Dong Wan Joo v Cho

[*1] Dong Wan Joo v Cho 2009 NY Slip Op 50411(U) [22 Misc 3d 1133(A)] Decided on February 4, 2009 Supreme Court, New York County Wilkins, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 4, 2009
Supreme Court, New York County

Dong Wan Joo and on Kyung Joo, Plaintiff,

against

Nicole M. Cho, Individually and Doing Business as Lotte Mortgage, Back Chul Kim, Soone Lee and American Gateway Energy, LLC, Defendants.



113591/05



M. Douglas Haywoode, Brooklyn, for defendant. Kestenbaum, Dannenberg & Klein, LLP, New York (Jeffrey C. Dannenberg of counsel), for plaintiffs.

Lottie E. Wilkins, J.

In papers denominated as a motion pursuant to CPLR 4404(a) defendant American Gateway Energy, Inc. (hereinafter "AGE") seeks an order setting aside the jury's verdict in favor of plaintiffs on their claim for fraudulent conveyance or, in the alternative, declaring a mistrial in the interests of justice. Plaintiffs oppose the motion arguing, inter alia, that AGE's papers do not raise issues properly considered on a motion pursuant to CPLR 4404(a) and that, notwithstanding this deficiency, the jury's verdict was supported by the evidence at trial.

As a procedural note, following submission of this motion on December 23, 2008, the Court received a letter from AGE's counsel dated December 24, 2008 which contained arguments in the nature of a reply to plaintiffs' opposition. Plaintiffs' counsel [*2]then wrote to the Court in a letter dated December 30, 2008 arguing that the letter should not be considered by the Court and suggesting that the letter was not actually mailed until several days after the date on it would suggest. Since neither letter was in the form required by the CPLR for arguments on motions, and since neither was submitted via the process provided in New York County for the submission of motion papers, neither letter will be considered.

Plaintiffs initially commenced this action against several defendants including AGE asserting various claims all arising from a loan plaintiffs made to defendant Back Chul Kim in 2003 secured by a mortgage for the premises located at 304 East 65th Street, Apartment 3C, in Manhattan. At the time of the loan, Back Chul Kim held himself out to plaintiffs as the owner of the premises. The loan was not repaid and, for reasons detailed in the record at trial, plaintiffs delayed significantly in filing their mortgage lien on the property. On August 31, 2004 Back Chul Kim sold the premises to defendant AGE, a company at least partially owned by his sister, Sandra Dyche. Notwithstanding the August 31, 2004 transfer of title from her brother to her company, Ms. Dyche maintained that she had always been the true owner of the apartment and that she only permitted title to be placed in her younger brother's name for the purpose of enhancing his image and giving him the appearance of respectability despite his "spoiled" nature and "playboy" lifestyle. Indeed, at some point after plaintiffs made their 2003 loan to Mr. Kim, but before this action was commenced in 2005, Sandra Dyche commenced an action against her brother in Supreme Court, New York County, under Index No. 102964/04, seeking a declaratory judgment that she was the title owner of the property. That action never resulted in the declaration sought because it was settled and discontinued shortly after the Justice presiding over the case (Friedman, J.) issued a preliminary injunction on April 16, 2004 enjoining Back Chul Kim from transferring or otherwise encumbering title to the premises. Defendant here claims that part of the settlement agreement required Back Chul Kim to covey title in the premises to AGE.

Counsel for AGE has put forth two (somewhat inconsistent) arguments at various points during and after trial, depending on the exigencies of the situation. At times, defendant maintained that Back Chul Kim was never the owner of the premises and that the 2004 preliminary injunction order should be placed in evidence to show that Sandra Dyche had always been the owner of the apartment. More recently, defendant has argued that the August 31, 2004 transfer of title from Back Chul Kim to AGE was performed as a condition of settlement of the 2004 declaratory judgment action and that the $25,000 transfer price reflected the negotiated value of Back Chul Kim's true ownership interest in the property. In general it seems that the former argument was the theory that defendant sought to place before the jury at trial while the latter argument is more of a fallback position made in several legal arguments to the [*3]court and now relied upon much more prominently in the instant motion.

It was defendant's stated intention at the trial of this action to show that Sandra Dyche had been the title owner of the property at all relevant times and that plaintiffs, through their own negligence, had failed to discover this fact before making a loan to Back Chul Kim.[FN1] In order to establish this, defendant sought introduction of the April 16, 2004 preliminary injunction order against Back Chul Kim. In support of its argument for admission of the document, defendant maintained that the preliminary injunction order proved that Sandra Dyche was the owner of the premises at the time of the 2003 loan or, at the very least, could be considered by the jury as evidence of that fact. When asked to elaborate on how an order granting a preliminary injunction could establish Ms. Dyche's ownership when that question was the very subject of the entire declaratory judgment action, counsel pointed to language in the order which repeated Ms. Dyche's allegations in the complaint that she resided in the apartment and paid the mortgage on it. It was defendant's position that this dicta in the preliminary injunction order which was nothing more than a verbatim recitation of allegations made in the complaint proved that the Court had found that Sandra Dyche was the owner of the premises as a matter of law. Based on these arguments, the motion to admit the order was denied.

