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NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SARATOGA
WEN MEI LU, CHIN CHUNG LIN LU,
LI HUA LU, and LU HOLDING, LLC,
Index No.: 2016-2946
Plaintiffs,
Hon. James E. Walsh
-against-
WEN YING GAMBA, YUEN HSIANG LU,
and CHUEN LOU, LLC,
Defendants.
PLAINTIFFS' MEMORANDUM OF LAW IN OPPOSITION
TO DEFENDANTS' MOTION TO CONTINUE THE RECEIVERSHIP
WHITEMAN OSTERMAN & HANNA LLP
Attorneys for Plaintiffs
One Commerce Plaza
Albany, New York 12260
(518) 487-7600
Of Counsel:
Jon E. Crain, Esq.
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TABLE OF CONTENTS
TABLE OF AUTHORITIES iii
PRELIMINARY STATEMENT 1
ARGUMENT 4
I. CONTINUATION OF A RECEIVERSHIP BY SUPREME COURT IS
INAPPROPRIATE FOLLOWING THE JURY VERDICT; CPLR 6401 PROVIDES
THAT THE RECEIVERSHIP SHALL TERMINATE UPON FINAL JUDGMENT 4
II. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW THAT
CONTINUATION OF THE RECEIVERSHIP IS NECESSARY TO PROTECT
DEFENDANTS FROM IRREPARABLE HARM 4
A. Defendants have not established that release of the rental monies currently held
by the Receiver would cause Defendants irreparable harm 5
B. Defendant have not established that they would suffer irreparable harm if the
receivership over the Duo Property were terminated 6
C. Defendants have not established that they would suffer irreparable halm if the
receivership over the Hibachi Property were terminated 6
III. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW A LIKELIHOOD
OF SUCCESS ON THE MERITS OF THEIR POST-JUDGMENT MOTIONS 6
A. The jury resolved issues of fact based upon the weight of the credible evidence 7
B. The Defendants failed to prove that Defendant Wen Ying Gamba had legitimate
claims to ownership of the Properties in or around 1993 8
C. The doctrine of unclean hands is in applicable because defendants were not
injured by the 1993 conveyances 11
D. Defendants failed to prove unclean hands because the Defendant Father directed
that Plaintiff Patty perform the 1993 conveyances 12
F. The doctrine of unclean hands is inapplicable to Plaintiffs' claim for a
constructive trust based upon the time, work and effort transferred into the
Properties, both before and after the 1993 conveyances to the Father 14
IV. THE EQUITIES WEIGH HEAVILY IN FAVOR OF PLAINTIFFS 15
CONCLUSION 16
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CERTIFICATION OF COMPLIANCE WITH UNIFORM CIVIL RULE 202.8-b 17
ii
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TABLE OF AUTHORITIES
State Cases
Annunziata v City of New York,
175 AD 3d 438 [2d Dept 2019] 7
Baker v Clinton Cty.,
134 AD3d 1218 [3d Dept 2015] 7
Baker v Harrison,
180 AD3d 1210 [3d Dept 2020] 8
Blueberry Invs. Co. v Ilana Realty Inc.,
184 AD2d 906 [3d Dept 1992] 14
Cliff v R.R.S. Inc.,
207 AD2d 17 [3d Dept 1994] 5
Cohen . Hallmark Cards,
45 NY2d 493 [1978] 7
Cyngiel v Krigsman,
192 AD3d 760 [2d Dept 2021] 5
DiFabio v Omnipoint Communications, Inc.,
66 AD3d 635 [2d Dept 2009] 5
Dillon v Dean,
158 AD2d 579 [2d Dept 1990) 12, 13
Dolny v Borck,
61 AD3d 817 [2d Dept 2009] 9
Family-Friendly Media, Inc. v. Recorder Tel. Network,
74 AD3d 738 [2d Dept 2010] 5
Farino v Farino,
88 AD2d 902 [2d Dept 1982] 9
Festinger v Edrich,
32 AD3d 412 [2d Dept 2006] 10
Guggenheim v Lieber,
42 AD2d 778 [2d Dept 1973] 9
111
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Jedlicka v JSPOL Invs. Corp.,
174 AD2d 652 [2d Dept 1991] 12, 13, 14
Mehlman v Avrech,
146 AD2d 753 [2d Dept 1989] 11
Olszowy . Norton Co.,
159 AD2d 884 [3d Dept 1990] 7
Rooney v Slomowitz,
11 AD3d 864 [3d Dept 2004] 11
Rowland v Dushin,
82 AD3d 738 [2d Dept 2011] 5
Sutter v Lane,
61 AD3d 1310 [3d Dept 2009] 11
Ta Chun Wang v Chun Wong,
163 AD2d 300 [2d Dept 1990] 10
Tooley v Corp,
63 AD3d 1607 [4th Dept 2009] 9
Trager v Vigliotti,
42 AD2d 912 [2d Dept 1973], affd 35 NY2d 865 [1974] 8
Trump on the Ocean, LLC v Ash,
81 AD3d 713 [2d Dept 2011] 5
Whalen v Gerzof,
206 AD2d 688 [3d Dept 1994] 13
Statutes and Regulations
CPLR 6401 3, 4
CPLR 6401(a) 4
Uniform Civil Rule 202.48 4
iv
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PRELIMINARY STATEMENT
Plaintiffs Wen Mei Lu ("Iris"), Chin Chung Lin Lu ("Mrs. Lu" or the "Mother"), Li Hua
Lu ("Patty"), and Lu Holding, LLC ("Lu Holding") (collectively, "Plaintiffs") respectfully submit
this memorandum of law in opposition to Defendants Wen Ying Gamba ("Gamba"), Yuen Hsiang
Lu ("Mr. Lu" or the "Father"), and Chuen Lou, LLC's (collectively, "Defendants") motion to
continue the receivership notwithstanding the jury verdict in Plaintiffs' favor. Defendants' motion
should be denied its entirety, for the reasons set forth below.
As the jury has now determined, prior to April 2015, and at all times thereafter, Plaintiffs
were the true and rightful owners of the restaurant property located at 175 South Broadway in
Saratoga Springs (the "Duo Property") and the restaurant property located at 3310 South Broadway
in Saratoga Springs (the "Hibachi Property") (together with the Duo Property, the "Properties").
The Properties were the life work of the Plaintiffs, particularly Iris and Patty Lu, and their only
source of income. The Defendants, knowing this, nonetheless endeavored to deprive Plaintiff of
the Restaurant Properties (during a time when two of the three Plaintiffs had fallen into ill health).
