Priestley v. Panmedix, Inc.

Decision Date09 April 2021
Docket NumberIndex No.: 114874/2010
Citation2021 NY Slip Op 31132 (U)
PartiesKATHERINE PRIESTLEY, Plaintiff, v. PANMEDIX, INC., ELECTRONIC KNOWLEDGE PUBLISHING, INC., HEADMINDER, INC., MCDONALD COMRIE, DR. DAVID ERLANGER, PHILIP YEE, BALLON, STOLL, BADER & NADLER, PC, HALKET WEITZ, CURTIS COMRIE, ROBERTA COMRIE, MARY ERLANGER, DARIN KAPLAN, RICHARD PECK, LINDA BIERER, TARA MACLEOD, MELVIN HELLER, JOHN THEODORACOPULOS, ALEXIS THEODORACOPULOS, STEPHANIE PARK, NICOLE KAPLAN, LITTLE ROCK, LTD, TANYA KAUSHIK, MABEL TRUESDELL, RELIDE REALTY, THEODORE WEITZ, ESQ. and DWIGHT YELLEN, ESQ., Defendants.
CourtNew York Supreme Court

KELLY O'NEILL LEVY, J.:

Motion Sequences 011, 012, 013, 014, and 015 are consolidated herein for disposition.

In Motion Sequence 011, defendants Relide Realty ("Relide") and Melvin Heller (collectively, the "Relide Defendants") move, pursuant to CPLR 3212, for summary judgment dismissing all claims against them.

In Motion Sequence 012, defendants McDonald Comrie, Curtis Comrie, Roberta Comrie, Darin Kaplan, Nicole Kaplan, Tanya Kaushik, Tara Macleod, Stephanie Park, Richard Peck, Alexis Theodoracopulos, John Theodoracopulos, Mabel Truesdell and Philip Yee (collectively the "Comrie Defendants") move, pursuant to CPLR 3212, for summary judgment dismissing all claims against them.

In Motion Sequence 013, Plaintiff cross-moves, pursuant to CPLR 3212, for summary judgment (i) on the first cause of action pursuant to Section 273-a of the Debtor & Creditor Law ("DCL"), (ii) on the second cause of action pursuant to DCL § 273, (iii) on the third cause of action pursuant to DCL § 275, (iv) on the fourth cause of action pursuant to DCL § 276, (v) on the fifth cause of action pursuant to DCL § 276-a, (vi) on the sixth cause of action pursuant to DCL § 278, (vii) on the eighth cause of action for aiding and abetting fraudulent conveyances, and (viii) on the ninth cause of action for tortious interference with enforcement of a money judgment. All of Plaintiff's causes of action are timely.1

In Motion Sequence 014, defendants Halket Weitz LLP and Theodore Weitz, Esq. (collectively the "Halket Weitz defendants") move, pursuant to CPLR 3212, for summaryjudgment dismissing Plaintiff's causes of action for fraudulent conveyance, aiding and abetting a fraud and tortious interference with collection of a money judgment.

In Motion Sequence 015, defendants Dwight Yellen, Esq., and his former law firm, Ballon Stoll Bader & Nadler, P.C. ("BSBN") (collectively the "Ballon Defendants") move, pursuant to CPLR 3212, for partial summary judgment on Plaintiff's causes of action for punitive damages, tortious interference with enforcement of judgment, and for fraudulent conveyances under Sections 273, 273-a, 275, and 276 of the New York Debtor and Creditor Law ("DCL").

Background

Defendant PanMedix, Inc. ("Panmedix") was formed as a Delaware corporation in 1995 with a principal place of business in New York City. Panmedix developed technology for healthcare, pharmaceutical, research and academic purposes. Defendant McDonald Comrie served as President and CEO of Panmedix from the company's founding until its dissolution in 2014.2 Defendant Phillip Yee was Director and Technology Officer of PanMedix. Defendant David Erlanger was the Chief Scientific Officer of PanMedix, Panmedix's business utilized cognitive tests developed by defendant Headminder, Inc.

Plaintiff had been a shareholder in Panmedix's predecessor company, Xcape, Inc., and on March 15, 2001, a Consent of Shareholders was executed and Plaintiff became one of the Directors of PanMedix. On April 6, 2001, Plaintiff loaned $750,000 to Panmedix pursuant to a Senior Secured Promissory Note and a Patent Security Agreement. The Senior Secured Promissory Note granted Plainitff a security interest in "all personal property of every kind and nature, including ... accounts ... patents ... copyrights ... and all recorded data" of Panmedix. SeeSenior Secured Promissory Note § 5.1. The Patent Security Agreement separately granted Plaintiff a security interest in "(i) all Patents; (ii) all General Intangibles connected with the use of or symbolized by the Patents; and (iii)...all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing." See Patent Security Agreement § 2. On April 9, 2001, Plaintiff publicly recorded her security interests by filing a UCC-1. In August 2001, Plaintiff acquired 20,777 shares of PanMedix common stock - 18.85% of PanMedix shares - for $100.00.

