The following papers numbered 1 to 12 read herein:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1 - 10

Opposing Affidavits (Affirmations)11

Reply Affidavits (Affirmations)12

Affidavit (Affirmation)

Other Papers

Upon the foregoing papers, defendants Lee M. Fong a/k/a Henry Fong, Sau Lam Cheung, Put Cheung, Jeffery Fong, Kevin Lee, Jian Qing Wang and Sandy Wang move for an order, 1) pursuant to CPLR 3212, granting summary judgment dismissing the [*2]second cause of action of plaintiff Thomas Calfa, 2) pursuant to CPLR 3211 (a)(7), dismissing the fourth, fifth, sixth and seventh causes of action and 3) pursuant to CPLR 3217 (b), granting leave to voluntarily discontinue defendants' counterclaim.

Plaintiff consents to the dismissal of the fourth, sixth and seventh causes of action and the discontinuance of defendants' counterclaim. As a result, such relief is hereby granted.

On December 14, 2005, plaintiff and other individuals commenced an action against Vinegar Hill Group, LLC and Vinegar Hill Construction & Management Co. LLC (Vinegar Hill defendants) for breach of contract stemming from the Vinegar Hill defendants' construction and sale of residential properties containing structural defects. On July 7, 2009, a judgment was entered in favor of plaintiff and the other plaintiff purchasers and against the Vinegar Hill defendants in the amount of $171,677.50. Defendants Sau Lam Cheung, Put Cheung, Jeffery Fong, Lee M. Fong a/k/a Henry Fong, Winnie Fong, Kevin Lee, Pui Din Lee, Jian Qing Wang and Sandy Wang (hereinafter "members") were members of the Vinegar Hill defendants.

On April 28, 2010, plaintiff commenced this action against the Vinegar Hill defendants and members seeking relief under the Debtor and Creditor Law (DCL). In his second cause of action, plaintiff alleges that, in violation of section 273-a of the DCL, the Vinegar Hill defendants and members transferred and distributed the assets of the Vinegar Hill defendants amongst themselves during the pendency of the breach of contract action with the intent to conceal the assets and hinder and delay plaintiff from collecting his judgment. In his fifth cause of action, plaintiff alleges that the Vinegar Hill defendants' March 17, 2009 conveyance of the property located at 13 Evans Street in Brooklyn during the pendency of the breach of contract action, with the proceeds of the sale transferred to defendant Lee M. Fong "without consideration," is fraudulent under DCL § 276.

On or about April 22, 2011, plaintiff moved for summary judgment against the members on his second cause of action. In support of his motion, plaintiff submitted copies of 2007 tax returns (IT-204-IP NY Partner's Schedule K-1) issued by Vinegar Hill Group, LLC which indicate distributions to the members in 2007 totaling $408,050.00. The tax returns were obtained by plaintiff in the course of judgment enforcement proceedings. By order dated June 27, 2001, the court (Hon. Arthur M. Schack, J.) denied plaintiff's motion, noting that amended 2007 tax returns submitted in opposition, which did not reflect the distributions, raised an issue of fact as to whether the members earned income from Vinegar Hill Group, LLC in 2007. On or about July 17, 2012, plaintiff moved for summary judgment on his second cause of action against defendants Pui Din Lee and Winnie Fong stemming from the conveyance of 13 Evans Street, where $162,170.97 in sale proceeds were paid to "Lee M. Fong As Attorney," who thereafter paid $97,302.60 to Pui Din Lee and $40,868.38 to Winnie Fong. Plaintiff alleged that these payments were made for no consideration. In opposition, defendants argued, inter [*3]alia, that the distribution of proceeds to Pui Din Lee and Winnie Fong was not without consideration but rather was for the purpose of repaying loans these individuals made to Vinegar Hill Group, LLC in 2003, 2005 and 2005. Defendants also argued that the sale of the property was not in contemplation of an adverse judgment since the property was sold pursuant to a contract of sale entered into in 2003. By order dated December 17, 2012, Justice Schack denied plaintiff's motion for summary judgment without prejudice to bring another motion following completion of discovery. Justice Schack determined that there were issues of fact as to whether Pui Din Lee and Winnie Fong were "transferees of assets of [defendant] Vinegar Hill Group, LLC without consideration during the pendency of the [breach of contract action]."^[FN1] A note of issue was filed by plaintiff on February 25, 2013.

