Thomas v Thomas

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[*1] Thomas v Thomas 2012 NY Slip Op 51749(U) Decided on August 20, 2012 Supreme Court, Monroe County Fisher, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 20, 2012
Supreme Court, Monroe County

Heather Marie Thomas, Plaintiff,

against

Tommy R. Thomas a/k/a TOM R. THOMAS; TOMMY J. THOMAS a/k/a TOM J. THOMAS; WENDY THOMAS; RANDY THOMAS, Defendant.



2012/07519

Kenneth R. Fisher, J.



This is an action to set aside an alleged fraudulent conveyance, pursuant to article 10 of the Debtor and Creditor Law, between defendant and judgment creditor Tommy J. Thomas (Tommy J. or "father") and defendant and judgment debtor Tommy R. Thomas ("husband "or "Tommy R.").

Plaintiff and Tommy R. are former husband and wife divorced pursuant to a judgment of this court dated April 5, 2012 (the "Judgment"). The undersigned presided over a trial of equitable distribution, maintenance, custody, counsel fees, and child support issues in late December 2011 and early January 2012. The court issued a Resettled Decision and Order following the trial on March 30, 2012 (the "Decision"). Pursuant to the Decision and Judgment, the court ordered that the former marital residence at 1793 Manitou Road be sold and that the net proceeds, after payment, from the net proceeds, of the fee owing to the attorney for the parties' children, be distributed 50% to plaintiff and 50% to defendant.

Defendant Tommy J. is the father of Tommy R., and the former father-in-law of plaintiff. A primary issue at the matrimonial trial concerned whether moneys provided to plaintiff and Tommy R. during the parties' marriage to pay debts and fund purchases of marital residences at 23 Vision Circle and, later, 1793 Manitou Road were gifts to Tommy R., or Tommy R. and plaintiff, or loans. During the matrimonial trial, husband and father each testified as to certain advances claimed to be loans to Tommy R. individually, totaling approximately $200,000. In the Decision, the court held, "the court does not credit the testimony of the husband and his father that financial advances made to the [*2]husband and his wife during the course of the marriage constituted loans resulting in indebtedness that must be treated as marital debt subject to equitable distribution." Decision, p. 4. This holding was based, in part on the lack of admissible evidence substantiating the alleged loans, but also, and more heavily, on the surrounding circumstances:

Separately, the circumstances of the financial advances betray their true character as gifts to both spouses, as was the initial $85,000 contribution to the purchase price of Vision Circle, i.e., "that came to them by reason of the marriage." Icart v. Icart, 186 AD2d 918, 919 (3d Dept. 1992). At least one of the financial advances was used to pay off the Vision Circle mortgage, which was undisputedly a marital debt associated with marital property held in both their names. Where a " gift' was used to satisfy a joint debt, it [i]s properly treated as marital property." Strang v. Strang, 222 AD2d 975, 788-89 (3d Dept. 1995)(citing Icart v. Icart, supra). Furthermore, many of the alleged debts were made several years ago with no contemporaneous or other credible demand for re-payment. For all this record shows, the first demand for re-payment came after the date of commencement, indeed not until the wife decided to reject divorce mediation in favor of hiring her separate lawyer. Such a lapse of time suggests that, "when he delivered the money, father, . . . [an experienced businessman], was not really concerned with securing re-payment." Matter of Marriage of Street, 90 Or. App. 466, 471, 753 P.2d 424, 426 (Ct. App. Or., 1988). Given the rather modest income levels of the parties, it is impossible to imagine how defendant's father could have expected re-payment of such large sums, either on demand or otherwise. And, indeed, the court finds that no demand for payment of any kind occurred until plaintiff filed for divorce, as in Matter of Marriage of Street, supra. Finally, without introduction into evidence of the purported promissory notes and testimony about the circumstances of their making, it is impossible to determine whether they were given, if at all, and whether if so they "were meant to serve some purpose other than to evidence a real debt." Id. 90 Or. App. at 470-71, 753 P.2d at 426. The court declines to treat these advances, including the ones for the children's parochial schooling, as loans subject to equitable distribution.

Decision, p. 5-6.

