Maidenbaum v. Marcus

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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SHALOM S. MAIDENBAUM,

Plaintiff,

MEMORANDUM & ORDER

- against - No. 23-cv-3039 (KAM)(ARL)

SEYMOUR H. MARCUS A.K.A.

SY H. MARCUS, ELLEN REA MARCUS,

Defendants.

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KIYO A. MATSUMOTO, United States District Judge:

Plaintiff Shalom S. Maidenbaum (“Plaintiff”) commenced the

instant diversity action against Defendants Seymour H. Marcus (“Sy

Marcus”) and Ellen Rea Marcus (“Ellen Marcus”) (collectively,

“Defendants”), alleging tortious interference with enforcement of

a judgment (“Count One”), and aiding and abetting a fraudulent

conveyance and conspiracy to defraud (“Count Two”). (ECF No. 14,

Amended Complaint (“Am. Compl.”) ¶¶ 40-63.) Presently before the

Court is Defendants’ motion to dismiss under Federal Rules of Civil

Procedure 12(b)(1), 12(b)(2), and 12(b)(6), or, in the

alternative, judgment on the pleadings under Federal Rule of Civil

Procedure 12(c) (ECF No. 65, “Mot.”). Defendants argue that (1)

the Court lacks subject-matter jurisdiction, (2) the Court lacks

personal jurisdiction, and (3) Plaintiff has failed to state a

claim upon which relief may be granted.

For the reasons herein, the Court concludes that: (1) the

Court has subject-matter jurisdiction over Plaintiff’s claims, (2)

the Court may exercise personal jurisdiction based on Defendants’

contacts and actions in New York, and (3) Plaintiff has alleged

sufficient facts to state a claim as to Count One, but fails to

state a claim as to his aiding and abetting fraudulent conveyance

claim in Count Two. Accordingly, Defendants’ motion to dismiss is

DENIED in part and GRANTED in part. Plaintiff is GRANTED thirty

(30) days from the entry of this Memorandum and Order to amend his

fraudulent conveyance claims.

BACKGROUND

The Court accepts the allegations in Plaintiff’s Amended

Complaint as true for the purpose of resolving Defendants’ motion

to dismiss under Rule 12(b)(6). J.S. ex rel N.S. v. Attica Cent.

Sch., 386 F.3d 107, 110 (2d Cir. 2004).

I. Factual Background

Plaintiff, Shalom S. Maidenbaum, is a New York resident

seeking to collect judgments entered in his favor against judgment

debtors Aaron Fischman (“Fischman”), Cardis Enterprises

International, B.V., Cardis Enterprises International, N.V.,

Cardis Enterprises International (USA), Inc, and Choshen Israel,

LLC (collectively “Judgment Debtors,” or excluding Fischman,

“Cardis”). (Am. Compl. ¶¶ 1, 4, 11.) Fischman was a New York

resident at the time of the events alleged in the Amended

Complaint. (Id. ¶ 9(b).)

Cardis, founded by Fischman, was promoted as an investment

opportunity based on claims that it owned highly valuable

developmental stage credit card processing technology with

potential applications for cryptocurrency transactions. (Id.

¶ 13.) Substantial amounts of Cardis’ receipts were paid to

accounts in the name of Lawrence Katz, Esq. (“Katz”), an attorney

for Cardis. (Id. ¶ 14.) Instead of forwarding all amounts to

Cardis, Katz would divert portions of the funds to Fischman’s wife,

Nina Fischman, and other individuals, businesses or charities

associated with Fischman. (Id.) Fischman also diverted portions

of his executive compensation to his wife, and then to a trust

controlled by his wife. (Id. ¶ 15.)

Plaintiff and other investors sued Fischman and Cardis

alleging securities fraud in connection with the solicitation of

their investments and Fischman’s misappropriation of their capital

contributions to Cardis.1 (Id. ¶ 17.) On February 23, 2015,

Plaintiff obtained two promissory notes from Cardis, Chosen and

Fischman in the amounts of $2,000,000 and $275,000. (Id. ¶ 12.)

Neither note was paid upon maturity. (Id.) In June 2016,

Plaintiff sought and obtained two judgments by confession against

1 Fischman’s fraudulent activities in connection with Cardis led to his

indictment in 2020 on charges of securities fraud, grand larceny, money

laundering and conspiracy. (Am. Compl. ¶ 18.) Fischman pled guilty to

criminal violations of General Business Law § 352-c(5) in 2022. (Id.)

Cardis, Chosen and Fischman in the amounts $2,576,446.78 and

$355,542.98 (“State Court Judgments”). (Id. ¶ 11.) The total

amount due at the filing of the Amended Complaint, including post-

judgment interest from the State Court Judgments, is

$4,734,457.92. (Id. ¶ 12.) Plaintiff alleges that the diversions

of Cardis’ receipts and Fischman’s compensation, as well as other

fraudulent conveyances, prevented Plaintiff from collecting any

portion of his judgment. (Id. ¶ 16.)

In 2018, during Plaintiff’s collection efforts, Fischman

founded a new company named Ultimas, Inc., which was later renamed

to Ultimax Digital, Inc. (“Ultimax”). (Id. ¶ 19.) Fischman was

originally the sole or controlling shareholder in Ultimax. (Id.)

Immediately after Ultimax’s formation, Fischman took steps to

transfer Cardis’ intellectual property rights and developmental

technology to Ultimax. (Id. ¶ 20.) Specifically, Cardis licensed

to Ultimax a source code (the “Source Code”) that was critical to

the technology that Cardis had intended to develop. (Id.) Ultimax

also hired software engineers and consultants who had previously

worked for Cardis, and possessed unique understandings of the

Source Code. (Id.)

Plaintiff issued subpoenas to Fischman, Ultimax, and

Ultimax’s Chief Executive Officer, Jesse Sutton (“Sutton”), as

part of his effort to locate, restrain, and levy on Fischman’s

shares in Ultimax and identify appropriate garnishees for those

shares. (Id. ¶ 22.) Despite Plaintiff obtaining several court

orders between 2018 to 2022 directing compliance with Plaintiff’s

subpoenas, neither Fischman, Ultimax nor Sutton complied with the

subpoenas. (Id.) As a result, Plaintiff was unable to collect

any portion of his judgment. (Id.)

To continue to frustrate Plaintiff’s collection efforts,

Fischman engaged in various schemes that involved transferring his

Ultimax stock to various individuals or entities in exchange for

either: (1) cash deposits to various bank accounts out of

Plaintiff’s reach, such as bank accounts that Plaintiff did not

know about, bank accounts previously unrestrained because of its

minimal balances at the time of the CPLR § 5222 notice, and bank

accounts in the name of Fischman’s wife, but controlled by

Fischman, (2) past or future legal services by attorneys in defense

of Plaintiff’s collection efforts, or (3) payments to attorneys.

(Id. ¶ 26.)

Defendants, Seymour “Sy” Marcus and Ellen Marcus, are husband

and wife and citizens of either Massachusetts or Florida. (Id. ¶¶

3, 6, 7.) Plaintiff alleges that, as part of Fischman’s scheme to

frustrate Plaintiff’s attempts at collection, Fischman transferred

a portion of his Ultimax shares to entities over which Defendants

exercised de facto control in exchange for consideration in the

form of cash deposits into accounts, payment of past or future

legal services, which Plaintiff could not execute upon. (Id. ¶¶

27, 30.) Defendants’ entities included the Level Up Revocable

Trust, Copper Trust, SMB Trust, Symar Irrevocable Trust, Jomar

Irrevocable Trust and Pamar Irrevocable Trust. (Id. ¶ 28.)

