H. Daya International Co., Ltd. v. DO Denim, LLC et al

Filing 239

DECISION AND ORDER granting in part and denying in part 182 Motion for Summary Judgment; granting in part and denying in part 191 Motion for Summary Judgment; denying 198 Motion for Summary Judgment. For the reasons stated above, it is he reby ORDERED that the motion of defendants R. Siskind & Co., Inc. ("RSC"), Vintage Apparel Group LLC ("Vintage"), and Richard Siskind for summary judgment on the claims of plaintiff H. Daya International Co., Ltd. ("H. Daya") (Dkt. 182) is DENIED in part and GRANTED in part; and it is further, ORDERED that the motion of defendants Do Denim, Reward, Only Brands, Inc., and Salomon Murciano for summary judgment on H. Daya's claims (Dkt. 191) is DENIED i n part and GRANTED in part; and it is further, ORDERED that the motion for summary judgment of H. Daya (Dkt. No. 198) is DENIED; and it is further, ORDERED that within twenty days of the entry of this Order the parties shall submit a joint letter setting forth a timeline for trial in August 2022 or thereafter. The parties shall also advise whether this case is to be tried to a jury and whether the parties would consent to proceeding to trial before the designated Magistrate Judge for this action pursuant to 28 U.S.C. § 636(c). (And as further set forth herein.) SO ORDERED. (Signed by Judge Victor Marrero on 3/31/2022) (jca)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

3/31/22

H DAYA INTERNATIONAL, CO., LTD.,

16 Civ. 8668 (VM)

Plaintiff,

DECISION AND ORDER

- against -

DO DENIM LLC, REWARD JEAN LLC, R.
SISKIND & COMPANY, INC., SALOMON
MURCIANO, VINTAGE APPAREL GROUP LLC,
RICHARD SISKIND, and ONLY BRANDS, INC.,
Defendants.
VICTOR MARRERO, United States District Judge.

Plaintiff H. Daya International Co. Ltd. (“H. Daya”)
brings this action against two groups of defendants: (1) Do
Denim

LLC

("Do

Denim"),

Reward

Jean

LLC

(“Reward,”

collectively with Do Denim, the “Judgment Debtors”), Only
Brands,

Inc.

(“Only

Brands”),

and

Salomon

Murciano

(“Murciano,” collectively with the Judgment Debtors and Only
Brands, “Murciano Defendants” or “Murciano Defs.”); and (2)
R. Siskind & Co., Inc. (“RSC”), Vintage Apparel Group LLC
(“Vintage”), and Richard Siskind (“Siskind,” and collectively
with RSC and Vintage, the “Siskind Defendants” or “Siskind
Defs.”;

and

collectively

with

the

Murciano

Defendants,

“Defendants”). (See “Second Amended Complaint” or “SAC,” Dkt.
No. 79.)

1

On June 29, 2012, prior to the commencement of this
action,

another

$1,157,012.23

court

judgment

in

this

District

(“Judgment”)

against

entered
the

a

Judgment

Debtors. H. Daya filed this action against the Defendants to
obtain payment on the Judgment and brings eight claims based
on the business relationship among the Defendants. Counts One
through

Four

allege

claims

for

constructive

fraudulent

transfers among the Defendants, in violation of New York’s
Debtor and Creditor Law (“DCL”) Sections 273, 273-a, 274, and
275. (See SAC ¶¶ 103-14.) Count Five alleges that these
transfers were also actual fraudulent conveyances under DCL
Section 276. 1 (See SAC ¶¶ 115-19.) Count Six alleges that the
Judgment Debtors, RSC, and Vintage are jointly and severally
liable for the Judgment under a de facto merger theory. (See
SAC ¶¶ 120-21.) Relatedly, Count Seven alleges that the
Judgment Debtors, RSC, and Vintage are jointly and severally
liable for the Judgment under a joint venture theory. (See
SAC ¶¶ 122-23.) And Count Eight is a hybrid claim that alleges
RSC and Vintage were successors to the Judgment Debtors and

1

In 2019, the New York legislature repealed and replaced — effective
April 4, 2020 — the provisions of the DCL under which H. Daya brings
its fraudulent conveyance claims. See 2019 N.Y. Sess. Laws ch. 580.
The prior provisions of the DCL are operative in this case because the
new provisions do “not apply to a transfer made or obligation incurred
before” the act's effective date, “nor shall [they] apply to a right
of action that has accrued before [that] effective date.” Id.; see Ray
v. Ray, No. 20 Civ. 6720, 2021 WL 1164655, at *4 n.4 (S.D.N.Y. Mar.
25, 2021).

2

made

fraudulent

transfers

to

Murciano

and

Siskind

individually. (See SAC ¶¶ 124-26.)
Pending before the Court are cross motions for summary
judgment

from

the

Siskind

Defendants,

the

Murciano

Defendants, and H. Daya. (See Dkt. Nos. 182, 191, 198.) For
the reasons set forth below, H. Daya’s motion for summary
judgment

is

DENIED;

the

Siskind

Defendants’

motion

for

summary judgment is DENIED in part and GRANTED in part; and
the

Murciano

Defendants’

motion

for

summary

judgment

is

DENIED in part and GRANTED in part.
I.

BACKGROUND

A. FACTS 2
RSC, Vintage, and the Judgment Debtors were organized in
separate states with differing ownership structures. Do Denim

2

Except as otherwise noted, the following background derives from the
undisputed facts as set forth by the parties in their Local Rule 56.1
Statements of Undisputed Material Facts and counterstatements thereto.
(See “Siskind Defs. Stmt.,” Dkt. No. 183; “Murciano Defs. Stmt.” Dkt.
No. 193; “H. Daya Stmt.,” Dkt. No. 202; “Siskind Defs. Counterstmt.,”
Dkt. No. 209; “Murciano Defs. Counterstmt.,” Dkt. No. 211; “H. Daya
Counterstmt.,” Dkt. No. 217.) The Court has also considered the full
record submitted by the parties, including the following frequently
cited declarations and exhibits: “Sosonko Moving Decl.,” Dkt. No. 188;
“Sosonko Opp’n Decl.,” Dkt. No. 208; “Sosonko Reply Decl.,” Dkt. No.
226; “Siskind Decl.,” Dkt. No. 184; “Murciano Moving Decl.,” Dkt. No.
194; “Murciano Opp’n Decl.,” Dkt. No. 212; “Scheier Decl.,” Dkt. No.
200; “Grossman Decl.,” Dkt. No. 218; “March 2011 Agreement,” Dkt. No.
188-1; “Vintage Member Agreement,” Dkt. No. 188-12; “First Am. to
Vintage Member Agmt.,” Dkt. No. 194-8. No further citations to the
record will be made herein except when specifically quoted. The Court
construes any disputed facts discussed in this section and the
justifiable factual inferences arising therefrom in the light most
favorable to the nonmovant for each motion, as required under the
standard set forth in Section II below.

3

was formed in 2005 as a Florida limited liability company,
and its only members were Murciano, Isaac Cohen (“Cohen”),
and Benjamin Levy. Reward was formed in 2008 as a Florida
limited liability company, and Murciano and Cohen were its
sole

members.

Both

Do

Denim

and

Reward

were

eventually

dissolved on February 13, 2017.
RSC is incorporated and headquartered in New York, and
distributes apparel, accessories, and home goods. Siskind was
the sole shareholder of RSC until 2004, when he sold 99.9
percent

of

his

common

shares

to

the

Jon

Siskind

2004

Irrevocable Trust. Although Siskind retained only 0.1 percent
of common shares, this amount consisted of 100 percent of the
voting shares in RSC. None of the members in the Judgment
Debtors

were

ever

shareholders

in

RSC.

