O'Connor, Trustee v. Cotrona et al

Page 1 of 21
UNITED STATES BANKRUPTCY COURT
DISTRICT OF CONNECTICUT
NEW HAVEN DIVISION
In re:
FRANK J. CATRONA, JR.,
Debtor
Case No.: 25-30539 (AMN)
Chapter 7
ANDREA O’CONNOR, CHAPTER 7
TRUSTEE,
Plaintiff
v.
SHERRY A. CATRONA, as Trustee of the
Sherry A. Catrona Revocable Truste
Indenture;
SHERRY A. CATRONA, Individually;
FRANK J. CATRONA, as Trustee of the
Sherry A. Catrona Revocable Trust
Indenture;
9 WEST MAIN PROPERTIES, LLC;
THE MARTONE GROUP, LLC;
MARTONE BUILDING GROUP, LLC;
MARTONE CUSTOM HOMES, LLC; and
NORTHSTAR ENTERPRISES BG, LLC,
Defendants
Adv. Pro. No. 25-03005 (AMN)
Re: AP-ECF Nos. 9, 251
MEMORANDUM OF DECISION
AND AMENDED ORDER REGARDING MOTION TO DISMISS
This memorandum of law explains and amends the Court’s prior Order entered as
AP-ECF No. 25 on March 31, 2026, addressing the defendants’ motion to dismiss the
Chapter 7 Trustee’s complaint for lack of subject matter jurisdiction under Fed.R.Civ.P.
1 “ECF No.” refers to the document number on the court’s electronic case filing docket for the Chapter 7
case, Case No. 23-30539. “AP-ECF No.” refers to the document number on the court’s electronic case
filing docket for the adversary proceeding case, Adversary Proceeding No. 25-03005.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 1 of 21

Page 2 of 21
12(b)(1) and failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). AP-ECF No. 9
(the “Motion”). See Fed.R.Bankr.P. 7012(b)(1), (6). Andrea O’Connor, in her capacity
as Chapter 7 Trustee (the “Trustee”) for the bankruptcy estate of Frank J. Catrona, Jr.
(the “Debtor”), initiated this adversary proceeding against several defendants, including
Sherry A. Catrona in her individual capacity and as trustee and grantor of the Sherry A.
Catrona Revocable Trust Indenture (the “Trust”); Frank J. Catrona, Jr. as co-trustee of
the Trust; 9 West Main Properties, LLC (“9 West”); The Martone Group, LLC (“The
Martone Group”); Martone Building Group, LLC (“Martone Building”); Martone Custom
Homes, LLC (“Martone Custom Homes”); and NorthStar Enterprises BG, LLC
(“NorthStar”) (collectively, the “Defendants.” The Martone Group, Martone Building, and
Martone Custom Homes are the “Martone Defendants”.).
For the reasons explained below, the Motion was granted in part and denied in part.
The Court notes that the prior Order, AP-ECF No. 25, contained a scrivener’s error by
omitting Counts XI, XIV, and XX from the list of dismissed counts. This amended Order
corrects that error and clarifies that the Counts will be treated as indicated below.
Because courts “should freely give leave [to amend] when justice so requires,” and
because the complaint might be amended to identify the transfers sought to be avoided
with the required specificity, leave was granted for the Trustee to file an amended
complaint. Fed.R.Civ.P. 15(a)(2); see also APP Grp. (Can.) Inc. v. Rudsak USA Inc.,
No. 22-1965, 2024 WL 89120, 2024 U.S. App. LEXIS 554, at *10-*11 (2d Cir. Jan. 9,
2024). If an amended complaint is not timely filed, the counts identified for dismissal in
this Order will be dismissed, and the surviving counts will stand.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 2 of 21

Page 3 of 21
Introduction
On July 26, 2024 (the “Petition Date”), the Debtor commenced the underlying
bankruptcy case by filing a voluntary petition under Chapter 7 of the United States
Bankruptcy Code. Case No. 25-30539. According to the complaint, the Debtor serves
as co-trustee alongside Sherry A. Catrona of the Sherry A. Catrona Revocable Trust
Indenture (the “Trust”), which lists its place of business as 5 Laurelwood Drive,
Wallingford, Connecticut (the “Residence”), where the Debtor and Sherry Catrona also
reside.
The Trustee alleges the Debtor is the sole owner and manager of 9 West, a
Vermont-based LLC, and the owner of Martone Custom Homes. According to the
Trustee, when referring to this entity, the Debtor interchangeably used the names
Martone Custom Homes, Martone Group, and Martone Building. The Trustee further
claims the Debtor holds a 50% ownership interest in NorthStar, with Sherry Catrona
possessing the remaining ownership interest in the business.
A. The Trustee’s Complaint
The Trustee filed a complaint commencing this proceeding on July 1, 2025. AP-ECF
No. 1. The Court assumes the counts on pages 21 and 22 of the complaint—numbered
as XIV and XV—were intended to be numbered as XVII and XIX, respectively, and will
refer to them as such. The complaint included 22 total counts. The allegations and
their disposition by the Court are summarized in the following chart:
Count 	Claims 	Disposition
Count I 	Claim seeking a declaratory judgment determining the
extent that 9 West’s assets constitute property of the
bankruptcy estate.
DENIED
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 3 of 21