In consideration for Fischman’s transfers of Ultimax stock to

Defendants’ entities, Sy Marcus agreed with law firm Kasowitz

Benson Torres LLP (“Kasowitz”) in a contract executed on July 21,

2021, to pay Fischman’s legal fees for services provided by

Kasowitz in connection with Fischman’s New York state criminal

case. (Id. ¶ 30.) Plaintiff alleges that this agreement between

Kasowitz and Sy Marcus was later informally expanded to cover

payments for other legal work rendered to Fischman, including legal

work opposing Plaintiff’s collection efforts. (Id. ¶ 32.)

As part of Defendants’ alleged scheme, Defendants made three

direct payments to Kasowitz totaling $430,000 for Fischman’s legal

defense. (Id. ¶ 33.) Specifically, Defendants paid $125,000 to

Kasowitz on June 7, 2022, $105,000 on July 7, 2022, and $200,000

on July 27, 2022. (Id.) Plaintiff alleges that Defendants made,

participated, and facilitated these payments to Kasowitz by

ordering wire transfers out of a so-called “house account” for the

Defendants’ family businesses. (Id. ¶¶ 34, 35.) In addition to

the $430,000 of direct payments, Kasowitz also received an

additional $1,089,933.52 in untraceable payments made on

Fischman’s behalf. (Id. ¶ 37.) As Defendants were contractually

obligated to pay Fischman’s legal fees with Kasowitz, Plaintiff

alleges that Defendants were also the source of the untraceable

payments made to Kasowitz. (Id.)

Plaintiff further alleges that Defendants were fully aware

that they were helping Fischman evade Plaintiff’s judgment

collection efforts. (Id. ¶ 33.) First, Plaintiff alleges that

Defendants had received invoices from Kasowitz identifying its

work as “Frozen accounts-Preliminary Assessment” – referencing a

frozen Fischman family trust account pursuant to Plaintiff’s

restraining notice. (Id. ¶ 36.) Second, on July 23, 2021,

Defendant Sy Marcus met with Plaintiff and Plaintiff’s counsel in

Cedarhurst, New York, and discussed Plaintiff’s judgments against

Fischman. (Id.) At this meeting, Marcus acknowledged that he had

known about Plaintiff’s judgments against Fischman for several

years. (Id.)

Plaintiff alleges that, as a result of Defendants’ scheme

with Fischman, he has been unable to execute on his judgment and

has incurred over $500,000 in attorneys’ fees in his efforts to

execute on Fischman’s personal property, including Fischman’s

Ultimax common stock. (Id. ¶¶ 38, 39.)

II. Procedural Background

On July 17, 2023, Plaintiff filed the instant Amended

Complaint, asserting claims of (1) tortious interference with

enforcement of a judgment, and (2) aiding and abetting a fraudulent

conveyance and conspiracy to defraud. (Id. ¶¶ 40-63.) Plaintiff

seeks compensatory damages in an amount no less than $930,000,

punitive damages in an amount no less than $2,000,000, and

interest, costs, and fees. (Id. at 16.)

On July 31, 2023, Defendants moved for a pre-motion conference

to discuss its anticipated motion to dismiss pursuant to Federal

Rules of Civil Procedure 12(b)(2) and 12(b)(6). (See ECF No. 15.)

Plaintiff responded to Defendants’ letter motion for a pre-motion

conference on August 3, 2023. (See ECF No. 16.) On August 23,

2023, the Court held a pre-motion conference to discuss Defendants’

anticipated motion to dismiss and directed the parties to engage

in jurisdictional discovery regarding Defendants’ contacts and

actions in New York. (See Minute Entry dated August 23, 2023.)

On August 20, 2024, Defendants’ fully briefed motion to dismiss

was filed with the Court. (See ECF Nos. 64, 65, 66, 67.) The

Court now considers Defendants’ motion to dismiss.

LEGAL STANDARD

Defendants move to dismiss this action under Federal Rules of

Civil Procedure 12(b)(1) for lack of subject matter jurisdiction,

12(b)(2) for lack of personal jurisdiction, and 12(b)(6) for

failure to state a claim. In the alternative, Defendants move for

judgment on the pleadings under Federal Rule of Civil Procedure

12(c). (Mot. at 1.)

I. Motion to Dismiss for Lack of Subject-Matter Jurisdiction

A motion to dismiss under Rule 12(b)(1) challenges the

court’s subject-matter jurisdiction to adjudicate the action.

Brokamp v. James, 66 F.4th 374, 386 (2d Cir. 2023). The plaintiff

has the burden to establish subject-matter jurisdiction by a

preponderance of the evidence. Collins v. United States, 996 F.3d

102, 108 (2d Cir. 2021). In resolving a motion under Rule

12(b)(1), the Court may consider affidavits or other materials

beyond the pleadings. Harty v. West Point Realty, Inc., 28 F.4th

435, 441 (2d Cir. 2022).

II. Motion to Dismiss for Lack of Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction

pursuant to Federal Rule of Civil Procedure 12(b)(2), “the

plaintiff bears the burden of establishing that the court has

jurisdiction over the defendant.” DiStefano v. Carozzi North

America, Inc., 286 F.3d 81, 84 (2d Cir. 2001) (citation omitted).

“[T]he showing a plaintiff must make to defeat a defendant’s claim

that the court lacks personal jurisdiction over it ‘varies

depending on the procedural posture of the litigation.’”

Dorchester Financial Securities, Inc. v. Banco BRJ, S.A., 722 F.3d

81, 84 (2d Cir. 2013) (quoting Ball v. Metallurgie Hoboken-

Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)).

Before jurisdictional discovery, a plaintiff’s prima facie

showing of jurisdiction “may be established solely by

allegations.” Ball, 902 F.2d at 197. However, where

jurisdictional discovery has been conducted, a plaintiff’s prima

facie showing must be factually supported; that is, it must

“include an averment of facts that, if credited by [the ultimate

trier of fact], would suffice to establish jurisdiction over the

defendant.” Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d

560, 567 (2d Cir. 1996) (quoting Ball, 902 F.2d at 197). In

assessing the plaintiff’s showing, the court applies a “standard

. . . akin to that on a motion for summary judgment,” construing

the “pleadings documents, and other evidentiary materials . . . in

the light most favorable to the plaintiff and all doubts are

resolved in [his or her] favor.” Melnick v. Adelson-Melnick, 346

F. Supp. 2d 499, 503 (S.D.N.Y. 2004) (citations and internal

quotation marks omitted).

III. Motion to Dismiss for Failure to State a Claim

On a Rule 12(b)(6) motion to dismiss, the Court must assume

the truth of “all well-pleaded, nonconclusory factual allegations

in the complaint.” Kiobel v. Royal Dutch Petroleum Co., 621 F.3d

111, 123 (2d Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662,

677 (2009)). A complaint must plead sufficient facts to “state a

claim to relief that is plausible on its face.” Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

plausibility when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. In

resolving a motion under Rule 12(b)(6), the Court must limit its

consideration to the complaint, documents incorporated by

reference into the complaint, documents not incorporated but

nonetheless integral to the complaint, and matters properly

subject to judicial notice. Clark v. Hanley, 89 F.4th 78, 93 (2d

Cir. 2023) (citing Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir.

2016)).