Additionally,

as

explained further below, in April 2011, Siskind, Murciano,
Jon

Siskind,

Timothy

Fullum,

and

Jonathan

Fuchs

formed

Vintage, a Florida limited liability company.
On June 14, 2011, H. Daya commenced an action in this
District

against

the

Judgment

Debtors,

and

eventually

obtained the Judgment on June 29, 2012. 3 The Judgment Debtors
have never paid any portion of the Judgment. H. Daya in turn
3

See H. Daya Int’l Co. v. Do Denim LLC, No. 11 Civ. 4028 (S.D.N.Y. June
14, 2011). The Clerk of Court entered a Judgment against Do Denim for
$326,675.42, and against Reward for $830,336.81. See Judgment, H. Daya
Int’l Co. v. Do Denim LLC, No. 11 Civ. 4028 (S.D.N.Y. June 14, 2011),
Dkt. No. 30.

4

commenced the current action against the Defendants based on
RSC and Vintage’s contractual relationship with the Judgment
Debtors.
1. The Financing Agreements
Over the years, Do Denim entered into several financing
agreements to help run its business. On September 22, 2008,
Do

Denim

Factoring

entered

into

Agreement”)

a

factoring

with

agreement 4

Rosenthal

&

(“Initial

Rosenthal,

Inc.

(“Rosenthal”), which is not a party to this action. Pursuant
to the Initial Factoring Agreement, Do Denim sold and assigned
to

Rosenthal

all

its

accounts

receivable

(“factored

accounts”), which meant Rosenthal had the right to collect
the amounts owed by Do Denim’s customers. In return, Rosenthal
agreed to advance Do Denim up to 85 percent of the aggregate
purchase price of amounts owed by customers on factored
accounts,

if

or

when

Do

Denim

requested

an

advance.

On

September 29, 2008, Rosenthal and Do Denim amended the Initial
Factoring

4

Agreement

(collectively,

the

“2008

Factoring

“Factoring is a form of financing that allows a manufacturer to obtain
immediate payment for the goods it sells even though the buyer is not
obligated to pay for those goods until the conclusion of a credit
period, usually months after the sale.” Cofacredit, S.A. v. Windsor
Plumbing Supply Co., 187 F.3d 229, 234 (2d Cir. 1999). When the
manufacturer ships the goods to the buyer (e.g., a retailer), the
factor (i.e., the lender) “pays the manufacturer the purchase price
evidenced by the invoice. In return, the factor obtains the right to
receive payment on the invoice from the buyer at the conclusion of the
credit period, as well as the right to collect related expenses from
the manufacturer.” Id.

5

Agreement”) to grant Rosenthal a continuing security interest
in all of Do Denim’s inventory and proceeds thereof.
On

March

agreement

18,

with

2009,

Star

Do

Denim

Funding,

entered

Inc.

(“Star

into

a

supply

Funding”)

and

Rosenthal (“2009 Supply Agreement”). Star Funding agreed to
(i) supply Do Denim with the goods necessary to fulfil certain
customer purchase orders, or (ii) provide Do Denim with the
financial accommodations to enable Do Denim to purchase the
goods necessary to fulfill customer orders. In transactions
where Star Funding provided assistance, the sale of goods to
Do Denim’s customers again resulted in factored accounts that
Do Denim agreed to sell and assign to Rosenthal.
2. Connection between RSC, Judgment Debtors, and Vintage
By December 2010, Do Denim accumulated significant debts
to Rosenthal and Star Funding that were attributable to the
2008

Factoring

Agreement

and

the

2009

Supply

Agreement.

Around this time, Rosenthal introduced Murciano to Siskind
and RSC, so that RSC could help the Judgment Debtors sell its
inventory and pay down its debts to various factors (i.e.,
lenders), including Rosenthal and Star Funding. On March 9,
2011, RSC and Murciano agreed to a joint venture to help the
Judgment

Debtors

Agreement”).

RSC

pay
would

down

their

purchase

debts

the

(“March

Judgment

2011

Debtors’

inventory held at ports in New York and Los Angeles, and sell
6

that inventory at a price agreed to by Murciano and RSC. At
first, the parties agreed RSC would receive a 7.7 percent
commission on the sale of goods to be released from these
containers, but the parties later agreed to increase this to
10 percent. Pursuant to the March 2011 Agreement, funds from
the sale of the Judgment Debtors’ inventory would also be
used to pay down their debts to various factors or lenders.
As noted above, in April 2011, Siskind, Murciano, Jon
Siskind, Timothy Fullum, and Jonathan Fuchs formed Vintage to
facilitate the joint venture between RSC and the Judgment
Debtors. These individuals were the only members in Vintage.
Further,

Vintage’s

membership

agreement

(“Vintage

Member

Agreement”) provided that the capital contribution “shall be
a total of $100,000 with each Member having a twenty (20)
percent interest upon payment of their respective $20,000
capital contribution which shall be paid within one (1) year
of the date hereof.” (See Vintage Member Agreement ¶ 1.)
Murciano never paid the $20,000 capital contribution, but he
was listed as a member of Vintage.
RSC and Vintage were formally distinct companies but
appeared to operate hand-in-hand. RSC was responsible for
“overhead

operations”

for

Vintage,

which

included

office

space, financing, accounting, payroll, legal, and warehouse
operations. (See Vintage Member Agreement at 1.) RSC provided
7

these services in exchange for “fifteen (15) percent of total
sales less mark downs, charge backs and other customary
allowances” from Vintage. (Id.) If the operational costs
exceeded 15 percent, then RSC would be responsible for the
excess costs. Additionally, when Vintage was first formed,
RSC issued purchase orders on behalf of Vintage on several
occasions because Vintage did not have a credit history.
However, RSC and Vintage maintained separate bank accounts,
financial statements, general ledgers, and filed separate tax
returns.
3. Allegedly Fraudulent Transfers
In practice, there were two aspects to the joint venture
to pay down the Judgment Debtors’ debts. These two aspects
correspond to twenty payments from Do Denim (via Rosenthal)
to

RSC

that

are

identified

in

paragraph

38

of

the

SAC

(“Paragraph 38”). Preliminarily, it is undisputed that a
$500,000 payment on July 15, 2011, listed in Paragraph 38,
was

part

of

RSC’s

regular

business

and

is

unrelated

to

H. Daya’s claims. As a result, only nineteen of the payments
listed in Paragraph 38 are allegedly fraudulent.

The first aspect of the joint venture involved twelve
payments from Do Denim (via Rosenthal) that reimbursed RSC
for funds RSC paid to release goods held at ports in New York
and Los Angles. The second facet of the joint venture regards
8

seven payments reimbursing RSC for funds it paid to Do Denim’s
third-party

suppliers

manufacturing

goods

or

or

creditors

(b)

secure

to
the

either

(a)

release

of

finish
other

inventory.
a. Funds for Inventory Held at Ports
Soon after entering into the March 2011 Agreement, RSC
became aware of five shipping containers of Do Denim inventory
held at ports in New York and Los Angeles. These containers
were shipped from China, in accordance with the 2009 Supply
Agreement with Star Funding. But before the inventory could
be released and used to fulfil outstanding customer orders,
Do Denim had to pay $889,880.04 to Star Funding, customs
brokers, and freight forwarders. Pursuant to the March 2011
Agreement, RSC paid the $889,880.04. The twelve payments that
correspond to Rosenthal’s reimbursements to RSC for goods
held at ports are as follows:
Advances to Release Goods at U.S. Ports
Date

Amount Transferred
from Do Denim (via
Rosenthal) to RSC

May 2, 2011

$65,000.00

May 27, 2011

$17,856.91

June 6, 2011

$72,529.70

June 7, 2011

$54,639.36

June 10, 2011

$8,220.48

9

June 15, 2011

$35,838.72

July 1, 2011

$11,173.20

July 5, 2011

$15,070.55

July 5, 2011

$55,338.18

July 15, 2011

$33,183.39

July 25, 2011

124,462.80

August 31, 2011

$303,401.21

Total

$796,714.50

(See SAC ¶ 38.) Rosenthal ultimately paid RSC a total of
$978,868, which includes RSC’s ten-percent commission.
b. Funds to Complete Manufacturing
The remaining seven payments identified in Paragraph 38
relate to the second facet of the joint venture, which was
the advancement of funds to finish manufacturing Do Denim
goods. As part of this second stage, from July to October
2011, Do Denim (via Rosenthal) transferred $2.7 million to
RSC, which was intended as repayment for advances RSC made to
pay invoices from factories or third-party suppliers to (i)
finish manufacturing Do Denim’s goods, or (ii) secure the
release of Do Denim’s inventory. All of the invoices were for
Do Denim goods, but some were issued to Do Denim directly
while others were issued to RSC or Vintage. These seven
payments are as follows:

10

Advances to Factories and Suppliers
Date

Amount Transferred
from Rosenthal to RSC

July 20, 2011

$1,000,000

July 28, 2011

$200,000

August 2, 2011

$25,000

August 19, 2011

$150,000

September 1, 2011

$500,000

October 6, 2011

$400,000

October 7, 2011

$425,000

Total

$2,700,000

(See SAC ¶ 38.)
From this $2.7 million, $1,225,766.97 was attributable
to a promissory note and agreement, dated June 29, 2011,
between Do Denim and RSC. In the SAC, H. Daya further conceded
that this amount, and an additional $538,500 for another
contract
“payment

between
of

RSC

and

legitimate

the

Judgment

debts

of

the

Debtors,

was

for

judgment-debtor

defendants.” (SAC ¶ 39.)
c. The Do Denim Trademark
The

Do

Denim

trademark

(“Trademark”)

went

through

several hands before landing in Vintage’s possession. In May
2010, Do Denim assigned the Trademark to SMIC Holdings LLC
(“SMIC”),

which

was

before

the
11

Siskind

Defendants

were

introduced to the Murciano Defendants. Cohen and Murciano
were members of SMIC.
In March 2011, SMIC transferred the trademark to RF
Collection LLC (“RF Collection”). In May 2011, RF Collection
then transferred the trademark to Vintage. Vintage ceased
using the trademark in 2013, the same year it also ceased
operations, before its eventual dissolution in 2014. In May
2014, the Trademark’s registration was cancelled when Vintage
failed to make a necessary filing with the U.S. Patent and
Trademark Office (“PTO”).
Over a year later, on June 26, 2015, Only Brands applied
to the PTO to re-register the Trademark. Only Brands was a
Florida corporation whose sole shareholders were Murciano and
Cohen. Although it re-registered the Trademark, Only Brands
eventually abandoned the Trademark altogether. Like most of
the corporate defendants in this case, Only Brands was later
dissolved in September 2017.
Separately, none of the Defendants have ever possessed
a registered trademark for “Reward Jeans.” Reward applied to
register the “Reward Jeans” trademark, but the PTO denied the
application due to the likelihood of confusion with a preexisting

“Reward”

trademark

for

apparel.

Nevertheless,

various documents in the record refer to the existence of a
“Reward Jeans” trademark.
12

4. Payments to Siskind and Murciano Individually
As part of the joint venture, Murciano worked for Vintage
and,

pursuant

responsible

for

to

the

“sales,

Vintage

Member

product

design

Agreement,
and

he

was

sourcing

for

purposes of production.” (Vintage Member Agreement ¶ 5.) The
First Amendment to the Vintage Member Agreement provides that
Murciano would “be paid a salary of $7,000 per calendar month
plus a monthly advance of pre-tax profits of $18,000.” (First
Am. to Vintage Member Agmt. ¶ 1.) Among other income received
from Vintage, Murciano reported on his IRS Form 1099 that,
from 2011 to 2013, he received a total of $405,000 in monthly
advances from Vintage. Separately, on July 6, 2012, RSC paid
Siskind $1 million, which was repayment of a loan Siskind
made to RSC in 2004.
B. PROCEDURAL HISTORY
H. Daya commenced this action on November 8, 2016, (see
Dkt. No. 1), and filed an amended complaint on March 30, 2017.
(See

Dkt.

No.

56).

On

June

15,

2017,

the

Court

denied

Siskind’s motion to dismiss the individual claims against
him. (See Dkt. No. 65.) After H. Daya filed the SAC on May
22, 2018, the Defendants filed their respective answers on
July 12, 2018. (See Dkt. Nos. 83-88).
The parties proceeded with fact discovery through the
summer of 2020. On March 23, 2021, the Siskind Defendants
13

filed a letter requesting a pre-motion conference prior to
moving for summary judgment. (See Dkt. No. 162.) The Murciano
Defendants filed a similar letter on March 26, 2021. (See
Dkt. No. 165.) Also on March 26, 2021, H. Daya filed its
letter

opposing

requesting

a

the

Defendants’

pre-motion

requests,

conference

prior

to

while
moving

also
for

summary judgment. (See Dkt. No. 166.) On April 12, 2021, the
Court granted the parties leave to file their respective
motions for summary judgment, but denied the requests for a
pre-motion conference. (See Dkt. No. 174.)
The parties filed their opening briefs on June 15, 2021.
(See “Siskind Defs. Br.,” Dkt. No. 186; “Murciano Defs. Br.,”
Dkt. No. 192; “H. Daya Br.,” Dkt. No. 199.) They filed
opposition briefs on July 2, 2021. (See “Siskind Opp’n,” Dkt.
No. 207; “Murciano Defs. Opp’n,” Dkt. No. 210; “H. Daya
Opp’n,” Dkt. No. 216.) And they filed reply briefs on July
13, 2021. (See “Siskind Defs. Reply,” Dkt. No. 225; “Murciano
Defs. Reply,” Dkt. No. 227; “H. Daya Reply,” Dkt. No. 228.)
C. PARTIES’ ARGUMENTS
The Defendants move for summary judgment on all of H.
Daya’s claims, and present several overlapping arguments in
their

respective

briefs.

For

the

constructive

fraudulent

conveyance claims (Counts One through Four), the Defendants
argue broadly that the transfers were made without fair
14

consideration.

(See

Siskind

Defs.

Br.

at

10-15,

23-25;

Murciano Defs. Br. at 8-14.) For Count Five, the Defendants
also argue that there is no evidence of the knowledge or
intent to defraud a creditor, which is needed for an actual
fraudulent

conveyance.

(See

Siskind

Defs.

Br.

at

15-17;

Murciano Def. Br. at 14-16.) On Count Six, the Defendants
argue that there was no de facto merger between RSC and the
Judgment

Debtors

because

there

was

no

continuity

of

ownership; and there was no de facto merger between Vintage
and the Judgment Debtors because the other hallmarks of a de
facto merger are absent. (See Siskind Defs. Br. at 20-23;
Murciano Def. Br. at 16-20.) On Count Seven, the Defendants
argue that no New York court has held a member to a joint
venture joint and severally liable for the pre-existing debts
of another member. (See Siskind Defs. Br. at 19-20; Murciano
Defs. Br. at 19-20.) And for Count Eight, the Defendants
reiterate the above arguments to respond to H. Daya’s hybrid
claim that RSC and Vintage were successors to the Judgment
Debtors

and

that

the

payments

to

Murciano

and

Siskind

individually were therefore fraudulent. (See Siskind Defs.
Br. at 23-25; Murciano Defs. Br. at 8-12.)
H. Daya simultaneously moves for summary judgment, but
only as to Counts Six and Eight. H. Daya argues that it
established all the elements of a de facto merger between
15

RSC, Vintage, and the Judgment Debtors. (See H. Daya Br. at
5-22.) As for Count Eight, H. Daya argues that — as an
extension of a de facto merger between all the Defendants —
transfers from a debtor to an insider are fraudulent as a
matter of law. (See H. Daya Br. at 23-25.)
II.

LEGAL STANDARD

Summary judgment is appropriate if the evidence shows
that “there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). In this context, a court’s role “is not to resolve
disputed issues of fact but to assess whether there are any
factual issues to be tried.” Knight v. U.S. Fire Ins. Co.,
804 F.2d 9, 11 (2d Cir. 1986).
The

moving

party

bears

the

initial

burden

of

demonstrating the absence of any genuine issues of material
fact. See Celotex, 477 U.S. at 323. “When a motion for summary
judgment
evidence,

is

supported

the

nonmoving

by

documentary

party

may

not

and
rest

testimonial
upon

mere

allegations or denials — rather, he must present sufficient
probative evidence to establish a genuine issue of material
fact.” Horror Inc. v. Miller, 15 F.4th 232, 240 (2d Cir.
2021).

