Opinion
604107/2007.
November 8, 2010.
The following papers, numbered 1 to 2 were read on this motion by plaintiff(s) for a default Judgement.
PAPERS NUMBERED Notice of Motion/ Order to Show Cause — Affidavits — Exhibits ... 1 Answering Affidavits — Exhibits (Memo)___________________________ 2
Cross-Motion: [] Yes [x] NoIn this motion, plaintiff seeks to extend a notice of pendency, pursuant to CPLR 6513, on a property that defendants allegedly transferred fraudulently. In or about 1997, defendant Le Arc Corporation (hereinafter "Le Arc") acquired interest in a certain apartment, designated Hotel Unit 1614, in the Trump International Hotel and Tower Condominium, located at One Central Park West in Manhattan. Plaintiff alleges that Le Arc was at all relevant times a wholly owned subsidiary of defendant Parigi International, Inc. (hereinafter "Parigi"), which in turn was wholly owned by defendant Lyn Yu.
On September 28, 2006, this court rendered a default judgment in favor of the plaintiff herein in RH39 Realty, L.P. v Parigi International, Inc., Index No. 604298/2005, for the total amount of $340,730.68. That action was for Parigi's breach of a commercial lease agreement with the plaintiff. Parigi was in arrears as of October 1, 2005, and was evicted on November 30, 2005, pursuant to a summary proceeding. Plaintiff alleges that it has not collected any money pursuant to the default judgment, despite serving notices restraining Parigi's bank accounts.
Meanwhile, on November 1, 2005, defendant Lyn Yu caused to be recorded a transfer of the subject Trump property. The transfer document purports to effect a transfer between Le Arc as grantor and L L Investments, LLC as grantee, for the consideration of $10. The transfer document also purports to be dated March 20, 2002, more than three and a half years prior to the recording date. The transfer document is signed by defendant Yu as both grantor and grantee, in the capacity of president of each.
On or about December 10, 2007, plaintiff commenced the instant action alleging that Parigi and Lyn Yu effected the subject transfer of the Trump property, making Parigi insolvent, to conceal assets and defraud Parigi's creditors. Plaintiff also alleges that all the named defendants conspired to defraud Parigi's creditors. Plaintiff seeks to void the subject transfer of the Trump property, and also seeks judgment against all the defendants equal to the amount of the default judgment.
On December 14, 2007, plaintiff filed a CPLR Article 65 notice of pendency, also called a lis pendens, which notice is the subject of this motion. As the notice of pendency's statutory three year duration is now coming to an end, plaintiff requests that the Court extend the said duration for an additional three years, pursuant to CPLR 6513. Defendants oppose the motion on grounds that the lis pendens was inappropriate in the first instance. Defendants have not made a motion to cancel the notice of pendency pursuant to CPLR 6514.
Notice of Pendency — Purpose and Standards
"The usual object of filing a notice of lis pendens is to protect some right, title or interest claimed by a plaintiff in the lands of a defendant which might be lost under the recording acts in event of a transfer of the subject property by the defendant to a purchaser for value and without notice of claim" ( Rose v Montt Assets, Inc., 250 AD2d 451, 451 [1st Dept. 1998], quoting Braunston v Anchorage Woods, 10 NY2d 302, 305).
CPLR 6513 provides that the three year duration of a notice of pendency may be extended by the court for an additional three years "upon motion of the plaintiff . . . for good cause shown. . . ." The courts of the Appellate Division have ruled that good cause exists where there has been a stay of trial ( Stassou v Cassini Huang Const., Inc., 203 AD2d 357 [2d Dept. 1994]) or if a note of issue has been filed, but the underlying case would not go to trial until after the lis pendens had expired ( Tomei v Pizzitola, 142 AD2d 809, [3d Dept. 1988]). A plaintiff has been held unable to show good cause where the plaintiff delayed the disposition of the case by refusing to provide court-ordered discovery ( Petervary v Bubnis, 30 AD3d 498 [2d Dept. 2006]).