Page 4 of 21
Count 	Claims 	Disposition
Count II 	Claim seeking a declaratory judgment piercing the
corporate veil and determining 9 West is the Debtor’s
alter ego.
DENIED
Count III 	Claim seeking a declaratory judgment determining the
extent that the Trust’s assets are property of the
bankruptcy estate.
DENIED
Count IV 	Claim seeking a declaratory judgment piercing the
corporate veil and determining the Trust is the
Debtor’s alter ego.
DENIED
Count V 	Claim seeking a declaratory judgment determining the
extent that the Martone Defendants’ assets are
property of the bankruptcy estate.
DENIED
Count VI 	Claim seeking a declaratory judgment piercing the
corporate veil and determining the Martone
Defendants are the Debtor’s alter ego.
DENIED
Count VII 	Claim seeking a declaratory judgment determining the
extent that assets of NorthStar are property of the
bankruptcy estate.
DENIED
Count VIII 	Claim seeking a declaratory judgment piercing the
corporate veil and determining NorthStar is the
Debtor’s alter ego.
DENIED
Count IX 	Claim seeking a declaratory judgment substantively
consolidating the Debtor, 9 West, the Trust, the
Martone Defendants, and NorthStar, and holding them
jointly liable.
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count X 	Claim for fraudulent transfer pursuant to 11 U.S.C. §§
544, 548, 550 and in violation of Conn. Gen. Stat. 52-
552e(a)(1).
GRANTED
pursuant to
Fed.R.Civ.P. 9(b)
Count XI 	Claim for actual fraudulent transfer pursuant to Conn.
Gen. Stat. § 52-552b(3) and VT S. T. 9 § 2288(a)(1).
GRANTED
pursuant to
Fed.R.Civ.P. 9(b)
Count XII 	Claim for constructive fraudulent transfer pursuant to
Conn. Gen. Stat. § 52-552e(a)(2) or VT. Stat. T. 9, §
2288(a)(2).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count XIII 	Claim for constructive fraudulent transfer pursuant to
Conn. Gen. Stat. § 52-552h(a) and VT. Stat. T. 9, §
2291(a).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count
XIV
Claim for actual fraud pursuant to Conn. Gen. Stat. §
52-552h(a), VT. Stat. T. 9, § 2291(a), or Tex. Bus. &
Com. Code. § 24.008(a).
GRANTED
pursuant to
Fed.R.Civ.P. 9(b)
Count XV 	Claim for constructive fraud pursuant to Conn. Gen.
Stat. 52-552e(a)(2), VT. Stat. T. 9, § 2288(a)(2), and
Tex. Bus. & Com. Code. § 24.005(a)(2).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 4 of 21

Page 5 of 21
Count 	Claims 	Disposition
Count
XVI
Claim for constructive fraud pursuant to Conn. Gen.
Stat. § 52-552f(a), VT. Stat. T. 9, § 2289(a), or Tex.
Bus. & Com. Code. § 24.006(a).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count
XVII
Claim for actual fraud pursuant to Conn. Gen. Stat. §
52-552e(a)(1), VT. Stat. T. 9, § 2288(a)(1), or Fla. Sta.
§ 726.105(1)(a).
GRANTED
pursuant to
Fed.R.Civ.P. 9(b)
Count
XVIII
(Numbered
as Count
XIV p. 21)
Claim for constructive fraud pursuant to Conn. Gen.
Stat. § 52-552e(a)(2), VT. Stat. T. 9, § 2288(a)(2), Fla.
Stat. § 726.105(1)(b).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count
XIX
(Numbered
as Count
XV p.22)
Claim for constructive fraud pursuant to Conn. Gen.
Stat. § 52-552f(a), VT. Stat. T. 9, § 2289(a), Fla. Stat. §
726.106(1).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Count XX 	Claim for actual fraud pursuant to Conn. Gen. Stat. §
52-552e(a)(1) or VT. Stat. T. 9, § 2288(a)(1).
GRANTED
pursuant to
Fed.R.Civ.P. 9(b)
Count
XXI
Claim for constructive fraud pursuant to Conn. Gen.
Stat. § 52-552e(a)(2) or VT Stat. T. 9, § 2288(a)(2).
DENIED
Count
XXII
Claim for constructive fraud pursuant to Conn. Gen.
Stat. § 52-552f(a) or VT Stat. T. 9, § 2289(a).
GRANTED
pursuant to
Fed.R.Civ.P. 8
Jurisdiction and Venue
This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §
1334(b) and derives its authority to hear and determine this matter on reference from
the District Court for the District of Connecticut pursuant to 28 U.S.C. §§ 157(a), (b)(1),
and the District Court’s General Order of Reference dated September 21, 1984. This
adversary proceeding is a core proceeding. 28 U.S.C. §§ 157(b)(2)(A) (administration
of the estate), (E) (turnover), (H) (determine, avoid, or recover fraudulent transfers), and
the parties have filed statements consenting to the Court’s entry of a final judgment.
AP-ECF Nos. 24, 27. This adversary proceeding is governed by Federal Rules of
Bankruptcy Procedure Rule 7001, et seq. Venue of this proceeding is proper pursuant
to 28 U.S.C. §§ 1408 and 1409.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 5 of 21

