Summary
In Barristers Abstract, the Appellate Division upheld a denial of summary judgment on collateral estoppel grounds, despite the fact that the judge in the defendant's bankruptcy proceeding had denied an application to block defendant's discharge due to a fraudulent conveyance.
Summary of this case from Day v. ZwirnOpinion
July 14, 1997
Appeal from Supreme Court, Kings County (Garson, J.).
Ordered that the order is affirmed insofar as appealed from, with costs.
The plaintiff Barristers Abstract Corporation obtained a judgment against the defendant Thomas W. Caulfield, and thereafter commenced the instant action to set aside a transfer of real property from Caulfield to the appellant Dorothy A. Elliot, claiming that the transfer constituted a fraudulent conveyance under Debtor and Creditor Law § 276. While this action was pending, Caulfield filed for bankruptcy. A hearing was held in the bankruptcy court on the plaintiff's application for an order declaring that Caulfield's debt was not dischargeable in bankruptcy. The bankruptcy court denied the plaintiff's application in a lengthy decision. The defendant Elliot thereafter moved for summary judgment in this action contending that the decision of the bankruptcy court was conclusive as to all issues under principles of res judicata and collateral estoppel.
Contrary to the defendant's contentions, the Supreme Court properly denied her motion for summary judgment. The instant action is not barred by res judicata as the bankruptcy court stated that it was not deciding the issue of whether the subject conveyance was a fraudulent transfer under New York State law, but was deferring to the courts of this State on that issue ( see, e.g., Mattes v. Rubinberg, 220 A.D.2d 391, 393). While the doctrine of collateral estoppel may have binding effect with respect to certain of the findings of fact of the bankruptcy court, the ultimate question of fact under Debtor and Creditor Law § 276, namely, whether the transfer was made "with actual intent * * * to hinder, delay, or defraud either present or future creditors", is still unresolved and awaits trial.
Thompson, J. P., Joy, Altman and Florio, JJ., concur.