Opinion
514084/17
07-17-2019
Julia ASHIROVA, for herself and on behalf of Northeastern Capital Funding LLC and Empire Advance Funding LLC, Plaintiffs, v. Dan CEVALLOS, John Cevallos, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Northeastern Capital Funding, LLC ; Empire Advance Funding, LLC; Advance Funding, LLC; Majestic Funding, LLC; Mercury Capital Funding, LLC; Harrajo, LLC; and DCACOC, LLC, Defendants.
Recitation in accordance with CPLR 2219 (a) of the papers submitted on the joint motion, by order to show cause, of defendants Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding, LLC; Harrajo, LLC, and DCACOC, LLC (hereinafter the movants) for an order pursuant to CPLR 6501 and 6514, canceling or vacating the Notices of Pendency (hereinafter the subject notices) filed by Julia Ashirova, for herself and on behalf of Northeastern Capital Funding LLC and Empire Advance Funding LLC (hereinafter the plaintiffs) on January 24, 2019, against two real properties located at 220 81st Street, Brooklyn, New York [Block 5996, Lot 15] and 327 101st Street, Brooklyn, New York [Block 06137 Lot 1001] (hereinafter the subject properties); and for an order, pursuant to CPLR 6514 (b) and (c) awarding costs and expenses.
Order to Show Cause
Affirmation of movant's counsel in support
Affidavit of Athena Salavantis-Cevallos in support
Exhibits A-H
Movants' Memorandum of law in further support
Exhibits I-L
Plaintiff's affirmation in opposition to Order to Show Cause
Exhibits A-E
BACKGROUND
On February 13, 2017, plaintiff Julia Ashirova, commenced the instant action for, inter alia, an accounting by electronically filing a summons and verified complaint with the Kings County Clerk's office. On February 15, 2017, plaintiff Julia Ashirova, electronically filed a summons and amended verified complaint with the Kings County Clerk's office.
By notice of motion filed on March 9, 2018, Julia Ashirova, on behalf of herself, Northeastern Capital Funding LLC and Empire Advance Funding LLC moved to amend the complaint to add additional parties and additional causes of action for breach of fiduciary duty and conversion. By order July 13, 2018, the Court granted the motion to amend the complaint. On January 11, 2019, Galiah Jeanette Harel, filed a notice of appearance as attorney of record for the movants .
The only answer annexed to the movants' papers was that of defendant Harrajo, LLC. The Court learned of the notice of appearance of Galiah Jeanette Harel and her submission of separate answers on behalf of each of the movants by examining the Kings County Clerk's minutes. The Court may take judicial notice of its own records (see Wachovia Bank, N.A. v. Otto N. Williams , 17 Misc 3d 1127 [A] [NY Sup 2007] citing Matter of Khatibi v. Weill , 8 AD3d 485 [2nd Dept 2004] ).
On January 14, 2019, Galiah Jeanette Harel, electronically filed a separate answer to the amended verified complaint on behalf of the movants.
Plaintiff's amended verified complaint alleges the following salient facts. The action is brought on behalf of Julia Ashirova, and on behalf of Northeastern Capital Funding LLC and Empire Advance Funding LLC, two companies that she owns. Plaintiffs seek an accounting and damages for breach of fiduciary duty and conversion. Plaintiffs allege that defendants John Cevallo and Dan Cevallos and their numerous alter egos and accomplices, looted assets from the plaintiff companies and failed to make distributions to the plaintiff.
MOTION PAPERS
The movants motion papers consist of an order to show cause, an affirmation of their counsel, and an affidavit of defendant Athena Salavantis-Cevallos. Annexed to Athena Salavantis-Cevallos affidavit are eight exhibits labeled A through H. Exhibit A is the Notice of Pendency against real property located at 220 81st Street, Brooklyn, New York [Block 5996, Lot 15]. Exhibit B is the Notice of Pendency against real property located at 327 101st Street, Brooklyn, New York [Block 06137 Lot 1001]. Exhibit C is a copy of the instant summons and amended verified complaint. Exhibit D is the answer of the defendant Harrajo, LLC. Exhibit E is described as a stipulation of settlement between Dan Cevallos as plaintiff and Julia Ashirova as the sole defendant in the action bearing Index Number 19308/2011 in Kings County Supreme Court. Exhibit F is described as a Marketing Consultant Agreement. Exhibits G and H are described as correspondence to plaintiff's counsel demanding that the subject notices of pendency be vacated and a memorandum of law.