Page 6 of 21
Burdens of Proof and Applicable Law
A. Standing
It is well-settled that a bankruptcy trustee may bring claims founded both on the
rights of the debtor and on certain rights of the debtor's creditors. HK Int’l Funds Invs.
(USA) Ltd., LLC v. Despins (In re Kwok), 2026 U.S. App. LEXIS 9809, 2026 WL 922975,
at 3 (2d Cir. Apr. 6, 2026) (hereinafter the “2026 Kwok Decision”). To assert claims
based upon a debtor's rights, trustees generally must invoke section 541 of the
Bankruptcy Code,2 which sweeps “all legal or equitable interests of the debtor in
property as of the commencement of the [bankruptcy] case” into the estate administered
by the trustee. 2026 Kwok Decision, 2026 WL 922975 at 3; Stadtmauer v. Tulis (In re
Nordlicht), 115 F.4th 90, 105 (2d Cir. 2024) (quoting In re Bernard L. Madoff Inv. Secs.
LLC, 740 F.3d 81, 88 (2d Cir. 2014)). Trustees may also pursue the “rights of the
debtor's creditors” by turning to other sections, including Bankruptcy Code § 544. 2026
Kwok Decision, 2026 WL 922975 at 3. If property is found to be estate property, state
law then governs whether such a claim then belongs to a debtor or creditor. 2026 Kwok
Decision, 2026 WL 922975 at 10 (citing St. Paul Fire and Marine Ins. Co. v. PepsiCo,
Inc., 884 F.2d 688, 700 (2d Cir. 1989)).
Section 544 grants a trustee authority to “assert any generalized claims that would
belong to a hypothetical high-priority lien creditor.” 2026 Kwok Decision, 2026 WL
922975 at 11. A creditors’ claim is a general one if it has “no particularized injury arising
from it . . . [and] could be brought by any creditor of the debtor.” St. Paul Fire, 884 F.2d
at 700-01. By contrast, personal creditors’ claims, which creditors are exclusively
2 Title 11 of the United States Code is the “Bankruptcy Code.”
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 6 of 21

Page 7 of 21
entitled to pursue, belong “only to specific sets of creditors harmed in particular ways.”
2026 Kwok Decision, 2026 WL 922975 at 14 (internal citations omitted).
Generalized alter ego claims may be asserted by a trustee under either Bankruptcy
Code § 541 or § 544. 2026 Kwok Decision, 2026 WL 922975 at 15 (citing St. Paul Fire,
884 F.2d at 700, 704); Despins v. ACA Capital Grp. Ltd. (In re Kwok), 2025 Bankr.
LEXIS 1000, 2025 WL 1185195 at *27 (Bankr. D. Conn. Apr. 23, 2025). Reverse veil-
piercing claims, which seek to establish personal liability of corporate insiders for the
entity’s obligations, are considered generalized claims that a trustee can assert under §
544 as they “increase[e] the basket of assets that could be used to satisfy any and all
liabilities owed by the debtor.” 2026 Kwok Decision, 2026 WL 922975 at 17 (citing In re
Nordlicht, 115 F.4th at 108-09) (internal quotations omitted)).
B. Motions to Dismiss
Rules 8, 9, and 12 of the Federal Rules of Civil Procedure govern motions to dismiss
and apply to this adversary proceeding. See Fed.R.Bankr.P. 7008, 7009, and 7012(b).
i. 	Fed.R.Civ.P. 8
Rule 8(a) requires a complaint to include a “short and plain statement of the claim
showing that the pleader is entitled to relief, and a demand for the relief sought,” to “give
the adverse party a fair notice of the claim asserted so as to enable [them] to answer
and prepare for trial.” Fed.R.Civ.P. 8(a)(2), (3).
ii. 	Fed.R.Civ.P. 9(b)
Rule 8’s requirements are less stringent compared to those imposed under Rule
9(b), which requires parties alleging fraud or mistake to “state with particularity the
circumstances constituting fraud or mistake,” though conditions related to an individual’s
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 7 of 21

