KeyBank National Association v. Deen

Background

KeyBank sued Yoel Deen, Chaiya Deen, Nancy Lane LLC, and unnamed defendants, alleging fraudulent transfers of real property. KeyBank previously obtained a default judgment against Yoel Deen and Direct Building Products Corporation for $514,568.51 after alleging defaults on loans and a guaranty.

On April 3, 2019, Yoel Deen transferred the property at 6 Nancy Lane from his sole ownership to joint ownership with Chaiya Deen. The deed listed consideration of $10 and other valuable consideration. The defendants later stated that Chaiya Deen’s work, payments, and maintenance of the property supplied the additional consideration. On May 7, 2019, the Deens transferred the property to Nancy Lane LLC in exchange for the same stated consideration. Nancy Lane LLC transferred the property back to the Deens jointly on March 7, 2023, effectively undoing the second transfer. The property remained in the Deens’ joint names.

KeyBank sought to avoid both transfers and execute on the property to satisfy the default judgment. It moved for summary judgment, which asks the court to rule without a trial when there is no genuine dispute over a fact that could affect the result.

Legal standard and analysis

The court applied the version of New York Debtor and Creditor Law § 273 that was in effect when the first transfer occurred. Under that provision, a conveyance could be constructively fraudulent—meaning fraudulent based on objective financial conditions rather than the transferor’s actual intent—if it was made without fair consideration and the transferor was insolvent or was made insolvent by the transfer.

Fair consideration required both a fair exchange of value and good faith. The court concluded that the $10 stated on the deed was disproportionately small compared with the property’s asserted value of at least $180,000. It also found that the defendants had not provided specific evidence showing the value of Chaiya Deen’s alleged work, prior payments, or upkeep. Thus, the defendants had not produced evidence creating a genuine factual dispute about whether the first transfer involved an exchange of fair value.

The court nevertheless found a genuine dispute about good faith. Yoel Deen testified that he changed the property from sole to joint ownership because he was concerned about what would happen to his wife if something happened to him and wanted to make sure she was taken care of. This evidence supported a possible finding that the transfer was made in good faith.

The court also held that KeyBank had not provided evidence establishing Yoel Deen’s insolvency. Insolvency required comparing his assets with his debts, not merely comparing income with expenses. The record contained no evidence of the value of his assets or the amount of his debts. Although insolvency may be presumed when a conveyance lacks fair consideration, the court stated that Yoel Deen might be able to overcome that presumption because he still had an interest in the property and may have retained assets through Direct Building Products Corporation.

Disposition

The court held that it could not decide as a matter of law whether the first transfer rendered Yoel Deen insolvent. Because a genuine factual dispute existed regarding good faith and the record did not establish insolvency, the court denied KeyBank’s motion for summary judgment. The clerk was directed to terminate the motion, and the parties were directed to appear for a conference on March 22, 2024.