| Swartz v Swartz |
| 2016 NY Slip Op 08390 [145 AD3d 818] |
| December 14, 2016 |
| Appellate Division, Second Department |
[*1]
| Starnette Swartz,Appellant-Respondent, v Jerome Swartz et al., Defendants, ShanahSwartz-Gordon et al., Respondents-Appellants, and James P. King et al.,Respondents. |
Robinson Brog Leinwand Greene Genovese & Gluck, P.C., New York, NY(Michael A. Leon and Peter Kane of counsel), for appellant-respondent.
Lamb & Barnosky, LLP, Melville, NY (Scott M. Karson of counsel), forrespondents-appellants and for respondents Swartz Family Limited Partnership #4,Jerome Swartz Irrevocable Trust #1, Jerome Swartz Irrevocable Trust #2, Jerome SwartzIrrevocable Family Trust, Jerome Swartz Irrevocable Family Trust #2, Jerome SwartzIrrevocable Family Trust #3, Jerome Swartz Qualified Annuity Trust No. 1, JeromeSwartz Qualified Annuity Trust No. 2, Jerome Swartz Qualified Annuity Trust No. 3,Jerome Swartz Charitable Lead Annuity Trust, Swartz Family Holding Corp., Kopelman2001 Family Trust, Swartz Foundation, Sound Point Investments I, LLC, Sound PointInvestments II, LLC, Sound Point Investments III, LLC, SK Joint Ventures, LLC, SKJoint Ventures II, LLC, OTM Distributions, LLC, 3151 SW 141 Penal Law, LLC, 3300So Congress Ave, LLC, BBD Associates, FL, Swartz Organization, LLC, Pershing,LLC, Swartz Initiative for Computational Neuroscience, Inc., Swartz NYC, LLC, andSpring Café Realty, LLC (one brief filed).
Meyer, Suozzi, English & Klein, P.C., Garden City, NY (Kevin Schlosser ofcounsel), for respondents James P. King and James P. King & Associates, LLC.
Appeal and cross appeal from an order of the Supreme Court, Suffolk County(Whelan, J.), dated May 14, 2014. The order, insofar as appealed from by the plaintiff,(1) denied her motion for a preliminary injunction; (2) granted those branches of themotion of the defendants Shanah Swartz-Gordon, Nikola Swartz-Hennes, Joshua Swartz,and the first 27 defendant trust, partnership, and corporate entities named in the amendedsummons and complaint which were (a) to dismiss the amended complaint insofar asasserted against those 27 defendant entities, (b) pursuant to CPLR 3211 (a) (7) to dismisscertain causes of action insofar as asserted against the defendants Shanah Swartz-Gordonand Nikola Swartz-Hennes, and (c), in effect, to stay various causes of action insofar asasserted against the defendants Shanah Swartz-Gordon and Nikola Swartz-Hennespending resolution of an action entitled Swartz v Swartz (Supreme Court, SuffolkCounty, index No. 10874/09); (3) granted those branches of the motion of the defendantsJames P. King and James P. [*2]King & Associates,LLC, which were (a) to dismiss certain causes of action insofar as asserted against them,and (b) to stay the cause of action to recover damages for accounting malpractice insofaras asserted against them; and (4) denied those branches of her cross motion which werepursuant to 22 NYCRR 130-1.1 for the imposition of sanctions. The order, insofar ascross-appealed from by the defendants Shanah Swartz-Gordon and NikolaSwartz-Hennes, denied those branches of their motion made with the defendant JoshuaSwartz, and the first 27 defendant trust, partnership, and corporate entities named in theamended summons and complaint which were (a) pursuant to CPLR 3211 (a) (4) and (7)to dismiss the causes of action under Debtor and Creditor Law §§ 273,275, 276 and 278, to recover attorneys' fees, for a permanent injunction, and for adeclaratory judgment insofar as asserted against the defendants Shanah Swartz-Gordonand Nikola Swartz-Hennes, and (b) pursuant to 22 NYCRR 130-1.1 for the imposition ofsanctions against the plaintiff.
