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ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined a written guarantee to pay the debt of another was not enforceable because no consideration for the guarantee was included in the written guarantee. The 2nd Department further held that an oral guarantee would have been enforceable if it was induced by plaintiff’s promise to hold off on bringing suit.  But only plaintiff’s counsel made that argument unsupported by an affidavit from the plaintiff:

… “[N]othing” in the writing supported the plaintiff’s claim that [she] had agreed to “forbear() pursuing a claim” in exchange for the promised payments]). In the absence of such a binding promise by plaintiff, the guaranty is unenforceable for want of consideration. “Unless both parties to a contract are bound, so that either can sue the other for a breach, neither is bound” … . …

Case law has established that an oral promise to guarantee the debt of another may be enforced, notwithstanding General Obligations Law § 5-701(a)(2), if the plaintiff “prove[s the promise] is supported by new consideration moving to the promisor and beneficial to him and that the promisor has become in the intention of the parties a principal debtor primarily liable” … . Thus, plaintiff could enforce [the] guaranty if she could prove, through parol evidence, that he gave her the guaranty in exchange for her unwritten promise to forbear from suing him until the due date of the guaranty, which would constitute new consideration beneficial to him. Plaintiff fails, however, to offer any admissible evidence (as opposed to unsupported assertions by her counsel) that she actually made such a promise. Reddy v Mihos, 2018 NY Slip Op 02565, First Dept 4-17-18

​CONTRACT LAW (GUARANTEE, ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/DEBTOR-CREDITOR (CONTRACT LAW, GUARANTEE,  ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/GUARANTEE (CONTRACT LAW, ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))/CONSIDERATION (CONTRACT LAW, GUARANTEE,  ABSENCE OF ADMISSIBLE EVIDENCE OF CONSIDERATION RENDERED ANY WRITTEN OR ORAL GUARANTEE UNENFORCEABLE (FIRST DEPT))

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FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the fraudulent conveyance allegations, which were made “upon information and belief,” were insufficient, and the tortious interference with contract allegations were insufficient because there was no allegation the contract would not have been breached but for the defendant’s conduct:

Plaintiff alleges that defendants engaged in a fraudulent scheme to transfer and dispose of the assets of several related entities (the judgment debtors) in order to thwart plaintiff’s ability to collect debts owed by those entities, including judgments in two related actions.

The actual fraudulent conveyance claims, under the common law and Debtor and Creditor Law (DCL) § 276, should be dismissed because plaintiff failed to allege fraudulent intent with the particularity required by CPLR 3016(b) … . The key allegations were made “[u]pon information and belief,” without identifying the source of the information … . Moreover, the timing of the allegedly fraudulent transfers – beginning two years before the judgment debtors incurred the subject debts – undermines the claim of fraudulent intent… .

The constructive fraudulent conveyance claims pursuant to DCL 273, 274, and 275 should be dismissed because plaintiff failed to sufficiently allege that the transfers were made without fair consideration, as the relevant allegations were all made “[u]pon information and belief”…

Because the viability of the claims under DCL 276-a, 278, and 279 depends on the viability of the other fraudulent conveyance claims, these claims should likewise be dismissed.

The tortious interference claim should be dismissed because plaintiff failed to sufficiently allege that the contract “would not have been breached but for’ the defendant’s conduct” .. . The relevant allegations were vague and conclusory and supported by “mere speculation” … . Carlyle, LLC v Quik Park 1633 Garage LLC, 2018 NY Slip Op 02436, First Dept 4-10-18

​DEBTOR-CREDITOR (FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/FRAUD (DEBTOR-CREDITOR, FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/FRAUDULENT CONVEYANCES (DEBTOR-CREDITOR, FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/CONTRACT LAW (TORTIOUS INTERFERENCE, FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/TORTIOUS INTERFERENCE WITH CONTRACT (FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/CIVIL PROCEDURE (FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/CPLR 3016 (DEBTOR-CREDITOR, FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/UPON INFORMATION AND BELIEF (COMPLAINT, (FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/COMPLAINT (UPON INFORMATION AND BELIEF, FRAUDULENT CONVEYANCE, TORTIOUS INTERFERENCE WITH CONTRACT, AND DEBTOR-CREDITOR LAW CAUSES OF ACTION INSUFFICIENTLY PLED, COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT))

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USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court did not have the power to find provisions of loan agreements usurious. Defendant defaulted in the action to enforce the loan agreements. Usury is an affirmative defense which is waived if not raised by a defendant:

Pursuant to CPLR 3215, a plaintiff may seek a default judgment against a defendant who fails to appear or answer … . A plaintiff moving for a default judgment against a defendant must submit proof of service of the summons and complaint, proof of the facts constituting the cause of action, and proof of the defaulting defendant’s failure to answer or appear … .

