Orthotec, LLC v Healthpoint Capital, LLC

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Orthotec, LLC v Healthpoint Capital, LLC 2013 NY Slip Op 31189(U) May 30, 2013 Sup Ct, New York County Docket Number: 601377/08 Judge: Melvin L. Schweitzer Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 06/03/2013 1] INDEX NO. 601377/2008 NYSCEF DOC. NO. 330 RECEIVED NYSCEF: 06/03/2013 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HELVIN L. S~~6Ln..s~ PART 4"" INDEX NO. '0 1~ Justice 17/ O~ MOTION DATE _ _ __ -y- (){JS MOTION SEQ. NO. The following papers, numbered 1 to _ _ , were read on this motion to/for _ _ _ _ _ _ _ _ _ _ _ __ Notice of Motion/Order to Show Cause - Affidavits Answering Affidavits - Exhibits Exhibits _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ Replying Affidavits _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ Upon the foregoing papers, n Is ordered that this motion ¢ j I No(s)._ _ _ __ I No(s). _ _ _ __ I No(s). _ _ _ __ ~~ C f'LR. "3'2.12... to ~ t:/I..£. Co ~NTEj) f:b t4,~~ tk$~ w o t=: U) t;. ¢ (:A,'.. ~-:;:; o~1:>EN'Eb l:fU-~ ~~.-.~ ~OY~ ¢ .., :;:) ~ c W 0::: 0::: u.. W w 0::: >- ..J~ :;:) 0 ..J Z u.. t W U) ~ 0::: 3; (!) W Z 0::: ~ ~ 0 W ..J ..J U) « o 0 u.. Z W :I: l- o t=: o 0::: 0 ::E u.. Dated: ~ 3o, "1-o'~ 1. CHECK ONE: ..................................................................... 2. CHECK AS APPROPRIATE: ........................... MOTION IS: 3. CHECK IF APPROPRIATE: ................................................ .C. 0 0 0 CASE DISPOSED GRANTED 0 SETILE ORDER 000 NOT POST ON-FINAL DISP DENIED mON o GRANTED IN PART 0 OTHER o SUBMIT ORDER o FIDUCIARY APPOINTMENT 0 REFERENCE [* 2] ., I SUP~ME COURT OF THE STATE OF NEW YORK COuNTY OF NEW YORK: lAS PART 45 --------~---------------------------------------------------------------x ORTH.OTEC, LLC, I , Plaintiff, Index No. 601377/08 -againstDECISION AND ORDER , HEALTHPOINT CAPITAL, LLC, JOHN FOST~R, MORTIMER BERKOWITZ, III, HEA~THPOINT CAPITAL PARTNERS, I LP, H~ALTHPOINT CAPITAL PAR'ij~ERS II, LP, and SCIENT'X, S.A., Motion Sequence No. 005 Defendants. -------1----------------------------------------------------------------x MELVIN L. SCHWEITZER, J.: ; : Defendants Healthpoint Capital, LLC (HPC), John Foster, Mortimer Berkowitz, III, I HealtThpoint Capital Partners, LP (HPC I), and Healthpoint Capital Partners II, LP (HPC II) move for an; order, pursuant to CPLR 3212, dismissing the complaint. I I : PlaintiffOrthoTec, LLC (OrthoTec) brought this action alleging that the defendants should be held liable for the payment of two judgments which it obtained against a French I I comp;:tny, Eurosurgical, S.A. (Eurosurgical), in California state and federal courts in 2004 and ! ; 2007,: based on breaches of an agreement in which Eurosurgical had assigned to Ortho Tec the , I right fo produce and distribute certain of its spinal surgical devices in the United States, and on copyright and trademark infringement. The judgments, with interest, currently total' in excess of I i $56 million. OrthoTec claims that, facing these large judgments, Eurosurgical conspired with the defen~ants to fraudulently transfer all of Eurosurgical's assets, which it asserts were worth in , I exces;s of$47 million at the time of transfer, away from the company, and leaving it an empty, , insol~ent shell. OrthoTec also asserts that under the judgments, Eurosurgical was required to [* 3] ; i tum oyer manufacturing plans for certain surgical products, and that upon the fraudulent transfer defen~ants came into possession of these plans, and have refused to tum them over. It further i I assert~ that it entered into a contract to sell all its product rights to a third party, but that when it was u*able to deliver the plans the purchase price was reduced by $11 million. : Defendants now move for summary judgment, urging that OrthoTec cannot recover from I them fuecause the challenged transfers were between Eurosurgical and another French company I I Surgi~iew, S.A.S., and defendants were nqt transferors, transferees or beneficiaries of the transf~r. They contend that New York's fraudulent conveyance law does not permit recovery ; again~t them based on their ownership of stock in an entity affiliated with the transferee, nor does it penn it recovery of the damages, that is, the amount of the judgments, OrthoTec is seeking. i They ~lso urge that OrthoTec is asking the court to disregard the fact that the challenged transfers I I were ~pproved by the Commercial Court of Arras, in France, the process was overseen by a pre- insoh;ency agent, fair value was derived by a valuation expert, and the transfer was confirmed by I I an independent legal expert. Further, defendants urge that based on undisputed facts, OrthoTec canndt demonstrate by clear and convincing evidence that defendants acted with an intent to defra~d. I : OrthoTec counters that its claims are governed by California law, which permits recovery on a conspiracy theory against parties such as these defendants based on their actions and I connection to the transferee, and as parties interfering with its ability to collect on its judgments. i . It argues that even if New York law applied, its damages are recoverable for tortious interference I I . j with ~he collection of a judgment. It asserts that comity does not prevent it from challenging the j fraudhlent transfers, because the French court approval does not curtail its right to sue for 2 [* 4] I ; fraudutent transfer. Finally, it asserts that California, law does not require proof by clear and convi~cing evidence, and, even if it did, it can prove such intent. Background OrthoTec is a Delaware company with its principal place of business in California (first amended complaint, ~ 1). HPC, a Delaware company with its principal place of business in New I I . York, lis a private equity firm that acquires and manages investments in the medical industry. HPC I: and HPC II are the investment funds managed by HPC, and the individual defendants, John ~oster and Mortimer Berkowitz, III are residents of New york and are principals ofHPC (id., i ~~ 2, 4, 5). Defendant Scient'x, S.A. (Scient'x) is a French company that manufactures spinal: surgical implants. HPC owns a one-third interest in Scient'x, and Foster and Berkowitz i I were directors on Scient'x's board (id., ~ 2-3, 14). I I i In 1998, Ortho T ec and nonparty Eurosurgical, a French company, entered into an assigriment agreement (the Assignment Agreement) in which OrthoTec purchased all rights in I the U.lS. to certain Eurosurgical surgical devices, acquired the right to market any new products I . created by or for Eurosurgical, and gave OrthoTec certain intellectual property rights in certain geogr~phical areas (id., ~ 6-7; see also exhibit 2 to affirmation of Colleen M. Carey, dated Decerj1ber 12,2012 [Carey affirm], at 1-2). Several years into the agreement, Eurosurgical i falsely asserted that OrthoTec owed certain amounts for product purchases, and OrthoTec filed , suit it} California state court for breach of the assignment agreement. On August 27, 2004, that , I actiory resulted in a jury award in OrthoTec's favor of$8.93 million, with an additional i $596Ji96.17 in fees and costs (first amended complaint, ~ 9; exhibit 5 to Carey affirm). This I I judg~ent was affirmed in June 2007 (first amended complaint, ~ 9). While that action was I 3 [* 5] pendi~g, OrthoTec brought another action against Eurosurgical in California federal district court , . I for infringement of its trademarks and copyrights. That federal action resulted in a judgment, ! entered on January 11,2007, in OrthoTec's favor for $30 million, and Eurosurgical's subsequent , ~ \ appeal was dismissed (id., ~ 10; see also exhibit 6 to Carey affirm) (collectively, the California ! , Judgrrients). OrthoTec has been unable to collect upon these California Judgments. , I : On September 28, 2004, after the California state court judgment but before the federal i I courqudgment, Eurosurgical entered into a Business Lease Contract (the Business Lease) with a I , Frenc~ company called Surgiview, which gave Surgiview the right to occupy the premises I Euroshrgical used, to take possession of the business and ~perate it, and to continue to employ its I i empldyees, fulfilling existing contracts with clients, assuming liability for current purchase I , order~, assuming all contracts with surgeons, and assuming the equipment used by the business, I among other things (exhibit 7 to Carey affirm). Surgiview also purchased all of Eurosurgical's i , inveniory. The Business Lease was for an