This action arises out of a one time loan, made on or about February 19, 1998 and in the amount of $301,922.00, provided by Metlife Capital Corporation ("Metlife") to defendant, Erba Food Products Inc. ("Erba Food"). In connection with the loan, Erba Food signed a loan agreement and note in favor of Metlife, and provided Metlife with a security interest in certain computer equipment which appears to have been purchased as a result of the loan. The sole shareholder of Erba Food, William Bauer, personally guaranteed the loan. On August 17, 1998, Metlife transferred its interest in the Loan Agreement and Note to the plaintiff, G.E. Commercial Finance Business, Property a/k/a Capital Business Asset Funding Corporation ("G.E.").

On or about February 15, 2006, plaintiff commenced the present action with the service of a Summon and Complaint. On July 12, 2006, the parties stipulated that plaintiff would withdraw any causes of action for conversion and breach of fiduciary duty and serve an amended complaint. On or about July 18, 2006, plaintiff served the amended complaint.

By Notice of Motion, dated October 24, 2006, defendants, Erba Food, William Bauer, Judy Bauer, Benzy Bauer, SBL Marketing Corporation and Israel Wise, seek an Order dismissing the amended complaint on a number of grounds. Plaintiff opposes the motion pursuant to CPLR 3211 (a) (1), (a) (5), and (a) (7), CPLR 3013 and CPLR 3016 (b). [*2]

At some point after the loan was made in 1998, in either 2001 or 2002, Erba Food defaulted on the loan. The lender did not seek to take possession of the computer equipment at that time, but instead permitted Erba Food to continue to utilize the equipment to conduct their business. Plaintiff alleges that the decision to allow Erba Food to continue to utilize the equipment was based, in part, because William Bauer, the president and sole shareholder of Erba Food, fraudulently represented that the company was operating normally and was solvent in the years 2001 and 2002. Thereafter, at the end of 2002, Erba Food became insolvent and dissolved, and sold off or otherwise disposed of most of its assets.

On or about July 18, 2003, G.E., after acquiring the debt, commenced an action against Erba Food and William Bauer, and a number of other defendants (G.E. Capital Business Asset Funding Corp. a/k/a G.E. Capital Commercial Asset Funding v Erba Food Products, Inc, William Bauer, 88 Amarnick Corp., and J. Itzkowitz, Inc., Index No. 28361/03 [Sup Ct, Kings County]). On October 16, 2003, a judgment was entered against the defendants in the amount of $156,959.27 plus interest, the unpaid amount of the loan.

Thereafter, in 2005, G.E. learned that William Bauer was possibly operating a business in New Jersey named SBL Marketing Corporation ["SBL"], and that the same business was organized just a few months subsequent to the dissolution of Erba Food. In an effort to enforce the judgment of October 16, 2003, G.E. subpoenaed William Bauer and examined him under oath. The examination of William Bauer was conducted on June 9, 2004 and July 25, 2005.

Defendants argue that the motion to dismiss should be granted for a number of reasons. First, defendants argue that the cause of action in the amended complaint for fraud fails to sufficiently plead the elements of fraud, that plaintiff failed to plead fraud with the specificity required by CPLR 3016 (b), and that plaintiff's cause of action for fraud is merely an attempt to subvert the shorter statute of limitations for a conversion cause of action. Second, that the cause of action in the amended complaint for unjust enrichment is precluded by the existence of an actual contract. Third, that plaintiff has failed to sufficiently establish the elements required for a piercing of the corporate veil, such that defendants William Bauer, Judy Bauer, Benzy Bauer and Israel Wise should be personally liable for the debts of Erba Food. Fourth, that plaintiff has failed to sufficiently establish the elements required for finding a de facto merger between Erba Food and SBL, such that defendant SBL should be held liable for the debts of Erba Food. And finally, that cause of action in the amended complaint for constructive fraud fails to sufficiently plead the elements of constructive fraud under the New York State Debtor and Creditor Law.

In opposition, plaintiff argues, among other things, that William Bauer provided minimal information regarding the organization, operation and dissolution of Erba Foods; minimal information regarding what became of the computer equipment; and minimal information regarding the organization and operation of SBL. Plaintiff contends that any failure on its part in pleading is the result of defendants intentional concealment of [*3]evidence. Plaintiff further argues that the motion to dismiss is premature at this juncture, and that further discovery is needed prior to the determination of any such motion. The Court agrees.

There has only be minimal discovery in this action thus far. A preliminary conference has not yet been held and is scheduled for April 4, 2007. In support of the motion, defendants submit the pleadings; the stipulation of July 12, 2006; copies of a loan and security agreement between MetLife and Erba Food, dated February 18, 1998, and a number of invoices for various computer equipment which was billed to, and shipped to, Erba Food from Bridge Plaza Enterprises. In opposition, plaintiff submits transcripts of the two examinations of Mr. Bauer, from June 9, 2004 and July 25, 2005, and the amended complaint. In reply, defendants further submit a record of a judgment against Erba Food; a copy of a financing statement listing Erba Food as the debtor; portions of the transcripts of the examinations of Mr. Bauer.

Plaintiff twice examined Mr Bauer under oath. Mr. Bauer testified that he was the President and sole shareholder of Erba Food. Mr. Bauer was also the guarantor of the loan at issue. Mr. Bauer testified that he does not know the whereabouts of, or what happened to, the computer system for which he provided plaintiff a security interest. Mr. Bauer testified that he does not know the whereabouts of, and is unable to produce, the books and records of Erba Food. He testified that he did not file tax returns for Erba Food in 2002 and 2003.

Furthermore, Mr. Bauer testified that SBL, a New Jersey corporation, was organized by his wife, Judy Bauer, after the dissolution of Erba Food, and that Ms. Bauer is the sole shareholder. Mr. Bauer further testified that SBL was a similar business to Erba Food. He testified that the two corporation conducted business with the same customers, sold the same products, utilized the same suppliers, and was operated by substantially the same family employees.

It is axiomatic that the Court may hold a motion to dismiss in abeyance pending further discovery (see e.g. CPLR 3211 [d]; Mayo v Grottenthaler, 25 AD3d 998 [2006]; Ying Jun Chen v Lei Shi, 19 AD3d 407 [2005]; Herzog v Town of Thompson, 216 AD2d 801 [1995]). In this instance, on the record before the Court, the Court finds that plaintiff has alleged that sufficient facts may exist to justify opposition and that plaintiff's claims do not appear to be frivolous (see e.g. Herzog, 216 AD2d at 803; Dine-A-Mate Inc. v J.B. Noble's Restaurant Inc., 240 AD2d 802, 804 [1997]; Cerchia v V.A. Mesa, Inc., 191 AD2d 377 [1993]). The Court thus finds that any decision on defendants motion to dismiss would best be held in abeyance pending discovery. Accordingly, it is

ORDERED, that defendants' motion to dismiss is denied without prejudice to renew upon the completion of discovery, and it is further

ORDERED, that all parties are to appear in the Intake Part of this courthouse, on April 4, 2007, for a preliminary conference.

This constitutes the Decision, Opinion and Order of this Court.

Dated: March 12, 2007 [*4]

ENTER,

_________________________

IRA B. HARKAVY

J.S.C.