Here, the plaintiff, by its submissions, met all of these requirements and, thus, demonstrated its entitlement to a default judgment against the defendants … . The Supreme Court erred when it severed those provisions of the agreements which it found to be illegal pursuant to the criminal usury statute. Usury is an affirmative defense which a defendant must either assert in an answer or as a ground to move to dismiss the complaint pursuant to CPLR 3211. Otherwise, the defense is waived … . Power Up Lending Group, Ltd. v Cardinal Resources, Inc., 2018 NY Slip Op 02351, Second Dept 4-4-18

​DEBTOR-CREDITOR (USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/USURY (DEBTOR-CREDITOR, USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/CIVIL PROCEDURE (AFFIRMATIVE DEFENSE, (USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/AFFIRMATIVE DEFENSE (USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/WAIVER (CIVIL PROCEDURE, AFFIRMATIVE DEFENSE, USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/CPLR 3215  (USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))/CPLR 3211 (USURY IS AN AFFIRMATIVE DEFENSE WHICH IS WAIVED IF NOT RAISED, SUPREME COURT SHOULD NOT HAVE SEVERED USURIOUS PROVISIONS OF LOAN AGREEMENTS WHERE DEFENDANT DEFAULTED (SECOND DEPT))

QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT).

The Fourth Department, modifying Supreme Court, determined, inter alia, that there were questions of fact whether a note and  guaranties were ratified, despite forged signatures:

It is well established that a forged instrument may be ratified where “the principal retains the benefit of an unauthorized transaction with knowledge of the material facts” … . The evidence submitted in support of the motion contained sworn statements of Wheeler and his business partner establishing that the proceeds of the loan were used to provide the corporation with capital and that its president, Wheeler, knew that his signature had been forged on the documents authorizing the loan. Wheeler, however, never attempted to return the proceeds of the loan, and the loan “cannot now be repudiated” … . Thus, Wheeler’s own submissions raised issues of fact whether he ratified the forged note … . …

Even assuming, arguendo, that Wheeler established as a matter of law that the guaranties were forged, we conclude that plaintiff raised issues of fact whether he had knowledge of the guaranties and thus whether he ratified them … . Adirondack Bank v Midstate Foam & Equip., Inc., 2018 NY Slip Op 01713, Fourth Dept 3-16-18

DEBTOR-CREDITOR (QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT))/FORGERY (DEBTOR-CREDITOR, QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT))/NOTES (FORGERY, QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT))/GUARANTIES (DEBTOR-CREDITOR, QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT))/RATIFICATION (NOTES, GUARANTIES, QUESTIONS OF FACT WHETHER FORGED NOTE AND GUARANTIES WERE RATIFIED (FOURTH DEPT))

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INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Rivera, affirmed the appellate division’s ruling that the complaint by an indenture trustee stated causes of action on behalf of noteholders for fraudulent conveyances under a corporate veil-piercing theory. The court explained the issues before it as follows:

On this appeal we must determine whether an indenture trustee may seek recovery on behalf of noteholders for defendants’ alleged fraudulent redemptions intended to siphon off assets, leaving corporate obligors unable to pay the noteholders. The indenture at issue authorizes the trustee to “pursue any available remedy to collect . . . the payment of principal, premium, if any, and interest on the Notes,” and thus empowers that trustee to proceed at law and in equity to recover losses incurred by all noteholders from the unpaid notes. As such, the trustee may assert causes of action to recover pro-rata losses caused by defendants’ scheme to render the note debtor insolvent. The trustee may also seek to pierce the corporate veil and impose corporate obligations on defendants under an alter ego theory of liability based on properly pleaded factual allegations — here that defendants created, for unlawful purposes, a corporate structure over which they exercised complete control and domination, and which they used to incur corporate debt so they could distribute the loan proceeds to themselves through fraudulent transfers, leaving the corporation unable to pay its creditors. * * *

