Cantor Fitzgerald & Co. v 8an Capital Partners Master Fund L.P.

[*1] Cantor Fitzgerald & Co. v 8an Capital Partners Master Fund L.P. 2018 NY Slip Op 50690(U) Decided on May 16, 2018 Supreme Court, New York County Hagler, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 16, 2018
Supreme Court, New York County

Cantor Fitzgerald & Co., Petitioner,

against

8an Capital Partners Master Fund L.P. and PHILIP EYTAN, Respondents.



159825/15



Plaintiff was represented by David A. Paul, Esq., and Michael S. Popok, Esq., Cantor Fitzgerald, 110 East 59th Street, 7th Floor, New York, NY 10022, Tel: 212-610-2298.

Respondent Philip Eytan was represented by David Bolton, Esq., David Bolton, P.C., 666 Old Country Road, Suite 509, Garden City, NY 11530, Tel: 516-222-0600.
Shlomo S. Hagler, J.

In this special proceeding, petitioner Cantor Fitzgerald & Co. ("Cantor" or "Petitioner) seeks an Order (1) piercing the veil of 8an Capital Partners Master Fund L.P. (the "Fund Judgment Debtor"), a Cayman Islands limited partnership, to hold Philip Eytan ("Eytan" or "Respondent") liable for a judgment obtained by Cantor against the Fund Judgment Debtor; (2) directing Eytan to turnover assets of the Fund Judgment Debtor and of Eytan pursuant to CPLR 5225(b); and (3) attaching Eytan's assets pursuant to CPLR 6201 (the "Petition") [Motion Sequence Number 001]. Cantor also seeks leave of the Court to amend its Petition to add causes of action alleging fraudulent conveyance in violation of the Debtor and Creditor Law [Motion Sequence Number 002]. Respondent opposes the Petition and the motion to amend.

BACKGROUND AND PROCEDURAL HISTORY

Underlying Action

In August 2012, Cantor commenced an action against the Fund Judgment Debtor seeking damages in excess of $2,500,000 for the Fund Judgment Debtor's failure to settle a securities trade with Cantor [Index No. 652792/12] ("Underlying Action"). The Underlying Action alleged that the Fund Judgment Debtor reneged on its commitment to purchase certain securities from Cantor. In March 2014, a Judgment in favor of Cantor and against the Fund Judgment Debtor was entered in the amount of $2,883,528.48 (the "Judgment") (Petition, Affidavit of Sean [*2]Goodrich [Sales Trader at Cantor], Exhibit "A").[FN1] By Order, dated August 15, 2014, the Court (Hon. O. Peter Sherwood, J.S.C.) granted Cantor's motion to compel the Fund Judgment Debtor in the Underlying Action to respond to an Information Subpoena and Questionnaire previously served by Cantor on the Fund Judgment Debtor, on or before September 19, 2014 (Goodrich Affidavit, Exhibit "B"). According to Cantor, having failed to respond before September 19, 2014, Cantor twice moved against the Fund Judgment Debtor for contempt. By Orders, dated March 18, 2015 and October 2, 2015, respectively, Cantor's motions for contempt were denied.[FN2]

By Order, dated May 19, 2015, Justice Sherwood granted the motion of the Fund Judgment Debtor's counsel to withdraw, but conditioned the grant on the requirement that counsel must serve a copy of the decision upon Eytan, who retained the same counsel (Goodrich Affidavit, Exhibit "C"). According to the instant Petition, the Fund Judgment Debtor has failed to respond to the Information Subpoena, and the Judgment remains unsatisfied (Goodrich Affidavit, ¶¶ 15, 16).

