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U.S. v. HANSEL

March 25, 1999

UNITED STATES OF AMERICA, PLAINTIFF,
v.
SHELDON G. HANSEL, CHRISTY HANSEL, GRANT HANSEL, SHELLEY HANSEL AND EUNICE HANSEL, DEFENDANTS.



The opinion of the court was delivered by: Mcavoy, Chief Judge.

MEMORANDUM — DECISION & ORDER

Plaintiff United States of America ("plaintiff") commenced an action against defendants pursuant to 26 U.S.C. § 7401 and 7403 to reduce tax assessments to judgment against Sheldon Hansel and to set aside certain alleged fraudulent conveyances of stock to Defendants Christy, Grant, Shelley, and Hope Hansel.*fn1 By Memorandum — Decision & Order dated March 14, 1998, familiarity with which is assumed, see United States v. Hansel, 999 F. Supp. 694 (N.D.N Y 1998), the Court granted summary judgment against Sheldon, Christy, Grant and Shelley Hansel.*fn2 Plaintiff now moves pursuant to FED. R. CIV. P. 56 seeking summary judgment against Defendant Hope Hansel declaring that the one share of stock transferred to Eunice Hansel and re-transferred to Hope Hansel be set aside as fraudulent.

I. BACKGROUND

The facts surrounding the instant litigation were fully set forth in the Court's prior decision, Hansel, 999 F. Supp. 694. In brief, in 1983 the Internal Revenue Service ("IRS") commenced an examination of Sheldon and Hope Hansel's tax liabilities for the years 1980 and 1981. In 1984, Sheldon and Hope transferred their farm land, buildings, and equipment into a farm corporation entitled Hanwinsel Farms, Inc. ("Hanwinsel") in exchange for all 200 shares of outstanding stock in the Corporation (100 shares to Sheldon, 100 to Hope). On June 25, 1985, the IRS sent Sheldon and Hope a Notice of Deficiency in the amounts of $70,691.00 for 1980 and $86,603.00 for 1981, plus interest and penalties. In September 1985, Sheldon and Hope filed a petition with the United States Tax Court for a determination of the tax liabilities set forth in the Notice of Deficiency.

In 1987, Sheldon transferred 45 shares of stock in Hanwinsel equally to each of his children. In 1989, Sheldon transferred his remaining 55 shares as follows: 30 shares equally to each of his children; 25 shares to his mother, Eunice Hansel.

On January 23, 1991, the Tax Court determined Sheldon to have deficiencies of $20,909.00 for 1980 and $53,030.00 for 1981. Shortly before her death in 1995, Eunice transferred her 25 shares as follows: 8 shares to each of her grandchildren (Sheldon and Hope's children); 1 share to Hope.

The plaintiff thereafter commenced the instant litigation seeking to: (1) reduce to judgment the tax assessments against Sheldon Hansel; (2) set aside the fraudulent transfers by Sheldon Hansel to Christy, Grant, Shelley, and Eunice; and (3) obtain judgments against Christy, Grant, Shelley and Eunice in amounts equal to the value of the shares of stock conveyed to them, plus dividends, profits, and increases in the value of the stock. By Memorandum — Decision & Order dated March 14, 1998, Hansel, 999 F. Supp. 694, the Court granted summary judgment to plaintiff and declared the stock conveyances to be fraudulent under New York Debtor and Creditor Law § 273. Judgment was subsequently entered in favor of the United States and against Sheldon Hansel in the amount of $222,007.21, plus interest. The judgment provided that "[t]he conveyances of that interest in the stock of Hanwinsel Farms, Inc., for no consideration by Sheldon G. Hansel to Eunice, Christy, Grant and Shelley Hansel were fraudulent under N Y Debt. & Cred. L. § 273."

Plaintiff now moves pursuant to Fed. R.Civ.P. 56 seeking summary judgment that one of the shares of stock fraudulently transferred to Eunice and re-transferred by her to Hope remains tainted and must be set aside.

II. DISCUSSION

A. Fraudulent Transfer of Stock to Eunice Hansel

The issue of whether Sheldon fraudulently conveyed 25 shares of stock in Hanwinsel to his mother, Eunice, has already been decided by this Court in its prior Memorandum — Decision & Order. See Hansel, 999 F. Supp. at 701 ("[T]here is no genuine issue of fact as to any of the elements of § 273. The conveyances were therefore fraudulent under New York law, and the Government is entitled to summary judgment against the transferees."). That finding is the law of the case and defendant has offered no reasons why the Court should not adhere to its prior ruling. See Prisco v. A & D Carting Corp., 168 F.3d 593, 606 (2d Cir. 1999). There are no new facts, intervening changes of law, or other factors demonstrating that the Court made an error of law requiring departure from the prior decision. See id.

Because plaintiff is a creditor, see United States v. Kaplan, 267 F.2d 114, 117 (2d Cir. 1959); United States v. Scharfman, 1981 WL 1855, at * 5 (S.D.N.Y. Aug. 14, 1981), and the Court already found the transfers to be fraudulent pursuant to § 273, the Court need not consider whether the transfers were also fraudulent under § 276.

B. Whether Hope Hansel is a Purchaser in Good Faith

  The Court's inquiry does not end there because Eunice
re-transferred one share of Hanwinsel stock to Hope. Thus, the
conveyance may be set aside only if Hope is not a purchaser in
good faith. See N.Y. Debt. & Cred. L. ยงยง 278, 279; Atlantic
Bank of New York v. ...

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