On April 1, 2024, Justice Crane of the New York County Commercial Division issued a decision in G & Y Maintenance Corp. v. 540 W. 48th St. Corp., 2024 NY Slip Op. 31087(U), holding that a fraudulent conveyance claim in an amended complaint related back to the original complaint, explaining:
Section 273 of NY’s Debtor and Creditor law states:
“Every Conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without fair consideration.”
Defendants do not contest that the statute of limitations for fraudulent conveyance under § 273 is six years from the date of the conveyance. Plaintiff pleads in paragraphs 63 and 64 of the second amended complaint that Chiang made conveyances in late 2014 to Jannat I, LLC and Jannat Rockaway that rendered Core unable to pay creditors. Oddly, plaintiff has sued neither Jannat entity, so it is difficult to understand how plaintiff plans to have any practical victory with this cause of action. Moreover, as plaintiff interposed the SAC in 2023, unless this claim relates back to plaintiffs original complaint, it is time barred.
Defendant argues there is no relation back because plaintiff never made any sort of allegation in the prior complaint about siphoning assets to another entity and therefore this is an entirely new claim having nothing to do with the prior claims. However, plaintiff only found out about the alleged siphoning to the allegedly related Jannet companies during discovery.
In a strikingly similar case, where defendant allegedly shorted payments for the sale of goods, the court permitted amendment to add claims for fraudulent conveyance, because they related back to the original complaint. Here too, the fraudulent conveyance claims revolve around the collectability of payment from defendants who allegedly failed to pay plaintiff the full amount plaintiff claims is owed. Accordingly, the court allows plaintiff to amend to interpose a claim for Fraudulent Conveyance under Debtor and Creditor Law § 273.
(Internal citations omitted).