Ordered that the order is modified, on the law, (1) by deleting the provision thereofdenying those branches of the motion of the defendants Shanah Swartz-Gordon, NikolaSwartz-Hennes, Joshua Swartz, and the first 27 defendant trust, partnership, andcorporate entities named in the amended summons and complaint which were pursuant toCPLR 3211 (a) (7) to dismiss the causes of action under Debtor and Creditor Law§§ 273, 275 and 278, and for a permanent injunction insofar asasserted against the defendants Shanah Swartz-Gordon and Nikola Swartz-Hennes, andsubstituting therefor a provision granting those branches of that motion, (2) by deletingthe provision thereof granting that branch of the motion of the defendants ShanahSwartz-Gordon, Nikola Swartz-Hennes, Joshua Swartz, and the first 27 defendant trust,partnership, and corporate entities named in the amended summons and complaint whichwas pursuant to CPLR 3211 (a) (7) to dismiss the cause of action alleging conversioninsofar as asserted against the defendants Shanah Swartz-Gordon and NikolaSwartz-Hennes, and substituting therefor a provision denying that branch of that motionand staying litigation of this cause of action pending resolution of an action entitledSwartz v Swartz, pending in the Supreme Court, Suffolk County, under indexNo. 10874/09, and (3) by deleting the provision thereof granting that branch of themotion of the defendants James P. King and James P. King & Associates, LLC,which was pursuant to CPLR 3211 (a) (7) to dismiss the cause of action alleging unjustenrichment insofar as asserted against them and substituting therefor a provision denyingthat branch of their motion and staying litigation of this cause of action pendingresolution of an action entitled Swartz v Swartz, pending in the Supreme Court,Suffolk County, under index No. 10874/09; as so modified, the order is affirmed insofaras appealed and cross-appealed from, with one bill of costs to the respondent trust,partnership, and corporate entities payable by the plaintiff.
In April 2009, the plaintiff, Starnette Swartz, commenced an action for a divorce andancillary relief against her husband, Jerome Swartz (hereinafter the matrimonial action).In connection with the matrimonial action, Starnette Swartz and Jerome Swartz enteredinto a so-ordered stipulation, which, inter alia, restricted their ability to transfer ordispose of certain assets. The plaintiff then commenced this action against JeromeSwartz; James P. King and James P. King & Associates, LLC (hereinafter togetherthe King defendants), who were the accountants for the plaintiff and Jerome Swartzduring their marriage; Shanah Swartz-Gordon and Nikola Swartz-Hennes, who areJerome Swartz's two daughters from a prior marriage (hereinafter together the Swartzdaughters); Joshua Swartz, who is Jerome Swartz's son from the prior marriage; and 27trust, partnership, and corporate entities that Jerome Swartz allegedly had an interest in orcontrolled (hereinafter collectively the corporate defendants). In an amended summonsand complaint, three partnerships and one corporate entity were added as defendants(hereinafter collectively the added defendants). The plaintiff contended that JeromeSwartz, with the help of the King defendants, transferred assets to his children, thecorporate defendants, and the added defendants in order to hide these assets and todeprive the plaintiff of her right to equitable distribution in connection with thematrimonial action.
The plaintiff moved for a preliminary injunction, inter alia, enjoining the corporatedefendants, the Swartz daughters, and Joshua Swartz (hereinafter collectively the Swartzdefendants), and the King defendants from transferring or disposing of assets or funds tothe extent that they received such assets or funds from Jerome Swartz beginning onJanuary 1, 2009, until the present. The King defendants moved, inter alia, to dismiss theamended complaint insofar as [*3]asserted against thempursuant to CPLR 3211 (a) (7), or to stay the action pending resolution of thematrimonial action. The Swartz defendants separately moved, inter alia, to dismiss theamended complaint insofar as asserted against them pursuant to CPLR 3211 (a) (4) and(7), and for sanctions pursuant to 22 NYCRR 130-1.1 from the plaintiff. The plaintiffcross-moved for sanctions pursuant to 22 NYCRR 130-1.1 against all of thedefendants.
The Supreme Court denied the plaintiff's motion for a preliminary injunction and theplaintiff's cross motion for sanctions. The court granted those branches of the motions ofthe King defendants and the Swartz defendants which were to dismiss the amendedcomplaint insofar as asserted against the corporate defendants and all of the causes ofaction asserted against the King defendants pursuant to CPLR 3211 (a) (7), with theexception of the accounting malpractice cause of action asserted against the Kingdefendants, which the court stayed pending a determination regarding the plaintiff'sequitable distribution rights in the matrimonial action. The court denied that branch ofthe Swartz defendants' motion which was pursuant to CPLR 3211 (a) (4) to dismiss theamended complaint insofar as asserted against the Swartz daughters. The court alsodenied those branches of the Swartz defendants' motion which were pursuant to CPLR3211 (a) (7) to dismiss the causes of action under Debtor and Creditor Law§§ 273, 275, 276, 276-a and 278, for a declaratory judgment, and for apermanent injunction insofar as asserted against the Swartz daughters and stayed thesecauses of action pending a determination regarding the plaintiff's equitable distributionrights in the matrimonial action. The court also held that the Swartz daughters were notentitled to sanctions from the plaintiff. However, the court granted those branches of theSwartz defendants' motion which were pursuant to CPLR 3211 (a) (7) to dismiss thecauses of action to recover damages for fraud, aiding and abetting fraud, conversion,conspiracy, and unjust enrichment, for an accounting, and to impose a constructive trustinsofar as asserted against the Swartz daughters. The plaintiff appeals and the Swartzdaughters cross-appeal.
