Management, Inc. 63 AD3d 1128, 1129; Kreisler Borg Florman General Canst. Co., Inc. v Tower LLC, supra at p. 696; Steinberg v Levine, supra p. 621; Dempster v Overview Equites, supra at p. 498). Only the actual intent to hinder or delay creditors need be established, not an actual intent to defraud" (Broyhil Furniture Industries, Inc. v Hudson Furniture Galleries LLC Misc3d, 2008 WL 692563 (Supreme Court, New York County 2008), affd, 61 AD3d 554). "A conveyance made with actual intent to defraud may be set aside even iffair value was given in exchange for the property (see, Spencer v Hylton-Spencer 273 AD2d 374, 375; Wall St. Assocs. v Brodsky, supra at p. 529; Grumman Aerospace Corp. v Rice, supra at pp. 366-367). Here, the plaintiff has prima facie demonstrated that the subject transfers were made with an " intent to hinder (and) delay" Maureen as a creditor (Phillp v Zanani 67 AD 3d 877; Prudential Farms of Nassau County v Morris, supra; Miler v Miler 276 AD2d 758; Debtor and Creditor Law ~ 276) a showing which the defendants failed to refute (Ehrler v Cataffo 42 AD3d 424, 426). More particularly, present here as "badges" or indicia of intent to hinder and defraud (Ehrler v Cataffo, supra) are inter alia, an alleged transfer between spouses and then to a family-member Trustee; a conveyance removing the judgment debtor/defendant from the chain oftitle during the pendency of a lawsuit against him; improbable and undocumented
claims of prior agreements and/or claimed consideration therefor; and the debtor continued, beneficial use and/or occupancy of the property acquired by virtue of the challenged transactions (see generally, Cadle Co. v Organes Enterprises, Inc., supra p. 928; Dempster v Overview Equities, Inc., supra; Steinberg v Levine, supra at p. 621; Prudential Farms of Nassau County v Morrs, supra; AMEV Capital Corp. v Kirk, supra pp. 776-777; Marine Midland Bank v Murkoff supra at pp. 128-129 ct., Butera v Wilow Woods, Inc., supra; Merman v Miler, supra). Since the plaintiff has prevailed on her Debtor and Creditor claims, she has "thus established * * * (her) entitlement to judgment as a matter of law" setting aside, as null and void, the challenged conveyances "to the extent necessary to satisfy * * * (her) claim (Debtor and Creditor Law, ~ 278(1naD; namely, the August 2006 purchase of 650 Park Avenue, Manhasset, New York, to the extent of reflecting title in the name of Mary Delaney alone, as opposed to both Mary and Matthew, as husband and wife; and the 2007 transfer of said real property to the Delaney Trust (e., Cadle Co. v Organes Enterprises Inc., supra at p. 828; Citbank, N.A. v Plagakis 8 AD3d 604, 605 see also Debtor and Creditor Law, ~ 278(1 nad. Lastly, that branch ofthe plaintiff'. motion for an award of counsel fees pursuant to Debtor and Creditor Law ~ 276-a, is granted (see, NPR, LLC v Met Fin Management Inc., supra at p. 1129; Kreisler Borg Florman General Canst. Co. Inc. v Tower LLC supra at p. 696; Ford v Martino 281 AD2d 587; Dilon v. Dean 256 AD2d 436). The plaintiff, if she be so advised, may notice a properly supported application for reasonable counsel fees, as authorized by Debtor and Creditor Law ~ 276-a (see, Kreisler
Borg FJorman General Const. Co., Inc. v Tower LLC, supra at p. 696; Marine Midland Bank v Murkoff supra at pp. 133-134). The Court has considered the defendants' remaining contentions and concludes that they are insufficient to defeat the plaintiff' s application. In light of the Court' s holding with respect to the plaintiff's motion, the defendants cross motion pursuant to CPLR 3211 (a)1. and7. is denied. Accordingly, it is ORDERED that the deeds dated August 16, 2006 and December 23, 2007 conveying the subject property to: (1) Mary J. Delaney; and (2) thereafter from Mary J. Delaney to Catherine LaGreca, as Trustee of the Mary Jean Delaney Revocable Trust, are deemed fraudulent as the plaintiff and therefore void to the extent indicated herein pursuant to Debtor and Creditor Law ~~ 273-a, 276 and 278, and the premises known as 650 Park Avenue, Manhasset, New York are declared to be the property of Matthew Delaney and Marry J. Delaney, and it is further ORDERED that plaintiff shall have the right to execute upon the defendants ' interest in excess of the $50 000. 00 homestead exemption, and it is further ORDERED that the cross motion to dismiss by defendants Matthew P. Delaney, Mary J. Delaney, and Catherine LaGreca, as Trustee ofthe Mary Jean Delaney Revocable Trust pursuant to CPLR 3211 (a) 1. and 7., is denied. The foregoing constitutes the decision and order of the Court. Dated: October 18, 2010 UTE WOLFF NTERED OCT 2 0 2010 NASSAU COUNTY COUNTY CLERK"! O F'CE
TO: Harry H. Kutner, Jr., Esq. Attorney for Plaintiff 136 Wills Avenue Mineola, NY 11501 Lavalle Law Offices, PLLC Attorneys for Defendants Matthew P. Delaney, Mary J. Delaney and Catherine LaGreca 4 West Gate Road Farmingdale, NY 11735 delaney-delaney, #2/cplr