B & N Roofing & Sheet Metal, Inc. v BFC Partners

[*1] B & N Roofing & Sheet Metal, Inc. v BFC Partners 2009 NY Slip Op 50414(U) [22 Misc 3d 1133(A)] Decided on March 11, 2009 Supreme Court, Kings County Schneier, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 11, 2009
Supreme Court, Kings County

B and N Roofing and Sheet Metal, Inc., Plaintiff,

against

BFC Partners, Donald Capoccia, Brandon Baron, Gregory Baron, Joseph Ferrara, Peter Ferrara, and Bank of America, Defendants,



15459/08



ATTORNEYS FOR PLAINTIFF

B and N ROOFING AND SHEET METAL, INC.

CINDY J. MENDELSON, ESQ.

26 COURT STREET SUITE 1903

BROOKLYN, NEW YORK 11242-1119

(718) 852-8849

ATTORNEYS FOR DEFENDANTS

TODTMAN, NACHAMIE, SPIZZ and JOHNS, P.C.

425 PARK AVENUE

5TH FLOOR

NEW YORK, NEW YORK 10022

(212) 754-9400

Martin Schneier, J.

Defendants BFC Partners, Donald Capoccia, Brandon Baron, Gregory [*2]Baron, Joseph Ferrara and Peter Ferrara (collectively, the "movants") moved to dismiss the action pursuant to CPLR § 3211(a)(10) for failure name a necessary party and pursuant to CPLR § 3211(a)(7), for failure to state a cause of action. Plaintiff responded by serving an amended complaint. The movants then elected to proceed with this motion

"against the amended complaint."

Background

Plaintiff was involved in contract disputes with two non-parties, BFC Construction Corporation ("BFC") and a subcontractor. Plaintiff and BFC entered into binding arbitration on October 29, 2003. On March 15, 2005, plaintiff was awarded $175,270.22 by the arbitrator. The arbitration award was confirmed and judgment was entered against BFC on September 9, 2005, in the amount of $182,673.53. At the time of the arbitration award, defendants Donald Capoccia, Brandon Baron, and Joseph Ferrara , were the principals and only shareholders of BFC.

The amended complaint alleges, in pertinent part, that: "18. During the course of the legal proceedings between plaintiff and BFC Construction Corp., and continuing after judgment was entered against BFC Construction Corp., defendants Donald Capoccia, Brandon Baron, Josep Ferrera, Gregory Baron and Peter Ferrera willfully and intentionally transferred assets from BFC Construction Corp. to BFC partners.19. During the course of legal proceedings defendants Donald Capoccia, Brandon Baron, Joseph Ferrera, Gregory Baron and Peter Ferrera also transferred assets of BFC Construction Corp. to other entities owned and controlled by themselves.20. During the course of legal proceedings, defendants Donald Capoccia, Brandon Baron, Joseph Ferrera, Gregory Baron and Peter Ferrera also transferred assets of BFC Construction Corp. To themselves personally21. The above transfers of the assets of BFC Construction Corp., were done with the intent to avoid the judgment awarded to the plaintiff against the judgment debtor, BFC Construction Corp."

The amended complaint alleges as the First Cause Of Action in pertinent part as follows: "31. Subsequent to the issuance of the arbitration award, the defendants Donald Capoccia, Brandon Baron, Joseph Ferrera, Gregory Baron and Peter Ferrera wilfully transferred funds to themselves, BFC Partners and other [*3]entities controlled by them without consideration in an attempt to avoid execution of the judgment by the plaintiff.32. In 2005, defendants Donald Capoccia, Brandon Baron and Joseph Ferrera transferred their shares in BFC Construction Corp. to defendants Gregory Baron and Peter Ferrara in an attempt to defraud the judgment creditor.33. The defendants Gregory Baron and Peter Ferrara accepted the conveyance of shares in BFC Costruction Corp. with knowledge of the wrongful and fraudulent attempt of defendants Donald Capoccia, Brandon Baron and Joseph Ferrera.34. The above described conveyances were made with the further intention of assuring that the judgment debtor would not be in possession of assets out of which plaintiff and other creditors could satisfy their past and future claims against judgment debtor....36. The above transfers describes a fraudulent conveyance under the Debtor and Creditor Law including but not limited to, section 276 thereof."

The amended complaint alleges as the Second Cause Of Action in pertinent part as follows: "39. As set forth above, defendants caused assets of the judgment debtor to be placed in possession of themselves, BFC Partners and other entities owned and controlled by the defendants for little or no consideration.40. These conveyances for little or no consideration constituted a fraudulent conveyance under the Law including but not limited to Sections 273 and 275 thereof."

The amended complaint alleges as the Third Cause Of Action in pertinent part as follows:

"43. Defendants became fraudulent transferees of the assets of the judgment debtor, BFC Construction Corp., in 2005.

44. Pursuant to the Debtor and Creditor Law, as well as in equity, the assets paid to defendants BFC Partners, Donald Capoccia, Brandon Baron, Joseph Ferrera, Peter Ferrera, Gregory Baron and those assets held by Bank of America (formerly known as Fleet Bank) should be placed in a constructive trust for the benefit of plaintiff." [*4]

Plaintiff claims to have properly alleged in its amended complaint fraudulent conveyances by the defendants pursuant to the Debtor and Creditor Law, Sections 273 and/or 275 and/or 276.