identified territory which did not include the areas in i I which OrthoTec was assigned in the Assignment Agreement (e.g., North America, Central i I Amer~ca, India, Australia and New Zealand (id. at 2). Eurosurgical could have sold its products in these territories, it just had to do so through OrthoTec under its Assignment Agreement (see I I affid~vit of Patrick Bertranou, dated January 31, 2013 [Bertranou aft], ~ 8). In the preamble to I I the B?siness Lease, Eurosurgical specifically acknowledged that it was encountering difficulties , from ~ts litigation with OrthoTec, and obtained a pre-insolvency agent, Robert Meynet, to assist I i in mraging the company and preserving the employees, while the OrthoTec litigation was ongo~ng (exhibit 7 to Carey affirm, at 1). Upon termination of the Business Lease, Eurosurgical I I was rfquired to repurchase the inventory (id. at 7-8, article 6). On September 29, 2004, Mr. 4 [* 6] i I I . Meymh presented to the Commercial Court of Arras, France, the Business Lease, requesting that I I the co~rt ratify it, which the court did (exhibit 12 to Carey affirm, declaration of Robert Meynet filed in California state court action, dated September 11,2008 [Meynet Declaration] at ~~ 5-8). I " ! Ortho!ec was not aware of, nor was it a.party to the proceedings before the Commercial Court of I ; Arras,: and it did not receive notice of any request that the Arras court approve the transaction , i (Bertranou aff, ~ 9). : Several months before, in June 2004, HPC I, through a Luxembourg affiliate, Healthpoint Capit~l (Luxembourg) I S.a.r.l., acquired a 33.1 percent interest in Scient'x (exhibit 24 to Carey affimi, affidavit of Mortimer Berkowitz, III, dated December 12, 2012 [Berkowitz aff], I ~ 7). One I year after Eurosurgical and Surgiview entered into the Business Lease, in July 2005, Scient'x ! I acquired a 73 percent interest "in Surgiview (id., ~ 9). i I : On April 25, 2006, OrthoTec entered into an asset purchase agreement with Choice Spine i in wh~ch it sold its product rights to the Eurosurgical products in the United States to Choice Spine: at an original purchase price of $16 million (Bertranou aff, ~ 13 and exhibit 139 annexed_ i thereto). In order to effect this sale, OrthoTec made repeated demands on Eurosurgical to tum I i over plans and specifications for the products to which the California state court adjudged OrthoTec to own the rights, and Eurosurgical never complied (Bertranou aff, ~~ 14-16). Because ofO~hoTec's inability to obtain these plans and specifications, by a third amendment to the partie',s' asset purchase agreem-ent, dated April 24, 2008, OrthoTec claims it reduced its purchase , price ~o Choice Spine to $5.225 million (id., and exhibit 152 annexed thereto). I i I ! On May 17,2006, Eurosurgical then entered into a Partial Sale oflndustrial and " i Commercial Business (the PSA) with Surgiview, in which it sold the business, the commercial 5 [* 7] name 'i'Eurosurgical," the clientele and all related assets, the industrial property rights, the right to I lease the premises, the inventory, the benefit of the lease agreement and real estate loans I described therein, and the benefit of contracts for the distribution of the products listed in an I appen~ix (exhibit 8 to Carey affirm, at 1-2). Basically, Eurosurgical sold everything ~hich i represfnted the business in all territories except for the territories or zones which OrthoTec had ~ been alssigned - North America (USA and Canada), Central America, India, Australia and New ! Zeala~d (id at 2). Eurosurgical also agreed to, within three months following its entry into the I PSA, remove all liens on the business (id at 3; exhibit 39 to Bertranou aff, at 3). Together these 1 ; liens ~mounted to just over 2 million euros (id). The PSA purchase price was 1.6 million euros I I (id atj8; see exhibit 12 to Carey affirm., Meynet declaration ~13). Scient'x allegedly loaned i I Surgi~iew the $2 million it needed to put into escrow under the PSA (exhibit 3 to Carey affirm, ; ; first a~ended complaint, ~ 20). Again, OrthoTec did not receive notice of this transaction I I (Bertr~nou aff, ~ 9). i On July 14,2006, public notice regarding Eurosurgical's sale to Surgiview was published , ! in the IFrench newspaper called "BODACC," and in the local Arras paper, but'OrthoTec did not , see su¢h notice (id). On October 20, 2006, the commercial court of Arras approved the sale of : . the gdod will and the physical plant of Eurosurgical to Surgiview (exhibit 12 to Carey affirm, I Meyn~t " declaration, ~~ 14, 16, 17). , I ! On July 6, 2007, Eurosurgical filed to liquidate in bankruptcy "in France (affidavit of i " Arlett¢ Bardon, dated January 30, 2013 [Bardon aff], I ~ " 5, and exhibit A annexed thereto). " : On November 21,2007, HPC II acquired majority ownership of Scient' x, and acquired a ; I . 4.9 P9rcent interest in Surgiview (exhibit 24 to Carey affirm, Berkowitz aff, 6 ~ 12). [* 8] 1 On May 7, 2008, OrthoTec commenced this action asserting three causes of action: i I ' fraudtilent transfer, fraudulent conveyance under New York Debtor and Creditor Law (DCL) §§ , 273 et: seq., and intentional interference with prospective economic advantage (exhibit 3 to Carey affirm~. I ; Defendants now move for summary judgment seeking dismissal of all of OrthoTec's claims. First, they argue that there is no third-party liability for fraudulent transfer and fraudulent I conveyance claims under New York common law and the DCL. They contend that it is I , undis~uted that the challenged transfers took place between Eurosurgical and Surgiview - not the I : defen4ants, and that they have submitted undisputed proof that they had no involvement with I those parties at the time of the relevant events. They contend that an action for fraudulent transfer in New York does not create a remedy for money damages against third parties who I i ; assist pr conspire with the debtor. They assert that under the DCL only transferees of the assets , ; or beneficiaries of the conveyance may be held liable, and that non-transferees or noni , benefi:ciaries are not liable solely for assisting the transfer. They urge that holding stock owne~ship in a company that owned an interest in the transferee is too attenuated a relationship to be a tr.ansferee or beneficiary of a conveyance. They assert that the PSA was between i Euros~rgical and Surgiview, with Surgiview being the transferee, and that none of the defendants i were ~ party to that transfer, received any funds individually, and they only held a minority , interest in an affiliated company of the transferee, which is insufficient asa matter of law. i , Second, defendants urge that OrthoTec cannot obtain the remedy it seeks as a matter of , law. Rather, the remedy in such an action is limited to reaching the property which would have 7 [* 9] , been a;vailable to satisfy the judgment had there been no conveyance- not for damages against partieJ who caused the transfer in the amount of unpaid court judgments for the creditor's loss. j Next, defendants assert that the challenged transfer was conducted In accordance with Frenc~ law, by obtaining the approval of the Business Lease and the PSA from the Commercial , , Court :of Arras, which approval is entitled to comity. Defendants submit the report of their I French legal expert, Professor Alain Pietrancosta, who opined that the transactions and ! proceciures by Eurosurgical were not inherently abnormal or suspicious, and that they went beyon~ the minimal legal requirements in France (exhibit 14 to Carey affirm at 3-14). They ! , point ~o the fact that the transfer was publically disclosed as required by French law - once in the , I I Gazet~e Nord-Pas Calais (exhibit 9 to Carey affirm at 128-130; see also exhibit 58 to Carey affirm~ declaration of Saverio Cuiaba, dated March 9, 2007, ~ 4), ~nd twice in the BODACC in I I July ahd August 2006 (exhibit 12 to Carey affirm, Meynet declaration ~ 16, and exhibit 6 , i annex~d thereto; exhibit 9 to Carey affirm at 128-130; exhibit 10 to Carey affirm, deposition of I Alain ;Pietrancosta at 69-70). I I i Finally, defendants urge that plaintiff cannot show clear and convincing evidence of an ! intent!to hinder, delay or defraud, requiring dismissal of their claims. They point to evidence that I they h;ad no role in the Business Lease or its negotiation, and had no ownership interest in either Euros~rgical or Surgiview at that time (exhibit 24 to Carey affirm, Berkowitz aff, ~ 8). Defendants further submit that HPC and HPC II had no role in the negotiation of the PSA, and I were ~ot parties to it (id., ~ 10). Defendants urge that plaintiff s conspiracy theory defies logic, consi~ering that, voluntarily, Eurosurgical contacted OrthoTec before entering into the Business Lease; sUbjected itself to the French co~rt scrutiny, engaged an independent pre-insolvency agent, I 8 [* 10] i Mr. ~eynet, hired and independent valuation expert, Mr. Preud'homme, who opined that fair consideration was paid, obtained an independent French law expert opinion, and placed I . , I appropriate legal notices in French papers (id., ~~ 2-10). With respect to plaintiffs intentional interference claim, defendants urge that plaintiff , canno~ establish a prima facie claim because it cannot show the existence of a prospective relat!