Page 8 of 21
mindset or intent may be “alleged generally.” Fed.R.Civ.P. 9(b). The Second Circuit
applies Rule 9(b) to require that a complaint: “(1) specify the statements that the plaintiff
contends were fraudulent, (2) identify the speaker, (3) state where and when the
statements were made, and (4) explain why the statements were fraudulent.” Rombach
v. Chang, 355 F.3d 164, 170 (2d Cir. 2004).
When alleging fraud by multiple defendants, “the complaint should inform each
defendant of the nature of his alleged participation in the fraud” and “make specific and
separate allegations against each defendant.” Conn. Gen. Life Ins. Co. v. BioHealth
Labs., Inc., 573 F. Supp. 3d 671, 686 (D. Conn. Nov. 22, 2021) (emphasis in original)
(internal citations omitted).
iii. 	Fed.R.Civ.P. 12(b)(1)
The Defendants argue the Trustee lacks standing to assert Claims I through VIII,
subjecting them to dismissal pursuant to Fed.R.Civ.P. 12(b)(1). In support of this, they
rely on the so-called Wagoner rule, derived from the Second Circuit’s holding in a 1991
case, Shearson Lehman Hutton, Inc. v. Wagoner, which held that a trustee lacks
standing to assert claims of creditors against third parties alleged to have aided the
Debtor in defrauding creditors. Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d
114 (2d Cir. 1991). Notably, the Wagoner Rule was recently clarified by the Second
Circuit, which distinguished personal creditor claims—which Wagoner bars trustees
from asserting—from general creditor claims—which trustees have standing to pursue
under § 544. 2026 Kwok Decision, 2026 WL 922975, at 13-14.
Rule 12(b)(1) allows for dismissal for lack of subject matter jurisdiction if the
reviewing court lacks the statutory or constitutional power to adjudicate the case.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 8 of 21

Page 9 of 21
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). Under this, courts must
accept the complaint’s factual allegations as true and draw reasonable inferences in
favor of the plaintiff. Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir.
2006) (quoting Sweet v. Sheahan, 235 F.3d 80, 83 (2d Cir. 2000)). The plaintiff bears
the burden of proving subject matter jurisdiction exists by a preponderance of the
evidence. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); Marakova v. United
States, 201 F.3d 110, 113 (2d Cir 2000). In this analysis, courts are not “limited to the
allegations contained in the complaint” and may consider outside material to resolve
disputed jurisdictional facts. Fausat Amoke Ongunbayo v. City of New York, 2013 U.S.
Dist. LEXIS 182820, 2103 WL 6920861, at *12-13 (E.D.N.Y. June 10, 2013); Marakova,
201 F.3d at 113.
iv. 	Fed.R.Civ.P. 12(b)(6)
At this stage, the Court considers the factual allegations contained in the complaint
as true. “On a motion to dismiss under Rule 12(b)(6), a court must assess whether the
complaint ‘contains sufficient factual matter, accepted as true, to state a claim for relief
that is plausible on its face.’” New Jersey Carpenters Health Fund v. Royal Bank of
Scotland Grp., PLC, 709 F.3d 109, 119 (2d Cir. 2013) (quoting Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009)). A claim is plausible on its face if “the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.
The Court must “draw all reasonable inferences in the light most favorable” to the
trustee, as the plaintiff. Iqbal, 556 U.S. at 675. Though the Court must accept the facts
asserted in the complaint as true, this analysis is still a “context-specific task that
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 9 of 21

Page 10 of 21
requires . . . the court to draw on its judicial experience and common sense” in
evaluating its plausibility. Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal,
556 U.S. at 679). Pleadings raising nothing more than a suspicion of a legally
cognizable right of action or containing mere formulaic recitations of the elements of a
cause of action are insufficient to survive a motion to dismiss. Lynch v. City of N.Y., 952
F.3d 67, 74 (2d Cir. 2020); Errato v. Am. Express Co., 646 F. Supp. 3d 402, 408 (D.
Conn. 2022).
C. Requirements for a Complaint by a Trustee Seeking to Avoid Transfers Pursuant
to 11 U.S.C. §§ 544, 548, and 550.
i. 	Bankruptcy Code § 544 (Trustee as Lien Creditor)
Bankruptcy Code § 544 authorizes a trustee to use applicable state law to recover
the proceeds of certain pre-petition avoided transfers for the bankruptcy estate. 11
U.S.C. §§ 544(b)(1); 550. Here, the Trustee seeks to avoid several transfers under the
Connecticut Uniform Fraudulent Transfer Act (‘CUFTA’), which creates state law causes
action for actual and constructive fraudulent transfers. Conn. Gen. Stat. §§ 52-552a, et
seq. Both CUFTA and § 548 empower the trustee to avoid intentional and constructive
fraudulent transfers. Though CUFTA provides a four-year look back period, compared
to the two-year period under § 548, “the standards for avoiding fraudulent transfers
under the two statutes are not ‘materially different’”. Katz v. Anderson (In re Anderson),
623 B.R. 199, 212 (Bankr. D. Conn. 2020) (quoting In re Carrozzella & Richardson, 302
B.R. 415, 419 (Bankr. D. Conn. 2003)).
The Trustee relies on both Conn. Gen. Stat. § 52-552e (actual fraudulent transfer)
and Conn. Gen. Stat. § 52-552f (constructive fraudulent transfer) in her quest to avoid
pre-petition transfers by the Defendants. She must prove the elements of these claims
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 10 of 21