The [appellate division properly] concluded that the relevant language of the indenture “confers standing on the trustee to pursue . . . the fraudulent conveyance and other . . . claims, which seek recovery solely of the amounts due under the notes, for the benefit of all noteholders on a pro rata basis, as a remedy for an alleged injury suffered ratably by all noteholders by reason of their status as noteholders” … . The court also [properly] found that the complaint sufficiently states a cause of action against these defendants under a veil-piercing theory … . Cortlandt St. Recovery Corp. v Bonderman, 2018 NY Slip Op 01149, CtApp 2-20-18

SECURITIES (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))/DEBTOR-CREDITOR (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))/CORPORATION LAW  (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))/INDENTURE TRUSTEE  (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))/FRAUD  (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))/PIERCING THE CORPORATE VEIL (INDENTURE TRUSTEE STATED CAUSES OF ACTION FOR FRAUDULENT CONVEYANCES UNDER A VEIL-PIERCING THEORY, COMPLAINT ALLEGED FRAUDULENT REDEMPTIONS SIPHONED OFF ASSETS LEAVING CORPORATE OBLIGORS UNABLE TO PAY NOTEHOLDERS (CT APP))

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PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, in an extensive full-fledged opinion by Justice Friedman, reversing Supreme Court, determined New York courts did not have jurisdiction to enforce an Albanian judgment. The opinion is too detailed to fairly summarize here. The court explained the criteria for the enforcement of foreign money judgments under article 53 of the CPLR (Uniform Foreign Money-Judgments Recognition Act), and the applicability of Daimler AG v Bauman, 571 US ___, 134 S Ct 746 (2014) and Abu Dhabi Commercial Bank PJSC v Saad Trading, Contr. & Fin. Servs. Co.m 117 AD3d 609 (1st Dept 2014) to a CPLR article 53 proceeding. The plaintiff did not claim it had any basis for in personam or in rem jurisdiction in New York and relied upon the Abu Dhabi case for the argument such a jurisdictional demonstration was not required:

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To go beyond Abu Dhabi and hold, as [plaintiff] urges, that no jurisdictional nexus is ever required for a proceeding under article 53, even if the defendant asserts substantive defenses to recognition of the foreign judgment, would be a substantial departure from the prior general understanding of the law. For example, the Restatement (Third) of Foreign Relations Law takes the position that the creditor on a foreign country judgment “must establish a basis for the exercise of jurisdiction by the enforcing court over the judgment debtor or his property” (§ 481, Comment g). AlbaniaBEG Ambient Sh.p.k. v Enel S.p.A., 2018 NY Slip Op 00928, First Dept 2-8-18

CIVIL PROCEDURE (FOREIGN MONEY JUDGMENTS, PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/DEBTOR-CREDITOR  (FOREIGN MONEY JUDGMENTS, PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/CORPORATION LAW (FOREIGN MONEY JUDGMENTS, PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/FOREIGN MONEY JUDGMENTS (PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/JURISDICTION (CIVIL PROCEDURE, FOREIGN MONEY JUDGMENTS, PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))/CPLR ARTICLE 53  (FOREIGN MONEY JUDGMENTS, PLAINTIFF DID NOT DEMONSTRATE ANY BASIS FOR IN PERSONAM OR IN REM JURISDICTION BY THE NEW YORK COURTS, PROCEEDING TO ENFORCE AN ALBANIAN MONEY JUDGMENT PURSUANT TO ARTICLE 53 OF THE CPLR SHOULD HAVE BEEN DISMISSED (FIRST DEPT))

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DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ON THE GROUND THAT THE ISSUING COURT DID NOT HAVE PERSONAL JURISDICTION SHOULD NOT HAVE BEEN DISMISSED EVEN THOUGH THE JUDGMENT HAD BEEN SATISFIED BY A PROPERTY EXECUTION, IF DEFENDANT CAN DEMONSTRATE A LACK OF PERSONAL JURISDICTION, THE JUDGMENT WILL BE A NULLITY (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the defendant did have standing to move to vacate a default judgment on the ground that the court which issued the judgment did not have personal jurisdiction over the defendant. The judgment had been satisfied by a property execution on the defendant’s bank account:

