Romano v. Triborough Energy Corp

Background

Louis Romano sued to collect a $200,000 loan that he made to Triborough Energy Corp. in May 2018. The company was then owned by Jack Berisha, who later died. Romano alleged that Jack agreed to be personally responsible for the loan and that Diane Berisha later agreed to the same. After Jack’s death, Diane became Triborough’s sole owner and chief operating officer. Romano alleged that the loan remained unpaid despite assurances from Diane and Larry Berisha.

Romano also alleged that defendants hid valuable assets from Jack’s estate, including Rolex watches and real property, to make the estate insolvent and avoid repayment. The motion addressed Count Three, which alleged that the extended family defendants fraudulently transferred estate assets, and Count Four, which alleged common-law fraud against Larry Berisha. The moving defendants were Gjeste Berisha, Alex Berisha, and Larry Berisha. The motion also sought dismissal of the real property as a defendant.

Fraudulent-conveyance claims

The court treated the amended complaint as asserting intentional and constructive fraudulent-conveyance claims under the former provisions of New York’s Debtor and Creditor Law because the alleged events largely occurred before the relevant statutory amendment took effect.

For intentional fraudulent conveyance, the court applied Federal Rule of Civil Procedure 9(b), which requires fraud to be pleaded with particular details. The court held that the amended complaint did not describe the alleged transfers with sufficient specificity. Although it referred generally to hidden Rolex watches and real property, it did not adequately identify what property was transferred, to whom, when, or why the transfer was fraudulent. The court therefore held that the intentional fraudulent-conveyance claim was not adequately pleaded.

For constructive fraudulent conveyance, the court explained that Romano needed to allege a transfer made without fair consideration and either insolvency or an inability to pay debts as they came due. The court held that the amended complaint did not plausibly allege that the extended family defendants controlled Jack’s assets while he was alive, transferred estate assets to themselves, or made any transfer without adequate consideration. The constructive fraudulent-conveyance claim therefore also failed.

Fraud claim against Larry Berisha

Romano based his fraud claim against Larry on Larry’s alleged statement in summer 2021 that Diane should repay the loan by November 2021, even though Larry allegedly knew Diane would not do so. The court held that this did not adequately plead common-law fraud.

The court found no sufficient factual allegation that Larry’s statement was a material misrepresentation rather than his prediction or best guess about what Diane would do. Romano did not allege facts showing that Larry had authority over repayment, used that authority to prevent repayment, or knew in summer 2021 that Diane and Triborough would not repay the loan by November. The later failure to repay did not by itself show that Larry’s statement was false when made.

The court also held that Romano did not adequately allege reasonable, detrimental reliance. The amended complaint stated only that Romano did not pursue his legal rights, without explaining how the delay injured him or why reliance on Larry’s statement was reasonable. The court therefore granted the motion to dismiss Larry as a defendant.

Disposition

The court granted the extended family defendants’ motion to dismiss. It dismissed the extended family defendants and the real property from the case and directed the clerk to terminate Alex Berisha, Gjeste Berisha, Larry Berisha, and the real property as defendants. The order also stated that discovery was no longer stayed and required the parties to submit a revised case-management plan and joint letter by January 19, 2023. An initial pretrial conference was scheduled for January 27, 2023.