IV. Motion for Judgment on the Pleadings

Rule 12(c) provides that “[a]fter the pleadings are closed—

but early enough not to delay trial—a party may move for judgment

on the pleadings.” Fed. R. Civ. P. 12(c). “Pleadings” include

both the “complaint” and the “answer to [the] complaint.” Fed. R.

Civ. P. 7(a).

“The standard for granting a Rule 12(c) motion for judgment

on the pleadings is identical to that for granting a Rule 12(b)(6)

motion for failure to state a claim.” Lynch v. City of New York,

952 F.3d 67, 75 (2d Cir. 2020) (cleaned up). “To survive a Rule

12(c) motion, [the plaintiff’s] complaint must contain sufficient

factual matter, accepted as true, to state a claim to relief that

is plausible on its face. Hayden v. Paterson, 594 F.3d 150, 160

(2d Cir. 2010) (cleaned up). “The assessment of whether a

complaint’s factual allegations plausibly give rise to an

entitlement to relief . . . calls for enough fact[s] to raise a

reasonable expectation that discovery will reveal evidence of

illegal conduct.” Lynch, 952 F.3d at 75 (internal quotation marks

omitted). In making this assessment, we “draw all reasonable

inferences in [the plaintiff’s] favor.” Johnson v. Rowley, 569

F.3d 40, 43 (2d Cir. 2009).

DISCUSSION

Defendants seek to dismiss this action based on lack of

subject-matter jurisdiction, lack of personal jurisdiction, and

Plaintiff’s failure to state a claim upon which relief may be

granted. Each argument will be addressed in turn.

I. Subject Matter Jurisdiction

The Court first addresses subject-matter jurisdiction because

the Court cannot proceed further with an action it has no power to

adjudicate. See Coniglio v. Garland, 556 F. Supp. 3d 187, 194

(E.D.N.Y. 2021). Plaintiff invokes the Court’s diversity

jurisdiction under 28 U.S.C. § 1332. (Am. Compl. ¶ 4.) For the

reasons below, the Court concludes that it has diversity

jurisdiction over Plaintiff’s claims.

Under the federal diversity statute, federal district courts

have original subject-matter jurisdiction over civil actions

between citizens of different states where the amount in

controversy exceeds $75,000 excluding interest and costs. See 28

U.S.C. § 1332(a)(1). The parties must be completely diverse,

meaning that no plaintiff may be a citizen of the same state as

any defendant. See OneWest Bank, N.A. v. Melina, 827 F.3d 214,

217-18 (2d Cir. 2016). For diversity purposes, an individual

person is a citizen of the state where he or she is “domiciled.”

Van Buskirk v. United Group of Cos., Inc., 935 F.3d 49, 53–54 (2d

Cir. 2019).

Plaintiff has alleged, and Defendants do not dispute, that

the parties are completely diverse. Plaintiff is a citizen of New

York. (Am. Compl. ¶ 1.) Defendants Sy Marcus and Ellen Marcus

are citizens of either Massachusetts or Florida, but in any event

are not citizens of New York. (Id. ¶¶ 2, 3.) Thus, the Court

concludes that because no plaintiff is a citizen of the same state

as any defendant, the complete diversity requirement is met.

Defendants argue that, despite complete diversity, the Court

still lacks subject matter jurisdiction because Plaintiff has not

adequately pled the $75,000 amount-in-controversy requirement.

(Mot. at 22-25.) The Court disagrees. A plaintiff has only a

minimal burden to satisfy the federal diversity statute’s amount-

in-controversy requirement. Courts presume that a plaintiff’s

good faith allegation about the amount in controversy controls

unless it appears to a legal certainty that the plaintiff cannot

recover that amount. St. Paul Mercury Indem. Co. v. Red Cab Co.,

303 U.S. 283, 288-89 (1938); accord Pyskaty v. Wide World of Cars,

LLC, 856 F.3d 216, 223 (2d Cir. 2017).

Here, though the Court does not, and need not, credit

Plaintiff’s bald assertion that “the value of [his] claims in this

action, exclusive of interest and costs, exceeds $75,000[,]” (Am.

Compl. ¶ 8), the Court finds that Plaintiff’s underlying factual

allegations sufficiently allege an amount-in-controversy exceeding

$75,000. Plaintiff alleges that, because of Defendants’ actions,

Plaintiff was unable to seize or execute on Fischman’s assets in

satisfaction of Plaintiff’s two judgments of confession totaling

$4,734,457.92. (Id. ¶ 4.) Moreover, Plaintiff alleges that

Defendants have wired at least $430,000 to Kasowitz in satisfaction

of Fischman’s legal bills, thereby placing their assets out of

Plaintiff’s reach. (Id. ¶¶ 33, 37.)

Given these allegations, and assuming that Defendants’

actions tortiously caused those losses, it does not appear to a

legal certainty that Plaintiff could not recover $75,000 in this

action. Thus, the Court has subject matter jurisdiction over the

claims in this action under the federal diversity statute and will

proceed to Defendants’ other arguments.

II. Personal Jurisdiction

Having established subject-matter jurisdiction, the Court now

turns to Defendants’ arguments regarding personal jurisdiction.

To ensure that the exercise of personal jurisdiction is

proper, the district court must determine, first, whether there is

a statutory basis for the exercise of such jurisdiction. See Boyce

v. Cycle Spectrum, Inc., 148 F. Supp. 3d 256, 263-64 (E.D.N.Y.

2015). In New York, there are two potential statutory bases for

personal jurisdiction: (1) N.Y. C.P.L.R. § 301 provides the basis

for general personal jurisdiction, and (2) N.Y. C.P.L.R. § 302,

New York’s so-called Long-Arm Statute, provides the basis for

specific jurisdiction. See Boyce, 148 F. Supp. 3d at 263-65.

After determining whether a statutory basis exists for personal

jurisdiction, a court must separately evaluate whether the

exercise of personal jurisdiction comports with due process. See

Brown v. Lockheed Martin Corp., 814 F.2d 619, 625 (2d Cir. 2016).

Plaintiff focuses his argument in support of personal

jurisdiction solely on the long-arm statute, C.P.L.R. § 302(a)(1).

(See ECF No. 66, “Opp.” at 3-5.) Thus, the Court does not address

the other subdivisions of C.P.L.R. §§ 301 and 302. As detailed

below, the Court finds that Defendants are subject to personal

jurisdiction in New York.

A. C.P.L.R. § 302(a)(1) – Transaction of Business or

Contract to Supply Goods/Services in New York

Plaintiff asserts that Defendants are subject to personal

jurisdiction under C.P.L.R. § 302(a)(1), which states that “a court

may exercise personal jurisdiction over any non-domiciliary . . .

who in person or through an agent . . . transacts any business

within the state or contracts anywhere to supply goods or services

in the state[.]” C.P.L.R. § 302(a)(1). The Court agrees.

There are two requirements under § 302(a)(1) for a court to

exercise jurisdiction over a non-domiciliary defendant. First,

the defendant must have transacted business in New York. As the

Second Circuit has instructed, “the overriding criterion necessary

to establish a transaction of business [under § 302(a)(1)] is some

act by which the defendant purposefully avails itself of the

privilege of conducting activities within New York.” Licci ex

rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 61 (2d

Cir. 2012) (citing Ehrenfeld v. Bin Mahfouz (“Licci I”), 9 N.Y.3d

501, 508 (N.Y. 2007)). “To determine whether a party has

‘transacted business’ in New York, courts must look at the totality

of circumstances concerning the party’s interactions with, and

activities within, the state.” Bank Brussels Lambert v. Fiddler

Gonzalez & Rodriguez, 171 F.3d 779, 787 (2d Cir. 1999) (Sotomayor,

J.).

