SIGLER v. BALDAN (2026)

Order, Supreme Court, New York County (James G. Clynes, J.), entered on or about April 23, 2026, which granted the motion of defendants Jorgelina and Federica Sabez (collectively the Sabez defendants) to dismiss the complaint, and denied, as moot, plaintiff's motion to disqualify defense counsel, unanimously modified, on the law, without costs, to deny the Sabez defendants' motion insofar as it sought to dismiss the cause of action for a declaratory judgment (the third cause of action), and to vacate so much of the order as denied plaintiff's motion to disqualify and remand the motion for further proceedings consistent with this opinion, and otherwise affirmed, without costs.

Supreme Court correctly dismissed the causes of action for violation of Debtor and Creditor Law § 273(a)(1) (the first cause of action) and § 273(a)(2) (second cause of action), both of which sought to set aside a transfer of co-op shares to the Sabez defendants as a fraudulent conveyance. Plaintiff's predecessor, the Sarah Tracy Sigler Trust (the Trust), lent $450,000 to nonparty 3 CI, Inc., secured by a promissory note signed by defendant/transferor Beatriz Baldan. A Florida court adjudged that the Trust could recover only against 3 CI, Inc., and not against Baldan because Baldan was not a personal guarantor of 3 CI's debt. As a result, plaintiff cannot assert a claim for fraudulent conveyance against Baldan, as plaintiff is a creditor of 3 CI, not Baldan (see Etage Real Estate LLC v. Stern, 244 AD3d 521, 521 [1st Dept 2025]). Moreover, by the time Baldan purported to transfer the co-op shares in April 2022, she had no interest left to transfer, as she had already lost her interest in the shares at a September 2021 sheriff's sale (see Debtor and Creditor Law §§ 270[b], [l], [p]).

The cause of action for conspiracy to commit fraud (the fourth cause of action) was also correctly dismissed. Allegations of conspiracy are permitted only to the extent that defendants' actions can be connected with an actionable tort, and, as noted above, the fraudulent conveyance claims were correctly dismissed (see Alexander & Alexander v. Fritzen, 68 N.Y.2d 968, 969 [1986]; see also Matter of Schleifer v. Yellen, 158 AD3d 512, 513 [1st Dept 2018]). Moreover, the allegedly unauthorized termination of the Trust's UCC financing statement does not, in itself, constitute fraud.

The court properly dismissed the cause of action for unjust enrichment (the fifth cause of action), as the pleadings show “no indicia of an enrichment that was unjust” (see Georgia Malone & Co., Inc. v Rieder, 19 NY3d 511, 517 [2012]). The complaint did not assert facts sufficient to show that the Trust relied on the Sabez defendants when extending a loan to 3 CI; on the contrary, the pleadings show that the Trust relied on the real estate broker's valuation as the basis for extending the loan. Further, the pleadings do not allege that the Trust and the Sabez defendants had any relationship that could have caused reliance or inducement.

However, Supreme Court should not have dismissed the cause of action for declaratory judgment, which sought declarations regarding the validity and enforceability of the Trust's security interest and whether the transfer of the co-op shares to the Sabez defendants was subject to that secured interest (the third cause of action). For purposes of UCC article 9, Baldan was the “debtor” (see UCC 9–102[a][28][A]), and 3 CI was the “obligor” (id. at subsection [59]). The Trust had an enforceable security interest in her co-op shares because Baldan had “rights in the collateral or the power to transfer rights in the collateral to a secured party” (UCC 9–203[b][2]).

The Trust filed its UCC financing statements in New York and not in Florida, the state of Baldan's residence. Assuming nonetheless that the Trust had a perfected security interest, the Florida sheriff's sale did not extinguish it. “The purchaser at an execution sale takes only the right, title, and interest which the execution debtor had, subject to the equities existing when the judgment was recorded” (Mansfield v. Johnson, 51 Fla 239, 252 [1906]; see also e.g. Aquastar Holdings LLC v Peckar & Abramson P.C., 415 So 3d 1157, 1161–1162 [Fla Dist Ct App 2025]). Thus, all that the sale could transfer was the judgment debtor's interest in the property (Aquastar, 415 So 3d at 1165; see also UCC 9–315[a][1]; Fla Stat § 56.27[2][a]).

Similarly, the Trust's security interest was not extinguished by the March 2022 Florida court judgment which determined that the Trust was to take nothing against Baldan individually. That same judgment awarded the Trust $647,702.35 against 3 CI, and a bankruptcy court later allowed the Trust to “take any ․ actions necessary to pursue any ․ of its rights ․ and remedies to recover the amounts due under the Final Judgment against ․ 3 CI ․ through post-judgment collection proceedings, ․ and to foreclose upon the Sigler Trust Liens and Security Interests in the New York Property.” Although Baldan no longer has in personam liability, plaintiff can still proceed in rem against the co-op shares (see Johnson v. Home State Bank, 501 U.S. 78, 82–84 [1991]).

Under Florida law, which applies here because Florida is the rendering jurisdiction, neither collateral estoppel nor full faith and credit bars plaintiff's declaratory judgment claim, as the parties here are not identical to the ones in the Florida action. Rather, the Florida action was between the Trust on the one hand and Baldan and 3 CI on the other (see Bruno v. Bruno, 83 AD3d 165, 169 [1st Dept 2011], lv denied 18 NY3d 805 [2012]; see also Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 275 [1970]). Further, the Sabez defendants were not parties in the Florida action, and 3 CI is not a party in the action at bar (see Mobil Oil Co. v. Shevin, 354 So.2d 372, 374 [Fla 1977]).

In addition, the issues in the declaratory judgment claim were the validity and enforceability of the Trust's security interest and whether the transfer of the co-op shares to the Sabez defendants was subject to that secured interest. Because those issues were not fully litigated and determined in Florida the doctrine of full faith and credit does not bar this action (see Matter of Farmland Dairies v Barber, 65 N.Y.2d 51, 55 [1985]).

As the motion for disqualification is no longer moot, it should be decided on remand by Supreme Court, as the parties concede in their appellate briefs.