Evidence

that

is

“‘merely

colorable,’

or

is

not

‘significantly probative’” is insufficient to defeat a motion
16

for summary judgment. Id. (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249-50 (1986)). In short, the nonmoving
party’s evidence must be persuasive enough that a reasonable
jury could return a judgment in their favor. Id. at 241.
“[T]he mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is
that there be no genuine issue of material fact.” Anderson,
477 U.S. at 247–48. A factual dispute is material if it “might
affect the outcome of the suit,” and a factual dispute is
genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Id. at 248.
III.

DISCUSSION

A. FRAUDULENT CONVEYANCE
H.

Daya

asserts

three

bases

for

its

fraudulent

conveyance claims in Counts One through Five: (1) Do Denim’s
reimbursements to RSC, (see SAC ¶¶ 38-43; 103-14); (2) the
transfer of the Trademark to Vintage, and Only Brands’s
registration of the Trademark when Vintage let it lapse, (see
SAC ¶¶ 48-51; 103-14); and (3) RSC’s $1 million payment to
Siskind and Vintage’s $405,000 payment to Murciano. (See SAC
¶¶ 44-47; 103-14; H. Daya Opp’n at 7.) H. Daya’s third basis
for a fraudulent conveyance claim is intertwined with its
hybrid claim in Count Eight, which asserts that there was a
17

de facto merger between the Defendants, and that the payments
to Murciano and Siskind were fraudulent. The Court considers
these bases in turn, but the Court addresses this third basis
further below after discussing the de facto merger theories.
1. Transfers from Do Denim to RSC
The transfers to RSC, listed in Paragraph 38, fall into
two categories. First, twelve payments between May and August
2011

from

Do

Denim

(via

Rosenthal)

to

RSC

that

were

reimbursements for RSC’s monetary advances used to secure the
release of completed inventory that was being held at U.S.
ports. (See Siskind Defs. 56.1 ¶¶ 19-28.) Second, seven
payments between July and October 2011 from Do Denim (via
Rosenthal)

to

RSC

that

were

reimbursements

for

monetary

advances used to complete the manufacture of Do Denim goods.
(See Siskind Defs. Stmt. ¶¶ 29-40.) These transfers underpin
H.

Daya’s

constructive

and

actual

fraudulent

conveyance

claims.
a. Constructive Fraud
Under the DCL, a conveyance is constructively fraudulent
if it is without “fair consideration” and if one of the
following conditions is met: “(i) the transferor is insolvent
or will be rendered insolvent by the transfer in question,
DCL § 273; (ii) the transferor is engaged in or is about to
engage in a business transaction for which its remaining
18

property constitutes unreasonably small capital, DCL § 274;
or (iii) the transferor believes that it will incur debt
beyond its ability to pay, DCL § 275.” In re Sharp Int'l
Corp., 403 F.3d 43, 53 (2d Cir. 2005). For Section 273-a
claims, “a plaintiff must establish (1) that the conveyance
was made without fair consideration; (2) that the conveyor is
a defendant in an action for money damages or that a judgment
in such action has been docketed against him; and (3) that
the defendant has failed to satisfy the judgment.” See Grace
v. Bank Leumi Tr. Co. of N.Y., 443 F.3d 180, 188 (2d Cir.
2006).

At

bottom,

“[a]n

essential

element

of

a

claim

pursuant to DCL [Sections] 273, 273-a, 274, 275, is lack
of fair consideration.” Atlanta Shipping Corp. v. Chem. Bank,
818 F.2d 240, 248 (2d Cir. 1987).
Fair

consideration

elements

are

satisfied:

debtor's

property

exists

must

where

“first,
either

.

the

‘the
.

.

following

recipient
convey

three

of

property

the
in

exchange or . . . discharge an antecedent debt in exchange’;
second, ‘such exchange must be a fair equivalent of the
property received’; and third, ‘such exchange must be in good
faith.’” United States v. Watts, 786 F.3d 152, 164 (2d Cir.
2015) (quoting Sharp, 403 F.3d at 53). In general, “the party
challenging the conveyance” has the “burden of proving . . .
the lack of fair consideration.” United States v. McCombs, 30
19

F.3d 310, 324 (2d Cir. 1994) (quoting Am. Inv. Bank, N.A. v.
Marine Midland Bank, N.A., 595 N.Y.S.2d 537, 538 (2d Dep’t
1993)).
There is no genuine dispute that a large portion of Do
Denim’s payments to RSC were reimbursements for the money RSC
advanced pursuant to the March 2011 Agreement, and were
therefore made with fair consideration. (See Siskind Defs.
Stmt. ¶¶ 25-39; H. Daya Counterstmt. ¶¶ S19-39.) 5 However, H.
Daya raises a factual dispute about two subsets of payments
to RSC. First, H. Daya argues that some of the transfers to
RSC lacked fair consideration because RSC was supposedly
reimbursed for eight invoices to factories and suppliers
where Do Denim was uninvolved. (See H. Daya Opp’n at 8-9; H.
Daya

Counterstmt.

¶

S40.)

H.

Daya

cites

the

deposition

testimony from RSC’s controller, Galina Sosonko (“Sosonko”),
5

H. Daya’s Local Rule 56.1 Counterstatement largely responds to the
facts about these payments by presenting legal assertions to support
its de facto merger claim. (See H. Daya Counterstmt. ¶¶ S19-39.) Using
a
counterstatement
to
take
issue
with
the
implications
or
characterizations of facts in a moving party’s statement of facts, and
in turn make legal arguments in the counterstatement, is improper under
Local Rule 56.1. See LG Cap. Funding, LLC v. PositiveID Corp., No. 17
Civ. 1297, 2019 WL 3437973, at *2 (E.D.N.Y. July 29, 2019) (“The Court
can . . . disregard legal conclusions or unsubstantiated opinions in
a Local Rule 56.1 statement.” (internal quotation marks omitted));
Crump v. Fluid Handling, LLC., No. 17 Civ. 45, 2019 WL 2145929, at *2
(W.D.N.Y. Mar. 29, 2019) (“Rather than scrutinize a Rule 56.1 statement
line by line, a court may simply disregard any improper assertions or
inadmissible evidence.”); see also Individual Practices of United
States District Judge Victor Marrero Rule II.E.3 (“Local Rule 56.1
Statements . . . shall not be used for argumentation of legal issues
or recitation of case law, or . . . repetition of conclusory
pleadings.”). Therefore, the Court disregards H. Daya’s improper
assertions.

20

in which Sosonko stated that Do Denim was not involved with
these eight invoices. (See H. Daya Opp’n at 8-9.) These eight
invoices were issued directly to RSC or Vintage from September
to

November

2011,

and

total

$849,954.90.

(See

H.

Daya

Counterstmt. ¶ S40; Sosonko Decl., Ex J (Bates S001047,
S001043, S001050-51, S001061-63.) 6
The Siskind Defendants respond to H. Daya’s arguments by
noting that H. Daya does not refute that there were occasions
where Do Denim ordered goods but the invoices from suppliers
were issued directly to RSC or Vintage. (See Siskind Defs.
56.1 ¶ 37; Sosonko Moving Decl. ¶ 19; H. Daya Counterstmt. ¶
S36-39, S36-37.) The invoices associated with these eight
payments indicate that the payments were for goods bearing
the Trademark. (See Sosonko Decl., Ex J; Sosonko Reply Decl.
¶

2.)

Nonetheless,

the

inconsistencies

between

the

testimonial and documentary evidence raises a genuine dispute
of material fact about whether Do Denim’s transfers related
to

the

eight

invoices

were

pursuant

to

the

March

2011

Agreement. In other words, there is a material fact dispute
about whether there was fair consideration for transfers to
RSC that are related to these eight invoices.

6

These invoices are listed under sample invoices 13, 15, 16, and 20,
respectively. (See Sosonko Decl., Ex J.)

21

The second issue that H. Daya raises relates to a series
of transactions listed on RSC’s general ledger from May to
July 2011 that are identified simply as “Do Denim.” (See H.
Daya Counterstmt. ¶ 40.) These payments total approximately
$435,000,

and

H.

