Hoffman v. Rattner

Background

Hoffman and Rattner had been in a romantic and business relationship and lived together in an apartment leased by Hoffman. When the building became a cooperative, the sponsor offered Hoffman an opportunity to purchase the apartment at an insider price. Hoffman assigned that opportunity to Rattner, who purchased the apartment. Title has remained in Rattner’s name alone.

After the relationship ended and both parties later left the apartment, Rattner contracted to sell it. Hoffman then brought an earlier federal action alleging that Rattner had cheated her out of money in their business relationship and had used money that should have been hers to purchase the apartment. The earlier complaint primarily sought money damages but also sought a declaration that Hoffman held an ownership interest in the apartment and requested a constructive trust. Hoffman filed a notice of pendency, a recorded notice that can affect the sale or title of real property.

The court identified a defect in the earlier complaint’s jurisdictional allegations: it alleged diversity of residence rather than diversity of citizenship. The court ordered Hoffman to amend the allegations or face dismissal, but she did not comply. Rattner later moved to dismiss the earlier complaint and cancel its notice of pendency. After expedited proceedings, the court canceled that notice.

Three hours after the first notice was canceled, Hoffman filed a new, substantially identical action in New York state court and filed a new notice of pendency. The new complaint corrected the jurisdictional allegations by stating that Hoffman was a New York citizen and Rattner was a Florida citizen. Rattner removed the action to federal court and moved to cancel the new notice and obtain costs and attorney’s fees.

Issue and parties’ arguments

The issue was whether New York Civil Practice Law and Rules § 6516(c) barred the second notice of pendency even though it was filed in a different action and the first notice had been filed in federal court.

Rattner argued that the second notice should be canceled. Hoffman argued that the statute did not apply because the first notice had not been canceled for failure to comply with a particular provision of New York law. Hoffman’s counsel also asserted that the first action had been dismissed because the diversity allegations were inadequate and that the refiling was a legitimate effort to correct that problem.

Court’s reasoning

The court explained that New York’s common-law “no second chance” rule prohibited successive notices of pendency by the same plaintiff for the same cause of action. New York later codified that rule in § 6516(c), which prohibits a second notice in an action when a prior notice has been canceled or has expired.

The court held that the rule applied even though the second action began in state court and the first action had been in federal court. The two actions were materially identical, involved substantially the same allegations and causes of action, and sought the same relief concerning the apartment. The court also emphasized that the second notice was filed only hours after cancellation of the first and appeared designed to cloud the apartment’s title and block the scheduled sale.

The court found the circumstances especially significant because, in its view, Hoffman’s counsel delayed responding to the first motions, purported to end the first action during the New Year’s holiday weekend, and promptly filed the second action and notice. The court rejected counsel’s explanation that the refiling was simply meant to correct the jurisdictional allegations, noting that the new complaint expressly alleged diverse citizenship. It also rejected the argument that the second filing was a legitimate way to amend the first complaint and was not persuaded by counsel’s claimed intention to withdraw the first notice.

The court distinguished a New York appellate decision allowing a successive notice after a pleading defect because that case did not show an attempt to abuse the privilege of filing a notice. On the facts here, the court concluded that the cited decision did not permit the second notice to remain in effect.

Ruling and disposition

Judge Lewis A. Kaplan granted Rattner’s motion to cancel the notice of pendency and for other relief in all respects. The court canceled the notice and ordered Hoffman to pay Rattner any costs and expenses caused by filing and canceling it. The amount of those costs and expenses was to be determined on a later motion filed by Rattner within 21 days of the order. The court stated that it did not need to reach Rattner’s additional grounds for cancellation.