The following papers numbered 1 to 22 were read on this motion by defendant, XUE SUN, for an order pursuant to CPLR 3212, granting summary judgment and dismissing the plaintiff's first amended verified complaint against her; and the cross-motion of plaintiff, MELNOHER REALTY CORP. for an order granting summary judgment pursuant to CPLR 3212 in favor of the plaintiff against defendant, XUE SUN, setting aside a conveyance made by defendant YING TONG to his wife XUE SUN on October 21, 2009 on the ground that said conveyance was fraudulent and a violation of Debtor & Creditor Law § § 275 and 276:

Papers Numbered

Xue Sun Notice of Motion-Affidavits-Exhibits.............1 - 5

Plaintiff's Cross Motion and Affirmation in Opposition...6 - 10

Xue Sun Reply Affirmation...............................11 - 16

Plaintiff's Reply Affirmation...........................17 - 22

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In this action commenced by the plaintiff on March 1, 2012, for an order pursuant to Debtor & Creditor Law § § 273, 274, 275 and 276, setting aside the alleged fraudulent transfer of a corporation and setting aside the alleged fraudulent conveyance of real property for purposes of avoiding payment of a judgment, defendant Xue Sun moves, prior to the completion of discovery, for an order granting summary judgment dismissing the plaintiff's complaint on the ground that she has no personal liability in this matter.

According to the first amended verified complaint dated April 12, 2012, plaintiff, Melnoher Realty Corp., the owner of real property located at 53-20 Flushing Avenue, Maspeth, Queens, entered into a lease with non-party ALTA USA in November 2002. In February 2006, defendant DKL subleased the premises from ALTA. Pursuant to a lease modification, DKL became jointly and severally liable for the obligations of ALTA under the master lease. In addition, defendant Ying Tong, an officer of DKL Enterprises executed a limited guaranty whereby he assumed personal liability for payments under the master lease. In July 2009, ALTA defaulted under the terms of the lease. As DKL and Ying Tong had assumed the liabilities of ALTA, ALTA's default constituted a breach by DKL of the modification agreement and a breach by Ying Tong of the limited guaranty. As a result of the breach, plaintiff commenced an action for a money judgment for arrears in rent in Kings County on March 3, 2011. On July 15, 2011, Justice Kramer issued an order granting plaintiff a judgment against the defendants. On September 1, 2011, said judgment was entered in Kings County in favor of the plaintiff Melnoher Realty Corp. against DKL in the amount of $228,852.65 and against defendant Ying Tong in the amount of $174,337.25 with interest from September 1, 2011.

In the instant matter, the plaintiff alleges that on June 3, 2011, DKL Enterprises transferred all its assets to DKO Enterprises and DKL became insolvent as a result. The complaint asserts that the transfer was fraudulent and should be set aside as it was made in violation of the Debtor & Creditor Law for the purpose of DKL avoiding its obligations under the Kings County judgment. The complaint asserts that the transfer was made without consideration pursuant to a fraudulent scheme and conspiracy carried out by DKL, DKO and Ying Tong with the intent and purpose of defrauding the plaintiff by transferring assets from DKL to DKO in order to avoid the payment of plaintiff's judgment.

In addition, the complaint asserts that on August 6, 2009, defendants Ying Tong and his wife, Xue Sun, purchased improved [*3]real property located at 50-50 207th Street, Oakland Gardens, New York. Shortly thereafter by deed dated October 26, 2009, defendant Ying Tong transferred his interest in the property to defendant Xue Sun without consideration. The complaint asserts that the transfer to his wife, Xue Sun, was made with intent to defraud the plaintiff. Counsel asserts that at the time of the transfer, Tong and Sun believed that Tong would incur debts for the rental payments and as a result he intentionally was rendered insolvent by the transfer of his property to his wife. The complaint states that the transfer was in violation of the Debtor & Creditor Law and should be set aside and the deed to the real property should be recorded naming defendants Tong and Sun as tenants by the entirety.

