Vested Bus. Brokers, Ltd. v. Ragone

Full title: VESTED BUSINESS BROKERS, LTD, Plaintiff, v. DARLENE RAGONE, RONNIE…

Court: Supreme Court of the County of Suffolk State of New York - Part XLVI

Date published: Apr 20, 2021

2021 N.Y. Slip Op. 31379 (N.Y. Sup. Ct. 2021)

Opinion

INDEX NO.:004893/2012

04-20-2021

VESTED BUSINESS BROKERS, LTD, Plaintiff, v. DARLENE RAGONE, RONNIE TARULLI, and MOXIE BUSINESS & CONSULTING, INC., Defendants.

SULLIVAN & SULLIVAN Attorneys for Plaintiff By: Joseph D. Sullivan 1305 Franklin Avenue, Suite 300 Garden City, NY 11530 LONG TUMINELLO, LLP Attorneys for Defendants 120 Fourth Ave, Suite 1 Bay Shore, NY 11706

HON. JAMES HUDSON Acting Justice of the Supreme Court

COPY

Memorandum Decision after Hearing

PRESENT: HON. JAMES HUDSON Acting Justice of the Supreme Court

MOT. SEQ. 007-Mot D; CASEDISP

SULLIVAN & SULLIVAN
Attorneys for Plaintiff
By: Joseph D. Sullivan
1305 Franklin Avenue, Suite 300
Garden City, NY 11530 LONG TUMINELLO, LLP
Attorneys for Defendants
120 Fourth Ave, Suite 1
Bay Shore, NY 11706

In this Action, Plaintiff Vested Business Brokers Ltd., seeks to enforce a Default Judgment which was entered against Defendants Darlene Ragone, Ronnie Tarulli and Moxie Business & Consulting Inc. when they failed to appear at a conference. By Order dated September 20^th, 2013 (Whelan, J.), the Court determined that Defendants were in default and struck their Answer and Counterclaim, After an inquest as to damages, by Order dated April 29^th, 2014 (Whelan, J.), the Court awarded Plaintiff a Judgment in the amount of $1,100,000.00, which was duly entered in the Office of the Suffolk County Clerk. After an appeal of the Court's denial of a motion to vacate the judgment, by Order dated September 30^th , 2015, the Appellate Division, Second Department Affirmed the Default but reduced the Judgment to $150,000.00. Plaintiff entered an Amended Judgment, in the amount of $213,295.85.00, in the Office of the Suffolk County Clerk on November 30^th, 2015. Plaintiff sought discovery from Defendants which went unanswered, resulting in a motion seeking to place Defendants in contempt of court. The motion was denied by Order dated November 23^rd, 2016 (Hudson, J.) for failure to include certain statutory language in the motion papers. By Order dated March 19^th, 2018 (Hudson, J.), the Defendants were held in Contempt of Court, directing Defendants Tarulli and Moxie Business and Consulting Inc. to each pay to Plaintiff the amount of $3,500.00. On March 26^th, 2018, the Judgment was amended to reflect the accrued interest. The Judgment remains unsatisfied. The record reveals that Darlene Ragone may have filed for Chapter 7 Bankruptcy protection on or about November 30^th, 2018, and subsequently may have filed for Chapter 13 Bankruptcy protection.¹

1 Defendant Ragone has not informed this Court as to the outcome of either of her bankruptcy filings.

The delay in determining the instant Petition is due to Covid-19 restrictions placed upon the Court. The Petition was submitted on October 23^rd, 2019, and a hearing was conducted on December 18^th, 2019. Plaintiff submitted the transcript of the hearing on February 3^rd, 2020. Shortly thereafter, the Covid-19 pandemic occurred, closing the Courts to the public from February of 2020 until the present time. In a letter dated March 4^th, 2020, Counsel for Defendant Tarulli submitted proof of a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on February 19^th, 2020, triggering an automatic stay as to Tarulli.² However, the Action was marked stayed in error in the Court's computerized records. In any event, virtual conferences were held on January 18^th, 2021, March 8^th, 2021, and March 25^th, 2021. At the most recent virtual conference, the Parties informed the Court that the automatic stay on the Action should be lifted. The Petition was marked fully submitted on April 13^th, 2021.

2 Defendant Tarulli has also not informed this Court as to the outcome of his bankruptcy filing.

Plaintiff/Petitioner now submits a Notice of Petition and Petition which was served upon the Defendants and non-parties Moxie Group, Moxie Brokerage Group, M.O.X. Advisors, and Moxie Funding Group (the non-party entities). Plaintiff/Petitioner seeks a judgment as against the non-party entities pursuant to New York Debtor Creditor Law § 273, alleging that a fraudulent conveyance took place between Defendants and the non-party entities.

Plaintiff/Petitioner contends in the Petition that a recent online search for Moxie Business & Consulting Inc., links to a site for Moxie Group, which includes the non-party entities, and has its place of business at 262 Main Street, East Setauket, New York. In addition, the Moxie Group website lists Defendants Ronnie Tarulli and Darlene Ragone as Moxie Group's partners. The Petition also alleges that while Defendant Moxie Business & Consulting, Inc. previously maintained its business address at 320 Main Street, Port Jefferson, New York, its present place of business is located at 262 Main Street, East Setauket, New York.

