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Current Developments in the Commercial Divisions of the
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Posted: May 10, 2015

Notice of Pendency Vacated When Not Support by Allegations of Original Complaint

On April 28, 2015, Justice Kornreich of the New York County Commercial Division issued a decision in Poguntke v. Corrier, 2015 NY Slip Op. 30692(U), vacating a notice of pendency.

In Poguntke, the parties disputes included a dispute over the ownership of a company whose assets included a brownstone in Manhattan. The defendant moved to vacate the notice of pendency the plaintiffs had filed regarding the brownstone. The trial court granted the motion, explaining:

5303 Realty Corp. v. 0 & Y Equity Corp., 64 NY2d 313 (1984), is the seminal case governing motions to vacate a notice of pendency. Pursuant to CPLR 6514(a), a notice of pendency is subject to mandatory cancellation when the action upon which it is based does not qualify for a notice of pendency under CPLR 6501. The court, moreover, has discretion to cancel a notice of pendcncy under CPLR 6514(b) if the action supporting the notice was not commenced in good faith. In entertaining a motion to cancel a notice of pendency, the court essentially is limited to reviewing the pleading to ascertain whether the action falls within the scope of CPLR 6501. The complaint filed with the notice of pendency must be adequate unto itself; a subsequent, amended complaint cannot be used to justify an earlier notice of pendency.

1t is well settled that where, as here, the dispute is over ownership of a company that owns real estate – as opposed to a dispute over ownership of the real estate itself – such a controversy will not support the filing of a notice of pendency.

The Notice of Pendency must be canceled because this action does not seek adjudication of title to real property. The case law simply does not permit a notice of pendency to be filed where, as here, the dispute is over ownership of the company that owns real estate. Nor will the court consider [the] argument that a claim for a constructive trust over real estate may sustain the Notice of Pendency. While the law in this area is somewhat unclear, the court will not address this issue since it is not properly before the court. Though the original complaint does assert a claim for breach of fiduciary duty, nothing in the original complaint can be fairly read as seeking the imposition of a constructive trust. That [the plaintiffs’] amended complaint and opposition brief raise the issue is immaterial since the court is strictly limited to determining the validly of a notice pendency based on the original complaint alone.

(Internal quotations and citations omitted) (emphasis added). A notice of pendency is a powerful tool in litigation relating to real estate but, as this decision shows, the procedural requirements for filing the notice must be strictly complied with.

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