"A person whose conveyance or encumbrance is recorded after the filing of [a] notice [of pendency] is bound by all proceedings taken in the action after such filing to the same extent as a party" (CPLR 6501). "The purpose of the notice of pendency is 'to afford constructive notice from the time of the filing so that any person who records a conveyance or encumbrance after that time becomes bound by all of the proceedings taken in the action'" ( 2386 Creston Ave. Realty, LLC v M-P-M Mgt. Corp., 58 AD3d 158, 161, quoting Corporation of Presiding Bishop of Church of Jesus Christ of Latter-Day Sts. v Solow Bldg. Corp., 52 AD2d 533, 534; see Novastar Mtge., Inc. v Mendoza, 26 AD3d 479, 480; Matter of Jenkins v Stephenson, 293 AD2d 612, 614; Roth v Porush, 281 AD2d 612, 614; Green Point Sav. Bank v St. Hilaire, 267 AD2d 203; American Auto. Ins. Co. of St. Louis v Sansone, 206 AD2d 445, 446; Goldstein v Gold, 106 AD2d 100, 102).
The cases relied upon by the Neglias are factually distinguishable from the facts herein. In Roth v Porush (281 AD2d 612. 722 NYS2d 566 [2d Dept 2001]), a judgment creditor filed a notice of pendency and commenced the action to set aside a fraudulent conveyance of real property from the judgment debtor to his wife, who in turn sold the real property to third parties. The court found that there were facts which should have led the third-parties and their title insurance company to conduct further inquiry before purchasing the property, and found that the doctrine of equitable subrogation was inapplicable.
The doctrine of equitable subrogation provides that a mortgagee who pays off a prior mortgage without knowledge of the existence of an intervening lien may have its rights subrogated to the rights of the senior mortgage and thus gain priority over the intervening lien holder. See Roth v. Porush, 722 N.Y.S.2d 566, 568 (App.Div. 2001). The doctrine does not apply, where the party seeking subrogation has notice of the intervening lien. R.C.P.S. Assoc. v. Karam Developers, 656 N.Y.S.2d 666, 667 (App.Div. 1997).
Accordingly, the Bank's constructive knowledge of the plaintiff's mortgage is not an absolute bar to application of the doctrine of equitable subrogation ( see King v. Pelkofski, 20 N.Y.2d 326, 282 N.Y.S.2d 753, 229 N.E.2d 435;Elwood v. Hoffman, 61 A.D.3d 1073, 876 N.Y.S.2d 538). Under the circumstances of this case, the Supreme Court should have denied that branch of the plaintiff's motion which was for summary judgment on the complaint insofar as asserted against the Bank, and granted that branch of the Bank's cross motion which was for leave to serve an amended answer asserting a counterclaim so as to seek lien priority pursuant to the doctrine of equitable subrogation. To the extent that our decisions in Bank One v. Mon Leang Mui, 38 A.D.3d 809, 835 N.Y.S.2d 585,Roth v. Porush, 281 A.D.2d 612, 722 N.Y.S.2d 566, and R.C.P.S. Assoc. v. Karam Devs., 238 A.D.2d 492, 656 N.Y.S.2d 666 provide contrary authority, they should not be followed. In light of our determination, the Bank's alternative contention has been rendered academic.
The proceeds of the appellants' mortgage were used to satisfy a prior and more senior purchase-money mortgage given by Dombek First National Bank of Arizona in 2004, which mortgage the plaintiff also held by virtue of an assignment. In this foreclosure action commenced by the plaintiff after Dombek defaulted under the July 2005 mortgage, the appellants contend that the doctrine of equitable subrogation applies so that their lien is to be given priority over the plaintiffs lien ( see Bank One v Mon Leang Mui, 38 AD3d 809, citing King v Pelkofski, 20 NY2d 326). Given the existence of triable issues of fact as to whether the appellants were on notice of the July 2005 mortgage at the time they executed their mortgage, the Supreme Court erred in granting those branches of the plaintiff's motion which were for summary judgment on the complaint and to strike the affirmative defense of equitable subrogation asserted in the answer ( see King v Pelkofski, 20 NY2d 326; Roth v Porush, 281 AD2d 612; cf. LaSalle Bank Natl. Assn. v Ally, 39 AD3d 597). [Prior Case History: 2008 NY Slip Op 3124(U).]