In her pleadings in this action, plaintiff alleges that a judgment taken by Tommy J. on May 19, 2011 ("money judgment"), is a fraudulent conveyance as that term is defined in Debtor & Creditor Law, article 10. In father's suit on the notes, Tommy J. alleged that he made certain loans pursuant to promissory notes and oral agreements, that such promissory notes and oral [*3]agreements created binding contracts, and that no payments have been made. According to an affidavit before the court, Tommy R. was personally served with the summons and complaint in father's action. Tommy R., however, never appeared or answered the suit, and Tommy J.'s counsel submitted a Statement for Judgment to the Clerk of Monroe County on May 18, 2011, and the Statement of Judgment was filed May 19, 2011. The trial on the matrimonial was due to start on May 24, 2011, but was adjourned due to an illness.

Plaintiff further alleges that the purpose of the fraudulent conveyance was to hinder, delay, defraud, impair, diminish and deny plaintiff her rights to assets under the Judgment of Divorce. Defendants have answered with a denial.

Plaintiff now moves for summary judgment setting aside the money judgment and seeks attorney's fees, a finding of contempt, and an award of $200,000 for fraudulent conduct. The order to show cause bringing on this motion also sought, and a TRO was granted consisting of, injunctive relief against Tommy J. holding any attempted enforcement of the money judgment in abeyance as against the proceeds of the sale of the marital residence at 1793 Manitou Road.

According to the affidavit of plaintiff's counsel, submitted in support of the present motion, the money judgment was found during research by the title company retained by counsel for plaintiff and Tommy R. in the sale of 1793 Manitou Rd ("sale counsel"). The sale counsel then telephoned plaintiff's counsel to advise her of the money judgment. According to plaintiff's counsel, this was first time she became aware of the judgment. The transcript in the matrimonial action shows that Tommy R. and Tommy J. each testified on direct and cross-examination as to the alleged loans. Despite that a money judgment as to these same alleged loans had been issued on May 19, 2011, the existence of this judgment was not revealed. Tommy J., the judgment creditor, testified as to the amount and alleged reason for each loan and, when asked if any of these loans had been repaid to him, he answered only "no" without mention of the judgment he obtained on these loans months earlier. Tommy R.'s testimony was similar, that is, without mention of the default in father's action that he now admits to. He could easily recall the circumstances and amounts of the loans, though some had taken place 6 years prior, but failed to mention (if he knew - the record contains no direct evidence on this point) that his father had obtained a judgment against him as to these very loans.

In response to this motion, Tommy R. asserts that plaintiff alleges no fraudulent or deceitful acts on his part. He states that plaintiff and her counsel were fully aware of the loans his father made and at no time was he asked during the trial whether has father had pursued legal action against him. Further, [*4]plaintiff's counsel could have easily found the judgment had she properly searched the public records. Tommy R.'s counsel asserts that there was no fraud in the making of the promissory notes which became known to plaintiff's counsel during the matrimonial action, and the fact that the money judgment was unknown to plaintiff's counsel is due to her inability to properly search public records. The court notes that whether plaintiff's counsel should have discovered the Statement of Judgment sooner is not the issue here as there is no assertion of a statute of limitations question as to plaintiff's claims interposed here. Dowlings, Inc. v. Homestead Dairies, Inc., 88 AD3d 1226, 1231 3d Dept. 2011) (statute of limitation begins to run two years from when plaintiff discovered or should have discovered the fraudulent conveyance and noting that "[t]he failure to ascertain that an allegedly fraudulent conveyance has occurred through the inspection of public records is not a basis for imputing knowledge of the fraud in the absence of circumstances that would require the plaintiff to investigate").

Similarly, Tommy J. asserts that the various loans to Tommy R. are antecedent debts resulting from loans made by him, his company Tra-Mac Builders, Inc., his wife Wendy, and his other son, Randy,[FN1] to Tommy R.[FN2]

"A fraudulent or collusive judgment is a transfer or conveyance within the meaning of the law relating to fraudulent transfers or conveyances both at common law and under the Debtor and Creditor Law, section 270. (See Decker v. Decker, 108 NY 128). Relief by judicial process to creditors against fraudulent transfers including judgments involves the exercise of equitable jurisdiction." Petrides v. Park Hill Restaurant, 265 App. Div. 509, 510 (1st Dept. 1943)(emphasis supplied). See United States v. Coppola, 1994 U.S. Dist. LEXIS 16848, 1994 WL665751 (Conclusion of Law #47)(E.D.NY 1994)("The courts of New York have recognized that a transfer of property which occurs with the use of a judicial decree is not removed from further scrutiny under [*5]the Debtor and Creditor Law")(collecting cases), aff'd, 85 F.3d 1015 (2d Cir. 1996). In a case such as this, the Second Department upheld an award of summary judgment with the following passage:

A party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law offering sufficient evidence to demonstrate the absence of any triable issue of fact (see Alvarez v. Prospect Hosp., 68 NY2d 320 [1986]; Zuckerman v. City of New York, 49 NY2d [1980]). The plaintiff demonstrated the absence of any triable issue of fact with respect to her claims pursuant to Debtor and Creditor Law §§ 273-a and 276. Therefore, the motion was sufficient to make out a prima facie case for summary judgment (see Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v. City of New York, supra). In opposition, the defendant fails to raise a triable issue of fact.

Dempster v. Overview Equities, Inc., 4 AD3d 495, 497 (2d Dept. 2004).

Here, plaintiff establishes that she was a creditor of Tommy R. by virtue of the matrimonial action wherein maintenance and child support was sought. Kasinski v. Questel, 99 AD2d 396 (4th Dept. 1984). Plaintiff also has established her entitlement to summary judgment pursuant to Debtor & Creditor Law §273(a) by proving that the conveyance, i.e., the money judgment, was made without fair consideration at a time when Tommy R. was insolvent. Dempster v. Overview Equities, Inc., 4 AD3d 495, 497-498 (2d Dept. 2004)(holding that there was no fair consideration where underlying notes had expired and were unenforceable). It is not controverted by any defendant that plaintiff was a creditor or that Tommy R. was insolvent. The Statement of Judgment exceeds Tommy R.'s assets at the time, which consisted of his share of the marital residence, which was determined to be 50% of the net equity, far less than the money judgment.

Plaintiff establishes inadequate consideration through the findings of this court that the alleged antecedent debt, the basis of the money judgment, were not bona fide debts. As the Decision indicates, the issue of whether the monetary advances to Tommy R. were debts or gifts was fully litigated, and this court found that they were gifts. Accordingly, plaintiff establishes prima facie entitlement to judgment.

As to whether defendants raise an issue of fact, defendants argue that the judgment merely satisfies antecedent debt. Defendants proffer the alleged promissory notes claimed to evidence the debt. This court is required to determine if the averments of the defendants and the proffer of promissory notes are sufficient to raise an issue of fact in this action. They are not. The issue of the validity of the notes is settled and [*6]the principles of res judicata bar relitigation here. Kromberg v. Kromberg, 44 NY2d 718 (1978)(wife is barred by the doctrine of res judicata from relitigating the validity of the reconveyance provision, which was resolved against her in the prior divorce action); Dayanoff v. Dayanoff, __ AD3d __, 946 N.Y.S.2d 624 (2d Dept. 2012). As a party to the prior action, Tommy R. is certainly barred from asserting that his father made legitimate loans to him.

Further, Tommy J. may not assert that he made legitimate loans as he was in privity with Tommy R. People ex rel. Spitzer v. Applied Card Systems, Inc., 11 NY3d 105, 122-23 (2008); Matter of Shea, 309 NY 605 (1956); Avco Security Systmes, Inc. v. Bergel, 29 AD3d 837 (2d Dept. 2006); Shire Realty Corp. v. Schorr, 55 AD2d 351, 360-61 (2d Dept. 1977); ACE Holding, LLC v. New York State Off. of the State Comptroller, 2009 NY Misc. LEXIS 5191, 8-9 (Sup. Ct. NY Co., Oct. 15, 2009)("a non-party may be collaterally estopped from commencing an action, or defending one, when it is in privity with the party who lost the first action"). Tommy R. admitted in his testimony that he borrowed money for his attorney's fees from his father. In explaining why he could borrow money to meet this need, but not borrow to pay his obligations under various court orders, Tommy R. answered: "because my father, when I spoke with him about it, it was in his best interests for me to have an attorney to cover the money that is owed to him . . . He [Tommy J.] did that in his benefit to protect his interests." Transcript, January 4, 2012, p. 4, lines 22-24; p. 5, lines 7-8. Thus, Tommy J. provided money for Tommy R.'s attorneys to protect his [Tommy J.'s] interests i.e., to reclaim his money. Moreover, Tommy J. testified extensively at trial as to the various alleged loans. The court does not consider Wendy and Randy as their alleged rights were by their admission assigned to Tommy J.

