a lawsuit in the circuit court of miami dade county we have traveled through nine or ten different courts and we are here today try to collect on these judgments it's the public policy of new york to see to it that judgments are enforced this this judgment this was a settlement that was entered into by your client with companies that might be expected to be difficult to collect from  without getting any guarantee from the individuals that everyone knew was behind those companies is that a fair statement of what happened here yes and what's also a fair statement judgment is that that judgment also said quote nothing contained here in shell in any way limit a f t c from taking any and all efforts to collect on his judgment and extraordinarily as to other provisions number one the judgment debtor stipulated that notwithstanding the stipulated entry of the judgment that we were entitled to those judgments no matter what because they had lost every claim they had lost every defense they had lost everything and i'll go one step further the judgment enters also stipulated that we are the bonafide prevailing party for purposes of that litigation notwithstanding the existence of the settlement so at the time frame when the judgment debtors had lost everything thing kind of thing going on then correct ok that is true so so only because i've lived through this and i actually had hair when this case started ok i know what we have been through over a decade and the desperate desperate fight to get them off our properties to get our properties back to extricate them while they collected thirteen million dollars of our subtenant revenue and put it in their pocket while mr gross took a six million dollars tax deduction and put that in his pocket while he milked every single penny that he could take and that's the second public policy that we're talking about here is a factual finding by the district court is there not that the management fees were bonafide the transactions were value is that wrong on a quantitative quantity i think that was a yes or no question you can explain the answer but am i wrong that there was a factual finding that the management fees were bona fide transactions were fair reasonable value i can't tell exactly language but but we chose week shows based upon the law in new york we chose not to challenge the the quantitative portion of the management fees visa vi the value of the and it's going on an ongoing basis pain it is not a conveyance in new york but i don't agree with us i don't agree with that i want draw a distinction i want to draw distinction if i may so the a and m entities had quantitatively you know challenging that was paid for those services no what i'm saying no it's not what i'm saying what i'm saying is that there were actual am employees who were on site who actually manage the property they were paid we've never sought to challenge those payments they charged you a fee which was superfluous because you already were getting the services that's exactly right every every is that this management fee which is paid why are you here on it in a review because not a factual finding that that that's what the question i asked was was this not a factual finding by the district court that there was fair compensation paid or services provided for the management fees no what the judge did what the judge did is say has created this exception because the the law in new york says that when a company is insolvent every conveyance every obligation every one of them that goes to an insider ok is fraudulent as to a creditor and it is especially so hard all the cases that you're relying on before the decision of this court that said that presumption only applies in the case of antecedent obligations not in the case of ongoing services being provided well i don't read actually you are referring to the h b e case ok so so the h p case i don't think actually says and provides for that holding first of all first of all you've read our british we think that the statute which expressly says every conveyance and every obligation made while the debtor is is insolvent is constructively for every single one of them we don't think that your decision and h b franks was intended to create a judicially created exception to the plain language of the statute and intended to do then i'll t think it was wrongly decided no no no no no no i'll tell you what i think if we go back and we look at the age i just need to check every conveyance by insolvent and i'm looking at two seventy three and it says if it's made without a fair consideration yes yes and we're talking about with the district court made a finding that was fair consideration but what the district court judge is decided fair consideration on one side of the pointers to the district court judge said as a provided what is that but a quantitative assessment because this six percent is on top of everything else that was paid for actual services what that what the su seventy two says is that in the district would find that that is standard in the industry as if you have a management company that's what you pay them but but what we're talking about a situation where the entities were insolvent that triggers two seventy three and under two seventy two the definition of a fair consideration is both quantitative which is the which is what we've talked about as well as in good faith and the cases in new york every single case that we've cited to and i'm not aware of a case that says  a moment just give me a moment says that when an entity isn't solved every single transfer conveyance or obligation to seventy three also says every obligation doesn't have to be a conveyance every obligation which goes to an insiders pocket is fraudulent constructively and that is especially so when the same entity controls the transfer or and controls the transfer in fact the case law in new york says th presumption these transfers to insiders that they lack good faith and what with the district court judge dead he's got stuck at the quantitative aspect and forgot about the good faith part of it he addressed good faith in the motion for reconsideration and came to the end and decided