~nship- the Eurosurgical judgments are not such a relationship. The Assignment Agree:ment and the agreement plaintiff entered into with Choice Spine could not qualify as the I Assignment Agreement was already breached in 2002, and the Choice Spine agreement was I ,I alread~ entered into and was not a prospective relationship. Further, even if the Choice Spine , agreement could form the basis of the claim, defendants assert that the claim fails because the undisputed facts show that defendants did not interfere with that relationship directly, nor did they convince Choice Spine not to enter into a contractual relationship with plaintiff or act with , I the requisite malice. They point to the testimony of Richard Henson from Choice Spine who testified that he never spoke to Foster, Berkowitz or anyone at the HPC entities, regarding Choice I Spine:s agreement with OrthoTec; and no one from the HPC entities tried to dissuade him from / , enterihg into the agreement or threatened him physically or otherwise in connection therewith I (exhi~it 46 to Carey affirm, deposition of Richard Henson at 31-32). Mr. Bertranou never told defendants he had a business deal contingent upon defendants' actions, but instead sought to sell Ortho!'ec's rights to the HPC entities (exhibit 20 to Carey affirm at response 9, and exhibit 61 to , ; Carey; affirm). Finally, defendants argue that, at the least, the claims against the individual , i defen~ants Foster and Berkowitz must be dismissed because there is no personal liability, under French law, for their actions taken as directors of Scient'x. ! 9 [* 11] ,: In opposition, plaintiff first contends that defendants fail to support their motion with admisSible evidence, relying on unauthenticated documents, and witnesses attesting to facts I without personal knowledge. Plaintiff also contends that its allegations, not the titles of its , I claim~ govern. Thus, plaintiff asserts that the substance of its claims state cognizable claims under Falifornia and New York law, and the evidence supports such claims. Plaintiff urges that I under~ew York's choice of law rules, California law applies, because that is where the injury I I occurr;ed, where plaintiff is located. It contends that, under California law, parties who aid a I fraudtilent transfer and who conspire with a debtor to conceal assets fot the purpose of .. I defrau~ing creditors are guilty on a claim for fraudulent conveyance. Plaintiff asserts that I i defemfants, as beneficial owners of Surgiview (Ross affidavit, exhibit F, deposition of John I Fosteri at 10, 88-89), each benefitted, at least indirectly from the fraudulent conveyance, and that defenqants Berkowitz and Foster personally directed the transaction, so they conspired to violate I Califo~ia's fraudulent conveyance law, and are personally liable. Plaintiff also asserts that in I Califohlia a creditor can recover its damages, not just the fraudulently transferred assets, as well I ; as pu~itive damages. , ! Alternatively, plaintiff urges that it may proceed, in its first cause of action, under New I York ¢ommon law for defendants's unlawful interference with plaintiff s collection of its I judgm:ents. This claim, plaintiff urges, may be asserted against one who is neither a transferor I, nor a ?eneficiary of the transfer. : Plaintiff next challenges defendants's contention that the French "Commercial Court of Arras'f, which purportedly approved the transaction is entitled to any comity, because its approval does ~ot bar the rights of a non-signatory, such as plaintiff, from ,challenging the agreement or 10 [* 12] suing :for fraudulent transfer of assets. It submits the affidavit of its French legal expert, Arlette I Bardo:n, who opines that such agreements are enforceable between the parties thereto, but do'not . ; , I bar nqn-signatories from challenging them (Bardon aff, ~ 4), and defendants's expert, Professor , I Pietrapcosta agrees (exhibit 14 to Carey affirm at 8). Since plaintiff did not participate and was I ; I not a signatory, it is not bound by, or restricted in its rights as creditor of Eurosurgical, by the ! Frenc~ court proceeding. In any event, plaintiff contends there is a sharp dispute of fact as to the , legititpacy of the French proceeding. On the issue of intent, plaintiff maintains that under California law it has asserted a: claim , i for co~structive fraudulent transfer- that is, a transfer made without reasonably equivalent value by one who is insolvent or rendered insolvent, which does not require proof of actual fraudulent I ! intenti(see Cal Civ Code § 3439.05; Mejia v Reed, 31 Cal 4th 657, 664 [2003]). Plaintiff urges I that tHere is sufficient evidence here that Eurosurgical sold its business without receiving I reasoqably equivalent value, selling it for 1.6 million euros (exhibit 8 to Carey affirm, PSA at 8), i and pl!aintiffs expert economist, Robert Wunderlich opines that it was actually worth over 36 milliop euros (affidavit of Robert Wunderlich, dated January 30, 2013 [Wunderlich aft], and I exhibit A annexed thereto at'2, 6-12). The sale left Eurosurgical insolvent in that the purchase price Was insufficient even for it to payoff Eurosurgical' s other creditors (besides plaintiff). , I Plaint~ff further I ' argues that, under California law, it is enough if the plaintiff proves that the . conspirators knew that the transferor sought to defraud or hinder creditors, and proof need only I ; I be by·~ preponderance of the evidence. In any event, plaintiff asserts that whether a conveyance I I was rrtade with fraudulent intent is a question of fact as it is here. 11 [* 13] j On the intentional interference claim, plaintiff asserts that, under either New York or I California law, the California Judgments qualify as prospective economic advantage. Plaintiff conte~ds that, in California, ajudgment is a contract, and thus interference with ajudgment is , interf~rence with a contract. In New York, at common law, a claim for tortious interference with i the copection of a judgment is recognized, and liability may be extended beyond transferees and ! benefitiaries. It contends that it is entitled to pursue its claim whether it is for tortious I , interf~rence with contract or with prospective economic advantage. In addition, plaintiff maint~in~ that by preventing it from obtaining the manufacturing plans, defendants used wrongful means and interfered with plaintiffs ability to sell its product rights to Choice Spin~. It points! to the Assignment Agreement provision requiring Eurosurgical to turn over the plans (Betrapou aff, exhibit 119, § 4), plaintiffs California state court judgment requiring Eurosurgical to tur~ over the plans (Bertranou aff~ 14, and exhibit 81 annexed thereto, at 7, ~ 5), Surgiview's I posse~sion of all Eurosurgical's assets, defendants' indirect oWnership or control of Surgiview----, , I (affid4vit of Peter W. Ross in opposition, dated January 31, 2013 [Ross aft], exhibit B, deposition of John Foster at 99), defendants' knowledge of the state court judgment but failure to ! act to ~nsure plans were turned over (Ross aff, exhibit E, deposition of Mortimer Berkowitz III, I at 94-95, and exhibit B, Foster dep at 39-41,44-45,59-60,62,66), and the fact that plaintiff I never received the manufacturing plans and had to reduce the purchase price in its agreement i I with Ghoice Spine (Bertranou aff~~ 14, 16-17). By these actions, plaintiff contends, defendants i interfered with plaintiffs enforcement of the California Judgments and with its sale agreement with Ghoice Spine. 