"Even assuming, arguendo, that the [money judgment] was made in [ ] satisfaction of a bona fide antecedent debt, it was not made in good faith. Good faith is required of both the transferor and the transferee, and it is lacking when there is a failure to deal honestly, fairly, and openly." Matter of CIT Group/Commercial Servs., Inc. v. 160-09 Jamaica Ave. Ltd. Partnership, 25 AD3d 301, 303 (1st Dept. 2006). As noted, and discussed below, neither Tommy R. or Tommy J. disclosed the fact of the money judgment during their trial testimony concerning these alleged loans and no notification of service of the suit, default in the suit, or the Statement of Judgment was provided to plaintiff or the court.

Accordingly, the Statement for Judgment, dated May 18, 2011, and filed May 19, 2011, taken by defendant Tom J. Thomas as against Tom R. Thomas, Index number 2011/03211, is hereby vacated and declared null and void. The court is unaware of any current [*7]attempts by Tommy J. to enforce his statement of judgment against the proceeds of the sale of 1793 Manitou Road. However, to the extent that any such attachments, levies or other enforcement measures exist, such are hereby vacated and declared null and void.

Plaintiff here is also entitled to summary judgment on her Debtor and Creditor Law §276 claim for counsel fees and disbursements.

Debtor and Creditor Law §276 provides that "[e]very 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." Moreover, "[d]irect evidence of fraudulent intent is often elusive. Therefore, courts will consider 'badges of fraud' which are circumstances that accompany fraudulent transfers so commonly that their presence gives rise to an inference of intent"

Badges of fraud include (1) the close relationship among the parties to the transaction, (2) the inadequacy of the consideration, (3) the transferor's knowledge of the creditor's claims, or claims so likely to arise as to be certain, and the transferor's inability to pay them, and (4) the retention of control of property by the transferor after the conveyance.

Dempster v. Overview Equities, Inc., 4 AD3d at 498, approved, ABN AMRO Bank NY v. MBIA, Inc., 17 NY3d 208 (2011).

Here, Tommy R. and Tommy J. enjoy a close relationship. They are father and son and work together in the father's business. The inadequacy of the consideration has been established in that the alleged loans on which the money judgment was granted have been judicially determined to be gifts and not loans. Further, the matrimonial action had been extant for a year at the time Tommy J. brought his money judgment action, and temporary support orders were in effect.Interim Unallocated Support Order, December 28, 2010 [Winslow, J.]; Interim Counsel Fee Order, January 14, 2011 [Winslow, J.]. Moreover, Tommy R. has repeatedly, in his response to this motion, his trial testimony, and various appearances before this court provided sworn averments that he has "no money." His statement of net worth submitted in this action shows his only significant asset to be his interest in the marital residence.

To these badges of fraud, the court would add the chronology of events. In re Flutie NY Corp., 310 B.R. 31 (Bankr, S.D.NY, 2004) (badges of fraud may be found in examination of the "general chronology of events and transactions under inquiry"). The father's action for a money judgment was initiated two months prior to the original trial date in the matrimonial action and the Statement of Judgment was sought just one week prior to the [*8]original trial date. As to this timing, this court made a prior finding that "the first demand for re-payment came after the date of commencement, indeed not until the wife decided to reject divorce mediation in favor of hiring her separate lawyer." Additionally, despite his decision to default, Tommy R. failed to update his statement of net worth to show that he would become a judgment debtor to his father to the tune of $197,614.97.[FN3] Although his present lawyer asserts that there was no proof that Tommy R. ever knew of the judgment, there was proof that he was served with his father's suit on the notes. Tommy R. admitted service in his responding affidavit, further admitted that he had "no defense" to his father's suit, further admitted that by reason thereof he refused to hire a lawyer to defend against it, and thus he admitted facts establishing that he intentionally defaulted in answering his father's complaint. See further discussion below at 17. This timing, Tommy R.'s default in the suit without notice of the default to the court or plaintiff in the matrimonial action, and the lack of subsequent disclosure leads to a strong inference of underhandedness, and lack of good [*9]faith, and thus amounts to a "badge" of fraud. A "secret and hasty transfer not in the usual course of business" between the parties is considered a "badge of fraud" indicative of fraudulent intent. MFS/Sun Life Trust-High Yield Series v. Van Dusen Airport Services Co., 910 F. Supp. 913, 935 (S.D.NY 1995); United States v. McCombs, 928 F. Supp. 261, 276 (W.D.NY 1995)(collecting cases).