"To obtain a preliminary injunction, a movant must demonstrate, by clear andconvincing evidence, (1) a likelihood of success on the merits, (2) irreparable injury if apreliminary injunction is not granted, and (3) a balance of equities in his or her favor"(M.H. Mandelbaum Orthotic& Prosthetic Servs., Inc. v Werner, 126 AD3d 859, 860 [2015]; seeCPLR 6301). "The decision to grant or deny a preliminary injunction lies within thesound discretion of the Supreme Court" (Arthur J. Gallagher & Co. v Marchese, 96 AD3d 791,792 [2012]). Here, the plaintiff failed to demonstrate irreparable injury since she did notestablish that monetary damages would be inadequate compensation (see Stangel v Zhi Dan Chen,74 AD3d 1050, 1053-1054 [2010]; Family-Friendly Media, Inc. v Recorder Tel. Network, 74 AD3d738, 740 [2010]; Etzion vEtzion, 62 AD3d 646, 655 [2009]; Leo v Levi, 304 AD2d 621, 623[2003]). Accordingly, the Supreme Court providently exercised its discretion in denyingthe plaintiff's motion for a preliminary injunction restraining the King defendants and theSwartz defendants from, inter alia, transferring assets that they received from JeromeSwartz after January 1, 2009.
The Supreme Court properly denied that branch of the Swartz defendants' motionwhich was pursuant to CPLR 3211 (a) (4) to dismiss the amended complaint insofar asasserted against the Swartz daughters. " 'Pursuant to CPLR 3211 (a) (4), a courthas broad discretion in determining whether an action should be dismissed based uponanother pending action where there is a substantial identity of the parties, the two actionsare sufficiently similar, and the relief sought is substantially the same' " (Mazzei v Kyriacou, 139 AD3d823, 824 [2016], quoting DAIJ, Inc. v Roth, 85 AD3d 959, 959 [2011]; seeCPLR 3211 [a] [4]; Whitney v Whitney, 57 NY2d 731, 732 [1982]). It is notnecessary that the precise legal theories presented in the first action also be presented inthe second action as long as the relief sought is the same or substantially the same (see Cherico, Cherico & Assoc.v Midollo, 67 AD3d 622, 622 [2009]). Here, the relief sought in this action isnot substantially the same as the relief sought in the matrimonial action, and there is not asubstantial identity of the parties because the 36 additional parties in this action arealleged to have engaged in tortious conduct (see Wharry v Lindenhurst Union Free School Dist., 65 AD3d1035, 1036 [2009]; Pagoulatou v Kourkoumelis, 14 Misc 3d 1222[A], 2007NY Slip Op 50125 [U] [Sup Ct, Queens County 2007]; cf. Rossignol v Rossignol, 82AD3d 1335 [2011]; Liebertv TIAA-CREF, 34 AD3d 756 [2006]; Raik v Clindent Devs., 282 AD2d513 [2001]; St. John v St. John, 201 AD2d 552 [1994]).