In support of their motion for summary judgment, defendants submit the individual affidavits of Sau Lam Cheung, Put Cheung, Jeffery Fong, Kevin Lee, Jian Qing Wang and Sandy Wang who each aver that they were members of Vinegar Hill Construction & Management Co., LLC and Vinegar Hill Group, LLC until their dissolution in 2007 and 2009, respectively, and that they received distributions from these companies in 2005 but were not transferees or beneficiaries of any transfer or conveyance after 2005. Additionally, defendants submitted the affidavits of Lee M. Fong a/k/a Henry Fong and nonparty Chien H. Hua, the accountant for the Vinegar Hill defendants.

Fong states that in addition to being a member of the Vinegar Hill defendants, he served as the companies' real estate attorney. Fong asserts that Vinegar Hill Group, LLC entered into a contract for the sale of 13 Evans Street with Alfonse L. Santagata in December 2003. Thereafter, Santagata commenced a lawsuit relating to construction defects at the property which was settled in 2008. Santagata, who was also a real estate broker for the Vinegar Hill defendants, commenced a separate lawsuit relating to his commission. This lawsuit was also resolved in 2008. Santaga died in late 2008. On March 17, 2009, 13 Evans Street was conveyed to Merrill Lynch Bank & Trust Co. FSB, as ancillary executor of the last will and testament of Alfonse L. Santagata. Fong states that the sale price for 13 Evans Street was $700,000.00, from which Vinegar Hill Group, LLC received $162,170.97 after deducting Santagata's broker's commission, legal fees and other expenses. Fong received two checks totaling $162,170.97 which were deposited into his escrow account. After deducting $24,000.00, which was paid to the law firm Luk & Luk, the proceeds were paid to Winnie Fong and Pui Din Lee. Fong avers that the proceeds were paid to these members as repayment for personal loans made to the Vinegar Hill defendants in 2003, 2004 and 2005.

Chien states that he prepared the state and federal income tax returns for the Vinegar Hill defendants. Chien avers that there were no distributions to the members in 2007, 2008 or 2009. Chien attests that the distributions noted on the original 2007 tax [*4]returns were erroneous due to the misclassification of an adjustment entry in IRS Form 1065 for 2007. Chien explains that in the form, the classification of the adjustment to the members' capital accounts in Schedule M-2 "Analysis of Partners' Capital accounts" on Page 4, Line 6a as due to cash distributions should have been reflected in Schedule M-2, Line 7 as "other decreases" and itemized as due to accrued sales commission payable and contingent liabilities. Chien states that Vinegar Hill Group, LLC's rental income and expenses reported in Form 8825 attached to Form 1065 (2007) reflects gross rents of $10,875 and expenses of $12,861, leaving a net rental loss of $1,986. Chien avers that in 2008 he prepared amended returns reclassifying the adjustment to the members' accounts as sales commission payable and contingent liabilities. The amended forms were filed on June 21, 2011.