Fraudulent Transfer Action

In July 2014, Cantor commenced an action against (1) the Fund Judgment Debtor; (2) an affiliate of the Fund Judgment Debtor known as 8an Capital Partners, Ltd. ("Capital Partners" or the "Fraudulent Action Transferee"); (3) and Eytan pursuant to Debtor and Creditor Law, §§ 273-a, 276, 276-a, 278, seeking to set aside a certain transfer made between affiliated companies allegedly to prevent the Fund Judgment Debtor from satisfying its Judgment [Index No. 156559/14] (the "Fraudulent Conveyance Action"). Specifically, the complaint in that action alleges that on or about the date that the Fund Judgment Debtor filed its Answer to Cantor in the Underlying Action, Cantor learned that the Fund Judgment Debtor transferred $500,000 and several million shares of stock from a domestic JP Morgan account to a Swiss bank account maintained in the name of Capital Partners. Most significantly, the complaint alleges that the Fraudulent Action Transferee and the Fund Judgment Debtor were controlled by Eytan who was authorized to trade securities, and generally to act on behalf of the Fund Judgment Debtor. As such, the complaint alleges that the transfer by the Fund Judgment Debtor to Capital Partners, an entity under the same control as the Fund Judgment Debtor, was made without fair consideration and for the benefit of Eytan, who controlled both the Fraudulent Action Transferee and the Fund Judgment Debtor. By Order, dated October 1, 2015, the First Department granted Eytan's motion to dismiss the Fraudulent Conveyance Action as against him [Cantor Fitzgerald & Co. v 8an [*3]Capital Partners Master Fund, L.P., 132 AD3d 402].[FN3]

By Order, dated October 27, 2015, the Court (Justice Anil C. Singh, J.S.C.) denied a motion by Cantor to amend the complaint to add 8an Capital Management LLC ("Capital Management") as a party defendant on grounds that the Court lacked jurisdiction given that the First Department dismissed the action against the sole defendant (Eytan) served with process.

The Subject Petition

While the appeal of the Fraudulent Transfer Action was pending, Cantor commenced the instant special proceeding in September 2015 seeking a Court Order in aid of its effort to enforce and satisfy the Judgment. Specifically, the Petition seeks to (1) "pierce the corporate veil" of the Fund Judgment Debtor to hold Eytan liable for the Judgment; (2) direct Eytan to turnover his assets and the assets of the Judgment Debtor pursuant to CPLR 5225(d); and (3) attach Eytan's assets.

The Petition alleges, among other things, that the Fund Judgment Debtor and its affiliates were a hedge fund conglomerate conceived and controlled by Eytan (Petition, ¶ 32). In or about March 2009, Capital Partners entered into an Investment Management Agreement with the Fund Judgment Debtor and Capital Management, another affiliated entity (Capital Partners and Capital Management, together "Related Entities") pursuant to which Capital Partners invested its assets in the Fund Judgment Debtor, and Capital Management acted as the investment manager for Capital Partners and the Fund Judgment Debtor (the "Investment Management Agreement"). Under the Investment Management Agreement, Capital Partners agreed to invest substantially all of its "investable" assets in the Fund Judgment Debtor (Goodrich Affidavit, Exhibit "D").

Eytan executed the Investment Management Agreement in many capacities: as director of Capital Partners, as managing member of 8an General Partner, LLC, which was the general partner of the Fund Judgment Debtor, and as managing member of Capital Management. Petitioner alleges that under the Investment Management Agreement, Capital Management, by and through Eytan as its managing member, was given complete and unlimited discretionary trade authorization as to all assets of the Fund Judgment Debtor. It is further alleged that Eytan entered into the trade at issue in the Underlying Action, which resulted in the Judgment.

In its First Cause of Action to pierce the corporate veil of the Fund Judgment Debtor, Cantor alleges that Eytan was the primary investor in the Fund Judgment Debtor and its Related Entities, the Fund Judgment Debtor is a mere instrumentality of Eytan and Eytan had unilateral control of the Fund Judgment Debtor and the Related Entities. As such, the Petition alleges that Eytan caused the diversion of substantial assets of the Fund Judgment Debtor to evade post- Judgment payment and disclosure obligations and that Eytan used his dominion and control over the Fund Judgment Debtor and its affiliates to commit wrongs which damaged Cantor. Cantor argues therefore that Eytan "abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against Petitioner" (Petition, ¶ 62), and that based on such conduct, this Court should pierce the corporate veil to hold Eytan personally liable for the Judgment (Petition, ¶¶ 45-63).

Petitioner's Second Cause of Action seeks an order against Eytan pursuant to CPLR [*4]5225(b) to turn over assets in which Petitioner, as a judgment creditor, has an interest as a result of the Judgment (Petition, ¶¶ 64-69).

Petitioner's Third Cause of Action seeks an Order attaching Eytan's assets pursuant to CPLR 6201(5) on grounds that this Petition is based on a Judgment. The Petition also seeks attachment of Eytan's assets pursuant to subsection (3) on the basis that the Fund Judgment Debtor, at Eytan's direction, entered into a Fraudulent Transfer in order to evade payment of the Judgment. Further, Petitioner seeks injunctive relief pursuant to CPLR 6210 prohibiting Eytan from transferring his assets or permitting others to do the same with respect to assets in which Petitioner has an interest (Petition, ¶¶ 70-85).

