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Whelan v. Pascale

United States District Court, E.D. New York

September 16, 2014

DAVID J. WHELAN AND MARY M. WHELAN, Plaintiffs,
v.
JUDITH A. PASCALE, COUNTY OF SUFFOLK, DAVID JANNETTI, AND DOES 1-5, Defendants.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge.

Defendants move to dismiss, under Federal Rule of Civil Procedure 12(b)(6), plaintiffs' claims challenging the constitutionality of Article 65 of the New York Civil Practice Law and Rules. In a lawsuit in New York state court, defendant David Jannetti ("Jannetti") sought specific performance of a real estate contract in which he agreed to purchase plaintiffs' home in Suffolk County. As part of the state lawsuit, Jannetti filed several notices of pendency with the County Clerk for the County of Suffolk ("Suffolk County"), defendant Judith Pascale ("Pascale"), who immediately recorded them. A notice of pendency does not create a property interest; it simply informs the public that the judgment demanded in a lawsuit "would affect the title to, or the possession, use or enjoyment of, real property." N.Y. C.P.L.R. § 6501. Defendants do not have the opportunity to challenge a notice of pendency before it is filed and recorded. Instead, after the notice is recorded, defendants may move the court to cancel it. Id. § 6514.

Plaintiffs in this action, who were defendants in the state action, moved to cancel Jannetti's notices of pendency, and were successful with respect to the first two, but not the third notice of pendency. After the state court upheld the third notice, plaintiffs initiated this action, arguing that the filing and immediate recording of Jannetti's multiple notices of pendency violated their due process, equal protection, and free speech rights. The particular harm alleged is that plaintiffs could not obtain a construction loan while their property was burdened by a notice of pendency.

For the reasons discussed below, the Court grants defendants' motions to dismiss. The Second Circuit considered and rejected a very similar challenge to the constitutionality of Article 65 in Diaz v. Paterson, where it concluded that Article 65 "provides all the process that is due in respect of the claimed property interests at stake." 547 F.3d 88, 96 (2d Cir. 2008). Plaintiffs-who allege the same type of injury as the Diaz plaintiffs-have not materially distinguished their case, and accordingly, their due process claims fail, as a matter of law, under Diaz.

Plaintiffs' equal protection and free speech claims are also dismissed because the Court concludes, as a matter of law, that: (1) a cognizable equal protection claim cannot be asserted by plaintiffs based upon any alleged differences in the length of time it takes for various judges to resolve legal challenges brought under Article 65; and (2) a cognizable First Amendment claim cannot be asserted by plaintiffs based upon the theory that Article 65 requires plaintiffs to use the court system to challenge a notice of pendency, and thus somehow interferes with plaintiffs' free speech rights. These two purported theories of liability do not, and cannot, support a cognizable constitutional claim in this case as a matter of law.

I. BACKGROUND

The following facts are taken from the complaint. The Court assumes them to be true for the purpose of deciding this motion, and construes them in the light most favorable to plaintiffs, the non-moving parties.

Plaintiffs jointly own a home in Suffolk County, and were parties to a real estate contract with Jannetti involving the sale of the home to him. (Compl. ¶¶ 1, 14.) On December 9, 2010, Jannetti filed a summons and complaint seeking specific performance of the real estate contract, which would require plaintiffs to sell him their home. ( Id. ¶¶ 14-15.) Jannetti also filed a notice of pendency in the office of Pascale, the Suffolk County Clerk, who immediately recorded it in Suffolk County's publicly available real property records ( id. ¶ 15), as she was bound to due by Article 65. See N.Y. C.P.L.R. § 6511(c) ("Each county clerk with whom a notice of pendency is filed shall immediately record it.").

As is discussed below, plaintiffs received no prior notice of the filing or recording of the notice of pendency, and they object to the fact that Article 65 does not require such notice, which they argue is due to them because of the potential for abuse of the notice of pendency. The complaint alleges that "the recorded lis pendens[1] is a document that has a significant adverse impact on the property owners' private interests, such as a tainted credit rating, ability to procure even a small mortgage through a home equity loan... and an impaired ability to alienate the property." (Compl. ¶ 53.) Plaintiffs allege that Jannetti's notice of pendency harmed them by making it impossible for them to obtain a construction loan in order to make needed repairs to their home. ( Id. ¶ 64.)

On April 7, 2011, the Suffolk County Supreme Court canceled Jannetti's notice of pendency in response to plaintiffs' motion and dismissed his claim for specific performance, but plaintiffs allege that Pascale did not remove the notice of pendency from Suffolk County's real property records. ( Id. ¶ 18.) On May 16, 2011, Jannetti filed a second notice of pendency, which Pascale immediately recorded, again without notice to plaintiffs ( id. ¶ 16), who contend in this lawsuit that Article 65 forbids successive notices of pendency when the first one was canceled. See N.Y. C.P.L.R. § 6516(c). The Suffolk County Supreme Court canceled Jannetti's second notice of pendency as well, but plaintiffs allege that Pascale did not remove it from the real property records either. (Compl. ¶ 19.)

On July 25, 2012, the New York Appellate Division reinstated Jannetti's claim for specific performance and his original notice of pendency. ( See Ex. 2 to Weiss First Decl.) For reasons that are not entirely clear, Jannetti responded to the Appellate Division's order by filing a third notice of pendency on August 3, 2012, which the Suffolk County Supreme Court held was valid on April 17, 2013. ( See Ex. B to McGowan Decl.) It does not appear that plaintiffs ever appealed the April 17, 2013 order upholding Jannetti's third notice of pendency, though the Suffolk County Supreme Court dismissed the entire specific performance claim on February 5, 2014. ( See Ex. 1 to Weiss First Decl.)

The complaint is not clear concerning whether, after the February 5, 2014 dismissal, the state litigation remains ongoing, but counsel for plaintiffs stated at oral argument in this case that Jannetti had appealed the dismissal of his state claim, and that the parties were awaiting oral argument in the Second Department. Plaintiffs filed their complaint in this action on December 9, 2013, in between the Suffolk County Supreme Court's order upholding Jannetti's third notice of pendency and its order dismissing his specific performance claim. Defendants moved to dismiss the complaint in this action in its entirety on February 14, 2014. On March 17, 2014, plaintiffs responded in opposition, and also moved to disqualify defendants' counsel.[2] Defendants responded in opposition to the disqualification motion, and in further support of their motion to dismiss, on April 7 and 21, 2014. Plaintiffs replied in further support of their disqualification motion on both April 16 and 29, 2014.

II. STANDARD OF REVIEW

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010). "In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient to raise a ...


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