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Where, as here, a defendant moves to vacate a default judgment on the ground that the court that rendered the judgment lacked personal jurisdiction over the defendant … a finding in favor of the defendant would mean that the judgment was “a nullity” . It necessarily follows that, “if a judgment is a nullity, it never legally existed so as to become extinguished by payment” … . …

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In addition, inasmuch as plaintiff levied the judgment amount with interest by a property execution on defendant’s bank account, we conclude that defendant did not voluntarily pay and satisfy the judgment … . Thus, it cannot be said that she waived the defense of lack of personal jurisdiction … . Cach, LLC v Ryan, 2018 NY Slip Op 00755, Fourth Dept 2-2-18

 

DEBTOR-CREDITOR (DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ON THE GROUND THAT THE ISSUING COURT DID NOT HAVE PERSONAL JURISDICTION SHOULD NOT HAVE BEEN DISMISSED EVEN THOUGH THE JUDGMENT HAD BEEN SATISFIED BY A PROPERTY EXECUTION, IF DEFENDANT CAN DEMONSTRATE A LACK OF PERSONAL JURISDICTION, THE JUDGMENT WILL BE A NULLITY (FOURTH DEPT))/CIVIL PROCEDURE (PERSONAL JURISDICTION, DEFAULT JUDGMENT, DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ON THE GROUND THAT THE ISSUING COURT DID NOT HAVE PERSONAL JURISDICTION SHOULD NOT HAVE BEEN DISMISSED EVEN THOUGH THE JUDGMENT HAD BEEN SATISFIED BY A PROPERTY EXECUTION, IF DEFENDANT CAN DEMONSTRATE A LACK OF PERSONAL JURISDICTION, THE JUDGMENT WILL BE A NULLITY (FOURTH DEPT))/DEFAULT JUDGMENT (PERSONAL JURISDICTION, (DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ON THE GROUND THAT THE ISSUING COURT DID NOT HAVE PERSONAL JURISDICTION SHOULD NOT HAVE BEEN DISMISSED EVEN THOUGH THE JUDGMENT HAD BEEN SATISFIED BY A PROPERTY EXECUTION, IF DEFENDANT CAN DEMONSTRATE A LACK OF PERSONAL JURISDICTION, THE JUDGMENT WILL BE A NULLITY (FOURTH DEPT))/PERSONAL JURISDICTION (DEFAULT JUDGMENT, DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT ON THE GROUND THAT THE ISSUING COURT DID NOT HAVE PERSONAL JURISDICTION SHOULD NOT HAVE BEEN DISMISSED EVEN THOUGH THE JUDGMENT HAD BEEN SATISFIED BY A PROPERTY EXECUTION, IF DEFENDANT CAN DEMONSTRATE A LACK OF PERSONAL JURISDICTION, THE JUDGMENT WILL BE A NULLITY (FOURTH DEPT))

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ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT).

The Third Department, over a two-justice dissent, determined that the trial court’s finding that an oral agreement concerning the repayment of a $170,000 loan was enforceable, because the loan could have been paid off within a year (re: the statute of frauds). Both plaintiff and defendant were bookmakers who had been convicted of promoting gambling. The fact that plaintiff refused to answer questions about whether he paid income tax on the proceeds, based upon the Fifth Amendment, did not affect the result because there was nothing illegal about the loan agreement itself. The two dissenters argued the parties were engaged in money laundering and the loan agreement should not be enforced as a matter of public policy:

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We are mindful that plaintiff testified that the source of the loan proceeds was cash obtained through his illegal bookmaking activities. Indeed, both plaintiff and defendant were convicted of promoting gambling and required to pay fines in the amount of $100,000 and $50,000, respectively. Although plaintiff asserted his Fifth Amendment right against self-incrimination when asked whether he ever reported the cash as income, we are not persuaded by defendant’s contention that Supreme Court erred in failing to draw a negative inference because the source and/or taxable status of the funds was not probative of the issue presented. According due deference to Supreme Court’s credibility assessments, we find ample evidence to support the determination that plaintiff and defendant agreed to the loan that defendant breached by failing to make all of the payments due… . Contrary to defendant’s argument, because there was nothing prohibiting defendant from repaying the loan within one year, the statute of frauds did not bar enforcement of the oral agreement … .

