Js Equity Holdings 1 LLC v 527Myrtle LLC

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Js Equity Holdings 1 LLC v 527Myrtle LLC 2021 NY Slip Op 31822(U) May 27, 2021 Supreme Court, Kings County Docket Number: 513368/20 Judge: Leon Ruchelsman 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. [*FILED: 1] KINGS COUNTY CLERK 05/28/2021 01:23 PM INDEX NO. 513368/2020 NYSCEF DOC. NO. 60 RECEIVED NYSCEF: 05/28/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 ------------------------------------------x JS EQUITY HOLDINGS l LLC, Decision and order Plaintiff, Index No. 513368/20 - against - 527MYRTLE LLC, 527MYRTLEVC LLC, JERICO BLUE LLC, KINAM HAN and "JOHN DOE #1 through JOHN DOE #99", such names being fictitious and unknown to Plaintiff, the person or parties intended being the persons or entities with whom the named defendants have conspired or transacted with as described in the Complaint, May 27, 2021 Defendants, ------------------------------------------x PRESENT: HON. LEON RUCHELSMAN Yoon Sun Choi, the purported sole member of defendant Jerico Blue LLC has moved pursuant to CPLR §6514 seeking to cancel a notice of pendency filed on property located at 527 Myrtle Ayenue in Kings County. The plaintiff has opposed the motion. were submitted by the parties and arguments held. Papers After reviewing all the arguments this court now makes the following determination. As recorded in a prior order, on February 20, 2018 the plaintiff loaned an entity called Jerico Blue LLC one million dollars. The loan was guaranteed by Jason Lee. Further, between January and March 2018 the plaintiff loaned Lee personally an additional $545, 000. Jerico Blue and Lee faile~ to repay an·y of the funds and an action was commenced in New York County. A settlement agreement was reached wherein Lee filed confessions of judgement in the amount of $1,545,000 and agreed to repay the 1 of 5 [*FILED: 2] KINGS COUNTY CLERK 05/28/2021 01:23 PM NYSCEF DOC. NO. 60 INDEX NO. 513368/2020 RECEIVED NYSCEF: 05/28/2021 funds by May 20, 2019. Lee failed to repay the money and on July 8, 2019 the plaintiff filed the confession of judgement. The Complaint alleges that Lee transferred property he owned to his wife on July 16, 2018 in efforts to avoid the consequences of the confession of judgement. A year later Lee's wife transferred the property to another entity. Further, the Complaint alleges that on December 18, 2019 Lee and defendant Han purchased property located at 527 Myrtle Street through defendant entity 527Myrtle LLC whi-ch is owned by Jerico Blue LLC and Yorkshire Equity LLC. The Complaint contends that these entities are the alter egos of Lee and that pursuant to the confession of judgement the plaintiff should be declared the owner of these entities in place of Lee's interests. The plaintiff thus filed a Notice of Pendency on the property. The movant now seeks to cancel the notice of pendency on the grounds it was filed in bad faith since the judgement does not affect any real estate owned by Lee. This is true, argue the defendants, because there is no evidence any loan was given to Jerico Blue LLC. Rather, any loan was made to Jerico LLC a different entity entirely. Thus, there is no basis to impose a notice of pendency upon property owned by entities owned by Lee and the notice of pendency must be vacated. Conclusions of Law It is well settled that "a notice of pendency may be filed in any action in a court of the state 2 2 of 5 . in which the judgment [*FILED: 3] KINGS COUNTY CLERK 05/28/2021 01:23 PM NYSCEF DOC. NO. 60 INDEX NO. 513368/2020 RECEIVED NYSCEF: 05/28/2021 demanded would affect the title to, or the possession, use or enjoyment of, real property" (CPLR § 6501). Further, the filing of a notice of pendency "puts the world on notice of the plaintiff's potential rights in the action and thereby warn[s] all comers that if they then buy the realty or land on the strength of it or otherwise rely on t-he defendant 1 s right, they do so subject to whatever the action may establi.sh as the plaintiff's right" (In re Sakow, 97 NY2d 436, 741 NYS2d 175 [20_02]). The defendant's entire basis seeking to dismiss the notice of pendency is that the property is owned by an entity that has no connection to Lee at all. They assert that even if Lee owns one of the entities that owns the owner of the prope-rty that is not the entity that owed any money which Lee guaranteed. Further, in any event they argue that merely asserting ownership claims in an entity does not afford the right to encumber property wit_h a notice of pendency. It is well settled that a party seeking to pierce the corporate veil must establish that "the owners exercised complete domination of the corporation in respect to- the transaction attached, and that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury" (.§..§£, Matter of Morris v. New York State, 82 NY2d 135, 603 NYS2d 807 [1993]). Conclusory claims of domination or assertions the corporation acted as an "alter ego 0 without more 3 3 of 5 [*FILED: 4] KINGS COUNTY CLERK 05/28/2021 01:23 PM NYSCEF DOC. NO. 60 INDEX NO. 513368/2020 RECEIVED NYSCEF: 05/28/2021 will not support the piercing of the corporate veil (Goldman v. Chapman·, 44 AD3d 938, 844 NYS2d 126 [2d Dept., 2007]). The Verified Complaint alleges that "Lee failed and continues to fail to adhere to corporate formalities" and "Lee and the LLC Defendants comingle funds amongst themselves" and "Lee uses corporate funds belonging to the LLC Defendants for p.ersonal use" and that ''Lee used his dominion over the LLC Defendants to conceal his assets which has resulted in injury to Plairitiff" {see, Verified Complaint, ~~ 38, 39, 43) . These allegations establish, at this juncture, that Lee abused the privilege of operating in corporate form by dominating or controlling the corporation (Sacks v. Kno.lls at Pinewood LLC, 157 AD3d 917, 69 NYS3d 677 [2d Dept., 2018]). As the court noted "under New York law, the Corpo.rate veil will be pierced to achieve equity, even absent fraud, '[w]hen a corporation has been so dominated by an individual or another corporation and its separate en.tity so ignored that it primarily transacts the dominator's business instead of its own and .can be called the other's alte-r ego'" (see, Island Seafood Co., Inc., v. Golub Corp., 303 AD2d 892, 759 NYS2d 768 [3rd Dept., 2003]). Thus, it is of no moment whether the entities which own 527Myrtle LLC are entities upon which a judgement was secured because the basis for the law·suit and indeed the notice of pendency is that Lee is not entitled to any corporate protection and that consequently the lien affects Lee 4 4 of 5 [*FILED: 5] KINGS COUNTY CLERK 05/28/2021 01:23 PM NYSCEF DOC. NO. 60 INDEX NO. 513368/2020 RECEIVED NYSCEF: 05/28/2021 and is therefore proper. Of course, further discovery will broaden the allegations of piercing the corporate veil and will shed light upon whether the allegations may prove true. However, at this stage of the litigation there are Surely sufficient indicia that Lee in fact is not entitled to corporate protections. Therefore, the notice of pendency is proper and the motion seeking to dismiss such notice is consequently denied. So ordered. ENTER: DATED: May 27, 2021 Brooklyn N.Y. Hon. JSC Leon;;? 5 5 of 5

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