Adam Leitman Bailey P.C. Motion Leads to Freeing Condo Units for Sale/Successful Title Defense
Attorneys from Adam Leitman Bailey, P.C. conceived and executed a successful strategy to lift a notice of pendency that had frozen the sale of units held by Adam Leitman Bailey, P.C.’s client. The lawsuit against Adam Leitman Bailey, P.C.’s clients ended in a favorable settlement without further costly litigation. The sale of the units went forward.
An LLC was formed by two individuals, who each held an equal 50% interest, primarily for the purpose of developing and selling real estate. The LLC purchased condominium units in the Hamilton Heights area of upper Manhattan and took out construction loans to develop and sell the units.
The construction project went over budget and was delayed. A dispute between these two members led to two lawsuits being filed. The first lawsuit was resolved through arbitration.
After the first lawsuit was resolved, the managing member authorized the sale of the units to one of Adam Leitman Bailey, P.C.’s corporate clients. This sale was completed. Adam Leitman Bailey, P.C.’s corporate client and now the new owner of the units, subsequently sought to sell the units.
The non-managing member sued Adam Leitman Bailey, P.C.’s corporate client. He alleged that the units in the project were sold to our corporate client at an under-market rate in a scheme to defraud him so that he would receive much lower profits from the sale. He also alleged that the managing member of the LLC and a second corporate client of Adam Leitmann Bailey, P.C.’s were complicit in this alleged scheme.
The non-managing member of the LLC froze the units by filing a notice of pendency and asserting a cause of action for a constructive trust, among other claims related to allegations of fraud.
Attorneys at Adam Leitman Bailey, P.C. immediately recognized a weakness in the plaintiff’s notice of pendency—it was improperly placed because the constructive trust was invalid. A constructive trust is only valid if it affects title to or affects the use or enjoyment of the units.
Accordingly, Adam Leitman Bailey, P.C. swiftly made a motion to dismiss the constructive trust and notice of pendency because the non-managing member’s claims did not affect title to or affect the use or enjoyment of the units. We put forth a strong argument that the plaintiff, as a member of the LLC, did not hold title to the units—the LLC did. The plaintiff, even if successful, was not entitled to the relief he sought by imposing a trust on the property.
Within three months of serving the motion on the non-managing member, a stipulation was entered into between the parties dismissing the notice of pendency, the units were unfrozen, and a settlement favorable to Adam Leitman Bailey, P.C.’s clients was reached. The integrity of title to the units was maintained.
Colin Kaufman and an associate represented our corporate clients on the motion.