In motion 3, dated October 8, , defendant Monique Pillard moves pursuant to CPLR a 1 , 2 , 4 , 5 , 7 and 8 to dismiss the action. In motion 4, dated October 26, , defendant John Casablancas moves pursuant to CPLR a 1 , 2 , 4 , 5 and 7 to dismiss the action. Click moves on behalf of Elite Model Management, Inc. The request for an extension of time was granted and the parties agreed to a briefing schedule for defendants' joint motion to dismiss, which was submitted as motion 8.
Hantman, dated May 24, , who submitted motion 7, the court was informed that defendant George Gallier joined motion 7.
In motion 8, dated March 12, , Ford Models, Inc. Counsel for Lorex A. In a letter dated November 30, , pro se defendant Douglas Asch stated that he wished to join the March 12, joint motion to dismiss. The Shelton action was initiated in April The complaint sets forth four classes of plaintiffs: 1 the "Model Agency Class" who are all current and former professional models who booked work through any of the defendant agencies from to the present; 2 the "Elite Class" who are current and former professional models who are or were represented by any of the Elite defendants from to the present; 3 the "Wilhelmina Class" who are current and former professional models represented by Wilhelmina Models, Inc.
In his decision addressing defendants' motion to dismiss, Judge Baer described the antitrust action with pendant state claims as follows: "Plaintiffs, consisting of models who work or have worked at some point over the past three decades for New York modeling agencies, bring this lawsuit as a class action against the modeling agencies for allegedly violating federal antitrust and New York state laws by, inter alia, 1 conspiring to set the fees charged to models and to fix other terms and conditions of the plaintiffs' contracts; 2 knowingly charging plaintiffs fees in excess of the maximum amount permitted by New York law; and 3 deliberately breaching their fiduciary duties through various unlawful practices, including earning undisclosed profits from third parties, billing models for phony expenses, and making profits on services which were agree to be provided at cost.
According to plaintiffs, the only plaintiffs in this action, but not in the federal action, are Shelton, who was disqualified as a class representative in the federal action, Shea and Johnson.
Plaintiffs filed and served an amended complaint dated November The action was transferred to this court from Justice Gammerman on December 16, On December 7, , Bankruptcy Judge Drain considered a motion by plaintiffs' counsel in this action for relief from the automatic bankruptcy stay. Judge Drain indicated on the record transcript at , though he did not issue an order, that the stay might apply to Mr.
Casablancas, Mr. Marie and Mr. Kittler as officers of Elite. Hayes letter dated Dec. The motions to dismiss were argued on May 20, On July 16, , the court was advised that a settlement had been reached in the related federal action. As part of that settlement, plaintiffs agreed to dismiss 33 defendants in this action,[FN8] leaving 27 nonbankrupt defendants. According to a November 8, letter from plaintiffs' counsel, Mr. Haazan, and the settling defendants, the settlement would result in dismissal of counts 5 to 8 of the complaint because they involve only settling defendants and count 9 is dismissed to the extent that it involves settling defendants.
By letter dated November 23, , Casablancas challenged whether any settlement had been reached. On March 18, , the court received a phone message that the "Elite defendants"[FN9] were settling, which was confirmed by letter on May 13, Due to the constant state of flux in the action, the court delayed decision on the motions waiting for activities to settle down and for clarity with regard to which parties remained, which causes of action remained and which motions remained.
The parties' papers added to the confusion when, for example, plaintiffs stated in their January 20, brief that only counts 1 and 2 of the complaint applied to NY Models, but, in the same brief, plaintiffs addressed breach of fiduciary duty claims against NY Models in counts 3 through 8.
The court made several requests to the parties to clarify these outstanding issues. Instead of clarity, the court's requests yielded inappropriate letters rearguing the motions and even more motions for sanctions and contempt. By letter dated April 14, , the nonsettling defendants advised the court that the only remaining claims against them were counts 1 and 2 and that they awaited a decision on their joint motion to dismiss.
Though the settlement has yet to be approved by this court, as a result of the proposed settlement, motions 3 and 4 shall be denied as moot with leave to renew upon five days' notice.
