Is Court Bound by the Complaint or May Merits Be Examined?
On March 20, 2023, 2047 Ryer Avenue LLC, as seller, and 2047 Ryer Development LLC, as buyer, entered into a contract for the sale of 2047 Ryer Avenue in the Bronx. Buyer made a $427,500 down payment toward the purchase as required under the agreement. The full amount of the down payment was being held in escrow by seller’s attorneys.
Soon after the contract was executed, a dispute arose among the parties. Specifically, on June 20, 2023, buyer’s attorney wrote a letter to seller asserting that the adjoining property encroached onto the property under contract in such a manner as to render title to encroached upon property uninsurable. The letter further asserted that the encroachment did not fall into a permissible exception under contract of sale.
Seller responded to the letter the following day, June 21, 2023. In that responsive letter, seller’s attorney asserted that buyer was in default under the agreement by failing to close on the sale by the time-of-essence closing date of June 20, 2023. Seller’s attorney disputed buyer’s contention that the encroachment was not a qualifying exception under the contract and that seller’s title insurance company had declined to issue a title insurance policy for the property. As a consequence of buyer’s alleged default, seller demanded the down payment be immediately released to seller.
Buyer initiated suit on June 26, 2023, by filing a complaint that alleged that seller was unable to convey insurable fee-simple title to the property; as a result, seller was required to refund the down payment; and seller refused to refund the down payment despite due demand. Based on those alleged facts, the complaint asserted two causes of action: (1) foreclosure of buyer’s common-law vendee’s lien arising from its down payment toward the purchase of real property; and (2) breach of contract. Simultaneously with the filing of the complaint, buyer also filed a notice of pendency based on the alleged vendee lien.
Seller sought an “emergency” Order to Show Cause on July 5, 2023. In the supporting affidavit, seller asserted that, shortly after buyer “canceled” the agreement, seller and a different buyer entered into a new contract for sale of the property that set July 24, 2023, as the closing date and provided that time was of the essence. Seller requested that buyer’s notice of pendency be immediately vacated so as not to interfere with the subsequent sale.
On July 17, 2023, before the motion was set to be heard by the Court, buy filed an amended complaint. In addition to the two causes of action asserted in the original complaint, the amended complaint asserted several new causes of action, including one for specific performance. Buyer also filed an amended notice of pendency, which was based not only on the cause of action for foreclosure on the alleged vendee’s lien but also on the new specific performance cause of action.
CPLR § 6501 provides, in relevant part, that a “notice of pendency may be filed in any action in a court of the state . . . in which the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property.” In deciding a motion to vacate or cancel a notice of pendency, a court essentially is limited to reviewing the pleading to ascertain whether the action falls within the scope of CPLR 6501. A court is not to investigate the underlying transaction in determining whether a complaint comes within the scope of CPLR 6501. Instead, in accordance with historical practice, the court’s analysis is to be limited to the pleading’s face.1.
Here, the filing of the amended complaint and amended notice of pendency mooted the pending motion. The amended complaint was filed prior to seller’s submission of an answer to the original complaint. Thus, the amended complaint, which was filed as of right, was, by operation of law, the operative pleading in the action. And when a complaint is amended, the plaintiff may be permitted to file a new notice of pendency to cover any additional realty or additional causes of action not previously pleaded in the original complaint which fall within the ambit of CPLR 6501.
The amended notice of pendency was based on the amended complaint’s new cause of action for specific performance of the contract of sale, as well as the previously pleaded cause of action for foreclosure of buyer’s alleged vendee’s lien. The pending motion, however, was directed only to the original notice of pendency, which was based solely on the original complaint’s cause of action for foreclosure. Seller’s motion made no arguments concerning the viability of the amended notice of pendency in the context of the new specific performance claim. And that omission was unavoidable, given the sequence of the parties’ filings. Yet, it was precisely the sequence of the filings and their creation of a new set of circumstances that rendered the motion moot.
In a letter filed to the docket shortly after buyer filed the amended complaint and amended notice of pendency, and again during oral argument on the motion, seller argued that specific performance was not a remedy available to buyer under the contract of sale. But the merits of buyer’s causes of action were not before the Court—nor would they be before the Court on any freestanding motion to vacate a notice of pendency. As the Court of Appeals hads commanded, the Court was to review only the face of the pleading to determine whether it stated a cause of action warranting the filing of a notice of pendency under CPLR § 6501. Regardless of whether buyer’s specific cause of action for foreclosure on an alleged vendee’s lien was such a cause of action, it was indisputable that buyer’s cause of action for specific performance of the agreement qualified–since a judgment in the buyer’s favor on the cause of action for specific performance would affect the title to, or possession, use, or enjoyment of, real property,. So, under the circumstances of the case, buyer was entitled to reinstatement of their notice of pendency.
Seller might have grounds to seek dismissal of the specific performance cause of action and seller might ultimately be successful on any such future attempt. But that was simply irrelevant to the determination of whether the amended notice of pendency should be vacated. The notice of pendency could not be canceled for the reason that a court, looking into the future, might conclude that buyer will not on the merits finally prevail. So long as the action was pending, the notice could not be canceled.
The right of buyer to retain the notice of pendency of action in an action for a decree for specific performance of the contract for a conveyance of real property must be determined upon the allegations of the complaint, or facts clearly established And upon such a motion, as was the case here, the Court was not to look into the facts as upon a trial nor to search the complaint as upon a demurrer.
Seller’s motion to vacate buyer’s notice of pendency was denied.