[*1]
Promenade Nursing Home v Cohen-Fleisher
2013 NY Slip Op 51991(U) [41 Misc 3d 1236(A)]
Decided on November 1, 2013
Supreme Court, Kings County
Schmidt, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on November 1, 2013
Supreme Court, Kings County


Promenade Nursing Home D/B/A PROMENADE REHABILITATION AND HEALTH CENTER, Plaintiff,

against

Louise Cohen-Fleisher, Defendant.




21175/11



Plaintiff Attorney: Jordan Meisner, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger, LLP, 1111 Marcus Avenue, Suite 107, Lake Success, NY 11042

Defendant Attorney: Jimmy Wagner, Esq., Law Office of Thaniel J. Beinert and Associates, 155 Bay Ridge Avenue, Brooklyn, NY 11220

David I. Schmidt, J.



The following papers numbered 1 to 7 read herein:Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-4

Opposing Affidavits (Affirmations)5-6

Reply Affidavits (Affirmations)7

Upon the foregoing papers, defendant, Louise Cohen-Fleisher (Cohen-Fleisher), moves for an order, pursuant to CPLR 3211 (a) (1), (3), (7) and (10), dismissing the fraud complaint of plaintiff Promenade Nursing Home, Inc. d/b/a Promenade Rehabilitation and Health Center (Promenade Nursing Home).

Promenade Nursing Home, a nursing facility at 140 Beach 114th Street in Rockaway Park, New York commenced this action against Cohen-Fleisher to recover $28,480 for "room, board and skilled nursing care services" provided to her late husband, Irwin Fleisher, before his death on April 10, 2011.

Promenade Nursing Home asserts two causes of action against Cohen-Fleisher, alleging that (1) defendant fraudulently transferred Irwin Fleisher's interest in the marital home with the intention of "defraud[ing], hinder[ing], delay[ing] and otherwise prevent[ing]" Promenade Nursing "from collecting debts due and owing . . ." and that (2) such conveyance should be set aside because it violated New York Debtor and Creditor Law (DCL).

Undisputed Facts And Procedural History


The 2009 Deed Transfer And Reverse Mortgage

Defendant admits that in 2009 her husband "put [her] on the deed to their marital home for [*2]no consideration" in order to refinance their house in contemplation of retirement. More specifically, Irwin Fleisher, who held title to the marital home in his own name, conveyed his interest in the property to "IRWIN FLEISHER AND LOUISE FLEISHER, his wife, residing at 1754 W. 9th Street, Brooklyn, NY 11223 party of the second part," under an April 14, 2009 deed (2009 Deed Transfer). The deed expressly provides that the 2009 Deed Transfer was made "in consideration of ten dollars and other valuable consideration paid by the party of the second part."

Irwin and Louise Fleisher, in connection with the 2009 Deed Transfer, concurrently executed an "Adjustable Rate Second Reverse Mortgage (Home Equity Conversion)," collectively as "mortgagor" and "borrower," on April 14, 2009 for $795,000 (2009 Reverse Mortgage). The 2009 deed and the 2009 Reverse Mortgage were both recorded on May 6, 2009 in the New York City Register's Office, Department of Finance, and are included in the record.

Cohen-Fleisher's April 27, 2011 affidavit specifically addresses her and her late husband's motivation and intention regarding the 2009 Deed Transfer and Reverse Mortgage. Cohen-Fleisher explains that they took a reverse mortgage in 2009 to "enjoy their retirement" and that "My husband had no intention of going into the nursing home he was a young man." Irwin Fleisher's Death

Irwin Fleisher suffered "major brain damage from choking on a chicken bone" on February 18, 2011, at age 68, which resulted in his admission to Promenade Nursing Home. He received in-patient nursing care services for 37 days beginning February 18, 2011. Mr. Fleisher was "effectively brain dead'," ventilator dependent and remained on life support at Promenade Nursing Home until his untimely death on April 10, 2011.

Promenade Nursing Home's Insurance Claims

Cohen-Fisher claims that "[t]he nursing home was to present a claim to [her] husband's insurance company and Medicare for his limited stay in their facility." Documentary evidence reflects that Promenade Nursing Home submitted multiple insurance claims to both Empire Blue Cross Blue Shield and Medicare seeking reimbursement for nursing home services provided to Irwin Fleisher, and that all these claims were denied.[FN1]

The record includes a February 18, 2013 letter from plaintiff's counsel, Jordan Meisner, Esq., to defense counsel, Jim Wagner, Esq., attaching copies of the insurance coverage denials from Empire Blue Cross Blue Shield and Medicare. Meisner's letter notes that: (1) a "woman who [he] spoke with from the nursing home said she had been handling this matter"; (2) "both medicare and blue cross blue shield denied coverage because each claimed the other was the primary provider"; (3) "medicare claimed they would have ultimately resolved the matter but needed to speak with someone who had Power of Attorney over Irwin Fleisher . . ."; and (4) "your client refused to come in to address the issue."