that the payment fell within the statute and was not that there was no in rebuttable presumption that she was bound to apply ok so she did address it doesn't mean that we agree that the judge was correct but it's not fair to say that she didn't consumption i was referring to the i'm referring to the judgment so so here's what happens in h b h me a really interesting case but it's broken into sections section one a h b e specifically entitled equitable subordination what was happening there was the parties is that mom whether she's the district court found that you as the court found that she was an insider but the court and ultimately resolve that on appeal so mom lends two hundred fifty thousand dollars to her son's company stop right there as a pure quantitative matter on a balance  creditor is harmed that's what that's what they're saying and they're also saying that it doesn't matter whether the advance not the exchange whether the advance of money the new cash coming in ok whether it came from an insider or not is irrelevant now if you think about all that happened as an asset was converted yes or when raef twenty six of h p is twenty six of judge woods yes under is that that the judge is focused on fair equivalent fair equivalent is one half of the statutory definition of fair consideration ok all the judge is doing here is is looking at the fair equivalent which is the quantitative side but not the addressing the good faith element which the courts say is an era but a presumption that transfers to insiders fallen solvent a in bad faith and that but the district court considered good faith in the motion for reconsideration she says the f t c has pointed to no evidence to show that the transfers remain bad faith and she goes through further discussion instead the trial record  management fee payments were disclosed an f t c in service fair compensation yes even if we were to treat is a separate independent requirement somehow which i'm not entirely sure of that would play out given that the amounts were shown to be proportionate within the stand industry standard the district court so found you're saying that no matter that it was for contemporaneous consideration that they were a reasonable amount that by virtue of the company's relationship they have to be deemed fraudulent i think is that right yes is that under the statute and under every single case in new york that has looked at transfers to insiders when the company is insolvent every single case h p t i don't think stance from the contrary proposition  no on the contrary we cited cases there not only antecedent but we're also contemporaneous exchanges i reviewed those cases in each of them seemed distinguished to me in some way what do you what do you think is your strongest case on that score we were talking to a couple appellate division cases right well we have we have the southern district case in alan morse and alan morse alan morse makes the point of saying that quote with respect to the question of good faith it has been held that transfers from insolvent corporation to an office or directory of major shareholder of that corporation are per se violet to of the good faith requirement goes further citing atlanta shipping and goes further in citing southern industries quote such a transfer is it were bought oblique presumed to be fraudulent for purposes of section two seventy three zero you can get back to you money that was paid for services that were in fact provided you got the no sir no i'm i'm  sorry but that no that is absolutely not true with there is no effort whatsoever never has been to get back money that were paid to people who actually provided on site management services the vendors who received money while working well met while managing the properties we even paid the overhead of g f i management employees who actually provided services there's never been an effort to recover that money this is pure six percent gr to the bottom line that came out of our properties and went into mr gross's personal pocket that is the classic exchange or conveyance of an insolvent outer you paid separately so i understood this and maybe because i'm making assumptions and i shouldn't that there was a fee paid every month to mr gross's management company in addition to every single expense which i am was paying out to every single vendor and every single person decided you not pay it and i'm sorry i did you not paid at the time i'm puzzled way way way i need to understand your question sorry let me get to the basic here you are saying that this was not a case where the management company build you a an overall thief for managing the properties instead you are saying every other single expense it is pure profit there's no it is nothing to a pure six percent of the gross profit so the if there's an onsite manager paid that and it's the question yet if there's an onsite manager he is not a salaried employee of g f i management services that's sure there was a salaried employee of a and m and paid so the only money that goes to defy management is the premium that's correct that's the only fee that you're including including g f i management supervisory executive employees or what not and which charge overhead for them and that was paid by to you had some other company that was not related to mr gross is not the finding that the standard industry practice is you would be doing exactly the same thing that is paying an approximately six percent be on top of whatever the specific expenses of the management company work it it's it's a counterfactual example because mr gross testified that that and so did judas crook the c f o of the company they testified with these hundred million dollars of intercompany loans going back and forth that there were times when if one of his entities didn't have money to pay the management fee they didn't pay it so so they the evidence was that when jeff i management wasn't able to collect a management fee from an entity that wasn't able to pay it they didn't pay it but they continued to manage the property so this management fee is purely a lect is that it's merely saying that the district court's factual findings were