Opinion
June 11, 1990
Appeal from the Supreme Court, Putnam County (Dickinson, J.).
Ordered that the order is affirmed insofar as appealed from, with costs.
In this mortgage foreclosure action, the appellants Carmen Pazzino, Edward Pian, Gladys Cseryni, Frank Rotundini, Elizabeth Guerrazzi and the estate of Charles Bihr and the respondent, Bozzuto's Inc., claim priority to surplus moneys generated after a mortgage foreclosure sale (see, RPAPL 1441 et seq.).
On March 27, 1984, Geraldine Ryan executed a mortgage in favor of the appellants as mortgagees. On April 6, 1984, Ryan executed a mortgage involving the same property in favor of the respondent as mortgagee. In its cross claim in this mortgage foreclosure action, the respondent alleges that its mortgage was executed to secure a preexising debt and that the appellants' mortgage was executed and delivered to the appellants to "hinder, delay and defraud the creditors of Ryan, and, in particular" the respondent. The respondent also alleges that, in part because of the execution of the appellants' mortgage, Ryan was rendered wholly insolvent and, as a result, filed a bankruptcy petition. These allegations were sufficient to state a cause of action sounding in a fraudulent conveyance (Debtor and Creditor Law § 270 et seq.; Glassman v. Glassman, 309 N.Y. 436; Hudson Fence Co. v. Fabro Bldrs., 80 A.D.2d 578; see, United Natl. Bank v. Russo, 64 A.D.2d 759; Freudman v. Freudman, 36 A.D.2d 968; see also, 2 Mortgages Mortgage Foreclosure N Y § 35.18 [rev ed]). Accordingly, that branch of the appellants' motion which was for summary judgment dismissing the cross claim was properly denied (see, CPLR 3211 [a] [7]; Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275).
Ryan's discharge in bankruptcy had been challenged by the respondent by its commencement of a proceeding in bankruptcy court (see, 11 U.S.C. § 727 [d] [1]; 28 U.S.C. § 157 [b] [2] [J]). The respondent, by stipulation, subsequently withdrew its petition in that proceeding, "with prejudice". Any issue that was necessarily decided in the bankruptcy proceeding has no bearing on the question of whether the respondent is entitled to priority over the appellants with respect to the surplus money generated in this foreclosure action. Accordingly, the Supreme Court properly denied that branch of the appellants' motion which was for summary judgment against the respondent based on the doctrine of collateral estoppel (Schwartz v Public Adm'r of County of Bronx, 24 N.Y.2d 65, 71; see, Kaufman v. Lilly Co., 65 N.Y.2d 449, 456; see also, Richard L. v. Armon, 144 A.D.2d 1; Weldotrun Corp. v. Arbee Scales, 161 A.D.2d 708). Bracken, J.P., Brown, Lawrence and Kooper, JJ., concur.