Decision and Order The defendants have moved seeking to vacate 28 notices of pendency filed upon properties owned by the defendants. The plaintiffs oppose the motion. Papers were submitted by the parties and arguments were held. After reviewing all the arguments, this court now makes the following determination. The plaintiffs are all individuals who invested sums of money with the defendant Yechezkel Strulovich as investments in various real estate ventures in Kings County. According to the Amended Complaint the defendant did not invest any of the money given to him for the intended purposes but rather used the money for other ventures unrelated to the interests of any of the plaintiffs. The Amended Complaint alleges causes of action for constructive trusts, fraud, RICO, breach of contract, conversion, breach of fiduciary duty, unjust enrichment, violations of the debtor creditor law and an accounting. The defendant Strulovich has now moved seeking to vacate the filing of the notices of pendency on various properties owned by him and entities he owns. The motion is opposed. Conclusions of Law It is well settled that a notice of pendency provides constructive notice of an action where the judgement may affect the title to real property (Sharestates Investments, LLC v. Hercules, 178 AD3d 1112, 116 NYS3d 299 [2d Dept., 2019]). It is further well settled that causes of action for a constructive trust on real property allows the filing of a notice of pendency over that property (Natasi v. Natasi, 26 AD3d 32, 805 NYS2d 585 [2d Dept., 2 0 0 5]). That general rule, however, has been refined by the courts and in truth a notice of pendency is permitted to be filed in a constructive trust action only where the plaintiff seeks to impose a trust on the defendant’s actual real property. However, where the res of the prospective trust is not real property then a notice of pendency is not available (see, Pizzurro v. Pasquino, 201 AD2d 635, 607 NYS2d 975 [2d Dept., 1994]). Thus, in Yonaty v. Glauber, 40 AD3d 1193, 834 NYS2d 744 (3rd Dept., 2009] the court held a constructive trust inapplicable where the res sought were really interests in various corporations. The defendant Strulovitch argues the notices of pendency are improperly filed in this case. The defendant asserts that the properties are owned by holding companies which in turn are owned by Strulovich and perhaps other individuals. Thus, the plaintiffs merely have interests in companies and not any real property. In a related action filed by other investors against Strulovich in Federal Court, a decision did hold that the plaintiffs there could not successfully file any notice of pendency based on claims of a constructive trust because those plaintiffs only maintained an interest in the companies that were formed and had no direct claims over the property itself. In that case there were two sets of properties, those properties labeled Schedule A Properties which were properties owned by corporations of which the plaintiffs were owners and properties labeled Schedule B Properties which were properties owned by Strulevich and entities he owned. The federal decision held there could be no notices of pendency filed on any Schedule A Properties. There are two critical distinctions that must be made which distinguish that precedent from the fact of this case. First, in that case the plaintiffs sought to return any proceeds to the LLC’s they owned together with the defendant. Therefore, as the court noted “indeed even if successful, their claim would not result in any direct interest in the four Schedule A Properties because they hold only membership interests in the Holding Company Defendants or the LLC Plaintiffs” (see, Schonberg v. Strulovich, 17-CV-2161, Decision dated November 2, 2017, page 45). Thus, the court held the plaintiffs were not really seeking any property but rather to return investment money to the corporations. Second, the court held that “the Amended Complaint belies plaintiffs’ assertion that they would have a direct interest in the underlying properties because it requests only that the Court issue an order that the four Schedule A Properties are owned by the respective Holding Company Defendant-not by any plaintiff in this action” (id) . Indeed, a careful examination of the Amended Complaint in that case makes clear the relief sought only concerned corporations and not any direct claim on the property itself. Thus, paragraph 165 of the Amended Complaint in that case stated that “insofar as the Secret Properties were procured with the proceeds of Individual Defendants’ fraudulent scheme against the Individual Plaintiffs, the Plaintiffs demand that title to the Secret Properties be conveyed to the appropriate LLC Plaintiffs, together with any profits that the Individual Defendants obtained from the Secret Properties” (see, Schonberg