Summary
In Henry (89 A.D.3d at 617–618, 936 N.Y.S.2d 84), the Appellate Division, First Department, reversed a ruling by the Supreme Court, New York County, which denied a motion by the defendant-wife therein to vacate the sale of the marital residence, and remanded the matter for a hearing on whether the sale of the marital residence was a fraudulent conveyance, with the purchasers to be joined as necessary parties, and the hearing to be followed by a trial on the issue of equitable distribution.
Summary of this case from L.G. v. C.G.G.Opinion
2011-11-29
Christopher HENRY, Plaintiff–Respondent, v. Marisa SOTO–HENRY, Defendant–Appellant.
Law Office of Joseph J. Mainiero, New York (Antony Hilton of counsel), for appellant.ANDRIAS, J.P., FRIEDMAN, CATTERSON, RENWICK, DeGRASSE, JJ.
Order, Supreme Court, New York County (Tandra L. Dawson, J.), entered on or about November 3, 2010, which, to the extent appealed from, as limited by the brief, denied defendant's motion to vacate the sale of the marital residence, unanimously reversed, on the facts and in the exercise of discretion, without costs, the order vacated as appealed, and the matter remanded for a hearing on whether the sale of the marital residence was a fraudulent conveyance, with the purchasers to be joined as necessary parties, and, in the event defendant prevails, the sale vacated, and in any event, said hearing to be followed by further proceedings, including a trial on the issue of equitable distribution.
In October 2009, defendant was granted exclusive use and occupancy of the marital residence, where she continues to reside with the parties' two children. Shortly before a trial on equitable distribution was scheduled to take place, plaintiff transferred the marital residence, which he had purchased several years prior to the marriage, to his aunt, Hilma Gray, and a friend, Michael Pottinger (the purchasers), for $200,000. The purchasers then commenced proceedings in Civil Court seeking to evict defendant.
Defendant is a creditor to plaintiff as to equitable distribution of assets in a pending divorce even though the claim may be unmatured and unliquidated at the time of the conveyance (Debtor and Creditor Law § 270; see Kasinski v. Questel, 99 A.D.2d 396, 472 N.Y.S.2d 807 [1984], appeal dismissed 62 N.Y.2d 977, ––– N.Y.S.2d ––––, ––– N.E.2d –––– [1984]; Soldano v. Soldano, 66 A.D.2d 839, 411 N.Y.S.2d 395 [1978] ). Appreciation in the value of the separate property of one spouse due to the direct or indirect contributions of the other spouse would constitute marital property subject to equitable distribution (see Domestic Relations Law § 236[B][1][d] [3]; Hartog v. Hartog, 85 N.Y.2d 36, 45–46, 623 N.Y.S.2d 537, 647 N.E.2d 749 [1995]; Price v. Price, 69 N.Y.2d 8, 17–18, 511 N.Y.S.2d 219, 503 N.E.2d 684 [1986] ).
Defendant's allegations, if true, show that the sale of the apartment to purchasers was a fraudulent conveyance in that it was made with “actual intent ... to hinder, delay, or defraud” her by defeating the award of exclusive possession and depriving her of her potential equitable share in the apartment (Debtor and Creditor Law § 276; see also Spencer v. Hylton–Spencer, 273 A.D.2d 374, 374–375, 709 N.Y.S.2d 207 [2000], lv. denied 96 N.Y.2d 708, 725 N.Y.S.2d 638, 749 N.E.2d 207 [2001] ). In support, defendant pointed to many badges of fraud, including the timing of the sale, shortly before a hearing on equitable distribution was to commence, and the transfer of the apartment to plaintiff's aunt and friend, who were aware that defendant occupied the apartment ( see Dempster v. Overview Equities, Inc., 4 A.D.3d 495, 773 N.Y.S.2d 71 [2004], lv. denied 3 N.Y.3d 612, 788 N.Y.S.2d 667, 821 N.E.2d 972 [2004] ). Plaintiff's assertion that the sale was necessary to avoid foreclosure did not utterly refute these contentions.
Although defendant did not provide proof of inadequate consideration, at oral argument counsel for plaintiff and defendant both offered to produce an appraisal if given the opportunity to do so. Plaintiff's counsel also stated that the apartment sold at a lower price because “right now [it] qualifies as an occupied apartment.” Further, Supreme Court had noted in a prior order dated September 17, 2010 that plaintiff was very evasive and did not provide straightforward answers when questioned regarding foreclosure proceedings, the amount of arrears owed on the mortgage for the marital residence and his actions regarding his attempt to sell the marital residence.
Given these circumstances, a hearing is warranted to determine whether the sale of the marital residence was a fraudulent conveyance.
We note that the purchasers are necessary parties to the hearing because their interest in the premises would be affected by an order vacating the sale. We also note that counsel for the purchasers were heard at oral argument on defendant's motion and asked that the sale not be set aside because they were bona fide purchasers. They also moved before this Court on multiple occasions to lift the stay of eviction we granted. Consequently, we direct that the purchasers be added as parties on remand with respect to the determination of the fraudulent conveyance issue.