Commercial Division Blog

Posted: March 1, 2023 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Evidence, Commercial, Consolidation, Trial

Plaintiffs Precluded From Using Evidence Of Alleged Fraudulent Transfers As Proof Of Consciousness of Guilt

In a Decision and Order, dated January 27, 2023, in Beach v. Touradji Capital Mgmt, LP, Index No. 603611/2008, Justice Andrea Masley granted Defendant’s motion to preclude Plaintiffs from offering evidence and testimony regarding distributions made between 2012 and 2018 that were the subject of a separate lawsuit.  The Court explained: 

Plaintiffs' sole claim is for breach of contract.  The connection between defendant's 2012 to 2018 transfer of the funds and plaintiffs' anticipated judgment for a 2007 breach of contract is too attenuated to be probative here. (See cf. Miller ex rel. Miller v Lewis, 40 Misc 3d 499, 502, 963 N.Y.S.2d 533 [Sup Ct, Kings County 2013] [failure to remain at the scene, provide information and render assistance, all contrary to law, "was highly relevant to show a 'consciousness of responsibility'" for the accident] [citation and quotation omitted].) This is particularly true since the parties agree, and the court has ordered, that the reversed 2019 trial is not to be mentioned during this new trial; plaintiffs cannot connect defendant's alleged consciousness of guilt to the timing of the prior trial without disclosing that prior trial.  In order to consider plaintiffs' fraudulent conveyance theory a full and fair hearing, there must be a trial where both parties have an opportunity to present their cases. Plaintiffs' evidence is simple: 2012 to 2018 transfers connected to the timeline of this action. However, defendants offer numerous explanations for the transfers some of which involve complex tax code. There may be such a trial in plaintiffs' 2019 fraudulent transfer action, but now is not the time for that complex trial. This trial is already set to take three to four weeks and this time period cannot be expanded. For that reason, among others, plaintiffs' motion to consolidate this trial with the fraudulent transfer case was denied. Introduction of 2012 to 2018 transactions would impermissibly create a trial within a trial. (See Cheney v Wells, 2008 NY Misc LEXIS 6660 [Sur Ct, NY County Oct. 21, 2008] [alleged 2007 solicitation of brother's murder not admissible as proof  of sister's consciousness of guilt in probate proceeding regarding mother's life insurance proceeds because "too equivocal as to consciousness of guilt, and too likely to create a 'mini-trial'"]; Cheney v Wells, 22 Misc 3d 502, 874 N.Y.S.2d 679 [Sur Ct, NY County, Sept. 23, 2008].)

The evidence admitted by courts that have allowed consciousness of responsibility evidence, was not an entire trial in and of itself as it would be here. (See Miller ex rel. Miller v Lewis, 40 Misc 3d at 503 ["Lewis continued to drive further down the block, failed to call 911 and placed and received numerous phone calls to and from Duane Reade employees, is all admissible as evidence of Lewis' consciousness of liability" for the car accident at issue]; see also Johnson v Ingalls, 95 AD3d 1398, 944 N.Y.S.2d 654 [3d Dept 2012].) Finally, plaintiffs cannot remedy their tardy motion to consolidate by injecting the fraudulent transfer case into this trial.

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