12 [* 14] : On the issue of the liability of defendants Berkowitz and Foster, plaintiff asserts that Frenc~ law does not apply- either California or New York law applies which do not conflict. I Thus, under either of those state's law, directors and officers may be held liable on a fraud claim iftheyiparticipated in, directly ordered, or authorized the fraud, even if they did not stand to gain I persorlally. Plaintiff contends that the evidence establishes that Foster and Berkowitz were J directly involved in the fraudulent transfer. , : In reply, defendants assert that plaintiff cannot now, after discovery is complete and the , " I note of issue was filed on October 12, 2012, amend its complaint to change the theory of its , I claim to one for intentional interference with the collection of a judgment. They then argue that , even it the claim could be construed as plaintiff urges, it cannot demonstrate the elements of such a clairrt because it cannot show that defendants made the purported transfers with the intent and I I objective of depriving plaintiff of the opportunity to collect on its judgment. At most, plaintiff , could Uemonstrate that defendants were aware of the California state court judgment in 2004, and had c~nsidered any ill~gal and had rejected an investment in Eurosurgical in 2004. There is no evidence of conduct by defendants, just evidence that they acted in their own economic interest, which(is not enough to establish malice". They also urge that French law applies under New York'~ choice oflaw principles, and French law does not pennit recovery against defendants who , I were Qot transferees. Even if California law applies, defendants assert that plaintiff cannot demoristrate sufficient "badges of fraud" so that the facts add up to an actual fraudulent transfer. 1 They vrge that plaintiff fails to demonstrate that they are transferees or that they had dominion and cQntrol over the transferee or over the assets. They point to th,e lack of connection between Euros~rgical and Surgiview, as debtor and transferee on the one hand, and defendants on the I 13 " ) [* 15] other. i Only HPC held a minority interest, through a Luxembourg subsidiary, in Scient' x, 1 Surgiyiew's parent company (exhibit 24 to Carey affirm, Berkowitz aff, ~~ 7,9; and exhibit 25, I affidavit of John Foster, ~ 3). This is not sufficient. Plaintiffs conspiracy theory fails because it I fails t9 demonstrate an underlying fraudulent transfer by a primary tortfeasor which defendants I . joined as conspirators. Defendants assert that they were not the transferee, they were not parties to the! transfer agreement, they did not benefit from the transfer, and they did not create the I trans~eree there ~s for the purpose of completing a fraudulent transfer. Additionally, they contend that no intent to defraud based on evidence that Eurisurgical contacted plaintiff before i executing the Business Lease, voluntarily subjected itself to French court scrutiny,voluntarily ; enga~ed Mr. Meyner as its independent pre-insolvency agent, hired Mr. Preud'homme as an independent valuation expert who opined that the consideration paid was fair, obtained an expert I I legal 9pinion, and publicized the PSA in the appropriate French paper for legal notices (exhibit , 24 to ~arey affirm, Berkowitz aff, ~~ 2-10). I , ~ Defendants contend that the tortious interference claim cannot be based on the Judgments becau~e the California courts have distinguished between ajudgment entered after litigation and contrJcts derived through the parties's mutual agreement. They assert that plaintiff has not and , cann~t cite a California case in which such a claim is based on a judgment because there are none.! Judgments may be like a contract because they are enforceable between the parties but , , they ~re not construed as a contract for purposes of a third party. The intentional interference i , claim'is not maintainable with regard to the Choice Spine agreement, because defendants had no I ; obligation regarding the manufacturing plans and so the failure to deliver them was not wrongful and t~eir inaction was not designed to interfere with the agreement. Finally, with respect to I 14 [* 16] Foste~ and Berkowitz, defendants maintain that French law applies to their personal liability for , action$ taken as directors of Scient' x, a French corporation, and under such law the claim must I , ~ be disinissed (see Pietrancosta aff). I Discussion , ; The defendants' motion for summary judgment is granted only to the extent that the secon~ cause of action for .violation of DCL§§ 273 et seq., is dismissed, and is otherwise denied. , I : The first issue to be resolved on this motion is which law is to be applied to plaintiffs 1 fraud4lent conveyance and tortious interference claims - New York law or California law. In i detefI1.1ining which law is to be applied, the first issue to be determined is whether there is an , actuaL conflict between the laws of the jurisdictions involved (Matter ofAllstate Ins. Co. [Solarz] , I , v New: Jersey Mfrs. Ins. Co., 81 NY2d 219, 223 [1993]; Elson v Defren, 283 AD2d 109, 114 [1st dept 2001]). California follows the Uniform Fraudulent Transfer Act (UFTA) (Cal Civ Code § 3439 et seq.), but New York has adopted the Uniform Fraudulent Conveyance Act (UFCA) (NY DCL ch 12, ~rticle 10). While these two statutes are substantially similar, they also differiin several respects (see Allstate Ins. Co. v Countrywide Fin. Corp., 842 F Supp 2d 1216, I I I 1224 [CD Cal 2012]; Drenis v Haligiannis, 452 F Supp 2d 418, 426-427 [SO NY 2006]). The , I UFT iX, which California follows, specifically sets forth "badges of fraud" from which an I I infere~ce of fraudulent intent may be drawn for actual fraud (CalifCiv Code § 3439.04 [b]), where~s New York looks to the common law (see Allstate Ins. Co. v Countrywide Fin. Corp., I 842 F:Supp 2d at 1222-1223 [analyzing choice oflaw for fraudulent transfer claim between Illinois, an UFTA state, and New York, an UFCA state]; MFS/Sun Life Trust-High Yield Series 'v 1 ' . Van l1usen Airport Servs. Co., 910 F Supp 913, 935 [SO NY 1995]; Marine Midland Bank v 15 [* 17] i Murkoif, 120 AD2d 122, 128 [2d Dept 1986], appeal dismissed 69 NY2d 875 [1987]). Under Califobia's UFT A, an actual fraudulent transfer is one which was made with "actual intent to , hinde~, delay, or defraud any creditor of the debtor" (CalifCiv Code § 3439.04 [a] [1]). For ~' , const~ctive fraud, a transfer is fraudulent if the debtor did not receive a "reasonably equivalent I value fn exchange for the transfer" and the debtor is or is about to become insolvent (id. § 3439.@4 [a] [2]). A transferee's good faith is irrelevant to determination of the adequacy of I ; I consideration. I In New York, every transfer made with actual intent to defraud existing or future creditors I is fraudulent irrespective of good faith or exchange of fair consideration (NY DCL§ 276). With i . , respec,t to constructive fraudulent transfers, however, there must be an absence of "fair consi~eration" (NY DCL§ 272 [a]). "Fair consideration" is defined as requiring both "fair I I equiv~lent" value, and "good faith" (id.). Therefore, unlike in California, in New York, the ! . , transferee's good faith is relevant. In addition, under California law, a creditor may pursue I consp~rators with the debtor or transferee (Qwest Communications Corp. v Weisz, 278 F Supp 2d I 1188, :1192-1193 [SD Cal 2003] [California law]), whereas, under New York law, a claim is I '! actionable only against the transferee and those who benefitted from the transfer, and.not those I who conspired or aided and abetted the transferee (see Paradigm BioDevices, Inc. v Viscogliosi I I Bros.,iLLC, 842 F Supp 2d 661, 667 [SO NY 2012] [New York law]). Because there/is a I confli~t between New York and California law (see Allstate Ins. Co. v Countrywide Fin. Corp., 842 F!Supp 2d at 1224 [conflict exists between UFTA and'UFCA]; Drenis v Haligiannis, 452 F Supp 2d at 426-427 [same]), New York conflict oflaw principles will be applied to determine which! law applies to these claims. 