As a result, Plaintiffs have been deprived of the Properties and the income therefrom for over six
years now. Defendants' malfeasance has caused financial devastation to Plaintiffs. As set forth
in Iris Lu's accompanying Affidavit, Plaintiffs' debts — incurred as a result of this litigation and to
cover Plaintiffs' living and medical expenses the past six years — well exceed the rental income
currently held by the Receiver. Now, after six years of litigation culminating in a two-week trial,
a jury has spoken and justice has been rendered. Enough is enough. Plaintiffs are entitled to
immediate possession of the Properties, prompt tettnination of the receivership, and delivery of
the funds held by the receiver.
Defendants' motion seeks an indefinite continuation of the receivership while Defendants
pursue a motion for judgment notwithstanding the verdict (a process likely to take at least six
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months under the current briefing schedule) and "long enough to permit defendants to request that
the Appellate Division maintain the Receiver during the pendency of any appeal" (a process which
could take years). A post-verdict receivership is an extraordinary remedy. In fact, Defendants are
not able to identify a single New York case continuing a receivership following a jury verdict.
This is because there are none. Defendants' motion provides no valid basis for the Court to issue
such an extraordinary and harsh remedy.
First, Defendants have failed to show that a receivership is necessary to protect them from
irreparable harm. Upon entry of judgment on the jury's verdict, Plaintiffs obviously intend to
maintain the Properties to the utmost level of care, and to take all steps necessary to preserve their
value. Accordingly, there is no need for a receiver.
At any rate, following the conclusive jury verdict, Defendants have no property interest in
the Properties that could be harmed. Even if they did, any harm caused by Plaintiffs' collection of
rents and possession of the Properties would be compensable by monetary damages, and thus not
irreparable. Defendants effectively concede this with respect to the Duo Property. Defendants
also do not contend that release of the monies held by the Receiver, in and of itself, could not pose
irreparable harm, as a matter of law. The only argument proffered by Defendants regarding
irreparable harm is to meekly assert that they might be harmed if a new tenant were brought into
the Hibachi Property. The encumbrance of a property by a lease is compensable by monetary
damages (assuming it is even actionable). More to the point, the presence of a paying tenant in
the long-vacant Hibachi Property would not harm the Property.
Second, Defendants do not have a likelihood of success on the merits of their post-verdict
motions or appeals. In this regard, Defendants continue to hang their hats entirely on their ill-fated
"unclean hands" defense. As set forth below, Defendants failed to prove that defense as a matter
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of law. Even more to the point, the defense presented factual issues, which the jury (correctly)
resolved. A jury verdict is sacred. Defendants cannot come close to meeting the extraordinarily
high burden they would need to meet to overturn the jury's decision.
Finally, the equities weigh heavily in Plaintiffs' favor. As the jury determined, Plaintiffs
have always been the true owners of the Properties. Accordingly, it is now beyond dispute that
Defendants' conduct has deprived Plaintiffs of Plaintiffs' Properties, and the income therefrom,
for over six years. Defendants' motion is not simply another example of the "shoe being on the
other foot," as Defendants state. The receivership was initially necessary because Defendants were
actively trying to evict Duo, and were demonstrating a manifest disregard of requisite maintenance.
The receivership was put in place for the pendency of this action. This action has now been
resolved by a jury verdict, following a two-week trial. Defendants' motion completely ignores the
weight of the jury's verdict, which conclusively resolved the parties' competing claims to
ownership of the Properties. Because those claims have now been resolved by a jury, the
receivership is no longer warranted and must terminate pursuant to CPLR 6401.
Defendants have inflicted more than enough financial harm on Plaintiffs. Defendants'
motion is a transparent attempt to punitively deprive Plaintiffs of much-needed funds following
the jury's decision, and it should not be countenanced by this Court. If Defendants' motion were
granted (indeed, even if the receivership were only continued while post-verdict motions were
resolved, a process which will take approximately six months), Plaintiffs would likely face
bankruptcy in the interim. Enough is enough. Defendants' motion must be denied.
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ARGUMENT
I. CONTINUATION OF A RECEIVERSHIP BY SUPREME COURT IS
INAPPROPRIATE FOLLOWING THE JURY VERDICT; CPLR 6401
PROVIDES THAT THE RECEIVERSHIP SHALL TERMINATE UPON
FINAL JUDGMENT.
CPLR 6401 provides that a receivership "shall not continue after final judgment."
Judgment on the jury verdict does not wait for resolution of post judgment motion practice —
judgment must enter promptly following the verdict, consistent with the procedure set forth in
Uniform Civil Rule 202.48. The procedure is clear. Judgment should enter promptly, and that
judgment should terminate the receivership.
To this point, the jury verdict conclusively resolved the parties' competing claims to
ownership. While post-verdict motions remain, those motions concern severed conversion claims
(which do not speak to ownership and thus cannot trigger a receiver). To the extent Defendants
intend to seek judgment notwithstanding the verdict as part of post-verdict motion practice, such
motion would have no merit, for the reasons set forth in Point II below. Because the jury resolved
the parties' competing claims to ownership, the receivership must be terminated.
II. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW THAT
CONTINUATION OF THE RECEIVERSHIP IS NECESSARY TO PROTECT
DEFENDANTS FROM IRREPARABLE HARM.
CPLR 6401(a) permits the Court, upon a motion by a person with an "apparent interest" in
property, to appoint a temporary receiver of that property where "there is danger" that the property
will be "materially injured or destroyed." Here, there is no danger that the Properties will be
injured or destroyed. To the contrary, Plaintiffs intend to maintain and/or improve the value of the
Properties, as they have always done.
Further, the appointment of a temporary receiver "is an extreme remedy" that should be
granted "only where the moving party has made a 'clear and convincing' evidentiary showing of
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"irreparable loss or waste to the subject property and that a temporary receiver is needed to protect
their interests." Cyngiel v Krigsman, 192 AD3d 760 (2d Dept 2021). "Economic loss, which is
compensable by money damages, does not constitute irreparable harm." Family-Friendly Media,
Inc., 74 AD3d at 739; Cliff v R. R. S. Inc., 207 AD2d 17, 20-21 (3d Dept 1994) (denying preliminary
injunction where the moving party set forth claims that could be compensated in money damages).
Irreparable injury cannot be remote or speculative; rather, the moving party must demonstrate that
the harm alleged is concrete and imminent. See e.g. Family-Friendly Media, Inc. v Recorder Tel.
