Peckar - Abramson vs. Lyford Holdings, Et Al

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

Index No. 09-100005
--------------------------------------------------------------------x
PECKAR & ABRAMSON, P.C.,
Plaintiff,
AMENDED
VERIFIED COMPLAINT
-againstLYFORD HOLDINGS, LTD., MITCHELL STERN,

SAVOY MANAGEMENT CORPORATION, SAVOY
SENIOR HOUSING CORP.,
JACOB FRYDMAN, WHITE ACRE EQUITIES, LLC,
TUSCANY BUILDERS, LLC, TIVOLI PARTNERS LLC
and SAVOY LITTLE NECK ASSOCIATES, L.P.,
.
Defendants.
------------------------------------------------------------------------x
Plaintiff, by its attorneys, Strassberg & Strassberg, P.C., as and for its Amended
complaint against the defendants respectfully show and alleges that:
1. At all times herein set forth, plaintiff Peckar & Abramson, P.C. ("P&A"), was and still is a
corporation duly organized and existing under and by virtue of the laws of the State of
New Jersey, and maintains a place of business in the County, City and State of New York.
2.
On information and belief, defendant Mitchell Stern ("Stern"), was and still is a resident
of the County of Nassau and State of New York.
3.
At all times herein set forth, defendant Savoy Management Corporation ("Savoy
Management"), was and still is a corporation duly organized and existing under and by
virtue of the laws of the State of New York, and maintains its principal place of business in
the County, City and State of New York.
4.
At all times herein set forth, defendant Savoy Senior Housing Corp. ("SSHC"), was and still
is a corporation duly organized and existing under and by virtue of the laws of the State
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Supreme Court Records Online Library - page 1 of 18
of New York, and maintains its principal place of business in the County, City and State of
New York.
5.
On information and belief, defendant Jacob Frydman ("Frydman"), was and still is a resident
of the County of Westchester and State of New York.
6. At all times herein set forth, defendant White Acre Equities, LLC ("White Acre"), was and
still is a limited liability company duly formed and existing under and by virtue of the laws
of the State of New York and maintains a place of business in the County, City and State of
New York.
7.
At all times herein set forth, defendant Tuscany Builders, LLC ("Tuscany"), was and still is a
limited liability company duly formed and existing under and by virtue of the laws of
the State of New Jersey, and maintains a place of business in the County, City and State of
New York.
8.
At all times herein set forth, defendant Tivoli Partners LLC ("Tivoli") was and stil1 is a
limited liability company duly formed and existing under and by virtue of the laws of the
State of New York and maintains a place of business in the County, City and State of New
York.
9.
At all times herein set forth, defendant Savoy Little Neck Associates, L.P. ("Savoy Little
Neck"), was and still is a limited partnership duly formed and existing under and by virtue
of the laws of the State of New York
10. Defendant Savoy Little Neck operated pursuant to an Agreement of Limited Partnership
dated the 23rd day of December, 1998, and amendments thereto, including but not
limited to an Amendment by Letter Agreement between the General Partner and Lyford
{00066263.1}
Holdings, Ltd. ("Lyford
1
")
dated February 16, 1999 and the "First Amendment of Agreement of
Savoy Little Neck Associates Limited Partnership" (of unknown date) by which the foregoing
partnership agreement was further amended to provide for the addition of additional limited
partners including Mitchell Stem (collectively the "LP Agreement 2").
11. Defendant Savoy Little Neck purchased certain property located at 55-15 Little Neck
Parkway , Little Neck, New York (the "Property") which it converted into an Assisted Living
Facility.
12. P&A is a law firm. Savoy Little Neck and Savoy Boro Park failed to pay P&A,
and
on April 5, 2004 P&A commenced an action in the Supreme Court of the State of New York
entitled Peckar & Abramson, P.C. v. Savoy Little Neck Associates, L.P. and Savoy Born Park
Associates, L.P. (New York County Index No. 105261/04). The action was based on a breach
of contract (a settlement) for work, labor and services provided in 2003 ("the underlying
action").
13. The Answer in the underlying action was verified on May 19, 2004 by defendant
Frydman as President of SSHC, managing member of Alta Knoll, L.L.C. (general
partner of Savoy Little Neck and Savoy Boro Park).
14. On February 22, 2006 P&A entered a judgment against Savoy Little Neck for
$237,731.75 ("Judgment").
15. The Judgment remains unpaid and outstanding.
1 Lyford is listed in the caption which has not been amended since prior decisions in this case. There are no claims
against Lyford in this Amended Complaint.
2 Relevant Sections and Definitions from the LP Agreement are re-printed beneath Schedule "A" solely for
convenience of reference.
(00066263. l}
16. P&A is a creditor of Savoy Little Neck pursuant to Sections 278 and/or 279 of
Article 10 of the New York Debtor and Creditor Law ("DCL").
Savoy Little Neck

17. P&A is a law firm that was engaged by Savoy Little Neck and a related entity
each
of which were in the business of running Assisted Living Facilities.
Savoy Little Neck is one of more than a dozen entities operated by Frydman, an
18.
attorney, who is also an owner and/or indirect beneficiary of each related entity.
19. At all times herein, Frydman, Lyford and Stem were limited partners of Savoy Little
Neck.
20. At all relevant times herein defendants SSHC, White Acre, Tuscany and Tivoli and nonparty Frydman & Co were owned or controlled by defendant Frydman.
21. At all times herein set forth, defendant SSHC was the managing member of the
corporate general partner of Savoy Little Neck.
22. At all times herein set forth, Frydman was the President of SSHC.
Sale of the Assisted Living Facility by Savoy Little Neck - and financial condition at date of
sale
23. By deed dated June 16, 2004 Savoy Little Neck conveyed the Property upon which the
assisted living facility operated to an unrelated entity, CRP Little Neck, L.P. ("Date the
Property was sold").
24. As at the Date the Property was sold (June 16, 2004) and thereafter Savoy Little Neck was
insolvent, its investors had lost millions of dollars, and its major remaining asset was a claim
for a property tax refund.
3 Savoy Bora Park Associates, L.P. ("Savoy Boro Park").

