Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on August 26, 2026

2024-10386, (Index No. 534602/22)

Betsy Barros, J.P.

Helen Voutsinas

Donna-Marie E. Golia

Phillip Hom, JJ.

[*1]

DECISION & ORDER

In an action pursuant to RPAPL article 15 to quiet title to real property and to impose a constructive trust, the plaintiff appeals from an order of the Supreme Court, Kings County (Reginald A. Boddie, J.), dated August 2, 2024. The order granted the motion of the defendant JB Lexington, LLC, for summary judgment dismissing the amended complaint insofar as asserted against it and to cancel a notice of pendency filed against the subject property.

ORDERED that the order is affirmed, with costs.

The plaintiff commenced this action against the defendant JB Lexington, LLC (hereinafter JB Lexington), and another defendant, pursuant to RPAPL article 15 to quiet title to certain real property located in Brooklyn and to impose a constructive trust on that property. The plaintiff was the owner of the property until it was sold to JB Lexington in August 2019. The amended complaint alleged that the plaintiff's managing director, Yechezkel Strulovitch, effectuated a "sham sale" of the property in collusion with JB Lexington to "fraudulently dispossess" the plaintiff of the property. In support of its allegations, the plaintiff annexed to the amended complaint an operating agreement entered into in June 2013. Pursuant to the 2013 operating agreement, CSRE, LLC, owned 54% of the plaintiff and 853 Lexington Operations, LLC, owned the remaining 46% of the plaintiff.

JB Lexington moved for summary judgment dismissing the amended complaint insofar as asserted against it and to cancel a notice of pendency filed against the property, arguing, inter alia, that it was a bona fide purchaser for value (see Real Property Law § 266). In an order dated August 2, 2024, the Supreme Court granted JB Lexington's motion. The plaintiff appeals.

Pursuant to Real Property Law § 266, the title of a bona fide purchaser for value is protected unless that purchaser had previous notice of "the fraudulent intent of [the] immediate grantor, or of the fraud rendering void the title of such grantor" (see Scope v Equity NY Corp., 222 AD3d 687, 688; Morris v Adams, 82 AD3d 946, 946). "[T]o establish itself as a bona fide purchaser for value, a party has the burden of proving that it purchased the property for valuable consideration and did not have 'knowledge of facts that would lead a reasonably prudent purchaser to make [*2]inquiry'" (Bello v Ouellette, 211 AD3d 784, 785, quoting TCJS Corp. v Koff, 74 AD3d 1188, 1189). "If the purchaser fails to use due diligence in examining the title, [the purchaser] is chargeable, as a matter of law, with notice of the facts which a proper inquiry would have disclosed" (id. [internal quotation marks omitted]; see Alli v Navins Holdings, Inc., 242 AD3d 801, 802; Fairmont Funding v Stefansky, 301 AD2d 562, 564).

Here, JB Lexington established, prima facie, that it purchased the property for valuable consideration without actual or constructive notice of Strulovitch's alleged lack of authority to execute the sale. JB Lexington submitted evidence demonstrating that the purchase price of the property was $3,850,000 and that it made payments to the plaintiff and to third parties at the plaintiff's direction as consideration for the property. Additionally, JB Lexington's submissions demonstrated that Strulovitch was cloaked with the apparent authority to sell the property. Strulovitch was the only organizer listed on the plaintiff's articles of organization filed with the New York State Department of State, and no managers or members were listed therein (see CitiMortgage, Inc. v Caldaro, 145 AD3d 851, 853). Moreover, Strulovitch provided JB Lexington with a 2012 operating agreement listing himself as the plaintiff's only member and further attested in a seller's affidavit that he was the plaintiff's only member and that the composition of the plaintiff had not changed.

Although the plaintiff contends that the 2013 operating agreement was the operating agreement in effect at the time of sale, the plaintiff does not contend that the 2013 operating agreement had been filed with the State or provided to JB Lexington before the sale. As such, under the circumstances, JB Lexington's reliance upon Strulovitch's apparent authority to sell the property pursuant to the 2012 operating agreement was reasonable (see Unity Elec., Co., Inc. v William Aversa 2012 Trust, 193 AD3d 792, 794-795; Matter of Shau Chung Hu v Lowbet Realty Corp., 161 AD3d 986, 988-989).

In opposition to JB Lexington's prima facie showing, the plaintiff failed to raise a triable issue of fact as to whether JB Lexington paid valuable consideration for the property or had actual or constructive knowledge of facts that would lead a reasonably prudent purchaser to make inquiry as to Strulovitch's authority to sell the property. The plaintiff contends that JB Lexington is charged with notice of a certain federal action and the papers filed in that action. However, the plaintiff failed to submit any evidence in opposition to JB Lexington's motion demonstrating that a notice of pendency was filed with respect to the federal action before the property was sold (see CPLR 6501; Yesmin v Aliobaba, LLC, 241 AD3d 9, 13; JPMorgan Chase Bank, N.A. v Mule, 230 AD3d 1234, 1236; U.S. Bank N.A. v Ashon, 226 AD3d 941, 943).

The plaintiff's remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, the Supreme Court properly granted JB Lexington's motion for summary judgment dismissing the amended complaint insofar as asserted against it and to cancel the notice of pendency filed against the property.

BARROS, J.P., VOUTSINAS, GOLIA and HOM, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court