On April 6, 2002, when the $750,000 principal of the Senior Secured Promissory Note was due to be repaid, PanMedix was unable to repay Plaintiff. After extended discussions, Plaintiff sent a notice of default on June 23, 2003 but on June 25, 2003 opted to lend an additional $85,000 to Panmedix. When repayment issues again emerged, Plaintiff sent another notice of default on November 30, 2005. On March 9, 2006, Plaintiff filed an action in New York State Supreme Court seeking payment, but voluntarily dismissed her case on April 13, 2006 and the parties entered into negotiations relating to repayment. Notably, in April 2006, Plaintiff's UCC-1 expired as five years had elapsed since it was filed in April 2001. The UCC-1 was not renewed.

After settlement discussions failed, Plaintiff filed a second action in New York State Supreme Court on April 20, 2006, seeking payment on the Promissory Note. However, that action also ended by voluntary discontinuance on November 27, 2006. Plaintiff next filed a diversity suit in federal court on February 16, 2007. On August 28, 2008, the Hon. Harold A. Baer, Jr. entered judgment for Plaintiff in the amount of $1,603,716.51 against McDonald Comrie, David Erlanger, Philip Yee, Panmedix, Electronic Knowledge Publishing, Inc., andHeadminder, Inc. The judgment was later changed to eliminate all but Panmedix and Electronic Knowledge Publishing, Inc. as judgment debtors.

However, after an extended period of negotiations, the judgment was still unpaid. In July 2009, defendant Theodore Weitz, Esq., a partner at defendant Halket Weitz LLP and outside counsel for Panmedix, discovered that Plaintiff's UCC-1 had not been renewed. After discussing this with McDonald Comrie in his capacity as President of Panmedix and with litigation counsel for Panmedix - defendant Dwight Yellen of defendant BSBN - Mr. Weitz prepared a security agreement that was sent to certain persons and entities who had loaned money or extended credit to Panmedix, specifically:

Defendant Halket Weitz LLP.: $1,398,003.91 (unpaid legal fees).
Defendant McDonald Comrie: $777,500 (back pay) and $302,954.13 (14 loans).
Defendant Curtis Comrie: $592,100 (back pay) and $148,670.24 (13 loans).
Defendant Philip Yee: $594,850 (back pay) and $36,950 (12 loans).
Defendant Tanya Kaushik: $270,600 (back pay).
Defendant Little Rock, Ltd.: $250,000 (promissory note).
Defendant Melvin Heller: $175,000 (two promissory notes of $125,000 and $50,000).
Defendant Ballon Stoll Bader & Nadler, P.C. (BSBN): $105,058.13 (unpaid legal fees).
Defendant Alexis Theodoracopulos: $101,350 (back pay, partially paid).
Defendant Relide Realty: $69,788.41 (back rent).
Defendant David Erlanger: $51,200 (9 loans).
Defendant John Theodoracopulos: $35,000 (promissory note).
Defendant Linda Bierer: $30,000 (loan)
Defendant Richard Peck: $30,000 (promissory note).
Defendants Nicole and Darin Kaplan: $30,000 (two $15,000 promissory notes).
Defendant Mabel Truesdell: $30,000 (promissory note).
Defendant Roberta Comrie: $29,000 (two promissory notes of $10,000 and $19,000).
Defendant Mary Erlanger: $24,500 (loan)
Defendant Stephanie Park: $9,600 (backpay)
Defendant Tara Macleod: $58,280 (loan, partially repaid).

(hereinafter, the "signatory Defendants"). Pursuant to the Security Agreement dated August 24, 2009, the Creditors agreed to forbear on their claims until January 1, 2010 in exchange for a security interest in Panmedix's assets. Panmedix also granted each Creditor a 13% interest rateon debts due to the Creditor, unless the Creditor's prior agreement provided for a higher rate. The creditors signed the agreement, apparently without negotiation. The creditors' UCC-1s were prepared and filed soon thereafter. The filings stated that the acknowledgements should be sent to Panmedix, not the individual creditors.

Accordingly, when Plaintiff attempted to execute on the federal judgment on December 3, 2009 by delivering it to the New York City Marshal, the resulting public sale of Panmedix's assets was halted when defendant Yellen delivered a letter on December 11, 2009 notifying the Marshal that "substantially all of the assets of PanMedix, Inc. have been pledged pursuant to [a] Security Agreement dated August 24, 2009 to the scheduled Secured Creditors," who "assert a lien superior to judgment creditor Katherine Priestley."3

This action was subsequently commenced on November 8, 2010. However, Plaintiff also pursued relief in federal court.4 See Priestley v. Panmedix, 18 F.Supp.3d 486 (S.D.N.Y 2014). On May 1, 2014, the Hon. Paul A. Engelmayer - applying New York law - ruled in favor of Plaintiff in the federal action ("the Engelmayer Decision"). See id. at 495-504. Judge Engelmayer "decline[d] to exercise ancillary jurisdiction over" the creditors "who were not parties to the lawsuit that led to the original Judgment" by Judge Baer and instead focused on "the heart of this matter - ... whether the transferor, Panmedix, acted with fraudulent intent." See id. at 495-496. Judge Engelmayer held, in relevant part, that:

A. Constructive Fraudulent Conveyance
New York law "'identifies several situations involving 'constructive fraud,' in which a transfer made without fair consideration constitutes a fraudulent conveyance, regardless of the
...

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