First Franklin Fin. Corp. v. Merchant

First Franklin Fin. Corp. v Merchant (2020 NY Slip Op 06852)

First Franklin Fin. Corp. v Merchant

2020 NY Slip Op 06852

Decided on November 19, 2020

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided and Entered: November 19, 2020
Before: Gische, J.P., Mazzarelli, Moulton, Mendez, JJ.

Index No. 381431/08 Appeal No. 12433 Case No. 2019-5670

[*1]First Franklin Financial Corporation, Plaintiff-Respondent,

v

Arnold Merchant et al., Defendants. Nereid 2028, Non-Party Defendant-Appellant.

Cooper Paroff & Graham P.C., Kew Gardens (Henry M. Graham of counsel), for appellant.

McCalla Raymer Leibert Pierce, LLC, Iselin (Charles Jeanfreau of counsel), for respondent.

Order, Supreme Court, Bronx County (Doris M. Gonzalez, J.), entered on or about June 14, 2019, which denied nonparty defendant's (Nereid) motion to vacate a foreclosure sale, unanimously affirmed, with costs.

Supreme Court had jurisdiction to determine whether the proceeding before it was subject to the automatic bankruptcy stay triggered upon Nereid's Chapter 11 bankruptcy filing (In re Baldwin-United Corp. Litig., 765 F2d 343, 347 [2d Cir 1985]; In re Siskin, 258 BR 554, 562 [Bankr ED NY 2001]). The court correctly found that judgment debtor defendant Arnold [*2]Merchant's purported transfer of the property for $10, on the eve of a foreclosure sale, to a brand new entity that he created and caused to commence a Chapter 11 proceeding just a few hours before the foreclosure sale, bore all the badges of fraud necessary to conclude that the transfer was fraudulent as to plaintiff (see 5706 Fifth Ave., LLC v Louzieh, 108 AD3d 589 [2d Dept 2013]). It was therefore within the court's jurisdiction to determine that the property was never part of the bankruptcy estate and that accordingly the automatic stay did not preclude the foreclosure auction.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: November 19, 2020