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Grace Plaza of Great Neck12/29/2003
This opinion is uncorrected and subject to revision before publication in the Official Reports.
ROBERT W. SCHMIDT and REINALDO E. RIVERA, JJ.
DECISION & ORDER
(Index No. 4381/00)
In an action, inter alia, to set aside a conveyance pursuant to Debtor and Creditor Law article 10, the defendant appeals from an order of the Supreme Court, Queens County (Dye, J.), dated January 8, 2003, which denied her motion for summary judgment dismissing the complaint.
ORDERED that the order is reversed, on the law, with costs, the motion is granted, and the complaint is dismissed.
On January 8, 1996, the defendant's 81-year-old mother, Estelle Witt, entered a nursing home owned and operated by the plaintiff. Approximately nine months later, in September 1996, Mrs. Witt received the sum of $659,532 in settlement of a medical malpractice action. It is undisputed that Mrs. Witt gave over $350,000 of the settlement funds to the defendant and other family members. However, even after transferring these funds, Mrs. Witt retained over $342,700 in various bank and brokerage accounts. Mrs. Witt left the plaintiff's facility in November 1999, and moved to a nursing home in Texas. Approximately three months later, the plaintiff commenced this action, inter alia, to recover a balance of $26,610.73 allegedly due for Mrs. Witt's care, upon the theory that the September 1996 fund transfers to the defendant and other family members constituted fraudulent conveyances pursuant to Debtor and Creditor Law §§ 273, 275, and 276. After discovery was conducted, the defendant moved for summary judgment, contending that the September 1996 fund transfers were not fraudulent conveyances because they did not render her mother insolvent, and were not made with the intent to defraud creditors. The Supreme Court denied the motion, concluding, inter alia, that there were issues of fact as to whether Mrs. Witt had a "good indication" of future insolvency when she transferred funds to her family in September 1996, and whether she made the transfers with intent to defraud. We now reverse.
Pursuant to Debtor and Creditor Law § 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. An individual is "insolvent" within the meaning of the Debtor and Creditor Law 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" (Debtor and Creditor Law § 271 ). Here, in support of her motion for summary judgment, the defendant submitted uncontroverted evidence that her mother, now deceased, retained cash assets of over $342,700 after the subject intra-family transfers, and that she continued to receive a pension and social security benefits. Furthermore, there is no evidence that Mrs. Witt had outstanding debts to the plaintiff nursing home, or any other creditor, when the transfers were made in September 1996. Under these circumstances, the transfers did not render Mrs. Witt insolvent (see St. Teresa's Nursing Home v Vuksanovich, 268 AD2d 421), and thus were not fraudulent conveyances within the meaning of Debtor and Creditor Law § 273.
Furthermore, the September 1996 transfers cannot be deemed fraudulent as to creditors pursuant to Debtor and Creditor Law § 275. Debtor and Creditor Law § 275 provides that a conveyance made without fair consideration at a time when the person making the conveyance "intends or believes that he [or she] will incur debts beyond his [or her] ability
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