Porush v Porush
Annotate this CaseDecided on August 8, 2006
Supreme Court, Nassau County
Nancy Porush, Plaintiff,
against
Daniel Porush, Defendant.
200807-04
Robert A. Ross, J.
Defendant did not appear for a contempt hearing before me, ordered by decision and order of this Court (Ross, J.) Dated May 12, 2006. Upon his non appearance on May 30, 2006, the matter was adjourned until June 14, 2006 to afford him yet additional time to appear, and upon notice to him by plaintiff's counsel, he again failed to appear. A hearing was held before me and completed on June 14, 2006.
This is the third application for contempt, and is particularly egregious given that the plaintiff initiated similar proceedings in August, 2004, and November, 2005. Those matters were resolved by stipulation, with the plaintiff exalting herself to utilize enforcement and then lending herself to compromise - - - each time, the defendant's position shifted - - - from conciliation to subsequent violation of the stipulation he entered into.
This record is expanded, upon the Court's sua sponte motion, to include all previous orders, and the testimony of defendant, from the previous hearing before me, as they are "material and pertinent" to the issue to be resolved herein.
The defendant, currently on federal parole, resides in Florida, in a luxurious, expansive, ocean view condominium. From the previous hearing before me, it was demonstrated and acknowledged that the defendant's holdings, automobiles, and skin-care business is titled under the name of his new wife, who purportedly "pays" all the parties' personal expenses. The defendant's multi-dimensional plan for his skin products involved business capital and knowledge capital, all of which he possesses. His current prosperity was never acknowledged, and instead, replaced with arrogance, deep belief and self delusion in refusing to adhere to each stipulation that resolved each of the previous proceedings before me. The corporation used here to pay for his lifestyle and his use of placing assets under his wife's name is a shell game, albeit poorly orchestrated.
BACKGROUND[*2]
Plaintiff and defendant were previously divorced by Judgment granted on November 1, 2000 in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida. The parties have three children.
In May of 1999, the defendant pled guilty to money laundering and securities fraud in connection with his direct involvement with Stratton-Oakmont Brokerage. In 2001, the defendant was subsequently charged with engaging in unlicensed telemarketing in Florida. In April of 2001, six months after executing a Marital Settlement Agreement, the defendant was imprisoned. In December of 2003, he was released under house arrest.
Pursuant to the provisions of a Stipulation and Order dated January 20, 2006, the defendant was to pay the sum of $3,500 per month as and for child support for two (2) unemancipated children, in addition to the sum of $2,000 per month on account of arrears pursuant to the Stipulation and Order of September 8, 2004 for a total payment to the plaintiff of $5,500 per month. Additionally, the defendant was obligated to pay a penalty of 5% if payment was not made within ten (10) days of the due date.
The January payment was returned due to insufficient funds. In February and March, 2006, the defendant paid only $3,500 per month instead of $5,500, leaving a balance due plaintiff of $4,000, together with a late penalty of $200. Accordingly, the defendant was in arrears in the total amount of $8,600 ($4,200 + $4,400) as of March, 2006. No payments had been made for the months of April, May, June or July.
Pursuant to the Domestic Relations Law §244-a notice, the total amount of arrears to the date amount to $31,700.00 ($8,600 + [$5775 X 4) = $31,700.
Previously, the plaintiff brought a proceeding to have the defendant in contempt in or about August, 2004. By stipulation dated September 8, 2004, the contempt issue was resolved only after the defendant was admonished by this Court that he faced imprisonment and the potential of violation of his federal probation due to his contemptuous behavior.
On March 21, 2005 and October 2, 2005, the plaintiff submitted an application for upward modification of child support and to adjudge the defendant in contempt for his refusal to reimburse medical expenses for the children. A hearing was scheduled on October 26, 2005 but was adjourned due to defendant's house arrest for violation of the terms of his probation. On January 20, 2006, the defendant appeared before this Court for a hearing on plaintiff's application for an upward modification of child support. After testimony was taken from defendant relative to his financial means, a Stipulation was entered into resolving the plaintiff's upward modification and contempt motions.
CONTEMPT
To sustain an application of contempt, there must be a demonstration that the [*3]alleged contemptor has violated a clear and unequivocal court order which actually defeated, impaired, impeded or prejudiced the other party's rights (see, Great Neck v. Central, 65 AD2d 616) or were calculated to affect those rights (Stempler v. Stempler, 200 AD2d 733). The movant must meet this burden by clear and convincing evidence (Bulow v. Bulow, 121 AD2d 423). Upon a finding of contempt, the Court may impose a period of commitment to jail (Powers v. Powers, 86 NY2d 63). Where a factual dispute exists which cannot be resolved on the papers, a hearing is required (De Meo v. De Meo, 281 AD2d 662; Mastrantoni v. Mastrantoni, 242 AD2d 825; Bowie v. Bowie, 182 AD2d 1049). The Court may not, however, hold a party in contempt where payment may be enforced by other enforcement procedures (Wiggins v. Wiggins, 121 Ad2d 534), unless such remedies would be an exercise in futility or ineffectual (Farkas v. Farkas, 209 AD2d 316). The actions of defendant here have had the affect of impairing or impeding the rights of the plaintiff.