In her motion for summary judgment, defendant Xue Sun submits an affidavit dated June 5, 2012, in which she states that the complaint should be dismissed against her because she was not an owner of the corporate defendant, she never signed a personal guaranty, she was ever employed by the corporate defendant, she did not have an interest in the corporate defendant, she never signed the lease with the plaintiff and she was never a tenant or subtenant of the plaintiff. Sun states that the complaint fails to state a cause of action against her as there is no basis to hold her personally liable for the plaintiff's Kings County judgment against DKL Enterprises. She states that all of the plaintiff's business dealings were with the corporate defendant and with her husband Ying Tong, and none of the business transactions involved her. Thus, Sun asserts that the complaint must be dismissed against her because she has no personal liability as she had no involvement at all with the corporate defendant nor did she sign a personal guaranty. Ms. Sun states that her name does not appear on any of the dealings leases, or guaranties. She states that she was not involved in a fraudulent scheme to transfer business assets because she never acquired an interest in any business asset. Therefore, she states that there is no privity against her for the debts of the corporation.

In opposition, the plaintiff cross-moves for an order granting plaintiff summary judgment against defendant Sun and directing that her husband Tong's October 21, 2009 conveyance of his interest in the real property located at 50-50 207th Street Oakland Gardens, New York to his wife for no consideration be declared void as a fraudulent conveyance in violation of Debtor & Creditor Law § 275 and 276 and ordering that the real property be deemed to be returned to ownership by the entirety of Ying Tong and Xue Sun as husband and wife.

In support of the cross-motion the plaintiff submits an [*4]affidavit from Donna Shore, a CPA and principal of plaintiff Melnoher Realty. She states that in July 2009, DKL stopped paying rent and surrendered possession of the premises back to the original lessee ALTA. Based upon the failure of DKL to pay rent in accordance with the modification agreement, plaintiff obtained a judgment in Kings County Supreme Court in July 2011 against DKL and Tong for unpaid rent. Shore asserts that Tong was aware in 2009 that he incurring a significant debt to plaintiff as a result of failing to pay rent since July 2009. She asserts that the transfer of his home to his wife in 2009 without consideration was a result of his knowledge that he was acquiring significant debt and was a fraudulent transfer made in order to shield that asset from the judgment that he knew would be forthcoming.

In opposition to Ms. Sun's motion to dismiss the plaintiff's complaint counsel for the plaintiff asserts that only causes of action six and seven of the amended complaint which assert that Ms Sun conspired with Tong to convey Tong's property in order to avoid a judgment apply to Ms. Sun. Counsel states that the sole relief requested against Ms. Sun is that the property be returned to status quo ante ownership with her husband by the entirety. Counsel asserts that Ms. Sun does not address those allegations in her motion and only asserts that she is not liable for the Judgment against her husband and against DKL. Counsel asserts that as she failed to address the causes of action against her she has failed to establish, prima facie that she did not conspire with Tong to have the property transferred to her and she failed to show that the conveyance of the real property was not made solely for the purpose of avoiding the enforcement of a judgment against her husband's property. Counsel submits that the evidence shows that in July 2009, the defendant Tong, knowing that he was incurring debts beyond his ability to pay as they matured, purchased property for $490,000. Three months later Tong conveyed his entire interest in the property to his wife without consideration. Plaintiff contends, therefore, that the evidence is sufficient to demonstrate, prima facie, that the parties intended to defraud the plaintiff so that the plaintiff would not be able to collect the debt defendant Tong was accruing based upon the default in his personal guaranty of rental payments. Counsel asserts that the transfer violated debtor and creditor law § 275 which provides that conveyances made without fair consideration when the person making the conveyance believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present ad future creditors.

