PETITIONER OBTAINED JUDGMENTS EXCEEDING $1 BILLION AGAINST RESPONDENTS STEMMING FROM THE 2008 FINANCIAL CRISES WHICH HAVE YET TO BE SATISFIED; PETITIONER BROUGHT THIS TURNOVER PROCEEDING IN 2023; THE CORPORATE VEIL-PIERCING CLAIM AND THE FRAUDULENT CONVEYANCE AND VOIDABLE TRANSACTIONS CAUSES OF ACTION PROPERLY SURVIVED THE MOTION TO DISMISS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, affirmed the denial of the motion to dismiss the corporate veil-piercing claim and the fraudulent conveyance and voidable transactions causes of action: The respondents have not satisfied a pair of judgments totaling more than $1 billion stemming from the 2008 financial crisis. The petitioner, UBS, commenced this turnover proceeding pursuant to CPLR 5225 in 2023:

… UBS alleged that, after it secured the first judgment, it discovered that [respodents] had conspired to frustrate UBS’s ability to recover against the judgment debtors. UBS alleged that [respondents], exercising complete domination over the judgment debtors and other related entities, transferred the debtors’ assets to themselves or other entities that they controlled in an effort to avoid paying UBS any of the obligations stemming from … the judgments. * * *

For pleading purposes, a party seeking to pierce the corporate veil does not have to satisfy the heightened pleading requirement imposed on one interposing a cause of action for fraud (see CPLR 3016); rather, the party must plead facts that would establish that the individual defendant’s domination of the corporation was used to perpetrate a wrong or injustice against the party, and the allegations of domination must be adorned with particularized allegations of consequent wrongs … .  Matter of UBS Sec. LLC v Dondero, 2026 NY Slip Op 05460, First Dept 9-24-26

Practice Point: Consult this opinion for insight into the pleading requirements for piercing the corporate veil and fraudulent conveyance and voidable transactions causes of action in the context if a (post-judgment) turnover proceeding pursuant to CPLR 5225.