DISCUSSION Relief Sought in the Petition First Cause of Action for Piercing the Corporate Veil

The concept of veil piercing is not applicable to an entity in limited partnership form as a matter of law given such a partnership has by its very nature no "veil" to pierce.[FN4] Petitioner has failed to demonstrate, that either Cayman Islands or New York law recognizes a claim against a limited partnership based on a veil piercing theory given there is no such authority.[FN5]

In support of its argument to pierce the corporate veil to hold Eytan liable for the Judgment, Petitioner cites to principles applicable to piercing the corporate veil of entities in corporate form. As such, Petitioner's reliance on authority permitting piercing the corporate veil of corporations and limited liability companies is misplaced (see e.g., Retropolis, Inc. v. 14th St. Dev. LLC, 17 AD3d 209, 210 [1st Dept 2005] [piercing of corporate veil can apply to limited liability companies]; Rotella v Derner, 283 AD2d 1026, 1027 [4th Dept 2001] [piercing the corporate veil of a corporation where there was a "disregard of corporate formalities and personal use of corporate funds"]; Rebh v Rotterdam Ventures, 252 AD2d 609, 610-611 [3rd Dept 1998] [issue of fact as to whether a defendant parent company completely controlled and dominated its subsidiary corporation to support a claim for piercing the corporate veil]; Austin Powder Co. v McCullough, 216 AD2d 825 [3rd Dept 1995] [piercing the corporate veil of corporation to reach corporation's president justified given the president's complete domination of the corporation debtor and its undercapitalization]; Lally v Catskill Airways, 198 AD2d 643, 644-645 [3rd Dept 1993] [issues of fact as to whether the corporate veil of a corporation could be pierced to reach a shareholder given evidence that the shareholder exercised authority over the corporation]).

Likewise, Petitioner's reliance on Partnership Law § 121-303(a) is inapposite. Section [*5]121-303 provides:

"a limited partner is not liable for the contractual obligations and other liabilities of a limited partnership unless he is also a general partner or, in the addition to the exercise of his rights and powers as a limited partner, he participates in the control of the business. However, if the limited partner does participate in the control of the business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner."[FN6]

Subsection (b) provides a safe harbor, namely, a list of protected activities that a limited partner may engage in which does not constitute participation in the control of a limited partnership (see Tapps of Nassau Supermarkets v Linden Blvd, 242 AD2d 235, 237 [1st Dept 1997] [decided under similar provision in Delaware Law]).

Petitioner argues Eytan controlled the Judgment Debtor and was the only person authorized to engage in the subject trade on behalf of the Judgment Debtor. Petitioner also claims it believed that Eytan acted as a general partner of the Judgment Debtor and business personnel involved in the subject trade identify Eytan as conducting the Judgment Debtor's business and acting as its general partner.

Here however, given that Petitioner does not allege that Eytan was a limited partner of the Fund Judgment Debtor, Petitioner's reliance on Partnership Law § 121-303(a) to hold Eytan liable for the Judgment is misplaced. Rather Eytan executed the Investment Management Agreement as director of Capital Partners, Ltd., as managing member of 8an General Partner, LLC, general partner of the Judgment Debtor, and as managing member of 8an Capital Management, LLC, Investment Manager of the Fund Judgment Debtor.[FN7]

Accordingly, the Petition is denied to the extent it seeks to enforce the Judgment against Eytan personally.

Second Cause of Action Seeking an Asset Turnover

CPLR 5225 (b) provides, in relevant part:

"Upon a special proceeding commenced by the judgment creditor, against a person in possession or custody of money or other personal property in which the judgment debtor has an interest, or against a person who is a transferee of money or other personal property from the judgment debtor, where it is shown that the judgment debtor is entitled to possession of such property or that the judgment creditor's rights to the property are superior to those of the transferee, the court shall require such person to pay the money or so much of it as is sufficient to satisfy the judgment to the judgment creditor and, if the [*6]amount to be so paid is insufficient to satisfy the judgment, to deliver any other personal property or so much of it as is of sufficient value to satisfy the judgment."

The Petition alleges that Cantor, as a judgment creditor, possesses an interest in the assets of the Fund Judgment Debtor and Eytan resulting from the Judgment, and as such, is entitled to an order directing Eytan to turnover such assets to Cantor to satisfy the Judgment.