Accordingly, motions 5, 6, 7 and 8 are undecided as to the remaining defendants and as to counts 1 and 2 only. Defendants jointly move to dismiss this action. They argue that count two, for violations of General Business Law article 11, should be dismissed because there is no private right of action under article Finally, defendants argue that plaintiffs' first and second causes of action are time-barred.
Since the court grants defendants' joint motion to dismiss, it is unnecessary to address the remaining individual defendants' motions. General Business Law article 11 governs employment agencies. An "employment agency" is defined as: "2. In his January 17, decision, Judge Baer determined that General Business Law article 11 does not explicitly provide for a private right of action, so he thoroughly analyzed whether a private right of action could be implied in General Business Law article As he stated, while plaintiffs are members of the class to be protected by General Business Law article 11 and a private right of action would promote the legislative purpose of protecting working people such as models from unscrupulous employment agencies, a private right of action would be inconsistent with the legislative scheme.
He held plaintiffs had no implied private right of action and dismissed plaintiffs' article 11 claims and nonarticle 11 claims because they were impermissibly premised on violation of article Judge Baer's decision is not binding on this court under theories of res judicata or collateral estoppel to the extent that the parties here are different.
Rather, a fundamental underpinning of both res judicata and collateral estoppel is that every person is entitled to his day in court. Gramatan Home Invs. Therefore, the action must be dismissed as to any plaintiffs who were plaintiffs in the federal action. Shelton, Shea and Johnson were not parties to the federal action, however, and they are entitled to their day in court. Although we find Judge Baer's reasoning for finding that there is no implicit private right of action under General Business Law article 11 to be sound, we disagree that it is necessary to engage in the analysis at all.
Judge Baer relies on the fact that the Legislature failed to add a private right of action in Today, the same section reads "The bond. An explicit private right of action complements the DCA's enforcement powers. Neither remedy benefits the victimized employee. This raises the question of whether the private right of action would allow an employee to bring an action against a nonlicensed employment agency as well.
The answer is yes. The court need only look to article 11 itself. However, it fails to state who must make the demand upon the employment agency and is not limited to licensed employment agencies. In February , Robert Mayer discussed with Michael Flutie that it was necessary to "cut off the money that was being spent on Flutie Entertainment.
Eventually, in October of , Robert Mayer sent a memo to Michael and Robert Flutie informing them that no more advances should be made from Flutie N. Robert Mayer advised Robert Flutie that he must create a different corporate entity if he wanted to continue running the Flutie Entertainment business. In , Flutie Bros, proceeded to take over the business of Flutie Entertainment. No consideration was paid for the transfer of that business [Trial Trans, at , , , , Day 2 ].
At the end of , Robert Flutie was advised that he needed to change the corporate structure of Flutie Bros, to a subchapter S corporation. No consideration was paid for this transfer. Robert Flutie testified at trial that he is a consultant and performs services for various entities primarily owned by his wife, Maryann Flutie, including Flutie Holding Corp. Despite claiming that Maryann Flutie is actively involved in Flutie Bros.
When asked to identify and describe the roles of the employees of Flutie Entertainment, Robert Flutie pointedly omitted his wife. Sums that are substantially below the poverty line. However, Michael Flutie has made it known that he is the Flutie of "Flutie Entertainment" and Robert admittedly has not done anything to stop Michael Flutie from referring to himself as "Michael Flutie of Flutie Entertainment.
In fact, Kristine Szabo testified at trial that she was under the impression that Michael Flutie started Flutie Entertainment and was the President. Szabo also testified that it was her understanding that Michael is actively trying to find television and other entertainmenttype jobs for her. Flutie Entertainment and Flutie N.
Although, Robert testified at trial that he was not aware that Alexis Bledel had ever done any modeling for Flutie N. Bledel in the offices he shared with Flutie N. Y, Robert did not deny the accuracy of Bledel's internet listing which refers to Michael Flutie as Ms. Bledel's agent and further states that "Alexis was introduced to her manager, Michael Flutie of Flutie Entertainment and Company Management. Jaime King is also represented by Robert Flutie. Robert Flutie and Flutie Entertainment receive commissions for work that she does related to television or film.
