| Pritchard v Curtis |
| 2012 NY Slip Op 03485 [95 AD3d 1379] |
| May 3, 2012 |
| Appellate Division, Third Department |
| 2—Charles Pritchard et al., Respondents, v Darlene A. Curtiset al., Defendants, and Donald W. Chichester, Appellant. |
—[*1] Ganz, Wolkenbreit & Siegfeld, Albany (Robert E. Ganz of counsel), forrespondents.
Lahtinen, J. Appeal from an order of the Supreme Court (Devine, J.), entered January 13,2011 in Schoharie County, which granted plaintiffs' motion for partial summary judgment.
This action was commenced in August 2009 to, among other things, foreclose two mortgagesthat were executed in December 2005 (but not recorded until April 2009) and to set aside asfraudulent the conveyances of the two mortgaged parcels. Defendant Donald W. Chichester(hereinafter defendant) owned two parcels in Schoharie County, a 103-acre parcel with a singlefamily house and an unimproved parcel of about 50 acres. In 1999, he formed defendantPentastar Corporation and conveyed both parcels to the corporation.[FN*]In July 2005, [*2]Pentastar conveyed the parcels to defendantDarlene A. Curtis, who is defendant's companion and was Pentastar's president.
Curtis needed money for her used car business, New York Carriage Corporation, and shecontacted DKR & Associates. Between September 2005 and January 2007, DKR wrote a seriesof checks totaling $105,500 to New York Carriage and $32,000 to Curtis. In December 2005,Curtis executed two "promissory grid" notes, secured by mortgages on both parcels, for $75,000each, agreeing to pay DKR the principal and interest on or before December 31, 2007. Althoughexecuted in December 2005, the mortgages were not recorded by DKR until April 2009.
In March 2008, Curtis conveyed both parcels to defendant Robert P. Toleno, a friend ofdefendant and Curtis. In December 2008, Toleno transferred the parcels to defendant Anne S.Hartjen, another friend of defendant and Curtis. Defendant and Curtis continued at all times toreside at the residence on the 103-acre parcel without paying rent.
After recording the mortgages in April 2009, DKR assigned the notes and mortgages in May2009 to plaintiffs. In August 2009, plaintiffs filed a notice of pendency and commenced thisaction to, among other things, set aside the March 2008 and December 2008 conveyances asfraudulent and to foreclose on the mortgages. Approximately 10 months later, in June 2010,while the action was pending and discovery was being conducted, Hartjen conveyed the parcelsto American Dream Ventures, Inc., a corporation formed by defendant in late May 2010.
Following discovery, plaintiffs moved for summary judgment on two of their causes ofaction. They sought summary judgment, first, setting aside the March 2008, December 2008 andJune 2010 conveyances as fraudulent and, second, foreclosing the two mortgages. Supreme Courtgranted plaintiffs' motion and appointed a referee. Defendant appeals.
Initially, we find merit in plaintiffs' contention that defendant lacks standing. Our review ofthe record reflects that defendant last had an individual ownership interest in the property in1999, and he is not a signatory to the promissory grid notes or a mortgagor on the mortgages thatare the subject of this action (see Bancplus Mtge. Corp. v Galloway, 203 AD2d 222, 223[1994]; Marine Midland Bank-E. N.A. v Haufler Assoc., 55 AD2d 803, 804 [1976]). Thefact that American Dream Ventures—a corporation defendant formed—took title tothe parcels after the action was commenced does not on this record establish individual standingfor defendant since there is no argument or proof to avoid the general rule that a corporation'slegal existence is separate from its shareholders (see e.g. Harris v Stony Clove LakeAcres, 202 AD2d 745, 747 [1994]).
In any event, we agree with Supreme Court that plaintiffs set forth ample badges of fraud toestablish fraudulent intent in support of their claim under Debtor and Creditor Law § 276(see Dowlings, Inc. v HomesteadDairies, Inc., 88 AD3d 1226, 1231 [2011]; Matter of Shelly v Doe, 249 AD2d756, 758 [1998]). The two transfers in 2008 involved friends of Curtis and defendant, and the2010 transfer was to a corporation formed by defendant less than a month before the transfer.Although there are some discrepancies about the amount—if any—of [*3]consideration paid by the transferees, it is clear that all relevanttransfers were—at best—for far less than market value and, moreover, Curtis'sattorney stated in an affidavit that all conveyances were made without any consideration. Curtisand defendant continued to live on the property throughout the series of transactions withoutpaying rent. Plaintiffs established a prima facie case of fraudulent transfers. Furthermore,plaintiffs also established entitlement to a judgment of foreclosure by producing the mortgages,the unpaid promissory grid notes and proof of default (see Charter One Bank, FSB v Leone, 45 AD3d 958, 958-959[2007]; HSBC Bank USA v Merrill,37 AD3d 899, 900 [2007], lv dismissed 8 NY3d 967 [2007]). Defendant'ssubmissions were insufficient to raise a triable issue.
Peters, P.J., Rose, Malone Jr. and Kavanagh, JJ., concur. Ordered that the order is affirmed,without costs.
Footnote *: Earlier, in 1994, defendant hadmortgaged the 103-acre parcel to Central National Bank and that mortgage was assigned todefendant Alaska Seaboard Partners, L.P. and its nominee, defendant Mortgage ElectronicRegistration Systems, Inc. Plaintiffs executed a stipulation and order providing, among otherthings, that proceeds of a foreclosure sale on the 103-acre parcel will be applied first to theamount owed Alaska Seaboard/Mortgage Electronic.