Daya

summarily

states

that

these

are

transactions for Do Denim labelled apparel that RSC “failed
to credit.” (See H. Daya Opp’n at 9; H. Daya Counterstmt. ¶
40.) It is unclear what exactly H. Daya is arguing, but RSC
counters that all the payments correspond to payments on the
itemization of reimbursements and commissions RSC submitted
in support of its motion. (See Siskind Defs. Reply at 3 n.4;
Sosonko Reply Decl. ¶ 3.)
An

examination

of

RSC’s

general

ledger

and

RSC’s

itemization of reimbursements and commissions indicates that
almost all these payments appear on both documents. (Compare
Sosonko Moving Decl., Ex. D (Bates S00990), with Grossman
Decl., Ex. 25 (Bates SISKIND_00015827 to 15828); see Sosonko
Reply Decl. ¶ 3.) There are only nine transactions — totaling
$7,128 — on RSC’s general ledger that do not match the amounts
in RSC’s itemization of reimbursements and commissions. (See
Grossman

Decl.,

Ex.

25

(Reference

Nos.

014325,

014326,

014327, 014328, 014359, 014360, 014387, 014388, and 014389).)
To the extent H. Daya is arguing that any of the allegedly
fraudulent transfers identified in Paragraph 38 relate to the
22

nine payments on RSC’s general ledger, there is a material
factual dispute about whether those transfers were made with
fair consideration.
As for the remaining payments, H. Daya failed to present
any evidence of a genuine dispute about whether the remaining
payments in Paragraph 38 were made pursuant to the March 2011
Agreement and were made with fair consideration. As a result,
for

H.

Daya’s

constructive

fraudulent

conveyance

claim

against RSC, the only issues suitable for trial are whether
the transfers from Do Denim to RSC, in Paragraph 38, that
relate to the above seventeen payments — the eight invoices
directly to RSC or Vintage, and the nine payments on RSC’s
general ledger — were made with fair consideration. Summary
judgment is appropriate as to any other reimbursements to RSC
that

H.

Daya

relies

on

for

its

constructive

fraudulent

conveyance claim.
b. Actual Fraud
DCL Section 276 provides that a conveyance may be voided
on the basis of actual fraud if “actual intent to hinder,
delay,

or

defraud

present

and

future

creditors”

is

established. DCL § 276. Fraudulent intent must be proven by
clear and convincing evidence. See HBE Leasing Corp. v. Frank,
48 F.3d 623, 639 (2d Cir. 1995). But due to the difficulty
with proving fraudulent intent, New York law permits courts
23

to rely on “badges of fraud” when determining whether to void
an allegedly fraudulent transfer. See Sharp, 403 F.3d at 56.
These

badges

include:

“a

close

relationship

between

the

parties to the alleged fraudulent transaction; a questionable
transfer not in the usual course of business; inadequacy of
the consideration; . . . and retention of control of the
property

by

the

transferor

after

the

conveyance.”

Id.

(quoting Wall St. Assocs. v. Brodsky, 684 N.Y.S.2d 244, 247
(1st

Dep’t

conveyance

1999)).
claim,

consideration

for

“a
a

Unlike

a

transferor
conveyance

constructive
need
to

be

not

fraudulent

receive

fraudulent

fair
under

[S]ection 276.” DoubleLine Cap. LP v. Odebrecht Fin., Ltd.,
323 F. Supp. 3d 393, 467 (S.D.N.Y. 2018). “[A] transfer
motivated by actual fraudulent intent may not be voided if a
transferee who paid fair consideration did not have actual or
constructive knowledge of such intent.” HBE Leasing, 48 F.3d
at 639; see also DCL § 278(1) (providing that a credit may
not set aside a conveyance where a transferee “knowledge of
the fraud at the time of the purchase”).
As noted above, H. Daya fails to establish that the bulk
of

the

transfers

listed

in

Paragraph

38

lacked

fair

consideration. A genuine dispute of material fact exists here
only regarding whether there was fair consideration for the
the seventeen payments identified above. H. Daya also fails
24

to provide any evidence that RSC had actual or constructive
knowledge of the Judgment Debtors’ alleged intent to defraud
H. Daya of payment on the Judgment. (See Siskind Defs. Stmt.
¶¶ 41-42; H. Daya Counterstmt. at ¶ S41.) As a result, the
undisputed facts establish that most of the payments in
Paragraph 38 do not provide a basis for an actual fraudulent
conveyance

claim,

and

summary

judgment

in

favor

of

the

Defendants is appropriate as to those payments where fair
consideration was already established. As for any transfers
in Paragraph 38 related to the seventeen payments about which
there is a factual dispute, the parties should address at
trial whether those payments also provide a basis for an
actual fraudulent conveyance.
2. Transfer of the Do Denim Trademark
The Defendants also argue that the transfer of the
Trademark does not support a fraudulent conveyance claim
against Vintage or Only Brands because the Judgment Debtors
never transferred it to Vintage, and that Only Brands acquired
the Trademark after its registration lapsed. (See Siskind
Defs. Br. at 17-19; Murciano Defs. Br. 20-21.) As noted, the
Trademark passed through SMIC and RF Collection before ending
up with Vintage in May 2011. (See Siskind Defs. Stmt. ¶¶ 5657;

Murciano

Defs.

Stmt.

¶¶

28-29.)

Ultimately,

Vintage

stopped using the Trademark in 2013 when it also ceased
25

operations, and the Trademark’s registration lapsed in May
2014. (See Siskind Defs. Stmt. ¶¶ 61-62.) And over a year
later, on June 26, 2015, Only Brands submitted an application
to the PTO to re-register the trademark, before Only Brands
also abandoned the Trademark. (See Murciano Def. Stmt. ¶¶ 3133, 35.)
H. Daya’s constructive and actual fraudulent conveyance
claims based on the Trademark fail against Vintage because H.
Daya was never a creditor of SMIC or RF Collection. “It is
well

settled

that

in

order

to

set

aside

a

fraudulent

conveyance, one must be a creditor of the transferor; those
who are not injured by the transfer lack standing to challenge
it.” Eberhard v. Marcu, 530 F.3d 122, 129 (2d Cir. 2008); see
also

Watts,

786

F.3d

at

162

n.3

(finding

that

although

Eberhard involved a Section 276 claim, “the relevant language
invoking

a

transferor’s

‘creditors’

is

substantially

the

same” in Sections 273 and 276). Since H. Daya was never a
creditor of SMIC or RF Collection, H. Daya cannot void the
transfer of the Trademark from SMIC to RF Collection and then
to Vintage. H. Daya’s fraudulent conveyance claims against
Only Brands also fail because no entity ever transferred the
Trademark to Only Brands, which merely re-registered the
Trademark on its own in 2015. (See Murciano Defs. Stmt. ¶ 31-

26

32.) In other words, there is no transfer to Only Brands that
can be voided pursuant to a DCL claim.
For

the

reasons

stated

above,

summary

judgment

is

warranted dismissing H. Daya’s fraudulent conveyance claims
based on the Trademark’s transfer.
B. DE FACTO MERGER 7
The

Defendants

and

H.

Daya

cross-move

for

summary

judgment on H. Daya’s de facto merger claim. H. Daya presents
several arguments it contends establish a de facto merger
between RSC, Vintage, and the Judgment Debtors. (See H. Daya
Br. at 8-23.) But H. Daya essentially asserts that there was
a merger between RSC and Vintage, which in turn merged with
the Judgment Debtors. (See id. at 17-23.) The Defendants argue
that there was no de facto merger between RSC and the Judgment
Debtors because there was no continuity of ownership, and
that the other elements of a de facto merger are absent
between Vintage and the Judgment Debtors. (See Siskind Defs.
Br. at 20-23; Murciano Def. Br. at 16-20.)

7

Although RSC was incorporated in New York, and the Judgment Debtors
and Vintage were incorporated in Florida, the parties’ briefs assume
New York law applies to H. Daya’s de facto merger claim. See Arch Ins.
Co. v. Precision Stone, Inc., 584 F.3d 33, 39 (2d Cir. 2009) (“The
parties’ briefs assume that New York substantive law governs the issues
. . . presented here, and such implied consent is . . . sufficient to
establish the applicable choice of law.”); Tommy Lee Handbags Mfg.
Ltd. v. 1948 Corp., 971 F. Supp. 2d 368, 378 (S.D.N.Y. 2013) (applying
choice of law analysis to de facto merger claim).

