Knopf et al v. Meister Seelig & Fein, LLP et al.
MEMORANDUM OPINION & ORDER.This case involves two Notices of Pendency (Notices) filed pursuant to N.Y. CPLR § 6501 by plaintiffs Norma and Michael Knopf (Plaintiffs) on two New York City properties wholly owned by defendant Pursuit Holdings, LLC (Pursuit). Those properties are 10 Bedford Street, Units 1, 2, and 4 (the Townhouse) and 44 East 67th Street, Unit PHC (PHC; collectively, the Properties)....Accordingly, the Notices of Pendency on 10 Bedford Street, Units 1, 2, and 4, and 44 East 67th Street, Unit PHC, shall be cancelled pursuant to CPLR § 6514(b). The cancellation, however, shall be stayed for 10 days as to PHC to permit the Plaintiffs to return to state court and make any arguments made here that they believe may be p ersuasive. Defendants request for costs and expenses occasioned by the filing and cancellation, in addition to any costs of the action pursuant to CPLR § 6514(c) will be considered at a later date. (Signed by Judge Denise L. Cote on 10/16/2015) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
NORMA KNOPF and MICHAEL KNOPF,
MEISTER, SEELIG & FEIN, LLP and
PURSUIT HOLDINGS, LLC.
OPINION & ORDER
DENISE COTE, District Judge:
This case involves two Notices of Pendency (“Notices”)
filed pursuant to N.Y. CPLR § 6501 by plaintiffs Norma and
Michael Knopf (“Plaintiffs”) on two New York City properties
wholly owned by defendant Pursuit Holdings, LLC (“Pursuit”).
Those properties are 10 Bedford Street, Units 1, 2, and 4 (the
“Townhouse”) and 44 East 67th Street, Unit PHC (“PHC”;
collectively, the “Properties”).
Litigation involving these two Properties -- including
litigation over other notices of pendency on the Properties -has been ongoing in New York state court for over six years.
Plaintiffs filed initial Notices of Pendency (“Initial Notices”)
on the Properties in September 2009 and soon thereafter filed
suit against Pursuit, alleging breach of certain loan agreements
entitling Plaintiffs to mortgages on the Properties; in
addition, Plaintiffs sought to impose a constructive trust on
the Properties or, in the alternative, obtain monetary damages.
On December 11, 2014, the Appellate Department affirmed the
lower court’s grant of summary judgment on the breach of
contract claim and its denial of summary judgment on the
constructive trust claim, holding that in regard to the latter
that Plaintiffs had “not made an evidentiary showing” at that
stage “that monetary damages would be inadequate” as a remedy.
On December 23, 2014, the lower court granted Pursuit’s
motion to cancel the Initial Notices, a decision that was upheld
on July 2, 2015 because Plaintiffs “failed to show that monetary
damages would be inadequate” as a remedy for their breach of
contract claims and because service on Pursuit had been
Knopf v. Sanford, --- N.Y.S.3d ---, 2015 WL 5794358,
at *1 (1st Dep’t Oct. 6, 2015). 1
Plaintiffs moved before the
state court for a pre-judgment attachment pursuant to CPLR §
6201 in order to “prohibit Pursuit from transferring” the
Properties; on July 23, the court denied the motion for
The Plaintiffs filed the instant case in federal court on
July 1, 2015, invoking this Court’s diversity jurisdiction.
of that date, the Plaintiffs were on notice that the Appellate
The decision of July 2d was reissued as amended on October 6.
Division intended to uphold the cancellation of the Initial
This federal action is brought against Pursuit and its
counsel in the state court litigation, Meister, Seelig & Fein,
MSF represented Pursuit and its principal Michael
Sanford in state court proceedings to cancel the Initial
On January 5, 2015, Pursuit granted MSF a $575,000
mortgage on PHC to secure payment of Pursuit’s legal fees.
Plaintiffs filed the new Notices and initiated this suit,
alleging that Pursuit is indigent, and therefore judgment-proof,
and that the PHC mortgage transaction was a fraudulent
They seek in this case to cancel the mortgage on
PHC and request a permanent injunction preventing the transfer
or encumbrance of both PHC and the Townhouse.
conference with the Court on October 9, defendants moved on
October 13 to cancel the new Notices.
briefing, this application became fully submitted today.