(00066263. I }
Other Assets of Savoy Little Neck - Bank Accounts

25. Prior to commencement of the underlying action Savoy Little Neck maintained three
checking accounts at North Fork Bank ("NFB") as follows: Savoy Little Neck "Operating"
account (Checking Acct. No. 9054019857); Savoy Little Neck "Payroll" account (Checking
Acct. No. 9054019865); and Savoy Little Neck "Checking" account (Checking Acct. No.
9054011102).
26. Jacob Frydman was a signatory on all NFB checking accounts of Savoy Little Neck [see
,r2s, supra].
27. After commencement of the underlying action Savoy Little Neck transferred monies to the
defendants as set forth in Schedule "A" hereto (hereafter collectively referred to as the
"Other Transfers").
28. In the 10 days before the sale of the Property, Savoy Little Neck depleted several hundred
thousand dollars from its NFB Checking account, transferring cash therein to defendants
White Acre and Tivoli Partners and non-party Frydman & Co. [see Schedule "A"]
29. On September 2, 2004 Savoy Little Neck depleted its NFB Payroll account by transferring
the remaining balance of $3,008.97 in its payroll account to White Acre, after which the
account was closed without further transactions [see Schedule "A"].
30. On the date the property was sold and thereafter, Savoy Little Neck's Operating account
never contained a balance exceeding $21,471.11 until it was closed in November of
2004.
(00066263.1)
AS AND FOR A FIRST CAUSE OF ACTION
31. Plaintiff repeats, reiterates and realleges each and every allegation contained in paragraphs
"1" through "30" inclusive, with the same force and effect as if set forth at length.
32. Tuscany, White Acre, Tivoli and non-party Frydman & Co. were affiliates of Savoy Little Neck
at the time they received the Other Transfers.
33. Each of the affiliate defendants operated by Frydman, directly or indirectly, had Frydman's
knowledge of P&A's lawsuit and its claims.
34. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party Frydman &
Co. were without consideration (see Schedule "A"].
35. To the extent there was any actual consideration for the Other Transfers to defendants Tuscany,
White Acre, Tivoli and non-party Frydman & Co. said actual consideration was based upon a
contractual obligation.
Co. were without fair consideration as defined in the DCL.
37. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party Frydman & Co.
rendered Savoy Little Neck insolvent, or came at a time when Savoy Little Neck was insolvent,
as defined in the DCL.
Co. were without good faith as defined in the DCL.
39. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party
Frydman & Co. occurred at a time when Savoy Little Neck had, intended or believed it would
incur debts beyond its ability to pay.
{00066263. I)
40. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party Frydman
& Co. left Savoy Little Neck with unreasonably small capital to remain in business.
Co. were made with the actual intent to hinder, delay or defraud creditors of Savoy Little
Neck including Plaintiff.
42. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party Frydman
& Co. were received with the actual intent to hinder, delay or defraud creditors of
Savoy Little Neck including Plaintiff.

43. The Other Transfers to defendants Tuscany, White Acre, Tivoli and non-party
Frydman & Co. violated DCL 273, 273-a, 274, 275, 276, 277, 278 and/or 279.
Co. should be declared void or voidable and judgment should be entered against defendants
Tuscany, White Acre and Tivoli as transferees, and any other defendants found to have been
beneficiaries of the transfers to defendants Tuscany, White Acre, Tivoli and non-party
Frydman & Co. in an amount equal to each transfer [see Schedule "A"J with interest from
the dates of each transfer4; or alternatively, a judgment should be fashioned in any manner
permitted by law necessary to enforce the setting aside of the transfers herein including, but
not limited to imposition of a constructive trust over the transferred proceeds.
4 Limited only to the extent that the combined award against any defendant (exclusive of damages under DCL 276a) does not exceed the amount of the judgment due (plus interest) against Savoy Little Neck.
{00066263 .l}
AS AND FOR A SECOND CAUSE OF ACTION

45. Plaintiff repeats, reiterates and realleges each and every allegation contained in
paragraphs "1" through "44" inclusive, with the same force and effect as if set forth at
length. Assets of Savoy Little Neck - Initial Transfer of the Property Tax Refund
46. On or about September 24, 2004 the Department of Finance of the City of New York issued
a property tax refund check to Savoy Little Neck in the amount of $722,365.43 ("Property
Tax Refund").
47. On September 30, 2004 the $722,365.43 Property Tax Refund check was not properly
endorsed by Savoy Little Neck, but was endorsed "Savoy" and deposited into Savoy
Management's operating account.
Subsequent Transfers of the Property Tax Refund
48. Within 15 days after deposit, all proceeds of the Property Tax Refund were depleted leaving
the Savoy Management operating account with a negative balance.
5
49. Disbursement of the Property Tax Refund proceeds included $425,000.00

transferred to Stem, and $65,000.00 to White Acre.
50. The purported consideration for the $425,000.00 transfer to Stem is the sale of limited
partnership interest to SSHC as of August 1, 2004 as more fully set forth in the annexed
"Assignment and Assumption of Limited Partnership Interests" by and between Stem and
SSHC, a copy of which is annexed as Exhibit "1".
5 Recovery for the $154,299.14 transferred to Lyford is not requested herein.