[*4] With respect to that branch of the King defendants'motion which was pursuant to CPLR 3211 (a) (7) to dismiss the sixth cause of action,which alleged breach of fiduciary duty insofar as asserted against them, " '[t]heelements of a cause of action to recover damages for breach of fiduciary duty are (1) theexistence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damagesdirectly caused by the defendant's misconduct' " (Stortini v Pollis, 138 AD3d977, 978-979 [2016], quoting Deblinger v Sani-Pine Prods. Co., Inc., 107 AD3d 659, 660[2013], and Rut v Young AdultInst., Inc., 74 AD3d 776, 777 [2010]). A cause of action sounding in breach offiduciary duty must be pleaded with particularity under CPLR 3016 (b) (seeDeblinger v Sani-Pine Prods. Co., Inc., 107 AD3d at 660; Palmetto Partners, L.P. v AJWQualified Partners, LLC, 83 AD3d 804, 808 [2011]). Here, affording theamended complaint a liberal construction, accepting the facts alleged therein to be true,and granting the plaintiff the benefit of every possible favorable inference, the amendedcomplaint failed to plead with the requisite particularity the existence of a fiduciary dutybetween the plaintiff and the King defendants and a breach thereof (see Theaprin Pharms., Inc. vConway, 137 AD3d 1254, 1255 [2016]). Accordingly, the Supreme Courtproperly granted that branch of the King defendants' motion which was pursuant toCPLR 3211 (a) (7) to dismiss the cause of action alleging breach of fiduciary dutyasserted against them.
The Supreme Court properly granted those branches of the motions of the Kingdefendants and the Swartz defendants which were pursuant to CPLR 3211 (a) (7) todismiss the first cause of action, which alleged fraud insofar as asserted against the Kingdefendants, the Swartz daughters, and the corporate defendants. The elements of a causeof action to recover damages for fraud are (1) a misrepresentation or a material omissionof fact which was false, (2) knowledge of its falsity, (3) an intent to induce reliance, (4)justifiable reliance by the plaintiff, and (5) damages (see Ginsburg Dev. Cos., LLC v Carbone, 134 AD3d 890,892 [2015]). To sustain a cause of action alleging fraudulent concealment, the plaintiffmust allege that the defendant had a duty to disclose the material information (see Bannister v Agard, 125AD3d 797, 798 [2015]). Pursuant to CPLR 3016 (b), where a cause of action isbased on fraud, the "circumstances constituting the wrong" must be "stated in detail,"including "specific dates and items" (Orchid Constr. Corp. v Gottbetter, 89 AD3d 708, 710[2011] [internal quotation marks omitted]; see Doukas v Ballard, 135 AD3d 896, 898 [2016]).
With respect to the King defendants, although the amended complaint alleged thatthey made a statement to the plaintiff to transfer her interest in certain real property fortax purposes, there was no factual support for the plaintiff's assertion that this statementwas false or a misrepresentation of fact (see Nanomedicon, LLC v Research Found. of State Univ. ofN.Y., 112 AD3d 594, 598 [2013]; Caldwell v Gumley-Haft L.L.C., 55 AD3d 408 [2008]).The remaining allegations in the amended complaint regarding alleged misstatementsthat the King defendants made to the plaintiff, including that they issued false financialstatements and accounting reports to the plaintiff, were not pleaded in accordance withCPLR 3016 (b). The amended complaint also failed to allege a basis for imposing a dutyon the King defendants to disclose to the plaintiff the alleged transfers that JeromeSwartz made because they did not have a fiduciary or confidential relationship with theplaintiff. Additionally, the amended complaint failed to allege that the Swartz daughtersmade any material misrepresentations of fact to the plaintiff or that they owed a duty tothe plaintiff to disclose the transfers that Jerome Swartz allegedly made (see Nafash v Allstate Ins. Co.,137 AD3d 1088, 1090 [2016]; Sanford/Kissena Owners Corp. v Daral Props., LLC, 84 AD3d1210, 1211 [2011]). Similarly, there were no allegations in the amended complaintthat the corporate defendants made any misrepresentations of fact to the plaintiff or thatthey owed a duty to disclose information to the plaintiff.
"The elements of a cause of action alleging aiding and abetting fraud are 'anunderlying fraud, [the] defendants' knowledge of this fraud, and [the] defendants'substantial assistance in the achievement of the fraud' " (Ginsburg Dev. Cos., LLC vCarbone, 134 AD3d 890, 894 [2015], quoting High Tides, LLC v DeMichele,88 AD3d 954, 960-961 [2011]), and, pursuant to CPLR 3016 (b), the"circumstances constituting the wrong" must be "stated in detail" (Doukas vBallard, 135 AD3d at 898 [internal quotation marks omitted]). Here, the SupremeCourt properly granted those branches of the motions of the King defendants and theSwartz defendants which were pursuant to CPLR 3211 (a) (7) to dismiss the ninth causeof action alleging aiding and abetting fraud insofar as asserted against the Kingdefendants, the Swartz daughters, and the corporate defendants (see McBride v KPMG Intl.,135 AD3d 576, 579 [2016]; High Tides, LLC v DeMichele, 88 AD3d at960-[*5]961; CRT Invs., Ltd. v BDO Seidman, LLP, 85 AD3d 470, 472[2011]; Stanfield OffshoreLeveraged Assets, Ltd. v Metropolitan Life Ins. Co., 64 AD3d 472, 476[2009]).
