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Spyco Inc. v. Demenus

Decided: January 21, 1988.

SPYCO, INC., PLAINTIFF,
v.
MANFRED DEMENUS AND THEODORE VAN ARTHOS, DEFENDANTS



McGann, J.s.c.

Mcgann

This action was brought to discharge a lis pendens filed by defendants and for compensatory and punitive damages to which plaintiff alleges it is entitled by reason of the alleged wrongful filing. The matter came before the court on the return date of an initial order to show cause. The question argued then was whether this lis pendens should be discharged. Counsel have fully briefed and argued that issue. There are no material facts that are contested. Counsel were advised that the court considered the matter resolvable as on a motion for summary judgment and that it would be decided by this opinion.

Spyco, Inc. is a New Jersey corporation engaged, generally, in the acquisition and development of real estate. In December of 1986 Spyco transferred title to some 60 acres of land in the Borough of Tinton Falls to Tinton 60, Inc., and took back a note and recorded mortgage for $1,135,000. In June of 1987 Sypco transferred title to some 26 acres in the Borough of Tinton Falls to Tinton 35, Inc. and took back a note and recorded mortgage for $1,620,000.

On August 21, 1987, there was instituted in the United States District Court for the District of New Jersey an action entitled Manfred Demenus and Theodore Van Arthos -- vs -- Tinton 35, Inc., Tinton 60 Inc., Homes For Today, Inc., Harvey I. Marcus, Jacques Rotnemer and Group Construction Company of Ocean Township I, Inc. It alleged, among others, that Spyco and others entered into a joint venture agreement with the plaintiffs for the acquisition and development of three tracts of land (two of which are the 60 acre and 26 acre tracts set forth above); that in violation of that agreement Spyco had acquired title to those tracts in its own name and had transferred title to Tinton 60, Inc. and Tinton 35, Inc. The plaintiffs, Demenus and Arthos, sought a judgment setting aside those transfers or, in

the alternative, the imposition of a constructive trust in favor of the joint venture. They also sought the cancellation of the mortgages given by Tinton 60, Inc. and Tinton 35, Inc. as well as other equitable relief as the same might be accorded, and money damages. Neither Spyco, Inc. or Herbert Sylvester, its principal, are named in that District Court action.

On August 26, 1987, the plaintiffs in that action caused to be filed with the Monmouth County Clerk, two Notices of Lis Pendens (captioned in the District Court case). One was referenced to the mortgage from Tinton 60, Inc. to Spyco and the other from Tinton 35, Inc. to Spyco. Metes and bounds descriptions were attached to each. On September 29, 1987, Amended Notices of Lis Pendens were filed to correct errors in the metes and bounds descriptions.

In this action, it is Spyco's position that a Notice of Lis Pendens may not be filed affecting the property interest of one not a party to the underlying action. It seeks a declaration of nullity and an order discharging the lis pendens of record.

N.J.S.A. 2A:15-6, in pertinent part, provides as follows:

In every action, instituted . . . in the United States District Court for the District of New Jersey, the object of which is to enforce a lien . . . upon real estate or to affect title to real estate or a lien or encumbrance thereon, plaintiff, or his attorney shall, after the filing of the complaint, file in the office of the county clerk . . . of the county in which the affected real estate is situate, a written notice of the pendency of the action, which shall set forth the title and the general object thereof, with description of the affected real estate.

The Notice of Lis Pendens as filed complied with those requirements. The District Court action, among other purposes, was brought "to affect title to real estate or a lien or encumbrance there." The Notices contain the following language:

This Lis Pendens is limited to liens and encumbrances on the property and is not filed against or with respect to fee title ...


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