{00066263. L J
51. The transfer of the Property Tax Refund to defendant Savoy Management was without
consideration as defined in the DCL.
52. To the extent there was any actual consideration for the transfer of the Property Tax Refund
said actual consideration was based upon a contractual obligation or contractual obligations.
fair consideration as defined in the DCL.
54. The transfer of the Property Tax Refund to defendant Savoy Management rendered Savoy
Little Neck insolvent, or came at a time when Savoy Little Neck was insolvent, as defined in
the DCL.
good faith as defined in the DCL.
56. The transfer of the Property Tax Refund to defendant Savoy Management occurred
at a time when Savoy Little Neck had, intended or believed it would incur debts beyond
its ability to pay.
57. The transfer of the Property Tax Refund to defendant Savoy Management left Savoy Little
Neck with unreasonably small capital to remain in business.
58. The transfer of the Property Tax Refund to defendant Savoy Management was made with
the actual intent to hinder, delay or defraud creditors of Savoy Little Neck including
Plaintiff.
( 00066263. l)
59. The transfer of the Property Tax Refund to defendant Savoy Management was
received with the actual intent to hinder, delay or defraud creditors of Savoy Little
Neck including Plaintiff.
60. The transfer of the Property Tax Refund to defendant Savoy Management violated DCL
273, 273-a, 274, 275, 276, 277, 278 and/or 279.
61. The transfer of the Property Tax Refund to defendant Savoy Management should be
declared void or voidable and be set aside, and judgment should be entered against
defendants Savoy Management as transferee, and any other defendants found to have been
beneficiaries of the transfers to defendant Savoy Management in an amount equal to each
transfer with interest from the dates of each Transfer6; or alternatively, a judgment should
be fashioned in any manner permitted by law necessary to enforce the setting aside of the
transfers herein including, but not limited to imposition of a constructive trust over the
transferred proceeds.
AS AND FOR A THIRD CAUSE OF ACTION
paragraphs "1" through "61" inclusive, with the same force and effect as if set forth at
length.
63. P&A is a creditor of Savoy Management pursuant to Sections 278 and/or 279 of Article
10 of the DCL.
64. Savoy Management's transfers of the proceeds of the Property Tax Refund
to
defendants Stern and White Acre were without consideration.
{00066263.1)
Supreme Court Records Online library - page 10 of 18
65. To the extent there was any actual consideration for Savoy Management's transfers of the
proceeds of the Property Tax Refund to defendants Stem and White Acre said actual
consideration was based upon a contractual obligation.
66. Savoy Management's transfers of the proceeds of the Property Tax Refund to
defendants Stern and White Acre were without fair consideration as defined in the
DCL.
67. Savoy Management' s transfers of the proceeds of the Property Tax Refund to defendants
Stern and White Acre rendered Savoy Management insolvent, or came at a time when Savoy
Management was insolvent, as defined in the DCL.
68. Savoy Management's transfers of the proceeds of the Property Tax Refund to
defendants Stem and White Acre were without good faith as defined in the DCL.
69. Savoy Management's transfers of the proceeds of the Property Tax Refund to defendants
Stem and White Acre occurred at a time when Savoy Management had, intended or
believed it would incur debts beyond its ability to pay.
Stem and White Acre left Savoy Management with unreasonably small capital to remain
in business.
Stem and White Acre were made with the actual intent to hinder, delay or defraud
creditors of Savoy Management including Plaintiff.
Stern and White Acre were received with the actual intent to hinder, delay or defraud
creditors of Savoy Management including Plaintiff.
{00066263.1}
10
Stem and White Acre violated DCL 273, 273-a, 274, 275, 276, 277, 278 and/or 279.
Stem and White Acre should be declared void or voidable and be set aside, and judgment
should be entered against defendants Stem and White Acre as transferees, and any other
defendants found to have been beneficiaries of the transfers to defendants Stem and White
including but not limited to defendant SSHC in an amount equal to each transfer with
interest
7
from the dates of each Transfer ; or alternatively, a judgment should be fashioned in any
manner
permitted by law necessary to enforce the setting aside of the transfers herein including, but
AS AND FOR A FOURTH CAUSE OF ACTION
paragraphs "l" through "74" inclusive, with the same force and effect as if set forth at length.
76. Plaintiff is entitled to an award of reasonable legal fees against the defendants
pursuant to DCL 276-a.
WHEREFORE, Plaintiffs demand judgment as follows:
ON THE FIRST CAUSE OF ACTION:
A. Judgment setting aside the Other Transfers to defendants Tuscany, White Acre, and
Tivoli and non-party Frydman & Co. as having violated the DCL; and awarding entry of a
(00066263. l )
11
money judgment against defendants Tuscany, White Acre and Tivoli as transferees, and any
other defendants found to have been beneficiaries of the transfers to defendants Tuscany,
White Acre, Tivoli and non-party Frydman & Co. in an amount equal to each transfer [see
Schedule
8
"A"] with interest from the dates of each Transfer; or alternatively, a judgment should be
fashioned in any manner permitted by law necessary to enforce setting aside of the
transfer(s) herein including, but not limited to imposition of a constructive trust over the
transferred proceeds.
ON THE SECOND CAUSE OF ACTION:
B. Judgment setting aside the transfer of the Property Tax Refund to defendant
Savoy
Management as having violated the DCL; and awarding entry of a money judgment against
Savoy Management as transferee, and any other defendants found to have been
beneficiaries of
the transfers to defendant Savoy Management in an amount equal to each transfer with interest
9
from the dates of each Transfer ; or alternatively, a judgment should be fashioned in any
manner
permitted by law necessary to enforce setting aside of the transfer(s) herein including, but
ON THE THIRD CAUSE OF ACTION:
C. Judgment setting aside Savoy Management's transfers of the proceeds of the Property Tax
Refund to defendants Stern and White Acre as having violated the DCL; and awarding entry
of a money judgment against defendants Stern and White Acre as transferees, and any other
{00066263 .1)
12
defendants found to have been beneficiaries of the Savoy Management transfers to defendants
Stem and White including but not limited to defendant SSHC in an amount equal to each
transfer
with interest from the dates of each Transfer; or alternatively, a judgment should be fashioned
10
in any manner permitted by law necessary to enforce setting aside of the transfer(s)
herein including, but not limited to imposition of a constructive trust over the transferred
proceeds. ON THE FOURTH CAUSE OF ACTION:
D. Judgment against each of the defendants pursuant to DCL 276-a awarding reasonable legal
fees, in an amount to be determined by the Court.
ON ALL CAUSES OF ACTION:
E. The costs and disbursements of this action.
F. For such other, further and different relief as to this Court may seem just and proper.
Dated: New York, New York
September 27, 2010
Yours, etc.,
STRASSBERG & STRASSBERG, P.C.
By:
'.,L_A
EL
Todd Strassberg, Esq.
57 West 38th Street, 8th
Floor New York, New York
10018 (212) 736-9500
1l--
IO Limited only to the extent that the combined award against any defendant (exclusive of damages under DCL
276-a) does not exceed the amount of the judgment due (plus interest) against Savoy Little Neck.
(00066263. I }
13
SCHEDULE "A" to Complaint

