NINTH SPACE LLC v. The Bluestone Group et al., Defendants–Respondents. (2021)

Order, Supreme Court, New York County (Joel M. Cohen), entered on or about March 12, 2020, which, to the extent appealed from as limited by the briefs, granted the motion of defendants Bluestone Group and DEG Investor, LLC (the Bluestone defendants) to dismiss the amended complaint pursuant to CPLR 3211(a)(7), unanimously reversed, on the law, with costs, and the motion denied.

The amended complaint is defective because it merely alleges that the Bluestone defendants participated in fraudulent transfers, without alleging that they were a transferee of the assets or benefited in any way from the transfers (see e.g. Federal Deposit Ins. Corp. v. Porco, 75 N.Y.2d 840, 841–842, 552 N.Y.S.2d 910, 552 N.E.2d 158 [1990]).  However, a defective complaint will not be dismissed where affidavits and other evidence amplify inartfully pleaded but potentially meritorious claims (see AG Capital Funding Partners, L.P. v. State St. Bank and Trust Co., 5 N.Y.3d 582, 591, 808 N.Y.S.2d 573, 842 N.E.2d 471 [2005];  Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635, 389 N.Y.S.2d 314, 357 N.E.2d 970 [1976]).  Plaintiffs rely on evidence submitted by the Goldman defendants in opposition to the Bluestone defendants’ motion to dismiss which suggests that the Bluestone defendants may have participated in and benefitted from the alleged fraudulent transfers.  This evidence indicates that plaintiffs have potentially meritorious fraudulent conveyance claims against the Bluestone defendants.