Chambi v. Navarro, Vives & Cia, Ltd.

• Decision Date: 07 June 1983
• Citation: 463 N.Y.S.2d 218,95 A.D.2d 667
• Court: New York Supreme Court — Appellate Division
• Parties: Bahia Mehmet Bin CHAMBI, etc., Plaintiff-Respondent, v. NAVARRO, VIVES & CIA, LTD., et al., Defendants-Appellants, and Helm C.V., et al., Defendants.

Page 218

463 N.Y.S.2d 218

95 A.D.2d 667

Bahia Mehmet Bin CHAMBI, etc., Plaintiff-Respondent, v. NAVARRO, VIVES & CIA, LTD., et al., Defendants-Appellants and Helm C.V., et al., Defendants.

Supreme Court, Appellate Division First Department.

June 7, 1983.

C. Castro, New York City, for plaintiff-respondent.

H.I. Rhine, New York City, for defendants-appellants.

Before KUPFERMAN, J.P., and ASCH, SILVERMAN, MILONAS and KASSAL, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County, entered on April 29, 1982, which denied defendants' motion to cancel a Notice of Pendency filed by plaintiff, reversed, on the law and the facts, without costs, and the motion granted.

According to the complaint, plaintiff, formerly president and sole shareholder of Second 40th St. Corp., which corporation is not a party to this action, and the sole asset of which corporation is a building in Manhattan, pledged her stock in that corporation to certain of the defendants as security for a loan of approximately $607,400.00. Defendants allege that the proceeds of that loan were used to purchase the shares pledged. When plaintiff defaulted on repayment of the loan, a foreclosure sale was held at which defendant Navarro purchased plaintiff's stock.

Plaintiff thereupon commenced this action charging, inter alia, that defendants committed fraud in connection with that foreclosure sale. After plaintiff filed a Notice of Pendency (CPLR 6501) with respect to the building owned by the corporation, defendants moved to cancel the Notice of Pendency (CPLR 6514) on the ground that the judgment demanded would only affect the ownership of stock rather than of real property.

In denying the motion to cancel, Special Term relied on the fact that plaintiff was the sole shareholder of the corporation, and that the building was the corporation's only asset, stating in its memorandum decision that the shares of stock "... equate with the real property itself." In effect, Special Term disregarded the corporate entity.

The filing of a Notice of Pendency is an extraordinary privilege, and the statute conferring it should be strictly construed. See Israelson v. Bradley, 308 N.Y 511, 516, 127 N.E.2d 313. CPLR 6501 directs that a Notice of Pendency may be filed only in an action where the judgment demanded would "affect the title to, or the possession, use or enjoyment of, real property." Defendants are correct in their contention that any judgment obtained in the present action could only affect the title to shares of stock in the corporation that owns the real property. Alternative provisional remedies to be sought in an action of this type could be an attachment or a temporary restraining order or a preliminary injunction. Cf. First Nat. Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630, 290 N.Y.S.2d 721, 237 N.E.2d 868. A Notice of Pendency is used as a shield and not as a sword. See Mageloff v. Sarkin, 52 Misc.2d 737, 740, 276 N.Y.S.2d 708 (Cardamone, J.).

All concur except MILONAS, J., who dissents in a memorandum as follows:

MILONAS, Justice (dissenting).

In my opinion, the order of Special Term should be...