Singh v. Lintech Electric, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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GURSEWAK SINGH,

MEMORANDUM AND ORDER

Plaintiff,

Case No. 18-cv-05780-FB-LB

-against-

LINTECH ELECTRIC, INC., LINDEN J

TUDOR,

Defendants.

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Appearances: For the Defendant:

For the Plaintiff: JOSHUA LEVIN-EPSTEIN

JONATHAN SILVER JASON MIZRAHI

80-02 Kew Gardens Road Levin-Epstein & Associates, P.C.

Kew Gardens, NY 11415 420 Lexington Avenue, Suite 2525

N ew York, NY 10170

BLOCK, Senior District Judge:

Plaintiff Gursewak Singh filed a claim on October 16, 2018 seeking payments

for alleged unpaid wages and other monies owed under the Fair Labor Standards Act

(“FLSA”) and New York Labor Law § 190. Singh subsequently filed two state court

complaints on December 9, 2019 and December 10, 2019 alleging the defendants

had fraudulently conveyed properties in their ownership. The two actions allege that

the defendants engaged in a series of property transfers that “were either without

consideration or without fair consideration.” See ECF No. 68 at 3; ECF No. 69 at 3.

The first property, a residence located at 109-70 133rd Street South Ozone Park, NY

was allegedly conveyed fraudulently on March 26, 2003. The second property, a

commercial property located at “1609 Nostrand Avenue/3006 Tilden Avenue in

Brooklyn,” was allegedly conveyed fraudulently first on March 6, 1998 and later on

September 24, 2007. ECF No. 68 at 2; ECF No. 69 at 2.

Having removed the state court cases to federal court, the defendants move

under Federal Rule of Civil Procedure Rule 12(b)(6) to dismiss the fraudulent

conveyance actions and ask the Court to cancel the lis pendens, or notices of

pendency, filed against defendants’ residential and commercial properties.

Defendants also move for attorney’s fees and costs pursuant to C.P.L.R. § 6514(c)

and sanctions pursuant to 28 U.S.C. § 1927. For the reasons below, defendants’

motions to dismiss the fraudulent conveyance actions and to cancel the lis pendens

in Brooklyn and Queens are granted. Defendants’ motions for attorney’s fees, costs,

and sanctions are denied.

I.

The defendants argue that both fraudulent conveyance actions are barred by

the statute of limitations. See C.P.L.R. § 213(8) (“the time within which the action

must be commenced shall be the greater of six years from the date the cause of

action accrued or two years from the time the plaintiff or the person under whom

the plaintiff claims discovered the fraud, or could with reasonable diligence have

discovered it.”); see also In re Bernard L. Madoff Inv. Sec. LLC, 773 F.3d 411, 416

(2d Cir. 2014) (“New York’s fraudulent conveyance law has a six-year statute of

limitations”).

A statute of limitations defense “may be decided on a Rule 12(b)(6) motion

if the defense appears on the face of the complaint.” Connecticut Gen. Life Ins. Co.

v. BioHealth Lab'ys, Inc., 988 F.3d 127, 131-32 (2d Cir. 2021) (internal citations

and quotations omitted).1 Such is the case here.

Since the first fraudulent conveyance allegedly occurred on March 26, 2003,

the defendants contend legal action should have commenced on or before March

26, 2009. Similarly, since the second allegedly false conveyances occurred on

March 6, 1998 and September 24, 2007, the defendants contend legal action should

have commenced on or before March 6, 2004 and September 24, 2013,

respectively.

Plaintiff contends fraudulent conveyances are “difficult to prove” and the

transfers in question should be subject to heightened scrutiny because they display

“badges” of fraud. ECF No. 76 at 6. Plaintiff also contends there was no reason to

inquire about the allegedly fraudulent conveyances before he stopped working for

defendants in the fall of 2018.

1 Defendants also move to dismiss based on various pleading defects. Since

plaintiff’s claims are clearly barred by the relevant statute of limitations, the Court

need not assess the pleading defects.

Plaintiff’s arguments are unavailing. Public documents with indicia of fraud

– like those cited by plaintiff – are sufficient to put one on notice of potential fraud.

See Sejin Precision Indus. Co. v. Citibank, N.A., 726 F. App'x 27, 30 (2d Cir.