Following trial the jury returned a verdict finding that Back Chul Kim had conveyed the premises to AGE on August 31, 2004 with actual intent to hinder, delay or defraud present or future creditors in violation of Debtor and Creditor Law § 276 and, in addition, that Back Chul Kim had conveyed the premises to AGE without fair consideration at a time when he intended or believed that he would incur debts beyond his ability to pay as they matured in violation of Debtor and Creditor Law § 275. Immediately after the verdict, counsel for AGE made a motion to set it aside. The motion, however, was not directly addressed to the evidentiary support for the jury's verdict or plaintiffs' entitlement to judgment as a matter of law. Instead, the primary argument made in support of defendant's post-trial motion was a reiteration of the argument that AGE should have been permitted to place the preliminary injunction order before the jury. The motion was denied on the record from the bench.

Notwithstanding defendant's motion to set aside the verdict immediately after the conclusion of trial and it's immediate denial by the Court, counsel for the defense apparently believes that he is entitled to make the motion once again on papers. Although it is by no means clear that a party is entitled to make two CPLR 4404 [*4]motions, this Court will err on the side of giving defendant all the process that it may be entitled to and once again rule on this motion.

Plaintiffs are correct in their opposition that the instant motion raises the same arguments made by defendant (and rejected by the Court) several times during the trial concerning the admissibility of the 2004 preliminary injunction order. Plaintiffs are also correct in pointing out that this argument essentially challenges an evidentiary ruling and is not the proper subject of a motion pursuant to CPLR 4404(a). Thus, to the extent this motion seeks to re-litigate this Court's ruling on the admissibility of the April 16, 2004 preliminary injunction order, it is once again denied. Similarly, to the extent that the instant motion seeks the declaration of a mistrial "in the interests of justice" based on the same challenged ruling, that motion is also denied for the same reasons. Consistent with its earlier rulings, this Court continues to find no merit in counsel's argument that the preliminary injunction order from the 2004 declaratory judgment action should have been part of the evidence at this trial for the purposes advocated by defendant. The overall effect of admitting that order into evidence at this trial would have been to mislead and confuse the jury.

Beyond mere repetition of arguments made and rejected several times at trial, defendant now fashions a new argument based on the aforementioned "fallback" position that the August 31, 2004 transfer of title was part of the settlement agreement in the declaratory judgment action and the $25,000 sale price represented Back Chul Kim's and Sandra Dyche's negotiated agreement as to the true value of Mr. Kim's ownership interest in the property. Relying now on this secondary argument, defendant seems to suggest that it was prevented at trial from introducing any evidence that AGE was a purchaser for fair value without knowledge of a fraud (see, Debtor and Creditor Law § 278; see also, Liebowitz v Arrow Roofing Co., Inc., 259 NY 391 [1932]). This is not the case. Although defendant was not permitted to rely on the preliminary injunction order as evidence of ownership, the defense was nonetheless given very wide latitude to introduce other evidence in support of its claims concerning ownership of the property and the circumstances surrounding the August 31, 2004 transfer from Back Chul Kim to AGE.

As already mentioned, the defense at trial was geared principally toward showing that Sandra Dyche had always been the owner of the premises and that it was plaintiffs who had engaged in predatory lending practices and had contrived to take a mortgage from Back Chul Kim even though he had no right to encumber the premises. Even though it contradicted her claim that she had always been the title owner of the premises, this Court did not prevent Sandra Dyche from testifying that her company, AGE, purchased the apartment from Back Chul Kim in settlement of her lawsuit and that the price paid reflected a fair value after negotiation. Thus the instant motion [*5]overstates the case when it suggests that the Court did not permit the defense to show that AGE paid fair value for the apartment or that it was unaware of a fraud simply because the 2004 preliminary injunction order was not admitted into evidence. The fact is AGE proffered testimony from Sandra Dyche in support of this theory, however, the jury chose not to credit that evidence. As a result, this latest effort to set aside the jury's verdict based on new arguments made for the first time in these papers is similarly unavailing.

To the extent this motion can be read to articulate a challenge to the jury's determinations in light of the evidence presented at trial, it is denied. There was sufficient evidence from which the jury could determine that Back Chul Kim fraudulently conveyed the premises in question. Moreover, to the extent this motion once again challenges this Court's evidentiary ruling concerning the admissibility of the April 16, 2004 preliminary injunction order in Dyche v Kim, it too is denied. Even if such an argument were properly raised on this motion, there is no merit to defendant's repeated assertions that the Court was obligated to put this evidence before the jury. Nor do the interests of justice justify setting aside the jury's verdict on this question. Finally, to the extent that defendant raises new substantive legal arguments on this motion, they too lack merit even though this is hardly the time or place for such arguments. For all these reasons, it is

Ordered that the motion by defendant, American Gateway Energy, to set aside the verdict is denied.

This constitutes the decision and order of the Court.

Dated: February 4, 2009

___________________________________Lottie E. Wilkins, J.S.C. Footnotes

Footnote 1: It must be noted that defense counsel's strategies, and the arguments made in support of them, were often difficult to follow and seemed to change at any given time. Thus the record at trial speaks best as to the nature of the defense's motions and the arguments in support of them.