Plaintiff has opposed the motion with an affirmation of counsel and five annexed exhibits labeled A through E. Exhibit A is described as the deed to the real property located at 220 81st Street, Brooklyn, New York 11209 [Block 5996, Lot 15]. Exhibit B is described as the deed to the real property located at 327 101st Street, Brooklyn, New York 11209 [Block 06137 Lot 1001]. Exhibit C is described as the New York State Department of State web page information regarding defendant Harrajo, LLC. Exhibit D is described as the deed to the real property located at 327 101st Street, Brooklyn, New York [Block 06137 Lot 1001]. Exhibit E is described as a copy of the index on Acris's webpage showing the recorded chain of title of the real property located at 327 101st Street, Brooklyn, New York [Block 06137 Lot 1001].
The movants submitted a memorandum of law in further support of the instant motion to vacate and cancel the subject notices of pendency. The memorandum of law included an affirmation of counsel and four annexed exhibits labeled I through L. Exhibit I is a copy of a complaint bearing index number 1842/2019 in which Dan Cevallos is the plaintiff and Yonatan S. Levoritz and Law Office of Yonatan S. Levoritz are the defendants. Exhibit J is an order of the court dated October 27, 2017 issued in an action bearing Index Number 520020/2016 in which Dan Cevallos is the plaintiff and Julia Ashirova is the defendant. Exhibit K is described as a transcript of a proceeding for multiple causes of action that had been joined for trial bearing Index Numbers 506927/2017, 520020/2016 and 503302/2017. Exhibit L is described in the affirmation of the movant's counsel as a copy of a summons and complaint dated March 30, 2015. No such document is annexed. Instead annexed as exhibit L is a document denominated as a stipulation of settlement on a cause of action in Westchester County Supreme Court bearing Index Number 54904/2015. No party in the Westchester action is a party in the instant action. The stipulation is dated January 2019 and does not contain the day of the month. Exhibit M is described as a stipulation of settlement dated January 14, 2019. No such document is annexed.
LAW AND APPLICATION
Motion to Vacate the Notices of Pendency Pursuant to CPLR 6501
A litigant's ability to file a notice of pendency is an extraordinary privilege because of the relative ease by which it can be obtained ( Matter of Sakow , 97 NY2d 436, 441 [2017] ) and because it permits a party to effectively retard the alienability of real property without any prior judicial review ( Delidimitropoulos v. Karantinidis , 142 AD3d 1038 [2nd Dept 2016] citing 5303 Realty Corp. v. O & Y Equity Corp. , 64 NY2d 313, 320 [1984] ). The movants seek an order pursuant to CPLR 6501 and 6514, canceling or vacating the subject notices filed by the plaintiffs on January 24, 2019, against the subject properties.
A notice of pendency may be filed only when the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property ( Delidimitropoulos , 142 AD3d at 1039 citing CPLR 6501 ; and Ewart v. Ewart , 78 AD3d 992 [2nd Dept 2010] ). When the court entertains a motion to cancel a notice of pendency it is in its inherent power to analyze whether the pleading complies with CPLR 6501, it neither assesses the likelihood of success on the merits nor considers material beyond the pleading itself; the court's analysis is to be limited to the pleading's face (see Nastasi v. Nastasi , 26 AD3d 32, 36 [2nd Dept 2005] quoting 5303 Realty Corp. v. O & Y Equity Corp. , 64 NY2d 313, 321 [1984] ).
As a threshold matter, the amended verified complaint, which was permitted by this Court dated July 13, 2018, superseded the original complaint and is the operative pleading in this action ( Taub v. Schon , 148 AD3d 1200, 1201 [2nd Dept 2017] ). Plaintiffs' instant amended verified complaint is brought by Julia Ashirova, as an owner and member of Northeastern Capital Funding LLC and Empire Advance Funding LLC. The plaintiffs have plead causes of action for conversion and breach of fiduciary duty against the defendants for the purpose of recovering earnings that allegedly belong to Northeastern Capital Funding LLC and Empire Advance Funding LLC.
The amended verified complaint alleges, among other things, that Dan Cevallos and John Cevallos used their respective positions to improperly divert earnings from the plaintiff companies and hid those earnings by purchasing the two subject properties using accomplices and shell companies that they either owned and controlled. It further alleges that the improperly diverted earning should have been paid to Julia Ashirova, as a shareholder of both companies, as annual distribution. The plaintiffs' amended verified complaint further contends that in order to recover the diverted earning the plaintiffs will need to force the sale of the subject properties, which necessarily affects the title to, or the possession, use or enjoyment of those properties.