New York CPLR § 6501 provides that “[a] notice of pendency
may be filed in any action . . . in which the judgment demanded
would affect the title to, or the possession, use or enjoyment
of, real property.”
Courts use a “narrow” approach “in
reviewing whether an action is one affecting the title to, or
the possession, use or enjoyment of, real property.”
Realty Corp. v. O & Y Equity Corp., 64 N.Y.2d 313, 321 (1984)
That is, courts do not “investigate the
underlying transaction in determining whether a complaint comes
within the scope of CPLR 6501”; rather, a “court's analysis is
to be limited to the pleading’s face.”
“[A] court must uphold a notice of pendency if the
underlying complaint sets forth a claim within the scope of [§]
Diaz v. Paterson, 547 F.3d 88, 91 (2d Cir. 2008).
“attempts to file a notice of pendency in controversies that
more or less refer to real property, but which [do] not
necessarily seek to directly affect title to or possession of
the land,” generally fail, 5303 Realty Corp., 64 N.Y.2d at 321,
and in all events “it is simply improper to use a notice of
pendency as a form of attachment.”
Id. at 324.
Under the standards set forth in the CPLR, Plaintiffs’
Notices must be cancelled.
First, the Complaint here only
alleges a fraudulent conveyance claim with respect to PHC, and
therefore the notice of lis pendens -- which must “affect the
title to, or the possession, use or enjoyment of, real property”
-- could only be entered with respect to PHC.
asserts that Pursuit improperly conveyed a mortgage on PHC to
It does not assert any fraudulent conveyance of an
interest in the Townhouse to MSF.
But, the Notice filed as to PHC must be cancelled as well.
The Defendants have shown that the Plaintiffs lacked good faith
in filing the Notice.
CPLR 6514(b), which provides for
“discretionary cancellation,” permits a court “upon motion of
any person aggrieved” to cancel a notice of pendency if “the
plaintiff has not commenced or prosecuted the action in good
Plaintiffs have not explained why they cannot now and
did not previously raise before the state court any arguments
made here to support the refiling of a notice so recently
cancelled by the state court.
Moreover, the Plaintiffs’
argument that the filing of the Notices is necessitated by
Pursuit’s indigence -- an argument which, if meritorious, could
be made in state court -- fails to persuade.
financial condition, the fraudulent conveyance claim is lodged
against MSF, and the Plaintiffs do not suggest that MSF lacks
the capacity to repay the total amount of the alleged fraudulent
MSF is an established law firm with scores of
employees and multiple offices.
There is, in other words, no good reason why Plaintiffs are
not presenting their arguments to support reimposition of the
recently-cancelled Notices to the state court forum.
plaintiff is using the notice of pendency for an ulterior
purpose, a finding of lack of good faith can be made.”
Architectural Grp., Inc., P.C. v. X & Y Dev. Grp., LLC, 930
N.Y.S.2d 652, 654 (2d Dep’t 2011) (citation omitted).
appearances, Plaintiffs have reinstated their Notices and filed
this suit in an attempt, in effect, to reverse the state court’s
decision to cancel the Initial Notices, and to obtain the
equivalent of an attachment on the Properties pending judgment.
This is an improper use of lis pendens.
See 5303 Realty Corp.,
64 N.Y.2d at 324.
While Plaintiffs contend that this federal action and its
new Notices are wholly independent of the state court litigation
since they are prompted solely by the fraudulent conveyance,
that argument fails.
To file a notice of pendency, the
Plaintiffs must have filed an action in which a judgment will
affect the title to, or an interest in, real property.
Plaintiffs’ claim to a protectable interest in both Properties
depends upon the success of their state court claims.
Notices cannot be divorced from that litigation.
Accordingly, the Notices of Pendency on 10 Bedford Street,
Units 1, 2, and 4, and 44 East 67th Street, Unit PHC, shall be
cancelled pursuant to CPLR § 6514(b).
however, shall be stayed for 10 days as to PHC to permit the
Plaintiffs to return to state court and make any arguments made
here that they believe may be persuasive.
for “costs and expenses occasioned by the filing and
cancellation, in addition to any costs of the action” pursuant
to CPLR § 6514(c) will be considered at a later date.
New York, New York
October 16, 2015
United States District Judge
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