R&E Secures Court Win In Dispute Over Brooklyn Property Acquisition
New York State Supreme Court, Kings County, Decided February 4, 2021
Featuring Adam Lindenbaum, Jason R. Davidson and Parker Rothman
Rosenberg & Estis secured a victory in New York State Supreme Court, Kings County, on behalf of Workable Atlantic LLC in a dispute over the 2018 acquisition of a mixed-use interim multiple dwelling property at 1236 Atlantic Avenue in Brooklyn, NY.
Plaintiffs, Steven Seidler, Stephanie Seidler Family Trust and Scott Seidler Family Trust, commenced an action under the New York Debtor Creditor Law to set aside the transfer of the property to Workable Atlantic LLC. Plaintiffs claimed that because they were potential judgment creditors of 1236 Atlantic LLC (and/or its members and principals) in a pending lawsuit for money damages, the transaction between Workable Atlantic LLC and 1236 Atlantic LLC was intended to hinder plaintiffs’ collection of a possible future judgment.
In furtherance of their claims, plaintiffs alleged, inter alia, that Workable Atlantic LLC was some kind of alter-ego of 1236 Atlantic LLC created to perpetuate a fraudulent conveyance of the property. To that end, plaintiffs alleged that the property was purchased for less than fair market value and, in doing so, that Workable Atlantic LLC never satisfied its mortgage with co-defendant Signature Bank.
R&E filed a motion to dismiss, establishing that plaintiffs’ claims were predicated on a series of outlandish, demonstrably false, and wholly fabricated theories — all of which were legally insufficient and refuted by the documentary evidence submitted by Workable Atlantic LLC. Specifically, R&E’s motion evidenced that seller and purchaser entered into an agreement at arm’s length for fair market value ($17.1 Million), with substantial net proceeds going to the seller and without actual intent to defraud or hinder plaintiffs’ collection upon a future judgment. The Court held that any damages to which plaintiffs might be entitled should be pursued in their collateral litigation against the seller parties, with whom plaintiffs made their investment.
Justice Baily-Schiffman granted R&E’s motion, dismissing the action based on lack of merit, cancelling the notice of pendency against the building and denying plaintiffs’ separate motion for leave to file a second amended complaint. The Court also dismissed the action against co-defendant Signature Bank, the seller’s mortgagee, which was fully-satisfied at the closing and the mortgage against the property terminated accordingly.