Network, 74 AD3d 738, 739-740 (2d Dept 2010) ("the plaintiff made only conclusory allegations
and failed to point to any imminent and non-speculative harm that would befall it"); Trump on the
Ocean, LLC v Ash, 81 AD3d 713, 716 (2d Dept 2011). In sum, Defendants' bear the burden of
demonstrating not only that the harm alleged is imminent and non-speculative, but also that any
injury suffered "would not be compensable by money damages." Rowland v Dushin, 82 AD3d
738, 739 (2d Dept 2011); DiFabio v Omnipoint Communications, Inc., 66 AD3d 635, 637 (2d
Dept 2009). Defendants cannot meet this burden.
A. Defendants have not established that release of the rental monies currently held by the
Receiver would cause Defendants irreparable harm.
Here, Defendants have failed to establish, by clear and convincing evidence, that they will
suffer non-speculative, imminent harm that could not be compensable by money damages. This
is indisputably true with respect to the monies currently held by the Receiver. Even if the receiver
were continued pending post-verdict motion practice, Defendants would not suffer irreparable
harm by the immediate release of the monies held by the Receiver. This is beyond dispute —
monetary damages, by definition, do not constitute irreparable harm. Accordingly, at a minimum,
the monies held by the Receiver must be released immediately upon entry of judgment on the
jury's verdict.
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B. Defendant have not established that they would suffer irreparable haiiii if the receivership
over the Duo Property were terminated.
Similarly, Defendants' motion papers do not even attempt to argue that continuation of the
receivership over the Duo Property is necessary to protect against irreparable harm. This is
because they cannot. Indeed, the tenant remains in the property, and Plaintiffs (unlike Defendants,
had they won) have no intention of evicting Duo or interfering with the status quo in any way.
Accordingly, at a minimum, the receivership over the Duo Property must be promptly terminated
(that is, the termination must occur with the judgment to be entered on the jury verdict), and
Defendants' motion must be denied with respect to the Duo Property.
C. Defendants have not established that they would suffer irreparable harm if the receivership
over the Hibachi Property were terminated.
This is also true with respect to the Hibachi Property. There, Defendants argue only that,
because the Hibachi Property is vacant, Plaintiffs "may enter a long-teiiii lease" and that "Plaintiffs
could make material changes to the property or have it encumbered by a tenant." (Defendants'
Memorandum of Law in Support p. 2, 4). The fact that something may or could happen is exactly
the type of speculation insufficient to demonstrate irreparable injury. Even more to the point, the
encumbrance of a property by a lease is compensable by monetary damages (assuming it is even
actionable). Defendants' motion must be denied in its entirety.
III. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW A
LIKELIHOOD OF SUCCESS ON THE MERITS OF THEIR POST-
JUDGMENT MOTIONS.
With respect to likelihood of success on the merits, Defendants hang their hats entirely on
their ill-fated "unclean hands" defense — arguing that it entitles them to either a judgment
notwithstanding the verdict or a reversal on appeal. As set forth below, Defendants failed to prove
that defense as a matter of law. Even more to the point, the defense presented factual issues which
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the jury (correctly) resolved. Defendants cannot come close to the extraordinarily high burden
they would need to meet to overturn the jury's decision.
A. The jury resolved issues of fact based upon the weight of the credible evidence.
Defendants overlook that the issue of unclean hands was presented to the jury during
Defendants' case, and completely disregard the weight of a jury verdict ("aside from the verdict,
nothing has changed"). To be clear, "for a court to conclude as a matter of law that a jury verdict
is not supported by sufficient evidence...it is necessary to...conclude that there is simply no valid
line of reasoning and permissible inferences which could possibly lead rational men [or women]
to the conclusion reached by the jury on the basis of the evidence presented at trial." Annunziata v
City ofNew York, 175 AD 3d 438, 440 (2d Dept 2019), quoting Cohen . Hallmark Cards, 45 NY2d
493 (1978). This test is a "harsh determination that a valid issue of fact does not exist." Id. "Great
deference is given to a jury's interpretation of the evidence and findings of fact that have sufficient
support in the credible evidence, even if there is evidence leading to a contrary conclusion."
Olszowy . Norton Co., 159 AD2d 884, 886 (3d Dept 1990). As set forth more fully below,
Defendants are not likely to succeed on the merits of the issue of unclean hands because the jury
had more than sufficient evidential support the conclusion that Plaintiffs were entitled to a
constructive trust and that Defendants' unclean hands defense was meritless.
The unclean hands doctrine applies where "the [plaintiff] is guilty of immoral,
unconscionable conduct and even then only when the conduct relied on is directly related to the
subject matter in litigation" (Baker v Clinton Cty., 134 AD3d 1218, 1220 [3d Dept 2015]).
Defendants, as the party claiming this affirmative defense, bore the burden to prove its defense at
trial. Significantly, based on the evidence presented during both Plaintiffs' and Defendant's case,
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the jury determined that Plaintiffs were not guilty of immoral or unconscionable conduct related
to the Properties. This is a factual determination that cannot be overturned.
B. The Defendants failed to prove that Defendant Wen Ying Gamba had legitimate claims to
ownership of the Properties in or around 1993.
The doctrine of unclean hands does not apply where, as here, property is transferred to
avoid meritless claims (such as the claims Defendant Wen Ying Gamba now concedes were
meritless in the 1990s, by arguing in this action that the Defendant Father owned everything,
always) (see e.g. Baker v Harrison, 180 AD3d 1210, 1210-13 [3d Dept 2020] [finding a viable
constructive trust claim where the plaintiff alleged "that he in fact was the purchaser of the
property," and that "although he was the actual purchaser of the property, he purposely directed
that the deed be put in defendant's name, in an effort to thwart potential creditors"]).
In Trager v Vigliotti, 42 AD2d 912, 913 (2d Dept 1973), affd 35 NY2d 865 (1974), for
example, the plaintiff "transferred his interest in [a] house to a corporation in order to hinder his
former wife's efforts to implement claims for support payments." The trial court ruled that the
plaintiff's constructive trust claim was barred by the doctrine of unclean hands, because the
plaintiff had admittedly transferred his interest in the house for the purpose of avoiding claims by
his former wife. The Appellate Division reversed that decision, and the Court of Appeals affirmed
the Appellate Division's decision. The Appellate Division held that "the law is settled": ‘" [t]he
rule denying relief to one who conveyed his property to defraud his creditors is inapplicable to
prevent recovery of the property so conveyed where the claim which caused him to make the
conveyance was never established" (id). Because there was no evidence presented "that the former
wife had a valid claim against plaintiff', the doctrine of unclean hands was inapplicable as a matter
of law (id. [emphasis supplied]). Again, this decision was affirmed by the Court of Appeals.