There is no dispute that plaintiff Julia Ashirova is a member of both Northeastern Capital Funding LLC and Empire Advance Funding LLC. There is also no dispute that her claims in the amended verified complaint are premised on the defendants' alleged improper diversion of the plaintiff limited liability company's assets. A membership interest in a limited liability company is personal property, and a member has no interest in specific property of the limited liability company ( Sealy v. Clifton, LLC , 68 AD3d 846, 847, 890 NYS2d 598, 600 [2nd Dept 2009] citing , Limited Liability Company Law § 601 ; Yonaty v. Glauber , 40 AD3d 1193, 1195 [3rd Dept 2007] ).
The alleged claims to the diverted earning or assets of Northeastern Capital Funding LLC and Empire Advance Funding LLC amounts to personal property ( Sealy , 68 AD3d 846 ; see also , CPLR 6501 ; General Prop. Corp. v. Diamond , 29 AD2d 173, 176 [1st Dept 1968] ). Consequently, plaintiffs' claims for breach of fiduciary duty and for an accounting do not entitle them to the filing of a notice of pendency. These causes of action relate to plaintiffs claim of an ownership in the assets of the aforementioned limited liability companies and not to any claim of an ownership interest in the subject real properties ( Delidimitropoulos , 142 AD3d 1038 ). In sum, on its face, the amended verified complaint does not seek relief that would affect the title to, or the possession, use or enjoyment of, real property (Id. ) Accordingly, the movants motion to vacate the subject notices of pendency pursuant to CPLR 6501 is granted.
Motion for Cost and Expenses Pursuant to CPLR 6514 (b) and (c)
The movants seek an order, pursuant to CPLR 6514 (b) and (c) awarding costs and expenses. The judgment sought in the amended verified complaint would not affect the title to, possession, use or enjoyment of, real property within the intendment of CPLR 6501. Therefore, the subject notices are properly canceled pursuant to CPLR 6501, that is, pursuant to the Supreme Court's inherent power, and not pursuant to CPLR 6514 (a) or (b). Under these circumstances, the court had no authority to award costs and disbursements under CPLR 6514 (c) ( Delidimitropoulos , 142 AD3d 1038, citing Congel v. Malfitano , 61 AD3d 807, 809 [2nd Dept 2009] ).
CPLR 6514 (a) provides authority for mandatory cancellation of a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519. CPLR 6514 (b) authorizes discretionary cancellation of a notice of pendency, if the plaintiff has not commenced or prosecuted the action in good faith.
The Court restricts its analysis to the allegations of fact and arguments actually raised by the movants and does not consider those which they could have raised but did not. Accordingly, the movants have neither argued nor established that cancellation of the subject notices of pendency should have been granted pursuant to CPLR 6514 (a).
Instead, they contended that cancellation was appropriate pursuant to the discretionary authority of CPLR 6514 (b). However, the movants arguments in support of cost and expenses pursuant to CPLR 6514 (b) and (c) is premised on the fact that the remedy sought was ultimately for monetary damages contrary to the requirements of CPLR 6501. It is not pursuant to any court rule (cf. Delidimitropoulos , 142 AD3d 1038 ).
Under these circumstances, the movant did not establish that this action was commenced in bad faith and, thus, failed to demonstrate their entitlement to recover costs and expenses pursuant to CPLR 6514 (c) (see Town of Oyster Bay v. Doremus , 94 AD3d 867, 870 [2nd Dept 2012], citing Lessard Architectural Group, Inc., P.C. v. X & Y Dev. Group, LLC , 88 AD3d 768 [2nd Dept 2011] ).
CONCLUSION
The joint motion of defendants Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding, LLC; Harrajo, LLC, and DCACOC, LLC for an order pursuant to CPLR 6501 vacating the Notices of Pendency filed by the plaintiffs against two real properties located at 220 81st Street, Brooklyn, New York [Block 5996, Lot 15] and 327 101st Street, Brooklyn, New York [Block 06137 Lot 1001] is granted.
The joint motion of defendants Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding, LLC; Harrajo, LLC, and DCACOC, LLC for an order pursuant to CPLR 6514 (b) and (c) awarding costs and expenses is denied.
The foregoing constitutes the decision and order of this Court.