27

Under New York law, “the purchaser of a corporation’s
assets does not, as a result of the purchase, ordinarily
become liable for the seller’s debts.” Cargo Partner AG v.
Albartrans,

Inc.,

352

F.3d

41,

45

(2d

Cir.

2003).

One

exception to this rule applies for a “buyer who merged with
a seller” (i.e., a de facto merger). Id. 8 There are four
hallmarks for identifying a de facto merger:
(1) continuity of ownership; (2) cessation of
ordinary business and dissolution of the acquired
corporation as soon as possible; (3) assumption by
the purchaser of the liabilities ordinarily
necessary for the uninterrupted continuation of the
business of the acquired corporation; and (4)
continuity of management, personnel, physical
location, assets, and general business operation.
New York v. Nat'l Serv. Indus., Inc., 460 F.3d 201, 209 (2d
Cir. 2006). These hallmarks should be balanced “in a flexible
manner

that

disregards

mere

questions

of

form

and

asks

whether, in substance, it was the intent of the successor to
absorb and continue the operation of the predecessor.” AT &
S Transp. v. Odyssey Logistics & Tech. Corp., 803 N.Y.S.2d
118, 120 (2d Dep’t 2005).
“[N]ot all of these elements are necessary to find a de
facto merger,” Cargo Partner, 352 F.3d at 46 (quotation

8

The full set of exceptions are: (1) “a buyer who formally assumes a
seller's debts”; (2) “transactions undertaken to defraud creditors”;
(3) a “buyer who merged with a seller”; and (4) “a buyer that is a
mere continuation of a seller.” Cargo Partner, 352 F.3d at 45. H. Daya
has invoked only the third exception for a de facto merger.

28

omitted), but “‘continuity of ownership is the essence of a
merger,’ and the doctrine of de facto merger cannot apply in
its absence.” Priestley v. Headminder, Inc., 647 F.3d 497,
505 (2d Cir. 2011) (quotation and citation omitted); TBA
Global, LLC v. Fidus Partners, LLC, 15 N.Y.S.3d 769, 780 (1st
Dep’t 2015) (“We agree with the Second Circuit that, under
New York law, continuity of ownership is ‘the touchstone of
the [de facto merger] concept’ and ‘thus a necessary predicate
to a finding of de facto merger.” (quoting Nat'l Serv. Indus.,
460 F.3d at 212)). “The purpose of requiring continuity of
ownership is ‘to identify situations where the shareholders
of a seller corporation retain some ownership interest in
their assets after cleansing those assets of liability.’” TBA
Global, 15 N.Y.S.3d at 780 (quoting Nat'l Serv. Indus., 460
F.3d at 212). Put differently, “[t]he fact that the seller’s
owners retain their interest in the supposedly sold assets
(through their ownership interest in the purchaser) is the
‘substance’ which makes the transaction inequitable.” Id.
(quoting Cargo Partner AG v. Albatrans Inc., 207 F. Supp. 2d
86, 104 (S.D.N.Y. 2002)). 9 Continuity of ownership may be

9

See also In re N.Y.C. Asbestos Litig., 789 N.Y.S.2d 484, 486-87 (1st
Dep’t 2005) (“[C]ontinuity of ownership describes a situation where
the parties to the transaction ‘become owners together of what formerly
belonged to each.’” (quoting Cargo Partner, 352 F.3d at 47)).

29

established when owners of the predecessor hold direct or
indirect ownership in the successor. See id. at 779.
1. Judgment Debtors as a Single Entity
Before turning to whether there was a de facto merger
between the RSC, Vintage, and the Judgment Debtors, the Court
addresses

H.

Daya’s

arguments

that

the

Judgment

Debtors

operated as a single entity with comingled assets. (See H.
Daya Br. at 5-8.) H. Daya makes this argument for two reasons:
(a) to aggregate the separate judgments against Do Denim and
Reward Jeans, totaling $1,157,012.23, (see H. Daya Br. at 78); and (b) to buttress its theory that there were “two
smaller defacto [sic] mergers” between RSC and Vintage, on
one side, and Do Denim and Reward, on the other, which
facilitated a “single larger defacto [sic] merger” between
all companies. (See H. Daya Br. at 22-23.)
H.

Daya

argues

that

the

Defendants

are

equitably

estopped from arguing that the Judgment Debtors be treated as
separate corporate entities. H. Daya relies principally on
the first footnote in the Siskind Defendants’ interrogatory
response, which states: “‘Do Denim,’ as used from this point
forward,

includes

[Reward],

which

was

another

Murciano

company that sold apparel under the REWARD JEANS trademark.”
(See Scheier Decl., Ex. 2 at 5 n.1 (emphasis added).) H. Daya
adds that it asked Sosonko, RSC’s controller, during her
30

deposition

whether

“the

footnotes

to

the

text,

in

[the

interrogatory], are accurate?” (Id., Ex. 3 at 99:13-16.) To
which, Sosonko summarily responded, “Yes.” (Id. at 99:17.)
H. Daya argues that Sosonko’s response established that “the
assets and liabilities of judgment-debtor-defendant Do Denim LLC
‘include’ those of its co-debtor Reward Jean LLC.” (H. Daya
Reply at 2.)

Facts

admitted

by

responses,

are

judicial

throughout

litigation.

a

party,

such

admissions
See

Int'l

as

interrogatory

that

bind

a

party

Cards

Co.,

Ltd.

v.

MasterCard Int'l Inc., No. 13 Civ. 2576, 2017 WL 1133425, at
*4 (S.D.N.Y. Mar. 24, 2017). However, “[j]udicial admissions
must be clear and unambiguous admissions of fact.” Hausler v.
JP Morgan Chase Bank, N.A., 127 F. Supp. 3d 17, 37 (S.D.N.Y.
2015) (quotation omitted). But definitional shorthand in a
footnote falls short of a clear and unambiguous admission.
See Edible Int'l, LLC v. Google, LLC, No. 18 Civ. 00216, 2019
WL

1052180,

at

*3

(D.

Conn.

Mar.

5,

2019)

(finding

definitional shorthand in a party’s opposition brief was not
a judicial admission).
The statement in the Siskind Defendants’ interrogatory
on which H. Daya relies appears to be a definitional footnote,
and does not constitute a clear and unambiguous admission
that the Judgment Debtors operated as a single entity. Id.
31

Further, Sosonko’s deposition testimony does not buttress H.
Daya’s argument because the testimony broadly confirmed the
accuracy of nineteen footnotes in the interrogatory, one of
which is the definitional footnote on which H. Daya relies.
Sosonko did not clearly testify that Do Denim’s assets and
liabilities included those of Reward’s. (See Sosonko Opp’n
Decl. ¶ 7.) Additionally, in Sosonko’s declaration in support
of

RSC’s

opposition,

Sosonko

stated

that

RSC

has

no

information about the extent to which Do Denim and Reward
operated their businesses as separate companies. (See Sosonko
Opp’n Decl. ¶ 7.) 10 Simultaneously, the Murciano Defendants
stated that Do Denim and Reward operated as separate entities,
which maintained separate bank accounts, assets, liabilities,
and tax returns. (See Murciano Opp’n Decl. ¶¶ 5-10.)
The only other evidence that H. Daya cites for its single
entity proposition is an email from Sosonko about certain
commission fees related to the Judgment Debtors. (See H. Daya
10

H. Daya is incorrect that the sham issue of fact doctrine applies.
(See H. Daya Br. at 6-7.) The doctrine is inapplicable where “the later
sworn assertion addresses an issue that . . . was not thoroughly or
clearly[] explored” in the deposition. In re World Trade Ctr. Lower
Manhattan Disaster Site Litig., 758 F.3d 202, 213 (2d Cir. 2014)
(quoting Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 43 (2d
Cir.2000)). Sosonko’s deposition testimony does not establish that the
testimony thoroughly or clearly examined the issue of whether the
footnote in the Siskind Defendants’ interrogatory was an admission
that the Judgment Debtors operated as a single entity. H. Daya’s
reliance on ePlus Grp. Inc. v. SNR Denton LLP, 976 N.Y.S.2d 20, 21
(1st Dep’t 2013), is also misguided because the successor-in-interest
in that case represented itself as the successor so it could obtain a
novation on the predecessor’s contracts. H. Daya has not presented
similar evidence in this case.