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This "settled" rule was recently applied in Tooley v Corp, 63 AD3d 1607 (4th Dept 2009).
There, the plaintiff transferred land to the defendant, on paper, for the "admitted purpose" of
avoiding potential creditors. The Appellate Division ruled that the doctrine of unclean hands did
not bar the plaintiff's constructive trust claim, because the defendant "failed to establish" that the
plaintiff had "any actual creditor at the time of the transfer" (id, at 1607). This case is the same.
At the time of the 1993 conveyances, Plaintiffs had no actual creditors — just a "potential" (id.)
claim by Defendant Wen Ying Gamba — a claim that she now concedes was without merit.
Yet another example is Guggenheim v Lieber, 42 AD2d 778, 779 (2d Dept 1973). There,
the plaintiffs delivered money to the defendants to "hold for him," with the admitted purpose "to
avoid the payment of Swiss taxes" (id.). The plaintiff thereafter claimed a constructive trust in the
monies, and the defendant asserted the doctrine of unclean hands as a defense. The trial court
rejected that defense, because the defendant failed to prove that the potential creditor (the Swiss
government) had a valid claim to tax the monies (id. ["we are in agreement with Special Term's
rejection of defendants' argument to the effect that relief be denied plaintiff because of the so-
called equity doctrine of 'unclean hands'. Defendants point out that plaintiff was attempting to
avoid the payment of Swiss taxes by his various investments in this country. Suffice it to say in
this regard that Special Term properly noted that there was no evidence of any tax owed to any
government."] [emphasis supplied]).
All of the cases relied upon by Defendants in their moving papers involve conveyances
effectuated to avoid "legitimate," "valid," and/or "just" creditors with established claims (see
Dolny v Borck, 61 AD3d 817 [2d Dept 2009] [applying unclean hands to a conveyance to avoid
"judgment creditors," i.e., creditors that had already established a valid and enforceable claim
against the plaintiff]; Farino v Farino, 88 AD2d 902 [2d Dept 1982] [involving a conveyance to
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avoid "a judgment of divorce"]; Festinger v Edrich, 32 AD3d 412, 413 [2d Dept 2006] [transfer
to avoid a sentencing of restitution resulting from proven "federal criminal fraud"]; Ta Chun Wang
v Chun Wong, 163 AD2d 300, 302 [2d Dept 1990] [the parties agree that the transaction at issue
was a "fraudulent scheme"]).
Here, unlike all the cases cited by Defendants, the doctrine of unclean hands is inapplicable
because the Defendant Wen Ying Gamba was not a legitimate or valid creditor in 1993. To the
contrary, all three Plaintiffs testified unequivocally that Defendant Wen Ying Gamba's prior
ownership interest was bought out in 1987 and that Defendant Wen Ying Gamba thereafter had
not valid claim to ownership. More to the point, the Defendants did not present any evidence
proving that Defendant Wen Ying Gamba had a valid claim to ownership in 1993. To the contrary,
Defendants, including Wen Ying Gamba, maintained throughout trial that the Defendant Father
always owned everything. Accordingly, they conceded that Defendant Wen Ying Gamba did not
have a valid claim to ownership in 1993, and indisputably failed to establish that Defendant Gamba
was ever a legitimate, valid, or just creditor, such that the 1993 conveyances do not constitute
"immoral" or "unconscionable" conduct.
Again, the jury correctly resolved the issues of fact pertinent to Defendants' unclean hands
defense, and did so based upon the overwhelming weight of the evidence (including Defendants'
own testimony). Defendants have almost no likelihood of successfully showing in post-judgment
motion practice that the jury was presented with "no valid line of reasoning and permissible
inferences which could possibly lead rational men [or women] to the conclusion reached by the
jury on the basis of the evidence presented at trial." Defendants' motion should be denied.
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C. The doctrine of unclean hands is in applicable because defendants were not injured by the
1993 conveyances.
The affirmative defense of "unclean hands" is only applicable "when the conduct relied on
is directly related to the subject matter in litigation and the party seeking to invoke the doctrine
was injured by such conduct" (Sutter v Lane, 61 AD3d 1310, 1313 [3d Dept 2009], quoting
Mehltnan v Avrech, 146 AD2d 753, 754 [2d Dept 1989]; Rooney v Slomowitz, 11 AD3d 864, 868
[3d Dept 2004]). Here, neither the Defendant Father nor Defendant Wen Ying Gamba were injured
by the 1993 conveyances. This is obviously true for the Defendant Father, who directed the
conveyances and obtained title to the Properties thereunder. This is also true for Defendant Wen
Ying Gamba. Again, Defendants (including Wen Ying Gamba) claimed throughout trial that the
Defendant Father always owned everything — including during the time when Defendant Wen
Ying Gamba was threatening and prosecuting the 1990s litigation. Defendants thus conceded that
Defendant Wen Ying Gamba did not have a valid claim to ownership in 1993. Defendant Wen
Ying Gamba cannot have it both ways. She maintained throughout trial that the Defendant Father
was the true owner of the Properties at all times prior to 2015. If that were true, she could not in
any way have been injured by a conveyance of title to the Properties to the Father in 1993 (or at
any time).
Furthermore, the 1993 conveyances were not hidden from Defendant Wen Ying Gamba —
she was able to add the Defendant Father as a defendant to her 1990s litigation, and to assert her
constructive trust claim against him just as she otherwise would have against Patty. Critically, as
Wen Ying Gamba conceded on cross-examination, her constructive trust claims against the
Saratoga Properties were dismissed by Decision and Order of Supreme Court, Suffolk County,
dated October 19, 1995, based upon the Court's finding that such claims must be pursued in
Saratoga County pursuant to CPLR 507. That dismissal was "without prejudice to plaintiffs
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repleading their complaint and instituting a separate action in the appropriate forum." As she
conceded on cross-examination, Defendant Wen Ying Gamba never pursued her constructive trust
claim in Saratoga County, and thereafter settled in 1997. Given that Defendant Wen Ying Gamba
voluntarily abandoned her constructive trust claim against the Saratoga Properties, Defendants are
unable to establish that Defendant Wen Ying Gamba was injured by virtue of the 1993
conveyances.
Because Defendants did not establish that they were injured by the 1993 conveyances,
Defendants did not meet their burden on the affirmative defense of unclean hands, and the jury
correctly resolved that defense in its verdict.
D. Defendants failed to prove unclean hands because the Defendant Father directed that
Plaintiff Patty perform the 1993 conveyances.
