Agai v. Diontech Consulting, Inc.

• Decision Date: 05 April 2017
• Citation: Agai v. Diontech Consulting, Inc., 149 A.D.3d 727, 51 N.Y.S.3d 566 (N.Y. App. Div. 2017)
• Parties: In the Matter of Jacob AGAI, et al., petitioners-respondents, v. DIONTECH CONSULTING, INC., et al., respondents, Peter Kutil, et al., appellants.
• Court: New York Supreme Court — Appellate Division

149 A.D.3d 727

51 N.Y.S.3d 566

In the Matter of Jacob AGAI, et al., petitioners-respondents,

v.DIONTECH CONSULTING, INC., et al., respondents,Peter Kutil, et al., appellants.

Supreme Court, Appellate Division, Second Department, New York.

April 5, 2017.

Winget, Spadafora & Schwartzberg, LLP, New York, NY (Matthew Tracy of counsel), for appellants.

Kasowitz, Benson, Torres & Friedman, LLP, New York, NY (Michael Paul Bowen of counsel), for petitioners-respondents.

WILLIAM F. MASTRO, J.P., CHERYL E. CHAMBERS, ROBERT J. MILLER, and BETSY BARROS, JJ.

In a proceeding pursuant to CPLR article 52, inter alia, to enforce two judgments, Peter Kutil and King & King, LLP, appeal from an order of the Supreme Court, Richmond County (Dollard, J.), dated November 24, 2014, which denied their motion pursuant to CPLR 3211(a) to dismiss the amended petition insofar as asserted against them.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the motion which was pursuant to CPLR 3211(a)(5) to dismiss so much of the amended petition as alleged that Peter Kutil and King & King, LLP, engaged in misconduct with respect to collateral relating to a certain appeal bond that was the subject of an action entitled Agai v. Liberty Mut. Agency Corp., commenced in the Supreme Court, Richmond County, under Index No. 101974/12, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed, without costs or disbursements.

This proceeding was commenced by the petitioners pursuant to CPLR article 52 to enforce and collect final judgments in the total sum of approximately $10 million, which were rendered in favor if them after trial in two underlying actions against Diontech Consulting, Inc., and its three owners (hereinafter collectively Diontech). Peter Kutil and his law firm, King & King, LLP (hereinafter together the law firm respondents), represented Diontech in the underlying litigation and at trial. In this proceeding, the petitioners asserted claims against the law firm respondents which alleged that they violated Debtor and Creditor Law §§ 273, 273–a, 274, 275, and 276 by receiving fraudulent transfers and/or otherwise unlawfully assisting Diontech in dissipating, hiding, and transferring Diontech's funds and other assets when Diontech was insolvent or thereby rendered insolvent, in order to avoid paying the subject judgments. The petitioners also alleged that the law firm respondents aided and abetted Diontech in breaching its fiduciary duties to creditors such as the petitioners.

The law firm respondents moved pursuant to CPLR 3211(a)(5) and (7) to dismiss the amended petition insofar as asserted against them, specifically seeking the dismissal pursuant to CPLR 3211(a)(5), on res judicata grounds, of any cause of action predicated on allegations that they engaged in misconduct with respect to collateral relating to a certain appeal bond that was the subject of a prior action entitled Agai v. Liberty Mut. Agency Corp., commenced in the Supreme Court, Richmond County, under Index No. 101974/12 (hereinafter the appeal bond litigation). The Supreme Court denied the motion.

Accepting the facts as alleged in the amended petition as true, and according the petitioners the benefit of every possible favorable inference (see CPLR 3211[a][7] ; Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ), the amended petition adequately pleads violations of Debtor and Creditor Law §§ 273, 273–a, 274, 275, and 276 against the law firm respondents (see DiMauro v. United, LLC, 122 A.D.3d 568, 996 N.Y.S.2d 297 ; Joel v. Weber, 197 A.D.2d 396, 602 N.Y.S.2d 383 ; Menaker v. Alstaedter, 134 A.D.2d 412, 521 N.Y.S.2d 35 ; see also Matter of Setters v. AI Prop. & Devs. [USA] Corp., 139 A.D.3d 492, 32 N.Y.S.3d 87 ; American Media, Inc. v. Bainbridge & Knight Labs., LLC, 135 A.D.3d 477, 22 N.Y.S.3d 437 ).

Further, the amended petition adequately pleads that the law firm respondents aided and abetted Diontech's alleged breach of a fiduciary duty (see Monaghan v. Ford Motor Co., 71 A.D.3d 848, 850, 897 N.Y.S.2d 482 ; Aranki v. Goldman & Assoc., LLP, 34 A.D.3d 510, 512, 825 N.Y.S.2d 97 ).

However, so much of the amended petition as alleged that the law firm respondents engaged in misconduct with respect to...