Goldstein v. Gold, 48 N.Y.2d 830 (1979)

A complaint alleging conspiracy to discourage bidders at a foreclosure sale, even with largely general allegations, states a cause of action sufficient to withstand a motion to dismiss for insufficiency of the pleading.

Summary

This case concerns a dispute over a mortgage foreclosure and allegations of a conspiracy to discourage bidders at the foreclosure sale. The Court of Appeals held that while general allegations of conspiracy typically require evidentiary support to survive summary judgment, they are sufficient to state a cause of action and withstand a motion to dismiss based on the insufficiency of the pleading. The court reinstated the plaintiff’s second cause of action, which alleged a conspiratorial postponement of the foreclosure sale.

Facts

Angelo Sardo was a party defendant in a mortgage foreclosure action. Travitsky purchased Sardo’s fee interest at a Sheriff’s sale after the filing of a notice of pendency related to the foreclosure. The plaintiffs brought a cause of action alleging a conspiracy to discourage bidders by postponing the foreclosure sale.

Procedural History

The lower court dismissed the second cause of action in the complaint. The Court of Appeals modified the order, reinstating the second cause of action, and otherwise affirmed the lower court’s decision.

Issue(s)

1. Whether the notice of pendency was constructive notice to Travitsky of the mortgage foreclosure action, binding him to the outcome of the foreclosure action.
2. Whether the allegations of conspiracy to discourage bidders by postponing the foreclosure sale were sufficient to state a cause of action and withstand a motion to dismiss based on insufficiency as a pleading.

Holding

1. Yes, because Angelo Sardo was properly made a party defendant in the foreclosure action, and the purchase of Sardo’s fee interest at the Sheriffs sale, which occurred after the filing of the notice of pendency, charged Travitsky with constructive notice of the foreclosure action, and he became bound by the foreclosure action to the same extent as if he had been made a party.
2. Yes, because the largely general allegations of conspiracy to discourage bidders by postponing the foreclosure sale, for the purposes of a motion to dismiss based on insufficiency as a pleading, do state a cause of action.

Court’s Reasoning

The Court reasoned that because Angelo Sardo was a party to the foreclosure action and the notice of pendency was filed before Travitsky purchased Sardo’s interest, Travitsky was bound by the foreclosure action. CPLR 6501 states that a person whose conveyance or incumbrance is recorded after the filing of the notice of pendency is bound by all proceedings taken in the action after such filing to the same extent as a party. As such, Travitsky’s rights were extinguished by the foreclosure sale, assuming the sale was properly conducted.

Regarding the conspiracy claim, the Court acknowledged the general allegations of conspiracy might not survive a summary judgment motion without evidentiary support. However, the Court emphasized that the standard for a motion to dismiss based on the pleading’s insufficiency is lower. For the limited purpose of assessing the complaint’s sufficiency, the allegations were deemed adequate to state a cause of action, requiring the reinstatement of the second cause of action.