FISCHER v. SADOV REALTY CORPORATION (2006)

In a shareholder's derivative action, inter alia, to cancel several mortgages and for an accounting of the income and profits of the defendant Sadov Realty Corporation, the defendants Sadov Realty Corporation, 701 Empire Boulevard Associates, LLC, Roslyn Malamud, Samuel Malamud, Chana Slavin, Lea Slavin, Michoel Slavin, Zalman Chanin, and Joseph Labkowski appeal, as limited by their brief, from so much an order of the Supreme Court, Kings County (F. Rivera, J.), dated April 21, 2005, as granted the plaintiff's motion for summary judgment on her second cause of action for an accounting of the income and profits of the defendant Sadov Realty Corporation and denied their cross motion for summary judgment dismissing the complaint insofar as asserted against them.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiff, Gitel Fischer, received a 10% interest in the defendant Sadov Realty Corporation (hereinafter Sadov) from her husband David Fischer prior to 1994.   In his affidavit submitted in support of the plaintiff's motion, David Fischer stated that Shabsie Gordon conveyed the subject shares to him on January 4, 1987, and in separate proceedings, Gordon both stated in an affirmation and testified at his deposition that he transferred the shares to David Fischer.

In opposition to that branch of the plaintiff's motion which was for summary judgment on her second cause of action for an accounting, and in support of their cross motion dismissing the complaint insofar as asserted against them, the appellants submitted a judgment of the Supreme Court, Kings County (Vinik, J.), dated August 2, 1991 (hereinafter the prior judgment), in a prior action entitled Sadov Realty Corp. v. Shipur H'Shechuna Corp., in which David Fischer was a defendant.   The prior judgment, in effect, dismissed David Fischer's counterclaim for a declaration that he was the sole owner of Sadov.   The appellants argue that this prior judgment bars the instant action under the doctrine of collateral estoppel.

 “The doctrine of collateral estoppel precludes a party from relitigating ‘an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point’ ” (Kaufman v. Eli Lilly & Co., 65 N.Y.2d 449, 455, 492 N.Y.S.2d 584, 482 N.E.2d 63).  “The two elements that must be satisfied to invoke the doctrine of collateral estoppel are that (1) the identical issue was decided in the prior action and is decisive in the present action, and (2) the party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior issue” (Luscher v. Arrua, 21 A.D.3d 1005, 1007, 801 N.Y.S.2d 379).

 Here, there is no identity of issue between the prior judgment and the instant action.   The prior judgment determined that David Fischer did not own 100% of the shares of Sadov;  it did not address whether Gordon had conveyed a 10% interest to him.   The Supreme Court properly found that the instant action was not barred by collateral estoppel.

 Moreover, the appellants failed to establish their prima facie entitlement to summary judgment dismissing the complaint on the ground that David Fischer's conveyance of his shares to the plaintiff was fraudulent pursuant to Debtor and Creditor Law § 273-a. To prevail on such a fraudulent conveyance claim, the movant must establish three elements:  (1) that the conveyance was made without fair consideration;  (2) that at the time of transfer, the transferor was a defendant in an action for money damages or a judgment in such action had been docketed against him;  and (3) that a final judgment has been rendered against the transferor that remains unsatisfied (see Durrant v. Kelly, 186 A.D.2d 237, 588 N.Y.S.2d 196).   Although the appellants' submission of the prior judgment satisfied the second prong of the test, the appellants failed to adduce any evidence to satisfy the remaining two prongs.

Therefore, the Supreme Court properly granted that branch of the plaintiff's motion which was for summary judgment on her second cause of action, and properly denied the appellants' cross motion for summary judgment dismissing the complaint insofar as asserted against them.