David v. Arbie Processing, LLC

2024 NY Slip Op 30476(U)

Opinion

David v Arbie Processing, LLC 2024 NY Slip Op 30476(U)

February 13, 2024

Supreme Court, Kings County Docket Number: Index No. 517803/2023 Judge: Leon Ruchelsman

Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

FILED: KINGS COUNTY CLERK 02/13/2024 10:02 AM INDEX NO. 517803/2023 NYSCEF DOC. NO. 38 RECEIVED NYSCEF: 02/13/2024

SUPREME C::OURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 - -.-- - -·- - - - · - - - - - - - - . - -·-·-·- - - - - - - - . - - - - - - - - - -·X. SNIR DAVID,

Plaintiff, Decision and order

- against - Index No. 517803/2023

ARBIE PROCESSING, LLC, RON BOROVINSKY and ELIZABETH BOROVINSK,

Defendants, February 13, 2024 --- .. --. ---.----.-------·------- ·-· ·-. ------- ·-x PRESENT: HON. LEON RUCHELSMAN Motion Seq, #2

The defendant has moved pursuant to CPLR §602 seeking to consolii:iate this matter with seven related matters, namely Snir David v. )250 Jefferson Management LLC, e·t al., Index No. 532287 /2 023, Snir David v. Elizabeth Borovinsky, et al., Index No. 532368 /2023, Snir David v. Elizabeth Borovinsky, et al., Index No. 53237 5/2023, Snir David v. Arbie Processing LLC, et al.; located in Nassau County Index No. 609726/2023, Snir David v. Elizabeth Borovinsky, et al. , located in Nassau County, Index No. 618010/2023, Snir David v. RQV 22 Equities, LLC, e.t al., located in Queens County, Index No. 723591/2023 and Snir David v. 10953 109 Street Holdings LLC, et al., located in Queens County, Index No. 723594/2023. The plaintiff opposes the motion. Papers were submitted by the parties and arguments held. After reviewing all the arguments this. court now makes. th.e following determin!3,tion.

In this action the plaintiff has. sued seeking. to enforce repayment of a loi;i.n ma,de to ~efendcl.nt A.rl:>i.e Processing tLC .in 20),8. The other seven actions all involve the same loari but concern d,iff1;::+:"ent properties purchased .by clefendant Arbie ; and ¢1efe,ndant

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l3orovinsky upon which the plaintiff has filed notices of pendency. This motion for consolidation has now been filed.

Conclusions of Law

It is well settled that when two or more cases represent common questions of law or fact then there should be a consolidation (Moses v. B & E Lorge Fa.milt Trust, 147 AD3d 1043, 48 NYS3d 427 [2d Dept., 2017]). A party objecting to the consolidation has the

burden of demonstrating prejudice which ha.trris a substantial right (Oboku v. New York City Transit Authority, 141 AD3d 708, 35 NYS3d

710 [2d Dept., 2016]).

In this case the eight lawsuits clearly concern the same questions of law and fact, namely a loan made and allegedly never repaid. The plaintiff asserts that "although the actions Defendants are seeking to consolidate concern the same Agreement, the Defendants purc:hased the properties in the names of independent companies rather than in the name Of ARBIE despite RON and ARBIE attaching a list Of properties to the af'oresaid agreement and holding them out as being owned by ARBIE" ( see, Affirmation in Opposition, '][12 [NYSCEF Doc. No. 2 7]) . However, even: if that is true that does not explain why all these matters cannot be decided withirt one lawsuit, This is especi~Iiy trtie corisidering they all concern the sam12: underlying facts. Further, it is :trµe that denying consoli.dation based upon the different 'states of the

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respective cases and hence expediting the trial ready case has been held proper (see, Abrams v. Port Authority Trans-Hudson Corp., 1 AD3d 118, 7 6 6 NYS2d 42 9 [ pt Dept., 2003] ) . However, these cases are all essentially at the same early stages of discb~ery and no prejudice or harm could possibly result if consolidation is granted. Therefore; based on the foregoing, the motion seeking consolidation is granted.

Next, the defendants move seeking to dismiss the seven lawsuits on the grounds they are duplicative of the current lawsuit. The agreement entered between the parties states that Arbie specialized in rehabilitating and selling distressed real estate and that the funds invested would be used in ''indivi<:iual projects" ( ~ ; Passive Investment Opportunity: Scope of Investment [NYSCEF boc. No. 16]). Thus, while the actual properties were not defined ih the agreement, clearly, multiple prop,erties were contemplated. At this- stage of the litigation, without any discovery, the restraints placed upon properties owned by Arbie is proper. Thus, the consolidated action has combined all the claims in this lawsuit, howe:Ver, the propriety of the notices of pendency filed against all the properties will not be disturbed at this june,:ture'. Thus, the motion seeking to dismiss those lawsuits is denied at this time.

The motion seeking to cancel the notice o,f pendency regarding 27 Lakeville Drive, East Hillsf New York is granted.

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Turning to the motion seeking to dismiss the individual defendants Ron andElizqbeth Borvinsky, to succeed on a request to pierce the corporate veil the plaintiff must demonstrate that "(1) the_ owners exercised complete dominion 'bf the corporation in respect to the transaction attqcked; and (2) that such dominion was used to comtnit a fraud or wrong against the plaintiff which resulted in plaintiff's injuryl' (Cana.son v. Megan Holding LLC, 25 NY3d 1, 6 NYS3d 206 [2015]). As the Court of Appeals observed, at the pleading stage "a plaintiff must do more than merely allege that [defendant] engaged in improper acts or acted in 'bad faith' while representing the corporation" (East Hampton Union Free School District v. Sandpebble Builders Inc,, 16 NY3d 775, 919 NYS2d 496 [2011 J) • Rather, the plaintiff must allege facts demonstrating such dominion over the corporation and that "through such domination, abused the privilege of doing business in the corporate form to perpetuate a wrong or injustice a9ainst the plaintiff such that a court in equity will intervene" (Oliveri Construction Corp.,. V. WN weaver Street LLC, 14 4 AD3d 7 €35, 41 NYS3d 59 [2d Dept., 2016]). "Factors to be considered in determining whether an individual has abused the privilege of doing business in the corporate or LLC form include the failure to adhere to [corporate or] LLC formalities, inadequate capitalization, commingling of pas.sets, apq. the. personal use .of [corporate or] LLC f:unds'I (see:, Gra:mmas v. Lockwood Associates LLC, 9.5 AD3d 1073, 944. NYS2d 623 [2d.