All three Plaintiffs testified that the Defendant Father was intimately involved in the
decision to effectuate the 1993 conveyances. Plaintiff Iris Lu testified, in no uncertain terms, that
it was the Defendant Father's idea to have the Properties conveyed to him, telling the jury that the
Defendant Father expressly told Iris and Patty to put the Properties in his name because it would
be "safer than a bank." Furth
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FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF SARATOGA WEN MEI LU, CHIN CHUNG LIN LU, LI HUA LU, and LU HOLDING, LLC, Index No.: 2016-2946 Plaintiffs, Hon. James E. Walsh -against- WEN YING GAMBA, YUEN HSIANG LU, and CHUEN LOU, LLC, Defendants. PLAINTIFFS' MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS' MOTION TO CONTINUE THE RECEIVERSHIP WHITEMAN OSTERMAN & HANNA LLP Attorneys for Plaintiffs One Commerce Plaza Albany, New York 12260 (518) 487-7600 Of Counsel: Jon E. Crain, Esq. 1 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 TABLE OF CONTENTS TABLE OF AUTHORITIES iii PRELIMINARY STATEMENT 1 ARGUMENT 4 I. CONTINUATION OF A RECEIVERSHIP BY SUPREME COURT IS INAPPROPRIATE FOLLOWING THE JURY VERDICT; CPLR 6401 PROVIDES THAT THE RECEIVERSHIP SHALL TERMINATE UPON FINAL JUDGMENT 4 II. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW THAT CONTINUATION OF THE RECEIVERSHIP IS NECESSARY TO PROTECT DEFENDANTS FROM IRREPARABLE HARM 4 A. Defendants have not established that release of the rental monies currently held by the Receiver would cause Defendants irreparable harm 5 B. Defendant have not established that they would suffer irreparable harm if the receivership over the Duo Property were terminated 6 C. Defendants have not established that they would suffer irreparable halm if the receivership over the Hibachi Property were terminated 6 III. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW A LIKELIHOOD OF SUCCESS ON THE MERITS OF THEIR POST-JUDGMENT MOTIONS 6 A. The jury resolved issues of fact based upon the weight of the credible evidence 7 B. The Defendants failed to prove that Defendant Wen Ying Gamba had legitimate claims to ownership of the Properties in or around 1993 8 C. The doctrine of unclean hands is in applicable because defendants were not injured by the 1993 conveyances 11 D. Defendants failed to prove unclean hands because the Defendant Father directed that Plaintiff Patty perform the 1993 conveyances 12 F. The doctrine of unclean hands is inapplicable to Plaintiffs' claim for a constructive trust based upon the time, work and effort transferred into the Properties, both before and after the 1993 conveyances to the Father 14 IV. THE EQUITIES WEIGH HEAVILY IN FAVOR OF PLAINTIFFS 15 CONCLUSION 16 2 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 CERTIFICATION OF COMPLIANCE WITH UNIFORM CIVIL RULE 202.8-b 17 ii 3 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 TABLE OF AUTHORITIES State Cases Annunziata v City of New York, 175 AD 3d 438 [2d Dept 2019] 7 Baker v Clinton Cty., 134 AD3d 1218 [3d Dept 2015] 7 Baker v Harrison, 180 AD3d 1210 [3d Dept 2020] 8 Blueberry Invs. Co. v Ilana Realty Inc., 184 AD2d 906 [3d Dept 1992] 14 Cliff v R.R.S. Inc., 207 AD2d 17 [3d Dept 1994] 5 Cohen . Hallmark Cards, 45 NY2d 493 [1978] 7 Cyngiel v Krigsman, 192 AD3d 760 [2d Dept 2021] 5 DiFabio v Omnipoint Communications, Inc., 66 AD3d 635 [2d Dept 2009] 5 Dillon v Dean, 158 AD2d 579 [2d Dept 1990) 12, 13 Dolny v Borck, 61 AD3d 817 [2d Dept 2009] 9 Family-Friendly Media, Inc. v. Recorder Tel. Network, 74 AD3d 738 [2d Dept 2010] 5 Farino v Farino, 88 AD2d 902 [2d Dept 1982] 9 Festinger v Edrich, 32 AD3d 412 [2d Dept 2006] 10 Guggenheim v Lieber, 42 AD2d 778 [2d Dept 1973] 9 111 4 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 Jedlicka v JSPOL Invs. Corp., 174 AD2d 652 [2d Dept 1991] 12, 13, 14 Mehlman v Avrech, 146 AD2d 753 [2d Dept 1989] 11 Olszowy . Norton Co., 159 AD2d 884 [3d Dept 1990] 7 Rooney v Slomowitz, 11 AD3d 864 [3d Dept 2004] 11 Rowland v Dushin, 82 AD3d 738 [2d Dept 2011] 5 Sutter v Lane, 61 AD3d 1310 [3d Dept 2009] 11 Ta Chun Wang v Chun Wong, 163 AD2d 300 [2d Dept 1990] 10 Tooley v Corp, 63 AD3d 1607 [4th Dept 2009] 9 Trager v Vigliotti, 42 AD2d 912 [2d Dept 1973], affd 35 NY2d 865 [1974] 8 Trump on the Ocean, LLC v Ash, 81 AD3d 713 [2d Dept 2011] 5 Whalen v Gerzof, 206 AD2d 688 [3d Dept 1994] 13 Statutes and Regulations CPLR 6401 3, 4 CPLR 6401(a) 4 Uniform Civil Rule 202.48 4 iv 5 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 PRELIMINARY STATEMENT Plaintiffs Wen Mei Lu ("Iris"), Chin Chung Lin Lu ("Mrs. Lu" or the "Mother"), Li Hua Lu ("Patty"), and Lu Holding, LLC ("Lu Holding") (collectively, "Plaintiffs") respectfully submit this memorandum of law in opposition to Defendants Wen Ying Gamba ("Gamba"), Yuen Hsiang Lu ("Mr. Lu" or the "Father"), and Chuen Lou, LLC's (collectively, "Defendants") motion to continue the receivership notwithstanding the jury verdict in Plaintiffs' favor. Defendants' motion should be denied its entirety, for the reasons set forth below. As the jury has now determined, prior to April 2015, and at all times thereafter, Plaintiffs were the true and rightful owners of the restaurant property located at 175 South Broadway in Saratoga Springs (the "Duo Property") and the restaurant property located at 3310 South Broadway in Saratoga Springs (the "Hibachi Property") (together with the Duo Property, the "Properties"). The Properties were the life work of the Plaintiffs, particularly Iris and Patty Lu, and their only source of income. The Defendants, knowing this, nonetheless endeavored to deprive Plaintiff of the Restaurant Properties (during a time when two of the three Plaintiffs had fallen into ill health). As a result, Plaintiffs have been deprived of the Properties and the income therefrom for over six years now. Defendants' malfeasance has caused financial devastation to Plaintiffs. As set forth in Iris Lu's accompanying Affidavit, Plaintiffs' debts — incurred as a result of this litigation and to cover Plaintiffs' living and medical expenses the past six years — well exceed the rental income currently held by the Receiver. Now, after six years of litigation culminating in a two-week trial, a jury has spoken and justice has been rendered. Enough is enough. Plaintiffs are entitled to immediate possession of the Properties, prompt tettnination of the receivership, and delivery of the funds held by the receiver. Defendants' motion seeks an indefinite continuation of the receivership while Defendants pursue a motion for judgment notwithstanding the verdict (a process likely to take at least six 6 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 months under the current briefing schedule) and "long enough to permit defendants to request that the Appellate Division maintain the Receiver during the pendency of any appeal" (a process which could take years). A post-verdict receivership is an extraordinary remedy. In fact, Defendants are not able to identify a single New York case continuing a receivership following a jury verdict. This is because there are none. Defendants' motion provides