16 [* 18] With respect to tort-claims, New York employs the "interest analysis," applying the law of the jufisdiction with the greatest interest in the action. That approach mandates application of Calif~rnia law here. Where the laws alleged to be in conflict are conduct-regulating, such as fraudulent conveyance statutes (Drenis v Haligiannis, 452 F Supp 2d at 427), "the law of the I jurisd~ction where the tort occurred will generally apply because that jurisdiction has the greatest intere~t in regulating behavior within its borders" (Pension Comm. of Univ. of Montreal Pension Plan v Bane ofAm. Sees., I LLC, 446 F Supp 2d 163, 192 [SD NY 2006] [internal quotation marks ! and citation omitted]; see also Paradigm BioDeviees, Inc. v Viseogliosi Bros., LLC, 842 F Supp I 2d at 665). As a general matter, a tort occurs where the injury was inflicted which is usually , where: the plaintiff is located (Drenis v Haligiannis, 452 F Supp 2d at 427). In fraud claims, the I param:ount concern of a court is the locus of the fraud which again is where the injury is inflicted, not w~ere the fraudulent act originated (Allstate Ins. Co. v Countrywide Fin. Corp., 842 F Supp I , I 2d at 1223). In the instant case, the place of injury is California because that is where the , plainti:ff, a Delaware company with its principal place of business in California, felt the economic I injury !of defendants' alleged tortious behavior (see Schultz v Boy Scouts ofAm., 65 NY2d 189, I 195 [1)985]). This is also true for plaintiff's third cause of action for interference with t prospective economic advantage, and, to the extent that there are any differences in California i and N~w York law regarding that claim, California law will be applied, as that is where the tort i occurr~d. Defendants' reliance on Atseo Ltd. v Swanson (29 AD3d 465 [1 st Dept 2006]) and James: v Powell (19 NY2d 249, 256 [1967]) is misplaced as both are factually distinguishable. In ! James! v Powell, the court applied the laws of Puerto Rico because the case involved the transfer of lall(~ located in Puerto Rico. In Alseo Ltd. v Swanson, the underlying judgment was from a 17 [* 19] Mala~sian proceeding, and it involved a Malaysian citizen conveying property out of Malaysia, , and t~erefore, the court applied that law rather than the law of the Cayman Islands, where the I plaintiff was incorporated, or Japan,where it was a citizen. Here, since the plaintiffs injuries I I occu~ed in California as that is wh~re it is located, and the California Judgments arose out of lawsu~ts in California, California law will, therefore, apply to the tort claims (see Cooney v Osgo~d Mach., 81 NY2d 66, 72 [1993]). : A fraudulent conveyance under California's Uniform Fraudulent Transfer Act (CUFTA) I , . involies a "transfer by the debtor of property to a third person undertaken with the intent to I preve~t a creditor from reaching that interest to satisfy its claim" (Filip v Bucurenciu, 129 Cal I App 4;th 825, 829 [Cal App 2005] [internal quotation marks and citation omitted]). A transfer is fraudt}lent if the debtor made the transfer "[w]ith actual intent to hinder, delay, or defraud any credit9r of the debtor .... " (Cal Civ Code § 3439.04 [a] [1]). The courts consider any and all ; "badges of fraud" set forth in the statute to determine actual intent, including: "( 1) Whether the transfer or obligation was to an insider. (2) Whether the debtor retained possession or control of the property transferred after the transfer. (3) Whether the transfer or obligation was disclosed or concealed. (4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit. (5) Whether the transfer was of substantially all the debtor's assets. (6) Whether the debtor absconded. 18 [* 20] (7) Whether the debtor removed or concealed assets. (8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred. (9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred. (10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred. (11) Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor" , (Cal Civ Code § 3439.04 [b]). The presence of several of these badges of fraud does not I I autom~tically lead to the conclusion that there was an actual intent to defraud. Instead, the , badgeS must be viewed as a whole, and examined for the strength of the inference of actual intent I to defr~ud that those indicia permit (see Allstate Ins. Co. v Countrywide Fin. Corp., 842 F Supp , 2d at 1;228-1230 [applying Illinois law which also adopted UFTA]). A person who "took in good I faith and for reasonably equivalent value" has a complete defense to the claim (Cal Civ Code § i 3439.0:8 [a]). Damages are "the value of the asset transferred ... or the amount necessary to i satisfyahe creditor's claim, whichever is less," and that value is assessed at the time of the , . transfer(id., § 3439.08 [b] and [c]). I I : The creditor's judgment may be entered against "(1) the first transferee of the asset; (2) a ! subsequent transferee who did not take for value in good faith; or (3) the person for whose benefit the tra~sfer was made" (Qwest Communications Corp. v Weisz, 278 F Supp 2d at 1190, citing I I ; Cal Civ Code § 3439.08 [b]). "A transfer is not voidable against a person 'who took in good faith 19 [* 21] and for a reasonably equivalent value or against any subsequent transferee .... '" (Filip v Bucur~nciu, 129 Cal App 4th at 830, quoting Cal Civ Code § 3439.08 [a]). Generally, the I benefi¢iaries of a fraudulent transfer are the transferee who obtains the assets, or the debtor who I i avoids a creditor (Qwest Communications Corp. v Weisz, 278 F Supp 2d at 1191). The I Califo~ia I . courts, however, have extended liability, for example, to a parent entity that created a . I wholly-owned subsidiary to receive the transfer, and was the party to the transfer agreement, and I to the rewly-created subsidiary (Monastra v Konica Bus. Mach., U.S.A., Inc., 43 Cal App 4th I 1628, i1633-34 [Cal App 1996]); to the majority shareholder and president of the debtor corpo~ation as a beneficiary where the assets of the failing debtor were transferred to that shareholder'S father (Qwest Communications Corp. v . Weisz, 278 F Supp 2d at 1191); and to the , former wife and daughter of the debtor who were the sole shareholders of the transferee i corporation (Filip v Bucurenciu, 129 Cal App 4th at 829-830) Liability has also oeen extended based pn a conspiracy theory beyond transferees (see Qwest Communications Corp. v Weisz, 278 F Supp 2d at 1192 [conspiracy theory may be used to extend liability to person as co; I conspi:rator]; Fidelity Natl. Fin., Inc. v Friedman, 2009 WL 1160234,2009 US Dist LEXIS 40732:[CD Cal Apr. 27, 2009, No. CV 06-4271 CAS (JWJx)] [federal district court finds issues of fact; as to whether defendant participated in violation of CUFTA, and also conspired with I debtor~ to fraudulently transfer assets]); , see also Forum Ins. Co. v Comparet, 62 Fed Appx 151, 153 [9:h Cir 2003] [California recognizes claim for conspiracy to commit fraudulent transfer i allowihg a plaintiff to recover legal damages to the amount of property fraudulently transferred or i j amoul1t of the debt, whichever is less D. Conspiracy is a legal theory used to impose liability on a , " person, who did not actually commit the tort itself, but who shared a common plan with the 1 20 [* 22] tortfea~ors to perpetrate the fraud (Applied Equip. Corp. v Litton Saudi Arabia Ltd., 7 Cal 4th 503, 5JO-51.1, 869 P2d 454, 457 [Cal 1994]). It is well settled in California, that conspiracy liabilitY cannot arise vicariously out of participation in the conspiracy itself. Instead, the I conspirator must already owe an independent legal duty to the plaintiff, the breach of which will suppo~ an action against members of the conspiracy individually (see Applied Equip. Corp. v Litton ~audi Arabia Ltd., 7 Cal 4th at 510-11; Doctors' Co. v Superior Court, 49 Cal 3d 39, 775 , P2d 508 [1989]; Gruenberg v Aetna Ins. Co., 9 Cal 3d 566 [1973]; Chavers v Gatke Corp., 107 I Cal AAP 4th 606, 611-614 [Cal App 2003]; Ferris v Gatke Corp., 107 Cal App 4th 1211, 1225 [Cal A~p 2003]). The conspirator must be legally capable of committing the tort, that is, the I conspirator must owe a duty to plaintiff recognized by the law, and be potentially subject to liabilit~ for breach thereof (Applied Equip. Corp. v Litton Saudi Arabia Ltd., 7 Cal 4th at 511). "[A] d~btor and those who conspire with him to conceal his assets for the purpose of defrauding credit~rs are guilty of committing a tort and each is liable for damages" (Taylor v S & M Lamp I Co., 190 Cal App 2d 700, 706 [Cal App 1961]). In Qwest Comm. Corp., the court found that the alleged conspirator had a duty not to commit a fraud upon the creditor, noting that "[i]ndeed, everyone owes a duty not to commit an intentional tort against anyone" (278 F Supp 2d at 1192I , . 1193 &. n 4 [emphasis in original]; Filip v Bucurenciu, 129 Cal App 4th at 83 7 [claim under I UFT A iinvolves tortious conduct of fraudulently transferring property which may form basis for .. conspitacy claim]). i Defendants challenge plaintiff s fraudulent transfer claim on the ground that there is no ! third-p~rty liability for such a claim. They contend that any possible connection between them and Su'rgiview came after the Business Lease and PSA, and is too far attenuated to hold them i 21 [* 23] liable ~ven under the California fraudulent transfer law. They point to the fact that the PSA was II , entere~ into between Eurosurgical, the debtor, and Surgiview, the transferee, and not the ; defendants, which had no involvement with either of those parties at that time. They submit that HPC i~ a holding company which does not make direct investments in companies, and that it , , never tnvested in Eurosurgical, Surgiview, or Sci~nt'x(exhibit 24 to Carey affirm, Berkowitz aff, , , ~ . 