277 Mott St. LLC v Fountainhead Constr. LLC
2011 NY Slip Op 03128 [83 AD3d 541]
April 19, 2011
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, June 8, 2011


277 Mott Street LLC, Appellant,
v
Fountainhead Construction LLC et al., Respondents.

[*1] Jaffe, Ross & Light, LLP, New York (Steven R. Miller of counsel), for appellant.

Rivelis, Pawa & Blum, LLC, New York (Howard Blum of counsel), for respondents.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered July 2, 2009, which granted defendants' motion to dismiss the first, fourth, and fifth through ninth causes of action, unanimously modified, on the law, to deny the motion as to the first and fifth through ninth causes of action, and otherwise affirmed, with costs.

The complaint alleges that defendant Abrams, the principal of defendant Fountainhead Construction LLC, induced plaintiff to make a $1.5 million "down payment" to Fountainhead against a "to be negotiated" construction contract, "always intend[ing]" to divert the funds for purposes other than the construction on plaintiff's property. These allegations state a cause of action for fraud (see Shisgal v Brown, 21 AD3d 845, 846-847 [2005]). Limited Liability Company Law § 609 does not insulate Abrams from a fraud in which he personally participated (see Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491 [2008]). By alleging in pertinent detail that Fountainhead was insolvent and that Abrams transferred plaintiff's down payment out of Fountainhead to pay his personal debts and those of his other businesses, the complaint states a cause of action for fraudulent conveyance under Debtor and Creditor Law §§ 273-276-a.

The motion to dismiss was correctly granted as to the fourth cause of action, which, inter alia, does not specify the section of the Business Corporation Law that allegedly was violated. Concur—Andrias, J.P., Saxe, Moskowitz, Richter and Manzanet-Daniels, JJ. [Prior Case History: 2009 NY Slip Op 31446(U).]