Before the lunch recess, when Marion Smith was first called to testify concerning the model contracts and the high percentage of models under contract at Flutie N. I credit this portion of her testimony. After taking a recess for lunch, however, the manner of Marion Smith's later testimony was altogether different from her testimony before lunch.
She appeared very nervous and defensive. Her answers were suddenly much more supportive of Michael Flutie's case than they had been previously.
These observations, together with the fact that Marion Smith had lunched with Michael Flutie and, presumably, his lawyer [Trial Trans, at Day 1 ], tend to taint the credibility of her later testimony. Consequently, I give less weight to her later testimony. Kristine Szabo, a model with Flutie N. I found her testimony credible. In finding that Flutie N. Katz' report, the few financial documents made available by Flutie N. I find Mr. Katz to be a highly qualified and experienced forensic accountant.
He testified in a straightforward and intelligent manner and exhibited a thorough knowledge of the financial situation of Flutie N. I credit his testimony. More often than not, I found the testimony of Michael Flutie to be evasive, lacking in credibility, or both. When asked about the continuum of Company Management, Michael Flutie was extremely evasive. His testimony that he did no work for models in and is in direct conflict with the testimony of Kristine Szabo.
When confronted with this conflict, he ultimately admitted that he had indeed negotiated the renewal of Ms. Szabo's contract with Nivea [Trial Trans, at Day 1 ]. He also attempted to evade the Trustee's questions that were meant to show that Michael Flutie was the principal behind Flutie N. Again, he ultimately confessed that he was indeed the decision maker for Flutie N.
Therefore, I find the testimony of Michael Flutie greatly lacking in credibility. From beginning to end, the testimony of Robert Flutie was evasive and unreliable. Robert Flutie consistently refused to give forthright answers in response to the Trustee's questions. Even very simple questions, such as "what do you do?
I find his testimony to be wholly without credibility. Robert Mayer, Michael Flutie's accountant and financial advisor, also testified at trial. When questioned about specific entries or specific checks, he answered fairly consistently that he did not know what specific checks were for or why certain entries had been made.
Although called as a witness for the Defendants, he presented no financial evidence, or any other evidence for that matter, that would rebut an inference' of Flutie N. During his testimony, he contended that Flutie N. Based upon his role as an advisor, his professed general lack of knowledge of the specific activities of Flutie N.
This Court has subject matter jurisdiction over this adversary proceeding pursuant to 28 U. This matter is a core proceeding under 28 U. To establish a claim for a fraudulent transfer pursuant to section of the Bankruptcy Code, the Trustee must establish that 1 the debtor had an interest in property; 2 a transfer of that interest occurred within one year of the filing of the bankruptcy petition; 3 the debtor was insolvent at the time of the transfer or became insolvent as a result thereof; and 4 the debtor received less than a reasonably equivalent value in exchange for such transfer.
BFP v. Resolution Trust Corp. Bankruptcy Code section 32 defines "insolvent" as a "financial condition such that the sum of [the] entity's debts is greater than all of [the] entity's property, at a fair valuation The Trustee's expert, while not expressing an opinion about the solvency of Flutie N. Further, based on the documents provided by the Defendants, the Trustee's expert concludes that from the beginning of the corporation, Flutie N. The Defendants contend that the Trustee cannot establish Flutie N.
However, it is well within the discretion of the Bankruptcy Court to determine whether evidence presented to the Court is sufficient to support a finding of insolvency. Lawson v. Ford Motor Co. In re Roblin Industries, Inc. Furthermore, while an asset's book value may not generally be the appropriate measure of its fair value, such figures may still support a court's inference of an entity's insolvency in some circumstances.
In In re Buffalo Auto Glass, the Court inferred a debtor's insolvency from its corporate tax returns. The trustee presented the Court with copies of the debtor's tax returns, which showed negative retained earnings for the pertinent time period. The Court found that the trustee had established the debtor's insolvency by a preponderance of the evidence, because the debtor had failed to produce any evidence that the tax returns did not establish its insolvency.