North Fork Bank ("NFB") checking AJC#9054011102 (Savoy Little Neck Operating Account)
"Other Transfers"
Date of Check/Wire Date Check Paid
or intra-bank
Transfer
Payee/Transferee account no.
05/04/04
05/06/04
05/06/04
05/06/04
05/06/04
or transfer made Check #

05/04/04
05/06/04
05/06/04
05/06/04
05/06/04
05/11/04
05/12/04
05/18/04
06/07/04
06/10/04
06/14/04
06/14/04
06/14/04
06/14/04
05/11/04
05/12/04
05/18/04
06/07/04
06/10/04
06/14/04
06/14/04
06/14/04
06/14/04
Amount
$10,000.00 NFB NC#905421218 (White Acre Equities, LLC)
$12,100.00 NFB NC#9054020079 (Frydman & Company)
$11,500.00 NFB NC#9054019659 (Tuscany Builders, LLC)
$2,000.00 NFB NC#90542121 8 (White Acre Equities, LLC)
$28,329.88 NFS NC#905421218 (White Acre Equities, LLC)
$31,438.20 NFB NC#905420020 (Tivoli Partners, LLC)
$30,000.00 NFB NC#9054020079 (Frydman & Company)
North Fork Bank checking A/C#9054019865 (Savoy Little Neck Payroll Account)
9/2/04
9/2/04
$3,008.97 NFS NC#905421218 (White Acre Equities, LLC}
North Fork Bank checking AJC#905401 9840

(Savoy Management Corp. Operating Account)
09/30/04
10/1/04
10/04/04
10/06/04
10/14/04
09/30/04
10/1/04
10/15/06
10/12/04
10/15/04
$722,265.43 Deposited - Savoy Little Neck
Property Tax Refund

1465 $425,000.00 Mitchell Stern
1467 $154,299.14 Lyford Holdings, Ltd.
1469 $85,000.00 Armstrong Management Corporatfon
{00066263.l}
14
RELEVANT SECTIONS OF THE

AGREEMENTOF SAVOY LITTLE NECK ASSOCIATES LIMITED PARTNERSHIP ,
A NEW YORK LIMITED PARTNERSHIP
SECTION 1
THE PARTNERSHIP
1.4
Term. The term of the Partnership shall commence on the date that this
Agreement is executed, provided that the certificate of limited partnership is expeditiously
executed and filed in the office of the Secretary of State of New York in accordance with the
Act and shall continue until the earlier of (i) December 31, 2030, or (ii) the date upon which
the Partnership's entire Interest in all the Property.
1.6
Definitions. Capitalized words and phrases used in this Agreement have
the following message:
(b)
"Affiliate" means, with respect to any Partner, any person or
entity directly or indirectly controlling, controlled by or under common control with
such Partner.
(g)
"General Partner" means any Partner whose name is set forth in Section
2.1 hereof. "General Partners" means all such Partners.
U)
"Limited Partner" means any Partner whose name is set forth on
Schedule A attached hereto and made a part hereof and any other person who is admitted
as an additional or substituted Limited Partner. "Limited Partners" means all such Partners.
(k)
"Liquidating Event" has the meaning set forth in Section 11.
(m)
"Partners" means a11 of the General Partner and Limited
Partners. "Partner" means any one of the Partners.
(p)
"Property" means that certain parcel of land, together with all
improvements thereon, located at 5515 Little Neck Parkway, Little Neck, New York, as
more particularly described in the Purchase Agreement.
SECTION II
DISSOLUTION AND WINDING UP
11.1
A.
Liquidating Events
The Partnership shall dissolve and commence
winding up and liquidating upon the first to occur of any of the following (each a "Liq
uidating Event");
{00066263.1)
15
Supreme Court Records Online Library - page 16 of rn
(a)
the date for ending of the term of the Partnership as provided in
Section 1.4;
(b)
the happening of any other event that, in the judgment of the General Partner makes it
unlawful, impossible, or impractical to carry on the business of the Partnership;
(c)
the bankruptcy of the sole General Partner unless all the Limited Partners, within thirty (30)
days after receiving notice thereof, appoint a successor General Partner;
(d)
any event which causes there to be no General Partner, unless all the Limited Partners, within
thirty (3) days thereafter appoint a successor General Partner;
(e)
interest in the Property.
the date upon which the Partnership shall dispose of its entire
11.2
Winding Up. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely
for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership's
business and affairs. The General Partner (or, in the event there is no remaining General Partner,
any Partner or liquidator elected by holders of 60% in Interest of the Limited Partners) shall be
responsible for overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and assets. The Partnership assets shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom and
any cash of the Partnership, to the extent sufficient therefore, shall be applied and distributed in
the following order:
(a)
First, to the payment and discharge of all of the Partnership's debts and liabilities to creditors
(including to the Limited Partners after unaffiliated creditors) other than the General Partner
or reserves therefore and for contingencies as determined by the General Partner or
liquidator;
{00066263.1}
16
8 JO 8l aBed - i11e1q11 aunuo sp1mati ,.mo::,

awa1dns
Plaintiff,
-againstLYFORD HOLDINGS, LTD., MITCHELL STERN,
SENIOR HOUSING CORP.,
JACOB FRYDMAN, WHITE ACRE EQUITIES, LLC,
TUSCANY BUILDERS, LLC, TIVOLI PARTNERS LLC,
Defendant.
AMENDED VERIFIED COMPLAINT
Atto
n 1f
By:
,- l.
\/ {
Todd Strassberg, Esq.
57 West 381h Street, 8th Floor
New York, New York 10018
(2 I 2) 736-9500
To
Attomey(s) for
Dated,
' the wi
is hereby admitted.
[ ]Notice ofEntry
that the within is a true copy of an

duly entered in the office of the Clerk of the within named Court on
[ ] Notice of Settlement
that an Order
of which the within is a true copy will be presented for settlement to the
one of the Judges of the within named Court, at
HON.
on
Dated,
19
at
M.
Yours, etc.
Attorneys for Plaintiff
To:
57 West 38h1 Street, gth Floor

New York, New York
10018 (212) 736-9500
SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

PRESENT:
PART 11
Index Number :
INDEX NO .
100005/2009 PECKAR &
MOTION OATE
ABRAMSON , P.C.
MOTION SEQ,1\10.
vs.
LYFORD HOLDINGS, LTD.
MOTION CAL, NO.
SEQUENCE NUMBER :001
,n this motion to/for -------
DISMISS ACTION
PAPERS NUMBl;REQ.
Notice of Motion/ Order to Show Cause - Affidavits - Exhibits ...