In an attempt to raise an issue of fact, defense counsel at oral argument each stressed, Mr. Parrinello for the judgment debtor's father and Mr. Green for the judgment debtor and defendant in the matrimonial action, that there is no evidence that Tommy R. ever knew of the judgment taken against him when he testified at trial. Yet Tommy R. admits in his affidavit, as alluded to above, that he was served with his father's complaint, that he knew of his father's pending action on the notes, and that he made an affirmative decision not to defend because he had no money to pay a lawyer and "had no legitimate defense to the same." Moreover, Tommy R. acknowledged in his affidavit that the statement for judgment against him was filed with the County Clerk, but he failed to address whether he was served with the same. Most important, he did not in his affidavit deny or otherwise disavow knowledge of his father's judgment during the period leading up to the trial and the trial itself.

Similarly, there is no allegation in any of the papers filed by Mr. Parrinello's clients in this action that the judgment was never served on Tommy R., or that Tommy R. was not otherwise informed of the existence of the judgment. In response to plaintiff's motion, Tommy J. Thomas makes no reference to his creditor action at all except to say that the various assignments to him in early 2011 were made "to facilitate a single judgment proceeding." He does not deny discussing the judgment with his son although he, of course, had knowledge of it. The affidavits of Wendy and Randy Thomas make similar averments about the purpose of the assignments but fail to address whether the judgment was made known to Tommy R.

Because counsel for Tommy J., Wendy, and Randy Thomas acknowledged knowledge of the pendency of the matrimonial action and the identity of Tommy R.'s matrimonial counsel, the failure to address in these responding papers whether the judgment was ever served on Tommy R. or otherwise made known to him is damning in view of the other badges of fraud discussed above. If it was served on him, the fraudulent nature of father and son's testimony would be made manifest and his failure to update his statement of net worth as required by the rules would constitute clear fraud by omission. On the other hand, if Tommy R. was not made privy to the contents of the judgment, whether by service of a notice of entry or otherwise, that raises troubling questions about the motives of Tommy J. and his lawyer in not providing [*10]Tommy R. with such notice. Common practice would dictate preparation of a notice of entry to be served on the defaulting judgment debtor. The only reason for failing to do this would be to keep it as openly secret as it could be given the nature of the public recording statutes. In other words, not informing Tommy R. of the judgment could have no other purpose but to put the plaintiff to the burden of discovering it by suitable record searches, and further to keep the court from squarely addressing the credibility of the judgment in the course of the matrimonial trial should plaintiff fail to succeed, as indeed plaintiff did so fail, in discovering the existence of the judgment. On this view of the facts, which is the most charitable to Tommy R. and his father that the court can conceive, a further badge of fraud is identified. That a licensed lawyer permitted this to happen is most disappointing. Simply, whether Tommy R. was in fact served with notice of the Statement of Judgment does not raise a material question of fact.

As to Tommy R.'s "admission" that he had no defense to his father's creditor action, an examination of the record, placed before the clerk who entered judgment shows that this was not the case.[FN4] Had the matter come before the court on a motion for a default judgment under CPLR 3215, by reason of Tommy R.'s default in appearance, the court would have had the obligation to "make an assessment or take an account of proof," CPLR 3215(b), during which the "plaintiff must present some proof of liability so that the reviewing court can determine that the prima facie validity of the uncontested cause of action has been established." Gagen v. Kipany Productions, Ltd., 289 AD2d 844 (3d Dept. 2001)(internal citations and quotations omitted). This is "because the granting of a default judgment does not become a mandatory ministerial duty upon a defendant's default." Id. The court must be satisfied that non-hearsay facts exist upon which the judgment may be ordered. State v. Williams, 44 AD3d 1149 (3d Dept. 2007). This court likely would have determined that the Verified Complaint itself was defective and did not present prima facie entitlement to judgment.