Page 11 of 21
by clear and convincing evidence. In re Carrozzella & Richardson, 302 B.R. at 419-20;
Coan v. Xin Chen (In re LXEng, LLCP), 607 B.R. 67, 88 (Bankr. D. Conn. 2019). Under
CUFTA, claims of actual fraudulent transfer must meet the heightened pleading
standard of Fed.R.Civ.P. 9(b), whereas claims of constructive fraudulent transfer are not
subject to its heightened pleading standards. In re Bernard L. Madoff Inv. Sec., LLC,
454 B.R. 317, 329 (Bankr. S.D.N.Y. 2011).
ii. 	Bankruptcy Code § 548 (Fraudulent Transfers)
Under 11 U.S.C. § 548, a trustee may avoid any transfer of a debtor’s interest in
property made up to two years before the petition date if the debtor did not receive a
reasonably equivalent value for the exchange and was insolvent before or became
insolvent because of the transfer. 11 U.S.C. § 548(a).
To survive a motion to dismiss, a complaint invoking § 548 must plausibly allege four
elements. First, it must establish there was a transfer in a debtor’s interest in property.
Under the Bankruptcy Code, “transfer” is broadly construed to include “each mode,
direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or
parting with property or an interest in property.” In re Neri Bros. Construction Corp., 593
B.R. 100, 141 (2018) (quoting 11 U.S.C. § 548(a)(1)). Second, the transfer must have
occurred within two years prior to the petition date. Third, the debtor must have made
the transfer voluntarily or involuntary. Lastly, the transfer must have been made either
with actual intent to hinder, delay, or defraud creditors under § 548(a)(1)(A), or the
debtor received less than reasonably equivalent value in exchange for the transfer and
was insolvent or undercapitalized pursuant to § 548(a)(1)(B).
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 11 of 21

Page 12 of 21
To establish a constructive fraudulent transfer under § 548(a)(1)(B), proof of
fraudulent intent is not required, but it must be shown that a debtor received less than
reasonably equivalent value in exchange for the transfer and was insolvent at the time
of the transfer, became insolvent as a result, was engaged in business with
unreasonably small capital, or intended to incur debts beyond the debtor’s ability to pay.
11 U.S.C. § § 548(a)(1)(B)(i), (ii).
In determining whether reasonably equivalent value was received in exchange for a
transfer, the court must determine the value of the transferred property and of the
consideration provided to the debtor at the time of conveyance. This calculation need
not be made with exact mathematical precision but must be conducted to support the
equitable purpose of the statute, recognizing that a significant disparity between the
value received and the property transferred causes significant harm to the bankruptcy
estate’s creditors. Kirschner v. Large S’holders (In re Tribute Co. Fraudulent
Conveyance Litig.), 10 F.4th 147, 172 (2d Cir. 2021). This requires an evaluation of the
totality of the surrounding circumstances. Kirschner, 10 F4th at 172. “Equivalent value”
is determined solely based on economic factors, and “emotional benefits” or
“ephemeral, intangible, and psychological benefits” may not be considered. Pereira v.
Wells Fargo Bank, N.A. (In re Gonzalez), 342 B.R. 165, 169 (Bankr. S.D.N.Y. 2006)
(internal citations omitted); 5 COLLIER ON B ANKRUPTCY ¶ 548.05 (Richard Levin & Henry
J. Sommers eds., 16th ed.). The trustee bears the burden of proof to demonstrate lack
of reasonably equivalent value by a preponderance of the evidence. AYH Wind Down
LLC v. Silberstein (In re All Year Holdings Ltd.), 2025 Bankr. LEXIS 367, 2025 WL
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 12 of 21