Answering Affidavits - Exhibits
-------------
J .S.C.
X NON-FINAL DISPOSITION
Check one:
FINAL DISPOSITION
Check if appropriate:
DO NOT POST
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK: PART 11
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --X
PECK.AR & ABRAMSON, P.C.,
Plaintiff,
-against-
Index No . .100005/09
LYFORD HOLDINGS, LTD., MITCHELL STERN,

SENIOR HOUSING CORP., JACOB FRYDMAN,
WHITE ACRE EQUITIES, LLC, TUSCANY
BUILDERS, LLC, TIVOLI PARTNERS, LLC,
Defendants.
- - - - - - - - - - - - - - - - - - - - - - - - ------------------X
MADDEN, J.:
In 2006, plaintiff Peckar & Abramson, P.C. (P&A) obtained a default
judgment against defendant Savoy Little Neck Associates, L.P. (Savoy Little Neck) for legal
services rendered, which judgment remains unsatisfied. In this action, P&A alleges that Savoy
Little Neck "wrongfully' distributed and/or transferred the money to various entities, including
its general and limited partners, prior to fulfilling its obligation to pay P&A the money that it
was
owed, and asse1ts several causes of action seeking the recovery of such funds, in order to collect
on the judgment.
Defendants Savoy Little Neck, Lyford Holdings, Ltd. (Lyford), Savoy
Management Corporation (Savoy Management), Savoy Senior Housing Corp. (SSHC), Jacob
Frydman., White Acre Equities, LLC (White Acre}, Tuscany Builders, LLC (Tuscany) and Tivoli
Partners LLC (Tivoli)' now move, pursuant to CPLR 3211 {a) (3), (5) and (7), for an order
Defendant Mitchell Stem is the only defendant who does not move to dismiss the
complaint.
dismissing the complaint on the grounds that P&A has no legal capacity to sue, the statute of
limitations has expired, and the pleading fails to state a cause of action.
BACKGROUND
Accepting the allegations of the complaint as true (Leon v Martinez, 84 NY2d 83
[1994]), the following facts emerge: defendant Savoy Little Neck and non-party Savoy Boro Park
Associates, L.P. (Savoy Boro Park), a related entity, were each in the business of running assisted
living facilities (Complaint, ,r 19). Savoy Little Neck operated pursuant to an Agreement of
Limited Partnership dated December 23, 1998, and amendments thereto (id., 112). At a certain
point, Savoy Little Neck purchased property located at 55-15 Little Neck Parkway, Little Neck,
New York (the Property), which it converted into an assisted living facility (id., ,r 13).
Savoy Little Neck is one of more than a dozen entities operated by defendant
Frydman, an attorney, who is also an owner and/or indirect beneficiary of each related entity
(id.). All defendants other than Savoy Little Neck either owned limited partnership interests in
Savoy Little Neck, or were controlled by Frydman (either directly or via entities Frydman
controlled) (id.,,20)- Frydman was a limited partner of Savoy Little Neck (id.,,r 21).
Defendant SSHC was the managing member of non-party Alata Knoll, LLC, the corporate
general partner of Savoy Little Neck and Savoy Boro Park (id., ,i 15, 22}.
In 2003, P&A, a law firm, was engaged by Savoy Little Neck and Savoy Boro
Park for legal services ( id., 19). Although Savoy Little Neck and Savoy Boro Park entered
into an agreement to pay P&A 's outstanding legal fees over a period of time, Savoy Little Neck
failed to make payments required under that agreement. On April 5, 2004, P&A commenced an
action entitled Peckar & Abramson P. C. v Savoy Little Neck Assocs_, L.P. and Savoy Boro Park
Assocs., L.P. (Sup Ct, NY County, Index No. 105621/04) for breach of contract (id.,
,r 14). On
February 22, 2006, judgment was entered against Savoy Little Neck in the amount of
$237,731.75, which judgment remains unsatisfied (id., ,ir 16-17). P&A asserts that, as a result, it
is a creditor of Savoy Little Neck pursuant to Article 10 of the New York Debtor and Creditor
Law (id.,
18).
P&A contends that, after commencement of the underlying action, Savoy Little
Neck sold the assisted living facility, and made other payments and transfers to or for the benefit
of defendants. According to P&A, these transfers, which occurred over a period of six months,
were designed to avoid the P&A judgment, and/or controvert the express terms of the Savoy
Little Neck partnership agreement.
Specifically, P&A alleges that, in June 2004, Savoy Little Neck conveyed the
Property to an unrelated entity, CRP Little Neck, L.P. (id.,
124). As of the day the Property was
sold, Savoy Little Neck was insolvent, and its major remaining asset was a claim for a property
tax refund (id.,,r 25). According to P&A, the sale of the facility is a "liquidating event"
under the Savoy Little Neck partnership agreement (id., I47). Savoy Little Neck then made
numerous
payments to defendants (Complaint, 128; see id., Ex A).
Prior to the commencement of the underlying action, Savoy Little Neck
maintained three checking accounts at North Fork Bank (NFB): an operating account, a payroll
account and a checking account ( id., ,26). Frydman was a signatory on all NFB checking
accounts (id., 127). In the
10 days before the sale of the Property, Savoy Little Neck depleted
several hundred thousand dollars from its NFB checking account, and transferred the cash therein
to defendants White Acre, Tivoli, Tuscany, and non-party Frydman & Co. (id., ,i 29; see id., Exh
,
A). On September 2, 2004, Savoy Little Neck depleted the NFB payroll account by transferring the
remaining balance of $3,008. 97 to White Acre, after which the account was closed (id.,,r 30).
On September 24, 2004, the Department of Finance of the City of New York
issued a property tax refund check payable to Savoy Little Neck in the amount of $722,365.43
(the Property Tax Refund) (id.,
32). On September 30, 2004, the Property Tax Refund check,
which was endorsed "Savoy," was deposited into the "Operating" account of Savoy
Management, an entity related to Savoy Little Neck (id., 1r 33, 37). Within 15 days after
deposit, all proceeds of the Property Tax Refund were depleted, leaving the Savoy Management
operating account with a negative balance (id., 138).