Similarly, the tax returns of Flutie N. Although the Defendants have tried to refute an inference of insolvency with the argument that the fair value of the model contracts was never investigated, the Defendants have failed to present any evidence that the tax returns should not be relied upon for a finding that Flutie N.
Moreover, the Defendants' accountant, Robert Mayer, did not offer any credible evidence about the financial condition of Flutie N. Based upon the preponderance of the evidence offered at trial, testimonial and documentary, this Court can and does find that the insolvency of Flutie N. At the time these transfers took place, Flutie N. These transfers constitute fraudulent transfers as to all of Debtor's creditors.
Because the Defendants failed to provide any records or accounting of such transfers, they are directed to give an accounting and turn over to the Trustee all monies received, and all future monies, on account of all the models at Flutie N. This includes models that were at Flutie N.
Sullivan v. Messer In re Corcoran , B. Every conveyance made and every obligation incurred by a person who is or will be rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without fair consideration. McCombs, 30 F. Fair consideration is given for property, or obligation 1 when in exchange for such property, or obligation, as a fair equivalent therefore, and in good faith, property is conveyed or an antecedent debt is satisfied, or 2 when such property, or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared with the value of the property, or obligation obtained.
The Debtor received no consideration for such transfers. Michael and Albert Flutie argue that the loans were in lieu of a salary for Michael and, therefore, the Debtor did receive consideration in the form of Michael Flutie's services.
McGann, A. In Ravens, the Court found that a fraudulent transfer did not occur where the principal withdrew corporate monies to pay her personal expenses and obligations. The Ravens Court held that because the plaintiff had not shown that the monies withdrawn were in excess of what would be fair consideration for the principal's services, the plaintiff had failed to prove that the transfers occurred without consideration.
Id, at , N. The facts are very different here. Some of the American Express charges may indeed have been for legitimate expenses, but Michael Flutie has utterly failed to present any credible evidence that these charges were anything other than Michael Flutie's use of the Flutie N. I find that the Trustee has indeed carried his burden of proof and has shown that Michael Flutie caused Flutie N.
As already noted above, Flutie N. Indeed, Flutie N. Moreover, where a transfer occurs without consideration, the defendant is presumed to have been insolvent at the time of the transfer and may only rebut the presumption by proving its continued solvency after the date of the transfer.
RTC Mortg. Sopher, F. The Defendants have not presented any evidence to rebut the presumption of Flutie N.
Accordingly, the Court directs the Defendants give an accounting of and to turn over to the Trustee all monies received, and all future monies, on account of all the models at Flutie N. California Airparts Corp.
Rubino, 21 Misc. These transfers were made at a time when Flutie N. To be held liable they would have to be the successors of Flutie Entertainment. To prove this, the Trustee must show that 1 Flutie Bros expressly or impliedly assumed the liabilities of Flutie Entertainment; 2 the transaction amounted to a de facto consolidation or merger of the seller and purchaser; 3 the purchaser was a mere continuation of the seller; or 4 the transaction was entered into fraudulently for the purpose of escaping such liability.
Kern v. Frye Copysystems, Inc. Here, the facts are abundantly clear that Flutie Bros was little more than a continuation of Flutie Entertainment. Flutie Bros performed essentially the same business function as Flutie Entertainment had before it was dissolved. Furthermore, a substantial amount of the talent represented by Flutie Entertainment was later represented by Flutie Bros doing business as "Flutie Entertainment. Richards Shear Co. Production Machine Co.
Because the Defendants failed to provide any records or accounting of such transfers, they are directed to give an accounting of and turn over to the Trustee all monies received, and all future monies, on account of all the models at Flutie N. To satisfy a claim of fraudulent conveyance under section of the New York Debtor and Creditor law, the Trustee must establish that 1 the conveyance was made without fair consideration; and 2 that it will thereby render the conveying party insolvent or that the property remaining after the conveyance is insufficient to pay the conveying party's probable liabilities on existing debts as they become mature.