Page 13 of 21
559695, at *48 (Bankr. S.D.N.Y. 2025) (quoting Breeden v. L.I. Bridge Fund, LLC (In re
Bennett Funding Grp., Inc.), 232 B.R. 565, 570 (Bankr. N.D.N.Y 1999)).
iii. 	Bankruptcy Code § 550
Section 550 provides that if a transfer is avoided under § 544 or § 548, the trustee
may recover the property transferred, or its equivalent value, for the benefit of the
bankruptcy estate. The trustee may recover this from the initial transferee, the entity for
whose benefit the transfer was made, or any immediate or mediate transferee. 11
U.S.C. §§ 550(a)(1), (2).
D. Required Specificity of Pleadings
Courts evaluating fraudulent transfers under Bankruptcy Code § 544 and § 548 must
“focus precisely on the specific transaction or transfer sought to be avoided in order to
determine whether the transaction falls within the statutory parameters of either an
intentional or constructive fraudulent conveyance.” In re Geltzer, 502 B.R. 760, 766
(Bankr. S.D.N.Y. 2013). Intentional and constructive fraudulent transfers are subject to
different pleading standards.
i. 	Actual or Intentional Fraudulent Transfers
Claims for actual or intentional fraudulent transfers are subject to heightened
pleading standards under Fed.R.Civ.P. 9(b), which requires pleading both the
circumstances of the fraud and a transferor’s mental state. Loreley Fin. (Jersey) No. 3
Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160, 171 (2d Cir. 2015). Though allegations of
fraudulent intent may be pled generally, they must still “give rise to strong inference of
fraudulent intent.” Loreley Fin., 797 F.3d at 171 (internal quotations omitted). To
survive a motion to dismiss under 12(b)(6), the pleadings must allow for a reasonable
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 13 of 21

Page 14 of 21
“inference of scienter.” Employee’s Retirement Sys. Of Gov. of the Virgin Islands v.
Blanford, 794 F.3d 297, 306 (2d Cir. 2015). Pleadings must also contain a higher
degree of specificity in identifying the transfers sought to be avoided and generally
should identify “(1) the property subject to the transfer, (2) the timing and, if applicable,
frequency of the transfer, and (3) the consideration paid with respect thereto.” In re
Bernard L. Madoff Inv. Securities, LLC, 458 B.R. 87, 106 (Bankr. S.D.N.Y. 2006)
(quoting Pereira v. Grecogas, Ltd., (In re Saba Enters. Inc.), 421 B.R. 626, 640 (Bankr.
S.D.N.Y. 2009)).
ii. 	Constructive Fraudulent Transfers
Claims for constructive fraudulent transfers are not subject to 9(b)’s particularity
requirement and are instead “based on the transferor’s financial condition and the
sufficiency of the consideration provided by the transferee, rather than fraud.” Geltzer v.
Barish (In re Geltzer), 502 B.R. 760, 766 (Bankr. S.D.N.Y. 2013) (quoting Official Comm.
of Unsecured Creditors of Verestar, Inc. v. American Tower Corp. (In re Verestar, Inc.),
343 B.R. 444, 460 (Bankr. S.D.N.Y. 2006)). Such claims need only satisfy Fed.R.Civ.P.
8(a)’s mandate to plead a “short and plain statement of the claim showing that [the
trustee] is entitled to relief”. Madoff, 458 B.R. at 106. Movants may make “allegations
aggregating transfers into lump sums over several years without identifying the number
of transfers, the dates of the transfers, or the amount of any specific transfer,” but still
requires specificity when identifying the transfer to be avoided and whether the trustee
classifies it as a constructive or actual fraudulent one so that a defendant has “fair
notice of what the [trustee’s] complaint is and the facts upon which it rests.” Madoff,
458 B.R. at 113 (quoting Anwar v. Fairfield Greenwich Ltd., 728 F.Supp.2d 372, 422
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 14 of 21

Page 15 of 21
(S.D.N.Y. 2010)); see also Erickson v. Pardus, 551 U.S. 89, 93 (2007). Though it is
unnecessary to allege every single detail of the transfer in question, a complaint must
provide factual guideposts sufficient to give defendants fair notice of the claim itself. For
example, in Madoff, allegations identifying a transfer of at least $7.3 million from
investment accounts made after April 2004 and transfers between 2002 and 2008 to
pay for personal expenses charged to the defendants’ credit card were permitted,
whereas attempts to avoid transfers identified only as salaries and bonuses between
2001 and 2008 and undated payments made to finance the defendants’ ownership
stake in other entities were not sufficiently specific. Madoff, 458 B.R. at 113-14.
E. Substantive Consolidation
When seeking substantive consolidation, a plaintiff must allege facts showing either:
(i) the operational and financial affairs of the entities are so entangled that accurate
identification and allocation of assets and liabilities cannot be achieved: or (ii) creditors
dealt with the entities as a single economic unit and did not rely on their separate
identities in extending credit. Gordon v. I.M.V. 1290 (In re Mina), 2022 Bankr. LEXIS
1887, 2022 WL 2657481, at *7 (Bankr. N.D.N.Y., July 8, 2022). The “sole purpose of
substantive consolidation is to ensure the equitable treatment of all creditors,” though
this should be “used sparingly” to avoid unfair treatment of creditors that dealt with a
single party without knowing its relationship with the others. Chem. Bank New York Tr.
Co. v. KheeI, 369 F.2d 845, 847 (2d Cir. 1966); In re Augie/Restivo Baking Co., Ltd., 860
F.2d 515, 518 (2d Cir. 1988). When appropriate, courts may “substantively consolidate
debtor and non-debtor entities.” In re Verestar, 343 B.R. at 463.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 15 of 21