32

Br. at 7; Scheier Decl., Ex. 4.) The email states it is
attaching “information about DoDenim/RewardJeans commissions
deal 2010,” and the attachment is titled, “Statement of profit
and distribution for Do Denim/Reward Jeans orders taken in
2010.” (Scheier Decl. Ex. 4.) But aside from reference to
“DoDenim/RewardJeans commissions,” the email contains no more
information about the Judgment Debtors operating as single
entity. Ultimately, the Defendants have provided sufficient
evidence to defeat H. Daya’s argument that Judgment Debtors
operated as a single entity.
2. De Facto Merger with Vintage and Judgment Debtors
The parties raise genuine disputes of material fact
about whether there was a de facto merger between Do Denim
and Vintage. As for the first hallmark of a de facto merger
— continuity of ownership — there is a dispute about whether
Murciano was truly an owner in Vintage. H. Daya highlights
that the Vintage Member Agreement states that Murciano’s
compensation included “monthly pre-tax profits of $18,000”
(see First Am. to the Vintage Member Agmt. ¶ 1); Murciano was
listed as an owner on Vintage’s tax forms (see Scheier Decl.,
Ex.

16

(Vintage

tax

forms);

and

Sosonko’s

deposition

testimony identified Murciano as a member in Vintage. (See
Scheier Decl., Ex. 3 at 18:7-12.) The Defendants do not
contest that Murciano was listed as a member of Vintage, but
33

they assert that Murciano failed to fund his 20 percent
interest in Vintage by never providing a $20,000 capital
contribution. (See Siskind Defs. Stmt. ¶¶ 17-18; Murciano
Defs. Stmt. ¶¶ 16-18.) Murciano also testified that he was
never an owner in Vintage. (See Ewing Decl., Dkt. No. 187-2
at 36:2-4, 77:5-8.) The evidence raises a genuine dispute
about whether Murciano had an ownership interest in Vintage.
This alone is sufficient to deny summary judgment for H. Daya.
There is also a dispute about another hallmark requiring
continuity
assets,

of

and

management,
general

personnel,

business

physical

operations.

The

location,
Siskind

Defendants maintain that from summer of 2011 until Vintage
ceased operations in 2014, Vintage and Do Denim did not share
offices and instead Murciano worked from RSC’s offices. (See
Siskind Decl. ¶ 19; Sosonko Moving Decl. ¶ 27.) As noted, RSC
provided Vintage with “overhead operations,” which included
space in RSC’s office. (See Vintage Member Agreement at 1;
Siskind Decl. ¶ 4 (identifying RSC’s address as 1385 Broadway,
24th Floor, New York, New York 10018); Scheir Decl., Ex.7
(letter from Vintage using RSC’s address).) And H. Daya
identifies several letters from Do Denim to Rosenthal where
Do

Denim’s

letterhead

used

Vintage’s

same

address. (See

Scheier Decl., Ex. 9 (letters from May 27 to October 17,
2011).) Separately, Murciano was also an employee at Vintage
34

responsible

for

“sales,

product

design

and

sourcing

for

purposes of production.” (Vintage Member Agreement ¶ 5.)
On October 5, 2011, Do Denim also sent a letter to a
customer to “confirm that all assets of Do Denim LLC including
its trademark were acquired by Vintage Apparel Group, LLC.”
(Scheier

Decl.,

Ex.

8

(emphasis

added).)

The

Siskind

Defendants counter that RSC, not Vintage, paid for certain
finished inventory Do Denim commissioned, in addition to
paying Do Denim suppliers to complete the manufacture of other
goods Do Denim ordered. (See Sosonko Moving Decl. ¶¶ 6-13,
15-21.)

And

that

those

assets

were

the

only

items

RSC

acquired. (See Sosonko Opp’n Decl. ¶ 6.)
The Court finds that the factual disputes about two
hallmarks of a de fact merger described above precludes
summary

judgment

for

either

side.

See

N.Y.

Asbestos

Litig.,789 N.Y.S.2d at 486-88 (finding there was no triable
issue of fact where plaintiff did not establish continuity of
ownership, or cessation of business and dissolution of the
seller); Arch Ins. Co. v. Petrocelli Elec. Co., No. 653580/13,
2019 WL 6217272, at *8 (N.Y. Sup. Ct. Nov. 20, 2019) (denying
summary judgment where defendant raised fact issues about
continuity

of

ownership,

assumption

of

liabilities,

and

continuity of management). Given that not all the hallmarks
are required, the Court finds that factual issues about two
35

hallmarks, including continuity of ownership, warrants denial
of summary judgment.
Furthermore,

the

preceding

evidence

raises

factual

disputes specifically about whether there was a de facto
merger between Vintage and Do Denim, but the evidence does
not address whether there was a de facto merger between
Vintage and Reward. H. Daya’s argument that there was a de
facto merger between Vintage and Reward is premised on the
assertion that the Siskind Defendants’ interrogatory admitted
the Judgment Debtors were a single entity. (See H. Daya Br.
at

14-15.)

For

the

reasons

discussed

above,

that

is

an

insufficient basis to support a finding that there was a de
facto merger between Vintage and Reward. Regardless, the
Court reserves judgment because the parties have not squarely
briefed the issue of whether the evidence establishes a de
facto merger between Vintage and Reward. This issue may be
addressed after the facts and legal arguments are developed
at trial, as the Court considers further summary judgment
motion practice unwarranted under the facts presented on the
record before it. See Wechsler v. Hunt Health Sys., Ltd., No.
94 Civ. 8294, 1999 WL 397751, at *6 (S.D.N.Y. June 16, 1999)
(reserving

judgment

“until

the

relevant

facts

and

legal

arguments are developed, either at trial or on a renewed
motion for summary judgment”).
36

3. De Facto Mergers with RSC
The Siskind Defendants argue that there was no de facto
merger

between

RSC

and

the

Judgment

Debtors

because

continuity of ownership is not sufficiently established. (See
Siskind Defs. Br. at 20-22; Siskind Defs. Opp’n at 9-16.) The
Siskind Defendants highlight that the only shareholders in
RSC were Siskind and the Jon Siskind 2004 Irrevocable Trust,
and that no member of either Judgment Debtor ever directly or
indirectly owned any shares in RSC. (See Siskind Defs. Stmt.
¶¶ 4-5, 47.) In other words, continuity of ownership is absent
because Murciano did not have an ownership interest in RSC
that would provide any interest in the assets transferred
from Do Denim to RSC — i.e., the cash payments discussed
above. (See Siskind Defs. Opp’n at 13); see Nat'l Serv.
Indus., 460 F.3d at 212 (noting continuity of ownership is
“designed to identify situations where the shareholders of a
seller corporation retain some ownership interest in their
assets after cleansing those assets of liability”).
H. Daya presents several theories for how it nonetheless
established continuity of ownership. H. Daya first argues
that continuity of ownership can be established merely where
a successor entity “absorbed and continued” the business of
the predecessor. (See H. Daya Br. at 18-20.) H. Daya argues
that the decision in Tap Holdings LLC v. Orix Finance Corp.,
37