" 'The elements of a cause of action to impose a constructive trust are (1) theexistence of a confidential or fiduciary relationship, (2) a promise, (3) a transfer inreliance thereon, and (4) unjust enrichment' " (Mazzei v Kyriacou, 139AD3d at 824, quoting Quadrozzi v Estate of Quadrozzi, 99 AD3d 688, 691[2012]; see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). The King defendantsdid not owe a confidential or fiduciary relationship to the plaintiff as her accountants (see Kain Dev., LLC v KrauseProps., LLC, 130 AD3d 1229, 1235 [2015]; Zuley v Elizabeth Wende Breast Care, LLC, 126 AD3d1460, 1462 [2015]). The amended complaint also failed to allege that the Swartzdaughters or the corporate defendants had a confidential or fiduciary relationship withthe plaintiff, that they made a promise to the plaintiff, or that the plaintiff transferredsomething in reliance upon any such promise (see Silberstang v Biderman-Gross, 134 AD3d 693, 695[2015]; Igneri v Igneri, 125AD3d 813, 814 [2015]). Accordingly, the Supreme Court properly granted thosebranches of the motions of the King defendants and the Swartz defendants which werepursuant to CPLR 3211 (a) (7) to dismiss the eleventh cause of action, which sought toimpose a constructive trust, insofar as asserted against the King defendants, the Swartzdaughters, and the corporate defendants.
The Supreme Court also properly granted those branches of the motions of the Kingdefendants and the Swartz defendants which were pursuant to CPLR 3211 (a) (7) todismiss the fifteenth cause of action for an accounting insofar as asserted against theKing defendants and the corporate defendants since the plaintiff failed to allege that theyhad a confidential or fiduciary relationship with her (see Stortini v Pollis, 138AD3d at 979; Center forRehabilitation & Nursing at Birchwood, LLC v S & L Birchwood, LLC,92 AD3d 711, 713 [2012]; Baer v Complete Off. Supply Warehouse Corp., 89 AD3d877, 878 [2011]; Weinsteinv Natalie Weinstein Design Assoc., Inc., 86 AD3d 641, 643 [2011]).
With respect to the thirteenth cause of action, which alleged conspiracy, "[a]lthoughNew York does not recognize civil conspiracy to commit a tort . . . as anindependent cause of action, a plaintiff may plead the existence of a conspiracy in orderto connect the actions of the individual defendants with an actionable, underlying tortand establish that those actions were part of a common scheme" (JP Morgan Chase Bank, N.A. vHall, 122 AD3d 576, 580 [2014] [internal quotation marks omitted]). Moreover," 'under New York Law, [i]n order to properly plead a cause of action to recoverdamages for civil conspiracy, the plaintiff must allege a cognizable tort, coupled with anagreement between the conspirators regarding the tort, and an overt action in furtheranceof the agreement' " (Blanco v Polanco, 116 AD3d 892, 896 [2014], quoting Faulkner v City of Yonkers,105 AD3d 899, 900 [2013]). The amended complaint failed to allege that the Kingdefendants, the Swartz daughters, or the corporate defendants had an agreement withJerome Swartz or each other to commit a tort, or that the Swartz daughters committed anovert act in furtherance of any such agreement (see Matter of Nocro, Ltd. v Russell, 94 AD3d 894, 895[2012]). Accordingly, the Supreme Court properly granted those branches of the motionsof the King defendants and the Swartz defendants which were pursuant to CPLR 3211(a) (7) to dismiss the cause of action alleging conspiracy insofar as asserted against theKing defendants, the Swartz daughters, and the corporate defendants.
Pursuant to Debtor and Creditor Law § 276, "[e]very conveyance madeand every obligation incurred with actual intent, as distinguished from intent presumed inlaw, to hinder, delay, or defraud either present or future creditors, is fraudulent as to bothpresent and future creditors" (Debtor and Creditor Law § 276). A cause ofaction under Debtor and Creditor Law § 276 must be pleaded withsufficient particularity pursuant to CPLR 3016 (b) (see Gaetano Dev. Corp. v Lee, 121 AD3d 838, 840 [2014];Ray v Ray, 108 AD3d449, 451 [2013]). Additionally, "Debtor and Creditor Law § 278provides that a fraudulent conveyance may be set aside on behalf of a creditor whoseclaim has matured 'as against any person except a purchaser for fair considerationwithout knowledge of the fraud at the time of the purchase' " (Sardis v Frankel, 113 AD3d135, 141 [2014], quoting Debtor and Creditor Law § 278 [1]; see Kreisler Borg Florman Gen.Constr. Co., Inc. v Tower 56, LLC, 58 AD3d 694, 696 [2009]).
