Summary
applying the Uniform Fraudulent Conveyance Act to the transfer of goodwill
Summary of this case from Jones v. Tauber & Balser, P.C.Opinion
2048
October 30, 2003.
Order, Supreme Court, New York County (Joan Madden, J.), entered April 15, 2003, which, in this action pursuant to Debtor and Creditor Law § 273-a, denied plaintiff's motion for partial summary judgment, unanimously modified, on the law, to grant the motion as to the issues of the existence of goodwill and the fraudulent conveyance of goodwill from defendant Oltarsh Oltarsh to defendant Oltarsh Associates, P.C. and to remand the matter to Supreme Court for a determination of the value of the judgment debtor's goodwill, and otherwise affirmed, without costs.
Thomas C. Lambert, for plaintiff-appellant.
Marc T. Danon Jennifer M. Oltarsh, for defendants-respondents.
Before: Tom, J.P., Andrias, Saxe, Williams, JJ.
Plaintiff obtained a judgment against defendant Oltarsh Oltarsh (the firm) for unpaid rent in the amount of $108,000, which the firm has failed to satisfy (Debtor and Creditor Law § 273-a). In March 2001, the firm, whose lawyers were defendants David, William and Jennifer Oltarsh, ceased doing business and referred its clients to Oltarsh Associates, a professional corporation comprised of the same three individuals and contemporaneously incorporated. Defendants' own affidavits establish that William and David Oltarsh had developed professional reputations during more than 40 years of practice and that many of their clients followed them to Oltarsh Associates.
Plaintiff has established that the firm had goodwill (see Dawson v. White Case, 88 N.Y.2d 666, 670) and that its goodwill was transferred to the professional corporation without consideration (see Blakeslee v. Rabinor, 182 A.D.2d 390, lv denied 82 N.Y.2d 655). Defendants' bald conclusory assertion that the firm had no assets to convey in March 2001 is insufficient to defeat plaintiff's motion (Polluliah v. Fidelity High Income Fund, 102 A.D.2d 720, 722), and is contradicted by the firm's tax return (see Leo v. Mount St. Michael Academy, 272 A.D.2d 145, 146). While plaintiff has established that the conveyance of goodwill was fraudulent within the meaning of Debtor and Creditor Law § 273-a, a hearing is necessary to determine its value (CPLR 3212[c]).
The setting aside of the conveyance and the remedy of attachment are unavailing (Debtor and Creditor Law §§ 278[a], [b]). As we have stated, "A court of equity * * * may award a personal judgment against a party in lieu of setting aside a transfer" (Halsey v. Winant, 233 App. Div. 103, 114-15, revd on other grounds 258 N.Y. 512, cert denied 287 U.S. 620;see also Debtor and Creditor Law § 280; Baily v. Hornthal, 154 N.Y. 648, 660-661 ["a court of equity may adapt its relief to the exigencies of the case, and, when nothing more is required, may order a sum of money to be paid to the plaintiff, or give him a personal judgment therefor, to be enforced by execution"]; Rich v. New York White Line Tours, 266 App. Div. 752). Liability is imposed on "parties who participate in the fraudulent transfer of a debtor's property and are transferees of the assets and beneficiaries of the conveyance" (Stochastic Decisions v. DiDomenico, 995 F.2d 1158, 1172, citing Federal Deposit Ins. Corp. v. Porco, 75 N.Y.2d 840, 842), in this instance David and William Oltarsh and Oltarsh Associates, against which parties plaintiff sought partial summary judgment. With respect to the transfer of personal property, however, there are numerous questions of fact that preclude summary disposition. Finally, we agree that the record as developed thus far is insufficient to warrant piercing the corporate veil (see Rotella v. Derner, 283 A.D.2d 1026, lv denied 96 N.Y.2d 720; First Bank of Americas v. Motor Car Funding, 257 A.D.2d 287, 294).
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.