From the Property Tax Refund proceeds, Savoy Management transferred
$425,000 to defendant Mitchell Stem, $154,299.14 to defendant Lyford, the majority (49.5%)
limited partner of Savoy Little Neck, and $65,000 to defendant White Acre (id., 139).
According to Schedule A attached to the complaint, (which indicates that $722,265.43 as
opposed to $722,365.43 was deposited in the account), the transfer to White Acre was made on
October I , 2004, the transfer to Lyford was made on October 12, 2004, and the transfer to
Mitchell Stem was made on October 15, 2004 and another $85,000 was transferred to non-party
Armstrong Management Corporation on October 15, 2004. P&A asserts that, in addition to the
$65,000 paid from the Property Tax Refund, Savoy Little Neck also transferred additional funds
to White Acre, allegedly making the total transfers to White Acre in excess of the amount of the
unsatisfied judgment (id., i!44).
The complaint contains six causes of action. The first cause of action alleges a
violation of Savoy Little Neck's limited partnership agreement. The second cause of action
alleges a violation of New York Revised Limited Partnership Act (RLPA) 121-607. The
remaining four causes of action allege violations of the New York Debtor and Creditor Law
(DCL). The third, fourth and fifth causes of action claim violations of DCL 273, 273-a, 274,
275, 276, 277, 278 and/or 279. The sixth cause of action alleges a violation of DCL
276-a.
ANALYSIS
The first cause of action alleges a breach of contract claim against defendants
based on Savoy Little Neck's limited partnership agreement (the LP Agreement). P&A
maintains that, under the terms of the LP Agreement, Savoy Little Neck's June 2004 sale of the
Property constituted a "Liquidating Event," and P&A was an "unaffiliated creditor" entitled to be
paid before defendants from the proceeds of the Property Tax Refund. Defendants seek
dismissal of this cause of action on the ground that P&A lacks legal capacity to bring this clairn,
because it was not a party to the LP Agreement, and the complaint does not claim that P&A was
a third-party beneficiary of the LP Agreement. During oral argument, P&A consented to the
withdrawal of the first cause of action, and as such, it is dismissed.
In the second cause of action, P&A claims that defendants violated RLPA 12 l607 by knowingly accepting wrongful distributions from the partnership. However, RLPA
121-607 (c) specifically states:
Unless otherwise agreed, a limited partner who receives a wrongful

distribution from a limited partnership shall have no liability under
this article or other applicable law for the amount of the
distribution after the expiration of three years from the date of the
distribution
Here, the complaint alleges that the complained-of distributions occurred between
May and October 2004. The complaint was not filed until December 2008, more, than four years
after the date of the alleged wrongful distributions, and at oral argument P&A conceded that this
claim was untimely.
The third, fourth, fifth and sixth causes of action are all brought pursuant to the
DCL, and are based upon the allegation that "all defendants, other than Savoy Little Neck, either
owned limited partnership interests in Savoy Little Neck or were controlled by Frydman (directly
or via entities Frydman controlled) (Complaint, ,r 20). Defendants argue that P&A's claims
against Savoy Little Neck's limited partners brought pursuant to the DCL are time-barred by
section J 21-607 (c), asserting that the three year statute of limitations contained in RLPA 121607 (c) applies to all of P&A's claims arising from asserted "wrongful distributions."
In opposition to the motion, P&A argues that the longer six-year statute of limitations
governing fraudulent conveyances under the DCL applies to the third, fourth, fifth and sixth
causes of action, and not the three year time limit under RLPA 12-607 (c). P&A alternatively
contends that the three-year limitations period in RLPA 12-607 (c) applies only where the
limited partnership is the plaintiff, and does not apply to "innocent creditors" like P&A2.who
step into the shoes of the limited partnership.
At issue here is the interpretation of RLPA 12-607 and, in particular, whether the threeyear statute of limitations provided under subsection (c) relates to claims, like those at issue
here, which are brought by a creditor to recover under the DCL. RLPA 121-607 provides:
In reply, P&A asserts that in the second cause of action, P&A seeks recovery for
payments of wrongful distributions by "stepping into the shoes of ' Savoy Little Neck whereas in
the fraudulent conveyance claims (i.e. the third, fourth, and fifth causes of action) P&A seeks to
recover "in its own right." Whatever the legal significance of this distinction, the court need not
address it since as explained herein the three-year statute of limitations under RLPA 121607(c) applies to any claim against a limited partner who receives a wrongful distribution.
(a) A limited partnership shall not make a distribution to a partner to

the extent that, at the time of the distribution, after giving effect
to the distribution, all liabilities of the limited partnership, other
than liabilities to partners on account of their partnership
interests and liabilities for which recourse of creditors is limited
to specified property of the limited partnership, exceed the fair
market value of the assets of the limited partnership, except that
the fair market value of property that is subject to a liability for
which the recourse of creditors is limited shall be included in the
assets of the limited partnership only to the extent that the fair
value of that property exceeds that liability.
(b) A limited partner who receives a distribution in violation of
subdivision (a) of this section, and who knew at the time of the
distribution that the distribution violated subdivision (a) of this
section, shall be liable to the limited partnership for the amount
of the distribution. A limited partner who receives a distribution
in violation of subdivision (a) of this section, and who did not
know at the time of the distribution that the distribution violated
subdivision (a) of this section, shall not be liable for the amount
of the distribution. Subject to subdivision (c) of this section, this
subdivision shall not affect any obligation or liability of a limited
partner under a partnership agreement or other applicable law
for the amount of a distribution.
(c) Unless otherwise agreed, a limited partner who receives a