The Supreme Court properly determined that the amended complaint stated a cause[*6]of action under Debtor and Creditor Law§ 276 against the Swartz daughters. The amended complaint alleged thatthere were several "badges of fraud" that gave rise to an inference of the intent of JeromeSwartz and the Swartz daughters to hinder, delay, or defraud the plaintiff, including thatthe transfers were between family members, were for inadequate or no consideration, andwere made after the matrimonial action had been commenced (see Machado v A. Canterpass,LLC, 115 AD3d 652, 654 [2014]; Pen Pak Corp. v LaSalle Natl. Bank ofChicago, 240 AD2d 384 [1997]). Contrary to the Swartz daughters' contention, theplaintiff sufficiently alleged that she is a creditor of Jerome Swartz (see Henry v Soto-Henry, 89AD3d 617, 618 [2011]; Debtor and Creditor Law § 270; see alsoKasinski v Questel, 99 AD2d 396, 397 [1984]). For the same reasons, the amendedcomplaint adequately pleaded a cause of action to recover attorneys' fees pursuant toDebtor and Creditor Law § 276-a against the Swartz daughters (see Peery v United CapitalCorp., 84 AD3d 1201, 1204 [2011]; Gateway I Group, Inc. v Park Ave. Physicians, P.C., 62 AD3d141, 150 [2009]; CombinaInc. v Iconic Wireless Inc., 32 Misc 3d 1231[A], 2011 NY Slip Op 51511[U][Sup Ct, Kings County 2011]), and a cause of action for declaratory relief against theSwartz daughters (see 5706Fifth Ave., LLC v Louzieh, 108 AD3d 589, 591 [2013]).
However, the Supreme Court should have granted that branch of the Swartzdefendants' motion which was pursuant to CPLR 3211 (a) (7) to dismiss the fourth causeof action under Debtor and Creditor Law § 278 insofar as asserted againstthem because the plaintiff did not allege that her claim against Jerome Swartz hadmatured (see Debtor and Creditor Law § 278; see generallyFederal Deposit Ins. Corp. v Porco, 75 NY2d 840, 842 [1990]; cf. Debtorand Creditor Law § 279).
The allegations in the amended complaint failed to sufficiently set forth a cause ofaction under Debtor and Creditor Law § 276 insofar as asserted against thecorporate defendants. The amended complaint failed to make specific factual allegationswith respect to many of the corporate defendants. Where the amended complaint pleadedfactual allegations regarding some of the corporate defendants, it failed to plead withparticularity that they engaged in a fraudulent conveyance (see CPLR 3016 [b];Gaetano Dev. Corp. v Lee, 121 AD3d at 840; Cuglietto v Ferone, 269AD2d 556, 556 [2000]; Menaker v Alstaedter, 134 AD2d 412, 413 [1987]). Forthe same reasons, the Supreme Court properly granted that branch of the Swartzdefendants' motion which was pursuant to CPLR 3211 (a) (7) to dismiss the cause ofaction to recover attorneys' fees pursuant to Debtor and Creditor Law§ 276-a, and alleging a violation of Debtor and Creditor Law§ 278 insofar as asserted against the corporate defendants.
The Supreme Court also properly granted those branches of the King defendants'motion which were pursuant to CPLR 3211 (a) (7) to dismiss the causes of actionalleging violations of Debtor and Creditor Law §§ 276 and 278 and torecover attorneys' fees pursuant to Debtor and Creditor Law § 276-a insofaras asserted against them because they were not transferees of any assets or beneficiariesof the alleged fraudulent conveyances (see Federal Deposit Ins. Corp. v Porco, 75NY2d 840 [1990]; CantorFitzgerald & Co. v 8an Capital Partners Master Fund, L.P., 132 AD3d 402,402 [2015]; Citicorp TrustBank, FSB v Makkas, 127 AD3d 907, 908 [2015]; Estate of Shefner v Beraudiere,127 AD3d 442 [2015]; Loreley Fin. [Jersey] No. 4 Ltd. v UBS Ltd., 123 AD3d413, 414 [2014]; Cahen-Vorburger v Vorburger, 41 AD3d 281, 282[2007]).
