Opinion
Index No. 527164/2019 Motion Sequence 3
07-15-2024
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, Plaintiffs, v. 1152 53 MANAGEMENT LLC and ETTY SALAMON Defendants.
Unpublished Opinion
DECISION AND ORDER
The following papers e-filed papers read herein: NYSCEF Doc. Nos.:
Plaintiff's Order to Show Cause, Affirmation, Exhibits and Reply........................................................80-87,95
Defendant 1152 53 Management's Affirmation in Opposition and Exhibit.............................................93-94
Upon the foregoing papers, and after oral argument, Plaintiff Old Republic National Title Insurance Company ("Plaintiff") moves by order to show cause (Mot. Seq. #3) for an Order: seeking a preliminary injunction, restraining Defendants Etty Salamon and 1152 53 Management LLC (collectively, "Defendants") from transferring or encumbering the property located at 1152 53rd Street, Brooklyn, New York, Block: 5668, Lot: 26 ("Subject Premises"), pending a final judgment in this action.
This is an action to reverse an allegedly fraudulent conveyance, which this Court initially dismissed in its. entirety, but three of the six causes of action for constructive fraudulent conveyance were restored by the Appellate Division, Second Department (NYSCEF Doc. 88).
Preservation of the Notice of Pendency
Defendants suggested that Plaintiff brought this motion to replace the expired notice of pendency filed with the Complaint (NYSCEF Doc. 3) on December 13, 2019. Plaintiff maintains that the dismissal of this action by this Court automatically "abated" the suit and prevented the renewal of the notice of pendency.
CPLR § 6513, which governs the duration of the notice of pendency, provides that it shall "be effective for a period of three years from the date of filing" and that "[b]efore expiration of a period or extended period, the court, upon motion of the plaintiff and upon such notice as it may v require, for good cause shown, may grant an extension for a like additional period." Nothing on the face of this section suggests that a plaintiff, who appealed a decision dismissing its complaint, can not move for the extension of the notice of pendency while an appeal is pending.
CPLR § 6514(a), which addresses the mandatory cancellation of a notice of pendency, states that "the court, upon motion [emphasis added] of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519 [emphasis added]." Thus, the language of this section is clear- the notice of pendency can only be canceled upon the filing of a motion, and only if a CPLR § 5519 motion to stay was not granted before a motion to cancel the notice of pendency is decided.
Plaintiff argues that since its action was "abated" by the dismissal of its action, the notice of pendency was automatically canceled. Therefore, it could not have moved for an extension of its notice of pendency on or before December 10,2022 (three years after its filing). This is incorrect, as CPLR § 6514(a) addresses the scenario where a complaint is dismissed in the clause which refers to a "final judgment against the plaintiff [which] has not been stayed pursuant to section 5519."
Moreover, Plaintiff cites cases which involve the cancellation of a notice of pendency-after a defendant brought a § 6514 motion to cancel (see Da Silva v. Musso, 16 N.Y.2d 436,439 (1990) ["Plaintiff promptly appealed to the Court of Appeals, but did not obtain a CPLR 5519 stay. Consequently, on a motion made under CPLR 6514(a), his notice of pendency was canceled,"]. Indeed, CPLR § 6514, which is cited by Plaintiff, correctly states that "[o]nce a final order dismissing plaintiffs complaint has been entered, plaintiff has no further right to restrain the free transfer of the property that was the subject of the complaint unless he has followed the statutory procedures for continuing the previously filed notice of pendency." That procedure is, by definition, a renewal under CPLR § 6513, which the Plaintiff failed to do.
While Plaintiff did not move for the renewal of the notice of pendency, the Court will now turn to the merits of its request for a preliminary injunction.
Preliminary Injunction and Bond/Undertaking
A party is entitled to a preliminary injunction when it demonstrates: (1) a probability of success on the merits, (2) danger of irreparable harm in the absence of an injunction, and (3) a balance of the equities in its favor" (Related Properties, Inc. v. Town Bd. OfTown/Village of Harrison, 22 A.D.3d 587, 590 [2d Dept 2005]).
With respect to Plaintiffs first cause of action pursuant to DCL § 273, Defendant Salamon verified in her 2018 Chapter 13 bankruptcy petition that the Subject Premises was then valued at $1,520,825.00. The January 15,2020 New York City tax rolls valued the Premises at $1,803,000.00. Yet, on November 20,2019, it was transferred to Defendant 1152 53 Management LLC for $530,000.00 via short sale. After an examination of the recent valuations of the Subject Premises and the purchase price, this Court finds that Plaintiff has established its likelihood of success on its first cause of action under DCL § 273 for a conveyance made without fair consideration ("without regard to actual intent").
This Court also finds that Plaintiff established its likelihood of success on the merits on its second cause of action under DCL § 273-a for conveyances made without fair consideration by a defendant in a money damages action ("without regard to actual intent"). This Court's determination is premised on the following: (i) the commencement of the prior action under index number 517742/2018; (ii) Defendant Salamon's transfer of the Premises during the pendency of the prior action; (iii) the judgment obtained in the prior action; and (iv) the fact that no part of the judgment has been paid by Defendant Salamon.
Moreover, Plaintiff has shown some degree of irreparable harm. While there is case law . which suggests that fraudulent conveyance actions are for money damages only {Medallion Financial Corp. v. Tsitiridis, 203 A.D.3d 627 [1st Dept 2022]), the Plaintiff could be left without recourse if the Subject Premises is transferred.
Plaintiff has also shown a balance of the equities in its favor. CPLR § 6312(b) states that "prior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court, that the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction." The purpose and function of this undertaking is to reimburse defendant for damages sustained if it is later finally determined that preliminary injunction was erroneously granted {¶ofstra Univ. v. Nassau Cnty., New York, 166 A.D.3d 863 [2d Dept 2018]). The undertaking is the sole source of compensation for a defendant if the injunction was granted but defendant later triumphed (Technicare Corp. v. NYC Health and Hospitals, 131 A.D.2d 371 [1st Dept 1984]).
Thus, this Court finds that branch of Plaintiff s application for a preliminary injunction is granted, as it has satisfied all of the elements for this relief. Accordingly, it is hereby, ORDERED that pursuant to CPLR § 6301 and § 6311, Defendant 1152 53 Management LLC is enjoined from transferring or encumbering the premises at 1152 53ld Street, Brooklyn, New York, Block: 5668, Lot: 26, pending a final judgment in this action. It is further, ORDERED that pursuant to CPLR § 6312(b), Plaintiff Old Republic National Title Insurance Company will post a bond of $500,000.00 and electronically file proof of same within thirty (30) days of notice of entry of this Order.
Plaintiff's Motion is granted to the extent set forth above.
This constitutes the Decision and Order of the Court.