Fromer v. Yogel, 50 F. These transfers were made without fair consideration and constitute fraudulent conveyances as to both then present and future creditors. Every conveyance made and every obligation incurred with actual intent, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditor. To prevail on a claim under section of the New York Debtor and Creditor law, the Trustee must establish that 1 the thing transferred has value out of which the creditor could have realized a portion of its claim; 2 that this thing was transferred or disposed of by debtor; and 3 that the transfer was done with actual intent to defraud.
Gentry v. Kovler In re Kovler , B. The relevant intent may be inferred from the facts and circumstances surrounding the transfer.
Cadle Co. Carlin, F. Y Such facts and circumstances, which may be considered "badges of fraud," include: 1 lack or inadequacy of consideration; 2 family, friendship or close associate relationship between the parties; 3 retention of possession, benefit, or use of the property in question; 4 financial condition of the party sought to be charged both before and after the transaction in question; 5 existence or cumulative effect of a pattern or series of transactions or course of conduct after the incurring of debt, onset of financial difficulties or pendency or threat of suits by creditors; and 6 general chronology of the events and transactions under inquiry.
Salomon v. Kaiser In re Kaiser , F. Almost all of the badges are abundantly visible in this case. These transfers were made at a time when the Debtor knew that it would incur debts beyond its ability to pay as such debts matured. These conveyances are hereby avoided and the Trustee is entitled to set aside and recover from transferees the value of the conveyances. To satisfy a claim for breach of fiduciary duty, plaintiff must prove 1 the existence of a fiduciary relationship between the parties and 2 breach of the fiduciary duty.
Cramer v. Devon Group, Inc. A court will find that breach of fiduciary duty is properly alleged when the Debtor was insolvent or rendered insolvent by a fraudulent transfer or was operating in the vicinity of insolvency at the time of or immediately after the transfer.
Heyman, B. Michael Flutie, as the dominant and controlling personage, and in the absence of a formal operating board of directors, assumed a fiduciary obligation as the de facto president of Flutie N. To satisfy his fiduciary obligations, Michael Flutie's actions should be fair and in the best interest of the corporation. Then there's the case of year-old Jaime Rishar, who at 5-foot-6 is freakishly short for a model, even shorter than Kate Moss, who everyone knows as the bare-chested waif opposite Marky Mark in those Calvin Klein underwear ads.
Says Rishar: "Michael was the only one who would take a chance with me. It's paid off. Rishar has been successful in the eight months since she joined Company. She's posed for hotshot photographer Steven Meisel for Allure and Interview magazines. And she's really a man in drag. Working out of a SoHo office building with 19 staffers including his mother, who is the comptroller, and two brothers, who head up finance and operations and 40 models to his name, Flutie has managed to establish a thriving "boutique" agency in a matter of just five years.
Boutique Flutie's own term refers both to the smaller size of the agency in comparison to Elite Model Management or Ford Models, which handle hundreds of models, and to the nature of the business performed, says Flutie. He describes the difference this way: "They are in the business of providing models to clients. I am in the business of managing models.
Although Robert Flutie, his brother and chief financial officer, would not reveal Company's billing volume, he did say the agency has reported percent growth in revenue over the past five financial years. Now the industry is accepting of girls who are different," says Richter. They've always gone for the little bit more offbeat, unusual girl. Now is his time. There's got to be a reason why somebody walking down the street would decide to buy Coca-Cola versus Pepsi.
Or in this case, why the Gap or Byblos would choose Jaime Rishar over a taller model. Or why American Vogue would want to shoot Carina Wretman over a model with a straighter nose. Or why Cover Girl would sign Lana Ogilvie over the more "standard" white model. To all of the questions, Flutie has a singular answer: The time is ripe for models who look like real people in the real world.
Having spent his boyhood in the Middle East his father was the official photographer to the King of Jordan , Flutie says he observed a culture of dark-skinned people who revered that blond, blue-eyed image as the symbol of perfection. After his family moved to New York, he found that image not reflective of what America is all about. Flutie isn't the only one in the business who thinks America needs to see a different image.
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