Hope as a fraudulent transferee of Hanwinsel stock from Eunice Hansel.
On these bases, the amendment will be allowed. The Government avers, and defendants do not dispute, that it became aware of the one-share transfer from Eunice to Hope only after Hope's deposition on November 19, 1997. Though the Government waited until January 30, 1998 to make the present motion, nothing the in the record indicates bad faith or intentional delay. "'Mere delay . . . absent a showing of bad faith or undue prejudice, does not provide a basis for a district court to deny the right to amend.'" Block v. First Blood Associates, 988 F.2d 344, 350 (2d Cir. 1993) (quoting State Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981)).
Moreover, neither the current defendants nor Hope Hansel herself will be prejudiced by the amendment. She obviously has been well aware of both the existence and the subject matter of this litigation since it outset. The Government already has taken her deposition. Furthermore, once the Government properly serves Hope Hansel, she will have an opportunity to respond to the allegations in the Complaint, and the Court will be receptive to any arguments of merit she may have in favor of any discovery she may need.
Defendants argue that the Government's allegations of fraudulent transfer are flawed. That general contention is discussed in detail infra.
For all of the foregoing reasons, the Government's motion to amend the Complaint to add Hope Hansel as a defendant is GRANTED, and the Government is directed to serve a summons and Complaint on her within 30 days of receipt of this order.
B. The Government's Motion for Summary Judgment
1. Standard for Summary Judgment
The Government next moves for summary judgment against all current defendants. Under Fed. R. Civ. P. 56 (c), if there is "no genuine issue as to any material fact . . . the moving party is entitled to a judgment as a matter of law . . . where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The burden to demonstrate that no genuine issue of material fact exists falls solely on the moving party. Heyman v. Commerce and Indus. Ins. Co, 524 F.2d 1317 (2d Cir. 1975).
Once the moving party has met its burden, the non-moving party must come forward with specific facts showing there is a genuine issue for trial. Matsushita, 475 U.S. at 585-86. A dispute regarding a material fact is genuine "if evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Summary judgment is proper when reasonable minds could not differ as to the import of the evidence. Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert. denied, 502 U.S. 849, 116 L. Ed. 2d 117, 112 S. Ct. 152 (1991). The motion will not be defeated by a non-movant who raises merely a "metaphysical doubt" concerning the facts or who only offers conjecture or surmise. Delaware & H.R. Co. v. Conrail, 902 F.2d 174, 178 (2d Cir. 1990), cert. denied, 500 U.S. 928 (1991)(quoting Matsushita, 475 U.S. at 586).
The Court turns to the Government's motion for summary judgment with this standard in mind.
2. Judgment Against Sheldon Hansel on Unpaid Tax Liabilities
Sheldon Hansel is foreclosed by the January 1991 decision of the U.S. Tax Court from contesting the issue of his 1980 and 1981 tax liability. "If a claim of liability or non-liability relating to a particular year is litigated, a judgment on the merits is res judicata as to any subsequent proceeding involving the same claim and the same tax year." Commissioner of Internal Rev. Ser. v. Sunnen, 333 U.S. 591, 598-99, 68 S. Ct. 715, 92 L. Ed. 898 (1948). This holds true even where, as appears here, the initial judgment is based on an agreement between the parties in the action before the Tax Court. See United States v. International Bldg. Co., 345 U.S. 502, 506, 97 L. Ed. 1182, 73 S. Ct. 807 (1953).
Sheldon Hansel's liability as to the 1980 and 1981 deficiencies is thus established as a matter of law, and the Court will not revisit it here. See Toker v. United States, 982 F. Supp. 197, 201 (S.D.N.Y.), aff'd, 133 F.3d 908 (2d Cir. 1997).
Accordingly, the Court grants the Government's motion for summary judgment against Sheldon Hansel. Judgment will be entered against him in the amount of $ 222,007.21, plus interest.
2. Fraudulent Conveyances
The liability of a transferee of assets for taxes owed by the transferor under a theory of fraudulent conveyance is governed by state law.
See United States v. McCombs, 30 F.3d 310, 323 (2d Cir. 1994); Ginsberg v. Commissioner of Internal Revenue, 305 F.2d 664, 667 (2d Cir. 1962); United States v. Poio, 1986 U.S. Dist. LEXIS 30482, 1986 WL 31983, at *2 (E.D.N.Y.); United States v. Scharfman, 1981 U.S. Dist. LEXIS 13975, 1981 WL 1855, at *5 n.12 (S.D.N.Y.); United States v. Altmark, 331 F. Supp. 1346, 1347 (E.D.N.Y. 1971). Under New York law,
every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration.