United States District Court, E.D. New York
January 6, 2005.
GEORGE GASSER and GASSER CHAIR COMPANY, INC., Plaintiffs,
INFANTI INTERNATIONAL, INC., MARK INFANTI, NANCY APONTE INFANTI, VITTORIA INFANTI, MARGUERITA INFANTI, MARIELLA INFANTI, AMBOY NATIONAL BANK, GEORGE E. SCHARPF and SANDERS W. GROPPER, in his capacity as Receiver of Infanti International, Inc., Defendants.
The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge
MEMORANDUM AND ORDER
Plaintiffs Gasser Chair Company, Inc. and George Gasser
(collectively, "Gasser" or "Plaintiffs") filed this case seeking,
among other things, to set aside a fraudulent conveyance and to
satisfy a more than $15 million judgment (the "Judgment")
previously entered by this Court in favor of Plaintiffs against
Infanti Chair Manufacturing Corporation ("Infanti Chair") and
Vittorio Infanti ("Mr. Infanti"). Several of the defendants in
this case are Mr. Infanti's children, who are shareholders of
defendant Infanti International ("Infanti International"), a
company founded and incorporated more than two years after entry
of the Judgment (the Infanti children and Infanti International are collectively referred to as
"Defendants").*fn1 In this case, Plaintiffs ultimately seek
to impose liability upon Infanti International, as a successor to
Infanti Chair, and to hold Infanti International liable on the
Now pending before the Court is Defendants' motion for partial
summary judgment on the twelfth, thirteenth, fifteenth and
seventeenth causes of action in the Amended Complaint to the
extent that Plaintiffs seek a declaration that a patent once
owned by Mr. Infanti, which he subsequently conveyed to his
daughter, Vicky, is owned by Plaintiffs because Mr. Infanti's
assignment of the Patent to his daughter, without consideration,
constituted a fraudulent conveyance under New York law.
Defendants argue that because Mr. Infanti was President of
Infanti International at the time he obtained the patent, he did
not have the legal authority to transfer his interest in it to
his daughter, but rather it was and still is rightfully owned by
Infanti International. In opposition, Plaintiffs cross-move for
summary judgment on the twelfth cause of action for fraudulent
conveyance arguing that in deposition testimony, Mr. Infanti
admitted that he did not assume the position of President of
Infanti International until 2001 after he filed the application
for the patent which was subsequently granted and recorded in the
United States Patent & Trademark Office on October 24, 2000.
Plaintiffs thus argue that the facts are undisputed that Mr.
Infanti's purported transfer of the patent to his daughter
without consideration constituted a fraudulent conveyance in Mr.
Infanti's on-going effort to evade the payment of the Judgment. For the reasons set forth below, the Court denies Defendants'
partial motion for summary judgment and grants Plaintiffs'
cross-motion for partial summary judgment.*fn2
The following material facts are undisputed.*fn3 The prior
litigation between Plaintiffs, on the one hand, and Vittorio
Infanti and Infanti Chair, on the other hand, which resulted in
the Judgment against Mr. Infanti and Infanti Chair on August 9,
1996, after a seven-day bench trial, has been the subject of
several decisions, familiarity with which is assumed. See,
e.g., Gasser Chair Co, Inc. v. Infanti Chair Mfg. Corp.,
943 F. Supp. 201 (E.D.N.Y. 1997), judgment vacated by, 95 F.3d 1165
(Fed. Cir. 1996), judgment entered by, 1996 WL 683240 (E.D.N.Y.
Aug. 9, 1996), aff'd, 155 F.3d 565 (Fed. Cir. 1998). On August
28, 1996, just nineteen days after the Judgment was entered,
Infanti Chair filed a voluntary Chapter 11 petition in the United
States Bankruptcy Court for the Eastern District of New York,
bearing index number 96-18413 (CBD). (Defs. Rule 56.1 Statement ¶
1; Am. Compl. ¶ 26). Consequently, Infanti Chair terminated its
business and was subsequently dissolved. (Id.) The bankruptcy
court did not discharge the Judgment. (Am. Compl. ¶ 33). Mr.
Infanti also filed a voluntary personal Chapter 11 bankruptcy
petition on September 18, 1996 in the United States Bankruptcy Court for the District of New Jersey. (Id. ¶ 23).
The bankruptcy court did not discharge the Judgment as against
Mr. Infanti. (Id. ¶ 25). On August 30, 1996, Plaintiffs caused
an execution to be delivered to the United States Marshal for the
District of New Jersey where Mr. Infanti resided. (Affidavit of
Mark Gasser sworn to on October 27, 2004 ("Gasser Aff.") ¶ 11 &
Infanti International was incorporated under the laws of New
York State on February 9, 1999. (Defs. Rule 56.1 Statement ¶ 2).
Sometime in 1999 after Infanti International was founded, Mr.
Infanti designed a chair with "releasably detachable and
interchangeable cushions," which he has termed the "Versi-Chair."
(Id. ¶ 6). On September 10, 1999, Mr. Infanti, as inventor,
filed an application for a patent for the Versi Chair with the
United States Patent and Trademark Office. (Id. ¶ 8). The
United States Patent and Trademark Office issued patent number
6,135,562 for the Versi-Chair (the "Patent") on October 24, 2000.
(Id. ¶ 9).
Mr. Infanti was deposed over the course of three days in 2002
in connection with Plaintiffs' effort to enforce the Judgment.
During preliminary questioning, Mr. Infanti, who was represented
by counsel, acknowledged that even though English was his second
language, he would inform Plaintiffs' counsel if he was unable to
understand any deposition question. (Vittorio Infanti Deposition,
January 16, 2002 ("Infanti 1/16/02 Dep.") at 4-5). At no time was
an interpreter requested, nor did Mr. Infanti indicate a lack of
understanding. Mr. Infanti testified that he was able to form
Infanti International due in large part to $1,300,000 in loans
that he received collectively from Amboy and Scharpf in his individual capacity.*fn4 (Id. at
38-39). When Infanti International was founded, Mr. Infanti's
daughter, Vicky, was named as the corporation's first president.
(Vittorio Infanti Deposition, February 21, 2002 ("Infanti 2/21/02
Dep.") at 121-22).*fn5 Mr. Infanti stated that during the
time that Vicky was President of Infanti International, he served
as its "engineering advisor." (Id. at 121). Mr. Infanti was
absolutely "positive" that he did not become President of Infanti
International until sometime in 2001. (Id. at 122). Mr. Infanti
testified that he has "never been a shareholder or director of"
Infanti International (Infanti 9/15/04 Aff. ¶ 3), nor is there
any suggestion in his deposition testimony that prior to his
appointment as President in 2001, he was ever an officer of
In an affidavit submitted in support of Defendants' motion for
partial summary judgment and in opposition to Plaintiffs'
cross-motion for partial summary judgment, Mr. Infanti testified
that he is currently in charge of Infanti International, and has
been since Infanti International was founded in 1999. (Affidavit
of Vittorio Infanti sworn to November 19, 2004 ("Infanti 11/19/04
Aff.") ¶ 3). His sworn affidavit is at odds with his deposition
testimony given more than two years earlier that he served as an
"engineering advisor" during Vicky's tenure as President of
Infanti International. (Infanti 2/21/02 Dep. at 121). Mr. Infanti claims that based on
his "credit history" and the Judgment, he "was unable to sign
loan documents on behalf of" Infanti International, and thus his
daughter Vicky "may have been listed as President when executing
a loan document on behalf of International." (Id. ¶ 7). His
"credit history" and bankruptcy notwithstanding, loans were made
to Infanti International, in reliance, presumably, upon Mr.
Infanti's signature as "guarantor." With respect to his
deposition testimony given in early 2002, Mr. Infanti stated that
he "was asked a lot of questions using complex legal terms" and
that he "did not understand those terms then, and [he is] still
not certain of their meaning today." (Id. ¶ 8). Mr. Infanti
further commented that the "Court knows" that "English is not
[his] first language" as he is "much more comfortable speaking in
either Italian or Spanish." (Id. ¶ 9). Further, according to
Mr. Infanti, "[a]lthough there was a lawyer present at [his]
deposition, [counsel] was of no assistance to [him] because he
did not object to the questions that used technical terms, and
because [counsel] did not explain those terms to [Mr. Infanti] or
require that the lawyer asking the questions do so." (Id. ¶
10). As was previously noted, at no time did Mr. Infanti ask for
clarification or claim a lack of understanding.
The inconsistencies between Mr. Infanti's affidavits and
deposition testimony are of a piece with his testimony during the
course of the earlier trial at which he acknowledged that he
testified falsely under oath, that he sought to suborn the
perjury of a deposition witness, that he sat silently by while he
knew other witnesses testified falsely, that he forged documents,
and which led the Court to conclude that his testimony confirmed
Professor Wigmore's observation that "the moral efficacy of an
oath has long ceased to be what it once was." Gasser Chair Co.,
943 F. Supp. at 207 (citing VI Wigmore on Evidence (Chadbourne Revision) § 1847).
In opposing Plaintiffs' cross-motion for partial summary
judgment, Amboy submitted documents relating to, inter alia,
two loans (in the amounts of $200,000 and $500,000) which Amboy
extended to Infanti International. Two relevant documents for
this motion are revolving credit notes, dated July 14, 1999 and
April 18, 2000, respectively, that Vicky signed as President of
Infanti International and delivered to Amboy, together with
commercial security agreements and UCC-1 financing statements,
purportedly granting Amboy a perfected security interest in,
among other things, the Patent. (Affidavit of Stanley J. Koreyva
dated November 18, 2004 ("Koreyva Aff.") ¶¶ 3, 7 & Exhs. A & B).
The revolving credit notes, loan agreements and at least one
financing statement were signed by "Vittoria Infanti Valentino"
as President of Infanti International.*fn6 (Id. Exhs. A &
B). Mr. Infanti served as guarantor for the notes, but did not
execute the guarantees in a corporate capacity but merely as
"Vittorio Infanti," with a personal residence at 33 Disbrow Road,
Matawan, New Jersey 07747. (Id.)
Mr. Infanti has never received a salary from Infanti
International. (Infanti 1/16/02 Dep. at 73). All of Mr. Infanti's
living expenses, including such things as his rent, utilities,
cable service, and food, are paid by Infanti International in
consideration for the services he renders to the corporation.
(Id. at 58-60, 85-86).
Mr. Infanti testified that he transferred the Patent to his
daughter Victoria "as a gift" at or around the time (September
10, 1999) he filed his patent application with the United States Patent and Trademark Office. (Infanti 1/16/02 Dep.
at 103; Gasser Aff. Exh. D). Mr. Infanti did not receive any
consideration from Vicky for the assignment of his rights in the
Patent to her. (Infanti 1/16/02 Dep. at 103; Gasser Aff. ¶ 13 &
On September 6, 2002, the Board of Directors of Infanti
International adopted resolutions that stated in relevant part
that "all acts previously taken with respect to contracts of the
Corporation, its Board of Directors, stockholders or Vittorio
Infanti, as acting President . . . from the date of the
Corporation's incorporation in the State of New York to the date
of these resolutions are hereby ratified, confirmed and approved
in all respects." (Tieri Aff. Exh. C). The resolutions also
reflected Mr. Infanti's election to the position of President of
Infanti International as of September 6, 2002, and approved an
employment agreement entered into by Mr. Infanti and the
corporation as of September 6, 2002, pursuant to which Mr.
Infanti would serve in the position of President and Chief
Executive Officer. (Id.). Contrary to his deposition testimony
that he served as "engineering advisor" until he became president
in 2001, Mr. Infanti stated in an affidavit that the September 6,
2002 resolutions "confirm? what had in effect been true for the
prior three and one-half years," namely, that he had been serving
as "President and Chief Executive Officer of" Infanti
International during this time period. (Affidavit of Vittorio
Infanti sworn to September 15, 2004 ("Infanti 9/15/04 Aff.") ¶
A. Summary Judgment Standard
The standard for granting summary judgment is well established.
Federal Rule of Civil Procedure 56(c) provides that summary
judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits . . . show that there is no genuine issue as
to any material fact and that the moving party is entitled to
judgment as a matter of law." A genuine issue as to a material
fact exists when there is sufficient evidence favoring the
nonmoving party such that a jury could return a verdict in its
favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986). The substantive law governing the case will identify
those facts which are material. Id. at 248. Therefore, the
nonmoving party "may not rest upon the mere allegations or
denials" of its pleadings; rather, its response must go beyond
the pleadings to "set forth specific facts showing that there is
a genuine issue for trial." Fed.R.Civ.P. 56(e); see also
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Ying Jing
Gan v. City of New York, 996 F.2d 522, 532 (2d Cir. 1993) (the
nonmoving party must produce evidence in the record and "may not
rely simply on conclusory statements or on contentions that the
affidavits supporting the motion are not credible"). However, in
determining whether summary judgment is appropriate, a court must
resolve all ambiguities and draw all reasonable inferences
against the moving party. See Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United
States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
B. Defendants' Motion for Partial Summary Judgment
Defendants claim that the Court should grant them summary
judgment on the twelfth, thirteenth, fifteenth and seventeenth
causes of action in the Amended Complaint which would entitle
them to an order that Infanti International is rightful owner of
the Patent.*fn7 Defendants argue that two undisputed
material facts compel the conclusion they ask the Court to reach. First, Defendants argue
that it is undisputed that Mr. Infanti "has been President" of
Infanti International at all times since the corporation was
founded on February 9, 1999. Second, Defendants state that it is
undisputed that the Patent was recorded with the United States
Patent and Trademark Office on October 24, 2000 at a time when
Mr. Infanti was President of Infanti International. (Defs. Mem.
Before turning to the merits of Defendants' argument, the Court
examines the validity of Defendants' first premise that it is
undisputed that Mr. Infanti has been President of Infanti
International since its inception.*fn8 In support of this
position, as noted above, Defendants point to Mr. Infanti's
affidavit, in which he states that he has "managed the affairs
of" Infanti International since February 1999 and that in
September 2002, the Board confirmed "what had in effect been true
for the prior three and one-half years, [and] named me
President."*fn9 (Infanti 9/15/04 Aff. ¶ 1). Further, Amboy,
through its Senior Vice President and Chief Financial Officer,
Mr. Koreyva, submits two revolving credit notes, dated July 14,
1999 and April 18, 2000, and accompanying security interests and
financing statements, and states that these documents were signed
by Mr. Infanti acting as President of Infanti International.
(Koreyva Aff. ¶¶ 3, 7).
However, the evidence presented by Defendants (and Amboy) does
not support their argument that it is undisputed that Mr. Infanti was
President of Infanti International in 1999 and 2000. The
resolutions which the Board of Directors of Infanti International
approved on September 6, 2002 provide no support for the
proposition that Mr. Infanti served as President of the company
between February 1999 and October 24, 2000 when he recorded the
Patent with the United States Patent and Trademark Office. The
resolutions make a passing reference to Mr. Infanti having served
as "acting President" at some previous undefined time. For a
fact-finder to conclude that the resolutions establish that Mr.
Infanti served as President of Infanti International at the
relevant time periods (between February 9, 1999 and October 24,
2000) would therefore be an indulgence in speculation, surmise
and conjecture. See, e.g., Patterson v. County of Oneida,
New York, 375 F.3d 206, 218 (2d Cir. 2004) ("his contention in
this regard consists solely of surmise and conjecture, which is
insufficient to overcome defendants' motion for summary
Moreover, Mr. Koreyva's statement that the revolving credit
notes for which Mr. Infanti acted as a guarantor, were signed by
Mr. Infanti "acting as President" is patently wrong. Amboy
submitted a letter dated December 8, 2004 in which it
acknowledged that Mr. Koreyva's affidavit on this point is at
minimum, incorrect, or worse, false. The undisputed evidence
shows that Vicky Infanti signed the revolving credit notes, the
security interest relating to the Patent, and a UCC-1 financing
statement in the capacity of President of Infanti
International.*fn10 (Koreyva Aff. Exhs. A & B).
Further contradicting Defendants' assertion that it is
undisputed that Mr. Infanti was President of Infanti
International at all relevant times is Mr. Infanti's sworn
deposition testimony that he "positively" did not serve as
President of Infanti International between 1999 and 2001:
Q: You are the President of Infanti International,
A: Before it be my daughter Victoria as the
Q: When was she the president?
A: When we started the corporation she was the
president. Victoria started the corporation, but she
have the daughter and she cannot go in and working. I
tell you that last time.
Q: I read your transcript and I don't recall you
telling me Victoria was the president.
A: First of all, we open the corporation and she was
the first one because I be the engineering advisor.
She come into the corporation and then I take the
title to be president because they need someone to be
Q: When did you become president?
A: One year ago, less than one years.
Q: Less than a year ago?
Q: We are now in February of 2002, okay. So you're
saying that sometime within the last year you
A: When we open the corporation, she is the
Q: Please, Mr. Infanti, I have to finish my question.
Q: So sometime in 2001 you became president?
Q: And before 2001 you were not the president?
Q: You're sure about this?
Mr. Moskow: Objection.
Q: You're positive?
Q: But in 2001 you did become the president.
A: Yes. (Infanti 2/21/02 Dep. at 121-22) (emphasis added).
Therefore, Mr. Infanti's deposition testimony given as part of
Plaintiffs' efforts to enforce the Judgment is contradictory to
Mr. Infanti's affidavit testimony submitted in support of
Defendants' partial motion for summary judgment more than two
years later. The inference of perjury on one occasion or the
other is irresistible. Under well established precedent in this
Circuit, this Court must not consider the Infanti affidavits in
ruling on Defendants' partial motion for summary judgment because
they are contradictory and thus demonstrably false. See,
e.g., Mack v. United States, 814 F.2d 120
, 124 (2d Cir. 1987)
("It is well settled in this circuit that a party's affidavit
which contradicts his own prior deposition testimony should be
disregarded on a motion for summary judgment"); Raskin v. Wyatt
Co., 125 F.3d 55, 63 (2d Cir. 1997) (same); Salovaara v.
Eckert, 1998 WL 1661141, at *1 (S.D.N.Y. July 27, 1998)
(refusing to consider affidavit filed in opposition to summary
judgment motion where it contradicted plaintiff's "deposition
testimony in another civil action").
Here, the only explanation offered for Mr. Infanti's
contradictory testimony is that he does not speak English
fluently and thus purportedly did not understand the questions
posed to him at his deposition, and that his lawyer failed to
object to improper questioning. (Infanti 11/19/04 Aff. ¶¶ 8-10).
However, this explanation is neither plausible nor legitimate. At
the beginning of Mr. Infanti's deposition, Plaintiffs' counsel
specifically informed Mr. Infanti that if he did not understand
any questions, he could ask that they be rephrased. Mr. Infanti
testified that he understood this instruction. (Infanti 1/16/02
Dep. at 5-6). At no point during the questioning of Mr. Infanti
about any topic, let alone his status at Infanti International,
did he indicate that he did not understand Plaintiffs' counsel. Further, Mr. Infanti never asked
for an interpreter at his deposition. Moreover, contrary to Mr.
Infanti's affidavit testimony, his then counsel did object to
questioning about his corporate position with Infanti
International in 2001. (Infanti 2/21/02 Dep. at 122). In fact,
the Court has thoroughly read Mr. Infanti's deposition testimony
and it is clear that he had no problem understanding, and
responding to, the many questions that were asked of him, many of
which were technical in nature. Thus, in accordance with the law
of this Circuit, Mr. Infanti's affidavits "may be properly
disregarded based on his inconsistent and contradictory
statements."*fn11 Shabazz v. Pico, 994 F. Supp. 460, 470
(S.D.N.Y. 1998) (citations omitted).
Against this background, the Court finds that the undisputed
facts reveal that Mr. Infanti did not become President of Infanti
International until sometime in 2001, consistent with Mr.
Infanti's sworn deposition testimony.
Turning to the merits of Defendants' claim that Infanti
International owns the Patent because it was obtained and
recorded with the United States Patent and Trademark Office when
Mr. Infanti served as the company's President, both parties agree that determination of the ownership of the Patent is a
question of New York state law. See, e.g., Great Lakes Press
Corp. v. Froom, 695 F. Supp. 1440, 1445 (W.D.N.Y. 1987)
(hereinafter "Froom"); cf. E.F. Drew & Co. v. Reinhard,
170 F.2d 679, 682 (2d Cir. 1948) (federal common law and state law
are virtually identical with respect to patent ownership) (L.
The general rule is that an individual owns the patent rights
in the subject matter of which he is an inventor even though he
conceived of the subject matter or reduced it to practice during
the course of employment. See Cahill v. Regan, 5 N.Y.2d 292,
296-97, 157 N.E.2d 505, 184 N.Y.S.2d 348 (1959); Restatement
(Second) of Agency § 397, comment a (even where "one is employed
. . . to work in a particular line in which he is an expert,
there is no inference that inventions which he makes while
working belong to the employer"). Thus, the "mere existence of an
employer-employee relationship does not of itself entitle the
employer to an assignment of any inventions which the employee
devises during the employment." United States v. Dubilier
Condenser Corp., 289 U.S. 178, 182 (1933). There are at least
two exceptions to this general rule which may be applicable in
First, an officer or director's fiduciary duty may include the
obligation to assign a patent to the corporation if the officer
or director invented the subject matter of the patent while
employed by the corporation and the invention relates to the
business of the corporation. This rule was articulated early on
in Mechanical Plastics Corp. v. Thaw, 197 U.S.P.Q. 651, 654
(Sup.Ct. Nassau Co. 1977) (hereinafter "Thaw"), and later
followed by a federal district court interpreting New York law,
see Froom, 695 F. Supp at 1447-48.*fn12
In Radiant Energy Corp. v. Roberts-Gordon, Inc.,
639 N.Y.S.2d 237, 238, 225 A.D.2d 1025, 1025 (4th Dep't 1996), the appeals
court cast doubt on this principle by stating that "New York has
not adopted the rule announced in" such cases as Froom, and
held that officers of a corporation did not have the obligation
to assign patents they invented during their employment because
they did not have "sufficient control over the management of the
corporation or exercised the power of a president or chief
executive officer to come within that rule." Nonetheless, the
only support that the court in Radiant Energy Corp. found for
the conclusion it reached was the New York Court of Appeals
decision in Cahill, 5 N.Y.2d at 296-97. Cahill, however, did
not address the issue whether corporate officers and directors
have a fiduciary duty to assign patents they invent while working
for a company so as not to waste a corporate opportunity. Thus,
the holding in Radiant Energy Corp. is not supported by even
the thinnest reed. The better reasoned decisions, including
Froom and Thaw, hold that an officer or director of a
corporation generally has a fiduciary duty to assign patents to
that corporation. See also Golden Eagle/Satellite Archery,
Inc. v. Epling, 244 A.D.2d 959, 959-60, 665 N.Y.S.2d 169
(4th Dep't 1997) (president and chief executive officer must
assign patents to corporation where he "worked on the patent
using plaintiff's employees and computers"); Fish Prods., Inc.
v. World Wide Fish Prods., Inc., 100 A.D.2d 81, 88, 474 N.Y.S.2d 281, 285 (1st Dep't 1984) (employee
"is at all times bound to exercise the utmost good faith and
loyalty in the performance of his duties"), appeal dismissed,
63 N.Y.2d 625 (1984); cf. Burden v. Burden Iron Co.,
80 N.Y.S. 390, 395 (Sup.Ct. Rensselaer Co. 1903) (president not
required to assign patent where he did not receive a salary "and
was under no obligation to perform any such services for the
company, or to give to it the results of his inventive genius");
Tulumello v. W.J. Taylor Int'l Constr. Co., 84 A.D.2d 903,
446 N.Y.S.2d 673, 674 (4th Dep't 1981) ("Considering that Taylor Co.
[the complaining corporation] was a close corporation completely
run by Taylor and that Tulumello [the alleged diverter] was only
a nominal officer thereof, we find no basis to subject him to the
strict fiduciary duty of a responsible officer"); Smart Parts,
Inc. v. WDP Ltd., 2004 WL 1900411, at *11 (D. Or. Aug. 23, 2004)
("I decline to hold that a non-employee, minority shareholder,
who did not sign an agreement to assign his patent rights, has an
implied obligation to do so").
In any event, the documentary and credible testimonial evidence
drive the Court to conclude that it was his daughter and not Mr.
Infanti who was President of Infanti International when he
created his invention or had the Patent for it recorded, and he
had no duty, fiduciary or otherwise, to assign his interest in
the Patent to the corporation.
Second, where an employee is hired to invent something or solve
a particular problem, the invention of the employee, and the
Patent for it, belongs to the employer. See Cahill,
5 N.Y.2d at 296 (citing Standard Parts Co. v. Peck, 264 U.S. 52 (1924)).
The Court notes, however, that Defendants have not argued or
presented any evidence that Mr. Infanti was an "employee" between
the time Infanti International was founded and when the Patent was recorded with the United States Patent and
Trademark Office. For example, Mr. Infanti's deposition testimony
makes clear that Infanti International did not pay him a salary,
but paid all of his living expenses in return for the work he
performed on behalf of the corporation. See Infanti 1/21/02
Dep. at 58. The corporation did not pay any taxes for which they
would have been liable had Mr. Infanti been regarded as an
employee. Id. at 73. Therefore, the undisputed evidence compels
the conclusion that Infanti International did not regard Mr.
Infanti as an employee, and Burden, supra, is exquisitely
apposite. See Burden, 80 N.Y.S. at 395.
Further, Mr. Infanti testified that he served as Infanti
International's "engineering advisor" before he became President
and Chief Executive Officer sometime in 2001. (Infanti 2/21/00
Dep. at 121). Defendants have not presented any evidence to the
contrary, nor have they raised a genuine issue of material fact,
as to whether he was hired to invent a chair or "given the task
of devoting his efforts to a particular problem." Thus,
Defendants' partial summary judgment motion is denied.
C. Plaintiffs' Cross-Motion for Partial Summary Judgment
Plaintiffs cross-move for summary judgment on the twelfth cause
of action to the extent that, under the New York Debtor and
Creditor Law ("DCL"), they claim that Mr. Infanti's assignment of
his interest in the Patent to his daughter Vicky was
constructively fraudulent and therefore it should be set aside or
disregarded under DCL §§ 273, 273-a and 278(1).*fn13 Each of
these provisions is discussed in turn. DCL § 273 provides that "[e]very conveyance*fn14 made and
every obligation incurred by a person who is . . . 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." While the burden of proving insolvency and
lack of fair consideration is generally on the party challenging
the conveyance, "where a transfer occurs without consideration,
the defendant is presumed to have been insolvent at the time of
the transfer and may only rebut the presumption by proving its
continued solvency after the date of the transfer." In re Flutie
New York Corp., 310 B.R. 31, 54 (Bankr. S.D.N.Y. 2004) (citing
RTC Mortg. Trust 1995-S/N1 v. Sopher, 171 F. Supp. 2d 192, 199
(S.D.N.Y. 2001)). An individual is deemed to be "insolvent" when
the "present fair salable value of his assets is less than the
amount that will be required to pay his probable liability on his
existing debts as they become absolute and matured." N.Y. Debt. &
Cred. Law § 271. "A claim is said to have matured . . . when it
`has become absolutely due without contingency, although not
necessarily liquidated nor presently payable.'" Shelly v. Doe,
173 Misc.2d 200, 204, 660 N.Y.S.2d 937, 940 (Cty. Ct. St.
Lawrence Co. 1997) (citing Black's Law Dictionary at 1079),
aff'd as modified, 249 A.D.2d 756, 671 N.Y.S.2d 803 (3d Dep't
1998). A claim under DCL § 273 does not require proof "of an
intent to deceive or any of the traditional elements of fraud."
Intuition Consol. Group, Inc. v. Dick Davis Publishing Co.,
2004 WL 594651, at *3 (S.D.N.Y. Mar. 25, 2004) (citations
omitted). In addition, in cases where a conveyance has been made from one
family member to another and the facts relating to the type of
consideration are within their exclusive control, the defendant
has the burden of proving the adequacy of the consideration.
United States v. McCombs, 30 F.3d 310, 324 (2d Cir. 1994). The
Second Circuit has explained that "fair consideration" under the
DCL requires the following: (1) the assignee of the debtor's
property "must either (a) convey property in exchange or (b)
discharge an antecedent debt in exchange; (2) such exchange must
be a fair equivalent of the property received; and (3) such
exchange must be in good faith." HBE Leasing Corp. v. Frank,
61 F.3d 1054, 1058-59 (2d Cir. 1995) (internal quotations omitted).
Thus, the hallmarks of a valid conveyance are an exchange made in
return for a fair equivalent and good faith. See, e.g., In
re White Metal Rolling and Stamping Corp., 222 B.R. 417, 430
(Bankr. S.D.N.Y. 1998) ("a transfer made by an insolvent debtor
to an affiliate or insider in satisfaction of an antecedent debt
lacks good faith and is constructively fraudulent") (citations
Here, there is no dispute that Mr. Infanti is liable to
Plaintiffs for the Judgment, and has not paid any or at best
little of it to date. As such, Mr. Infanti is and was "insolvent"
as that term is defined in the DCL when he assigned his interest
in the Patent to his daughter, Vicky, without consideration.
Moreover, regardless of who bears the burden of proof on the
issue of whether Vicky paid "fair consideration" for the
assignment of Mr. Infanti's rights in the Patent, the facts are
undisputed that none was given. Indeed, Defendants themselves
argue that the assignment which Mr. Infanti characterized as a
"gift" is invalid because the Patent is owned by Infanti
International and therefore Mr. Infanti did not have any rights
in the Patent to assign to his daughter. (Defs. Mem. at 6). However, as set forth above, the undisputed
facts reveal that at the time when Mr. Infanti assigned the
Patent to his daughter, Infanti International did not have any
rights to the Patent, and Mr. Infanti was its sole owner.
Therefore, the Court concludes that Mr. Infanti's assignment of
the Patent to Vicky lacked any consideration, let alone "fair
consideration," under the DCL. Accordingly, Plaintiffs'
cross-motion for partial summary judgment on their claim under
DCL § 273 is granted.
The Court also finds that Plaintiffs have demonstrated that no
genuine issue of material fact exists precluding the grant of
summary judgment on their claim under DCL § 273-a. DCL § 273-a
"fleshed out the meaning of a fraudulent conveyance by
stigmatizing certain conveyances made during litigation." Orr v.
Kinderhill Corp., 991 F.2d 31, 35 (2d Cir. 1993). Under that
statute, "[e]very 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 the final
judgment for the plaintiff, the defendant fails to satisfy the
judgment." N.Y. Debt. & Cred. Law § 273-a. Here, as discussed
above, Mr. Infanti was the Plaintiffs' judgment debtor in the sum
of more than $15 million, and his assignment of the Patent to his
daughter was without "fair consideration." See, e.g.,
Barnett v. Bell, 213 A.D.2d 276, 276-77, 623 N.Y.S.2d 590, 590
(1st Dep't 1995) (affirming summary judgment to plaintiff on
claim under DCL § 273-a where defendant purported to convey
property four days after verdict was rendered against him);
Kavanaugh v. Rubin, 230 A.D.2d 892, 893, 646 N.Y.S.2d 868, 869
(2d Dep't 1996) (husband's transfer of realty to wife's estate
"without fair consideration, at a time when a money judgment had
been entered against him" and at a time when the judgment was not satisfied constitutes a
fraudulent conveyance under DCL § 273-a). Therefore, the Court
grants Plaintiffs' partial motion for summary judgment on this
DCL § 278 allows creditors, such as Plaintiffs, who have
established that a conveyance is fraudulent and are in possession
of a mature claim, to seek an order from the Court to "set aside"
the conveyance "to the extent necessary to satisfy his claim" or
to "[d]isregard the conveyance and attach or levy execution upon
the property conveyed." The purpose of the remedy fashioned by
DCL § 278 is to grant the creditor the right "to be paid out of
assets to which he is actually entitled and to set aside the
indicia of ownership which apparently contradict that right."
Hearn 45 St. Corp. v. Jano, 283 N.Y. 139, 143, 27 N.E.2d 814,
816-17 (1940) (citations omitted). Here, it is undisputed that
Vicky Infanti was not a bona fide purchaser of Mr. Infanti's
rights in the Patent, which would be a defense to Plaintiffs'
application to set aside the conveyance if she were. N.Y. Debt. &
Cred. Law § 278(1). Moreover, contrary to Amboy's arguments,
there is no competent evidence in the record to raise a material
issue of fact that Mr. Infanti was President of Infanti
International when he developed the Patent and had it recorded
with the United States Patent & Trademark Office. (Amboy Mem. at
5-9). As such, Plaintiffs have met their burden to prove that, as
a matter of law, they are entitled to an order setting aside Mr.
Infanti's assignment of the Patent to Vicky as a fraudulent
conveyance to the extent necessary to satisfy the Judgment.
See, e.g., McCarthy v. Sessions, 170 A.D.2d 25, 28,
572 N.Y.S.2d 749, 751 (3d Dep't 1991); BSL Dev't Corp. v. Aquabogue
Cove Partners, Inc., 212 A.D.2d 694, 696, 623 N.Y.S.2d 253, 255
(2d Dep't 1995) (summary judgment granted to creditors under DCL
§ 273 and the trial court "properly directed the Clerk . . . to set the conveyance aside
until [the creditor's] money judgment against the [debtor] was
satisfied"), leave to appeal denied, 85 N.Y.2d 811,
655 N.Y.S.2d 287 (1995); Orr, 991 F.2d at 36 ("the transaction was
not supported by fair consideration, and accordingly, the
district court properly set it aside as a fraudulent
Plaintiffs also seek relief under DCL § 278(1)(b), which would
allow them to "[d]isregard the conveyance and attach or levy
execution upon the property conveyed." Amboy objects to the
granting of this relief on two grounds. First, it argues that
Infanti International owns the Patent and thus Plaintiffs'
delivery of the execution to the Marshal relating to the Judgment
obtained against Mr. Infanti "does not impact Infanti
International's right in the" Patent. (Amboy Mem. at 9). However,
as set forth above, since the Patent was owned by Mr. Infanti and
not Infanti International (there is no evidence that Mr. Infanti
or Vicky ever transferred a valid interest in the Patent to
Infanti International), this argument lacks merit.
Second, Amboy argues that it has a superior claim to the Patent
because of the security agreement and UCC-1 financing statement
that was recorded with the New York Department of State on
September 23, 1999. (Amboy Mem. at 9-10). However, since, as
stated above, Infanti International never owned the Patent, it,
as a debtor under the Uniform Commercial Code, could not transfer
any interest in the Patent to Amboy. See N.Y.U.C.C. §
9-203(b)(2) (a security interest is enforceable against a debtor,
like Infanti International, only where the debtor "has rights in
the collateral or the power to transfer rights in the collateral
to a secured party"); Emergency Beacon Corp. v. Glatzer,
665 F.2d 36, 40 (2d Cir. 1981) ("if the debtor has no rights in the
collateral, no security interest in that collateral comes into existence") (citation
In this respect the Court notes that Amboy has not submitted
any evidence that it even has a valid security interest in the
Patent because pursuant to the letter Amboy received from the New
York Department of State's office, the financing statement lapsed
on September 23, 2004 almost two months after Amboy's
submission of opposition papers to Plaintiffs' cross-motion for
partial summary judgment. Koreyva Aff. Exh. A (letter dated
September 23, 1999 sent to Amboy from New York Department of
State Uniform Commercial Code Division). Amboy has provided no
indication that it filed the necessary paperwork to continue its
purported security interest in the Patent. (Id.) Therefore, in
the alternative, the Court finds that Plaintiffs are entitled to
attach or levy execution on the Patent under DCL § 278(1)(b).
D. Plaintiffs' Remedy
As set forth above, Plaintiffs are entitled to summary judgment
on their twelfth cause of action to declare the conveyance of the
Patent from Mr. Infanti to his daughter, Vicky, fraudulent, and
to also levy execution on the Patent. Realizing that interest in
the Patent cannot be secured through execution,*fn16
Plaintiffs moved the Court by order to show cause (filed one week after briefing was concluded on the
motions for summary judgment) for an order pursuant to
Fed.R.Civ.P. 69(a), directing delivery of the Patent to the United
States Marshal under N.Y.C.P.L.R. § 5225(a), or in the
alternative, for the appointment of a receiver under N.Y.C.P.L.R.
Three days before the return date on Plaintiffs' order to show
cause, the Court received a letter dated December 13, 2004, from
Scharpf, acting pro se, in which he opposed Plaintiffs'
application.*fn18 He claimed that to secure the repayment of
loans he made to Infanti International in the amount of $835,000
between September 10, 2001 and October 17, 2002, Mr. Infanti and
his daughter, Vicky, assigned their interests in the Patent to
him. That assignment was recorded in the United States Patent and
Trademark Office on October 8, 2002 in addition to a financing
statement recorded in the Richmond County Clerk's office on March
19, 2002. Scharpf thus claims a valid security interest in the
Patent superior to any claim to it asserted by Plaintiffs.
Perhaps due to the lateness of his letter, Plaintiffs did not
address Scharpf's claim prior to the hearing on December 17,
2004, nor has his claim been addressed thereafter. Prudence and the interests of finality dictate that a conclusive
determination of those competing claims be made. Towards that
end, a hearing will be held at 10:00 am on January 21, 2004.
Written submissions in support of their respective positions
shall be simultaneously served and filed on or before 3:00 pm on
January 18, 2004.
For the foregoing reasons, Defendants' partial motion for
summary judgment on the twelfth, thirteenth, fifteenth and
seventeenth causes of action in the Amended Complaint is denied
and Plaintiffs' cross-motion for partial summary judgment on the
twelfth cause of action in the Amended Complaint is granted.
Pending the hearing on January 21, 2004 and determination of
Plaintiffs' motion, pursuant to Fed.R.Civ.P. 69(a), for an
order directing the assignment of the Patent to the United States
Marshal under N.Y.C.P.L.R. § 5225(a) or, in the alternative, the
appointment of a receiver to take assignment of the Patent under
N.Y.C.P.L.R. § 5228(a), Vittorio Infanti and George E. Scharpf
continue to be enjoined from transferring, disposing, assigning,
encumbering or permitting any liens upon the Patent or upon any
right, title and interest that they have in the Patent.