wrongful distribution from a limited partnership shall have no
liability under this article or other applicable law for the amount
of the distribution after the expiration of three years from the
date of the distribution.
(emphasis supplied).
In Williamson v Culbro Corp. Pension Fund, 41 AD3d 229 (1st Dept 2007], lv denied,
10 NY3d 702 (2008], the Appellate Division, First Department considered whether claims
for unjust enrichment and money had and received asserted by a successor liquidating trustee
on behalf of a partnership to recover distributions allegedly wrongful paid to defendants
were governed by the three-year statute of limitations prov1ded by PA 12l-607(c). The
trial
7
court decision found that subdivision (c) did not apply because section 121-607 limits the three
year period to wrongful distributions described in subdivisions (a) and (b), that is those
distributions which would render the partnership insolvent and were received by a partner
knowingly that such distribution would lead to insolvency.
The First Department rejected the trial court analysis writing that it was "contrary to [the
statute's] plain language" and that "the limitation period applies when a limited partner recei ves
a 'wrongful distribution.'
The term 'wrongful' is plain and refers not only to distributions
thatrender a partnership insolvent, but any improper distribution. Moreover, the subdivision
states that the limited partner receiving a 'wrongful distribution' shall have no liability after
three years 'under this article or other applicable law.'" 41 AD3d at 331. The First
Department explained that "while subdivision (b) makes a limited partner liable for a
violation of subdivision (a) only to the extent that the limited partner knew the distribution
rendered the partnership insolvent, it expressly states that this does not affect 'liability of a
limited partner under a partnership agreement or other applicable law for the amount of a
distribution' but such liability is 'subject to subdivision(c)."' The court then wrote "[i]t is
hard to imagine how this sentence can mean anything other than that the limited partner's
liability for distributions 'under

the partnership agreement or other applicable law' is subject to the three-year statute of
limitations."Id. at 232.
Moreover, while Williamson did not involve claims under the DCL, the First Department
cited with approval the decision in Matter of Die Fliedermaus LLC, 323 BR 101, 108 [SD NY
2005], in which the Bankruptcy Court interpreted the almost identical language in 508 of the
Limited Liability Company Law, a sister statute based upon the RLPA, and found that
8
"[w]rongful is a broad term and the common understanding of the term would include
distributions that could be recovered as either constructive or intentional fraudulent conveyances
under the DCL, or as distributions based on an alleged breach of an LLC operating agreement."
Accordingly, based on Williamson, the court finds that the causes of action based on violation of
the DCL are governed by the three-year statute of limitations contained in RLPA 12-607 (c).
In addition, contrary to P&A' s assertion, Williamson is not "factually dissimilar"

because it involved claims by the partnership itself against former partners, and not claims by
"innocent creditors" of the partnership. The plaintiff in Williamson was not the partnership, but
a liquidating trustee. Such a liquidating trustee may assert claims on behalf of the partnership,
but the true beneficiaries of such claims are creditors, who are first in line for any resulting
distributions (see RLPA 121-804); see also Mastel v Petryc/..'1, _ Misc 3d _, 885
NYS2d 397 [Sup Ct, NY County 2009] [claims of plaintiff, a former employee who was essentially
a creditor of defendant, for fraudulent conveyance under the DCL, were barred by three-year
limitation set forth in LLCL 508 (c)]; see also Walker, Limited Liability Companies &
Partnerships 7:11 [1 West's NY Prac Series 2002 and Supp 2008] ["A member who
knowingly receives a wrongful distribution is not liable to the LLC or to creditors after three
years from the date of distribution''] [interpreting identical language in Limited Liability
Company Law 508 (c)J [emphasis added]).
Plaintiff further contends that the three-year statute of limitations only applies to
claims asserted by the partnership itself, on the ground that the phrase "liable to the limited
partnership" in subdivision (b) of 121-607 should be grafted onto subdivision (c). However, a
plain reading of the statute reveals that there is no limitation in subdivision (c) to the application
9
of the three-year statute of limitation, as to either to the type of claim or the claimant. As the
First Department noted in Williamson, the Legislature's use of qualification in one section of the
statute, and its failure to use such qualifications in another section, represents a deliberate choice
that should not be disregarded (see Williamson v Culbro Corp. Pension Fund, 41 AD3d 229,
supra [reversing trial courts's determination that subdivision (c) did not apply because section
121-607, when read as a whole, limits the three-year period to wrongful distributions made to
withdrawing partners that rendered the partnership insolvent]).
P&A next argues that allegedly fraudulent transfers of the proceeds of the Property
Tax Refund do not constitute ''distributions" within the meaning of RLPA, and therefore the
three year statute of limitations does not apply. At issue here are the transfers which are the
subject of the third and fourth causes of action of the complaint which allege that the proceeds
of Property
Tax Refund were transferred on September 24, 2004, into an operating account of Savoy
Management, an entity related to Savoy Little Neck, without consideration, and that in October
2004 in what the complaint labels as "the Little Neck Final Distribution," another transfer was
made to defendants which was also allegedly made without consideration. The moving
defendants identified in Schedule A of the complaint as receiving this Final Distribution are
White Acre and Lyford.3
The term "distribution" is defined under RLPA 121-101 to mean "the transfer of
property by a limited partnership to one or more of its partners." P& A argues that since the
proceeds of Property Tax Refund were transferred to White Acre arid Lyford by Savoy
Defendant Mitchell Stem, who is not moving to dismiss, is also alleged to have
received part of the final distribution.
10
'
Management and not by the limited partnership, i.e. Savoy Little Neck, that the transfers do not
qualify as distributions. This argument is unavailing as the mere fact that a limited partnership uses
a related entity as a conduit to transfer property is insufficient to take it out of the definition of
distribution. Significantly, the facts, as pleaded, make clear that the proceeds were in Savoy
Management's operating account for approximately 15 days, and that the proceeds remained in
the account until they were distributed to the limited partners.
P.A. next argues that certain transfers in the complaint were not distributions but were
returns on capital subject to Partnership Law 106(4). This argument is also unavailing.
Although a limited partner receiving a return on capital is liable to the partnership for any
sum necessary to discharge the partnership's liability to its creditors, the return of capital
from a partnership is nonetheless considered a distribution. Whitley v. Klauber, 51 NY2d 555,
563 [1980]; see also, Rand LLC v. Young, 384 BR 94 [D NJ 2008][noting that "the typical
nature of a distribution is the distribution of profits or the return of capital]; Mostel v
Petrycki, _ Misc 3d
' 2009 NY Slip OP 29363 [Sup Ct, NY County 2009] [return to
defendant managing manager of limited company of $300,000 of his invested capital was
"distribution" under LLCL
508].
P&A also argues that the transfers were not distribution as they were made to Savoy
Management to pay business expenses and debts, and asserts that Savoy Management received
$360,650 for payment of a business debt and $361,715.43 without consideration. Notably, this
argument is contrary to the facts as alleged in support of the third and fourth causes of action
under the DCL. These causes of action are not based on an allegation that Savoy Capital
received money for a business debt or otherwise retained the proceeds from the Property Tax
11
Refund, but instead, that Savoy Management transferred such proceeds to White Acre, Lyford,
Mitchell Stern and a nonparty. Thus, based on the allegations in the complaint, the transfers of
the proceeds of Property Tax Refund constitute distributions within the meaning of RLPA.4
Accordingly, as P&A's claims for relief based on violations of DCL are outside the
applicable three-year period provided under RLPA 12607 (c), these claims must be dismissed
as time-barred.
In view of the above, it is hereby
ORDERED that the motion to dismiss is granted and the complaint is hereby
severed and dismissed as against moving defendants Lyford Holdings, Ltd., Savoy Management
Corporation, Savoy Senior Housing Corp., Jacob Frydman, White Acre Equities, LLC, Tuscany
Builders, LLC, Tivoli Partners LLC and Savoy Little Neck Associates, L.P., and the Clerk is
directed to enter judgment in favor of said defendants; and it is further
ORDERED that the action shall continue as against defendant Mitchell Stem and
the remaining parties shall appear for a preliminary conference on January 7, 2010 at 9:30 am.
Dated: December 2009
While the complaint alleges that Savoy Little Neck and Frydman provided Lyford with a
spreadsheet entitled "Little Neck Distribution" indicating that $360,650 of the Property Tax
Refund was used to pay a Construction Management fee (Complaint, 41), this allegation is not
used as a basis for the DCL claims, and there is no allegation that Savoy M.!111agement was paid
this fee or that it retained any part of Property Tax Refund.
12

