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BLOG / 10.13.16 /Jack Malley

Appellate Division Reinforces The Risks Of Filing A Defective Notice Of Pendency

Under CPLR § 6501, a party to an action may file a notice of pendency if the judgment she demands “would affect the title to, or the possession, use or enjoyment of, real property.” The filing of the notice constitutes constructive notice to future purchasers and lenders who are “bound by all proceedings taken in the action after [the] filing to the same extent as a party.” Pursuant to CPLR § 6514(b), a court may grant a motion cancelling a notice of pendency upon the application of an aggrieved defendant who demonstrates that the plaintiff did not commence or prosecute the action in good faith. A court may issue an order awarding a defendant her attorneys’ fees and costs where the court finds that the plaintiff frivolously clouded the defendant’s title or did so in bad faith.

In Delidimitropoulos v. Karantindis, which was commenced in Supreme Court, Queens County, a father-in-law (the “FIL”) started a building supply business with his son-in-law (“SIL”). The FIL commenced an action against the SIL alleging that the SIL breached his fiduciary duty to the company by misappropriating the company’s funds. Approximately 11 months after he commenced the action, the FIL filed two notices of pendency against four properties that were allegedly owned by the company.

The trial court denied the SIL’s motion for an order canceling the notices of pendency. The Appellate Division, Second Department reversed the trial court’s decision and awarded the SIL his fees and costs. The Second Department found that the punitive fees/costs award was warranted because the FIL acted frivolously when he refused to cancel the notices of pendency, even after his lawyer was notified of authorities demonstrating that the outcome of the action would not affect the title or possession of the properties, or the use or enjoyment of them. Delidimitropoulos v. Karantindis, 2016 N.Y. Slip Op. 06057, 2016 WL 5107991 (2d Dep’t Sept. 21, 2016).

The lesson to be learned from the Delidimitropoulos decision is that plaintiffs should err on the side of not filing a notice of pendency in borderline situations.