RTN Networks, LLC v. Telco Grp., Inc.

• Decision Date: 10 March 2015
• Docket Number: 14468, 154494/12
• Citation: 5 N.Y.S.3d 80,126 A.D.3d 477,2015 N.Y. Slip Op. 01903
• Parties: RTN NETWORKS, LLC, Plaintiff–Respondent, v. TELCO GROUP, INC., et al., Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

126 A.D.3d 477

5 N.Y.S.3d 80

2015 N.Y. Slip Op. 01903

RTN NETWORKS, LLC, Plaintiff–Respondent

v.TELCO GROUP, INC., et al., Defendants–Appellants.

14468, 154494/12

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

March 10, 2015.

Ruta, Soulios & Stratis LLP, New York (Joseph A. Ruta of counsel), for appellants.

Steger Krane LLP, New York (Steven S. Krane of counsel), for respondent.

FRIEDMAN, J.P., SWEENY, ACOSTA, DeGRASSE, GISCHE, JJ.

Opinion

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered April 22, 2014, which denied defendants' motion to dismiss the complaint, unanimously reversed, on the law, the motion granted, and the complaint dismissed.The Clerk is directed to enter judgment accordingly.

In this action alleging causes of action for fraudulent conveyance and conspiracy, plaintiff seeks to recover $324,260.64 pursuant to a judgment awarded in its favor in 2010.Plaintiff alleges that defendants fraudulently conveyed defendantTelco Group, Inc.'s assets (Telco), rendering the company insolvent.

It further alleges that defendant Tawfik, a partial owner of Telco, received $40 million from the sale of Telco's assets but that it never received payment pursuant to the judgment.The complaint, however, fails to plead with sufficient particularity any facts alleging that the conveyance at issue was made without “fair consideration”(Debtor and Creditor Law §§ 273,274,275 ).Notably, it alleges that defendant Telco received $135 million for the sale of its assets.The additional allegations that most of the sale proceeds were used to pay off Telco debts, and that an additional portion was paid to defendant Tawfik, do not demonstrate that the amount paid was not the “ fair equivalent” of the value of Telco's assets.Plaintiff's “mere belief” that Telco transferred its assets without fair consideration is insufficient (seeJaliman v. D.H. Blair & Co., Inc.,105 A.D.3d 646, 647, 964 N.Y.S.2d 112[1st Dept.2013] ).

The complaint also fails to plead with particularity defendants' intent to hinder, delay or defraud present or future creditors, as required to properly assert a cause of action for intentional fraudulent conveyance (seeDebtor and Creditor Law § 276;CPLR 3016[b] ).The complaint alleges that Telco used most of the sale proceeds to pay off other creditors.While the judgment owed to plaintiff was not paid at the time, it is clear from the complaint that the judgment had not yet been obtained at the time of the transaction at issue.Moreover, the key allegations regarding the allegedly fraudulent conveyance are based on information and belief, and as they fail to...