Opinion
6772/09.
Decided November 20, 2009.
Nicoletti Hornig Sweeney, Attorney for Plaintiff, Wall Street Plaza, New York, NY.
Cohen Tauber Spievack Wagner, P.C., Attorneys for Defendants, New York, NY.
As alleged in the Complaint, Plaintiff Oltchim S.A. was and is a company organized and existing by virtue of the laws of Romania. Plaintiff is a manufacturer of chemicals including polyol. Defendant Zebulon Industries ("Zebulon") is an American corporation with an office at 75 South Broadway, White Plains, New York. Zebulon is a buyer and seller of chemicals including polyol. Zebulon is owned by Defendants Michel Goldschneider and Mathew Gelchion who each have a 50% ownership in Zebulon. Michel Goldschneider, who resides at 50 Law Road, Briarcliff Manor, New York, was the President of Velco Chemicals ("Velco") and is the President of Zebulon. Matthiew Gelchion, a resident of the State of New Jersey, was the Vice President of Velco and is the Vice President of Zebulon. Velco is an American corporation with an office at 101 Executive Boulevard, Elmsford, New York. Velco was a buyer and seller of chemicals including polyol. The Trust of Mary Goldschneider and the Trust of Vanessa Goldschneider (collectively, the "Trusts") are each administered and/or conduct business from property located at 50 Law Road, Briarcliff Manor, New York. Defendant Arthur Goldschneider, a resident of Belgium, and Defendant Lawremce Tomzack, a resident of Pennsylvania, are Trustees of the Trusts and have administered the Trusts from 50 Law Road, Briarcliff Manor, New York. The Trusts each own a 50% interest in Velco.
Such residence notwithstanding, Matthew Gelchion did not move to dismiss the Complaint for lack of jurisdiction.
Plaintiff and Velco entered into a series of contracts pursuant to which Plaintiff sold polyol to Velco. When Velco failed to pay therefor, the dispute was submitted to binding arbitration before the International Arbitration Court of the Commerce and Industry Chamber of Romania. In 2001 and 2002, Plaintiff obtained two arbitration awards from that tribunal totaling $1,592,538.21. The awards were subsequently confirmed by the District Court for the Southern District of New York which entered Judgment therefor on March 29, 2007 against Velco for such amount. After the arbitration awards were issued, but before they were confirmed, the Defendants, acting in concert, transferred the assets of Velco to Zebulon for less than a fair consideration and without assuming Velco's liability to Plaintiff. As a result, Velco has ceased operating and its office space, furniture, equipment and personnel are now being used by Zebulon. This action ensued.
The Complaint asserts 27 causes of action. Causes of Action Nos. 2, 6, 10, 13, 15, 18,20, 23 and 26 allege fraudulent conveyance; Causes of Action Nos. 1, 5, 9, 12, 12, 22 and 25 allege conspiracy to commit fraud; and Causes of Action Nos. 7 and 11 allege alter ego liability. All of the Defendants have moved to dismiss all of these Causes of Action based on CPLR 3013 and 3016(b).
The other Causes of Action seek recovery of debts allegedly owed by the Defendants to Velco.
Accepting all facts as alleged in the Complaint as true, and according the Plaintiff the benefit of every possible inference ( Gateway I Group, Inc. v Park Avenue Physicians, P.C. , 62 AD3d 141 , 145 [2d Dept 2009]), the Complaint sufficiently states claims for fraudulent conveyance, conspiracy to commit fraud and alter ego liability.
With respect to the Causes of Action under sections 273, 273-a and 275 of the Debtor and Creditor Law, as these claims do not require proof of an actual intent to defraud, it is unnecessary to plead such paragraphs with the particularity required by CPLR 3016(b) ( Menaker v Alstaedter, 134 AD2d 412, 413 [2d Dept 1987]). In any event, the allegations that Velco transferred all of its assets to Zebulon for less than a fair consideration when it was a defendant thereby rendering it insolvent in light of the Judgment adequately pleads causes of action under such statutes ( Shisgal v Brown , 21 AD3d 845 , 847 [1st Dept 2005]) and gives sufficient notice of the transactions to be proved (CPLR 3013; Lanzi v Brooks, 43 NY2d 778, 780). With respect to Debtor and Creditor Law § 276, intent to defraud is ordinarily a question of fact, pleaded by means of "badges of fraud" ( Shisgal Brown , 21 AD3d 845 , 847 [1st Dept 2005]). Here, its alleged that Defendants intentionally defrauded Plaintiff by the officers and shareholders of Velco transferring all of its assets to Zebulon for less than a fair consideration when it was a defendant thereby rendering it insolvent in light of the Judgment so that Michel Goldschneider and Matthew Gelchion could remain in control of Velco's assets and continue its business free of the Judgment. This is sufficient ( Id.; Jenkins v Jenkins, 181 Misc 2d 1, 9). Similarly, the Complaint adequately pleads Causes of Action for civil conspiracy to commit fraud ( Ed Moore Advertising Agency, Inc. v Shapiro, 124 AD2d 696 [2d Dept 1986]; City of New York v Lead Industries Assoc., 1991 WL 284454) and piercing the corporate veil ( Gateway I Group Physicians, Inc., 62 AAD3d 141, 145-46 [2d dept 2009]; Shisgal v Brown, 21 AD3d 845, 848 [1st Dept 2005]). Specifically, Plaintiff has alleged that all of Velco's assets were transferred to Zebulon without fair consideration for the benefit of Defendants Michel Goldschneider and Matthew Gelchion, who owned and/or controlled both companies, and that after the transfer Zebulon took over Velco's office space, furniture, equipment and personnel.
For the foregoing reasons, Defendants' motion to dismiss the Complaint for a failure to sufficiently plead pursuant to CPLR 3013 and CPLR 3016(b) is denied.
Defendants Arthur Goldschneider and Lawrence Tomzack have also moved to dismiss the Complaint for a lack of personal jurisdiction based on their being non-domiciliaries of New York.
CPLR 302 provides in pertinent part that a court may exercise personal jurisdiction over a non-domiciliary who:
"1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
"2. commits a tortious act within the state. . . ."
Here, Plaintiff's Causes of Action arise from Defendants Arthur Goldschneider's and Lawrence Tomzack's administration of Trust property in New York, and tortious conduct within the State. Specifically, such Defendants are alleged to have fraudulently transferred the assets of Velco, which were the property of the New York Trusts they administered, and which were located in New York, to Zebulon, also located in New York. This sufficiently sets forth a basis for jurisdiction under CPLR 302. These were purposeful activities in New York and there is a substantial relationship between the transactions and the claim asserted ( Atwal v Atwal , 24 AD3d 1297 , 1298 [4th Dept 2005]; Corpuel v Galasso, 268 AD2d 202, 203 [1st Dept 2000]; In re Deyette, 2007 WL 2325181 [Sup Ct]; Morganthau v A.J. Travis, Ltd, 184 Misc 2d 835, 843 [Sup Ct 2000]).
Finally, Defendants move to dismiss the Cause of Action for unjust enrichment based on a lack of privity between Plaintiff and the Defendants. Where, as here, the claim are based on fraudulent conveyance, privity is not required ( Dolmetta v Uintah National Corporation, 712 F2d 15, 20 [2d Cir 1983]).
For the foregoing reasons, the motion is denied. This constitutes the decision and order of the Court.