v. Strulovich, 17-CV-2161 Second Amended Complaint, 165). Consequently, the court held that concerning the notices of pendency, there were no real constructive trusts on any property directly and therefore the notices of pendency were dismissed. Concerning the Schedule B Properties of which the plaintiffs had no interest the court declined to rule substantively on that issue by declining to exercise supplemental jurisdiction. Thus, the issue is ripe for determination. It is obvious that the plaintiffs do not maintain any ownership interests in any of the properties for which they filed notices of pendency and only assert a constructive trust over those properties. This is in stark contrast to the Schedule A Properties of the Federal Decision wherein the plaintiffs did maintain ownership interests. This anomalous result wherein less ownership interests create greater constructive trust rights and consequently a greater ability to file a notice of pendency in contrast with actual ownership interests where no such notice of pendency is possible is rooted in the fact the ownership interests in corporations do not concern direct property ownership but indirect property ownership through another entity. The lack of any ownership interests in any corporations at all do not suffer from this deficiency. It cannot be argued the plaintiffs only have an indirect interest in those properties because they really have no interest at all other than that based upon a constructive trust. Therefore, the Federal Decision does not foreclose the availability of the notices of pendency sought here. A further examination of the arguments must now be explored. When reviewing a motion to cancel a notice of pendency on the grounds it does not affect real property the court is limited to the pleadings to determine whether the claims are directly related to property as required pursuant to CPLR §6501. The court may not investigate any of the underlying transactions (5303 Realty Corp., v. 0 & Y Equity Group, 64 NY2d 313, 486 NYS2d 877 [1984]). The Amended Complaint seeks a constructive trust concerning five distinct sets of properties called the Strulovitch Properties, the Trust Investment Properties, the Sham Transfer Properties and Controlled Holding Company Assets, the Trust Assets and the Strulevitch Trust Assets. The defendants assert that concerning the Strulovitch Properties the plaintiff’s “seek an interest in the Strulovitch Holding Company Defendants which own the Strulovitch Properties” (see, Memorandum of Law in Support of Motion to Vacate Notices of Pendency, page 11). However, paragraph 63 of the Amended Complaint asserts that “equity and good conscience require that the Court impose a constructive trust upon the Strulovich Properties” (see, Amended Complaint, 63). Thus, the plaintiffs are not seeking any interest in any corporations but rather in the property itself. The defendants argue that even if Strulovich diverted funds improperly that would only afford the plaintiffs rights in a holding company and not the actual property. However, that conclusory assertion is not based upon any facts and indeed is contrary to the allegations and pleadings of the Amended Complaint. Concerning the Trust Investment Properties, the defendants argue the plaintiffs obtained beneficial interests in companies formed to purchase these properties, therefore at most the plaintiffs only maintain interests in companies that own the property and not the property itself and therefore the notices of pendency concerning these properties must be vacated. However, there is no evidence or facts presented in the Amended Complaint to support this argument. Paragraph 66 of the Amended Complaint, which defendants assert support this position, merely states the plaintiff’s “forwarded Investment Funds to the Individual Defendants and CS which was to be used for the purchase, renovation and development of one or more specified beneficial interest” (see, Amended Complaint, 66). That does not support the investment funds provided were for the same properties denominated as the ‘Trust Investment Properties’ within paragraphs 64-71 of the Amended Complaint. Indeed, that identical language is used concerning the Trust Assets (see, Amended Complaint, 83) and does nothing more than reiterate the essential claim, namely that the defendants used the plaintiff’s investment funds for improper purposes and the plaintiff’s now seek to impose constructive trusts on the five categories of properties enumerated in the Amended Complaint. The remaining three categories of properties likewise share the same characteristics as the first two and are the legal equivalent for purposes of this motion. Since all the constructive trusts concern the direct property themselves, the motion seeking to vacate the notices of pendency is denied. So ordered. Dated: April 24, 2020