Discussion

A. Dismissal for the failure to name a necessary party.

Movants initial grounds for dismissal is that BFC is a necessary party and, the failure to name BFC requires dismissal pursuant to CPLR § 3211(a)(10). Section 3211 states: "a) Motion to dismiss cause of action. A party may move for judgment dismissing one or more causes of action asserted against him on the ground that:...10. the court should not proceed in the absence of a person who should be a party."

A defendant is not a necessary party if the plaintiffs have obtained a money judgment against it and, the challenged conveyances are absolute (Braun Farms, Inc. v. Goldman, 296 AD2d 472 [2d Dept 2002]). In the instant case, the plaintiff has obtained a money judgment against BFC and the challenged conveyances are alleged to be absolute. Accordingly, BFC is not a necessary party.

B. Dismissal for failure to state a cause of action.

Movants also seek dismissal on the grounds that complaint fails to state a cause of action, pursuant to CPLR § 3211(a)(7). Section 3211 states: "a) Motion to dismiss cause of action. A party may move for judgment dismissing one or more causes of action asserted against him on the ground that:...

7. the pleading fails to state a cause of action."

The court when deciding a motion to dismiss the complaint pursuant to CPLR § 3211(a)(7) for failure to state a cause of action must determine whether the plaintiff has a legally cognizable cause of action and not whether the action has been properly plead. (Leon v Martinez, 84 NY2d 83 [1994]; Well v Yeshiva Rambam, 300 AD2d 580 [2d Dept. 2002]. The complaint must be liberally construed, the facts alleged therein must be presumed to be true and the plaintiff [*5]must be given the benefit of every favorable inference (Leon v Martinez, supra; Sitar v Sitar, 50 AD3d 667, 669 [2d Dept. 2008]; Riback v Margulis, 43 AD3d 1023 [2d Dept. 2007]).

If, from the facts alleged in the complaint and the reasonable inferences which can be drawn from those facts, the court determines that the pleader has a cognizable cause of action, the defendant's motion to dismiss pursuant to CPLR 3211(a) (7) must be denied. (Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409 [2001]; Stucklen v Kabro Assocs. 18 AD3d 461 [2d Dept. 2005]).

The amended complaint alleges three causes of actions.

First cause of action

The first cause of action alleges fraudulent conveyances in violation of Debtor and Creditor Law Section 276. Section 276 of the Debtor and Creditor Law states: "Every conveyance made and every obligation incurred 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 future creditors."

The first cause of action alleges actual fraudulent intent; accordingly, it must comply with the particularity provisions of CPLR § 3016(b). CPLR § 3016(b) states: "Where a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail."

Because of the difficulty of proving actual intent to defraud creditors, "the pleader is allowed to rely on badges of fraud ' to support his case, i.e., circumstances so commonly associated with fraudulent transfers that their presence gives rise to an inference of intent" (In re Sharp Intl. Corp., 403 F3d 43, 56 [2d Cir 2005], quoting Wall St. Assoc. v. Brodsky, 257 AD2d 526, 529 [1st Dept 1999]). Such "badges of fraud" may include "a close relationship between the parties to the alleged fraudulent transaction; a questionable transfer not in the usual course of business; inadequacy of the consideration; the transferor's knowledge of the creditor's claim and the inability to pay it; and retention of control of the property by the transferor after the conveyance" (Wall St. Assoc., supra). In this case, the complaint alleges sufficient "badges of fraud" to defeat the motion to dismiss.

Second cause of action

The second cause alleges fraudulent transfers of the assets of BFC to movants for little or no consideration in violation of Debtor and Creditor Law Section 273 and 275. Section 273 of the Debtor and Creditor Law states:

"Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration."

Section 275 of the Debtor and Creditor Law states:

"Every conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors."

With Debtor and Creditors Law sections 273 and 275, the fraudulent intent is presumed. Therefore, it is unnecessary to plead these violations with the specificity required CPLR § 3016(b)(Menaker v. Alstaedter, 134 AD2d 412 [2d Dept 1987]).

This cause of action in the amended complaint is arguably inartfully drafted in that it fails to specify a single transfer of assets from BFC to the defendants. Nonetheless, the instant amended complaint adequately alleges for pleading survival purposes that the defendants received the assets of BFC without fair consideration and that BFC was rendered insolvent thereby. Accordingly, the drastic remedy of dismissal is not warranted

Third cause of action

The third cause of action seeks the imposition of a constructive trust on the assets allegedly transferred from BFC. The four elements of a constructive trust are: (1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment (Sharp v. Kosmalski, 40 NY2d 119,121 [1976]). The complaint fails to adequately plead any of these elements. Accordingly, this cause of action is dismissed.

Conclusion

Based on the foregoing, the motion by defendants BFC Partners, Donald Capoccia, Brandon Baron, Gregory Baron, Joseph Ferrara and Peter Ferrara is granted to the extent that the third cause of action is dismissed against these [*6]defendants on the grounds that it fails to state a cause of action and is otherwise denied.

This constitutes the Decision and Order of the Court.

____________________

J.S.C.