| Bobash, Inc. v Festinger |
| 2008 NY Slip Op 09544 [57 AD3d 464] |
| December 2, 2008 |
| Appellate Division, Second Department |
| Bobash, Inc., Respondent, v Samuel Festinger, Defendant, andGeorge Edrich et al., Appellants. |
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In an action, inter alia, to set aside transfers of real property as fraudulent conveyances under theDebtor and Creditor Law, the defendants George Edrich, Bruce Edrich, Dina R. Edrich, Jonathan R.Edrich, and Ellen Y. Baratz appeal (1), as limited by their brief, from so much of an order of theSupreme Court, Kings County (Lewis, J.), dated March 30, 2007, as denied those branches of theirmotion which were pursuant to CPLR 3211 (a) (5) to dismiss, as time-barred, so much of the amendedcomplaint as alleged constructive fraudulent conveyances and actual fraud in relation to the transfers ofreal property located at 607 Avenue K, Brooklyn, and (2) from an order of the same court datedAugust 24, 2007, which denied their motion to cancel the notice of pendency filed against the propertylocated at 607 Avenue K, Brooklyn, upon the posting of an undertaking pursuant to CPLR 6515,pursuant to CPLR 3211 (a) (5) to dismiss, as time-barred, so much of the second amended complaintinsofar as asserted against them as alleged constructive fraudulent conveyances and actual fraud inrelation to the transfers of the subject real property, and pursuant to CPLR 3211 (a) (7) to dismiss somuch of the second amended complaint as asserted a demand for punitive damages against them basedupon allegations of fraudulent conveyances.
Ordered that the appeal from the order dated March 30, 2007 is dismissed as academic; and it isfurther,
Ordered that the order dated August 24, 2007 is modified, on the law, the facts, and in theexercise of discretion, (1) by deleting the provision thereof denying that branch of the appellants' motionwhich was to cancel the notice of pendency filed against the property located at 607 Avenue [*2]K, Brooklyn, upon the posting of an undertaking pursuant to CPLR6515, and substituting therefor a provision granting that branch of the motion, conditioned upon theappellants' posting of an undertaking in the sum of $500,000, (2) by deleting the provision thereofdenying that branch of the appellants' motion which was pursuant to CPLR 3211 (a) (5) to dismiss, astime-barred, so much of the second amended complaint insofar as asserted against them as alleged aconstructive fraudulent conveyance of the subject real property based on a certain 1994 transfer of thesubject real property to Ester Edrich and substituting therefor a provision granting that branch of themotion, and (3) by deleting the provision thereof denying that branch of the appellants' motion whichwas pursuant to CPLR 3211 (a) (7) to dismiss so much of the second amended complaint as asserted ademand for punitive damages against them based upon allegations of fraudulent conveyances andsubstituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed;and it is further,
Ordered that one bill of costs is awarded to the appellants.
Since the amended complaint was superseded by the second amended complaint, the appeal fromthe order dated March 30, 2007, referable to the amended complaint, has been rendered academic(see DePasquale v Estate of DePasquale,44 AD3d 606 [2007]).
In July 1994 Ester Edrich, the sister of the defendant Samuel Festinger, purchased real propertylocated at 607 Avenue K in Brooklyn (hereinafter the property) from a third party. Ester Edrich diedon January 21, 1999 and her husband, the defendant George Edrich, was appointed as the executor ofher estate. On June 2, 2003 George Edrich, in his capacity as executor, caused title in the property tobe transferred to himself in his individual capacity. Thereafter, Festinger commenced an action againstGeorge Edrich, as well as several of the defendants in the within action, alleging that Ester Edrich hadpurchased the property solely with funds provided by him, and agreed to hold the subject property forhis sole benefit. Accordingly, in his action, Festinger sought, among other things, the imposition of aconstructive trust upon and transfer of title to the property.
On or about December 9, 2004 Bashir Majid and Robert DeBenedictis obtained a judgmentagainst Festinger in an unrelated action in the principal sum of $220,480.28 (hereinafter the judgment).On or about July 15, 2005 Bashir Majid and Robert DeBenedictis, for valuable consideration, assignedthe judgment to the plaintiff in this action Bobash, Inc.
In December 2005 the plaintiff, in an effort to collect on the judgment, commenced this actionagainst Festinger, as well as the appellants George Edrich, Bruce Edrich, Dina R. Edrich, Jonathan R.Edrich, and Ellen Y. Baratz. In the second amended complaint, the plaintiff seeks, inter alia, to set asidethe 1994 and 2003 transfers of the property based upon allegations of constructive fraudulentconveyances and actual fraud. The plaintiff also seeks punitive damages.
