Piller ex rel. Fallsburg Estates LLC v. Princeton Realty Assocs. LLC

• Decision Date: 06 June 2019
• Docket Number: 526497
• Citation: 173 A.D.3d 1298,104 N.Y.S.3d 344
• Parties: Abraham PILLER, Individually and on Behalf of Fallsburg Estates LLC, Respondent, v. PRINCETON REALTY ASSOCIATES LLC et al., Defendants, and Moshe Schwimmer et al., Appellants.
• Court: New York Supreme Court — Appellate Division

173 A.D.3d 1298
104 N.Y.S.3d 344

Abraham PILLER, Individually and on Behalf of Fallsburg Estates LLC, Respondent,
v.
PRINCETON REALTY ASSOCIATES LLC et al., Defendants,
and
Moshe Schwimmer et al., Appellants.

526497

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: April 24, 2019
Decided and Entered: June 6, 2019

Kudman Trachten Aloe LLP, New York City (Paul H. Aloe of counsel), for appellants.

Asher Fensterheim, PLLC, White Plains (Kelly Paul Peters of counsel), for respondent.

Before: Lynch, J.P., Mulvey, Devine, Aarons and Rumsey, JJ.

MEMORANDUM AND ORDER

Mulvey, J.

173 A.D.3d 1299

In 2001, to satisfy a debt and facilitate plans for a joint property development, defendant Moshe Schwimmer transferred to plaintiff a 50% interest in defendant Fallsburg Estates LLC (hereinafter Fallsburg), which owned approximately 220 acres of land in Sullivan County (hereinafter the property). Moshe Schwimmer agreed that the property would be free and clear of all liens and encumbrances, even though a 1999 mortgage then encumbered the property. In 2006, plaintiff and Moshe Schwimmer entered into a written agreement confirming that plaintiff was a 50% owner of Fallsburg and that Moshe Schwimmer was individually responsible for any encumbrances on the property, including the 1999 mortgage. In 2007, the mortgage was assigned to an entity equitably controlled by defendant Mendel Schwimmer, without plaintiff's knowledge or consent. At around the same time, Moshe Schwimmer represented to plaintiff that the 1999 mortgage had been satisfied.

To resolve their ongoing business disputes, plaintiff and Moshe Schwimmer participated in arbitration, resulting in a 2007 award that, among other things, confirmed that plaintiff was a 50% owner of Fallsburg and Fallsburg owned the property, and required Moshe Schwimmer to clear all encumbrances on the property within 60 days. Plaintiff commenced a proceeding in Supreme Court, Kings County to confirm the award, which the court granted. Upon Moshe Schwimmer's appeal, the Second Department affirmed ( Matter of Piller v. Schwimmer, 135 A.D.3d 766, 22 N.Y.S.3d 572 [2016] ). Meanwhile, in 2007, plaintiff had commenced an action in Supreme Court, Sullivan County to void deeds executed by Moshe Schwimmer on behalf of Fallsburg purporting to convey the property to defendant Princeton Realty Associates LLC, an entity equitably controlled by Mendel Schwimmer. Despite a 2008 preliminary injunction in the Sullivan County action, in July 2015 someone simultaneously

173 A.D.3d 1300

filed numerous conveyances and a mortgage – all with various dates from 1999 to 2014 – against the property. In November 2016, Supreme Court granted plaintiff summary judgment in that prior litigation, invalidating the 2007 deeds.

In October 2016, plaintiff commenced this action against Moshe Schwimmer and Mendel Schwimmer (hereinafter collectively referred to as defendants), as well as numerous other individuals and entities alleged to have some interest in the property, to quiet title to the property and recover damages from defendants based on their allegedly unlawful actions to divest plaintiff of the value of the property. After plaintiff made a motion not relevant to this appeal, defendants cross-moved to dismiss the complaint pursuant to

104 N.Y.S.3d 348

CPLR 3211(a)(1), (3), (5) and (7). As relevant here, Supreme Court partially denied the cross motion to dismiss.¹ Defendants appeal.

Supreme Court properly denied defendants' cross motion to dismiss as to the first cause of action seeking to quiet title to the property. Defendants contend that they are not proper parties to this claim and plaintiff has no standing to bring the claim. A plaintiff may maintain an action to quiet title against any defendant that has made or, according to public records or the allegations in the complaint, might make any claim against the property (see RPAPL 1501[1] ). Although Moshe Schwimmer does not have an individual interest in the property, he is a proper party in an action to quiet title because he has a 50% interest in Fallsburg, which was the original owner of the property, and he executed some of the conveyances on behalf of Fallsburg that transferred the property to other entities. As for Mendel Schwimmer, he may have an interest in the property under an alter ego theory. An alter ego will be established "when either (1) there is complete domination of a corporation by an individual ... with respect to the transaction being attacked that resulted in a fraud or wrong against the complaining party, or (2) when a corporation has been so dominated by an individual ... that it primarily transacts the dominator's business instead of its own" ( Belair Care Ctr., Inc. v. Cool Insuring Agency, Inc., 161 A.D.3d 1263, 1270, 77 N.Y.S.3d 171 [2018] [internal quotation marks and citation omitted] ). The record demonstrates that Mendel Schwimmer declared himself the equitable owner of entities that held recorded deeds or a mortgage to the property, and that he separately expended large sums of money on behalf of the property at the request of his brother, Moshe

173 A.D.3d 1301

Schwimmer. Because defendants might make a claim against the property, they are proper defendants in a cause of action to quiet title.

Plaintiff has standing to bring the cause of action to quiet title. Individually, as he is a 50% owner of Fallsburg and it appears that the property is Fallsburg's only asset, "plaintiff's property rights will be directly and specifically affected by the resolution of the issues herein," giving him "standing to maintain the instant action" ( Lumbermens Mut. Cas. Co. v....