Federal Deposit Ins. Corp. v. Porco

Decision Date28 February 1989
Citation538 N.Y.S.2d 261,147 A.D.2d 422
PartiesFEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff-Respondent, v. Daniel A. PORCO et al., Defendants-Appellants, and Asipco, Inc., Defendant.
CourtNew York Supreme Court — Appellate Division

I.L. Hyams, Jericho, for plaintiff-respondent.

C.M. Roberts, for defendants-appellants.



Order, Supreme Court, New York County (David H. Edwards, Jr., J.), entered November 24, 1987, which, inter alia, denied defendants' motion to dismiss the complaint pursuant to CPLR 3211(a)(7), unanimously reversed, on the law, to the extent appealed from, defendants' motion granted, and the verified complaint dismissed, without costs.

On October 8, 1974, the Comptroller of the Currency declared the Franklin National Bank insolvent and appointed the plaintiff, Federal Deposit Insurance Corporation (FDIC) as the receiver of the bank. Prior thereto, on June 14, 1974, an action was commenced in federal court to recover damages from Michele Sindona for certain acts and omissions on his part as a director of Franklin National. Five years later, on July 29, 1980, FDIC recovered a $6 million judgment in that action against Sindona, no part of which has been paid.

In the instant action, FDIC alleges, in its verified complaint, that on or about April 1, 1985, while the federal action was pending, defendants effected the wire transfer of $4,869,199.17, which was beneficially owned by Sindona, to Dorgali Trust, an account at Union Bank of Switzerland in Lugano, and that such transfer was intended to defraud Sindona's creditors, particularly FDIC, and to prevent the enforcement and collection of Sindona's obligations to Franklin National. FDIC seeks to recover damages from the defendants in the amount of the allegedly fraudulent transfer.

In denying defendants' motion pursuant to CPLR 3211(a)(7) to dismiss the complaint for failure to state a cause of action, the court below held that inasmuch as the transfer had taken place after the commencement of the federal action against Sindona, the FDIC "had a significant interest in the debtor's property to maintain an action prior to the recovery of a judgment", citing Debtor and Creditor Law §§ 279 and 273-a.

Section 279, however, merely entitles a creditor whose claim has not matured to seek, inter alia, equitable relief to restrain or set aside the fraudulent conveyance of his debtor's property, and Section 273-a defines a fraudulent conveyance as one made without fair consideration when the person making it is a defendant in an action for money damages without regard to the actual intent of the defendant-debtor, if after final judgme for the plaintiff-creditor, the defendant fails to satisfy the judgment. Neither section creates a cause of action at law to enable a creditor to recover damages for conspiracy to defraud him of his claim.

On the contrary, it appears well settled...

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5 cases
  • In re Magnesium Corp. of America
    • United States
    • U.S. Bankruptcy Court — Southern District of New York
    • January 16, 2009
    ...New York as Debtor & Creditor Law § 273."162 The Outsider Defendants move to dismiss those claims as well. Those motions are granted. In FDIC v. Porco,163 the New York Court of Appeals addressed similar, though not wholly identical, issues. There the FDIC, acting as the receiver of an insol......
  • Strachman v. the Palestinian Auth.
    • United States
    • New York Supreme Court — Appellate Division
    • March 30, 2010
    ...for all purposes, and not solely to thwart execution of plaintiffs' judgment”. The dissent relies on Federal Deposit Ins. Corp. v. Porco, 147 A.D.2d 422, 423, 538 N.Y.S.2d 261, 262 (1989), aff'd 75 N.Y.2d 840, 552 N.Y.S.2d 910, 552 N.E.2d 158 [1990] for the proposition that a judgment credi......
  • Villoldo v. BNP Paribas S.A., BNP Paribas N. Am., Inc.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • April 29, 2016
    ...a concrete interest in the property at the time of transfer. See Special App'x 7-8 (citing Federal Deposit Ins. Corp. v. Porco, 147 A.D.2d 422, 422-23, 538 N.Y.S.2d 261, 261 (1st Dep't 1989), aff'd, 75 N.Y.2d 840, 552 N.Y.S.2d 910 (1990)). Plaintiffs do not contest this understanding of New......
  • Federal Deposit Ins. Corp. v. Porco
    • United States
    • New York Court of Appeals Court of Appeals
    • February 13, 1990
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