2). They further submit that HPC I and HPC II never invested in Eurosurgical, and that, in May 2006 (when the PSA was executed), the only interest held by the defendants was HPC I's previo~s acquisition (in June 2004) ofa 33.1 % interest in Scient'x (id., ~~ 4-7). At that time, ; I Scientjx did not own any stock in Eurosurgical or Surgiview (id., , ~ 7). After that acquisition, I defendants Berkowitz and Foster, both of whom were directors and officers ofHPC, served on the board of Scient'x (id.; exhibit 25 to Carey affirm, affidavit of John H. Foster, dated December i 12,2012 [Foster aft], 4 ~ 3). Defendants Berkowitz and Foster both averthat they never personally owned, stock in Eurosurgical or Surgiview (Berkowitz aff, ~ 6; Foster aff, ~ 2). Then, in July .! 2005, ~cient'x purchased a 73% interest in Surgiview (exhibit 24 to Carey affirm, Berkowitz aff, ~~ 7,9). Thus, at the time of the PSA (in May 2006), HPC I owned a one-third interest in Scient'x, a company that owned a majority interest in the transferee, Surgiview. Almost one and a half years after the PSA, HPC II acquired majority ownership of Scient'x, and HPC II, through a Lux~mbourg affiliate, acquired a minority (4.9 %) interest in Surgivicw (id., ~ 12). Defendant , I Berko~itz though admits that he did participate in a Scient'x board meeting on March 6, 2006, in ! which ithe board authorized Mr. Oliver Carli, majority owner and president of Scient'x, to explore the ide~ of Surgiview entering into a purchase agreement with Eurosurgical (id., ~ 11). ! Defendants urge that plaintiff fails to present any case law to support its assertion of defendants' ; 22 II .' [* 24] liability. They further urge that while California courts have recognized a conspiracy theory in : I conne~tion with a fraudulent transfer claim, plaintiff fails to demonstrate that defendants were benefifiaries of the transfer, family or related members of the debtor, were parties to the transfer agree~ent, or created the transferee in order to complete a fraudulent transfer (cf Qwest I I Comm~nications Corp. v Weisz, 278 F Supp 2d at 1192; Filip v Bucurenciu, 129 Cal App 4th at 830; "10nastra v Konica Bus. Mach., US.A., Inc., 43 Cal App 4th at 1633-34). I ! Plaintiff, however, has submitted evidence raising a triable issue as to whether I defend~nts conspired with Eurosurgical, the debtor, and Surgiview, the transferee, to fraudulently i transfe:r Eurosurgical's assets, knowing of, and in order to avoid, plaintiffs California I Judgm~nts. It submits proof, in the form of Berkowitz's deposition testimony, that the HPC I , ' defend:ants were interested in acquiring Eurosurgical since 2004, two years before the PSA took place (~xhibit E to Ross aff, Berkowitz Qecember 16, 2008 deposition [Berkowitz dep I], at 59I 60, 86~87, 103-04). In this testimony, Berkowitz admitted that as early as May 2004, the HPC I defend,ants were evaluating a potential acquisition of Eurosurgical (id). The HPC defendants's I emailsialso indicated that they brought Mr. Carli into the deal to act as their agent and bid for I , , Eurosurgical while they provided the financing (id at 86-87). Berkowitz also attested that they I were atvare of plaintiffs California state court judgment by July 14,2004, nearly two years I I before ithe PSA (id at 94-95; see also exhibit A.I to supplemental affirmation of Peter W. Ross [Ross ~upplemental affirm], Berkowitz ,March 7, 2012 Deposition [Berkowitz dep II], at 71-72; 'i and expibit E.I, Berkowitz dep I at 51), and that they knew that Eurosurgical could not go into bankrJptcy because plaintiff would be the largest creditor and would, in effect take all the equity , I in Eurosurgical to pay the California Judgments (exhibit E to Ross aff, Berkowitz Dep I at 9523 , ; [* 25] 96). ~erkowitzfurther testified'that in the fall of2004, he personally visited Eurosurgical "[t]o , . under~tand the business of Eurosurgical and [sic] opportunity to - to combine activities with ! them ~nd Scient'x, and the growth potential of the business," and arranged for defendant Foster i to me~t with Eurosurgical's president Guy Viart (id at 102-105). He also testified regarding the , minut~s of a Scient' x board meeting, at which he and Foster attended as members, which I I indicated that plaintiff had obtained a judgment against Eurosurgical for $9 million, and that I . I "Scien~'x has been approached by Eurosurgical in an attempt to protect its assets," responding I that h~ could not recall what that meant (exhibit A.l to Ross supplemental aff, Berkowitz dep II I I at 71- ~2 and exhibit 131 annexed thereto at HPC00007345). He testified that Eurosurgical entere4 into the Business Lease with Surgiview, essentially leasing its entire business, as a way for it t6 continue without paying the debt to plaintiff (exhibit E to Ross aff, Berkowitz dep I at . 111-113). Plaintiff submits an October 18,2004 email between Foster and Tim Berkowitz, also I of HP¢, in which Berkowitz cautions "we can't [tell] anyone what the end game is with Euros~rgical" (exhibit 24 to Ross aff; see also exhibit E to Ross aff, Berkowitz dep I at 119-120). I Plaintiff points to the fact that almost a year before the PSA, Scient' x obtained a 73% majority ; interest controlling Surgiview, that the HPC defendants 'owned a 33% interest at the time of I I I transfe~, and then later a majority interest in Scient' x, Surgiview's parent entity. Berkowitz' I himself admitted that HPC's investment committee, which included himself and Foster, ; unani~ously approved the purchase by Surgiview of the assets ~f Eurosurgical in May 2006, which kpproval was necessary because HPC owned a third of the business, and without their I j approv~l no deal would have taken place (exhibit E to Ross aff, Berkowitz dep I aU 0-11). This I I evidenbe submitted by plaintiff is sufficient to raise a triable issue of fact as to whether these ; 24 [* 26] defen~ants conspired with Eurosurgical to conceal its assets for the purpose of defrauding , , plainti:ff, and as to whether they intended to hinder or delay plaintiff s collection of its judgments I I (see M,onastra v Konica Bus. Mach., US.A., Inc., 43 Cal App 4th at 1633-34; see also Qwest I I Comm,unications Corp. v Weisz, 278 F Supp 2d at 1192; Filip v Bucurenciu, 129 Cal App 4th at , I 830; qutierrez v Givens, 1 F Supp 2d 1077, 1087 [SO Cal 1998]; see also Cardinale v Miller, ! 2010 WL 1952423, *3-4,2010 Cal App Unpub LEXIS 3600, * 8-11 [Cal App May 17,2010, ¢ No. Ah25546]). The court notes that, contrary to defendants's contention, California does not requir~ clear and convincing proof of fraud, but, rather, a preponderance of the evidence (Gagan I I v GouJ(d, 73 Cal App 4th 835, 839 [Cal App 1999], disapproved on other grounds Mejia v Reed, ! 31 Cal! 4th 657, n2 [2003]; Whitehouse v Six Corp., 40 Cal App 4th 527,534,538 [Cal App 1995]; i In re Stern, 345 F3d 1036: 1043 [9 th Cir 2003], cert denied 541 US 936 [2004]). : To the extent that plaintiff is asserting an actual fraudulent transfer, "[w]hether a conveyanc(! was made with fraudulent intent is a question of fact, and proof often consists of I inferences from the circumstances surrounding the transfer" (Filip v Bucurenciu, 129 Cal App 4th , , , I at 834; see Bulmash v Davis, 24 Cal 3d 691, 699'[1979]). There are several of the badges of I , fraud present here, including that before the transfer was made, in May 2006, Eurosurgical had !. I been sued by plaintiff, defendants were aware of the California actions, the transfer was of substa~tially all of Eurosurgical' s assets, Eurosurgical was insolvent or became insolvent shortly i after the PSA (see Bardon aff, ,-r 5, and exhibits A and B annexed thereto), and the PSA occurred I , shortly' after a substantial debt was owed by the California state court judgment a'nd after the ! i California federal court judgment (Cal Civ Code §§ 3439.04 [a] [4], [5], [9], and [10]). In I I i additi~n, , whether Eurosurgical received a reasonably equivalent value is a genuine material 25 '! . \ " [* 27] I disputed fact. Defendants submit proof that it was independently valued by Mr. Preud'hom~e in i . the French Commercial Court of Arras proceeding (exhibit 28 to Carey affirm, at OTOI628-30, I , OT01637- OT01648) who opined that a valuation range from I to 1.5 million euros based on the then-present value of Eurosurgical' s future profit was fair (id. at OTO 1648). They also submit an ! I expert!report from Mark S. Brown of Price Waterhouse Coopers (exhibit 31 to Carey affirm), who opined that the fair market value of the assets that Eurosurgical transferred as of May 17, 2006 was b¢tween 1.26 million ~uros and 1.55 million euros (id. at 4). Mr. Brown challenges the valuatiion method used by plaintiffs expert, asserting that plaintiffs expert used only the market I ; appro8;ch, and failed to consider the income or asset-based approaches (id.). In opposition, plaintiff submits the report of its expert, Robert Wunderlich, who opines that the value of compahies such as Eurosurgical usually are based on a multiple of sales (Wunderlich aff and I , exhibi~s A and B annexed thereto; see also exhibit F to Ross aff, deposition of John Foster, dated Deceniber 15,2008, at 49). In 2005, the year before Eurosurgical's entry into the PSA, its sales I ; were 6~205,820 euros, which means that the price Surgiview paid for Eurosurgical was only .26 of its 2005 sales (exhibits A and B to Wunderlich aft). He asserts that in May 2006, the market value Of Eurosurgical was 37.2 million euros (id. at 2; see also Schedules AI-A4 of exhibit A to ~ I Wund~r1ich aft), and, in his rebuttal report, disputes the asset-based approach used by defendants for fail~ng to consider Eurosurgical's good will and/or intangible assets as an ongoing business, and th~ income approach as based on inappropriate assumptions which lead to an understatement I ofvalJe (exhibit B to Wunderlich aft). Plaintifff~rther submits Berkowitz's deposition i testimqny in which he states that two weeks after acquiring Eurosurgical's.assets, defendants j filed a :registration statement with the French Securities and Exchange Commission with regard , 26 . , [* 28] to Sci~nt'x in order to offer those assets for sale to the public, and the valuation mUltiplier used <~ was 6~6, not .26 (see exhibit E to Ross aff, Berkowitz dep I at 158-163, and exhibit 55 to Ross I I aft). Taken together, this proof supports the conclusion that whether Eurosurgical received a reasoriably equivalent value is a triable issue of material fact. Further, with regard to the issue of actual intent, defendants assert that based on ,1 J Euros~rgical's actions in engaging Mr. Meynet as its independent pre-insolvency agrent, and Mr. Preudihomme as an independent valuation expert, voluntarily subjecting itself to French court scruti~y, obtaining a legal opinion on French law, and in advertising the PSA in the French BOD4CC and the local newspaper, there is no basis for finding an actual intent to defraud. I Plaintiff, however, sharply disputes the legitimacy of the French court proceeding, and asserts I ' that the proceeding was not binding on it since it was not a party, was not notified of the \ procee:ding, and was not a party to the PSA which the French court supposedly approved. Arlette I I Bardot:I, plaintiffs French legal expert, affirms that, under French law, court approval of such volunt~ agreements renders them enforceable between the signatories, but does not comprpmise the rights of non-signatories, such as plaintiff here, to challenge the agreement and the tra?sfer of assets (Bardon aff, ~ 4). Further, plaintiff urges that, at the least, this transaction constit)Jted a constructive fraudulent transfer, because it was made without reasonably equivalent I , value ~y a debtor who was insolvent or was rendered insolvent by the transaction (see Cal Civ ~ I Code § 3439.05). This court finds that the circumstances surrounding this transaction give rise to I a question of fact as to whether reasonably equivalent value was exchanged, and whether I defendants acted with the relevant fraudulent intent (see Monastra v Konica Bus. Mach., US.A., Inc., 4~ Cal App 4th at 1633-34). 27 [* 29] i As to the individual defendants Berkowitz's and Foster's liability on these claims, contrary I to def~ndants' contention, French law will not be applied. The issue does not involve the internal affairs: of the corporation Scient'x, on whose board they served. Rather, it involves allegations of I I I thei~ a~tions in conspiring and participating in fraudulent transfers. As determined above, I I Califo~ia law applies to these fraud claims. Under California law, corporate officers may be held iI1dividually liable if they participate in, or have knowledge of, a fraud (Wyatt v Union I Mortghge Co., 24 Cal 3d 773, 785 [1979]). While they are not liable simply because of their I ¢ I positiQns as officers or directors of a corporation, they may be held liable if they "directly I I ordereo, authorized or participated" in the fraudulent conduct (id.). Such liability may rest upon an officer or director's conspiracy to injure third parties through the corporation (id.; see also I I I Thomd,s v Global Vision Prods., Inc., 2008 WL 7184817 [Cal Super, May 14,2008, No. RG , 03091) 95]; Schwartz v Pillsbury, Inc., 969 F2d 840, 844 [9 th Cir 1992]). Berkowitz and Foster I were s}gnificantly involved in the allegedly fraudulent conveyance as indicated above. There is a triableiissue as to whether they were engaged in, and the extent of their knowledge and I participation in, a conspiracy to hinder collection of the California Judgments through the PSA as I a frau~ulent transfer. Accordingly, summary judgment is denied as to the first cause of action for I fraudulent transfer as against all the defendants. i ! Summary judgment, however, is granted as to the se~ond cause of action. That claim specifi~ally I pleads fraudulent conveyance under DCL §§ 273 et seq. Plaintiff now contends, and ¢ this cohrt agrees, as determine? above, that California law applies to its fraudulent conveyance claim. !Therefore, this claim is dismissed. 28 [* 30] : Finally, summary judgment is denied with respect to the third cause of action. In the ! compl~int, plaintiff seeks recovery for intentional interference with prospective economic I advantage. Specifically, as pleaded in its first amended complaint, plaintiff alleges that it had the , right t6 payment from Eurosurgical of the amount of the California Judgments, which right would: have resulted in an economic benefit to plaintiff in that it would have been able to collect i all or part of this amount from Eurosurgical, and that defendants each engaged in wrongful condu~t by participating, conspiring, and aiding and abetting Eurosurgical's fraudulent transfer of I 4 substartially all of its assets for less than fair value, and interfering with plaintiffs right to collect on its judgments, resulting in plaintiffs inability to so collect to its damage (first amended. compl~int, ~~ 43-50). In California, to recover in tort for intentional interference with the I perfo$ance of a contract, a plaintiff must assert and prove: (1) an economic relationship I ! betwe~n plaintiff and a third party with a probable future economic benefit to plaintiff; (2) ! defendant's knowledge of the relationship; (3) defendant's intentional acts designed to induce a I I breach~ or disruption of the contractual relationship; (4) actual breach or disruption of the contra~tual , relationship; and (5) resulting damage proximately caused by defendant's actions (Koreq Supply Co. v Lockheed Martin Corp., 29 Cal 4th 1134, 1153 [2003]; Pacific Gas & Electric Co. v Bear Stearns & Co., 50 Cal 3d 1118, 1126-1129 [1990]). The defendant's acts ! . I must ~e wrongful apart from the interference itself (Korea Supply Co. v Lockheed Martin Corp., 29 Cal;4 th at 1153). Thus, it must be proscribed by constitutional, regulatory, statutory or , comm?n law or other determinable legal standard (id. at 1159). "[A]n essential element of the tort of~intentional interference with prospective business advantage is the existence of a business I I relationship with which the tortfeasor interfered. Although this need not be a contractual 29 [* 31] relatiopship, an existing relationship is required" (Roth v Rhodes, 25 Cal App 4th 530, 546 [Cal , , , App 1994] [citations omitted]; see also North Am. Chem. Co. v Superior Court oj Los Angeles Count);, 59 Cal App 4th 764, 786 [Cal App 1997] [to establish tort of interference with ~ prospe~tive business advantage, plaintiff must show "an economic relationship existed between ; the pl~intiff and a third party which contained a reasonably probable future economic benefit or , advant~ge to plaintiff']). : Plaintiffs claim, as