At oral argument, this Court granted the Petition without opposition solely to the extent of directing Eytan to turnover the assets of the Fund Judgment Debtor to Cantor in his possession (Tr Oral Argument, 12/14/15 at 25-27).[FN8] To the extent the Petition seeks a turnover of Eytan's personal assets to satisfy the Judgment, this Court stated on the record that such relief could only be granted if Cantor succeeds on its veil piercing claim. However, having dismissed Petitioner's cause of action to pierce the corporate veil to hold Eytan personally liable for the Judgment, this Court denies the Petition without prejudice to the extent it seeks an Order directing Eytan to turnover his personal assets to the Judgment Debtor (Id. at 26-28).

Third Cause of Action for Attachment

The Petition seeks an order of attachment against Eytan's personal assets in order to satisfy the Judgment. The Petition cites to CPLR 6201, which provides, in relevant part, that an order of attachment may be granted when:

"the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts . . . " or "the cause of action is based on a judgment, decree or order of a court of the United States or of any other court which is entitled to full faith and credit in this state. . .." [CPLR 6201 (3) and (5)].

Petitioner also seeks a temporary restraining order pursuant to CPLR 6210 and an order pursuant to CPLR 6220 requiring Eytan to disclose information regarding assets in which the Judgment Debtor has an interest.

At oral argument on the record, this Court stated that there was no evidence that Eytan secreted assets anytime since 2012 or at the latest 2013.[FN9] As such, this Court denied the Petition to the extent it seeks attachment of Eytan's assets given there are "no evidentiary facts which give rise to an attachment (Tr Oral Argument, 12/14/15 at 26).[FN10] In any event, the Petition only [*7]suggests that Eytan had caused the Fund Judgment Debtor to secrete its assets in 2012, and there is no allegation that Eytan has secreted his personal assets. "Attachment is a 'harsh' remedy, and is construed narrowly in favor of the party against whom the remedy is invoked" (VisionChina Media Inc. v Shareholder Representative Servs., LLC, 109 AD3d 49, 59 [1st Dept 2013]).

Motion to Amend the Petition

Cantor seeks leave of this Court to amend the Petition to add causes of action against Eytan sounding in fraudulent conveyance in violation of Debtor & Creditor Law, §§ 273-a, 276, 276-a and 278 (the "Proposed Amended Petition"). Common to all such causes of action are allegations that during the pendency of the Underlying Action, Eytan caused the Judgment Debtor to make fraudulent conveyances to Eytan personally (Proposed Amended Petition, ¶¶ 121, 134, 150). The Proposed Amended Petition alleges that "Eytan caused the Fraudulent Transfers from Judgment Debtor to affiliated insider hedge fund entities under Eytan's control and then he caused those entities to flush the assets out to investors, including him" (Proposed Amended Petition, ¶ 41). In addition, the Proposed Amended Petition makes claims that Eytan "directly and personally benefited from the Fraudulent Transfers by ultimately receiving the assets subject to the Fraudulent Transfers and by earning fees under the Investment Management Agreement for administering assets of Capital Management, including the assets subject to the Fraudulent Transfers" (Proposed Amended Petition, ¶ 122, 135, 151). Eytan caused such conveyances to be made "with actual intent to hinder, delay and defraud Petitioner" (Proposed Amended Petition, ¶¶ 116, 128, 143).

Petitioner maintains that it failed to assert fraudulent conveyance claims when the Petition was filed in September 2015 as the appeal of the Fraudulent Transfer Action was still pending before the Appellate Division, First Department. Cantor also asserts that leave to amend should be granted because Eytan will not be prejudiced, as he is well aware of the fraudulent transfer allegations against him.

In opposition, Eytan argues that Petitioner's motion to amend the Petition is not supported by an affidavit of merit or evidentiary proof. Eytan further argues that Petitioner's claims are not viable under New York law as Petitioner is seeking a Judgment against Eytan rather than the alleged fraudulent transferee hedge funds. Eytan also maintains that the Proposed Amended Petition consists of conclusory allegations which do not cure the defects found by the Appellate Division, First Department in its decision dismissing the Fraudulent Transfer Action.

