Enforcing a Judgment Against a Foreign Real Estate Developer

Job-site injuries on construction sites are a major source of work for personal injury lawyers due to the inherent dangers of the building trades. New York State law offers important protections to construction workers that make it easier to prove liability, including the imposition of vicarious liability on property owners.

But sometimes when a construction worker is injured, there’s a clear basis for liability but no available insurance coverage. In those situations, the Judgment you won can turn into a nightmare. Enforcement can appear to be impossibly difficult as a result of the arcane structure of real estate projects, where owners can hide behind an elaborate series of shell companies.

We have won major victories in this arena – piercing through the veil of the shell companies and using fraudulent transfer claims to obtain recovery for construction workers on the job site. A recent example is Setters v. AI Properties and Developments, where we managed to secure payment in full of a $1.2 million Judgment and created a significant appellate precedent in the First Department.

Our client was an injured construction worker who, through prior counsel, won a Judgment in his Labor Law case against an LLC that was the sponsor of a Tribeca luxury condominium project. The LLC had no insurance coverage and hired counsel to stall the case. While the lawsuit was pending the condo units were sold and profits distributed to the LLC’s members. The worker’s claim was ignored. We were retained as Judgment enforcement counsel and, after extensive post-Judgment proceedings to uncover the facts, filed an action against the LLC’s members to claw back the distributions as fraudulent transfers under the New York Debtor and Creditor Law.

The trial Court granted our application and directed that the worker’s Judgment be paid in full by the LLC’s members. However, the Court then reversed itself, finding the LLC’s members had raised an issue of fact on a Statute of Limitations defense based on a provision in New York’s Limited Liability Company Law. We immediately appealed and prosecuted the appeal on an expedited basis.

We obtained a complete reversal and total victory in a unanimous decision from the Appellate Division, First Department, in May 2016, just three months later. The Statute of Limitations defense was rejected, thereby establishing an important appellate precedent that strengthens the power of creditors to reach fraudulently transferred property. The cherry on top of a very satisfying triumph was the Appellate Division’s direction that the LLC members also pay the worker’s attorneys’ fees. Following the ruling, the underlying Judgment was paid in full, with interest and attorneys’ fees. Justice delayed is not always justice denied.

We offer lawyers a unique service – a no-risk, confidential, and free evaluation of any open money judgment you feel may be collectible. You may submit Judgments for review by simply clicking the link in this newsletter. Or you may send it to us by email (judgments@dorazio-law.com), FAX (212-608-5398), or USPS mail to Bernard D’Orazio & Associates, P.C., 238 W 139th St New York, NY 10030. We usually will have a response to you within one week.