In response to the cross-motion, Ms. Sun submits an affidavit dated June 29, 2012, stating that her husband's [*5]transfer of the property to her was not made to defraud the plaintiff but rather was conveyed to her pursuant to a separation agreement. Ms Sun asserts that the alleged fraudulent transfer was made three years prior to the commencement of this action and two years prior to the time the non-payment action was commenced in Kings County. She submits a copy of the separation agreement dated January 10, 2009. She also states that property was purchased to have their son educated in a better school district. The husband agreed to transfer his interest to his wife so that she could keep the property and live in it until her son turns 21. Thus she asserts that the conveyance was for the best interest of her child and was not made for the purpose of avoiding the execution of a judgment.

In reply, plaintiff asserts that Sun has failed to rebut the presumption of fraudulent transfer that comes with and intra-family transfer made for no consideration.

Upon review and consideration of the Ms. Sun's motion to dismiss the complaint, the cross-motion of the plaintiff for an order granting summary judgment against Ms. Sun, the respective affirmations in opposition, and replies thereto, this court finds as follows:

A party seeking summary judgment has the burden of tendering evidence in admissible form demonstrating the absence of any triable issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Seidman v Industrial Recycling Props., Inc., 52 AD3d 678[2d Dept. 2010]). Here, defendant Sun seeks summary judgment based upon the fact that she was not in privity with the plaintiff with respect to the lease and guaranty and therefore she has no personal liability for the debts of the corporation or the judgment against DKL and her husband Ying Tang. However, plaintiff asserts that the sole allegations in the complaint concerning Ms. Sun appear in six and seventh causes of action which concern the alleged fraudulent transfer of real property in which she does in fact have an interest. The complaint in this regard alleges she conspired with Tong in the fraudulent transfer of that property. As her motion papers do not address the conspiracy claim in her motion, this court finds that she did not tender sufficient evidence to demonstrate that absence of a triable issue of fact with respect to he sixth and seventh causes of action.

With respect to the plaintiff's cross motion, this court finds that the evidence submitted by the plaintiff was sufficient to show prima facie that the conveyance of real property which was made by Tong and Sun to Tong individually in July 2009 was [*6]fraudulent pursuant to the Debtor and Creditor Law § 275. Conveyances made without fair consideration when the conveyor intends or believes that he will incur debts beyond his ability to pay as they mature is considered fraudulent (Debtor and Creditor Law § 275; also see Matter of CIT Group/Commercial Servs., Inc. v 160-09 Jamaica Ave. Ltd. Partnership, 25 AD3d 301 [1st Dept. 2006]).

However, a court deciding a motion for summary judgment is required to view the evidence presented in the light most favorable to the party opposing the motion and to draw every reasonable inference from the pleadings and proof submitted by the parties in favor of the opponent to the motion (see Myers v Fir Cab Corp., 64 NY2d 806 [1985]). Here, viewing the evidence submitted in opposition to the plaintiff's motion for summary judgment this court finds that the papers submitted by defendant, Ms. Sun in opposition to the motion, raise a question of fact as to whether the conveyance of the property was made to defraud the creditor or was made pursuant to the terms of her separation agreement. Thus, there is a question of whether Ms. Sun had an actual intent to defraud the plaintiff pursuant to the Debtor and Creditor Law. Such intent must be proved by the plaintiff by clear and convincing evidence (see Matter of U.S. Bancorp Equip. Fin., Inc. v Rubashkin, 2012 NY Slip Op 6221 [2d Dept. 2012]). In addition, there are questions of fact as to whether the transfer of the property rendered Tong insolvent and whether Tong believed at the time of the transfer in 2009 that he would incur debts beyond his ability to pay when the debts matured. In this regard the Court notes that the plaintiff did not serve Tong, who is alleged to be a co-conspirator with Ms. Sun with a copy of the cross-motion.

Accordingly, for all the above stated reasons it is hereby,

ORDERED, that the motion of XUE SUN for summary judgment dismissing the plaintiff's complaint against her and the cross-motion of plaintiff, MELNOHER REALTY CORP., for summary judgment against defendant XUE SUN are denied.

Dated: October 2, 2012

Long Island City, NY

______________________________

Robert J. McDonald [*7]

J.S.C.