| Loreley Fin. (Jersey) No. 4 Ltd. v UBS Ltd. |
| 2014 NY Slip Op 08373 [123 AD3d 413] |
| December 2, 2014 |
| Appellate Division, First Department |
[*1]
| Loreley Financing (Jersey) No. 4 Limited et al.,Appellants, v UBS Limited et al., Respondents, et al.,Defendants. |
Kasowitz, Benson, Torres & Friedman LLP, New York (Sheron Korpus ofcounsel), for appellants.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York (Richard A. Rosenof counsel), for UBS Ltd., UBS Securities LLC, and UBS AG respondents.
Debevoise & Plimpton LLP, New York (Edwin G. Schallert of counsel), forDeclaration Management & Research LLC, respondent.
Judgment, Supreme Court, New York County (Shirley Werner Kornreich, J.),entered May 30, 2013, dismissing the complaint with prejudice as against defendantsUBS Limited, UBS Securities LLC, and UBS AG (collectively UBS) and DeclarationManagement & Research LLC (Declaration), unanimously modified, on the law, toreinstate the fraud claim, and otherwise affirmed, without costs. Appeal from orders,same court and Justice, entered April 8, 2013, which granted the motions of UBS andDeclaration to dismiss the complaint pursuant to CPLR 3211 (a) (7), unanimouslydismissed, without costs, as subsumed in the appeal from the judgment. Order, samecourt and Justice, entered December 24, 2013, which, to the extent appealed from aslimited by the briefs, denied, sub silentio, plaintiffs' motion for leave to amend their fraudand unjust enrichment causes of action, unanimously affirmed as to the unjustenrichment cause of action, and the appeal therefrom otherwise dismissed as academic,without costs.
The motion court did not have the benefit of our decisions in Loreley Fin. (Jersey) No. 3 Ltd. vCitigroup Global Mkts. Inc. (119 AD3d 136 [1st Dept 2014]) and Loreley Fin. (Jersey) No. 28, Ltd. vMerrill Lynch, Pierce, Fenner & Smith Inc. (117 AD3d 463 [1st Dept2014]), which are very similar to the case at bar. In light of Citigroup andMerrill Lynch, the fraud claim should be reinstated, but the causes of action forrescission, unjust enrichment, conspiracy to defraud, and aiding and abetting fraud wereproperly dismissed.
Because plaintiffs are only limited-recourse creditors, their fraudulent conveyanceclaim was properly dismissed (see Loreley Fin. [Jersey] No. 3 Ltd. v Wells FargoSec., LLC, 2013 WL 1294668, *15, 2013 US Dist LEXIS 49665, *47-48 [SD NY2013]). Furthermore, Declaration is not a proper defendant on the fraudulent conveyanceclaim, since plaintiffs merely allege that it assisted UBS in making a fraudulentconveyance, without being a transferee or beneficiary thereof (see e.g. FederalDeposit Ins. Corp. v Porco, 75 NY2d 840, 841-842 [1990]).
Plaintiffs' proposed amended complaint changed only the allegations relating to thefraud [*2]and unjust enrichment claims. We havereinstated the fraud claim, and the repleading of the unjust enrichment claim is stillinsufficient in light of Citigroup, Merrill Lynch, and Basis Yield Alpha Fund (Master) vGoldman Sachs Group, Inc. (115 AD3d 128, 141 [1st Dept 2014]).Concur—Mazzarelli, J.P., Acosta, Saxe, Clark and Kapnick, JJ. [Prior CaseHistory: 40 Misc 3d 323.]