Court Opinion

ID: 2809732
Source: CourtListenerOpinion
Date Created: 2015-06-18 14:13:10.260759+00
Date Added: 2024-06-11T12:23:30.167953
License: Public Domain

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