The decision of the Appellate Division, First Department in the Fraudulent Conveyance Action provides:

"The complaint alleges that defendant [Eytan] knew of and participated in the alleged fraudulent transfer of assets but fails to allege that he is the transferee, and further fails to allege, in anything other than conclusory fashion, that he benefitted from the transfer, as required to state a cause of action for fraudulent conveyance (Debtor and Creditor Law §§ 273, 276).""Moreover, while defendant is an officer of both defendant transferor and transferee [*8]corporations, receipt of a salary from the transferee corporation as an officer of the corporation is not sufficient to render the officer a transferee or beneficiary of the transfer."As there are no other nonconclusory allegations sufficient to hold defendant individually liable for the fraudulent transfer, the complaint should be dismissed as against him [internal quotation marks and citations omitted] (Cantor Fitzgerald & Co. v 8an Capital Partners Master Fund, L.P., 132 AD3d 402, 403 [1st Dept 2015]).

At oral argument on May 10, 2016, this Court asked Petitioner's counsel to compare the complaint in the Fraudulent Transfer Action with the subject Petition to indicate what claims are being alleged in the Proposed Amended Petition that were not alleged in the Fraudulent Transfer Action complaint. Petitioner's counsel read into the record the Proposed Amended Petition, Paragraphs 3 and 28. Paragraph 3 provides:

"Additionally, Petitioner seeks to recover assets totaling over Five Hundred Thousand Dollars ($500,000) plus several million shares of various stock, which were transferred in bad faith by Eytan to an account held by an insider hedge fund entity in Switzerland and to an account held by another insider hedge fund entity in the United States, and ultimately to Eytan himself, while Judgment Debtor was a defendant in an action brought by Petitioner to recover money damages, as part of a concerted effort by Eytan to place assets beyond the reach of impending judgment creditor Petitioner and to render Judgment Debtor judgment-proof."

Paragraph 28 provides:

"In connection with enforcement diligence, Petitioner learned that, on or about October 19, 2012, the very date that Judgment Debtor answered the complaint in the Underlying Action, Judgment Debtor, at Eytan's direction, transferred (the "Fraudulent Transfers") approximately Five Hundred Thousand Dollars ($500,000) and several million shares from a domestic account at JP Morgan Clearing Corp. to a Swiss bank account at Compagnie Bancaire Helvetique in the name of an affiliated hedge fund operated by Eytan, 8an Capital Partners, Ltd. ("Capital Partners"), and approximately $45,000 from Judgment Debtor's domestic JPMorgan Clearing Corp. account to a domestic JPMorgan Chase account in the name of 8an Capital Management, LLC ("Capital Management") [emphasis in original]."[FN11]

Petitioner's counsel alleges that at Eytan's direction, funds were transferred from the Judgment Debtor to affiliated entities which ultimately "landed in Eytan's pocket" (Tr Oral [*9]Argument 5/10/16 at 17-18).[FN12] In opposition, Eytan argues that the only real difference between the Fraudulent Transfer Action Complaint and the Proposed Amended Petition is the addition of the words "ultimately to Eytan himself" (Tr Oral Argument, 5/10/16 at 34; Proposed Amended Petition, ¶ 3).

The mere addition of allegations in the Proposed Amended Petition that Eytan caused the fraudulent transfers to be made ultimately to Eytan himself, or that Eytan benefitted from such transfers by receiving the assets subject to the Fraudulent Transfers do not, standing alone, cure the defects found by the First Department that Eytan "failed to allege in anything other than conclusory fashion, that he benefitted from the transfer" (Cantor Fitzgerald & Co. v 8an Capital Partners Master Fund, L.P., 132 AD3d at 402).[FN13] Further, Petitioner has failed to proffer an affidavit or any evidentiary proof to support its fraudulent conveyance claims.

CONCLUSION

Based on the foregoing, it is hereby

ORDERED AND ADJUDGED, that the Petition by Petitioner Cantor Fitzgerald & Co. for an Order (1) piercing the corporate veil of 8an Capital Partners Master Fund L.P. to hold Philip Eytan liable for the Judgment obtained by Cantor against the Fund Judgment Debtor; and (2) attaching Eytan's assets pursuant to CPLR 6201 [Motion Sequence Number 001] is denied; the Petition seeking an Order directing Eytan to turnover assets of the Fund Judgment Debtor and Eytan's personal assets is granted only to the extent of directing Eytan to turnover any assets of the Fund Judgment Debtor in his possession and is otherwise denied; and it is further

ORDERED, that Petitioner's motion for leave to amend the Petition in the form attached as Exhibits "A" and "B" to the motion [Motion Sequence No. 002] is denied.

