Court Opinion

ID: 9965025
Source: CourtListenerOpinion
Date Created: 2024-05-01 15:10:17.735618+00
Date Added: 2024-06-11T08:24:39.533896
License: Public Domain

National Auditing Servs. & Consulting, LLC v Assa
               2024 NY Slip Op 31487(U)
                     April 25, 2024
           Supreme Court, New York County
        Docket Number: Index No. 156862/2022
                  Judge: Arlene P. Bluth
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                     INDEX NO. 156862/2022
  NYSCEF DOC. NO. 125                                                                                          RECEIVED NYSCEF: 04/25/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ARLENE P. BLUTH                                            PART                              14
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          156862/2022
                NATIONAL AUDITING SERVICES & CONSULTING, LLC,
                                                                                                 MOTION DATE         04/23/2024
                                                         Plaintiff,
                                                                                                 MOTION SEQ. NO.         004
                                                 -v-
                SALIM ASSA, 511 PROPERTY LLC,511 PROPERTY II,
                LLC,9TH AVE. HOTEL PROPERTY HOLDING LLC,9TH
                AVE. RETAIL PROPERTY HOLDING LLC,RETAIL &
                                                                                                   DECISION + ORDER ON
                COMMERCIAL PROPERTY HOLDINGS LLC,NINTH
                AVENUE TOWER, LLC,511 PARTNERS, LLC,515                                                  MOTION
                VENTURES, LLC,515 NINTH HOLDING, LLC

                                                         Defendants.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 004) 121, 122, 123 1
            were read on this motion to/for                                                  COSTS AND EXPENSES                    .

                      Defendants’ motion for costs and expenses is denied.

            Background

                      This action arises out of plaintiff’s efforts to enforce a judgment from an underlying

            action filed in New York. Plaintiff observes that it obtained a judgment in a separate action for

            nearly $1 million in 2021 against defendant 511 Property LLC (“511 Property”) arising out of a

            contract between the parties.

                      Plaintiff alleges that in March 2016, 511 Property divided a property into 6 condominium

            lots, and during the course of litigation in the underlying action, plaintiff alleges that defendant

            Salim Assa, the managing member of 511 Property, engaged in fraudulent transfers of the lots to

            1
              The Court did not consider the reply papers, which were not timely filed (the reply was filed after the motion was
            returnable).
                156862/2022 NATIONAL AUDITING SERVICES & CONSULTING, LLC vs. ASSA, SALIM ET AL                       Page 1 of 4
                Motion No. 004

                                                                           1 of 4
[* 1]
                                                                                                    INDEX NO. 156862/2022
  NYSCEF DOC. NO. 125                                                                         RECEIVED NYSCEF: 04/25/2024

            various entities named as co-defendants in this action. Each co-defendant entity was purportedly

            controlled by defendant Assa and plaintiff alleges that Assa repeatedly transferred ownership of

            the lots to similarly-named entities to obscure the fraudulent nature of the conveyances. Each

            transfer resulted in a purge of 511 Property’s assets that effectively rendered the defendants

            “judgment proof” (NYSCEF Doc. No. 14 at 9). Plaintiff alleges that these transfers occurred for

            little or no consideration and were meant to render 511 Property insolvent so it would not have to

            pay the judgment.

                   Previously, this Court denied defendants’ motions to dismiss. However, the Appellate

            Division, First Department reversed and granted defendants’ dismissal motion on the ground that

            the claims were not timely (Natl. Auditing Services & Consulting, LLC v Assa, 217 AD3d 503,

            504, 191 NYS3d 373 [1st Dept 2023]). The First Department also remanded the issue of whether

            to award costs and expenses under CPLR 6514(c) to this Court (id.).

                   Defendants contend that they are entitled to such costs on the ground that plaintiff

            improperly filed the notice of pendency in this case. They insist that courts routinely invoke

            CPLR 6514(c) to award expenses to defendants who successfully seek the cancellation of a

            notice of pendency. Defendants argue that there is a presumption that they be entitled to recover

            such costs and expenses.

                   In opposition, plaintiff emphasizes that the statute does not create a presumption. Instead,

            it’s a discretionary statute that permits the Court to award costs and expenses where a notice of

            pendency is cancelled. Plaintiff emphasizes that it did not improperly file the notice of pendency;

            rather it observes that defendants have refused to satisfy the underlying judgment and plaintiff

            has had to chase defendants. It argues that it lost this case due to a “hyper technicality” and so it

            should not be forced to pay costs and expenses where it has not recovered a single dollar on its

             156862/2022 NATIONAL AUDITING SERVICES & CONSULTING, LLC vs. ASSA, SALIM ET AL         Page 2 of 4
             Motion No. 004

                                                           2 of 4
[* 2]
                                                                                                    INDEX NO. 156862/2022
  NYSCEF DOC. NO. 125                                                                         RECEIVED NYSCEF: 04/25/2024

            judgment against 511 Property. Plaintiff points out that the First Department did not find that

            defendants were entitled to recover costs and expenses, only that the Court should consider

            whether defendants could recover costs and expenses under the applicable statutes.