The second requirement, known as the “nexus” prong of

§ 302(a)(1), holds that there must be an “articulable nexus” or

“substantial relationship” between the plaintiff’s claim and the

defendant’s transaction in New York. See Best Van Lines, Inc. v.

Walker, 490 F.3d 239, 246 (2d Cir. 2007) (quoting Henderson v.

INS, 157 F.3d 106, 123 (2d Cir. 1998)). The nexus prong requires

only a “relatedness . . . such that the latter is not completely

unmoored from the former.” Licci v. Lebanese Canadian Bank, SAL

(“Licci II”), 984 N.E.2d 893, 900 (N.Y. 2012). This “relatively

permissive” nexus is satisfied where “at least one element [of the

plaintiff’s claim] arises from the [defendant’s] New York

contacts.” Id. at 900-01.

Upon a motion to dismiss for lack of personal jurisdiction,

“[t]he facts alleged in the complaint and affidavits in opposition

to such a motion to dismiss are deemed true and construed in the

light most favorable to the plaintiff, and all doubts are to be

resolved in favor of the plaintiff.” Fanelli v. Latman, 202 A.D.3d

758, 759 (2d Dept. 2022). Here, the Amended Complaint alleges

that Defendants, together with New York resident Fischman,

executed a letter agreement with Kasowitz, a New York law firm,

for Kasowitz to provide legal services in Fischman’s New York

criminal case. (Am. Compl. ¶¶ 30-31.) Defendant Sy Marcus later

expanded the scope of Kasowitz’s retention to cover legal work in

opposition to Plaintiff’s collection efforts. (Id. ¶ 32.)

Defendant Ellen Marcus then sent three wire transfers directly to

Kasowitz’s New York bank account, which allegedly allowed Fischman

to pay his legal bills without liquidating his Ultimax common

stock. (Id. ¶¶ 33, 35.) Defendants also separately transferred

at least $968,000 into a New York State Interest on Lawyer Account

Fund (“IOLA”) account associated with Fischman’s other attorneys

at Cohen, LaBarbera & Landrigan, LLP – a law firm based in Chester,

New York.2 (Id. ¶ 37; ECF No. 65, “Berry Decl.” Exs. 2, 3, 4.3)

2 An Interest on Lawyer Account is a type of interest-bearing account

used by New York lawyers to hold client funds. See N.Y. Senate, IOLA

and Civil Legal Services FAQ (accessed February 19, 2025),

https://www.nysenate.gov/iola-and-civil-legal-services-faq.

3 On a motion to dismiss for lack of personal jurisdiction, the Court

may also consider Plaintiff’s “affidavits and supporting materials” in

From the amounts deposited in the Cohen IOLA account, $347,500 was

transferred directly to Kasowitz in satisfaction of Fischman’s fee

obligations to that firm, and other sums were transferred directly

to Fischman and to Aurora Equities I. (Berry Decl. Exs. 2, 3, 4,

5.)

Defendants’ actions, as alleged in the Amended Complaint and

in Plaintiff’s declaration, more than suffice to establish

personal jurisdiction over the Defendants. As New York courts

have found, § 302(a)(1) is a “single act statute,” where even “one

transaction in New York is sufficient to invoke jurisdiction [under

§ 302(a)(1)] . . . so long as the defendant’s activities here were

purposeful and there is a substantial relationship between the

transaction and the claims asserted.” Deutsche Bank Secs., Inc.

v. Montana Bd. of Invs., 850 N.E.2d 1140, 1143 (N.Y. 2006)

(internal quotations and citations omitted). Defendants entered

an agreement with New York lawyers for Fischman, for legal services

in New York, and made not one, but multiple wire transfers directly

to New York bank accounts, including a New York-specific IOLA

account. These actions have allowed Defendants to avail themselves

of New York’s contract and banking protections, regulations and

laws.

determining whether a prima facie showing of personal jurisdiction has

been established. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899,

904 (2d Cir. 1981).

Moreover, because Defendants’ wire transfers are precisely

what is at issue in this lawsuit, there is a substantial

relationship between the transactions and Plaintiff’s asserted

claims. See Al Rushaid v. Pictet & Cie, 68 N.E.3d 1, 11–12 (N.Y.

2016) (concluding that the non-domiciliary’s use of a

correspondent bank “was precisely part of the defendant’s design”

to launder profits and that this was sufficient to “show the

minimum level of relatedness” to plaintiff’s claims); see also

Licci II, 984 N.E.2d 893, 901 (finding a substantial relationship

where defendants used New York accounts repeatedly “to move the

necessary” money).

The nexus between Plaintiff’s claims and Defendants’ New York

conduct is premised on more than just Defendants’ wire transfers.

As an element of his tortious interference and fraud claims,

Plaintiff must show that Defendants had knowledge of Plaintiff’s

judgments against Fischman. See Siegel v. Kontogiannis, No. 15-

cv-2856 (MKB)(JO), 2017 WL 9482101, at **4-5 (E.D.N.Y. Mar. 14,

2017) (finding a genuine dispute of material fact regarding

defendants’ knowledge of the underlying judgment precluding

summary judgment on tortious interference claim); Abu Dhabi

Commercial Bank v. Morgan Stanley & Co. Inc., 651 F. Supp. 2d 155,

186 (S.D.N.Y. 2009) (finding knowledge of the fraud to be an

element in a common law fraud claim). Plaintiff alleged that

Defendants acquired that knowledge in several instances, including

during an in-person meeting with Plaintiff in Cedarhurst, New York.

(Am. Compl. ¶ 36.) Defendants argue that a “single meeting” in

New York cannot establish personal jurisdiction. (Mot. at 20.)

Regardless of whether that particular meeting may establish

jurisdiction alone, the Court agrees with Plaintiff that such a

meeting may nevertheless be part of a culmination of conduct that

collectively establishes personal jurisdiction over Defendants.

(Opp. at 5.) See M. Fabrikant & Sons, Inc. v. Adrianne Kahn, Inc.,

144 A.D.2d 264, 265–66 (1st Dept. 1988) (finding jurisdiction where

defendant had a single meeting in New York followed by further

business dealings outside the state).

Furthermore, Defendants had retained and paid Kasowitz, a New

York law firm, for legal services rendered on behalf of Fischman

not only in Fischman’s New York criminal case, but also for

services which potentially challenge Plaintiff’s attempts to

collect on the Fischman judgments. (Am. Compl. ¶¶ 30, 32, 33.)

This, too, serves as a nexus for long-arm jurisdiction. See

Courtroom Tel. Network v. Focus Media, 264 A.D.2d 351, 353 (1st

Dept. 1999) (long-arm jurisdiction established where the defendant

relied on agents “to perform commercial activities in New York for

[their] benefit”).

Defendants nevertheless argue that the Amended Complaint

“does not assert an articulable nexus between the claims and the

few activities Defendants allegedly conducted in New York.” (Mot.

at 19.) As noted above, the Court disagrees. Defendants

themselves note that: (1) Defendants’ trusts “acquired the Ultimax

stock from Fischman when Fischman was in New York[,]” (2)

“Defendants agreed to pay Fischman’s legal fees owed to a non-

party New York law firm[,] (3) “Sy [Marcus] paid Fischman’s legal

fees into the law firm account at a branch in Manhattan[,]” (4)

“Ellen [Marcus] paid those same legal fees into a law firm account

at a branch in Manhattan[,] and” (5) “Sy [Marcus] occasionally

does unrelated business with New York clients.” (Mot. at 19-20.)