Promenade Nursing Home thus seemingly acknowledges that there is available insurance coverage for Irwin Fleisher's nursing home care, that it "had been handling" the insurance claims, and that such claims were never resolved. Promenade Nursing Home made no other efforts, on this record, to obtain reimbursement from the insurance providers.

Promenade Nursing Home's Fraud Action

Promenade Nursing Home commenced this fraud action against Cohen-Fleisher on or about August 9, 2011, alleging that: (1) the 2009 Deed Transfer was consummated "without fair consideration or for no consideration"; (2) Irwin Fleisher and his estate were "rendered insolvent as a result thereof"; and (3) defendant "intended by her actions that PROMENADE should be defrauded, hindered, delayed and otherwise prevented from collecting . . . the $28,480.00 for the care and services rendered to [Irwin Fleisher]."

Defendant's Motion To Dismiss [*3]

Defendant seeks dismissal of Promenade Nursing Home's fraud complaint on the grounds that the 2009 Deed Transfer could not have been a fraudulent conveyance because it did not render Irwin Fleisher "insolvent" within the meaning of the DCL. Defendant relies on the Appellate Division, Second Department's holding in Grace Plaza of Great Neck v Heitzler (2 AD3d 780, 781 [2003]), wherein the court held that "[a]n individual is insolvent' within the meaning of the DCL when the present fair saleable value of his [or her] assets is less than the amount that will be required to pay his [or her] probable liability on . . . existing debts as they become absolute and matured'" (quoting DCL § 271 [1]).

Defendant further contends that the 2009 Deed Transfer could not have been made with the intent to defraud Promenade Nursing Home since "there was no indication that Mr. Fleisher would need a nursing home stay [in 2009]." The defense submitted the affidavit of Chaim Levine, M.D., Irwin Fleisher's 2009 treating physician, which averred that "Mr. Fleisher was not diagnosed, suffering or inflicted with any medical condition wherein Mr. Fleisher would have been expecting to be a nursing resident for any time in the future."

Promenade Nursing Home opposes defendant's motion to dismiss the fraud complaint by making the conclusory argument that the 2009 Deed Transfer was a fraudulent conveyance because it rendered Irwin Fleisher insolvent and "unable to pay his debts, including to PROMENADE." Promenade Nursing Home's opposition includes the affidavit of Solomon Vogel, its Vice Secretary, which acknowledges that "Defendant transferred [Irwin Fleisher's] ownership and/or title of [Irwin Fleisher's] property located at 1754 West 9th Street, Brooklyn, NY from [Irwin Fleisher's] name to be held in the names of [Irwin Fleisher] and the Defendant as tenants by the entirety." Importantly, Vogel notes that the 2009 Reverse Mortgage was consummated "the very same day" as the 2009 Deed Transfer, and expressly acknowledges that "the funds realized from the reverse mortgage would have been more than sufficient to pay [Irwin Fleisher's] future debts, including to PROMENADE." Vogel nevertheless argues that the reverse mortgage left the property "without any equity," and therefore, rendered Irwin Fleisher and/or his estate insolvent.

Promenade Nursing Home further claims that (1) "Defendant provides no admissible proof that the conveyance did not render [Irwin Fleisher] insolvent, besides her own self-serving Affidavit stating same"; (2) "the element of insolvency is presumed when a conveyance is made without fair consideration . . ."; (3) "[c]ourts view intra-family transfers made without any signs of tangible consideration as presumptively fraudulent"; and (4) "if there exists an actual intent to hinder, delay, or defraud . . . the transfer of individual assets to estates by the entireties is voidable . . . irrespective of insolvency."

Discussion

The Appellate Division, Second Department has held that "[p]ursuant to [DCL] § 273, a conveyance made by a person who will be rendered insolvent thereby is fraudulent as to creditors, without regard to his or her actual intent, if the conveyance is made without fair consideration" (Grace Plaza of Great Neck v Heitzler, 2 AD3d at 781 [granting summary judgment dismissing nursing home's fraudulent conveyance claim where defendant's mother's intra-family gifts pre-dated debt to nursing home and did not render mother insolvent]; see also St. Teresa's Nursing Home v Vuksanovich, 268 AD2d 421, 422 [2000] [granting nursing home summary judgment on fraudulent conveyance claim because "conveyance of [decedent's] one-half interest in Lot 2 to the defendants as the surviving joint tenant upon his death was prima facie a fraudulent conveyance" where "there is no dispute that the conveyance rendered [decedent's] estate insolvent"]).

