Defendants, George Edrich, individually and as Executor of the Last Will and Testament of Ester Edrich, and his children, Bruce Edrich, Dina R. Edrich, Johnathan R. Edrich, and Ellen Y. Baratz (hereinafter, collectively referred to as the Edrichs), have moved this court for an order, pursuant to CPLR §3211 ( a) (1) and ( a) (5), based on documentary evidence, dismissing as untimely plaintiff's claims (second, third, and fourth) as they relate to the fraudulent transfer of assets, including a certificate of deposit, items of personalty, and real property, located at 607 Avenue K, Brooklyn, NY by Samuel Festinger to the Edrichs with the intent to hinder, delay, and defraud creditors; and, pursuant to CPLR §3211 ( a) (7), dismissing the plaintiff's eighth cause of action for punitive damages for failure to state a cause of action and his fifth (fraud based on Debtor & Creditor law §276) and seventh (aiding and abetting fraud) causes of action as duplicative of the first (conspiracy to commit fraud). (The plaintiff's sixth cause of action for attorney's fees is not herein contested). More particularly, the defendants argue that since the plaintiff's allegation is that Samuel Festinger fraudulently transferred the mentioned realty to his sister, Ester Edrich, on July 20, 1994 and it commenced this action in December 2005, that claim is time barred by CPLR 203(8) which confers a six year statute of limitations on actions based on constructive fraud. Likewise, the plaintiff's claims for actual fraud are barred by the time limitation of the longer of six years from the transfer or two years from when the plaintiff discovered, or with due diligence inquiry should have discovered the fraud established in CPLR 203(g). Finally, the defendants contend that not only does New York not recognize a separate cause of action for punitive damages (citing, Accord Park v. YMCA of Greater New York Flushing, 17 AD3d 333, 791 NYS2d 848 [2d Dept., 2005]), but ". . .even if the challenged conveyance was effected with the intent to avoid creditors, such conduct would not give rise to punitive damages" (citing, Cadle, Co. v. Organes Enterprises, Inc., 29 AD3d 927, 815 NYS2d 732 [2d Dept., 2006]).

The plaintiff, assignee of a $133,504.65 judgment [entered May 14, 2004] obtained against Festinger, counters the foregoing arguments by noting that while the Edrichs correctly note that attached to its papers is a copy of the amended verified complaint from a prior action [*2]brought on by Samuel Festinger (Festinger v. Edrich, et al, Ind. No. 18707/03 wherein he had alleged that his sister's children and former husband had refused his demands to return his alleged real and personal property upon his sister's death), that action had been initiated in May 2004 to which it had not been a party or privy to the substantive details or underlying facts thereof. Nevertheless, the present action was commenced in December 2005; i.e., within two years of the time that with due diligence inquiry it should have discovered the fraud if that knowledge is to be inferred from the said prior action. Consequently, its claim is not time barred. In any event, the plaintiff argues that since it had no knowledge of said prior action, when it was instituted, did not participate therein or in the underlying transactions, nor did the same conclusively establish the fraud that it alleges, its time limitation should not be countenanced thereby. Afterall, under New York law, a determination as to when inquiry could have reasonably been made with due diligence to discover fraud is a mixed question of law and fact which should be left to the trier of fact to determine (citing, Mitschele v. Schultz, 2006 NY Slip Op. 8900 [1st Dept., 2006]; Yatter v. William Morris Agency, Inc., 268 AD2d 335 [1st Dept., 2000]; K & E Trading & Shipping, Inc. v. Radmar Trading corp., 174 AD2d 346, 570 NYS2d 557 [1st Dept., 1991]; and, Rattner v. York, 174 AD2d 718 [2d Dept., 1991]). The fact is that George Edrich, Samuel Festinger's brother-in- law, had persuaded the Appellate Division to estop Mr. Festinger from claiming title to the house that he had transferred to his sister on Mr. Festinger's representation at a federal parole hearing that he had no assets, including said house and the other assets forming the basis of this litigation.

The plaintiff argues that although Mr. Festinger was precluded from asserting a constructive trust under the doctrine of unclean hands, a creditor who learned of Mr. Festinger's recantation of his federal court parole hearing statement (in 2004) should not be barred from avoiding the conveyance in order to satisfy a judgment. A fortiori, the plaintiff maintains that

the defendant's ". . .continuing concealment of the fraudulent conveyance warrants the equitable tolling of the statute of limitations until May 2004. . . .[which] is invoked in cases where, as here, a plaintiff is ignorant of his cause of action because of the defendant's fraudulent concealment" (citing, Grace v. Rosenstock, 169 FRD 473 {EDNY, 1996]).

