Clemente v Ide

[*1] Clemente v Ide 2023 NY Slip Op 50522(U) Decided on May 23, 2023 Supreme Court, Warren County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 23, 2023
Supreme Court, Warren County

Paul Clemente, Plaintiff,

against

Geri Ide, individually, and also in her capacity as Trustee of the living revocable trust of David P. Clemente, Defendant.



Index No. EF2022-69770



Mandel Clemente, P.C., East Greenbush (Linda A. Mandel Clemente of counsel), for plaintiff.

Tabner, Ryan & Keniry, LLP, Albany (Eric N. Dratler of counsel), for defendant.
Robert J. Muller, J.

The parties to this action have a long and protracted history of litigation. As relevant here, on August 27, 1998, Frank A. Clemente (hereinafter decedent) and his son, David P. Clemente (hereinafter David) created a Limited Partnership entitled The Clemente Family Group, LP. As set forth in the partnership agreement, decedent and David were designated as general partners with ownership of .50 units each and decedent was designated as the sole limited partner with ownership of 99 units. Thereafter, on November 24, 1999, the Frank A. Clemente Two-Year Grantor Retained Annuity Trust (hereinafter the GRAT Trust) was created,[FN1] with decedent being the grantor and David named as trustee. The GRAT Trust was funded by an assignment of decedent's 99 limited partner units in The Clemente Family Group, LP. Pursuant to the GRAT Trust terms, the trustee — i.e., David — was to pay the grantor — i.e., decedent — two equal annuity payments on November 24, 2000 and November 24, 2001, at which point the GRAT Trust was to terminate with the remainder paid to decedent's five children: David; Frank A. Clemente, Jr.; Robert A. Clemente; Maribeth Clemente; and plaintiff Paul Clemente.

Decedent died on March 22, 2016, and, on December 28, 2018, his will was admitted to probate in Rensselaer County Surrogate's Court. Letters testamentary were issued to David, who was named as executor in the will. On June 29, 2018, plaintiff filed a petition with Rensselaer County Surrogate's Court to compel an accounting by David, in his capacity as trustee of the [*2]GRAT Trust. Plaintiff further sought the imposition of a surcharge against David for alleged misappropriation of GRAT Trust funds. David filed his accounting on January 29, 2019, simultaneously filing a petition for judicial settlement of the account. David apparently argued that the two annuity payments were made to decedent on November 24, 2000 and November 24, 2001 and the GRAT Trust then terminated, with no assets remaining.

Plaintiff and Robert Clemente filed objections and, on December 29, 2020, the Rensselaer County Surrogate's Court (Morgan, J.) issued a Decision and Order finding, inter alia, that David never made the annuity payments to decedent and, as such, the GRAT Trust never terminated. Surrogate's Court further found questions relative to whether David diverted GRAT Trust funds to himself and his wife, defendant Geri Ide, and set the matter down for a 3-day hearing beginning on January 13, 2021.[FN2] The hearing never took place, however, as David was battling an advanced stage of cancer at that point and died on April 8, 2021. This proceeding remains ongoing.

In the intervening time, David sold certain property he owned in Redwood, Colorado on March 1, 2016 for the sum of $798,000.00. According to plaintiff, David paid off a $300,000.00 line of credit and had $498,000.00 in net proceeds. On July 5, 2016, David and defendant signed a contract to purchase a home located at 35 Padanarum Road in the Town of Bolton, Warren County, for the sum of $243,000.00. The sale price was paid in cash. A deed conveying the home to David and defendant, as joint tenants with the right of survivorship, was then recorded on August 8, 2016. On January 28, 2019 — one day prior to filing the accounting — a deed was recorded whereby David and defendant conveyed the home to defendant alone.

In November 2020, David created the Living Revocable Trust of David P. Clemente (hereinafter the LRT Trust), allegedly transferring all of his personal property into the LRT Trust and naming defendant as trustee. By operation of law, the LRT Trust became irrevocable upon David's death. According to plaintiff, he "learned of the existence of the [LRT] Trust through proceedings held with respect to the substitution of parties in the pending . . . Rensselaer County Surrogate['s] Court [proceeding], and through the lack of the filing of a probate proceeding for . . . David['s estate]."

On January 4, 2022, plaintiff commenced the instant action against defendant. Plaintiff alleges two causes of action: (1) the August 8, 2016 transfer of the Bolton home to defendant is void under Debtor and Creditor Law § 273; and (2) the transfer of any of David's assets to the LRT Trust is void under Debtor and Creditor Law §§ 274 and 276. Plaintiff filed a notice of pendency relative to the Bolton home simultaneous with commencement of the action. Plaintiff has also commenced an estate proceeding for David in the District Court for San Miguel County, Colorado. In this regard, David apparently owns property there with his sister Maribeth Clemente. According to plaintiff, the "property is significantly encumbered by a mortgage and therefore [has] little equity to satisfy the claims [made herein], even if the right of survivorship could be overcome." This notwithstanding, plaintiff wants to protect David's ownership interest in the property. Defendant has appeared in that proceeding and objected on the grounds that [*3]David died a resident of Warren County.