no valid basis for the Court to issue such an extraordinary and harsh remedy. First, Defendants have failed to show that a receivership is necessary to protect them from irreparable harm. Upon entry of judgment on the jury's verdict, Plaintiffs obviously intend to maintain the Properties to the utmost level of care, and to take all steps necessary to preserve their value. Accordingly, there is no need for a receiver. At any rate, following the conclusive jury verdict, Defendants have no property interest in the Properties that could be harmed. Even if they did, any harm caused by Plaintiffs' collection of rents and possession of the Properties would be compensable by monetary damages, and thus not irreparable. Defendants effectively concede this with respect to the Duo Property. Defendants also do not contend that release of the monies held by the Receiver, in and of itself, could not pose irreparable harm, as a matter of law. The only argument proffered by Defendants regarding irreparable harm is to meekly assert that they might be harmed if a new tenant were brought into the Hibachi Property. The encumbrance of a property by a lease is compensable by monetary damages (assuming it is even actionable). More to the point, the presence of a paying tenant in the long-vacant Hibachi Property would not harm the Property. Second, Defendants do not have a likelihood of success on the merits of their post-verdict motions or appeals. In this regard, Defendants continue to hang their hats entirely on their ill-fated "unclean hands" defense. As set forth below, Defendants failed to prove that defense as a matter 2 7 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 of law. Even more to the point, the defense presented factual issues, which the jury (correctly) resolved. A jury verdict is sacred. Defendants cannot come close to meeting the extraordinarily high burden they would need to meet to overturn the jury's decision. Finally, the equities weigh heavily in Plaintiffs' favor. As the jury determined, Plaintiffs have always been the true owners of the Properties. Accordingly, it is now beyond dispute that Defendants' conduct has deprived Plaintiffs of Plaintiffs' Properties, and the income therefrom, for over six years. Defendants' motion is not simply another example of the "shoe being on the other foot," as Defendants state. The receivership was initially necessary because Defendants were actively trying to evict Duo, and were demonstrating a manifest disregard of requisite maintenance. The receivership was put in place for the pendency of this action. This action has now been resolved by a jury verdict, following a two-week trial. Defendants' motion completely ignores the weight of the jury's verdict, which conclusively resolved the parties' competing claims to ownership of the Properties. Because those claims have now been resolved by a jury, the receivership is no longer warranted and must terminate pursuant to CPLR 6401. Defendants have inflicted more than enough financial harm on Plaintiffs. Defendants' motion is a transparent attempt to punitively deprive Plaintiffs of much-needed funds following the jury's decision, and it should not be countenanced by this Court. If Defendants' motion were granted (indeed, even if the receivership were only continued while post-verdict motions were resolved, a process which will take approximately six months), Plaintiffs would likely face bankruptcy in the interim. Enough is enough. Defendants' motion must be denied. 3 8 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 ARGUMENT I. CONTINUATION OF A RECEIVERSHIP BY SUPREME COURT IS INAPPROPRIATE FOLLOWING THE JURY VERDICT; CPLR 6401 PROVIDES THAT THE RECEIVERSHIP SHALL TERMINATE UPON FINAL JUDGMENT. CPLR 6401 provides that a receivership "shall not continue after final judgment." Judgment on the jury verdict does not wait for resolution of post judgment motion practice — judgment must enter promptly following the verdict, consistent with the procedure set forth in Uniform Civil Rule 202.48. The procedure is clear. Judgment should enter promptly, and that judgment should terminate the receivership. To this point, the jury verdict conclusively resolved the parties' competing claims to ownership. While post-verdict motions remain, those motions concern severed conversion claims (which do not speak to ownership and thus cannot trigger a receiver). To the extent Defendants intend to seek judgment notwithstanding the verdict as part of post-verdict motion practice, such motion would have no merit, for the reasons set forth in Point II below. Because the jury resolved the parties' competing claims to ownership, the receivership must be terminated. II. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW THAT CONTINUATION OF THE RECEIVERSHIP IS NECESSARY TO PROTECT DEFENDANTS FROM IRREPARABLE HARM. CPLR 6401(a) permits the Court, upon a motion by a person with an "apparent interest" in property, to appoint a temporary receiver of that property where "there is danger" that the property will be "materially injured or destroyed." Here, there is no danger that the Properties will be injured or destroyed. To the contrary, Plaintiffs intend to maintain and/or improve the value of the Properties, as they have always done. Further, the appointment of a temporary receiver "is an extreme remedy" that should be granted "only where the moving party has made a 'clear and convincing' evidentiary showing of 4 9 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 "irreparable loss or waste to the subject property and that a temporary receiver is needed to protect their interests." Cyngiel v Krigsman, 192 AD3d 760 (2d Dept 2021). "Economic loss, which is compensable by money damages, does not constitute irreparable harm." Family-Friendly Media, Inc., 74 AD3d at 739; Cliff v R. R. S. Inc., 207 AD2d 17, 20-21 (3d Dept 1994) (denying preliminary injunction where the moving party set forth claims that could be compensated in money damages). Irreparable injury cannot be remote or speculative; rather, the moving party must demonstrate that the harm alleged is concrete and imminent. See e.g. Family-Friendly Media, Inc. v Recorder Tel. Network, 74 AD3d 738, 739-740 (2d Dept 2010) ("the plaintiff made only conclusory allegations and failed to point to any imminent and non-speculative harm that would befall it"); Trump on the Ocean, LLC v Ash, 81 AD3d 713, 716 (2d Dept 2011). In sum, Defendants' bear the burden of demonstrating not only that the harm alleged is imminent and non-speculative, but also that any injury suffered "would not be compensable by money damages." Rowland v Dushin, 82 AD3d 738, 739 (2d Dept 2011); DiFabio v Omnipoint Communications, Inc., 66 AD3d 635, 637 (2d Dept 2009). Defendants cannot meet this burden. A. Defendants have not established that release of the rental monies currently held by the Receiver would cause Defendants irreparable harm. Here, Defendants have failed to establish, by clear and convincing evidence, that they will suffer non-speculative, imminent harm that could not be compensable by money damages. This is indisputably true with respect to the monies currently held by the Receiver. Even if the receiver were continued pending post-verdict motion practice, Defendants would not suffer irreparable harm by the immediate release of the monies held by the Receiver. This is beyond dispute — monetary damages, by definition, do not constitute irreparable harm. Accordingly, at a minimum, the monies held by the Receiver must be released immediately upon entry of judgment on the jury's verdict. 