The gravamen of this action is that the plaintiff, as a judgment creditor of Festinger, is entitled toenforce the judgment against the property, which was fraudulently conveyed to Festinger's sister EsterEdrich in 1994 and which was thereafter fraudulently conveyed in 2003 to George Edrich upon EsterEdrich's death. The appellants moved to cancel the notice of pendency against the property, upon theposting of an undertaking pursuant to CPLR 6515, pursuant to CPLR 3211 (a) (5) to dismiss, astime-barred, so much of the second amended complaint insofar as asserted against them as allegedconstructive fraudulent conveyances and actual fraud in relation to the transfers of the property, andpursuant to CPLR 3211 (a) (7) to dismiss so much of the second [*3]amended complaint as asserted a demand for punitive damages againstthem based upon allegations of fraudulent conveyances. In an order dated August 24, 2007 theSupreme Court denied the appellants' motion. We modify.
The Supreme Court improvidently exercised its discretion in denying that branch of the appellants'motion which was to cancel the notice of pendency, upon the posting of an undertaking pursuant toCPLR 6515. That branch of the motion should have been granted, conditioned upon the appellants'posting of an undertaking in the sum of $500,000, since the ultimate object of this action is to enforce amoney judgment against the property rather than to affect title to the property, and it is apparent "thatadequate relief can be secured to the plaintiff by the giving of such an undertaking" (CPLR 6515 [1]).
A cause of action based on constructive fraud in New York is governed by a six-year statute oflimitations (see CPLR 213 [8]), and such a cause of action arises at the time the fraudulentconveyance occurs (see Ehrler v Cataffo,42 AD3d 424 [2007]; Island Holding vO'Brien, 6 AD3d 498, 500 [2004]; Wall St. Assoc. v Brodsky, 257 AD2d 526, 530[1999]). Equitable estoppel applies to preclude a defendant from asserting a statute of limitations'defense where the defendant's affirmative wrongdoing, fraud, misrepresentations, or deception inducedthe plaintiff to refrain from commencing a timely action (see Zumpano v Quinn, 6 NY3d 666, 673 [2006]; Simcuski vSaeli, 44 NY2d 442, 448-449 [1978]; Santo B. v Roman Catholic Archdiocese of N.Y., 51 AD3d 956[2008]). The affirmative wrongdoing must be separate and apart from the underlying claim (seeZumpano v Quinn, 6 NY3d at 674-675). This action was commenced more than six years afterthe 1994 conveyance of the property. Thus, the constructive fraudulent conveyance claims premisedupon the 1994 conveyance are time-barred. Contrary to the Supreme Court's determination, theappellants are not estopped from raising the statute of limitations defense insofar as the 1994conveyance is concerned, since the alleged misrepresentation or act of concealment formed the basis ofboth the plaintiff's estoppel argument and its underlying substantive cause of action (see Santo B. vRoman Catholic Archdiocese of N.Y., 51 AD3d at 956; 3636 Greystone Owners, Inc. v Greystone Bldg. Co., 51 AD3d 461[2008]; Reiner v Jaeger, 50 AD3d761 [2008]; Giarratano v Silver, 46AD3d 1053 [2007]). Accordingly, the Supreme Court should have granted that branch of theappellants' motion which was pursuant to CPLR 3211 (a) (5) to dismiss, as time-barred, so much ofthe second amended complaint insofar as asserted against them as alleged a constructive fraudulentconveyance of the property based on the 1994 conveyance to Ester Edrich. However, since this actionwas commenced within six years of the 2003 conveyance to George Edrich, so much of the secondamended complaint as alleged a constructive fraudulent conveyance based upon that conveyance, is nottime-barred.
The Supreme Court should have granted that branch of the appellants' motion which was pursuantto CPLR 3211 (a) (7) to dismiss so much of the second amended complaint as asserted a demand forpunitive damages against them based upon allegations of fraudulent conveyances. A fraudulentconveyance of real property does not give rise to punitive damages, even if it was effected with intent toavoid creditors, such as the plaintiff judgment creditor herein (see Cadle Co. v Organes Enters., Inc., 29 AD3d 927 [2006]). Rivera,J.P., Lifson, Eng and Chambers, JJ., concur. [See 15 Misc 3d 1114(A), 2007 NY Slip Op50645(U).]