Presently before the Court is (1) defendant's motion for partial summary judgment dismissing the first cause of action and vacating the notice of pendency; and (2) plaintiff's cross motion to compel discovery responses and to "enjoin[ d]efendant . . . , and anyone acting on her behalf of at her direction, from disbursing, conveying, selling, transferring, pledging, assigning, or otherwise disposing of [David's] assets . . . ."The motion and cross motion will be addressed ad seriatim.

Turning first to that aspect of defendant's motion which seeks summary judgment dismissing the first cause of action, "'[s]ummary judgment is a drastic remedy, to be granted only where the moving party has tendered sufficient evidence to demonstrate the absence of any material issues of fact and then only if, upon the moving party's meeting of this burden, the non-moving party fails to establish the existence of material issues of fact which require a trial of the action'" (Taylor v Appleberry, 214 AD3d 1142, 1144 [3d Dept 2023], quoting Vega v Restani Constr. Corp., 18 NY3d 499, 503 [2012] [internal quotation marks, brackets, and citation omitted]; accord Davis v Zeh, 200 AD3d 1275, 1278 [3d Dept 2021]; see CPLR 3212 [b]). "'When considering a motion for summary judgment, courts must view the evidence in a light most favorable to the nonmoving party and accord that party the benefit of every reasonable inference from the record proof, without making any credibility determinations'" (Taylor v Appleberry, 214 AD3d at 1144, quoting Carpenter v Nigro Cos., Inc., 203 AD3d 1419, 1420-1421 [3d Dept 2022] [internal quotation marks and citation omitted]; see Vega v Restani Constr. Corp., 18 NY3d at 503, 505; Facteau v Mediquest Corp., 162 AD3d 1386, 1388 [3d Dept 2018]).

Here, defendant contends that — if plaintiff is successful on his first cause of action and the January 28, 2019 deed conveying the Bolton home is deemed void — then she will still own the home as joint tenant with right of survivorship under the original August 8, 2016 deed. More specifically, defendant contends as follows: "Only a filed judgment is a lien against real property, not merely a cause of action . . . . As [p]laintiff did not have a judgment against David . . . at the time of his death (or even today), title to the [p]roperty will have passed to [defendant], as the surviving joint tenant, free and clear of any claims of [p]laintiff]." Thus, according to defendant, she is entitled to ownership of the property as a matter of law.

At the outset, it is noted that Debtor and Creditor Law article 10 was revised, effective April 4, 2020 (see L 2019, ch 580, § 2). To the extent that the conveyances under consideration here occurred prior to that date, the provisions of former Debtor and Creditor Law article 10 are applicable. That being said, former Debtor and Creditor Law § 273 provides that "[e]very conveyance made . . . by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration."

The Court finds Gallagher v Kirschner (220 AD2d 948 [3d Dept 1995]) to be particularly instructive with regard to the application of former Debtor and Creditor Law § 273. There, John J. Crimmins, III was murdered in his home and Mark L. Larsen, the suspected murderer, was shot and killed while being pursued by police. Plaintiff — as executor of Crimmins' estate — subsequently commenced a wrongful death action against Larson's estate. A default judgment was awarded in the amount of $550,000.00, but Larsen's estate was insolvent. At the time of his death, Larson owned an interest in two parcels of property as joint tenant with right of survivorship. Plaintiff commenced an action against the surviving joint tenants, seeking to set [*4]aside the transfer of Larsen's interest as fraudulent. Following joinder of issue, plaintiff moved for summary judgment and the motion was granted, with Larsen's interest in the property declared an asset of his estate. An appeal ensued, with the Third Department finding as follows:

"We affirm. Supreme Court correctly determined that the transfer to the then-surviving joint tenants upon Larsen's death rendered his estate wholly insolvent. Under [former] Debtor and Creditor Law § 273, transfers which render a transferor insolvent are deemed fraudulent if such transfers are made without fair consideration. Notably, [former] Debtor and Creditor Law § 273 does not require any showing of actual motive or intent to defraud on the part of the transferor. Even where the transfer occurs by operation of law upon the death of a joint tenant, a creditor may recover the interest transferred, as a fraudulent transfer, if it can be demonstrated that the transfer rendered the deceased debtor's estate insolvent" (id. at 949 [citations omitted]).

Here, it is entirely unclear whether transfer of the property to defendant rendered David's estate insolvent. That being said, if it did, then the transfer — even by operation of law under the original deed — could still be set aside under former Debtor and Creditor Law § 273.

Briefly, to the extent defendant contends that plaintiff cannot succeed because he does not have a filed judgment against David, the Court finds such contention to be without merit. Former Debtor and Creditor Law § 270 defines creditor as "a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent." A filed judgment is therefore unnecessary. Plaintiff arguably has an unmatured claim against defendant, which is sufficient.