Plaintiff/Petitioner submits a copy of the New York State Department of State records revealing that Moxie Brokerage Group, Inc., was formed on June 5^th, 2014, approximately forty-five (45) days after the original judgment was awarded, at an address located at 320 Main Street, Port Jefferson, New York. Moreover, Plaintiff/Petitioner submits the New York State Department of State records for Moxie Funding Group, Inc., which was formed on October 9^th, 2018, sixty (60) days prior to Ragone's filing for Chapter 7 Bankruptcy. The listed agent for service of process was Darlene Ragone at 262 Main Street, East Setauket, New York.

At a hearing held on December 18^th, 2019, Plaintiff/Petitioner's Counsel informed that although he had served two (2) sets of information subpoenas upon the Defendants, he received no response. During that time, Moxie Business & consulting, Inc. morphed into three or four new entities. Counsel found that the telephone numbers were the same and the principals were the same. Therefore, Counsel stated that Moxie has transferred its assets, including its goodwill, listing agreements, trade name of "Moxie", contracts, clients, phone number, bank accounts to Moxie Group and its entities to avoid paying the Judgment, which constitutes a fraudulent transfer. Plaintiff/Petitioner relies upon Northpark Assocs., L.P. v S.H.C. Mergers , Inc. (8 AD3d 642, 779 NYS2d 549 [2d Dept 2004], holding that there are questions of fact, inter alia, as to whether the transfer was made in good faith). However, the Court pointed out that in that Action, a motion for summary judgment was utilized, whereas, here, Plaintiff/Petitioner has chosen a Notice of Petition and Petition to obtain redress. Plaintiff/Petitioner also cites High Speed Capital , LLC v Corporate Debt Advisors , LLC (339 FSupp3d 137 [WDNY 2018], a removal case), which is inapposite since this case does not involve removal. However, that Court noted that the correct means to litigate whether or not a conveyance is fraudulent would be within a special proceeding, pursuant to CPLR 5225 (b) and 5227. Indeed, Plaintiff/Petitioner may bring a special proceeding in lieu of a plenary action. Counsel further states that Geren v Quantum Chem. Corp. (832 FSupp 728 [SONY 1993], holding that a creditor's remedy in a fraudulent conveyance action is limited to reaching the property, which would have been available to satisfy the judgment, had there been no conveyance), that in this case, there would be certain assets that Plaintiff would try and claw back to recover. Counsel states that the evidence presented entitles Plaintiff/Petitioner to a judgment against the non-party entities, and if this application is not granted, that Plaintiff/Petitioner be granted the opportunity to engage in discovery.

In opposition, the non-party entities appeared by Counsel, who stated that the Court had no jurisdiction over them, and that they are not named parties in the Action. Instead, the non-party entities were merely served with the Petition to oppose Plaintiff/Petitioner's application to the Court. Counsel cites Riverside Capital Advisors , Inc. v First Secured Capital Corp. (28 AD3d 457, 460, 814 NYS2d 646 [2d Dept 2006], which held that "...a court has no power to grant relief against an entity not named as a party and not properly summoned before the court"). Counsel also cites Grace v Leumi TR Corp of New York (443 F3d 180 [2d Cir 2004], which holds that the creditor's remedy is limited to reaching the property which would have been available to satisfy the judgment, has there been no conveyance and requiring it to be restored to the debtor's possession).

In addition, Counsel stated that neither Debtor Creditor Law (DCL) § 273 nor § 276 contemplate a judgment or an award of Attorney fees against non-party entities. Moreover, Counsel states that the Petition does not substantiate with any evidence showing that the non-party entities were actually the same as the Defendant Moxie Business & Consulting Inc., and since Plaintiff/Petitioner cannot show a fraudulent conveyance at this time, Attorney fees are not appropriate. However, Counsel conceded that Defendants were noncompliant with all of Plaintiff/Petitioner's attempts at obtaining information. Counsel states that although Plaintiff served the non-party entities, they were not involved at any time before Plaintiff brought this Petition against them. Counsel requested the denial of Plaintiff/Petitioner's Petition. However, Counsel then acknowledged that if this Court finds that there is jurisdiction over the non-party entities that they will have to go through the discovery procedure.

DCL § 273 provides:

Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration.

CPLR 5225 sets forth the procedures for the return of property. Under CPLR 5225 (a), a judgment creditor can seek turnover of property held by the judgment debtor "upon motion" in the original action. However, when the property or money sought is in the possession of someone other than the judgment debtor, the judgment creditor must follow the procedure set forth in CPLR 5225 (b), which requires that the creditor commence an action against the person in possession, instead of merely filing a motion in the original action (see Runaway Development Group v Pentagen Technologies Intern . Ltd., 396 FSupp2d 471, 474 [SDNY 2005]).

Here, under the present circumstances, the Court declines to convert the Petition into a special proceeding. While the Moxie Group web page shows that Defendants Ragone and Tarulli started new companies, there is no evidence that they transferred the assets of Moxie Business and Consulting, Inc. without fair consideration. In any event, despite having duly served the non-party defendants, the instant Petition is an improper vehicle to obtain a judgment against them. Therefore, if so advised, Plaintiff/Petitioner may seek to recover a judgment as against the non-party entities in a special proceeding or a plenary action and the Parties will be required to engage in discovery (see CPLR 5225 [b]; NY DCL § 273 ; Runaway Development Group v Pentagen Technologies Intern. Ltd., supra).

Accordingly, the Plaintiff/Petitioner's Petition as against the non-party entities is denied without prejudice to commence a special proceeding or a plenary action. This matter is disposed.

This Memorandum also constitutes the Order of the Court. DATED: APRIL 20^th , 2021

RIVERHEAD, NY

/s/ _________

HON. JAMES HUDSON

Acting Justice of the Supreme Court