Such allegations sufficiently establish personal jurisdiction over

Defendants.

In sum, based on the totality of the circumstances, the Court

finds that Defendants have purposely availed themselves of the

privilege of transacting within New York and are subject to

personal jurisdiction pursuant to C.P.L.R. § 302(a)(1).4

B. Due Process

Having found specific personal jurisdiction to be proper in

4 Though Plaintiff does not argue in his opposition brief that N.Y.

C.P.L.R. §§ 302(a)(2) and 302(a)(3) apply to confer personal jurisdiction

on Defendants, Plaintiff cites to those subdivisions in his Amended

Complaint. (Am. Compl. ¶ 9.) In the interests of completeness, the

Court has reviewed the applicability of §§ 302(a)(2) and 302(a)(3) and

finds that the Amended Complaint and Plaintiff’s declarations fail to

allege that Defendants were either physically present in New York during

the commission of the alleged tort, or derive “substantial” revenue from

their dealings in New York. See Bank Brussels Lambert, 171 F.3d at 778-

91. Plaintiff has not even alleged that Ellen Marcus does business in

New York at all. Thus, Plaintiff fails to allege personal jurisdiction

under §§ 302(a)(2) and 302(a)(3).

New York, the Court has little difficulty further concluding that

the exercise of personal jurisdiction here comports with due

process. See International Shoe Co. v. Washington, 326 U.S. 310

(1945) (finding that courts gain personal jurisdiction over a non-

domiciliary only if that person has “certain minimum contacts

[within the state] such that the maintenance of the suit does not

offend ‘traditional notions of fair play and substantial

justice’”); Hanson v. Denckla, 357 U.S. 235, 251, 253 (1958)

(holding that “minimal contacts” arise where a person acts to avail

himself purposefully of the privilege of conducting business

within a state, thereby gaining the benefits and protection of its

laws). Based on the facts alleged in the Amended Complaint and

articulated above, the Court finds that Defendants have minimum

contacts in New York such that the maintenance of the lawsuit would

not offend traditional notions of fair play and substantial

justice.

Once the plaintiff has made a threshold showing that the

action arises from the defendant’s contacts with the state, the

defendant may nonetheless defeat jurisdiction by presenting “a

compelling case that the presence of some other considerations

would render jurisdiction unreasonable.” Bank Brussels Lambert,

305 F.3d 120, 129. Relevant considerations include: “(1) the

burden that the exercise of jurisdiction will impose on the

defendant; (2) the interests of the forum state in adjudicating

the case; (3) the plaintiff’s interest in obtaining convenient and

effective relief; (4) the interstate judicial system’s interest in

obtaining the most efficient resolution of the controversy; and

(5) the shared interest of the states in furthering substantive

social policies.” Id. As Defendants have not even addressed these

considerations in their briefs, the Court is unpersuaded that this

case is “the exceptional situation where exercise of jurisdiction

is unreasonable even though minimum contacts are present.” Id. at

130 (quotations omitted).

“Because the New York long-arm statute is more restrictive

than the federal due process requirements, by virtue of satisfying

the long-arm statute the minimum contacts and reasonableness

requirements of due process have similarly been met.” Chatwal

Hotels & Resorts LLC v. Dollywood Co., 90 F. Supp. 3d 97, 108

(S.D.N.Y. 2015). As the Second Circuit observed, it would be

“rare” and “unusual” for a court to determine that the exercise of

personal jurisdiction over a defendant was permitted by

§ 302(a)(1), but prohibited under principles of due process. Licci

ex rel. Licci v. Lebanese Canadian Bank, SAL (“Licci III”), 732

F.3d 161, 170 (2d Cir. 2013). In accordance with these principles,

and upon the factual allegations in Plaintiff’s Amended Complaint,

the Court concludes that the exercise of personal jurisdiction

over Defendants in this action comports with due process, and

therefore denies Defendants’ motion to dismiss pursuant to Federal

Rule of Civil Procedure 12(b)(2).

III. Failure to State a Claim

Defendants next argue that (1) Plaintiff’s judgments on

Fischman are invalid, (2) Plaintiff lacks a private right of action

under N.Y. C.P.L.R. article 52, and (3) the Amended Complaint fails

to state a claim for either of Plaintiff’s causes of action. (Mot.

at 4-13, 14-18, 25-26.) The Court will address each argument in

turn.

A. Validity of the Judgments of Confession

Defendants argue that, inter alia, Plaintiff’s judgments of

confession by Cardis, Chosen and Fischman are invalid because the

judgments allegedly omit material information and contradict other

record evidence. (Mot. at 5-15.) Plaintiffs respond, asserting

that the Marcus Defendants may not collaterally attack the

judgments of confession by Cardis, Chosen and Fischman – in

essence, state court judgments – in this federal court action.

(Opp. at 6-8.) The Court finds that the doctrine of res judicata

bars further review, and thus does not reach the parties’ remaining

arguments on the validity of the judgments of confession.5

5 It is unclear whether the Marcus Defendants would have standing to

collaterally attack judgments that they were neither parties to nor

impacted by. See Marino v. Ortiz, 484 U.S. 301, 304 (1988) (per curiam)

(noting that the “better practice” for nonparties affected by a certain

judgment is to intervene in the action rather than to collaterally attack

the judgment through a separate action). In any case, even assuming

Defendants have standing here, their argument nonetheless fails for the

reasons stated in this section.

Under New York law, confessions of judgments are treated like

consent decrees, which are, in turn, treated the same as a final

judgment after trial. See Canfield v. Elmer E. Harris & Co., 170

N.E. 121 (N.Y. 1930) (“A judgment by confession stands in much the

same position as one by stipulation or consent and is conclusive

adjudication of all matters embraced in it and a bar to any

subsequent action on the same claim.”); In re Madison 92nd Street

Associates LLC, 472 B.R. 189, 194 (Bankr. S.D.N.Y. 2012) (“Under

New York law, a consent judgment has the same res judicata effect

as a judgment on the merits.”). A confession of judgment is

therefore treated as any other judgment rendered by a state court,

and federal courts are required to give state court judgments the

same “preclusive effect it would be accorded by the rendering

state.” In re Higgins, 270 B.R. 147, 156 (Bankr. S.D.N.Y. 2001).

Confessions of judgments, like Plaintiff’s judgments against

Fischman, are subject to direct challenge at the time of their

entry. But after the time to challenge has expired or the

challenge has been denied, the judgment is final under longstanding

res judicata principles. Id.

As Plaintiff notes, Fischman had in fact challenged the

confessions of judgments in favor of Plaintiff, in a separate,

related state court action captioned: Fischman v. Jonathan A. Stein

and Shalom Maidenbaum, Index No. 608120/2022 (Sup. Ct. Nassau

Cnty.). (Opp. at 7; Berry Decl. Ex. 7.) In that case, the Nassau

County Supreme Court held that the confessions of judgment by

Cardis, Chosen and Fischman were indeed valid and enforceable.

(Berry Decl. Ex. 7 at 4.) As a result, this Court is prohibited

under the doctrine of res judicata from looking behind the

judgments of confession to consider Defendants’ arguments

regarding validity.

B. N.Y. C.P.L.R. Article 52

Defendants then appear to argue that, as for Count One

“involving a tort arising from a judgment,” Plaintiff would not

have a private right of action and would be limited to bringing an

action under N.Y. C.P.L.R. article 52. (Mot. at 25-26.) Though

Defendants describe this argument as one of subject-matter

jurisdiction, and Plaintiff does not address this argument in his

opposing brief, the Court construes this argument to be for failure

to state a claim.

In support of their argument, Defendants cite Plymouth

Venture Partners, II, L.P. v. GTR Source, LLC, 183 N.E.3d 1185

(N.Y. 2021). Plymouth, however, does not stand for Defendants’

broad proposition that any action related to restraining notices

issued under C.P.L.R. article 52 must be brought in the state court

where the judgment is recorded. (Mot. at 26.) Rather, as the

New York Court of Appeals stated in Plymouth, actions based on

“alleged violations of the procedural requirements of article 52”

must proceed within the mechanisms provided by article 52. Id. at

1192.

Defendants’ reliance on Cruz v. TD Bank is similarly

misplaced. (Mot. at 25.) Cruz had made clear that “common-law

tort claims” – such as Plaintiff’s claims here – were “beyond the

scope of the questions certified to [the Court of Appeals].”

2 N.E.3d 221, 225 (N.Y. 2013). Consistent with Plymouth, Cruz

held only that a plaintiff must sue for procedural violations of

C.P.L.R. article 52 using the mechanisms provided within C.P.L.R.

article 52. Id. at 231.

Here, however, Plaintiff has not asserted claims against

Defendants for procedural violations of C.P.L.R. article 52.

Instead, Count One of Plaintiff’s Amended Complaint asserts that

Defendants, with knowledge of a pending judgment against Fischman,

entered a tortious scheme to interfere with Plaintiff’s ability to

collect on a valid judgment. (Am. Compl. ¶¶ 40-53.) As Defendants

themselves recognize, New York courts have long recognized a

common-law cause of action for tortious interference with the

enforcement of a judgment. (See ECF No. 67, “Reply” at 4.); Quinby

v. Strauss, 90 N.Y. 664, 1882 WL 14577 (N.Y. 1882); James v.

Powell, 25 A.D.2d 1 (1st Dep’t. 1966). Thus, the Court finds that

Plaintiff is not limited to bringing Count One under a C.P.L.R.

article 52 proceeding.

C. Count One – Tortious Interference with Enforcement of

Judgment

Defendants next argue that Plaintiff has failed to state a

claim on Count One because (1) Defendants’ alleged actions in

paying for Fischman’s legal fees in exchange for Ultimax stock is

“neither fraudulent nor otherwise improper,” and (2) Defendants’

alleged actions were not the “but for” cause of Plaintiff’s injury.

(Mot. at 16; Reply at 4-9.) For the reasons stated below, the

Court finds that Plaintiff has sufficiently stated a claim for

tortious interference.

1. Standard of Conduct Required for Tortious

Interference Claims

As discussed above, New York courts have long recognized a

cause of action for tortious interference with the enforcement of

a judgment. See Ritter v. Klisivitch, No. 6-cv-5511, 2008 WL

2967627, at *14 (E.D.N.Y. July 30, 2008) (citing James v. Powell,

25 A.D.2d 1, 3-4 (1st Dept. 1966), rev’d on other grounds, 225

N.E.2d 741 (N.Y. 1967). “At common law, whoever by improper means

interfered with the execution of a judgment was liable for the

damage he caused to the judgment creditor.” James, 25, A.D.2d at

2. “Although applicable case law has not explicitly defined all

of the elements of such a claim, it does make clear that the

[Plaintiff] must establish that [Defendants] used improper means

to interfere with [his] ability to enforce” the judgment. New

Falls Corp. v. Soni Holdings, LLC, No. 2:19-cv-00449 (ADS)(AKT),

2020 WL 13850728, at *7 (E.D.N.Y. Mar. 31, 2020) (citing Siegel,

2017 WL 9482101, at *10).

Defendants assert that, to sustain a claim, Plaintiff must

allege that the Defendants engaged in “improper conduct” that is

independently tortious or criminal. (Reply at 5.) Upon review of

binding New York law, the Court disagrees that Plaintiff must

allege conduct rising to the level of independently tortious or

criminal.

In NBT Bancorp Inc. v. Fleet/Norstar Financial Grp. Inc., the

New York Court of Appeals made clear that “the degree of protection

available to a plaintiff” in a tortious interference claim is

“defined by the nature of the plaintiff’s enforceable legal

rights.” 664 N.E.2d 492, 495-96 (N.Y. 1996). To be specific,

“where there is an existing, enforceable contract and a defendant’s

deliberate interference results in a breach of that contract, a

plaintiff may recover damages for tortious interference with

contractual relations even if the defendant was engaged in lawful

behavior.” Id. at 496. On the other hand, “[w]here there has

been no breach of an existing contract, but only interference with

prospective contract rights . . . plaintiff must show more culpable

conduct on the part of the defendant[.]” Id. In making such a

distinction, the Court of Appeals noted the important balance

struck between “society’s interest in respect for the integrity of

contractual relationships, on the one hand, and, on the other, the

right to freedom of action on the part of the party interfering

and society’s concern that competition not be unduly hampered.”

Id. (citing Guard-Life v. S. Parker Hardware Mfg. Corp., 406 N.E.2d

445, 448 (N.Y. 1980)).

Here, Plaintiff alleges that Defendants tortiously interfered

with the enforcement of two judgments of confession by the Judgment

Debtors. (Am. Compl. ¶¶ 40-53.) These judgments are no less

binding than any other contract and are also imbued with the

additional authority of the court. Thus, Plaintiff possesses legal

rights akin to a plaintiff asserting a tortious interference claim

with contract, as opposed to a plaintiff asserting a tortious

interference claim with prospective contractual relations, and

Plaintiff need not allege independently tortious or criminal

conduct to state a claim for tortious interference with enforcement

of a judgment.

As discussed more thoroughly above, Plaintiff has adequately

alleged that Defendants’ conduct – even if lawful – tortiously

interfered with Plaintiff’s collection of his judgments.

Plaintiff alleges that, Defendants, with full knowledge of

Plaintiff’s attempts to collect from the Judgment Debtors, entered

into an agreement with Kasowitz to pay Fischman’s legal fees,

thereby helping Fischman conceal his assets from collection. (Am.

Compl. ¶¶ 30, 46, 49.) Defendant Sy Marcus admitted to knowing

about the outstanding judgments during his in-person meeting with

Plaintiff. (Id. ¶ 36.) In exchange, Defendants and their

entities received Fischman’s Ultimax stock, upon which Plaintiff

would have otherwise been able to levy and execute. (Id. ¶¶ 30,

45.) Defendant Ellen Marcus, Sy Marcus’ wife, made the payments

to Kasowitz herself from their “house account.” (Id. ¶ 35.) Thus,

Plaintiff has stated a claim with respect to Count One.

2. “But For” Causation of Plaintiff’s Injuries

Defendants argue that Plaintiff fails to allege that

Defendants’ actions were the “but for” cause of Plaintiff’s

injuries (i.e., his inability to levy and collect on his

judgments). The Court disagrees.

Fischman’s Ultimax shares are personal property subject to

execution in satisfaction of Plaintiff’s judgment. See C.P.L.R.