clearly erroneous as to this because the actual management fee and costs as he with management had already been paid in some other kind of transfer is that right i mean because we are really talking about good faith here we're talking about how much money was paid for what is how i understand you know what the argument well ok so so so the answer is yes that is true and we that's why this is this why all of this evidence is in the record we made this record evidence to the court to explain to the district court judge that this this six percent is over and above every possible expense that was paid and because but for but for this holding of h b e that i haven't had a chance to address yet ok the district court judge i believe misread that holding in h b a leasing and same with the bank of every single obligation every single one of them every conveyance of money that goes to an insider while insolvent the expense of creditor doesn't pass the test of fair consideration from the word go even if in fact as a matter of fact it is exactly what would be paid to any other entity doing the same work well i think i think i think the answer there is but it wasn't the answer there is is that here you have an insider who is in possession of our properties we can't get rid of them we're doing everything we can to get them out is this a yes i'm having trouble following the answer because what what we're talking about here is as i understand it a factual finding that this six percent fee is absolutely industry standard that if there was no mr gross if there was no insider if some other entity were managing the property they would get exactly the same amount of money that gross got we did not contest that that would be not contest that that was true we correct and you're saying even if it is true you're entitled to recover that money yes  and get something very clear first judge wood was absolutely right not only did the evidence show that the management fees were fair the rate was fierce services were provided the counsel at the trial for  agreed with that and i'll just read you one portion in fact i think you made that admission or concession i would say that's an admission it's a concession in two places on page eight fifteen of the record and i quote from  counsel but it is not our contention that the management fees were fraudulent transfers in the context of there wasn't consideration because they didn't appear to provide services for the work they did and he goes on to say that a second time as well and it was no question he didn't dispute and they have to dispute that the management fee rate was fair services were provided and those services in comp lot of things and they're all listed on page thirty and page  twenty of our brief right out of the record from the court's opinion it's a stipulation fact they team so now for counsel to come and say well the management fees are problem their problem is because they have the wrong interpretation of what h b leasing is and what the law is in this state h b e leasing couldn't be more clear for antecedent that there is a rule if you're an insider and you're and i just want to add it is totally consistent with the law in new york state logic alone compels it imagine going to an insider and saying the window is broken it has to be fixed here's ten dollars please fix fix the window according to council according to f t c that would be an insider fraudulent transfer that's not the lawyer here in fact we pay salaries of presidents of corporations on an ongoing basis deal yes thank you your honor we suspect the piercing the corporate veil about that the court was fact made very clear in the courts in this is in a motion for reconsideration exactly what the standards are it's the marist standards it's either a fraud was committed or the was in justice a wrong that was perpetrated you have to perpetrate the wrong there is not one single decision you think the law requires and intentionally unjust act intentionally would be the wrong word to use unless you place it in the right context it means that you are performing conduct that you mean to do in other words you'll never find a case of abuse of the corporate structure for an innocence or for somebody acting innocently there isn't any such thing you won't find a case even negligence because what the court demands to get through the basic structure of the insulation of the corporate structure is that there has to be some fraud or or other wrong or in justice the courts be quite the two that doesn't mean you have to file have a finding of fraud it doesn't mean you have to have the finding of intent that's required by fraud but you have to mean to do something you have to mean to abuse the system and you have to mean and then tend to dominate the corporation in a way that will cause harm to someone else or an injustice or inequity and that's what she meant and she made it very clear in her motion for reconsideration this is thank you thank you  you have two minutes rebuttal thank you working in reverse the i don't know what an intentional unjust act is it seems to be undefined in new york  law the judge cites in her final judgement the morris case but morris case doesn't say intentional unjust act the added tax case there has to be some wrong perpetrated so tell me what is the wrong that was perpetrated by whatever was whatever failure to comply with corporate formalities happened here or breach of legal duty as you say as you said an added tax so it's only what it is what is the breach that we're talking about was the wrongfulness that we're talking ok well the wrongfulness that we presented in addition to the fact that the you have the trust fund doctrine you have a breach of fiduciary duty issue here because the officers and directors had an obligation once they were insolvent to see insolvent is not a zone of insolvency issue they were actually insolvent which is what the judge found and added tech specifically says citing electronic switching that that the standard is a wrong a fraud or the breach of a legal duty or a dishonest and unjust act in contravention of a plaintiff's rights we believe in the argument that we had