The Clerk shall enter a judgment accordingly.

Dated: May 16, 2018 Footnotes

Footnote 1:By Order, dated January 7, 2014, the Court (Hon. O. Peter Sherwood, J.S.C.) granted summary judgment to plaintiff and ordered that plaintiff recover $2,503,125, plus interest, costs and disbursement from the Fund Judgment Debtor.

Footnote 2:By Order, dated March 18, 2014, the Court (Hon. O. Peter Sherwood, J.S.C.) denied the Fund Judgment Debtor's motion for contempt finding the Court lacked jurisdiction on the basis that the Fund Judgment Debtor failed to comply with the notice requirements of Judiciary Law § 756, and by Order, dated October 5, 2015, Justice Sherwood denied the Fund Judgment Debtor's second motion for contempt for failure to comply with a Commercial Division Rule. The October 5, 2015 Order was rendered after the subject proceeding was commenced.

Footnote 3:The First Department decision reversed an Order, dated December 19, 2014, denying Eytan's motion to dismiss (2014 WL 7664742 [Hon. Melvin L. Schweitzer, J.S.C.]).

Footnote 4:Partnership Act § 90 defines a limited partnership as "a partnership formed by two or more persons...having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership." To the extent that a limited partner exceeds his limited role, he may no longer have the liability protection generally afforded limited partners (see Partnership Law, § 121-303[a]).

Footnote 5:Although Petitioner argues that New York law applies and Eytan maintains that Cayman Islands law is controlling, Petitioner cites no authority recognizing a veil piercing claim against a limited partnership under either law. As such, the Court will look to the general concepts of partnership doctrines under New York law, and need not address the choice of law issue.

Footnote 6:Petitioner concedes that the comparable Cayman Islands statute (Cayman Islands Exempted Limited Partnership Law, § 20 [1]) provides similar protections to limited partners.

Footnote 7:While the Petition alleges that Eytan was the managing member of the Fund Judgment Debtor, and the Investment Management Agreement signature page reflects that Eytan was the managing member of the Fund Judgment Debtor's general partner, there is no allegation that Eytan was a limited partner of the Fund Judgment Debtor.

Footnote 8:Eytan's counsel stated on the record that "I'm hundred percent sure my client [Eytan] has no assets belonging to the debtor [the Fund Judgment Debtor]" (Tr Oral Argument, 12/14/15 at 26).

Footnote 9:This Court asked the Petitioner "pointedly whether or not there has been any attempts more recently for [E]ytan to s[n]eek away his assets, [and] the answer was no" (Tr Oral Argument, 12/14/15 at 26).

Footnote 10:Petitioner's reliance on CPLR 6201(5) is misplaced as that section authorizing attachments, is based on judgments of a Court of the United States or a Court entitled to full faith and credit. Here, the Underlying Action is based on a Judgment against the Fund Judgment Debtor obtained in a New York Court (see Sunrest Properties, LLC v Sunrest Nursing Home, 8 Misc 3d 1028(A), fnt 3).

Footnote 11:The aforesaid $500,000 transfer in 2012 from the Fund to a transferee in Switzerland in the name of Capital Partners was the subject of the Fraudulent Transfer Action. The alleged 2012 $45,000 transfer is being raised for the first time in the subject Petition.

Footnote 12:In response to a question by this Court, Petitioner's counsel stated that this argument was not made before the First Department (Tr Oral Argument 5/10/16 at 18-19).

Footnote 13:In fact, the Complaint in the Fraudulent Transfer Action alleges that Eytan was a beneficiary of the alleged transfer. The allegations in the Proposed Amended Petition, without more, that the assets were transferred by the transferee ultimately to Eytan or that Eytan received the assets are likewise conclusory and fail to sufficiently plead a cause of action for fraudulent conveyance. Petitioner claim that Eytan received fees under the Investment Management Agreement for the assets of Capital Management, including the assets allegedly subject to the fraudulent transfer (Proposed Amended Petition at ¶ 41) is likewise by itself insufficient to hold Eytan individually liable (see Cantor Fitzgerald & Co. v 8an Capital Partners Master Fund, L.P., 132 AD3d at 402-403 [receipt of a salary from the transferee corporation as an officer of the corporation is not sufficient to render the officer a transferee or beneficiary of the transfer]).