Opinion
651785/12 -13637, 13636B, 13636A, 13636
12-02-2014
LORELEY FINANCING (JERSEY) NO. LIMITED, et al., Plaintiffs–Appellants, v. UBS LIMITED, et al., Defendants–Respondents, Draco 2007–1, Ltd., et al., Defendants.
Kasowitz, Benson, Torres & Friedman LLP, New York (Sheron Korpus of counsel), for appellants. Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York (Richard A. Rosen of counsel), for UBS Ltd., UBS Securities LLC, and UBS AG respondents. Debevoise & Plimpton LLP, New York (Edwin G. Schallert of counsel), for Declaration Management & Research LLC, respondent.
Kasowitz, Benson, Torres & Friedman LLP, New York (Sheron Korpus of counsel), for appellants.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York (Richard A. Rosen of counsel), for UBS Ltd., UBS Securities LLC, and UBS AG respondents.
Debevoise & Plimpton LLP, New York (Edwin G. Schallert of counsel), for Declaration Management & Research LLC, respondent.
MAZZARELLI, J.P., ACOSTA, SAXE, CLARK, KAPNICK, JJ.
Opinion Judgment, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered May 30, 2013, dismissing the complaint with prejudice as against defendants UBS Limited, UBS Securities LLC, and UBS AG (collectively UBS) and Declaration Management & Research LLC (Declaration), unanimously modified, on the law, to reinstate 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 and Declaration to dismiss the complaint pursuant to CPLR 3211(a)(7), unanimously dismissed, without costs, as subsumed in the appeal from the judgment. Order, same court and Justice, entered December 24, 2013, which, to the extent appealed from as limited by the briefs, denied, sub silentio, plaintiffs' motion for leave to amend their fraud and unjust enrichment causes of action, unanimously affirmed as to the unjust enrichment 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. v. Citigroup Global Mkts., Inc., 119 A.D.3d 136, 987 N.Y.S.2d 299 (1st Dept.2014) and Loreley Fin. (Jersey) No. 28, Ltd. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 117 A.D.3d 463, 985 N.Y.S.2d 499 (1st Dept.2014), which are very similar to the case at bar. In light of Citigroup and Merrill Lynch, the fraud claim should be reinstated, but the causes of action for rescission, unjust enrichment, conspiracy to defraud, and aiding and abetting fraud were properly dismissed.
Because plaintiffs are only limited-recourse creditors, their fraudulent conveyance claim was properly dismissed (see Loreley Fin. [Jersey] No. 3 Ltd. v. Wells Fargo Sec., LLC, 2013 WL 1294668, *15, 2013 U.S. Dist LEXIS 49665, *47–48 [S.D.N.Y.2013] ). Furthermore, Declaration is not a proper defendant on the fraudulent conveyance claim, since plaintiffs merely allege that it assisted UBS in making a fraudulent conveyance, without being a transferee or beneficiary thereof (see e.g. Federal Deposit Ins. Corp. v. Porco, 75 N.Y.2d 840, 841–842, 552 N.Y.S.2d 910, 552 N.E.2d 158 [1990] ).
Plaintiffs' proposed amended complaint changed only the allegations relating to the fraud and unjust enrichment claims. We have reinstated the fraud claim, and the repleading of the unjust enrichment claim is still insufficient in light of Citigroup, Merrill Lynch, and Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc., 115 A.D.3d 128, 141, 980 N.Y.S.2d 21 (1st Dept.2014).