5 10 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 B. Defendant have not established that they would suffer irreparable haiiii if the receivership over the Duo Property were terminated. Similarly, Defendants' motion papers do not even attempt to argue that continuation of the receivership over the Duo Property is necessary to protect against irreparable harm. This is because they cannot. Indeed, the tenant remains in the property, and Plaintiffs (unlike Defendants, had they won) have no intention of evicting Duo or interfering with the status quo in any way. Accordingly, at a minimum, the receivership over the Duo Property must be promptly terminated (that is, the termination must occur with the judgment to be entered on the jury verdict), and Defendants' motion must be denied with respect to the Duo Property. C. Defendants have not established that they would suffer irreparable harm if the receivership over the Hibachi Property were terminated. This is also true with respect to the Hibachi Property. There, Defendants argue only that, because the Hibachi Property is vacant, Plaintiffs "may enter a long-teiiii lease" and that "Plaintiffs could make material changes to the property or have it encumbered by a tenant." (Defendants' Memorandum of Law in Support p. 2, 4). The fact that something may or could happen is exactly the type of speculation insufficient to demonstrate irreparable injury. Even more to the point, the encumbrance of a property by a lease is compensable by monetary damages (assuming it is even actionable). Defendants' motion must be denied in its entirety. III. DEFENDANTS HAVE NOT MET THEIR BURDEN TO SHOW A LIKELIHOOD OF SUCCESS ON THE MERITS OF THEIR POST- JUDGMENT MOTIONS. With respect to likelihood of success on the merits, Defendants hang their hats entirely on their ill-fated "unclean hands" defense — arguing that it entitles them to either a judgment notwithstanding the verdict or a reversal on appeal. As set forth below, Defendants failed to prove that defense as a matter of law. Even more to the point, the defense presented factual issues which 6 11 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 the jury (correctly) resolved. Defendants cannot come close to the extraordinarily high burden they would need to meet to overturn the jury's decision. A. The jury resolved issues of fact based upon the weight of the credible evidence. Defendants overlook that the issue of unclean hands was presented to the jury during Defendants' case, and completely disregard the weight of a jury verdict ("aside from the verdict, nothing has changed"). To be clear, "for a court to conclude as a matter of law that a jury verdict is not supported by sufficient evidence...it is necessary to...conclude that there is simply no valid line of reasoning and permissible inferences which could possibly lead rational men [or women] to the conclusion reached by the jury on the basis of the evidence presented at trial." Annunziata v City ofNew York, 175 AD 3d 438, 440 (2d Dept 2019), quoting Cohen . Hallmark Cards, 45 NY2d 493 (1978). This test is a "harsh determination that a valid issue of fact does not exist." Id. "Great deference is given to a jury's interpretation of the evidence and findings of fact that have sufficient support in the credible evidence, even if there is evidence leading to a contrary conclusion." Olszowy . Norton Co., 159 AD2d 884, 886 (3d Dept 1990). As set forth more fully below, Defendants are not likely to succeed on the merits of the issue of unclean hands because the jury had more than sufficient evidential support the conclusion that Plaintiffs were entitled to a constructive trust and that Defendants' unclean hands defense was meritless. The unclean hands doctrine applies where "the [plaintiff] is guilty of immoral, unconscionable conduct and even then only when the conduct relied on is directly related to the subject matter in litigation" (Baker v Clinton Cty., 134 AD3d 1218, 1220 [3d Dept 2015]). Defendants, as the party claiming this affirmative defense, bore the burden to prove its defense at trial. Significantly, based on the evidence presented during both Plaintiffs' and Defendant's case, 7 12 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 the jury determined that Plaintiffs were not guilty of immoral or unconscionable conduct related to the Properties. This is a factual determination that cannot be overturned. B. The Defendants failed to prove that Defendant Wen Ying Gamba had legitimate claims to ownership of the Properties in or around 1993. The doctrine of unclean hands does not apply where, as here, property is transferred to avoid meritless claims (such as the claims Defendant Wen Ying Gamba now concedes were meritless in the 1990s, by arguing in this action that the Defendant Father owned everything, always) (see e.g. Baker v Harrison, 180 AD3d 1210, 1210-13 [3d Dept 2020] [finding a viable constructive trust claim where the plaintiff alleged "that he in fact was the purchaser of the property," and that "although he was the actual purchaser of the property, he purposely directed that the deed be put in defendant's name, in an effort to thwart potential creditors"]). In Trager v Vigliotti, 42 AD2d 912, 913 (2d Dept 1973), affd 35 NY2d 865 (1974), for example, the plaintiff "transferred his interest in [a] house to a corporation in order to hinder his former wife's efforts to implement claims for support payments." The trial court ruled that the plaintiff's constructive trust claim was barred by the doctrine of unclean hands, because the plaintiff had admittedly transferred his interest in the house for the purpose of avoiding claims by his former wife. The Appellate Division reversed that decision, and the Court of Appeals affirmed the Appellate Division's decision. The Appellate Division held that "the law is settled": ‘" [t]he rule denying relief to one who conveyed his property to defraud his creditors is inapplicable to prevent recovery of the property so conveyed where the claim which caused him to make the conveyance was never established" (id). Because there was no evidence presented "that the former wife had a valid claim against plaintiff', the doctrine of unclean hands was inapplicable as a matter of law (id. [emphasis supplied]). Again, this decision was affirmed by the Court of Appeals. 