CPLR 6514 provides that a court may, upon motion, direct a county clerk to cancel a lis pendens "if the plaintiff has not commenced or prosecuted the action in good faith." In Jonestown Place Corp. v 153 West 33rd Street Corp. ( 74 AD2d 525 [1st Dept. 1980], Iv denied 50 NY2d 841), the First Department held that a 6514 motion to cancel was properly denied even though the plaintiff had no valid cause of action ( see Jonestown, id. at 526 [plaintiff seeking to enforce contract that was void under Statute of Frauds acted in good faith for purposes of CPLR 6514 lis pendens cancellation motion]). In such cases, defendants are entitled to a court order directing the mandatory cancellation of the notice of pendency if and when "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" ( Jonestown, id. at 526, quoting CPLR 6514[a]).
The cases cited hereinabove make clear that the merits of the underlying case may not be considered in a motion to extend or even to cancel a lis pendens. The only issue to address is whether the delay in disposition of the case beyond the three year statutory duration was for good cause, or if such delay was caused by bad faith conduct on the plaintiff's part.
Discussion
In the case at bar, plaintiff notes that a note of issue has been filed, that a motion for summary judgment by defendants is pending, and that defendants' original counsel for this action, Mr. Emengo, was suspended from the practice of law, resulting in new counsel being brought into the case to represent defendants. The Court finds these reasons to be good cause for the delay in disposition of this case.
In opposition, defendants have not made any argument as to how plaintiff did not show good cause for delay, instead relying on irrelevant, and unconvincing, arguments on the merits of plaintiff's case. The First Department has noted that such arguments have no bearing on motions concerning a lis pendens (see Jonestown, 74 AD2d at 526). Defendants could have presented these arguments in a motion to dismiss, which, if granted, would ultimately result in 6514(a) mandatory cancellation of the lis pendens. If defendants believed that a lis pendens was otherwise inappropriate, then procedurally defendants should have made an earlier CPLR 6514(b) motion to cancel, or even made a cross-motion to cancel instead of merely serving opposition to this motion ( see Tomei, 142 AD2d at 809).
Even if we treat defendants' opposition as a cross-motion to cancel, the Court finds in reviewing the record that the plaintiff did act in good faith in the prosecution of the within action. Plaintiff has filed a note of issue, and there is no indication that plaintiff violated any discovery orders or otherwise acted in bad faith in prosecuting the herein action. On the contrary, the delay in disposition may be explained by defendants' motion practice, including a pending motion for summary judgment. The Court also notes that defendant Parigi made an untimely motion to vacate the September 28, 2006 default judgment, which motion was recently denied by Hon. Marilyn Diamond, J.S.C. in a decision dated October 5, 2010. Counsel for defendants apparently made irrelevant arguments on the merits in support of that motion as well.
'While an examination of the merits is not directly relevant to this motion, the Court notes that defendants' argument on the merits Is Insufficient on its face. Defendants argue that the subject transfer of the Trump property was not fraudulent because it had been made three and a half years prior to Parigi's default on its rent obligations to plaintiff, and had only been recorded after Parigi went into arrears. Leon Luk, an attorney, served as a notary on the transfer document and apparently also presented the transfer document for recordation. Defendants' explanation In the opposition papers as to why Mr. Luk waited three and half years before recording the transfer document was "for some reason" (Defendants' Affirmation in Opposition at ¶ 9). To qualify "for some reason" as an insufficient legal argument would be an understatement.
Defendants also contend that the proper applicable standard is a weighing of the interests of the plaintiff in maintaining the status quo against the interests of defendants in the marketability of the subject property (Defendants' Affirmation in Opposition at p. 5, quoting Da Silva v Musso, 76 NY2d 436, 442). While it is true that balancing these interests is the purpose of the lis pendens mechanism (see Da Silva, 76 NY2d at 442; Rose, 250 AD2d at 451), this is not the correct standard on a motion to extend or cancel a notice of pendency. Moreover, defendants fail even if this was the appropriate standard, as the circumstances indicate that plaintiff would be prejudiced if the notice of pendency is not extended.
Conclusion
Based on the foregoing, it is
ORDERED that plaintiff's motion pursuant to CPLR 6513 to extend the duration of the notice of pendency is granted; and it is further
ORDERED that counsel for plaintiff shall serve a copy of this decision and order upon the County Clerk, who is directed to extend the subject notice of pendency, filed on December 14, 2007, for an additional three year period ending December 14, 2013.