advanced was in addition to the trust fund argument was that these entities all acted without a legitimate business interest none of them were acting for their selves they were all acting for the benefit of one man who is the only one who's who could stand to benefit none of these entities acted for their own best interest and if an argument again to do no argument is that because the judge a light she ate she made the argument akin to a two seventy six argument under the fraudulent conveyance statute in other words she was saying that because we didn't prove intentional fraud under two seventy six well then for sure we didn't prove an intentional unjust act and that was never the standard that's what you saying is the you didn't prove more than a breach of contract and and that doesn't seem to be enough in the ordinary course to pierce the corporate veil while i read the very last paragraph of your opinion as saying that we didn't prove up an undue an intentional unadjusted you agree that merely engaging in litigation in breach contract is not enough to pierce the corporate veil the word merely yes this is not merely this was an extraordinary piece of what what is the plus that you focus on and distinguishing ok number one is number one is that the litigation was brought none of that was designed to benefit any of the litigants in the case it was designed to benefit mr gross's actual issues is there a factual finding that supports what you just said the judge the judge seemed to agree that the case was of questionable merit and we're looking at a highly fact specific matter when we come to piercing the corporate veil you're saying that the plot you just described what a plus factor is that makes this not a breach of contract universe clearly erroneous by not willing to make a finding that this litigation was all brought in bed faith for no good purpose or not to benefit the corporation the district court erred what i'm saying is without challenging the factual findings  i'm saying is that the court made factual financing came to a conclusion saying we didn't prove an intentional innocent just didn't prove an intentional unjust act and what i'm saying to this court is is that the judge i did set out to prove an intentional unjust act i was required to prove that there was a fraud or a wrong not an intentional unjustified unjust act a wrong mean i don't know oh what an intentional and it's hard to imagine what an intentional unjust act is easy to imagine what an intentional unjust act is when i know i'm doing something wrong fall and i do it that's what intentional wrong means well what are you saying we're not going to stand what that means now because i don't i don't believe that the case law in new york acquires that requires an intentional act of an intentional effort to hurt a credit or for purposes of alter ego or piercing so what happened here was was the judge the district court but there has to be something done an intentional act yes which is in fact wrongful no i don't not innocent have to be really does not have to be an intentional act that's not  wouldn't be enough but something else would be is that what you're saying yes ok what is that something else ok so here here where you have the militia i'm going to call it maliciously prosecuted litigation designed to maliciously prosecuted litigation is an intentional wrong that's what malice meanings but we i understand but what i'm saying to the court is is that is that i call here a maliciously prosecuted case would found that  in the reasons for pursuing that action is that yes that's that's what's clearly rooms oh absolutely that that that that is that is  the being held to this here to for unknown standard of an intentional unjust act i think the court took the evidence and weighed it against a standard we're do you know your brief argue that the finding that there was legitimate reasons for bringing that lawsuit was clearly erroneous i don't i was answering judge hellerstein question he just made that you know you asked me do i claim that the answer is yes  that if i'm being held if i'm being held to an intent if i'm being held to an intentional unjustified act if the district court were to measure this against what is a sufficient wrong the judge may very well have found that we've established by the evidence that there was a sufficient wrong in order to pierce or run in circles and answer judge kearney's question you said the thing that is here that is more than a mere breach of contract which you agreed would not be sufficient is a malicious prosecution of a lawsuit and it's a malicious prosecution because there were no legitimate reasons to do it then it was cited to you that the judge made a find that there was there were legitimate reasons to bring that very lawsuit and now you say you didn't have to make that argument in the brief because we are holding you to an unreasonable and you know you are the one who said in response to judge carney's question that the thing that makes this not a breach of contract is the malicious prosecution of a lawsuit you said that and i mean you said that that and then i'm a mere breach of contract wouldn't be enough and this is the extra piece now it turns out that there's a factual finding that it wasn't malicious prosecution of a lawsuit and the and you're saying yeah but that was clearly erroneous which is something you didn't argue in your brief because you didn't have to i was answering judge hellerstein question what i what i have said is is that is that we've talked about the breach of fiduciary duty added text tells us that if there's a breach of a legal duty that's a sufficient basis that's not a breach of a legal duty doesn't necessarily mean intentional unjust act i can't tell breach of contract is a breach of the legal duty is it not yeah it can be shut well yes there is yes a breach of contract is always a breach of a legal duty ok but in this instance the parties but it's still not enough to breach the breach the peace clears the corporate veil you said earlier in my in in my view a mere breach of a contract with nothing more is not a sufficient basis to pierce the corporate veil i think