State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: June 18, 2015 520219 

________________________________

In the Matter of DENNIS MOGIL

et al.,

Respondents,

v

BUILDING ESSENTIALS, INC., MEMORANDUM AND ORDER

et al.,

Respondent,

and

TREES UNLIMITED, INC., et al.,

Appellants.

________________________________

Calendar Date: April 20, 2015

Before: Lahtinen, J.P., Rose, Devine and Clark, JJ.

__________

The Crossmore Law Office, Ithaca (Edward Y. Crossmore of

counsel), for appellants.

Sharon M. Sulimowicz, Ithaca, for Dennis Mogil and another,

respondents.

__________

Lahtinen, J.P.

Appeals (1) from an order of the Supreme Court (Mulvey,

J.), entered February 20, 2014 in Tompkins County, which, among

other things, granted petitioners' application, in a proceeding

pursuant to CPLR 5225 and 5227, to set aside certain transfers of

assets from respondent Building Essentials, Inc. to respondents

Trees Unlimited, Inc., Scott Howard and Mark Mecenas, and (2)

from the judgment entered thereon.
-2- 520219 

Petitioners commenced an action against respondent Building

Essentials, Inc. in March 2007, which resulted in an $81,266.37

judgment in November 2010. The judgment remained unsatisfied

and, in June 2013, petitioners brought this proceeding alleging

that Building Essentials had made fraudulent cash conveyances to

respondents Scott Howard, Mark Mecenas and Trees Unlimited, Inc. 

(hereinafter collectively referred to as respondents). Howard

and Mecenas owned all shares of Building Essentials, and Trees

Unlimited was wholly owned by Howard. Following a trial, Supreme

Court found, among other things, that petitioners had established

both constructive and actual fraudulent transfers (see Debtor and

Creditor Law §§ 273-a, 276). The court awarded petitioners (1)

$15,209.93 plus interest from May 15, 2007 against Howard, (2)

$37,710.25 plus interest from April 25, 2007 against Mecenas and

(3) $5,004.75 plus interest from October 1, 2008 against Trees

Unlimited. Judgment was entered thereon and respondents appeal.

Although we have broad authority to independently weigh the

evidence when reviewing a nonjury trial, we defer to the trial

court's credibility determinations and factual findings based

thereon (see Halpin v Cheikhet, 90 AD3d 1211, 1212 [2011]; Pronti

v Smutzinger, 52 AD3d 1015, 1016 [2008]). The proof at trial

supports Supreme Court's findings of constructive and actual

fraud. Regarding constructive fraud, Debtor and Creditor Law §

273-a states in pertinent part that "[e]very conveyance made

without fair consideration when the person making it is a

defendant in an action for money damages . . . is fraudulent as

to the plaintiff in that action without regard to the actual

intent of the defendant if, after final judgment for the

plaintiff, the defendant fails to satisfy the judgment." After

petitioners commenced the underlying action against Building

Essentials, which resulted in an unsatisfied judgment,

respondents made a series of transfers from Building Essentials

to Howard, Mecenas and Trees Unlimited. The transfers resulted

in corporate assets going directly to corporate insiders or an

entity controlled by a corporate insider (see Matter of Mega

Personal Lines, Inc. v Halton, 9 AD3d 553, 555 [2004]; Matter of

Superior Leather Co. v Lipman Split Co., 116 AD2d 796, 797

[1986]). The record supports the finding that the payments were

not made in good faith, which is "[a]n indispensable component of

fair consideration" (Matter of Superior Leather Co. v Lipman
-3- 520219 

Split Co., 116 AD2d at 797). Moreover, Supreme Court's finding

that, shortly after the underlying action against Building

Essentials was commenced, respondents engaged in a pattern of

purposefully depleting the corporation's assets – including

making large payments to Howard and Mecenas – is amply based on

proof found to be credible and supports the court's determination

of actual fraud (see Debtor and Creditor Law § 276; Matter of

Bernasconi v Aeon, LLC, 105 AD3d 1167, 1167-1168 [2013]). 

Supreme Court did not err in granting petitioners' motion

to amend the petition to conform to the proof. A court has

discretion to conform the pleadings to the proof on such terms as

may be just unless doing so results in prejudice to the nonmoving

party (see CPLR 3025 [c]; Ravens Metal Prods. v McGann, 267 AD2d

527, 530 [1999]; Lewis & Clarkson v October Mtn. Broadcasting

Co., 131 AD2d 15, 17 [1987]). At the beginning of the trial,

petitioners informed the court that they had just learned of

additional allegedly fraudulent transfers after receiving bank

statements of Building Essentials that had been produced as a

result of a trial subpoena and that, although such information

had been requested in discovery, it had not been previously

produced. Petitioners stated that they would agree to an

adjournment if respondents desired one, but that they otherwise

planned to produce such proof, and they requested that their

pleadings be conformed to the proof. Respondents, who rejected

the suggested adjournment, did not show prejudice regarding proof

contained in their own records. It was well within the court's

discretion to grant petitioners' motion. 

Contrary to respondents' contention, the accrual dates for

interest used by Supreme Court did not constitute an abuse of its

"broad discretion in determining a reasonable date from which to

award interest" when, as here, damages occurred at various times

(Pozament Corp. v AES Westover, LLC, 51 AD3d 1080, 1080 [2008];

see CPLR 5001 [b]). Respondents' argument on appeal that some of

the early transactions should not have been considered because

they were time-barred, although asserted in their answer, does

not appear to have been raised by motion before trial or at the

time of trial, and, in any event, is unpersuasive.

Rose, Devine and Clark, JJ., concur.
-4- 520219 

ORDERED that the order and judgment are affirmed, with

costs.

ENTER:

Robert D. Mayberger

Clerk of the Court