Pearl further alleges that Vantage Securities breached the Transaction Agreement by failing to remit the Earnout to One Hundred Pearl. The amount in controversy exceeds $ 50,000 exclusive of interest and costs. This Court has subject matter jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332.
Fitzgerald has moved for summary judgment on his first counterclaim against One Hundred Pearl. This counterclaim alleges that, as to Fitzgerald, 500 Hanover's assignment of the Earnout to One Hundred Pearl was a fraudulent conveyance within the meaning of New York Debtor and Creditor Law ("DCL") § 273-a (McKinney's 1990). The counterclaim seeks the Court to set aside the conveyance of the Earnout, pursuant to DCL § 278(1)(a), to the extent necessary to satisfy a judgment in favor of Fitzgerald against 500 Hanover, plus post-judgment interest having accrued thereon since the date of entry. For the reasons stated below, Fitzgerald's motion is granted.
On August 25, 1992, Fitzgerald commenced an arbitration proceeding before the New York Stock Exchange against 500 Hanover Corp. (then known as Reich & Co., Inc.), seeking in excess of $ 630,000 on the ground that 500 Hanover had breached a liquidated damages clause in Fitzgerald's employment contract.
On November 30, 1992, 500 Hanover sold certain of its assets to Vantage, in return for the Earnout, consisting of the right to receive a percentage of Vantage's future revenues, as elaborated in the Transaction Agreement. On March 1, 1993, 500 Hanover assigned the Earnout to One Hundred Pearl, in return for One Hundred Pearl's promise to manage 500 Hanover's assets and liabilities, as elaborated in a Management Services Agreement, see Affidavit of Paul H. Fitzgerald, Exhibit C ("Management Services Agreement").
On May 3, 1993, the arbitration panel awarded Fitzgerald $ 586,307.69, plus $ 73,847.32 in attorney's fees. The arbitration panel dismissed all counterclaims and assessed $ 10,000 in forum fees against 500 Hanover.
On November 1, 1993, New York State Supreme Court granted Fitzgerald's petition to confirm the arbitration award and, on January 4, 1994, entered judgment in his favor in the amount of $ 701,457.27.
"Summary judgment may be granted if, upon reviewing the evidence in the light most favorable to the non-movant, the court determines that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law." Richardson v. Selsky, 5 F.3d 616, 621 (2d Cir. 1993). In deciding the motion, "the court is required to draw all factual inferences in favor of the party against whom summary judgment is sought." Balderman v. U.S. Veterans Administration, 870 F.2d 57, 60 (2d Cir. 1989). "Only when no reasonable trier of fact could find in favor of the nonmoving party should summary judgment be granted." Cruden v. Bank of New York, 957 F.2d 961, 975 (2d Cir. 1992); accord Taggart v. Time, Inc., 924 F.2d 43, 46 (2d Cir. 1991).
The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion" and identifying the materials in the record that "it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Once a motion for summary judgment is properly made and supported, however, the burden shifts to the nonmoving party to "'set forth specific facts showing that there is a genuine issue for trial.'" Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (quoting Fed. R. Civ. P. 56(e)).
DCL § 273-a provides:
Every conveyance made without fair consideration when the person making it is a defendant in an action for money damages or a judgment in such an action has been docketed against him, is fraudulent as to the plaintiff in that action without regard to the actual intent of the defendant if, after final judgment for the plaintiff, the defendant fails to satisfy the judgment.