2018). Plaintiff cannot establish a direct, personal connection to the allegedly

fraudulent transfers, and the defendants persuasively note the conveyances were

made over a decade before plaintiff even started working for defendants. Nor does

plaintiff make any cognizable arguments that an exception to the six-year statute of

limitations applies.

Accordingly, relief is barred by the applicable six-year statute of limitations.

Both complaints, listed at ECF Nos. 68 and 69, must be dismissed. See Connecticut

Gen. Life Ins., 988 F.3d at 131-32.

II.

The defendants move for cancellation of lis pendens pursuant to C.P.L.R. §

6514(a) and (b).

A plaintiff bringing a lawsuit claiming interest in real property may file a lis

pendens against the property. See C.P.L.R. §§ 6501-6516. The lis pendens notify

future interest holders of a prior claim to that property. “Whether to cancel a notice

of pendency … is a matter entirely within the discretion of the Court.” Done v.

Wells Fargo, N.A., No. 12-CV-04296 JFB ETB, 2013 WL 3785627, at *7

(E.D.N.Y. July 18, 2013). The Second Circuit has explained that “[a]lthough a

court must uphold a notice of pendency if the underlying complaint sets forth a

claim within the scope of C.P.L.R. § 6501, the court may evaluate the claim’s legal

sufficiency and, if [the claim is] facially insufficient, the court should cancel the

notice.” Diaz v. Paterson, 547 F.3d 88, 91 (2d Cir. 2008) (citing Gallagher

Removal Serv., Inc. v. Duchnowski, 179 A.D.2d 622, 623 (2d Dept. 1992)).

The defendants argue that C.P.L.R. § 6514(a) demands dismissal of the

notices of pendency because dismissal of the fraudulent conveyance actions

negates any basis for the notice of pendency. The statute provides, in relevant part,

that “[t]he court … shall direct any county clerk to cancel a notice of pendency, if

… the action has been settled, discontinued or abated.” C.P.L.R. § 6514(a). In the

alternative, defendants argue the Court should rely on the discretionary

cancellation provisions of § 6514(b) because “the plaintiff has not commenced or

prosecuted the action in good faith.” Plaintiff did not respond to these arguments.

Dismissal is appropriate pursuant to C.P.L.R. § 6514(a). While the term

“abatement” is not defined in C.P.L.R. § 6514(a), New York courts have held that

dismissal of the underlying action on which the lis pendens is based qualifies as

abatement. See Nastasi v. Nastasi, 26 A.D.3d 32, 40 (2d Dept. 2005) (discussing

use of the term abatement in the C.P.L.R.). As a practical matter, the statute

contemplates dismissal following termination of the relevant action. Since a notice

of pendency cannot be maintained in the absence of a valid claim, and the statute

of limitations has run on the fraudulent conveyance actions, the lis pendens must

be cancelled. See, e.g., Guberman v. Rudder, 85 A.D.3d 683 (1st Dept. 2011)

(“notice of pendency could not be maintained in the absence of a valid claim”).

IV.

Defendants move for attorney’s fees and costs pursuant to C.P.L.R. §

6514(c) along with sanctions pursuant to 28 U.S.C. § 1927. Although the

defendant’s requests offer a tempting option to the Court, the Court declines to

impose fees, costs, and sanctions at this time. Plaintiff’s counsel is now on notice

that litigation tactics designed to harass or undertaken in bad faith will not be

tolerated.

CONCLUSION

For the foregoing reasons, defendants’ motions to dismiss and for

cancellation of both lis pendens are hereby GRANTED. The Clerk of the Court,

County of Kings is directed to cancel the notice of pendency filed by plaintiff

concerning the property located at 1609 Nostrand Avenue/3006 Tilden Avenue in

Brooklyn. The Clerk of the Court, County of Queens is directed to cancel the

notice of pendency filed by plaintiff concerning the property located at 109-70

133rd Street South Ozone Park, NY. Defendants’ motions for attorneys’ fees,

costs, and sanctions are hereby DENIED. Plaintiff’s FLSA and New York Labor

Law § 190 claims are unaffected by this decision.

SO ORDERED.

_/S/ Frederic Block________

FREDERIC BLOCK

Senior United States District Judge

Brooklyn, New York

March 19, 2021