Opinion ID: 553918
Heading Depth: 2
Heading Rank: 3

Heading: Finding of Actual Fraud.

Text: 16 Defendants argue that the district court made insufficient findings of actual fraud to award attorneys' fees against them. Section 276-a states that attorneys' fees should be awarded when a conveyance is found to have been made by the debtor and received by the transferee with actual intent, as distinguished from intent presumed in law, to hinder, delay or defraud either present or future creditors (emphasis added). Thus, before awarding attorneys' fees against a defendant, whether he be the debtor or the transferee, the court must make an explicit finding of actual intent to defraud; imputed fraud does not satisfy Sec. 276-a. Cf. Marine Midland Bank v. Murkoff, 120 A.D.2d 122, 508 N.Y.S.2d 17, 20-21 (2d Dep't 1986) (rejecting the notion that    a presumption of intentional fraud exists under Sec. 276-a). 17 In awarding attorneys' fees in this case, the district court found that there was actual intent to defraud because: (1) the transfers of the property were intrafamily; (2) the deeds recited a nominal consideration of $1; (3) there was deposition testimony that no consideration was paid; and (4), the debtor, Gene Crescenzi, knew of the potential claim against him when he transferred the property. 18 While these facts would be sufficient to support a finding of actual intent to defraud as against Gene Crescenzi, (who is no longer a party in this case), they are not sufficient to permit an inference of actual intent on the part of his sons, Hector and Armando. At the least, before charging Hector and Armando personally with attorneys' fees, there should be a finding of their actual knowledge of the circumstances that render these conveyances fraudulent. If they were unaware of their father's intent to defraud the plaintiff, believing, for example, that the conveyance was a gift, then they could not be charged here with actual intent to defraud under Sec. 276-a. Although the constructive fraud established by this record is sufficient to set aside the conveyance under Sec. 273-a, it is not sufficient to award attorneys' fees against Hector and Armando. 19 As to Harenzy Realty, the court ambiguously found that it was their corporation, referring perhaps to only Hector and Armando Crescenzi, or perhaps to Hector, Armando, and Gene Crescenzi. On the remand, the district court should focus more closely on the ownership and control of Harenzy Realty, and before charging it with liability for the attorney's fees, make an explicit finding that, in receiving the property, the corporation had an actual intent to defraud as required by Sec. 276-a. 20