Based upon the Court of Appeals' decision in King v Pelkofski ( 20 NY2d at 333-334), the presence of constructive notice does not render the doctrine of equitable subrogation inapplicable where, as here, the notice of pendency, was "unbeknown" to Delta at the time ( see United States v Baran, 996 F2d at 28). We decline to follow those cases holding otherwise inasmuch as they depart from the Court of Appeals' decision in King v Pelkofski (supra; see e.g. Bank One vMon Leang Mui, 38 AD3d 809; Roth v Porush, 281 AD2d 612; R.C.P.S. Assoc., v Karam Devs., 238 AD2d 492). Notably, plaintiff would be unjustly enriched if the doctrine of equitable subrogation were not applied in the case at hand.
In that case, the plaintiff who filed the notice of pendency already had a recorded interest in the property, having recorded his mortgage, and the notice simply preserved an existing property right. Other cases cited by plaintiff are similarly distinguishable because, like Goldstein, they involved a plaintiff who already had an established interest in the property, or a defendant who was not a good faith purchaser for value ( Novastar Mtge., Inc. v Mendoza, 26 AD3d 479; Roth v Porush, 281 AD2d 612; Green Point Sav. Bank v St. Hilaire, 267 AD2d 203, lv denied 95 NY2d 778; Morrocoy Mar. v Altengarten, 120 AD2d 500 [specific performance available because defendant was not a good faith purchaser for value]; Stephens v Snitow, 95 AD2d 806, lv denied 60 NY2d 557 ; United States v McCombs, 30 F3d 310 [2d Cir 1994]; In re 19 Ct, St. Assoc., LLC, 190 BR 983 [SD NY 1996]; Nitchie Barrett Realty Corp. v Biderman, 704 F Supp 369 [SD NY 1988]). In the case at bar, specific performance was an impossible remedy since M-P-M did not have title to the subject property at the time the action was commenced, and, under New York law as stated above, a contract vendee such as plaintiff does not, by virtue of the filing of a notice of pendency, create an interest in real property superior to a subsequent good faith purchaser from the same vendor who records a contract or conveyance.
The defense of waiver was also barred by the terms of the mortgages ( see Excel Graphics Tech. v CFG/AGSCB 75 Ninth Ave., 1 AD3d 65, lv dismissed 2 NY3d 794). Atlantic Bank's counterclaim for equitable subrogation and priority of lien, based on its payment of tax liens, was properly dismissed in light of its knowledge of plaintiff's mortgages ( see Roth v Porush, 281 AD2d 612, 614) and its failure to inquire in the face of the borrower's assertion that the mortgage was unenforceable. After due consideration, I also find appellants' other contentions meritless.
Ordered that the order is affirmed, with costs. New York has a "race-notice" recording statutory scheme whereby the mortgage recorded first by a mortgagee without notice of any other mortgages will maintain priority over such other mortgages ( see Real Property Law ยง 291; Roth v Porush, 281 AD2d 612, 614; Goldstein v Gold, 106 AD2d 100, 101-102, affd 66 NY2d 624). In applying this principle, the Supreme Court correctly determined that the plaintiff's mortgage recorded on September 13, 1999, has priority over the defendant's mortgage recorded on February 25, 2000.
Accordingly, the Supreme Court should have granted that branch of Nationscredit's cross motion which was for summary judgment in its favor on its equitable subrogation cause of action in the sum of $108,046.20 ( see Federal Natl. Mtge. Assn. v Woodbury, 254 AD2d 182; Zeidel v Dunne, 215 AD2d 472, 473-474; see generally King v Pelkofski, 20 NY2d 326, 333-334; cf. Roth v Porush, 281 AD2d 612, 614; Pawling Sav. Bank v Hunt Props., 225 AD2d 678, 680).