plead in its first amended complaint, based on the California , I Judgm:ents, fails because it has not demonstrated the required elements. Contrary to its conten~ions, a judgment is a final determination of the parties' rights and obligations by a court, whichidoes not constitute an "economic" relationship. Instead, an economic or business I relatio~ship involves providing or consuming goods or services. Plaintiff claims that this cause of acti9n does not require an economic relationship, but fails to cite to a California case, and this I I court Has found none, holding that a judgment can form the requisite relationship for a tortious , I interference claim. The goal of tortious interference claims is to protect competition, and to I ! preve~t parties from acting wrongfully to gain advantage in an underlying business relationship. The 0I1ly case upon which plaintiff relies in asserting that the judgments can form the basis for , . I the to~ious interference claim is Gold v Los Angeles Democratic League (49 Cal App 3d 365 I [1975]0. That case, however, is factually distinguishable. It involved a claim by an unsuccessful ; candidate for public office asserting that the defendants interfered with the election at issue, and I has be~n viewed by California's highest court as a lone case which would not be extended in I ; ; Youst y Longfo, (43 Cal 3d 64,72-74 [1987]). Thus, this court holds that, as plead in the first 4 I amend~d complaint, plaintiff fails to state a claim for tortious interference with prospective 30 [* 32] econdmic relationship under California law based on defendants' interference with the California , I ludgrftents. ; However, plaintiff, in its affidavit in opposition to this motion, which can be read along with ~he complaint, and the exhibits submitted in opposition, asserts that the tortious interference I claim: is also based on the defendants' purported interference with plaintiffs contract with Choice I ; Spin~. Defendants have addressed the claim as plead based on the Choice Spine agreement in . their opposition and reply briefs. Thus, plaintiff contends that, on April 25, 2006, it entered into I . . an aS$et purchase agreement with Choice Spine in which it sold its product rights to the , Euro~urgical products, among other things, to Choice Spine for an original purchase price of $16 , million (Bertranou aff, ~ 13 and exhibit 139 annexed thereto, ~ 1.3). In the California state court judgrhent, Eurosurgical was required to turn over the product plans and specifications for the I i prod~cts to plaintiff (exhibit 81 to Bertranou aff, at 5, ~ 7). Mr. Bertranou, plaintiffs principal and managing member, states in his affidavit in opposition that he made repeated demands on , Eurosurgical to turn over those plans and specifications, but it never complied (Bertranou aff, ~ 14). fie further attests that he contacted defendant Foster, by letter, on November 1, 2006, as I i Chairman of Alphatec Holdings, Inc., demanding that the plans and specifications be turned over enclo;sing a copy of the California state court judgment, but he received no response (id., ~ 15 and exhi9it 143 annexed thereto). Mr. Bertranou further states that, in early 2007, he personally advisfd defendant Berkowitz that he needed to obtain the plaris and specifications so that i plaintiff could comply with its contract with Choice Spine (Bertranou aff, ~ 16). He then states , I . that qecause Eurosurgical and defendants refused to turn over those plans and specifications, " i plain~iff was unable to provide them to Choice Spine, and, at Choice Spine's request, had to agree 31 [* 33] to re4uce the purchase price to be paid by Choice Spine to $5.225 million. He avers that without the pians, Choice Spine was delayed in manufacturing the products and lost its market share, so I the d~al had become less valuable, which required a third amendment to that agreement, reducing , the p~ice, ! which occurred on April 24, 2008 (id, ~ 14 and exhibit 152). The court finds this claim is not only sufficiently plead as a tortious interference claim, I but tnat there are triable issues of fact. Plaintiff has clearly presented an existing contractual ; relati?nship, with the first agreement being entered into by plaintiff and Choice Spine in April i 2006,: with a probable future economic i;>enefit to plaintiff. Plaintiff has also presented proof that defen~ants were aware that plaintiff needed the plans and specifications so that it could comply with i~s contract with Choice Spine (Bertranou aff, ~ 16). Whether plaintiff actually told them it had aA agreement with Choice Spine or not, and whether the lack of plans caused the price ' 1 I reductions (see exhibit 0 to : , , resol~ed , ~oss . aff, deposition of Richard Henson, at 122-127) may not be on these papers. In addition, whether these defendants used wrongf~l means in i interfering with the Choice Spine agreement is a genuine triable issue. As discussed above, ~ I , plaintjffpresents proof that, one month after the California state court judgment was entered, Surgi~iew took possession of all of Eurosurgical's assets, including the manufacturing plans, I throu&h the Business Lease; defend~nts owned and controlled Surgiview through their ownership in Sci~nt'x; defendants were financing Surgiview's purchase of Eurosurgical's business; I I defenqants knew of the state court judgment as soon as it was entered (exhibit E to Ross aff, I BerkoFitz Oep at 94-95, and exhibit B, Foster Oep at 44-45), and that while they we~e aware of the requirement in the judgment that Eurosurgical tum over the plans to plaintiff, and received I I the let~er ~ directly from plaintiff requesting the plans, they took no steps to ensure that the plans 32 [* 34] ; were turned over (exhibit B to Ross aff, Foster dep at 39-41,59-60,62). Whether defendants had I intentionally and wrongfully acted to disrupt the plaintiffs contractual relationship by conspiring I to fra*dulently transfer Eurosurgical's assets, including the manufacturing plans, to avoid the I California Judgments owed to plaintiff, and then by refusing to acknowledge the California j Judg~ents, and the obligation to turn over the plans of which they were aware, and whether they knew:that such refusal was harming plaintiff, are issues to be resolved upon the trial of this I , actio~. Therefore, summary judgment is denied on this claim to the extent that it is based on , ; tortio~s interference with plaintiffs contractual relationship with Choice Spine. I ; Finally, the court notes that, in an appendix annexed to its opposition papers, plaintiff I , ,I I obje~fs to the admissibility of defendants' exhibits as not properly authenticated, and as not based , on p~rsonal knowledge. Plaintiff claims that much of the evidence submitted is inadmissible beca4se the exhibits relied upon by defendants are attached to the affidavit of their attorney who does ~ot have personal knowledge of the documents. However, many of the documents appear i I to be 1self-authenticating under CPLR article 45 (for example, CPLR 4540 for domestic . public I docufnents, CPLR 4542 for foreign public documents, CPLR 4532 for newspapers, and CPLR I I 4538ifor acknowledged documents), or may be considered on this summary judgment motion as ; busi~ess records (CPLR 4518). Plaintiff has even objected to documents which it produced in ,/ disc~very and upon which it also relied in its opposition, such as the assignment agreement 1 between itself and Eurosurgical, the breach of which formed the basis of the California I JudgIPents, the Business Lease, the PSA, and facsimiles and emails (compare Appendix to I Plain~ifrs Memorandum Opposition to Summary Judgment with Defendants's Appendix A- I Response to OrthoTec's Evidentiary Objections). In addition, it objects that some of the 33 [* 35] 'I affida~its, such as Berkowitz's affidavit, are not based on personal knowledge, when the affiants i I do state they have such knowledge. In any event, as discussed above, the court finds that there are tr\'able issues of fact on plaintiffs first and third claims, the claims- to which most of these exhib~ts 1 , exhib~ts. apply, and the dismissed second cause of action is based on the law, not on these Thus, plaintiffs objections fail to warrant a different conclusion with regard to the second claim. Accordingly, it is ORDERED that the defendants' motion for summary judgment is granted only to the exten that the second cause of action is dismissed, and is otherwise denied. Date~: May 30, 2013 I MELVIN l. SCHWEITZER 34

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