Gordon v. Barrett

• Court: New York Supreme Court
• Writing for the Court: DAVID I. SCHMIDT, J.
• Citation: Gordon v. Barrett, 998 N.Y.S.2d 306(Table) (N.Y. Sup. Ct. 2014)
• Decision Date: 30 September 2014
• Docket Number: No. 15877/13.,15877/13.
• Parties: Gloria GORDON, Ian Dyer, and Nelsie Dyer,, Plaintiffs, v. Clover BARRETT, Malco Realty, Inc., Malco Real Estate, Inc., Joseph Malvasio, a/k/a Joe Malvasio, Commercial Mortgage Fund USA, Inc., KR Management, LLC, and 646 East 96 Street Associates, LLC, Defendants.

998 N.Y.S.2d 306 (Table)

Gloria GORDON, Ian Dyer, and Nelsie Dyer,, Plaintiffs

v.Clover BARRETT, Malco Realty, Inc., Malco Real Estate, Inc., Joseph Malvasio, a/k/a Joe Malvasio, Commercial Mortgage Fund USA, Inc., KR Management, LLC, and 646 East 96 Street Associates, LLC, Defendants.

No. 15877/13.

Supreme Court, Kings County, New York.

Sept. 30, 2014.

Audrey A. Thomas, Esq., Law Offices of Audrey A. Thomas, P.C., Rosedale, Attorney for Plaintiffs.

Martin Silver, P.C., Hauppage, Attorney for Defendant Malco Realty, Inc. (IP).

David K. Fiveson, Esq., Butler, Fitzgerald, Fiveson & McCarthy, New York, for Attorney for Defendant 646 96 Street Associates, LLC (SP).

Clover Barrett, P.C., Brooklyn, pro se.

Opinion

DAVID I. SCHMIDT, J.

This action to set aside deeds to real property arises from an allegedly fraudulent mortgage-foreclosure rescue scheme orchestrated by defendant Joseph Malvasio, a/k/a Joe Malvasio, and the entities that either were affiliated with or acted on his behalf—Malco Realty, Inc., Malco Real Estate, Inc., Commercial Mortgage Fund USA, Inc., and KR Management, LLC (collectively with Mr. Malvasio, Malco). Plaintiff Gloria Gordon (plaintiff¹ ) maintains that, in 2002, she unwittingly and under false pretenses conveyed title to her six-family house at 646 East 96th Street in Brooklyn (Block 4755, Lot 69) (the property) to a Malco entity for a fraction of its value and became Malco's tenant under a lease which contained an option for her to buy back her property at a stated price, but that Malco refused to honor the option and sold her property in Oct. 2012 to defendant 646 East 96 Street Associates, LLC (Associates). As part of this action, she sought to file a notice of pendency, dated Oct. 3, 2013, against the property. The County Clerk initially declined to accept her notice for filing because of a previously expired and vacated notice of pendency (a lapsed notice of pendency) she filed in connection with her 2004 action against Malco under index No. 19828/04 for specific performance of the sale/leaseback agreement and for a declaration that she was the true owner of the property (the prior action). On Oct. 8, 2013, the County Clerk, in accordance with an unopposed order to show cause of the same date, accepted for filing plaintiff's notice of pendency, pending a hearing on plaintiff's motion in Seq. No. 2 to deem such notice valid and effective. In addition, presently before the Court are two pre-answer motions to dismiss, one in Seq. No. 4 served by Associates, and the other in Seq. No. 3 served by plaintiff's former counsel Clover Barrett, Esq. (Barrett² ) in the prior action.

(1)

Initially, the Court will consider Associates' motion to dismiss plaintiff's claims of constructive trust and specific performance (the second and sixth causes of action against it, respectively), which constitute the entirety of plaintiff's claims against it. Associates offers four arguments in support of its request for dismissal. Its first argument for dismissal is that, under CPLR 3211(a)(1), the documentary evidence in the form of a title company's uncertified search establishes Associates' status as a bona fide purchaser for value, given that the proffered title search is silent about a lapsed notice of pendency and the prior action. “A motion pursuant to CPLR 3211(a)(1) to dismiss the complaint on the ground that the action is barred by documentary evidence may be granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, thereby conclusively establishing a defense as a matter of law” (Mendelovitz v. Cohen, 37 AD3d 670, 670 [2d Dept 2007] ). “[T]o be considered documentary,' evidence must be unambiguous and of undisputed authenticity” (Fontanetta v.. Doe, 73 AD3d 78, 86 [2d Dept 2010] ). The proffered title search, which was not “certified” by the searching company (CPLR 4523 ), fails to establish conclusively Associates' status as a bona fide purchaser for value (see JP Morgan Chase Bank, N.A. v. Balliraj, 113 AD3d 821 [2d Dept 2014] ; Miller–Francis v. Smith–Jackson, 113 AD3d 28, 34 [1st Dept 2013] ). Thus, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(1), is denied.

Associates' second argument for dismissal is that, under CPLR 3211(a)(4), the Court may, but need not, dismiss the present action because the prior action is “pending between the same parties on the same cause of action” (Whitney v. Whitney, 57 N.Y.2d 731, 732 [1982] ). Associates, however, was not a party to the prior action. Accordingly, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(4), is denied in the Court's discretion (see A.F. Rockland Plumbing Sup. Corp. v. Hudson Shore Assoc. L.P., 96 AD3d 885, 886 [2d Dept 2012] ).

Associates' third argument for dismissal is that plaintiff's claims against it are time-barred in accordance with CPLR 3211(a)(5). The statute of limitations is generally triggered once a cause of action accrues; i.e., “when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court” (Grynberg v. Giffen, 119 AD3d 526, 527 [2d Dept 2014] [internal quotation marks omitted] ). Associates maintains that plaintiff's conveyance of the property to a Malco entity in 2002 started the limitations clock, which ran out by the time she commenced the present action in 2013. The Court finds that Associates has failed to meet the initial burden of demonstrating, prima facie, that plaintiff's claims against it are time-barred. Plaintiff's claims against Associates arose in 2012 when it acquired the property from Malco, thus making her claims timely (see Carbon Cap. Mgt., LLC v. American Exp. Co., 88 AD3d 933, 932 [2d Dept 2011] ). Hence, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(5), is denied.

Associates' fourth and final argument for dismissal is that plaintiff's complaint fails to state a cause of action against it under CPLR 3211(a)(7). Associates posits that it is a bona fide purchaser for value because, when it recorded its deed to the property from Malco, the notice of pendency in the prior action had already lapsed and plaintiff's sale/leaseback agreement with Malco was never recorded. Associates' position raises a threshold question of whether, at the time of its purchase of the property, it was chargeable with constructive or inquiry notice of plaintiff's competing claim by virtue of her lapsed notice of pendency.

“At common law, the doctrine of lis pendens provided that any person who purchased real property that was the subject of litigation was presumed to have constructive notice of the dispute and was bound by the judgment in the action as if he or she were a party to it” (Kolel Damsek Eliezer, Inc. v. Schlesinger, 90 AD3d 851, 855 [2d Dept 2011], lv dismissed 19 NY3d 919 [2012] ). Thus, a search of all court records was required under the common-law lis pendens doctrine to determine whether real property in which a purchaser sought an interest was the subject of pending litigation (id. ). Because this cumbersome process of searching through court records was seen as an intolerable burden effectively restraining alienation of real property, “the common-law lis pendens doctrine was replaced in most states by statutes requiring the filing of a notice of pendency before a would-be purchaser ... would be charged with notice of the prior interest” (Matter of Sakow, 97 N.Y.2d 436, 440–441 [2002] [internal citation omitted] ).³ This reduced the harshness of the former common-law rule because the notice of pendency is now filed with the records pertaining to the real property itself, and third persons are chargeable with knowledge only of what appears in the records filed in the central registry (see Kolel Damsek Eliezer, Inc., 90 AD3d at 855–856 ). The primary purpose of the notice of pendency procedure set forth in CPLR article 65 is to furnish a substitute for actual notice of pending litigation (see Da Silva, 76 N.Y.2d at 442 ).

On the other hand, once a notice of pendency expires, or is vacated or canceled, it is considered to be a “ity”—a “void” that cannot be filled (see Sakow, 97 N.Y.2d at 442 ).⁴ The authorities are nearly uniform in their conclusion that a lapsed notice of pendency in a subsisting action does not impart inquiry notice to a prospective purchaser despite his or her actual knowledge of the lapsed notice of pendency (see Polish Natl. Alliance of Brooklyn, U.S.A. v. White Eagle Hall Co., 98 A.D.2d 400, 405 [2d Dept 1983] [a lapsed notice of pendency could not affect the rights of contract vendees who acquired their interest in the property after the notice lapsed]; Walter v. State Bank of Albany, 73 A.D.2d 406, 408 [3d Dept 1980] [an expired notice of pendency had no effect as to the parties acquiring and/or perfecting an interest in real property after its expiration]; Bankers Trust Co. of Cal., N.A. v. Bok, 26 Misc.3d 1203[A], 2009 N.Y. Slip Op 52650[U] [Sup Ct, N.Y. County] [“A Notice of Pendency ... only serves as constructive notice while it is valid.... In the case at bar, there was only one Notice of Pendency, which ... expired long before (the property buyer) obtained title.”] [internal citations omitted]; but see Schoepp v. State of NY, 69 A.D.2d 917, 917 [3d Dept 1979] [the defendant was responsible for determining the disposition of the action in which the lis pendens was filed but later expired] ). The leading commentators on the CPLR concur that:

“[O]ne who examines the records and discovers an expired notice is not charged with notice of a pending suit, even if that person actually knows the action has not yet been determined. Likewise, there is no duty to investigate to determine whether the suit is still pending.”

(13–6513 Weinstein–Korn–Miller, N.Y. Civ Prac CPLR ¶ 6513.04).⁵

Thus, even if Associates actually knew of the existence of...