970 N.Y.S.2d 178 (1st Dep’t 2013), supports this argument.
But that case is inapposite here because the Tap Holdings
court found, on a motion to dismiss, that the executives in
the successor company “received equity in [the successor]
equivalent

to

or

in

excess

of

their

equity

in

[the

predecessor], which they held through [a holding company].”
Id. at 180. In other words, the court found that continuity
of

ownership

was

sufficiently

alleged

based

on

indirect

ownership through a holding company. See id. at 184; see also
Miller v. Forge Mench Parntership, No. 00 Civ. 4314, 2005 WL
267551, at *8 (S.D.N.Y. Feb. 2, 2005) (finding continuity of
ownership where owners in successor had indirect ownership
through a holding company). H. Daya has not presented any
evidence that Murciano had an indirect ownership interest in
RSC through a holding company.
Instead, H. Daya argues that continuity of ownership
between RSC and Judgment Debtors is established by Siskind
and Murciano’s shared ownership in Vintage. (See H. Daya Mot.
at 20-22.) As noted above, H. Daya is essentially advancing
a theory that there were “two smaller defacto [sic] mergers”
between RSC and Vintage, on one side, and Do Denim and Reward,
on the other, which facilitated a “single larger defacto [sic]

38

merger” among all the companies. (H. Daya Br. at 22-23.) 11
Although H. Daya called this arrangement a de facto merger
between RSC and Vintage, this argument is really an alter ego
theory that RSC and Vintage “operated as a single unit.” (H.
Daya Reply at 10; see H. Daya Br. at 14-15, 20-22.)
Successor liability is typically a vehicle for holding
“the purchaser of a corporation’s assets” liable “for the
seller’s debts.” Cargo Partner, 352 F.3d at 45. However, under
New York law, “an aggrieved party can still seek to impose
liability on an individual associated with the successor
entity under a corporate veil-piercing theory.” Ji Li v. New
Ichiro Sushi, Inc., No. 14 Civ. 10242, 2020 WL 2094095, at *5
(S.D.N.Y. Apr. 30, 2020); Tommy Lee Handbags, 971 F. Supp. 2d
at 374-80 (finding plaintiff adequately alleged de facto
merger claim based on alter ego theory). But under New York’s
choice

of

law

principles,

“the

law

of

the

state

of

incorporation determines when the corporate form will be

11

H. Daya also argues that there was a “link of continuous ownership”
between RSC and the Judgment Debtors through Murciano’s ownership in
Vintage. (H. Daya Br. at 20-22.) In other words, Murciano was an owner
in the Judgment Debtors and Vintage, and Siskind was an owner in
Vintage and RSC, which establishes continuity of ownership among all
the companies. (See id.) H. Daya fails to cite a case accepting such
an attenuated theory of continuity of ownership, and this argument
merely sidesteps the requirement that there be continuity of ownership
between the predecessor and alleged successor. (See Siskind Defs. Opp’n
at 12-14); TBA Global, 15 N.Y.S.3d at 780 (“[T]he fact that the
seller's owners retain their interest in the supposedly sold assets
(through their ownership interest in the purchaser) is the ‘substance’
which makes the transaction inequitable.”)

39

disregarded and liability will be imposed on shareholders.”
Nat'l Gear & Piston, Inc. v. Cummins Power Sys., LLC, 975 F.
Supp. 2d 392, 401 (S.D.N.Y. 2013) (quoting Fletcher v. Atex,
Inc., 68 F.3d 1451, 1456 (2d Cir.1995)).
Although Florida law on veil piercing would seem to
apply, given that Vintage is a Florida corporation, the
parties

have

not

briefed

whether

New

York

or

Florida

substantive law applies. Moreover, piercing the corporate
veil would be moot if there was no de facto merger between
Vintage and the Judgment Debtors. For those reasons, the Court
reserves judgment issue until after the facts and legal
arguments are developed at trial. See Wechsler, 1999 WL
397751, at *6.
4. Fraudulent Conveyances to Siskind and Murciano
The parties also cross-moved for summary judgment on H.
Daya’s

fraudulent

transfer

claims

based

on

payments

to

Siskind and Murciano individually. But this claim would also
be impacted by a finding as to whether there was a de facto
merger between Vintage and the Judgment Debtors, and whether
RSC may be held liable under an alter ego theory of liability.
Accordingly, as to this issue as well, the Court reserves
judgment pending the resolution of the various disputes about
whether there was a de facto merger between Vintage and the

40

Judgment Debtors, and whether RSC may be held liable under an
alter ego theory.
C. JOINT VENTURE
As to Count Seven, the Defendants move for summary
judgment on the grounds that no New York court has held a
member to a joint venture joint and severally liable for the
pre-existing debts of another member. (See Siskind Defs. Br.
at 19-20; Murciano Defs. Br. at 19-20.) The Defendants argue
that, although joint and several liability exists for members
of a joint venture, New York courts have never found that a
member of a joint venture could be joint and severally liable
for the debts of another member. (See Siskind Defs. Br. at
19-20; Murciano Defs. Br. at 19-20.) H. Daya did not address
these arguments in its opposition to the Defendants’ motions.
(See H. Daya Br. at 8-23; H. Opp’n 1-9.) H. Daya’s failure to
oppose the Defendants’ arguments is sufficient grounds to
grant summary judgment. See Zhengfang Liang v. Cafe Spice SB,
Inc., 911 F. Supp. 2d 184, 214 n.27 (E.D.N.Y. 2012) (“[T]he
fact that plaintiff did not oppose defendants' motion for
summary judgment on her claim . . . is also adequate grounds
for granting summary judgment in defendants' favor on this
claim.”).

41

ORDER
For the reasons stated above, it is hereby
ORDERED that the motion of defendants R. Siskind & Co.,
Inc. (“RSC”), Vintage Apparel Group LLC (“Vintage”), and
Richard

Siskind

for

summary

judgment

on

the

claims

of

plaintiff H. Daya International Co., Ltd. (“H. Daya”) (Dkt.
182) is DENIED in part and GRANTED in part. Specifically, for
Counts One through Five, the motion is granted as to the
alleged fraudulent transfers described in paragraph 38 of the
Second

Amended

Complaint,

except

the

seventeen

payments

identified above and about which there are factual disputes.
The motion is also granted as to the fraudulent transfer
claims based on the transfer of the Do Denim LLC (“Do Denim”)
trademark. As to Count Six, the motion is denied as to the
claim that there was a de facto merger between Vintage and Do
Denim; judgment is reserved on whether there was a de facto
merger between Vintage and Reward Jeans LLC (“Reward”), and
whether RSC can be held liable for a de facto merger based on
an alter ego theory. As to Count Seven, the motion is granted.
As to Count Eight, judgment is also reserved, pending further
resolution of the factual disputes in Count Six; and it is
further,
ORDERED that the motion of defendants Do Denim, Reward,
Only Brands, Inc., and Salomon Murciano for summary judgment
42

on H. Daya’s claims (Dkt. 191) is DENIED in part and GRANTED
in part. Specifically, for Counts One through Five, the motion
is granted as to the alleged fraudulent transfers described
in paragraph 38 of the Second Amended Complaint, except the
seventeen payments identified above and about which there are
factual

disputes.

The

motion

is

also

granted

as

to

the

fraudulent transfer claims based on the transfer of the Do
Denim trademark. As to Count Six, the motion is denied as to
the claim that there was a de facto merger between Vintage
and Do Denim; judgment is reserved on whether there was a de
facto merger between Vintage and Reward, and whether RSC can
be held liable for a de facto merger based on an alter ego
theory. As to Count Seven, the motion is granted. As to Count
Eight, judgment is also reserved, pending further resolution
of the factual disputes in Count Six; and it is further,
ORDERED that the motion for summary judgment of H. Daya
(Dkt. No. 198) is DENIED. As noted above, on Count Six, the
motion is denied as to the claim that there was a de facto
merger between Vintage and Do Denim, and judgment is reserved
on (a) whether there was a de facto merger between Vintage
and Reward, and (b) whether RSC can be held liable for a de
facto merger based on an alter ego theory. As to Count Eight,
judgment is also reserved, pending further resolution of the
factual disputes in Count Six; and it is further,
43

ORDERED that within twenty days of the entry of this
Order the parties shall submit a joint letter setting forth
a timeline for trial in August 2022 or thereafter. The parties
shall also advise whether this case is to be tried to a jury
and whether the parties would consent to proceeding to trial
before

the

designated

Magistrate

Judge

for

this

action

pursuant to 28 U.S.C. § 636(c).

SO ORDERED.
Dated:

March 31, 2022
New York, New York

_________________________
Victor Marrero
U.S.D.J.

44