With regards to the its eighth claim for punitive damages, the plaintiff asserts that "punitive damages may be awarded in fraudulent conveyance cases where the defendant's conduct was gross and wanton and involves high moral culpability (citing, Blakeslee v. Rabinor, 182 AD2d 390, 582 NYS2d 132 [1st Dept., 1992]; Heimbinder v. Berkovitz, 175 Misc 2d 808, 670 NYS2d 301 [Kings County, 1998]; In re Kovler, 253 BR 592 [Bankr. SDNY, 2000]). In addition, "aiding and abetting is morally culpable' conduct. . .[which] has been found to warrant punitive damages (citing, Curiale v. Peat, Marwick, Mitchell & co., 214 AD2d 16, 630 NYS2d 996 [1st Dept., 1995]).

Finally, the plaintiff contends that its first cause of action asserts a claim for conspiratorial fraud, the fifth for fraud pursuant to §276 of the Debtor & Creditor law, and the seventh for aiding and abetting a fraud, and are therefore distinct and in no wise should be dismissed as duplicative.

In reply to the preceding, the Edrichs assert that the plaintiff does not dispute that its second, third, and fourth causes of action for fraudulent conveyances are subject to a six year statute of limitations, commencing in 1994 when Esther took title to the property. Hence, said claims are time barred. The Edrichs also contend that the conduct required for punitive damages [*3]is not met by a transfer made with the intent to avoid creditors (citing, Cadle, Co. v. Organes Enterprises, Inc., supra ; Abalon Precision Mfg. Corp. v. Flair Int'l Corp., 19 AD3d 338, 796 NYS2d 171 [2d Dept., 2005]; Marine Midland Bank v. Murkoff, 120 AD2d 122, 508 NYS2d 17 [2d Dept., 1986]). Furthermore, the Edrichs note that a deed can establish inquiry notice to commence the limitations period for a fraud claim. Here, title to the property by Esther was recorded more than a decade before commencement of this suit. Also, the Festinger action was filed in May, 2003, not in 2004 when an amended complaint was interposed. The Edrichs highlight the fact that the plaintiff has asserted no new basis for inquiry notice or actual knowledge of its claims aside from Esther's recorded deed or the prior Festinger action. Finally, the Edrichs contend that plaintiff's attempt to assert claims based on conspiratorial fraud, fraud pursuant to §276 of the Debtor & Creditor law, and aiding and abetting a fraud constitute "distinctions without differences" requiring dismissal of any two of the three claims.

Constructive fraud is established by demonstrating that 1. a representation was made; 2. the representation dealt with a material fact, 3. the representation was false, 4. the representation was made with the intent to make the other party rely upon it, 5. the other party did, in fact rely on the representation without knowledge of its falsity, 6. injury resulted, and 7. the parties are in a fiduciary or confidential relationship (see Del Vecchio v. Nassau County, et al, 118 AD2d 615, 499 NYS2d 765, citing Brown v. Lockwood, 76 AD2d 721, 432 NYS2d 186). Here we have no such demonstration of any representation or fiduciary relationship; hence, any claim for constructive fraud would be dismissible for failing to state a cause of action.

"A cause of action based upon actual fraud must be commenced six years from the date of the fraudulent act or two years from the date the plaintiff discovered the fraud, or could with reasonable diligence have discovered it, which ever is longer (Liberty Company v. Byle, et al, 272 AD2d 380, 708 NYS2d 122, citing Wall St. Assocs. v. Brodsky, 257 AD2d 460 and Ghandour v. Shearson Lehman Bros., 213 AD2d 304; Del Vecchio v. Nassau County, et al, supra , citing CPLR 213[8]; 203[f]; Smith v. Sarkisian, 63 AD2d 780, 404 NYS2d 911). Generally, the question of when the plaintiff discovered, or should have discovered the alleged fraud is a mixed' question of law and fact which should not be resolved summarily (citing, Azoy v. Fowler, 57 AD2d 541, 393 NYS2d 173)."

