BSL Development Corp. v. Aquabogue Cove Partners, Inc.

• Decision Date: 21 February 1995
• Parties: In the Matter of BSL DEVELOPMENT CORP., Respondent, v. AQUABOGUE COVE PARTNERS, INC., Appellant.
• Court: New York Supreme Court — Appellate Division

Page 253

623 N.Y.S.2d 253

212 A.D.2d 694

In the Matter of BSL DEVELOPMENT CORP., Respondent, v. AQUABOGUE COVE PARTNERS, INC., Appellant.

Supreme Court, Appellate Division,

Second Department.

Feb. 21, 1995.

Kirschenbaum & Kirschenbaum, Garden City, NY (Samuel Kirschenbaum and Ira Levine, of counsel), for appellant.

Anthony V. Labozzetta, New York City, for respondent.

Before BRACKEN, J.P., and ROSENBLATT, O'BRIEN and ALTMAN, JJ.

MEMORANDUM BY THE COURT.

In a proceeding pursuant to CPLR 5239 to determine the rights of the parties in the property of Broad Cove Inc., Aquabogue Cove Partners Inc. appeals, as limited by its brief, from so much of a judgment of the Supreme Court, Suffolk County (Lama, J.), dated December 18, 1992, as, after a hearing, declared a mortgage dated May 6, 1988, fraudulent as to the petitioner and set it aside "until the money judgment in favor of the petitioner and against respondent Broad Cove, Inc., entered October 17, 1989, in the original amount of $982,363.84 is fully satisfied".

ORDERED that the judgment is affirmed insofar as appealed from, with costs.

In March 1981 the petitioner BSL Development Corp. (hereinafter BSL) entered into a contract to purchase a parcel of undeveloped land on Long Island from the owner Broad Cove, Inc. (hereinafter Broad Cove). The closing was scheduled for June 1981. Stanley Weisz agreed to purchase all the shares of Broad Cove in August 1981, and the Stanley Weisz, P.C. Retirement Plan (hereinafter the Weisz Plan) subsequently advanced funds to Broad Cove and assumed certain of its obligations. When the closing did not take place, BSL commenced two actions in 1982 to recover damages for breach of contract against Broad Cove. Judgment was entered in favor of Broad Cove in 1985 following a jury trial. In February 1987 this court reversed the judgment in favor of Broad Cove, as a matter of law, on the issue of liability and remitted the matter for a new trial solely on the issue of damages (see, BSL Dev. Corp. v. Broad Cove, 127 A.D.2d 722, 512 N.Y.S.2d 120).

In 1988 Weisz obtained investors under the name Aquabogue Cove Partners, Inc. (hereinafter Aquabogue) to provide funds to Broad Cove. On May 6, 1988, while the trial on damages was pending, Broad Cove conveyed a note and mortgage to Aquabogue in the amount of $9,652,440. In May 1988 Aquabogue gave the Weisz Plan a promissory note in the amount of $8,000,000 and entered into an agreement in which it gave the Weisz Plan an ownership right in the Broad Cove mortgage to the extent of $8,000,000. In May 1989 Aquabogue commenced an action to foreclose on the mortgage. The following month, BSL brought this proceeding for a determination as to the rights of the parties in the property and alleged, inter alia, that the mortgage was a fraudulent conveyance as to it. On October 17, 1989, after a nonjury trial on damages in the action brought by BSL against Broad Cove, the court awarded BSL a judgment against Broad Cove in the amount of $982,363.84 (see, BSL Dev. Corp. v. Broad Cove, 178 A.D.2d 394, 577 N.Y.S.2d 98). In this proceeding, the court, after considering the evidence offered by the parties at a hearing and the papers submitted in connection with BSL's motion for summary judgment, granted judgment in BSL's favor and declared the mortgage conveyance void as to it. We now affirm.

Pursuant to Debtor and Creditor Law § 273-a, a conveyance made without fair consideration by a defendant in an action for money damages "is fraudulent as to the plaintiff in that action...