The elements for recovery on a promissory note require the plaintiff to establish that:

(1)The defendant signed the note, UCC §3-401;

(2)The note contains an unconditional promise to pay, UCC §3-106; [*11]

(3)The promise is to pay a sum certain or fixed amount of money, UCC §3-104(a);

(4)The note is payable on demand or at a definite time, UCC §108;

(5)The plaintiff is entitled to enforce the note, UCC §3-301;

(6)A default has occurred - that is, if the note is demand paper, that due demand has been made, UCC §§3-104, 3-108; and

(7)If the note is due at a definite time, that time has past without payment, UCC §3-108(b).

Note, Cause of Action to Enforce Payment of Draft or Note, 40 Causes of Action2d 463 at §16 (2009).

Those of the notes which contained no payment term (meaning all except the 23 Vision Circle note for $44,500 executed in 2004) are considered due on demand notes by virtue of UCC §3-108(a)(ii) (note is "payable on demand" if it "does not state any time for payment"). As to these notes plaintiff failed to present a prima facie case because such a case requires an allegation that there was a failure to comply with the terms of payment (where the note contains such terms) or a failure to pay after "due demand for payment has been made." Money Store v. Kuprianchik, 240 AD2d 398 (2d Dept. 1997)("defendant's default in payment of the note after due demand"); Three Feathers, Inc. v. Roemer, 270 AD2d 769, 770 (3d Dept. 2000)("failure to pay after demand for payment"); Bragarnik v. Zodiac on Brighton Café, Inc., 189 AD2d 744 (2d Dept. 1993)(prima facie case for summary judgment "demonstrated by proof of the existence of the promissory notes, the demand for payments, and the defendant's failure to make payments"). Here, there was no allegation in the trial that demand for payment was ever made except when the plaintiff in the matrimonial action decided to hire a lawyer in lieu of divorce mediation. Despite this, Tommy J.'s verified complaint in his action makes no reference to any demand for payment, oral or otherwise.

Similarly, Tommy R. could have raised credible defenses against his father's creditor action. Concerning the 23 Vision Circle note, the payment term read as follows: "This loan will be for 0% interest and will be paid back at $250.00 a month until paid in full starting 01/01/05." The complaint in the creditor action fails to allege that a demand for payment was made. The proof at trial showed that Tommy J. fully waived enforcement of this payment term through 2011, as no payments were made. [*12]Although the court's Re-settled Decision and Order in the matrimonial action made reference to a "first demand for re-payment" at the time the "wife decided to reject divorce mediation in favor of hiring her separate lawyer," no proof of any written demand was proffered at trial and the testimony of father and son was murky at best on the issue of whether any "due demand for payment" was made or instead whether father only harbored an expectation of re-payment at the time divorce proceedings began in earnest. At the very best, i.e., with respect to the Vision Circle note, the lack of any payment since the installment term was to begin in January 2005 would on its face raise questions of fact concerning waiver, or laches, in enforcement sufficient to preclude entry of a default judgment had Tommy R. answered and asserted these basic defenses.

Additionally, all but one of the so-called promissory notes provide in unambiguous terms that the loan would be paid back only when Tommy R. obtained a "mortgage" or "re-financing." Tommy J.'s complaint fails to allege that this condition was fulfilled.[FN5] Consequently, those notes which contain such a condition precedent were not yet due. Tommy J. was not entitled to enforce them at the time the judgment was taken, nor indeed is he now in any position to demand payment without fulfillment of the condition. Westchester Federal Sav. & Loan Ass'n v. Secor Lake Camp, Inc., 37 AD2d 615, 616 (2d Dept. 1971)("plaintiff's failure to allege that this condition precedent to its action has been satisfied requires dismissal of its complaint"); New York Plumbers Specialties Co. v. Columbia Cas. Co., 13 AD2d 449 (1st Dept. 1961)("failure to plead fulfillment of such condition is fatal to the complaint"); Gilsey v. Wm. Hengerer Co., 285 App. Div. 1007 (4th Dept. 1955)(same); Samson Elec. Co. v. Buffalo Elec. Co., 234 App. Div. 521 (4th Dept. 1932)("fulfillment is in the nature of a condition precedent, which must be pleaded as part of the cause of action").

