On August 27, 2025, Justice Masley of the New York County Commercial Division issued a decision in Benuvia Holdings, LLC v Next Frontier Holdings, Inc., 2025 NY Slip Op. 33220(U), denying default judgment on claims where the plaintiff alleged facts only upon information and belief, explaining:
CPLR 3215 (f) requires a plaintiff to submit proof of the facts constituting the claim, the default and the amount due by affidavit made by the party. Where a verified complaint has been served, it may be used as the affidavit of the facts constituting the claim and the amount due; in such case, an affidavit as to the default shall be made by the party’s attorney. Here, the complaint, which ultimately seeks to enforce a money judgment in an underlying action, is unverified. However, plaintiff submits the affidavit of Muna Said-Elmi, plaintiff’s director of strategic planning in support of his application.
In an underlying action, the court (Nock, J.) awarded plaintiff a money judgment against Next Frontier Holdings in the amount of $25,471,661.32, plus interest accrued thereon at the contractual rate of 1.5% per month from August 18, 2022, until the date of satisfaction of the money judgment, plus $33,735.38 in attorneys’ fees. Next Frontier Holdings has not paid any portion of the money judgment. Plaintiff commenced this action, seeking to pierce the corporate veil to impose Next Frontier Holdings’ liability on the defendants in this action. Plaintiff alleges causes of action for (i) piercing the corporate veil, (ii) breach of the Security Agreement, (iii) fraudulent conveyances under Debtor and Creditor Law (DCL) § 273, (iv) fraudulent conveyances under DCL § 274, (v) fraudulent conveyances under DCL § 276, and (vi) fraudulent inducement.
When the allegations supporting the claim are solely on upon information and belief, the default motion shall be denied. Said-Elmi attempts to verify the allegations of the complaint by affirming that “I have read the complaint in this matter and am thoroughly familiar with the facts and allegations contained therein. The same are true and correct to the best of my knowledge and belief, except for any facts pleaded on information and belief, which I believe to be true.” The affirmant must demonstrate the basis of affirmant’s personal knowledge of the facts through an in- depth account of the facts. Said-Elmi states no factual basis just a belief regarding the facts plead on information and belief. This presents an issue as almost all the allegations in support of the causes of action for piercing the corporate veil, fraudulent conveyances, and fraudulent inducement are based on information and belief.
For example, in support of piercing the corporate veil, plaintiff alleges that
Upon information and belief, Defendants engaged in an ongoing scheme of commingling, diverting and fraudulently transferring away funds as though they were one entity dominated by the Individual Defendants (because they are), and so as to deflate the Collateral and prevent Benuvia Holdings from recovering payment on the Senior Secured Note.
As to the fraudulent conveyances claims, plaintiff alleges that
upon information and belief, including the facts that the Entity Defendants were unable to repay the past due Treehouse Loan at the time of the Transaction, the Entity Defendants were insolvent at the time of Transaction and the effective date of the Senior Secured Note, December 8, 2021, and thereafter.
All these allegations, which are based on information and belief, are directly related to plaintiff’s causes of action. Again, Said-Elmi’s affirmance that Said-Elmi believes the allegations to be true is insufficient to prove that Said-Elmi has personal knowledge because the affirmation does not contain reference to the source of the information or the grounds for the belief.
Further, plaintiff’s submission of an email indicating that there is suspicious co-mingling of funds is not sufficient proof to find alter ego liability because there is no affidavit of personal knowledge or by the drafter of the email. The email is only a summary of alleged comingling of funds without any proof such as the underlying balance sheets or cash flow statements. Thus, the court cannot grant a default judgment on any of these claims.
(Internal quotations and citations omitted).