Further, the Supreme Court should have granted that branch of the Swartzdefendants' motion which was pursuant to CPLR 3211 (a) (7) to dismiss the third causeof action, which alleged violations of Debtor and Creditor Law §§ 273and 275 insofar as asserted against the Swartz daughters. The amended complaint merelyalleged in a conclusory manner that Jerome Swartz was rendered insolvent as a result ofthe transfers that he made; the facts alleged in the complaint do not support any inferencethat Jerome Swartz was insolvent or that he intended or believed that he would incurdebts beyond his ability to pay as a result of the transfers (see Wildman &Bernhardt Constr. v BPM Assoc., 273 AD2d 38, 39 [2000]; Debtor and CreditorLaw §§ 271 [1]; 273, 275; see also Zanani v Meisels, 78 AD3d 823, 825 [2010]; Grace Plaza of Great Neck vHeitzler, 2 AD3d 780, 781 [2003]). For the same reasons, the court properlygranted that branch of the Swartz defendants' motion which was pursuant to CPLR 3211(a) (7) to dismiss the causes of action under Debtor and Creditor Law§§ 273 and 275 insofar as asserted against the corporatedefendants.
[*7] The King defendants, thecorporate defendants, and the Swartz daughters were also entitled to dismissal of thetwelfth cause of action, which sought a permanent injunction insofar as asserted againstthem. "To sufficiently plead a cause of action for a permanent injunction, a plaintiff mustallege that there was a 'violation of a right presently occurring, or threatened andimminent,' that he or she has no adequate remedy at law, that serious and irreparableharm will result absent the injunction, and that the equities are balanced in his or herfavor" (Caruso vBumgarner, 120 AD3d 1174, 1175 [2014], quoting Elow v Svenningsen, 58 AD3d674, 675 [2009]). " 'A permanent injunction is a drastic remedy which maybe granted only where the plaintiff demonstrates that it will suffer irreparable harmabsent the injunction' " (Merkos L'Inyonei Chinuch, Inc. v Sharf, 59 AD3d 403, 408[2009], quoting Icy Splash Food& Beverage, Inc. v Henckel, 14 AD3d 595, 596 [2005]; see Matter of Long Is. Power Auth.Hurricane Sandy Litig., 134 AD3d 1119, 1120 [2015]). "Injunctive relief is 'tobe invoked only to give protection for the future . . . [t]o prevent repeatedviolations, threatened or probable, of the [plaintiffs'] property rights' "(Merkos L'Inyonei Chinuch, Inc. v Sharf, 59 AD3d at 408, quoting ExchangeBakery & Rest. v Rifkin, 245 NY 260, 264-265 [1927]). The amendedcomplaint failed to sufficiently allege that a permanent injunction was necessary toprotect the plaintiff from a threatened or probable risk posed by the King defendants, theSwartz daughters, or the corporate defendants, or that monetary damages would beinadequate compensation (seegenerally Massaro v Jaina Network Sys., Inc., 106 AD3d 701, 703 [2013]; Lemle v Lemle, 92 AD3d494, 500 [2012]). Therefore, the Supreme Court properly granted those branches ofthe motions of the King defendants and the Swartz defendants which were pursuant toCPLR 3211 (a) (7) to dismiss the cause of action for a permanent injunction insofar asasserted against the King defendants and the corporate defendants, and should havegranted that branch of the motion of the Swartz defendants which was pursuant to CPLR3211 (a) (7) to dismiss the cause of action for a permanent injunction insofar as assertedagainst the Swartz daughters.
The King defendants were not entitled to dismissal pursuant to CPLR 3211 (a) (7) ofthe eighth cause of action, which alleged unjust enrichment insofar as asserted againstthem. "The elements of a cause of action to recover for unjust enrichment are '(1) thedefendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity andgood conscience to permit the defendant to retain what is sought to berecovered' " (GFRE,Inc. v U.S. Bank, N.A., 130 AD3d 569, 570 [2015], quoting Mobarak v Mowad, 117 AD3d998, 1001 [2014]). A cause of action alleging unjust enrichment requires theplaintiff to set forth that the defendant possessed property or assets of the plaintiff (see Roslyn Union Free School Dist.v Barkan, 71 AD3d 660, 661 [2010], mod 16 NY3d 643 [2011]). Here,construing the amended complaint liberally, as augmented by the plaintiff's affidavit, theplaintiff sufficiently alleged that her assets were used to compensate the King defendantsfor their accounting services, and that they were unjustly enriched at her expense whenthey failed to perform or negligently performed these services on her behalf.Accordingly, the Supreme Court erred in granting that branch of the King defendants'motion which was pursuant to CPLR 3211 (a) (7) to dismiss the cause of action allegingunjust enrichment insofar as asserted against them.
