Summary
In Posner v. S. Paul Posner 1976 Irrevocable Family Trust, 260 A.D.2d 268, 688 N.Y.S.2d 548 (1st Dep't 1999) the appellate court reinstated a counterclaim based on alter ego where an intervenor alleged that the plaintiff transferred funds from a trust in an attempt to render it judgment-proof.
Summary of this case from In re MaghazehOpinion
April 22, 1999
Appeal from the Supreme Court, New York County (Lewis Friedman, J.).
The court erred in dismissing defendant-intervenor's counterclaim for a declaration that plaintiff is the alter ego of the defendant Trust, in this action to enforce a confession of judgment executed by the Trust in favor of plaintiff, whose wife serves as sole trustee of the Trust. The confession of judgment, in the amount of $1.25 million, was executed immediately after the court, in a prior action brought by defendant-intervenor against the Trust on a promissory note, indicated its intention at the conclusion of the jury trial to direct a verdict in favor of defendant-intervenor. Defendant-intervenor opposes the confession of judgment as being a fraudulent conveyance intended to render the Trust insolvent and his judgment on the note unenforceable.
Under these circumstances, we do not find the counterclaim for a declaratory judgment to be a misuse of such relief ( see, Abate v. All-City Ins. Co., 214 A.D.2d 627, 629) or that prosecution of such counterclaim would subject plaintiff to inequitable treatment, due to his not being a party to the action on the note. Although defendant-intervenor was previously aware of plaintiff's ties to the Trust, it only became apparent after the trial and the unexpected, dubiously-timed confession of judgment that plaintiff should have been joined as a necessary party to the action on the note.
Intervenor's remaining counterclaims, seeking to set aside the confession of judgment as a fraudulent conveyance and to enjoin plaintiff from enforcing the judgment, are equitable in nature and therefore resulted, in a waiver of the right to a jury trial ( Phoenix Garden Rest. v. Chu, 234 A.D.2d 233, 234; cf., Cadwalader Wickersham Taft v. Spinale, 177 A.D.2d 315). Contrary to intervenor's argument, the equitable relief sought is not incidental to any legal claim asserted in this action.
Concur — Rosenberger, J. P., Williams, Mazzarelli and Saxe, JJ.