The court will first address that part of defendants' motion to dismiss the fifth cause of action seeking to set aside the sale of 13 Evans Street under DCL § 276. In determining whether a complaint is sufficient to withstand a motion pursuant to CPLR 3211 (a) (7), "the sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Where evidence is submitted by the movant in support of the CPLR 3211(a)(7) motion, the court must determine whether the proponent of the pleading has a cause of action, not whether he or she has stated one (see Simos v Vic—Armen Realty, LLC, 92 AD3d 760 [2012] Fishberger v Voss, 51 AD3d 627 [2008]). "Pursuant to Debtor and Creditor Law § 276, [e]very conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors'" (Matter of U.S. Bancorp Equip. Fin., Inc. v Rubashkin, 98 AD3d 1057, 1060 [2012] see Pen Pak Corp. v LaSalle Natl. Bank of Chicago, 240 AD2d 384, 386 [1997]). "Direct evidence of fraudulent intent is often elusive. Therefore, courts will consider badges of fraud,' which are circumstances that accompany fraudulent transfers so commonly that their presence gives rise to an inference of intent" (Pen Pak Corp. v LaSalle Natl. Bank, 240 AD2d at 386, quoting MFS/Sun Life Trust-High Yield Series v Van Dusen Airport Servs. Co., 910 F Supp 913, 935 [SD NY 1995]). Badges of fraud include (1) the close relationship among the parties to the transaction, (2) the inadequacy of the consideration, (3) the transferor's knowledge of the creditor's claims, or claims so likely to arise as to be certain, and the transferor's inability to pay them, and (4) the retention of control of property by the transferor after the conveyance (Dempster v Overview Equities, 4 AD3d 495, 498 [2004]). On the other hand, the absence of badges of fraud constitutes evidence that there was no intent to defraud (Lippe v Bairnco Corp., 249 F Supp 2d 357, 375 [SDNY 2003], affd 99 Fed Appx 274 [2nd Cir 2004]). With respect to the sale and conveyance of 13 Evans Street, there is no indication of a "close relationship" between Vinegar Hill Group, LLC and either Merrill Lynch Bank & Trust [*5]Co. FSB, as ancillary executor of the last will and testament of Alfonse L. Santagata or Santagata himself. In fact, there is no allegation by plaintiff that there was a close relationship between Vinegar Hill Group, LLC and Santagata. There is no allegation in either the complaint or in plaintiff's counsel's affirmation in partial opposition that the property was not conveyed to the purchaser for adequate consideration. Rather, plaintiff alleges that the proceeds from the sale "were transferred to Defendant Lee M. Fong without consideration." However, Fong has averred in his affidavit that the proceeds were only received into his escrow account in his capacity as attorney for Vinegar Hill Group, LLC and then transferred to members Winnie Fong and Pui Din Lee as repayment for loans they made to the company. Significantly, these members are not joined in the instant motion and plaintiff's claims for recovery of these proceeds will remain. There is no evidence presented by plaintiff to suggest that Fong retained the proceeds of the sale or that the proceeds were distributed to any of the members joined in the instant motion. Thus, the proof is insufficient to show that Vinegar Hill Group, LLC retained control over 13 Evans Street or the sale proceeds following the conveyance. While 13 Evans Street was conveyed in 2009, when the Vinegar Hill defendants had knowledge of plaintiff's judgment, the conveyance was made pursuant to a contract of sale which was entered into in 2003, prior to the commencement of the breach of contract action. Since there was a contractual obligation to convey the property to Santagata which predated the breach of contract action giving rise to the judgment, it cannot be argued that the purpose of the conveyance to Santagata's estate was to hinder collection of the judgment. Accordingly, taking into consideration the documentary evidence and affidavits submitted by defendants, the court finds that plaintiff cannot maintain a cause of action to set aside the sale of 13 Evans Street as a fraudulent conveyance under DCL § 276.

As a result, that part of defendants' motion to dismiss the fifth cause of action is granted.

Turning to that part of defendants' motion for summary judgment dismissing the second cause of action pursuant to DCL § 273-a ^[FN2], such claim hinges on the question of whether the moving members received distributions in 2007 (during the pendency of the breach of contract action) as was noted on the original tax returns. Amended returns have since been filed to reflect that no distributions were received, and Chien, the Vinegar Hill defendants' accountant, has attested in a sworn affidavit that the reflection of [*6]distributions in the original returns were based on a line entry error. In addition, the banking statements produced by the Vinegar Hill defendants do not suggest that any distributions or other payments were made to any of the members during the pendency of the breach of contract action. The court finds that the foregoing is sufficient to establish prima facie that no distributions were issued by the Vinegar Hill defendants in 2007 or that the members received any monies from the Vinegar Hill defendants after 2005. While plaintiff contends that defendants do not provide documentation to substantiate the adjustments in the amended tax returns, plaintiff filed a note of issue without a demand for such documents and further chose not to depose Chien regarding the amendments to the tax returns or other issues regarding member distributions or receipt of other monies from the Vinegar Hill defendants. Plaintiff does not provide an affidavit from his own accountant calling into question the content of the amended tax returns. The burden therefore shifts to plaintiff to lay bare his proof and present evidentiary facts sufficient to raise a genuine triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557 [1980] Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065 [1979]). Plaintiff has not submitted or identified any proof demonstrating that any of the moving members received distributions or other income from the Vinegar Hill defendants following the commencement of the breach of contract action. Plaintiff merely speculates that the members may have received monies from the Vinegar Hill defendants for no consideration which is not apparent in the documentary evidence. However, mere conclusory assertions, devoid of evidentiary facts, are insufficient to raise an issue of fact, as is reliance upon surmise, conjecture, or speculation (see Smith v Johnson Prods., 95 AD2d 675 [1983]).

As a result, that part of defendants' motion for summary judgment dismissing plaintiff's second cause of action is granted.

The foregoing constitutes the decision and order of the court.

E N T E R,

J. S. C.