The Supreme Court, however, properly granted that branch of the Swartz defendants'motion which was pursuant to CPLR 3211 (a) (7) to dismiss the cause of action allegingunjust enrichment insofar as asserted against the Swartz daughters and the corporatedefendants. The amended complaint merely alleged, in a conclusory fashion, thatSwartz-Gordon was unjustly enriched to the plaintiff's detriment when she knowinglykept money that Jerome Swartz gave her, that Swartz-Hennes was unjustly enriched tothe plaintiff's detriment when Jerome Swartz forgave her loans, and that the corporatedefendants received funds, assets, and property to the plaintiff's detriment and wereunjustly enriched, which were bare legal conclusions (see Goel v Ramachandran, 111AD3d 783, 791-792 [2013]).
The Supreme Court also erred in granting that branch of the Swartz defendants'motion which was pursuant to CPLR 3211 (a) (7) to dismiss the tenth cause of action,which alleged conversion insofar as asserted against the Swartz daughters. The amendedcomplaint adequately alleged that Jerome Swartz unlawfully and without the plaintiff'sconsent gave Swartz-Gordon assets in the amount of $1,166,403 that the plaintiff owned,and that Swartz-Hennes unlawfully and without the plaintiff's consent exercised authorityand control over assets in the amount of $3,516,662 that the plaintiff owned (see Goldberger v Rudnicki, 94AD3d 1047, 1048 [2012]; Thys v Fortis Sec. LLC, 74 [*8]AD3d 546, 547 [2010]). The plaintiff's ultimate ability toprove these allegations is not relevant (see SV Vernon 43, LLC v Malik, 138 AD3d 730, 731[2016]).
Under the circumstances of this case, the Supreme Court providently exercised itsdiscretion in staying the cause of action alleging accounting malpractice insofar asasserted against the King defendants, and the causes of action under Debtor and CreditorLaw §§ 276 and 276-a and for declaratory relief insofar as assertedagainst the Swartz daughters, pending a determination in the matrimonial actionregarding the plaintiff's rights, if any, in the assets allegedly transferred by Jerome Swartz(see CPLR 2201; SSAHoldings LLC v Kaplan, 120 AD3d 1111, 1111 [2014]; Uptown Healthcare Mgt., Inc. vRivkin Radler LLP, 116 AD3d 631 [2014]; Concord Assoc., L.P. v EPT Concord, LLC, 101 AD3d1574, 1575 [2012]; OxbowCalcining USA Inc. v American Indus. Partners, 96 AD3d 646, 652 [2012]). Forthe same reasons, litigation of the cause of action alleging unjust enrichment insofar asasserted against the King defendants and the cause of action alleging conversion insofaras asserted against the Swartz daughters should be stayed pending a determination in thematrimonial action regarding the plaintiff's equitable distribution rights.
The Supreme Court providently exercised its discretion in denying those branches ofthe plaintiff's cross motion which were for attorneys' fees and to impose monetarysanctions on the King defendants, the Swartz daughters, and the corporate defendantspursuant to 22 NYCRR 130-1.1 (see Khadka v American Home Mtge. Servicing, Inc., 139 AD3d808, 809 [2016]; Berkowitzv 29 Woodmere Blvd. Owners', Inc., 135 AD3d 798, 800 [2016]; Schwartz v Sayah, 72 AD3d790, 792 [2010]). The court also providently exercised its discretion in determiningthat the Swartz daughters were not entitled to sanctions from the plaintiff because theyfailed to demonstrate that the plaintiff engaged in frivolous conduct within the meaningof 22 NYCRR 130-1.1. We decline to award the Swartz daughters sanctions based on theplaintiff's references in her reply brief to matter dehors the record, and note that we havenot considered the plaintiff's contentions to the extent that they pertain to matter dehorsthe record (see Poveromo vKelley-Amerit Fleet Servs., Inc., 127 AD3d 1048, 1049 [2015]). Balkin, J.P.,Hall, Sgroi and Barros, JJ., concur. [Prior Case History: 2014 NY Slip Op31296(U).]