Defendant next contends that the first cause of action erroneously relies upon sections of the current Debtor and Creditor Law article 10, as opposed to the former version effective at the time of the conveyances, and it must therefore be dismissed. While defendant is correct with respect to plaintiff's erroneous reliance on the current statute — and plaintiff should perhaps consider amending his complaint — this contention is also without merit. Indeed, as discussed above, former Debtor and Creditor Law §§ 270 and 273 are applicable, as is former Debtor and Creditor Law § 275, entitled "Conveyances by a person about to incur debts" (see Kocak v Dargin, 199 AD3d 456, 457 [1st Dept 2021]). To the extent that the current version of Debtor and Creditor Law § 276 — entitled "Remedies of creditor" — was added as of April 4, 2020 and did not previously exist, reliance on it is misplaced. That being said, the remedy requested in the first cause of action under Debtor and Creditor Law § 276 — namely, that the transfer be declared void — was available prior to the statute's enactment (see e.g. Gallagher v Kirschner, 220 AD2d at 949).

Inasmuch as defendants have failed to make a prima facie showing of their entitlement to summary judgment dismissing the first cause of action, plaintiff's opposition papers need not be considered (see Vega v Restani Constr. Corp., 18 NY3d at 503; Taylor v Appleberry, 214 AD3d at 1144; Davis v Zeh, 200 AD3d at 1278).

Based upon the foregoing analysis, defendant's motion for partial summary judgment dismissing the first cause of action and vacating the notice of pendency is denied.

Turning now to that aspect of plaintiff's cross motion which seeks to compel discovery responses, plaintiff served his discovery demands on April 28, 2022. Defendant then filed her motion for partial summary judgment on May 19, 2022, at which point discovery was stayed (see CPLR 3214 [b]). To the extent that only three weeks passed between service of the [*5]discovery demands and filing of the motion, plaintiff is not entitled to an Order compelling responses. It must also be noted that plaintiff's counsel failed to submit an affirmation "that [she] has conferred with counsel for the opposing party in a good faith effort to resolve the issues raised by the motion," as required under Uniform Rules for Trial Courts (22 NYCRR) § 202.7 (a). Additionally, by correspondence dated May 17, 2023, plaintiff's counsel advised that some of the information sought in these demands has now been obtained in the other pending actions.[FN3]

Insofar as the latter aspect of plaintiff's cross motion is concerned, "[t]o establish entitlement to a preliminary injunction, plaintiff [is] required to demonstrate a likelihood of success on the merits, irreparable harm if the injunction is not granted and that the balance of the equities is in [his] favor" (Sync Realty Group, Inc. v Rotterdam Ventures, Inc., 63 AD3d 1429, 1430 [2009]; see CPLR 6301; Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; Emerald Green Prop. Owners Assn., Inc. v Jada Developers, LLC, 63 AD3d 1396, 1397 [2009]).

At the outset, the Court finds that plaintiff has failed to demonstrate a likelihood of success on the merits. Indeed, there are actions pending in Rensselaer County Surrogate's Court and District Court for San Miguel County, Colorado, with the outcome of these actions likely to impact the outcome of the instant action. To the extent that plaintiff has provided little information relative to the status of these actions, the likelihood of success in this action cannot be ascertained. The Court further finds that plaintiff has failed to demonstrate irreparable harm in the absence of an injunction and that the balance of the equities is in his favor. There is in fact no discussion whatsoever relative to these two factors in his cross motion. Plaintiff's cross motion to compel discovery responses as well as his application for a preliminary injunction are denied.

Finally, plaintiff's counsel sent correspondence on July 21, 2022 requesting that the Court issue an Order of Attachment. To the extent that this relief was not included in the cross motion it is not properly before the Court.

Therefore, having considered NYSCEF document Nos. 13 through 15, 18 through 30, 35, 36, and 38 through 42, and oral argument having been heard on May 19, 2023 with Linda A. Mandel Clemente, Esq. appearing on behalf of plaintiff and Eric N. Dratler, Esq. appearing on behalf of defendant, it is hereby

ORDERED that defendant's motion for partial summary judgment dismissing the first cause of action and vacating the notice of pendency is denied; and it is further

ORDERED that plaintiff's cross motion to compel discovery responses and for a preliminary injunction is denied; and it is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been filed by the Court. Counsel for plaintiff is hereby directed to serve the Decision and Order with notice of entry in accordance with CPLR [*6]5513.

Dated: May 23, 2023

Lake George, New York

s/

ROBERT J. MULLER, J.S.C.

ENTER: Footnotes

Footnote 1:The purpose of a grantor retained annuity trust is to reduce the value of assets placed into the trust for gift tax purposes and eliminate estate taxes if the grantor outlives the defined term of the trust — here, a term of two years.

Footnote 2:The accounting — which is attached as Exhibit "C" to the complaint — includes $3,505,245.46 in "administrative expenses." These administrative expenses are then detailed in Schedule C of the accounting, which consists almost exclusively of compensation payments to David, including payments to his several credit cards and payments for his health care.

Footnote 3:In this regard, on October 20, 2022 plaintiff's counsel sent correspondence attaching a copy of a $1,000.00 check signed by David to Premier Properties as a down payment on the contract to purchase the Bolton home. This check — which is listed as an administrative expense in Schedule C of the accounting — appears to use funds from the GRAT trust.