A bond for prospective payments is unobtainable, given the defendant's sordid criminal record and propensity to litigate, settle, and default in settled support obligations. The available remedies here appear to be exhausted, if the shill corporate structure remains intact.
The defendant, who controls Stay Young Products, Inc., a closely held corporation "in name only" of his new wife, is responsible, by his own admission, for operation, sales, and day-to-day management. Piercing the corporate veil is an equitable concept that allows a creditor to disregard a corporation and hold its controlling shareholders personally liable for the corporate debt. But reverse piercing flows in the opposite direction and makes the corporation liable for the personal debt of the shareholders under certain circumstances. See, Sweeney, Cohn, Stahl & Vaccaro v. Kane, 6 AD3d 72; State of New York v. Easton, 169 Misc 2d 282. In both situations, there is a disregard of the corporate form, and the controlling shareholders are treated as alter egos of the corporation, and vice versa. See, Sweeney, supra.
FLORIDA LAW
Mindful that this is a Florida corporation, under Florida law, when there is an effort to pierce the corporate veil, the existence of control by the shareholder is insufficient by itself - - there must also be a demonstration of improper conduct such as to mislead creditors or to "use the corporation as a means of evading liability with regard to a transaction that was personal and not corporate." See, Riley v. Fatt, 47 So. 2d 769 [Fla]; Lipsig v. Ramlawi, 760 So. 2d 170 [Fla App].
Under Florida law, the concept of reverse piercing is compatible to New York Law (see, Walkovzky v. Carlton, 18 NY2d 414; Morris v. NY State Dept. Of Taxation & Fin., 82 NY2d 135) and the remedy is applicable here - - - to hold the corporation liable for the debts of shareholders, when those shareholders have "formed or used the corporation to secrete assets and thereby avoid preexisting personal liability." See, Estudros Proyectos e Inversiones de Centro America, S.A. v. Swiss Bank Corp. S.A., 507 So. 2d 1119. See, also, Sweeney, supra.
This corporation, Stay Young Products, is clearly utilizing personal assets of the [*4]defendant (earnings) to defraud personal creditors of the controlling insider, the defendant herein. The corporate entity is a straw by which the defendant's earnings are being funneled, to satisfy business and lavish personal expenses of the defendant and his new family, while the support obligations are being either violated or ignored.
Accordingly, while the Court makes a finding of contempt herein, it will stay execution of the jail sentence imposed herein, pending report of a receiver appointed herein, Michael Schulman, Esq., as to the viability of proceedings as against Stay Young Products, Inc. For purposes of enforcing the defendant's child support obligations through reverse piercing of the corporate veil, a remedy may very well present itself. If not, the incarceration ordered herein can be executed.
Under the circumstances of this case, the previous enforcement proceedings, and the efficacious representation provided, the plaintiff's counsel is granted a judgment of legal fees against the defendant in the amount of $4,650.00.
Accordingly, it is
ORDERED, that defendant, Daniel Porush, is held in contempt and is sentenced to 180 days imprisonment in the Nassau County Correctional Center; and it is further
ORDERED, that this decision and order is issued pursuant to Judicial Law §772, and shall authorize the Sheriff or other enforcement officer in any jurisdiction in which the offender may be found to arrest the defendant; and it is further
ORDERED, that this sentence shall be stayed for 20 days of the date of this order, to afford the defendant an opportunity to purge his contempt by paying the sum of $31,700 and to post a bond securing future support payments; and it is further
ORDERED, that a scheduling conference shall be held before me on August 22, 2006; and it is further
ORDERED, that there shall be no adjournments of the above date, which shall require personal appearances of all parties, without written order of this Court; and it is further
ORDERED, that defendant, Daniel Porush, shall pay to plaintiff's counsel, Maxine Last, Esq., the sum of $4,650.00 within 15 days of service of this order upon him, after which this shall be entered as a judgment against him in the office of the Nassau County Clerk; and it is further
ORDERED, that plaintiff's counsel shall serve a copy of this order by U.S. Postal Overnight Mail, within five (5) days of the date of this order, upon Daniel Porush, 5600
St. Anne's Way, Boca Raton, Florida 33496.
[*5]
This constitutes the decision and order of this Court.
Dated:Mineola, New York
August 8, 2006
E N T E R :
____________________________________
HON. ROBERT A. ROSS
J.S.C.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
