Sasco 1997 NI, LLC v. Zudkewich

This appeal involves the statute of limitations for filing an action under New Jersey's Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34. The main issues are at what point the UFTA's four-year statute of limitations begins to run and at what point a creditor “could reasonably have ... discovered” the transfer in circumstances that permit the one-year tolling of the statute of limitations. The parties to this action under the UFTA are plaintiff, SASCO 1997 NI, LLC (referred to with its predecessors-in-interest as “SASCO”), and defendants, Arik and Rochelle Zudkewich.

In December 1989, SASCO made a loan of $2.9 million to Gateway 195 (Gateway), a partnership formed to develop commercial real estate. Arik Zudkewich was one of the nine general partners of Gateway, each of whom personally guaranteed the loan. On December 6, 1994, Gateway was considered to be in default on the loan and immediate payment of the loan was demanded. Gateway and eight of the nine partners, including Zudkewich, were sued. Several months later Gateway declared bankruptcy.

Although most of the Gateway partners entered into a settlement of the litigation, which was coordinated with the resolution of the bankruptcy, Zudkewich and two other partners failed to settle, so the Law Division suit proceeded against them. Plaintiff obtained a judgment against Zudkewich in the amount of $1,300,347.50 in August 1997.

Plaintiff had ordered an investigative search of Zudkewich's assets when it appeared that plaintiff was about to obtain a default judgment against him. The search revealed that on May 1, 1990, five months after he had guaranteed the Gateway loan, Zudkewich had transferred to his wife for $1 his interest in the couple's residence. The deed was recorded on May 8, 1990. The house was sold for $1.2 million in 1992. Title to the next two homes the couple lived in was in the wife's name only.

On April 23, 1998, SASCO sued Arik and Rochelle Zudkewich, alleging a violation of the UFTA, fraud, conversion, unjust enrichment, and seeking the imposition of a constructive trust. The court granted defendants' motion to dismiss the claims, finding the UFTA claims barred by the statute of limitations.

The Appellate Division affirmed the judgment. The Supreme Court granted SASCO's petition for certification.

* * *

Click on the case caption above for the full text of the court's opinion.

Reversed and remanded.

Unknown

Unknown

None