| Ray v Ray |
| 2013 NY Slip Op 05180 [108 AD3d 449] |
| July 9, 2013 |
| Appellate Division, First Department |
| Ames Ray, Appellant, v Christina Ray,Respondent. |
—[*1] Christina Ray, respondent pro se.
Order, Supreme Court, New York County (Charles Edward Ramos, J.), entered July14, 2011, which granted defendant's motion to dismiss the complaint, unanimouslyaffirmed, without costs.
The parties, who are divorced, share an extensive business, financial and litigationhistory. In September 1998, plaintiff commenced an action against defendant (Ray vRay, Sup Ct, NY County, index No. 604381/98) (1998 action) for money damagesstemming from a promissory note and confession of judgment that defendant signed, aswell as a trading agreement. Defendant retained the Dechert LLP law firm in October1998 to represent her in that action and the Dechert firm continued to represent her atleast through June 2009.
Following motions by each side for summary judgment, the motion court dismissedthe 1998 action in its entirety by order dated January 11, 2008. Plaintiff filed a notice ofappeal on March 20, 2008, and in its order dated April 7, 2009, this Court reversed themotion court's order and reinstated the complaint (61 AD3d 442 [1st Dept 2009]).Although this Court found that the confession of judgment was not timely filed withinthree years, as required under CPLR 3218, the underlying debt was not extinguished(id. at 443).
After the trial court's decision, but before this Court reversed and reinstated thecomplaint in the 1998 action, defendant took steps to refinance her apartment. Amortgage company acquired a recorded security interest in the apartment on January 15,2008, and the closing of the refinanced mortgage occurred on April 21, 2008. On May 6,2008, defendant paid her attorneys $80,000 in legal fees using the proceeds. Plaintiffinitially commenced an action against defendant, the Dechert firm and "unknown others"by filing a summons with notice (index No. 101315/10), asserting that defendant'spayment of legal fees to the Dechert firm was a fraudulent conveyance. Plaintiff did notfurther pursue that action, however, and instead brought the action at bar. In his amendedverified complaint, plaintiff seeks, among other things, a constructive trust imposed onthe proceeds of the refinance and a permanent injunction against defendant's fraudulentconveyances of those proceeds. In the complaint, defendant makes numerous referencesto the 1998 action and includes the complaint in the 1998 action as an exhibit to thecomplaint herein.
In this complaint, plaintiff alleges that defendant "fully mortgaged her co-opapartment," [*2]her only significant asset, so as to makeherself insolvent and avoid paying him money damages in the 1998 action. Thecomplaint also alleges that defendant's undue haste in paying Dechert's fees, and the"unprofessional manner" of her payments demonstrate she made the conveyance in badfaith. The motion court dismissed the complaint finding that there were no "badges offraud" because there was no judgment against her, defendant did not begin the mortgageprocess until after she prevailed in having the 1998 action dismissed, and there was noclose relationship between defendant and the Dechert firm.
Plaintiff's claim against defendant is for actual, not constructive fraud. A claim underthe Debtor and Creditor Law for actual fraud, as opposed to constructive fraud, inmaking the conveyance alleged does not require proof of unfair consideration orinsolvency, allowing the plaintiff to rely on so-called "badges of fraud" to prove his case(see Debtor and Creditor Law §§ 270, 273, 275, 276; Wall St.Assoc. v Brodsky, 257 AD2d 526, 529 [1st Dept 1999]). Badges of fraud arecircumstances so commonly associated with fraudulent transfers that their presence givesrise to an inference of intent (see Wall St. Assoc. v Brodsky, 257 AD2d at 529;Wildman & Bernhardt Constr. v BPM Assoc., 273 AD2d 38, 38-39 [1st Dept2000]).
Since the motion that is the subject of this appeal is for an order dismissing thecomplaint based upon CPLR 3211 (a), regardless of which subsection of CPLR 3211 (a)a motion to dismiss is brought under, the court must accept the facts alleged in thepleading as true, accord the plaintiff the benefit of every possible inference, anddetermine only whether the facts as alleged fit within any cognizable legal theory (seeGoshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Leon vMartinez, 84 NY2d 83, 87-88 [1994]; Plaza PH2001 LLC v Plaza Residential Owner LP, 98 AD3d89, 99 [1st Dept 2012]).
The court below correctly dismissed the claims based upon Debtor and Creditor Law§ 273-a because there was no judgment against defendant when she refinanced themortgage and she had prevailed on having the 1998 action dismissed. Although plaintifffiled a notice of appeal, there was no stay against defendant taking the steps that shetook.
Plaintiff's claims under Debtor and Creditor Law § 276 were also properlydismissed. Those claims were not pleaded with the particularity required under CPLR3016 (b) (see NTL Capital, LLCv Right Track Rec., LLC, 73 AD3d 410, 412 [1st Dept 2010]; Wildman,273 AD2d at 38-39). General statements by plaintiff that defendant "hastily" paid herlegal fees, and that the timing of those payments was "suspect" because he had filed anotice of appeal, fail to support a cause of action for actual intent to defraud, even givingthe plaintiff the benefit of every possible favorable inference. Defendant's payment oflegal fees to the attorneys who had represented her in the 1998 action almost from itsinception until she could no longer afford to pay them, does not demonstratecircumstances so commonly associated with fraudulent transfers that their presence givesrise to an inference of intent, regardless of whether the payment was for services alreadyrendered or to be rendered in that ongoing action (see Wall St. Assoc. at 529;Wildman at 38-39).
A plaintiff may provide, and the court can consider, sworn affidavits to remedy anydefects in the complaint and preserve a possibly inartful pleading that may contain apotentially meritorious claim (Cron v Hargro Fabrics, 91 NY2d 362, 366[1998]). Furthermore, facts submitted by the plaintiff in opposition to a motion to dismissare also accepted as true (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98NY2d 144 [2002]). Plaintiff argues that defendant's intent can be inferred from certainstatements she made. The statement defendant allegedly made in a phone conversation isnot part of the record on appeal, and we decline to [*3]consider it (see Matter of Acme Bus Corp. v Board ofEduc. of Roosevelt Union Free School Dist., 91 NY2d 51, 56 n [1997]). Whiledefendant states in her reply affidavit that "[I would] probably prefer to be a debtor toanyone other than [p]laintiff," given his "litigious history," this statement does not supplyfacts missing from plaintiff's complaint that would satisfy the requirements of CPLR3016. The words manifest an intent by defendant to pay plaintiff before other debtors,not the other way around.
We have considered plaintiff's remaining arguments and find them unavailing.Concur—Mazzarelli, J.P., Renwick, Manzanet-Daniels, Gische and Clark, JJ.