Page 16 of 21
Discussion
I. 	Trustee Standing
The Defendants, relying on the now-clarified Wagoner Rule, assert that Counts I
through VIII should be dismissed under Rule 12(b)(1), arguing the Trustee lacks
standing to bring creditors’ claims related to alter ego and equitable ownership. The
Court disagrees. Trustees have standing to assert general claims of creditors. 2026
Kwok Decision, 2026 WL 922975 at 11; In re Kwok, 674 B.R. 679, 699 (Bankr. D. Conn.
June 17, 2025). The Wagoner rule applies to trustees asserting personal creditor
claims. 2026 Kwok Decision, 2026 WL 922975 at 14, n.5 (noting that “Wagoner did not
involve or attempt to interpret section 544.”).
Because the alter ego and equitable ownership claims here could be asserted by
any hypothetical creditor, they are generalized and thus the Trustee has standing to
assert them. 2026 Kwok Decision, 2026 WL 922975 at 15 (“[T]rustees may assert
generalized alter-ego claims either under section 544 or—if those claims also belong to
the estate itself—under section 541” (emphasis in original)). Therefore, the request to
dismiss Counts I through VIII for lack of standing was denied.
II. 	Dismissal Under Fed.R.Civ.P. 8, 9, and 12
For the purposes of this Memorandum of Decision, the Court assumes as true
the facts alleged in the complaint but does not give the same deference to conclusory
statements involving the applicability of law to fact. See Iqbal, 556 U.S. at 678–79.
Upon review of Counts XII, XIII, XV, XVI, XVIII, XIX, and XXII, the Court
concludes they are insufficiently pled under Rule 8. Each of these counts rely on
formulaic recitations of statutory elements under § 548 unsupported by the factual
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 16 of 21

Page 17 of 21
assertions necessary under Rule 8(a). For example, Count XVI states that various
transfers involving the Martone Defendants were constructive fraudulent transfers but
does not identify transfers the Trustee seeks to avoid. The Trustee does not provide
details supporting the assertion that the Debtor did not receive reasonably equivalent
value in exchange for the transfers, such as details on the fair market value of the
transferred property or terms of the exchange. Similarly, the complaint’s bare assertion
that the Debtor was insolvent at the time of the transfers (or became insolvent as a
result) is unsupported by subordinate facts or other financial indicia. Absent this, a
showing of constructive fraud is not plausible under Rule 8(a), and as a result the
Motion was granted as to these arguments against Counts XII, XIII, XV, XVI, XVIII, XIX,
and XXII, with the Trustee granted leave to amend.
Under Rule 9(b)’s heightened pleading requirements, Counts X, XI, XIV, XVII and
XX are also insufficiently pled because they fail to identify with the required specificity
transfer dates or amounts, fail to provide support demonstrating insolvency, and do not
offer support for the necessary finding of fraudulent intent. The general allegations are
devoid of specific transactional details, and do not provide fair notice or permit a
reasonable inference of fraud consistent with Rule 9(b)’s requirements. Therefore, the
Motion was granted as to these arguments against Counts X, XI, XIV, XVII, and XX, with
the Trustee granted leave to amend.
III. 	Dismissal for improperly seeking nunc pro tunc relief
The Defendants’ argument that Counts XII, XV, XVIII, and XXI improperly seek
nunc pro tunc relief by attempting to retroactively treat pre-petition transfers made by
non-debtor entities as property of the bankruptcy estate is well-taken. Such relief refers
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 17 of 21