We also find that defendant waived his right to challenge the loan on the basis of illegality because it was not raised as an affirmative defense … . Were we to consider the issue, we would find that, because neither the agreement nor the performance of the agreement was illegal, the judgment was enforceable … . Centi v McGillin, 2017 NY Slip Op 08430, Third Dept 11-30-17

 

DEBTOR-CREDITOR (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CONTRACT LAW (STATUTE OF FRAUDS, DEBTOR-CREDITOR, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/CRIMINAL LAW (DEBTOR-CREDITOR, MONEY LAUNDERING, ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))/MONEY LAUNDERING (DEBTOR-CREDITOR, CONTRACT LAW, (ORAL AGREEMENT BETWEEN TWO BOOKMAKERS FOR REPAYMENT OF A $170,000 LOAN ENFORCEABLE, DESPITE THE MONEY-LAUNDERING PURPOSE (THIRD DEPT))

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SUMMARY JUDGMENT ENTERING A RENEWAL JUDGMENT PROPERLY GRANTED, CRITERIA EXPLAINED (SECOND DEPT).

In finding plaintiff was properly granted summary judgment in this action for entry of a renewal judgment the court explained the criteria:

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The Supreme Court properly granted the plaintiff’s motion for summary judgment and entered a renewal judgment pursuant to CPLR 5014(1). The plaintiff established its prima facie entitlement to a renewal judgment as a matter of law by showing: (1) the existence of the original judgment; (2) that the defendant was the judgment debtor; (3) that the original judgment was docketed at least nine years prior to the commencement of this action; and (4) that the original judgment remains partially or completely unsatisfied … . Jones Morrison, LLP v Schloss, 2017 NY Slip Op 07712, Second Dept 11-8-17

 

CIVIL PROCEDURE (SUMMARY JUDGMENT ENTERING A RENEWAL JUDGMENT PROPERLY GRANTED, CRITERIA EXPLAINED (SECOND DEPT))/DEBTOR-CREDITOR (RENEWAL JUDGMENT, SUMMARY JUDGMENT ENTERING A RENEWAL JUDGMENT PROPERLY GRANTED, CRITERIA EXPLAINED (SECOND DEPT))/RENEWAL JUDGMENT (SUMMARY JUDGMENT ENTERING A RENEWAL JUDGMENT PROPERLY GRANTED, CRITERIA EXPLAINED (SECOND DEPT))/CPLR 5014 (1) (RENEWAL JUDGMENT, SUMMARY JUDGMENT ENTERING A RENEWAL JUDGMENT PROPERLY GRANTED, CRITERIA EXPLAINED (SECOND DEPT))

PLAINTIFF DID NOT DEMONSTRATE FRAUD CAUSE OF ACTION WOULD SUCCEED ON ITS MERITS, WARRANT OF ATTACHMENT SHOULD NOT HAVE BEEN GRANTED 1ST DEPT.

The First Department, reversing Supreme Court, determined the warrant of attachment should not have been granted. Plaintiff did not demonstrate the fraud cause of action would succeed on its merits:

… [S]tating a cause of action does not equate to a probability of success on the merits. In her moving papers, plaintiff submitted no affidavit or written evidence that [defendant] had committed fraud. Rather, she relied solely on the fact that partial summary judgment had been granted against three other defendants. However, ‘[t]o sustain a warrant of attachment against the property of a defendant, the moving papers must establish both a cause of action and a ground of attachment as to that particular defendant” … . Genger v Genger, 2017 NY Slip Op 05687, 1st Dept 7-13-17

DEBTOR-CREDITOR (WARRANT OF ATTACHMENT, PLAINTIFF DID NOT DEMONSTRATE FRAUD CAUSE OF ACTION WOULD SUCCEED ON ITS MERITS, WARRANT OF ATTACHMENT SHOULD NOT HAVE BEEN GRANTED 1ST DEPT)/ATTACHMENT, WARRANT OF, PLAINTIFF DID NOT DEMONSTRATE FRAUD CAUSE OF ACTION WOULD SUCCEED ON ITS MERITS, WARRANT OF ATTACHMENT SHOULD NOT HAVE BEEN GRANTED 1ST DEPT)/FRAUD (DEBTOR-CREDITOR, WARRANT OF ATTACHMENT, PLAINTIFF DID NOT DEMONSTRATE FRAUD CAUSE OF ACTION WOULD SUCCEED ON ITS MERITS, WARRANT OF ATTACHMENT SHOULD NOT HAVE BEEN GRANTED 1ST DEPT)

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