Huzhou Chuangtai Rongyuan Investment Management Partnership v. Qin

Background

The court had previously modified a preliminary injunction to permit Luban Construction, Inc. to sell the residential property at 35 Applegreen Drive, Old Westbury, New York, and place the net sale proceeds into escrow with the Chapter 7 trustee. A notice of pendency—a filing that gives notice of a lawsuit involving real property—had been filed by the plaintiffs and applied to the property.

Luban filed a letter motion asking the court to vacate the notice as to the property because the notice was preventing Luban from closing the sale. Luban later informed the court that counsel for the plaintiffs had sent a draft stipulation that could have canceled the notice, although one of the firms whose signature block appeared on the draft had not yet appeared in the action. The opinion states that both firms were listed on the docket as counsel for the plaintiffs.

Parties’ Positions

Luban argued that a stipulation was not necessary and that the court could direct the county clerk to cancel the notice under New York Civil Practice Law and Rules § 6514(b). That provision allows a court to cancel a notice of pendency if the plaintiff did not commence or prosecute the action in good faith.

Counsel for the plaintiffs stated that the plaintiffs did not object to cancellation. They argued, however, that the record did not support a finding that the plaintiffs had failed to act in good faith. The plaintiffs’ counsel instead proposed cancellation under § 6514(a). Luban also asked the court to impose the motion’s costs and expenses on the plaintiffs.

Court’s Analysis

Judge Katherine Polk Failla credited counsel’s representations that the plaintiffs had been in regular contact with Luban for weeks, that Luban had said it would file the motion if the matter was not resolved, and that the plaintiffs timely sent a proposed stipulation after Luban had filed the motion earlier that evening. Based on those circumstances, the court found no failure to act in good faith and declined to cancel the notice under § 6514(b).

The court instead concluded that the notice should be vacated under § 6514(a). For the same reasons, and citing authority stating that cancellation did not warrant an award of costs and expenses, the court denied Luban’s request to impose those costs on the plaintiffs.

Disposition

The court ordered that the notice of pendency was vacated insofar as it attached to the property. It directed the Clerk of the County of Nassau, upon payment of proper fees if any, to cancel the notice filed by the plaintiffs on April 5, 2024 solely as to the property and note the cancellation on the record. The court also directed its own clerk to file the order in both listed cases and terminate Luban’s pending motion at docket entry 178 in Case No. 24 Civ. 2219.