Peckar - Abramson vs. Lyford Holdings, Et Al

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

-againstLYFORD HOLDINGS, LTD., MITCHELL STERN,

Supreme Court Records Online Library - page 1 of 18

Supreme Court Records Online Library - page 2 of 18

Holdings, Ltd. ("Lyford

dated February 16, 1999 and the "First Amendment of Agreement of

Supreme Court Records Online Library - page 3 of 18

Savoy Little Neck

3 Savoy Bora Park Associates, L.P. ("Savoy Boro Park").

Supreme Court Records Online Library - page 4 of 18

Other Assets of Savoy Little Neck - Bank Accounts

Supreme Court Records Online Library - page 5 of 18

AS AND FOR A FIRST CAUSE OF ACTION

Supreme Court Records Online Library - page 6 of 18

Savoy Little Neck including Plaintiff.

Supreme Court Records Online Library - page 7 of 18

AS AND FOR A SECOND CAUSE OF ACTION

49. Disbursement of the Property Tax Refund proceeds included $425,000.00

5 Recovery for the $154,299.14 transferred to Lyford is not requested herein.

Supreme Court Records Online Library - page 8 of 18

Supreme Court Records Online Library - page 9 of 18

defendants Stern and White Acre were without consideration.

Supreme Court Records Online library - page 10 of 18

Supreme Court Records Online Library - page 11 of 18

Supreme Court Records Online Library - page 12 of 18

Supreme Court Records Online Library - page 13 of 18

Supreme Court Records Online Library - page 14 of 18

SCHEDULE "A" to Complaint

Payee/Transferee account no.

or transfer made Check #

North Fork Bank checking AJC#905401 9840

$722,265.43 Deposited - Savoy Little Neck

Property Tax Refund

Supreme Court Records Online Library - page 15 of 18

RELEVANT SECTIONS OF THE

"Liquidating Event" has the meaning set forth in Section 11.

Supreme Court Records Online Library - page 16 of rn

the date for ending of the term of the Partnership as provided in

Supreme Court Records Online Library - page 17 of 18

8 JO 8l aBed - i11e1q11 aunuo sp1mati ,.mo::,

that the within is a true copy of an

57 West 38h1 Street, gth Floor

SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

100005/2009 PECKAR &

MOTION CAL, NO.

SEQUENCE NUMBER :001

,n this motion to/for -------

Notice of Motion/ Order to Show Cause - Affidavits - Exhibits ...

SUPREME COURT OF THE STATE OF NEW YORK

PECK.AR & ABRAMSON, P.C.,

LYFORD HOLDINGS, LTD., MITCHELL STERN,

In 2006, plaintiff Peckar & Abramson, P.C. (P&A) obtained a default

124). As of the day the Property was

32). On September 30, 2004, the Property Tax Refund check,

operating account with a negative balance (id., 138).

Unless otherwise agreed, a limited partner who receives a wrongful

(a) A limited partnership shall not make a distribution to a partner to

(c) Unless otherwise agreed, a limited partner who receives a

The term 'wrongful' is plain and refers not only to distributions

liability for distributions 'under

In addition, contrary to P&A' s assertion, Williamson is not "factually dissimilar"

' 2009 NY Slip OP 29363 [Sup Ct, NY County 2009] [return to