SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION – [APPROPRIATE DEPARTMENT]
ROBERT WILSON,
Plaintiff-Appellant,
-against-
UNIQUE LOGISTICS INTERNATIONAL, INC.,
Defendants-Respondents.
Index No.: 631623/2024
NOTICE OF APPEAL AND MEMORANDUM OF LAW IN SUPPORT OF REVERSAL OF DISMISSAL ORDER
________________________________________
PRELIMINARY STATEMENT
Plaintiff-Appellant respectfully appeals from the Order of the [Trial Court], dated [Insert Date], which dismissed Plaintiff’s complaint on procedural grounds. The lower court erred in dismissing the action without addressing the substantive allegation that the defendants, by and through their current management, lack standing to appear as representatives of the corporate entity due to their fraudulent conveyance and manipulation of shareholdings. Under New York law, standing is jurisdictional and cannot be assumed where control is obtained through unlawful means. The decision below must be reversed.
STATEMENT OF FACTS
Plaintiff commenced this action alleging, among other claims, breach of fiduciary duty, fraudulent conveyance, and corporate mismanagement arising from a bad faith transfer of shares orchestrated by the Defendants, who now purport to control the corporate entity. The transfer at issue was executed without proper shareholder or board authorization and lacked lawful consideration, thereby violating both statutory and common law standards. Moreover, Defendants utilized convertible promissory notes bearing effective interest rates exceeding 25%, which constitutes criminal usury under New York law. Pursuant to the joint ruling of the U.S. Court of Appeals for the Second Circuit and the New York Court of Appeals in Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021), such instruments are void ab initio. The court in Adar Bays held that any loan agreement with an effective interest rate above New York’s criminal usury threshold is unenforceable as a matter of law, regardless of the label or structure of the transaction.
Despite these well-pleaded allegations, the trial court dismissed the action on procedural grounds, finding that the Plaintiff failed to state a claim. However, this ruling overlooks well-established New York precedent requiring courts to evaluate standing—particularly where allegations of fraud or illegality in the acquisition of corporate control are central to the dispute.
ARGUMENT
I. THE DEFENDANTS LACK STANDING DUE TO FRAUDULENT CONVEYANCE OF THEIR SHAREHOLDINGS
New York courts have consistently held that parties who obtain control over a corporation through fraud or improper acts cannot benefit from that control to shield themselves from judicial scrutiny.
Under Business Corporation Law (BCL) § 720, shareholders and directors have the right to bring actions against officers or directors for wrongdoing, including fraudulent or ultra vires acts. Fraudulent conveyances designed to manipulate corporate control are subject to challenge under Debtor and Creditor Law § 273-a, § 276, and § 278, and may result in the invalidation of transfers of interests or rights, including shares.
In Matter of Jamaica Assocs. v. Santos, 85 N.Y.2d 20 (1995), the Court of Appeals emphasized that “[c]courts will not permit the corporate form to be used as a shield for fraud or illegality.” Similarly, in TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335 (1998), the Court held that equitable principles permit courts to look beyond procedural formalities where parties seek to gain procedural advantage through fraudulent behavior.
Here, Defendants’ control is rooted in fraudulent transactions that undermine their legitimacy and preclude any assertion of standing. The doctrine of unclean hands, codified and supported in New York jurisprudence, also bars Defendants from asserting rights gained through inequity. (McConnell v. Commonwealth Pictures Corp., 7 N.Y.2d 465 (1960)).
II. THE COURT BELOW ERRED IN DISMISSING THE ACTION WITHOUT A FACTUAL DETERMINATION OF THE STANDING ISSUE
It is well-settled that standing is a threshold issue that must be resolved based on factual context. In Caprer v. Nussbaum, 36 A.D.3d 176 (2d Dep’t 2006), the Appellate Division held that “[s]standing does not depend solely on procedural status but must be evaluated in light of allegations regarding control, fraud, and entitlement to relief.”
Dismissing an action where the core issue is fraudulent corporate control effectively immunizes bad actors and undermines the integrity of corporate governance. The trial court’s summary dismissal deprived Plaintiff of due process and an opportunity to be heard on these critical matters.
III. EQUITY DEMANDS REVERSAL TO PREVENT AN INJUSTICE
Courts of equity will not countenance the use of formal legal status to commit or shield fraudulent conduct. As reaffirmed in Simonds v. Simonds, 45 N.Y.2d 233 (1978), “[e]equity intervenes to prevent injustice, especially where legal remedies are inadequate.”
The dismissal below allows Defendants to escape scrutiny not on the merits but based on an assumption of legitimacy that is precisely what Plaintiff seeks to disprove. The appellate court should reverse the lower court’s order and remand the matter for discovery and a determination on the merits.
CONCLUSION
For the foregoing reasons, the Plaintiff-Appellant respectfully requests that this Court:
1. Reverse the order of dismissal entered by the trial court;
2. Reinstate the complaint in its entirety; and
3. Remand the case for further proceedings on the merits, including discovery into the alleged fraudulent conveyance and improper assertion of corporate standing by Defendants.
4. Issue a restraining order preventing the current management from selling the company and misappropriating 99.3% of the proceeds to the exclusion of the lawful shareholder.
Dated: May 2, 2025
Respectfully submitted,
Robert Wilson
19 Mary’s Lane, Southampton NY 11968
631-819-8252
scfn34@gmail.com
Prose-Appellant
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