FT - In re Duke & Benedict (10/9/2002) 2d Cir.

[Riser Adkisson LLP]

In re Duke & Benedict, Inc.,
2002.C02.0000464 (2d Cir. 10/09/2002)

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

No. 02-5006

2002.C02.0000464

October 9, 2002

IN RE DUKE & BENEDICT, INC.: PLAINTIFF-APPELLANT,
v.
PETER D. LEIBOWITS COMPANY, INC., CENTENNIAL GOLF CLUB OF NEW YORK, LLC,
DEFENDANTS-APPELLEES, DAVID R. KITTAY, BENEDICT DAIRY FARMS, DUKE &
BENEDICT, INC., DEBTOR.

Appeal from United States District Court for the Southern District of New York (Colleen McMahon,
Judge).

Appearing for Appellant: Judith L. Siegel, Kittay & Gershfeld, P.C. (David R. Kittay, of
counsel), Tarrytown, Ny.

Appearing for Appellee: Allan M. Pepper, Kaye Scholer Llp (Michael J. Crames, Howard
Kleinhendler, of counsel), New York, Ny.

Present: Hon. Thomas J. Meskill, Hon. Robert D. Sack, Circuit Judges, Hon. J. Garvan Murtha, *fn1
District Judge.

SUMMARY ORDER

THIS SUMMARY ORDER WILL NOT BE PUBLISHED IN THE FEDERAL REPORTER AND MAY
NOT BE CITED AS PRECEDENTIAL AUTHORITY TO THIS OR ANY OTHER COURT, BUT MAY
BE CALLED TO THE ATTENTION OF THIS OR ANY OTHER COURT IN A SUBSEQUENT
STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF
COLLATERAL ESTOPPEL OR RES JUDICATA.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the United
States Courthouse, Foley Square, in the City of New York, on the 9th day of October, two thousand
and two.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED
that the judgment of December 28, 2001 be, and it hereby is, AFFIRMED.

Appellant, trustee of a bankrupt debtor, appeals from an order of the District Court granting
summary judgment for the defendants in an action alleging that a 1996 agreement involving the
conveyance of land was a constructive fraudulent conveyance under 11 U.S.C. § 548. The parties
stipulated to all elements of constructive fraudulent conveyance except whether reasonably
equivalent value was received for the land.

In the transaction at issue, Peter D. Leibowits Company Inc.

("Leibowits"), the defendant, acquired a fee simple interest in land previously under title held
by the debtor, Duke & Benedict Inc. During the same transaction, the parties terminated rights
existing under a 1994 joint venture agreement to develop the land, settled a lawsuit outstanding
between them, and Duke & Benedict received from Leibowits $2.25 million.

Under the 1994 agreement, Duke & Benedict had agreed to convey 457 acres of land to a new LLC if
Leibowits would design a golf course for the land and obtain appropriate development approvals.
Duke & Benedict was to receive 25% of the proceeds from the LLC, and 25% of any future sale value
of the land, while Leibowits was to retain the remainder.

At oral argument before the Bankruptcy Court, the appellant conceded that prior to the 1996
agreement: 1) The 1994 agreement was valid and enforceable between the parties; 2) Leibowits had
performed under it, at great expense, fulfilling all conditions precedent to Duke & Benedict's
obligation; 3) Duke & Benedict was obligated to convey the land to a new LLC; 4) Duke & Benedict
was entitled to no more than 25% of the profits generated by the golf course and 25% of its sale
value; 5)Duke & Benedict received more than 25% of the land's total value as a fully improved
golf course; and 6) That there were no triable issues of fact other than minor details of the
valuations presented by the parties.

Based on the concessions made at oral argument, the Bankruptcy Court concluded that the
only "interest of the debtor" Duke & Benedict had to sell in 1996 was a 25% interest in the land.
The District Court, agreeing with the Bankruptcy Court, found that the only "interest of the
debtor" possessed by Duke & Benedict as of the 1996 agreement was a 25% interest in the joint
venture between the parties.

Appellant contests the characterization of the interest it sold as equity in a common law joint
venture. Under any reasonable characterization, the result is the same. Whether the "interest of
the debtor" conveyed was an equitable interest in vacant land best used as a golf course, equity
in a common law joint venture formed to develop and operate the same golf course, or a
contractual right to receive a percentage of the future profits and eventual sale value of the
golf course, none could be worth more than the land as a fully improved operating golf course.
However characterized, Duke & Benedict sold 25% of a future golf course. The conceded
consideration, $2.25 million, is greater than 25% of the value claimed by the trustee for the
fully improved golf course. Having received, by its own admissions, reasonably equivalent value
for the interest sold, no material fact remains at issue and no constructive fraudulent
conveyance occurred.

For substantially the reasons stated by the Bankruptcy Court and District Court, the judgment of
the District Court is hereby AFFIRMED.


Opinion Footnotes

*fn1 Of the United States District Court for the District of Vermont, sitting by designation.