Page 18 of 21
to the court’s power to enter an order with retroactive effect, a remedy reserved only for
rare cases and used to correct the record but not to alter the parties’ substantive rights.
In re Buckskin Realty, Inc., 525 B.R. 4, 8 (E.D.N.Y. Bankr. Jan. 6, 2015) (internal
citations omitted). The Defendants contend that such relief is impermissible because it
would effectively alter the historical status of the entities’ assets without first adjudicating
the substantive consolidation or alter ego claims raised in Counts I through III.
The Defendants’ argument that seeking nunc pro tunc relief is premature is itself
premature under Rule 12(b)(6), as it asks the Court to evaluate the merits of Counts I
through III. A plaintiff may plead alter ego or equitable ownership and simultaneously
plead fraudulent transfer claims targeting transfers made by entities alleged to be a
debtor’s alter ego. See Kwok v. Meta Platforms, Inc. (In re Kwok), 2025 Bankr. LEXIS
1802, 2025 WL 2167577, at *12 (Bankr. D. Conn. July 29, 2025). The mere coexistence
and interrelated nature of the pleadings do not subject them to dismissal at this stage.
Similarly, the Defendants seek dismissal of Counts X, XI, XIV, XV, XVIII, XX, and
XXI on the basis that they assume judgment in favor of the Trustee on Counts I through
III. Because this would similarly require the Court to evaluate the merits of Counts I
through III, the Court also denies this request. For these reasons, the Motion was
denied as it pertains to these arguments against Counts X, XI, XII, XIV, XV, XVIII, XX,
and XXI.
IV. 	Dismissal for “lumping” multiple defendants
The Defendants argue that by “lumping” multiple Defendants together and failing
to delineate each party’s role or specific transfers between the parties, the pleadings
under Count X are insufficient. Though the pleadings contain deficiencies that warrant
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 18 of 21

Page 19 of 21
further clarification and particularization, the Trustee is not prohibited from pleading the
joint defendants are the initial transferees in fraudulent transfer claims so long as
sufficient detail is provided as to inform each defendant of its alleged involvement. See
Despins v. Agora Lab, Inc. (In re Ho Wan Kwok), 2025 WL 699666, 2025 Bankr. LEXIS
510, at 64 (D. Conn. Bankr. Mar. 4, 2025).
The Court agrees that Count X does not meet this standard. The complaint refers
broadly to “transfers” but does not indicate specific dates, transfer amounts, or
adequately differentiate between the parties. This amounts to the type of “vague
allegations about the defendants as a unit” that are inadequate to satisfy the pleading
requirements under Fed.R.Civ.P. 9(b) and therefore as it pertains to this argument
against Count X, the Motion was granted with leave to amend.
V. 	Substantive Consolidation
The Defendants also argue the complaint lacks specific factual assertions to
meet the necessary burden of proof for substantive consolidation. The Court agrees.
Count IX seeks a declaratory judgment substantively consolidating all Defendants to
hold them jointly liable for claims against the Debtor, pled as an alternative to the veil-
piercing and alter ego theories. While the complaint alleges the Defendants made
various transfers for “no consideration,” it does not connect those transfers to a factual
showing of pervasive entanglement necessitating substantive consolidation. Nor does it
allege facts indicating that creditors treated the entities as a single economic unit in
extending credit or other conduct suggesting a reliance on a unified enterprise. See In
re Mina, 2022 Bankr. LEXIS 1887 at *8-*9 (finding the Trustee had adequately pled a
cause of action for substantive consolidation by stating that one of the Debtor’s
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 19 of 21

Page 20 of 21
companies had reduced a debt it was owed in exchange for forgiveness of past-due
rent owed by two separate companies also solely owned by the Debtor). Absent such
allegations, the complaint does not plausibly state a claim for substantive consolidation
under either prong as presently pled, and the Motion was granted as it pertains to this
argument against Count IX with leave to amend.
VI. 	Conn. Gen. Stat. § 33-673c
The Defendants seek dismissal of Counts III through VI for lack of colorable basis,
arguing that that the Trust, Martone Group, and Martone Building are Connecticut
domestic entities, meaning, pursuant to Conn. Gen. Stat § 33-673c, they cannot be held
liable “for a debt, obligation or other liability of an interest holder of such entity based
upon a reverse veil piercing doctrine.”
Reverse veil piercing allows a third-party to hold a corporation liable for the debts of
an individual shareholder. In re Woldeyohannes, 665 B.R. 543, 568 (Bankr. D. Conn.
2024). The Motion’s contention rests on factual predicates, including the organizational
status, governance, ownership, and operational activities of the entities that cannot be
resolved on a motion to dismiss. Whether Conn. Gen. Stat. § 33-673c bars the
Trustee’s claims presents a mixed question of law and fact that is not suited for
resolution at this stage. The Motion was denied as it pertains to these arguments
against Counts III through VI on this basis.
Conclusion
The Court entered its Order at AP-ECF No. 25, which is amended here. 	All other
contentions by the parties were considered and found to be without merit.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 20 of 21

Page 21 of 21
Pursuant to the Scheduling Order entered as AP-ECF No. 29, the deadline for the
plaintiff to file an amended complaint is May 22, 2026, the deadline for the defendants
to file a response to an amended complaint is June 12, 2026, and a continued Pre-Trial
Conference will be held on June 23, 2026, at 2:00 p.m.
Case 25-03005 Doc 30 Filed 04/30/26 Entered 04/30/26 08:54:44 Page 21 of 21