Tommy R. could have asserted a potentially meritorious laches defense as to these notes as the the creditor suit demanding payment came at a time, after a lengthy delay, when Tommy R. could not mortgage the marital residence due to orders issued at the beginning of the matrimonial prohibiting him any further encumbrance of the marital residence.

The court believes that, in the circumstances, and especially in view of the defenses he had to enforcement of the notes as specified above, Tommy R.'s decision to default in his father's action was an affirmative act in derogation of the [*13]automatic orders the statute imposes and that he was served with. The automatic orders provide that: "neither party shall . . . encumber . . . or in any way dispose of, without the consent of the other party in writing, or by order of the court any property . . . including . . . real estate." DRL §236(B)(2).

Accordingly, plaintiff is entitled to attorneys' fees and costs. Plaintiff's counsel is to submit a detailed breakdown of service provided in bringing this application, including oral argument of the issue, along with a proposed order.

Plaintiff's application for contempt for "willful and contumacious deceit upon the court is denied." Plaintiff presented no arguments specific to the contempt issue in her affidavit. The court further declines to issue a money judgment, pursuant to Debtor & Creditor Law §279(d) (permitting an order which the circumstances of the case requires), for money judgment in the amount of $200,000 against all defendants. "Such damages are recoverable when a defendant's conduct "'evince[s] a high degree of moral turpitude and demonstrate[s] such wanton dishonesty as to imply a criminal indifference to civil obligations'" (Ross v. Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007], quoting Walker v. Sheldon, 10 NY2d 401, 405 [1961])." Dowlings, Inc. v. Homestead Dairies, Inc., 88 AD3d 1226, 1231-1232 (3d Dept. 2011). The court does not find that defendants' conduct here reaches to this standard.

SO ORDERED.

______________________

KENNETH R. FISHER

JUSTICE SUPREME COURT

DATED:August __, 2012

Rochester, New York Footnotes

Footnote 1: Tommy J. avers that the loans made by Tra-Mac Builders, Inc., Wendy Thomas and Randy Thomas were assigned to him on March 15, 2011, the same day he signed the verified complaint in the money judgment action (excepting one loan from Randy Thomas, which was assigned to Tommy J. on January 14, 2011).

Footnote 2: Tommy R.'s counsel urges the court to deny summary judgment as plaintiff did not submit an affidavit in support of her motion. However, "[a] verified pleading may be accepted in lieu of an affidavit of merit." Juseinoski v. Bd. of Educ., 15 AD3d 353, 356 (2d Dept. 2005). Here, plaintiff submitted her verified complaint in support of the motion.

Footnote 3: This information is material and relevant and could have been disclosed at several places on the statement of net worth. At Section IV (Assets), (G) Real Estate of the statement of networth as provided at 22 NYCRR 202.16(B) Subch A., a party must disclose the "amount of mortgage or lien." "Entering a money judgment creates a lien on any real property of the judgment debtor ( CPLR 5203)." Johnson v. Augsbury Organization, Inc., 167 AD2d 783, 784 (3d Dept. 1990). The judgment taken by Tommy J. created a lien on the marital residence that, in view of Tommy R.'s conscious decision to default, should have been disclosed in an updated statement of net worth.

Further, at section V(H) provides for the disclosure of "Other liabilities." The Statement of Judgment is a liability that should have been disclosed as such here. Further, Section X provides for "[o]ther data concerning the financial circumstances of the parties that should be brought to the attention of the Court." That his father had taken a money judgment, creating a lien on the marital residence, is certainly a circumstances that should have been brought to the attention of the court.

"The withholding of information from the court which, if disclosed, might cause the court to take a different view of the facts, is as much a fraud upon the court as actual misstatements of fact and in matrimonial actions, the People of the State of New York have an interest as a matter of public policy in addition to the rights of the plaintiff and defendant as between themselves." N.C. v. M.C., 34 Misc 3d 1202A (Sup. Ct. Queens Co. 2011)(internal quotes and citation omitted).

Footnote 4:The County Clerk, of course, looks only to proof of the default and whether the causes of action are for sum certain or may be reduced to a sum certain by calculation and is not concerned with prima facie cases or possible defenses.

Footnote 5: Indeed, at the trial no evidence of a mortgage pertaining to 1793 Manitou Road was adduced.



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