A transfer made without fair consideration at a time when an action is pending against a person, and the ensuing judgment is never satisfied is deemed to be a fraudulent conveyance (see, Durrant v. Kelly, et al, 186 AD2d 237, 588 NYS2d 196, citing, Farm Stores v. School Feeding Corp., 102 AD2d 249, 477 NYS2d 374). In addition, where a conveyance is fraudulent as to a creditor, the creditor may, as against any person except a purchaser for fair consideration without knowledge of the fraud at the time of the purchase or one who has derived title immediately of mediately from such a purchaser, have the conveyance set aside (Debtor & Creditor Law §§278 (1) ( a) & 279 ( c). A creditor is a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent (Debtor & Creditor Law §270). On the facts herein presented, there may not have been an actual fraud perpetrated; i.e., the conveyances from Mr. Festinger to his sister, Esther, and the other Edrichs may have been supported by fair consideration. The documentary evidence proffered by the Edrichs; to wit, the deed and prior law suit, however, do not speak to that issue, but rather are attempts to crystalize the point at which inquiry notice should be set. To this court, as noted in the Del Vecchio v. Nassau County, et al, supra , decision, ". . .the question of whether the actual [*4]fraud cause of action has been timely interposed after discovery of the alleged fraud, pursuant to the two year statute of limitations, should not be resolved on the motion to dismiss [as questions of fact abound]. Similarly, while a constructive fraud cause of action [if it existed in this case] is governed by a six year statute of limitations which begins to run at the time of the commission of the fraud (citing, CPLR 213[8]; Lapis Enterprises v. International Blimpie Corp., 84 AD2d 286, 445 NYS2d 574; see also Wall St. Assocs. v. Brodsky, supra ), a question of fact [would have existed] as to whether the [defendants] should be estopped from asserting the statute of limitations defense (citing, Simcuski v. Saeli, 44 NY2d 442, 406 NYS2d 259)." The plain fact is that it cannot be determined in this particular case, as a matter of law, whether the plaintiff was aware, or should have been aware, of any actual fraud more than two years before the commencement of this action. What is clear is that this court already decided in the matter of Festinger v. Edrichs, 2005 NY Slip Op. 251193; 8 Misc 3d 700; NYLJ 6/1/05, p. 18; col1, that Samuel Festinger would not be permitted to claim any interest in the properties herein concerned since he had denied ownership of any assets in his prior federal parole hearing. That decision was predicated upon the doctrines of judicial estoppel and unclean hands which required that Mr. Festinger not be "permitted to play fast and loose with the courts by advocating contrary positions in different legal proceedings." The question now in contention is why the Edrichs would not be subject to these just mentioned doctrines as against Mr. Festinger's creditors and/or their assigns. To answer that inquiry, it needs to be determined whether the Edrichs were parties to Mr. Festinger's deceptions, either by complicity in design or by receipt without fair consideration. Such questions of fact cannot be summarily decided on the arguments herein made, and will have to be resolved at trial.

With regards to the Edrichs' request for dismissal of what they term as duplicative causes of action for fraud, the Appellate Division, Second Department, spoke to this concern in the matter of Werbelovsky v. Rosen, et al., 260 AD 222, 21 NYS2d 88, by noting that while "[i]t is true that a mere conspiracy to commit fraud is never of itself a cause of action'(citing, Green v. Davies, 182 NY 499. . . .[i]t is the wrongful act committed by the conspirators, resulting in injury to the plaintiff's assignor, which alone gives rise to the cause of action (see Werbelovsky v. Rosen, et al., supra , citing, Miller v. Spitzer, 224 AD 39, 229 NYS 526). The gist of a civil action for conspiracy is damage; it is only important to join all defendants to hold them responsible for each other's acts in furtherance of the conspiracy (see Werbelovsky v. Rosen, et al., supra , citing, Von Au v. Magenheimer, 126 AD 257, 110 NYS 629). The same rationale would certainly hold true for a cause of action for aiding and abetting a fraud; namely, to join all defendants so as to hold them responsible for each other's acts in furtherance of the fraud.

It has long been held that punitive or exemplary damages are ordinarily unavailable in fraud and deceit cases; however, it has been determined that they may be recoverable in instances where the fraud is aimed at the public generally, is gross, and involves high moral culpability (see Walker v. Sheldon, et al, 10 NY2d 401, 223 NYS2d 488). Nevertheless, the law does not recognize a separate cause of action for punitive damages for pleading purposes. Hence, to the extent that such a demand, as in the matter sub judice, is not attached to a substantive cause of action, it cannot stand. Had the plaintiff predicated its demand for punitive damages as part of its ad damnum clause, such request would have been permissible (see Rocanova v. Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 612 NYS2d 339; Mo v. Chan, 17 AD3d 356, 792 NYS2d 589; Vanguard Equipment Rental, Inc. v. Cab Associates, 288 AD2d 306, [*5]732 NYS2d 883; and, Rose Lee Mfg. v. Chemical Bank 186 AD2d 548, 588 NYS2d 408).

Wherefore, on the bases of all of the foregoing, the defendants' motion for an order, pursuant to CPLR §3211 ( a) (1) and ( a) (5), based on documentary evidence, dismissing as untimely plaintiff's (second, third, and fourth) claims as they relate to the fraudulent transfer of assets, and his fifth (fraud based on Debtor & Creditor law §276) and seventh (aiding and abetting fraud) causes of action as duplicative of the first (conspiracy to commit fraud) are denied in their entirety. The defendant's remaining request, pursuant to CPLR §3211 ( a) (7), dismissing the plaintiff's eighth cause of action for punitive damages for failure to state a cause of action is granted. This constitutes the decision and order of this Court.

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