§ 5232(a); Gallant v. Kanterman, 249 A.D.2d 59, 62 (1st Dep’t.

1998) (finding stock certificates “available pursuant to CPLR

5232(b) to be levied upon by seizure and sold[.]”); (Am. Compl.

¶ 22.) Despite issuing subpoenas and writs, Plaintiff was unable

to locate, restrain and levy on Fischman’s Ultimax shares. (Id.)

Plaintiff further alleges that, were it not for Defendant Sy

Marcus’ agreement with Kasowitz, Fischman would have had to

liquidate his Ultimax stock for cash and deposit the funds into

bank accounts subject to restraining notices. (Id. ¶¶ 25, 36.)

Instead, Defendants paid Kasowitz for services to Fischman, who

avoided depositing funds into his restrained accounts. In other

words, without Defendants’ assistance, Fischman’s Ultimax shares

would have been converted to cash and deposited into a bank account

subject to Plaintiff’s restraining notices even if Plaintiff could

not execute on the shares directly. (Id. ¶ 25.) These allegations

are sufficient to show but-for causation at the motion to dismiss

stage.

D. Count Two – Aiding and Abetting Fraudulent Conveyance

and Conspiracy to Defraud

Defendants argue that Count Two in the Amended Complaint

should be dismissed. (Mot. at 17-18.) Though pleaded as a single

count, the Court will separately discuss Plaintiff’s aiding and

abetting fraudulent conveyance claim and Plaintiff’s conspiracy to

defraud claim.

1. Aiding and Abetting Fraudulent Conveyance

Defendants argue that Plaintiff has failed to allege an

underlying fraudulent conveyance for which aiding and abetting

liability would attach. (Mot. at 17-18.) On reply, Defendants

raise for the first time that (1) Plaintiff’s claim for aiding and

abetting fraudulent conveyance is “not cognizable upon New York

law,” and (2) Plaintiff has not met the heightened pleading

requirements for fraud under Federal Rule of Civil Procedure 9(b).

(Reply at 9-12.) The Court agrees that, as pled, Plaintiff’s

aiding and abetting claim must be dismissed.

As a preliminary matter, the Court notes that it has “wide

discretion” on whether to consider arguments made for the first

time on reply. See, e.g., Watson v. Geithner, 355 F. App’x 482,

483 (2d Cir. 2009) (summary order) (court may decline to consider

an argument raised for the first time in a reply brief); Compania

Del Bajo Caroni (Caromin), C.A. v. Bolivarian Republic of

Venezuela, 341 F. App’x 722, 724 (2d Cir. 2009) (citations omitted)

(finding “[a] district court enjoys broad discretion . . . to

consider arguments made for the first time in a reply brief[.]”).

As Plaintiff has neither objected nor sought to file a sur-reply,

and in the interests of thoroughness, the Court will address all

of Defendants’ arguments in turn.

Under a generous reading of the Amended Complaint, Plaintiff

appears to allege two fraudulent conveyances where aiding and

abetting liability may arise. First, Plaintiff appears to allege

certain fraudulent conveyances where Fischman’s wife, Nina

Fischman, was the transferee of Fischman’s executive compensation

and Cardis’ receipts. (Am. Compl. ¶¶ 14, 15; Opp. at 20.) Second,

Plaintiff also alleges that, as a result of Defendants’ scheme

with Fischman, Sy Marcus received Ultimax stock and/or a portion

of Fischman’s ownership interest in Ultimax. (Id. ¶¶ 56, 59.) In

other words, Sy Marcus was the transferee or beneficiary of the

allegedly fraudulent conveyances from Fischman to Defendants.

(See id. ¶¶ 44, 45.)

a. Conveyances from Aaron Fischman to Nina

Fischman

The Court first addresses Defendants’ argument that

Plaintiff’s claim of aiding and abetting fraudulent conveyance is

not cognizable under New York law where Defendants are neither the

transferees nor beneficiaries of the conveyance. (Reply at 11.)

The Court agrees that an aiding and abetting claim may not be

sustained “against parties who merely participated in the transfer

but did not benefit from it.” Amusement Indus., Inc. v. Midland

Ave. Assocs., LLC, 820 F. Supp. 2d 510, 527 (S.D.N.Y. 2011). New

York courts have consistently found that there is “no cause of

action for aiding and abetting a fraudulent conveyance against a

person . . . who is alleged merely to have assisted in effecting

the transfer . . . and who is not alleged to have been a transferee

. . . or to have benefitted from the transaction.” BBCN Bank v.

12th Avenue Restaurant Grp. Inc., 150 A.D.3d 623 (1st Dep’t. 2017)

(collecting cases). “[U]nder the existing fraudulent conveyance

statutes, the only possible claim for relief in such a circumstance

would be a claim against ‘transferees of the assets []or

beneficiaries of the conveyance.” Amusement Indus., Inc., 820 F.

Supp. 2d at 533 (citing Fed. Deposit Ins. Co. v. Porco, 552 N.E.2d

158 (N.Y. 1990)). Thus, Plaintiff’s aiding and abetting claim for

transfers made to Nina Fischman, where Defendants were neither the

transferee nor beneficiary, fails as a matter of law and is

dismissed.6

b. Conveyances from Aaron Fischman to Sy Marcus

As for Plaintiff’s aiding and abetting claim for Fischman’s

transfers of his interests in Ultimax stock to Sy Marcus, the main

issue here – as Defendants appear to concede – is that Plaintiff

has incorrectly alleged aiding and abetting liability when he

should have simply brought a direct claim of fraudulent conveyance.

(See Reply at 10 (noting that “the appropriate relief – if any –

would be to void the conveyance of the Ultimax stock”); Reply at

13 (Defendants “believe that any claim to recover the stock would

have to be brought directly against Sy in a fraudulent conveyance

action . . .”).)

Plaintiff alleged that Defendant Sy Marcus was the transferee

of Fischman’s Ultimax common stock. (Am. Compl. ¶ 55.) Though

“[t]ransferors cannot be sued for a fraudulent conveyance claim,

and thus someone who has aided and abetted the transferor could

not logically be sued either if they had no other role in the

transaction[,]” transferees clearly may be sued for fraudulent

conveyance. Amusement Indus. Inc., 820 F. Supp. 2d at 532-33.

“[I]n such an instance, there is no need to resort to a claim of

‘aiding and abetting.’ Instead, such a defendant may be sued

6 Plaintiff has also not alleged that Defendants assisted or even “merely

participated” in the transfer of Fischman’s assets to Nina Fischman.

The Amended Complaint suggests instead that those transfers were

facilitated by Lawrence Katz, an attorney for Cardis. (Am. Compl. ¶ 14.)

directly for the fraudulent conveyance[.]” Id. at 533.7

Plaintiff, however, has not brought a direct fraudulent conveyance

claim against Defendant Sy Marcus, and his claim as pleaded must

be dismissed.

2. Conspiracy to Defraud

As to the second claim in Count Two, Defendants argue that

Plaintiff “failed to allege with specificity a tortious act based

on a common agreement and overt action taken in furtherance of

such alleged conspiracy.” (Mot. at 17-18.) On reply, Defendants

argue that Plaintiff’s claim for aiding and abetting conspiracy to

defraud is also “not an independent cause of action under New York

law.” (Reply at 12.) Plaintiff does not respond or otherwise

address these arguments in his opposition brief.

As Defendants correctly assert, there is no independent cause

of action for civil conspiracy to defraud under New York law. See

Filler v. Hanvit Bank, 156 F. Appx. 413, 417 (2d Cir. 2005).

