Following this court’s August 28, 2020 decision on summary judgment on liability in favor of plaintiffs Marvin Sandler, Mimi Berman Sandler, and MiMarv, Inc. f/k/a Independent Living Aids, Inc. (ILA Inc.), the court held an inquest on damages on the first cause of action for breach of the Asset Purchase Agreement (APA), the second cause of action for breach of the 2008 Consulting Agreement (Consulting Agreement), and on the sixth cause of action for fraudulent conveyance pursuant to the Debtor Creditor Law against defendants Independent Living Aids LLC (A Delaware LLC) (ILA-DEL), Independent Living Aids LLC (A New York LLC) (ILA-NY), Economic Solutions, Inc., and Irwin Schneidmill.1 (NYSCEF Doc. No. [NYSCEF] 518, Decision.) The background is set forth in that decision and will not be repeated here except as relevant to the limited issue before the court. (id.) On May 23, 2008, plaintiffs sold ILA Inc. to defendant ILA-DEL for $10 million pursuant to the APA of which $2 million would be paid over a seven-year period pursuant to the Consulting Agreement. (NYSCEF 521, APA; NYSCEF 522, Consulting Agreement.) Schneidmill, a trained accountant, became president of ILA-DEL on May 8, 2008, as well as its managing member, and he also maintained ILA-DEL’s books and records. (NYSCEF 535, Schneidmill Tr at 138:2-139:11, 140:23-141:2.) Schneidmill did not contribute funds to ILA-DEL, but Economic Solutions, a company he owns, contributed 500,000 barter credits. (Id. at 144:10-145:15, 151:17-20.) Each barter credit is valued at $1 and expired in August 2013. (Id. at 151:1-2, 151:23-25.) TD Banknorth, N.A. (Bank) financed the 2008 transaction. (NYSCEF 418, Commercial Loan.) The Bank required security in the amount of $450,000 which plaintiffs put up on certain conditions, but the security was never returned to plaintiffs. (NYSCEF 317, Pledge Agreement between ILA-DEL and Bank, which plaintiffs signed as pledgor.) Instead, when defendants suffered financial difficulties, Schneidmill formed ILA-NY on May 31, 2012 which purchased ILA-DEL’s assets and liabilities for $1 on June 1, 2012. (NYSCEF 523, 2012 APA.) The Bank approved the sale on the condition that the $450,000 security would be applied to reduce the amount of the loan which occurred on September 18, 2012. (NYSCEF 441, Modification Agreement 6.) The predominant dispute for this hearing was to determine whether ILA-DEL’s net worth on May 30, 2012 was negative, as defendants assert, or sufficient to pay plaintiffs all or part of what they are owed. The court held that the burden of proof to establish value rested with plaintiffs. (NYSCEF 529, Court Tr. at 14:9-15:7.) The amount of plaintiffs’ money judgment would be the lower of the net value of the property at the time of the transfer or the amount owed to plaintiffs. (See Manufacturers and Traders Trust Co. v. Lauer’s Fum. Acq., Inc., 226 AD2d 1056, 1057 [4th Dept 1996].) Defendants insist that plaintiffs failed to satisfy their burden. Defendants rely on plaintiffs’ attorney’s statement at a deposition that determining the value of ILA-DEL requires an expert to value ILA-DEL’s assets. Defendants assert that plaintiffs neither retained such an expert nor valued ILA-DEL’s assets at all. Rather, plaintiffs retained Henry Dubrow, a certified public accountant, who had never before been qualified as an expert witness and who testified that he lacked the expertise needed to value ILA-DEL’s assets. Indeed, Dubrow testified that he did not undertake a valuation of a single asset of ILA-DEL. Rather, he was engaged to opine on accepted accounting procedures and whether ILA-DEL followed such procedures and thus, he relied on the book value, an alternative to valuing each asset. (NYSCEF 535, Dubrow Tr78:14-79:7; NYSCEF 314, Dubrow Nov. 15, 2017 Report at 3/9.2) Defendants also challenge the documentary evidence on which plaintiffs rely to prove ILA-DEL’s value on May 30, 2012. For example, the financial documents on which plaintiffs rely are not timely and relate to ILA-NY, not ILA-DE. Defendants insist that plaintiffs cannot prove value through tax documents, a financial statement, and compilation report because they are contradictory and fail to establish a definitive value for any ILA-DEL asset. Finally, defendants object to plaintiffs’ introduction of defendants’ expert report during plaintiffs’ direct case and plaintiffs’ attempt to discredit Mitchell Sorkin, a partner of Raiche Ende Malter & Co. LLP, defendants’ expert. Sorkin concluded that ILA-DEL’s liabilities exceeded tangible assets because he opined that goodwill had no value resulting in a negative net value for ILA-DEL. According to defendants, plaintiffs failed to undermine Sorkin’s analysis. Moreover, defendants assert that, even if the court does not credit Sorkin’s report and testimony, that would not satisfy plaintiffs’ burden to establish a value for ILA-DEL’s assets. Therefore, defendants ask the court to conclude that plaintiffs have failed to satisfy their burden to establish the net value of ILA-DEL’s assets on May 30, 2012. As to the first cause of action, based upon the uncontroverted and credible testimony of plaintiff Marvin Sandler and the documentary evidence, including the 2008 APA, the 2012 APA, and the Bank’s pledge, and modification agreement, plaintiffs have established by a preponderance of credible evidence that they are entitled to judgment against ILA-DEL in the amount of $450,000 for the return of the Collateral, with interest from September 19, 2012, the date that ILA-NY entered into the modification agreement with the Bank, and the Bank took the $450,000 to ILA-DEL’s loan. As to the second cause of action, based upon the uncontroverted and credible testimony of plaintiff Marvin Sandler and the documentary evidence, including the 2008 APA, the Consulting Agreement, and the 2012 APA, plaintiffs have established by a preponderance of the credible evidence that they are entitled to judgment against ILA-DEL in the amount of $1,456,000 for the remaining balance due under the Consulting Agreement with interest from June 1, 2012, when the Consulting Agreement terminated due to change in control (§3(b)) of the Consulting Agreement and the amount due fully accelerated.3 As to the sixth cause of action, plaintiffs established that ILA-DEL’s net value on May 30, 2012 was $2,665,981.75, contrary to defendants’ position that ILA-DEL had a negative net worth and far exceeding the $1 ILA-NY paid ILA-DEL on June 1, 2012. The ILA-DEL Internally Prepared Balance Sheet of May 30, 2012,4 which itemized ILA-DEL’s assets and liabilities transferred to ILA-NY, reports a balance of $2,665,981.75 as of May 30, 2012 before any adjustments were made by Sorkin in 2017. (NYSCEF 532, Balance Sheet at 4/55; NYSCEF 535, Schenidmill Tr at 164:10-14.) Assets total $7,042,561.74, including goodwill in the amount of $3,558,652.83 and inventory of $1,981,794.50. (NYSCEF 532, Balance Sheet at 4/5.) Liabilities total $4,376,709.99 including loans payable to TD Bank in the amounts of $1,989,476.00 and $527,172.00, as well as accounts payable of $694,110.64 and long-term debt of $462,341.86. (Id.) Schneidmill, a trained accountant, testified that he supplied the information used to prepare the balance sheet and that the numbers are true and accurate. (NYSCEF 535, Schneidmill Tr at 138:2-139:11). He also testified that the information used to prepare the balance sheet was obtained from the internal books and records of ILA-DEL, which Schneidmill maintained. (Id. at 165:11-15.) Sorkin stated that there was no evidence of fraud or mismanagement in the books and records. (NYSCEF 531, Sorkin email June 15, 2017 at 114/137.) The court finds this balance sheet to be reliable and the best evidence of the value of ILA-DEL on May 30, 2012 in the absence of an asset valuation or efforts to sell assets such as customer lists or trademarks. (NYSCEF 535, Schneidmill Tr at 211:5-212:3.) Defendants’ former accountant until 2012, Mitchell Sorkin, was called as an expert to testify. The firm Raich Ende Malter & Co LLP, where Sorkin is a partner, was engaged to prepare defendants’ expert report (Report). (NYSCEF 532, Report; NYSCEF 534, Sorkin Tr at 234:22-235:17.) Specifically, the firm was engaged to determine ILA-DEL’s financial condition on May 30, 2012. (NYSCEF 532, Report 2/5.) The balance sheet is contained in defendants’ March 20, 2017 expert report. (Id.) It concludes with a negative net worth for ILA-DEL on May 30, 2012 of ($1,130,937.08). (Id. at 5/56) Two adjustments lead to this adjusted balance with a negative net worth: goodwill of $3,558,652.83 and barter credits of $228,000 are written off. (NYSCEF 532, Report at 2,