            Discussion

                   The First Department directed that this Court evaluate whether or not legal fees should be

            awarded under CPLR 6514(c) and emphasized that fees could be awarded “even in the absence

            of bad faith.” The relevant statute provides that “The court, in an order cancelling a notice of

            pendency under this section, may direct the plaintiff to pay any costs and expenses occasioned by

            the filing and cancellation [of a notice of pendency], in addition to any costs of the action”

            (CPLR 6514[c]).

                   “CPLR 6514(c) authorizes the court to award costs and expenses to the defendant

            whenever a notice of pendency is cancelled ‘under this section’” (Vincent C. Alexander, Practice

            Commentaries, C6514:3). Cases exploring whether or not award costs under this statute

            frequently mention the circumstances of the case (see DeCaro v East of East LLC, 95 AD3d

            1163, 1164, 945 NYS2d 159 [2d Dept 2012]; see also Rabinowitz v Larkfield Building Corp.,

            231 AD2d 703, 647 NYS2d 820 [2d Dept 1996]).

                   The question for this Court is whether the circumstances here merit the award of costs

            and expenses. The Court, in its discretion, denies such an award. As plaintiff points out, this is

            not a situation in which it “wrongfully filed” a notice of pendency. Rather, the case was

            dismissed pursuant to the statute of limitations. Plaintiff did not commence a frivolous or wholly

            meritless action. While that is not dispositive (bad faith is not required to award costs and

            expenses under CPLR 6514[c]), the Court finds that plaintiff cited persuasive reasons not to

            award defendants costs and expenses. The Court observes that a federal court, when cancelling a

             156862/2022 NATIONAL AUDITING SERVICES & CONSULTING, LLC vs. ASSA, SALIM ET AL         Page 3 of 4
             Motion No. 004

                                                           3 of 4
[* 3]
                                                                                                    INDEX NO. 156862/2022
  NYSCEF DOC. NO. 125                                                                         RECEIVED NYSCEF: 04/25/2024

            notice of pendency based on statute of limitations grounds, declined to award costs and expenses

            under CPLR 6514(c) (Singh v Lintech Electric, Inc., 18-CV-05780-FB-LB, 2021 WL 1062533,

            at *3 [ED NY 2021]).

                      The fact is that plaintiff obtained a judgment against 511 Property and that judgment has

            not yet been satisfied. The complaint alleges that defendant Assa attempted to move assets to

            render 511 as “judgment proof.” There is no dispute that 511 Property’s interests in a property

            were transferred, although defendants insist that there was nothing fraudulent about these

            transactions. Plaintiff therefore had good reason to name these defendants and to file a notice of

            pendency. In other words, as plaintiff argues, it would only add “insult to injury” if defendants

            successfully avoided paying plaintiff’s judgment and were also awarded costs and expenses.

                      Contrary to defendants’ claims, the award of costs and expenses under CPLR 6514(c) is

            not mandatory nor is there a presumption that they receive such an award. It is in this Court’s

            discretion and this Court declines to issue such an award. The Court observes that the First

            Department found that “dismissal of the action is warranted” (Assa, 217 AD3d at 504), and so

            the Court marks the case as disposed.

                      Accordingly, it is hereby

                      ORDERED that defendants’ motion for costs and expenses pursuant to CPLR 6514(c) is

            denied.

                   4/25/2024                                                             $SIG$
                       DATE                                                      ARLENE P. BLUTH, J.S.C.
             CHECK ONE:                X   CASE DISPOSED                  NON-FINAL DISPOSITION

                                           GRANTED          X   DENIED    GRANTED IN PART             OTHER

             APPLICATION:                  SETTLE ORDER                   SUBMIT ORDER

             CHECK IF APPROPRIATE:         INCLUDES TRANSFER/REASSIGN     FIDUCIARY APPOINTMENT       REFERENCE

             156862/2022 NATIONAL AUDITING SERVICES & CONSULTING, LLC vs. ASSA, SALIM ET AL         Page 4 of 4
             Motion No. 004

                                                            4 of 4
[* 4]