8 13 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 This "settled" rule was recently applied in Tooley v Corp, 63 AD3d 1607 (4th Dept 2009). There, the plaintiff transferred land to the defendant, on paper, for the "admitted purpose" of avoiding potential creditors. The Appellate Division ruled that the doctrine of unclean hands did not bar the plaintiff's constructive trust claim, because the defendant "failed to establish" that the plaintiff had "any actual creditor at the time of the transfer" (id, at 1607). This case is the same. At the time of the 1993 conveyances, Plaintiffs had no actual creditors — just a "potential" (id.) claim by Defendant Wen Ying Gamba — a claim that she now concedes was without merit. Yet another example is Guggenheim v Lieber, 42 AD2d 778, 779 (2d Dept 1973). There, the plaintiffs delivered money to the defendants to "hold for him," with the admitted purpose "to avoid the payment of Swiss taxes" (id.). The plaintiff thereafter claimed a constructive trust in the monies, and the defendant asserted the doctrine of unclean hands as a defense. The trial court rejected that defense, because the defendant failed to prove that the potential creditor (the Swiss government) had a valid claim to tax the monies (id. ["we are in agreement with Special Term's rejection of defendants' argument to the effect that relief be denied plaintiff because of the so- called equity doctrine of 'unclean hands'. Defendants point out that plaintiff was attempting to avoid the payment of Swiss taxes by his various investments in this country. Suffice it to say in this regard that Special Term properly noted that there was no evidence of any tax owed to any government."] [emphasis supplied]). All of the cases relied upon by Defendants in their moving papers involve conveyances effectuated to avoid "legitimate," "valid," and/or "just" creditors with established claims (see Dolny v Borck, 61 AD3d 817 [2d Dept 2009] [applying unclean hands to a conveyance to avoid "judgment creditors," i.e., creditors that had already established a valid and enforceable claim against the plaintiff]; Farino v Farino, 88 AD2d 902 [2d Dept 1982] [involving a conveyance to 9 14 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 avoid "a judgment of divorce"]; Festinger v Edrich, 32 AD3d 412, 413 [2d Dept 2006] [transfer to avoid a sentencing of restitution resulting from proven "federal criminal fraud"]; Ta Chun Wang v Chun Wong, 163 AD2d 300, 302 [2d Dept 1990] [the parties agree that the transaction at issue was a "fraudulent scheme"]). Here, unlike all the cases cited by Defendants, the doctrine of unclean hands is inapplicable because the Defendant Wen Ying Gamba was not a legitimate or valid creditor in 1993. To the contrary, all three Plaintiffs testified unequivocally that Defendant Wen Ying Gamba's prior ownership interest was bought out in 1987 and that Defendant Wen Ying Gamba thereafter had not valid claim to ownership. More to the point, the Defendants did not present any evidence proving that Defendant Wen Ying Gamba had a valid claim to ownership in 1993. To the contrary, Defendants, including Wen Ying Gamba, maintained throughout trial that the Defendant Father always owned everything. Accordingly, they conceded that Defendant Wen Ying Gamba did not have a valid claim to ownership in 1993, and indisputably failed to establish that Defendant Gamba was ever a legitimate, valid, or just creditor, such that the 1993 conveyances do not constitute "immoral" or "unconscionable" conduct. Again, the jury correctly resolved the issues of fact pertinent to Defendants' unclean hands defense, and did so based upon the overwhelming weight of the evidence (including Defendants' own testimony). Defendants have almost no likelihood of successfully showing in post-judgment motion practice that the jury was presented with "no valid line of reasoning and permissible inferences which could possibly lead rational men [or women] to the conclusion reached by the jury on the basis of the evidence presented at trial." Defendants' motion should be denied. 10 15 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 C. The doctrine of unclean hands is in applicable because defendants were not injured by the 1993 conveyances. The affirmative defense of "unclean hands" is only applicable "when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct" (Sutter v Lane, 61 AD3d 1310, 1313 [3d Dept 2009], quoting Mehltnan v Avrech, 146 AD2d 753, 754 [2d Dept 1989]; Rooney v Slomowitz, 11 AD3d 864, 868 [3d Dept 2004]). Here, neither the Defendant Father nor Defendant Wen Ying Gamba were injured by the 1993 conveyances. This is obviously true for the Defendant Father, who directed the conveyances and obtained title to the Properties thereunder. This is also true for Defendant Wen Ying Gamba. Again, Defendants (including Wen Ying Gamba) claimed throughout trial that the Defendant Father always owned everything — including during the time when Defendant Wen Ying Gamba was threatening and prosecuting the 1990s litigation. Defendants thus conceded that Defendant Wen Ying Gamba did not have a valid claim to ownership in 1993. Defendant Wen Ying Gamba cannot have it both ways. She maintained throughout trial that the Defendant Father was the true owner of the Properties at all times prior to 2015. If that were true, she could not in any way have been injured by a conveyance of title to the Properties to the Father in 1993 (or at any time). Furthermore, the 1993 conveyances were not hidden from Defendant Wen Ying Gamba — she was able to add the Defendant Father as a defendant to her 1990s litigation, and to assert her constructive trust claim against him just as she otherwise would have against Patty. Critically, as Wen Ying Gamba conceded on cross-examination, her constructive trust claims against the Saratoga Properties were dismissed by Decision and Order of Supreme Court, Suffolk County, dated October 19, 1995, based upon the Court's finding that such claims must be pursued in Saratoga County pursuant to CPLR 507. That dismissal was "without prejudice to plaintiffs 11 16 of 22 FILED: SARATOGA COUNTY CLERK 07/30/2021 04:42 PM INDEX NO. 20162946 NYSCEF DOC. NO. 281 RECEIVED NYSCEF: 07/30/2021 repleading their complaint and instituting a separate action in the appropriate forum." As she conceded on cross-examination, Defendant Wen Ying Gamba never pursued her constructive trust claim in Saratoga County, and thereafter settled in 1997. Given that Defendant Wen Ying Gamba voluntarily abandoned her constructive trust claim against the Saratoga Properties, Defendants are unable to establish that Defendant Wen Ying Gamba was injured by virtue of the 1993 conveyances. Because Defendants did not establish that they were injured by the 1993 conveyances, Defendants did not meet their burden on the affirmative defense of unclean hands, and the jury correctly resolved that defense in its verdict. D. Defendants failed to prove unclean hands because the Defendant Father directed that Plaintiff Patty perform the 1993 conveyances. All three Plaintiffs testified that the Defendant Father was intimately involved in the decision to effectuate the 1993 conveyances. Plaintiff Iris Lu testified, in no uncertain terms, that it was the Defendant Father's idea to have the Properties conveyed to him, telling the jury that the Defendant Father expressly told Iris and Patty to put the Properties in his name because it would be "safer than a bank." Furth