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Dept., 2012]). Thus, mere conclusory statements that the individual dominated the corporation are insufficient to defeat a motion to dismiss (AHA Sales Inc. , v. Creative Bath Products Inc., 58 AD3d 6, 867 NYS2d 169 [2d Dept.i 2008]).

In this case there is no evidence presented at all demonstrating either def·endant acted in ways in which the corporate veil can be pierced. Therefore, the motion seeking to dismiss the individual defendants is granted.

The plaintiff has filed motions in the other actions seeking pre-judgement attachment that will now be addressed.

It is well settled that a party seeking pre-judgment attachment .must demonstrate, "by affidavit and such other written evidence as may be submitted, that there is a cause of action, that it is probable that plaintiff will succeed on the merits, that one or more grounds for attachment provided in CPLR .§6201 exist and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff" (Elliot Associates L.P., v, Republic of Peru, 948 F.Supp 1203 [S.D.N. Y .• 1996.]). The basis for the attachment is to provide security to insure the enforcement of any money judgement (see, Hotel 71 Mezz Lender LLC v. Falor, 14 NY3d 303, 9C)0 NYS2d 69.S [2010]).

CPLR §62 01 provides five dist:i.ntt grounds permitting the .attachment bf prope.rty in an action where th.e party would. be entitled to a money judgement. The p1aint,iff is seeking th.e

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attachment on one ground, namely that "the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgement that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or i.s about to do any of thes·e acts (see, CPLR §6201 (3)).

Attachment is a drastic remedy which should be construed narrowly in favor of the party against whom it is sought (Michaels Electrical Supply Corp., V-. Trott Electric Inc., 231 AD2d 695, 647 NYS2d 839 [2d Dept., 1996]) . Thus; to succeed upon the attachment r:equest it must be demonstrated the defendant acted with the. intent to frustrate the enforcement of a judgement (Abacus Federal Savings Bci.nk V. Lim, 8 AD3d 12, 778 NYS2d 145 [1 st Dept., 2004]). The disposition o:f the property without the requisite intent is an insufficient basis upon which to attach property (Sylmark Holdings Ltd. V. Silicone Zone Intern. Ltd., 5 Misc3d 285, 783 NYS2d 758 [Supreme Court New York County 2004 Ll .

Thus I the plaintiff must demonstrate the tleifendants intentionally sought to frustrate the enforcement of a judgement by disposing of its assets (Silverman v. Miranda, 116 F. Supp3d 289 [g_o.N,Y. 2015]),

The plaintiff does not present any evidenc-e supporting the contention the property has heen disposed of to. frustrate a potential judgement; The plaintiff essentially argues that of

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course the defendants intention is to frustrate any judgement, since why else would the property be so disposed. However, that c::ircular argument lacks any evidence supporting the allegation. Essentially, that argument boils down to the fact that since property has been removed an attachment is proper. As already noted the mere removal -of assets is not grounds for an attachment (Corsi v. Vroman, 37 AD3d 397, 829 NYS2d 234 [2:d Dept. 2007]). To support a request for attachment the plaintiff must present evidentiary facts and circumstances tending to establish a probability that such intent exists (Ros:enthal v. Rochester Button Company Inc., 148 AD2d 375 539 NYS2d 11 [Pt Dept., 1989]) . This means there must be evidence that fraudulent or improper intent existed in the mind of the defendants (DLJ Mortgage Capital Inc., v, KOntoqiannis, 594 F.Supp2d 308 [E.D·.N.Y. 2009].). To be sure, since fraudµlent or improper intent is difficult to prove courts have developed 'badges of fraud' which can give rise to intent. Although the stated basis for the attachment in this case is the frustration of a judgem<:'lnt, the a11.alysis is the same a.s fraud. Such badges of fraud include g·ross inadequacy of consideration, a close relationship bet we.en tra,ns f e ror and transferee, the transferor 1 s insolvency as a result of the conveyance, a questi9pable transfer not in the ordinary course of business, secrecy in the transfer and retention .o.f control of the property by the. tr.ansferor a(ter th.e conveyance (seet In re Kaiser, 722 F2d

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15 7 4 [ 2.d Cir . 1 98 3 ] ) .

As noted, the plaintiff does not support these allegations of frustration of judgement with any evidentiary facts at all. The plaintiff merely seeks to secure_ funds in case they secure a judgement. Where no evidence supporting the allegation has been ptesented then attachment is hot proper (Singapore Tong PTE Ltd;,

V. Corrado Coppola, 2004 WL 1936296 [E.D.N.Y. 2004]).

Therefore, based on the foregoing, the motion seeking

attachment of any of the subject properties is denied. Further, the plaintiff's motion seeking to amend the complaint is denied to the extent none of the causes of action may involve any dismissed party or attachment. The remainder of tbe request to amend the complaint, if any, is granted.

So ordered.

ENTER:

DATED: February 13, 2024

Brooklyn N,Y, Hein.

JSC

7J

Leon Ruchel.srrian

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