However, a civil conspiracy may be alleged for the purpose of

7 Defendants also appear to argue that Plaintiff may not seek monetary

damages through a fraudulent conveyance claim. (Reply at 10.) The Court

disagrees. “Generally, the creditor’s remedy in a fraudulent conveyance

action is limited to reaching the property which would have been

available to satisfy the judgment had there been no conveyance.” Cap.

Distributions Servs., Ltd., v. Ducor Exp. Airlines, Inc., 440 F. Supp.

2d 195, 204 (E.D.N.Y. 2006). “However, where the assets fraudulently

transferred no longer exist or are no longer in the possession of the

transferee, a money judgment may be entered against the transferee in

an amount up to the value of the fraudulently transferred assets.” Id.;

accord Mfrs. & Traders Trust Co. v. Lauer’s Furniture Acquisition, Inc.,

226 A.D.2d 1056, 1057 (4th Dep’t. 1996) (“money judgment was properly

granted” where asserts were “sold and commingled”).

showing that an otherwise actionable tort was committed jointly by

the conspirators and that, because of the conspirators’ common

purpose and interests, the acts of one may be imputed to the

others. Id.; Grove Press, Inc. v. Angleton, 649 F.2d 121, 123 (2d

Cir. 1981) (“The allegation [of conspiracy] ‘is merely the string

whereby the plaintiff seeks to tie together those who, acting in

concert, may be held responsible in damages for any overt act or

acts.’”) (quoting Rutkin v. Reinfeld, 229 F.2d 248, 252 (2d Cir.

1956)).

Thus, to establish a sufficient claim for conspiracy to

defraud, a plaintiff must first allege facts demonstrating the

underlying fraud, although the plaintiff need not prove that each

defendant committed every element of the underlying fraud. Meisel

v. Grunberg, 651 F. Supp. 2d 98, 119 (S.D.N.Y. 2009) (citing Snyder

v. Puente De Brooklyn Realty Corp., 297 A.D.2d 432, 435 (N.Y.

2002)). In addition, a plaintiff must allege plausible facts of

(1) a corrupt agreement; (2) an overt act in furtherance of that

agreement; and (3) membership in the conspiracy by each defendant.

Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229, 240

(2d Cir. 1999). “As is true in criminal conspiracies, agreements

in civil conspiracies will not easily be shown by direct evidence,

but may be inferred from circumstantial evidence.” Id.

Plaintiff has sufficiently and plausibly alleged a conspiracy

to defraud. As a preliminary matter, the Court notes that

Plaintiff only asserts this claim against defendant Sy Marcus.

The underlying fraud that Plaintiff alleges is that Sy Marcus

knowingly schemed with Fischman to conceal and transfer Fischman’s

assets, thereby placing them out of Plaintiff’s reach. In

furtherance of that scheme, Plaintiff alleged that Sy Marcus and

Fischman, with knowledge of Plaintiff’s underlying judgments,

entered into an agreement with Kasowitz, where Sy Marcus agreed to

pay Fischman’s legal fees. (Am. Compl. ¶¶ 9, 30.) As

consideration for undertaking those payments, Plaintiff alleges

that Sy Marcus received Fischman’s valuable Ultimax common stock.

(Id. ¶ 30.) Defendants then made several wire transfers directly

to Kasowitz, in furtherance of their agreement with Fischman,

thereby permitting Fischman to continue to enjoy Kasowitz’s legal

services without placing assets within Plaintiff’s reach. (Id. ¶

35.) Additionally, Defendants proceeded to wire money for

Fischman’s benefit through other channels, including to IOLA

accounts for Fischman’s other attorneys. (Id. ¶ 37.) Plaintiff’s

allegations against Sy Marcus are sufficient and plausibly alleged

at this stage in the litigation. Thus, Defendants’ motion to

dismiss Plaintiff’s conspiracy to defraud claim is denied.

3. Leave to Replead

In light of the Federal Rules of Civil Procedure’s general

deemphasis on the form of the pleadings in favor of trying a case

on its merits, Plaintiff is granted leave to amend his complaint

to assert a direct fraudulent conveyance claim.

Pursuant to Federal Rule of Civil Procedure 15(a), “leave (to

replead) shall be freely given when justice so requires[.]” Here,

Plaintiff has not requested leave to amend any of his claims. “[A]

district court has no duty to instruct plaintiffs that they may

move to amend their complaint and, at least in counseled cases,

cannot abuse its discretion by failing to sua sponte grant leave

to amend.” Oparaji v. City of N.Y., 152 F.3d 920 (2d Cir. 1998)

(summary order) (citing In re Am. Express Co. S’holder Litig., 39

F. 3d 395, 401 (2d Cir. 1994)).

Nevertheless, the Court may sua sponte grant leave to replead.

See Straker v. Metropolitan Travel Auth., 333 F. Supp. 2d 91, 102

(E.D.N.Y. 2004). The Court’s discretion is “broad[,]” and “its

exercise depends upon many factors, including undue delay, bad

faith or dilatory motive on the part of the movant, repeated

failure to cure deficiencies by amendments previously allowed,

undue prejudice to the opposing party by virtue of allowance of

the amendment, futility of amendment, etc.” Local 802, Assoc.

Musicians of Greater N.Y. v. Parker Meridien Hotel, 145 F.3d 85,

89 (2d Cir. 1998).

As discussed above, Plaintiff has alleged facts that may

sustain a fraudulent conveyance claim against Sy Marcus and the

entities which received Fischman’s Ultimax shares. Defendants

have ample notice of this claim. First, Plaintiff’s Amended

Complaint cites the statutory provision for a direct fraudulent

conveyance claim, New York Debtor & Creditor Law § 273(a)(1),

despite fashioning the claim as aiding and abetting a fraudulent

conveyance. (Am. Compl. ¶¶ 58, 59.) Second, Defendants have moved

to dismiss this claim on their own initiative in their motion to

dismiss briefing. (See Reply at 10, 13.) Considering all the

circumstances, the Court, in the exercise of its discretion, grants

Plaintiff leave to amend his fraudulent conveyance claims.

IV. Defendants’ Motion for Judgment on the Pleadings

As the Court has fully addressed Defendants’ motion to dismiss

under Rule 12(b)(6), the Court need not reach Defendants’ motion

in the alternative for judgment on the pleadings. See Irish

Lesbian & Gay Org. v. Giuliani, 143 F.3d 638, 644 (2d Cir. 1998)

(stating that “[t]he test for evaluating a 12(c) motion is the

same as that applicable to a motion to dismiss under [Rule

12(b)(6)].”).

CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss

pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(2)

is DENIED. Defendants’ motion to dismiss pursuant to Federal Rule

of Civil Procedure 12(b)(6) is DENIED as to Count One, and GRANTED

in part as to Count Two. To the extent Plaintiff asserts claims

of aiding and abetting fraudulent conveyance, those claims are

hereby DISMISSED. If Plaintiff intends to amend his complaint to

replead his fraudulent conveyance claims, he is directed to do so

within thirty (30) days of this Memorandum and Order.

In light of this Memorandum & Order, the parties are also

referred to Magistrate Judge Lindsey for supervision of discovery

and pre-trial issues as appropriate.

So ordered. b “4 ~, __

oe □□ ou wwe

Dated: March 4, 2025 ig

Brooklyn, New York Kiyo A. Matsumoto

United States District Judge

Eastern District of New York

41