"[B]oth insolvency and a lack of fair consideration are prerequisites to a finding of constructive fraud under §273, and the burden of proving these elements is upon the party challenging the conveyance" (Joslin v Lopez, 309 AD2d 837, 838 [2003] [holding that transfer of property owned by husband and wife as tenants by the entirety to wife while husband was defending lawsuit by creditors was fraudulent conveyance because transfer lacked fair consideration] [*4]

Significantly, "[a] conveyance is fraudulent as to creditors only if the conveyance makes the debtor insolvent" (Stokes Coal Co. v Garguilo, 255 App Div 281, 283 [1938], affd 280 NY 616 [1939] [emphasis added] [dismissing creditor's fraudulent conveyance complaint because the mortgages on the real property conveyed by defendant had already exceeded its market value at the time of conveyance, and thus, the conveyance, itself did not render debtor insolvent]). This principle is further illustrated by the Appellate Division, Second Department's holding in St. Teresa's Nursing Home (268 AD2d at 422), a factually analogous case, which held that a deed transferring ownership of the decedent's property to defendants as tenants by the entirety and to himself as a joint tenant was not a fraudulent transfer within the meaning of DCL § 273 because a $600,000 mortgage encumbered the property, which indicated that the decedent's one-half interest in the property "was not without value" at the time of the transfer.

The Court of Appeals has held that a deed transfer in real property from a husband to himself and his wife — like the conveyance at issue here — creates a tenancy by the entirety (Boehringer v Schmid, 254 NY 355, 356 [1930], citing Matter of Klatzl, 216 NY 83 [1915], rearg denied 218 NY 734 [1916]). The Court of Appeals explained that "[a]t common law, husband and wife were deemed a single legal entity, and a conveyance of property to both created an indivisible interest so that both parties were deemed seized of the whole" (V.R.W., Inc. v Klein, 68 NY2d 560, 563 [1986]). "Unlike other forms of ownership, tenants by the entirety do not hold partial interests; each owns the whole, subject to the parallel right of his or her spouse" (Kozyra v Goldstein, 146 Misc 2d 25, 27 [Sup Ct, Suffolk County 1989] [holding that judgment setting aside transfer of marital home and returning home to debtor husband and wife as tenants by the entirety was unenforceable because property became wife's upon husband's death]).

Here, dismissal of Promenade Nursing Home's fraud complaint is warranted because the 2009 Deed Transfer and Reverse Mortgage did not render Irwin Fleisher insolvent. Rather, the 2009 Deed Transfer admittedly created a tenancy by the entirety in which Irwin owned a coexistent interest in the marital home, which was not without monetary value.Indeed, Promenade Nursing Home expressly acknowledges that Irwin Fleisher was not rendered insolvent by the 2009 Deed Transfer, which enabled him and his wife to obtain a $795,000 reverse mortgage, providing them with a stream of income that was more than adequate to cover Irwin Fleisher's nursing home expenses.

Promenade Nursing Home's Vice Secretary, Solomon Vogel, contends that the 2009 Reverse Mortgage left the marital home "without any equity," but Mr. Vogel expressly acknowledges in his affidavit in opposition that "the funds realized from the reverse mortgage would have been more than sufficient to pay [Irwin Fleisher's] future debts, including to PROMENADE." Thus, Promenade Nursing Home admits that the 2009 Deed Transfer at issue here did not render Irwin Fleisher insolvent, as it was done in conjunction with the 2009 Reverse Mortgage which, by definition,[FN2] provided Irwin Fleisher with a sizable stream of disposable, liquid income to pay creditors.

Furthermore, the circumstances accompanying the subject debt's creation preclude any finding of intent to defraud, hinder or delay Promenade Nursing Home from collecting such debt. Defendant had no way of knowing in April 2009 that her husband would choke on a chicken bone in 2011, which would render him brain-dead and needing plaintiff's nursing care facility. Plaintiff fails to explain how defendant could have intentionally thwarted its ability to collect a debt that did not yet exist. Accordingly, it is [*5]

ORDERED that defendant's motion to dismiss the complaint is granted.

This constitutes the decision, judgment and order of the court.

E N T E R,

J. S. C.

Footnotes


Footnote 1:Curiously, Empire Blue Cross Blue Shield's August 23, 2011 statement denying coverage reflects that Promenade Nursing Home filed an insurance claim seeking reimbursement of $8,571.33 from Empire Blue Cross Blue Shield for nursing services purportedly rendered to Irwin Fleisher for 19 days from May 31 through June 20, 2011, after his death on April 10, 2011.

Footnote 2:Black's Law Dictionary defines a "reverse annuity mortgage" as "[a] mortgage in which the lender disburses money over a long period to provide regular income to the (usu. elderly) borrower, and in which the loan is repaid in a lump sum when the borrower dies or when the property is sold" (see Black's Law Dictionary 1033 [8th ed 2004]).