Key Points

  • The Appellate Division, Second Department, unanimously affirmed, with costs, a Nassau County order canceling Limitless Automotive Group's notice of pendency on premises owned by Marchese Associates.
  • The court treated the earlier denial of a preliminary injunction, on the ground that monetary damages would be adequate, as a determination that Limitless Automotive is not entitled to specific performance.
  • The court found the notice of pendency was placed on the property as a matter of course and not in bad faith, but held that maintaining it after Limitless Automotive was relegated to monetary damages carries indicia of bad faith under CPLR 6514(b).
  • The court acknowledged the Court of Appeals' rule in 5303 Realty Corp. v O & Y Equity Corp. that likelihood of success on the merits is irrelevant to the validity of a notice of pendency.

A New York appeals court ruled that a company trying to buy an automobile dealership could not keep a notice of pendency on the dealership's premises after a judge had decided that money damages, rather than a court-ordered sale, would be an adequate remedy.

The Appellate Division, Second Department, unanimously affirmed a Nassau County Supreme Court order that canceled the notice Limitless Automotive Group LLC had filed against premises owned by Marchese Associates LLC. The four-justice panel of Betsy Barros, who presided, Lara J. Genovesi, Helen Voutsinas and Carl J. Landicino issued its unsigned decision and order on Oct. 14 and awarded costs.

The panel held that the notice was not placed in bad faith when Limitless Automotive filed it but that keeping it in place became a sign of bad faith once the trial court denied a preliminary injunction on the ground that damages would suffice.

The dispute began in June 2023, when L.J. Marchese Chevrolet Inc., as seller, and Marina Letsios, as buyer, signed a term sheet setting out basic terms for the sale of the dealership and the premises on which it operated. According to the decision, the term sheet stated that the deal was "[s]ubject to formal agreements, General Motors approval, [and] mortgage financing contingency."

Efforts to reach a more formal agreement failed, the court wrote. Marchese Chevrolet then signed an asset purchase agreement with a third party covering both the dealership and the premises.

Limitless Automotive, as successor in interest to Letsios, sued in Supreme Court, Nassau County, seeking specific performance of the term sheet. The company also asked for a preliminary injunction to stop the sale to the third party. In addition, Limitless Automotive filed a notice of pendency in Orange County, where the dealership and the premises are located.

In an order dated June 20, 2024, the Nassau County court denied the injunction. The court determined that monetary damages would be adequate and allowed the dealership sale to go forward.

Marchese Associates, the owner of the premises, filed a proceeding in Supreme Court, Orange County, in August 2024 to cancel the notice. On Limitless Automotive's motion, that proceeding was transferred to Nassau County by an order entered Sept. 13, 2024.

Marchese Associates then moved to cancel the notice under CPLR 6514. Bryan Marchese, a principal of the company, stated in an affidavit that the notice prevented Marchese Associates from selling the premises. The dealership's new owner was leasing the premises instead of buying them, the court wrote.

Limitless Automotive opposed the motion. The company argued that its lawsuit still alleged a cause of action that supported a notice of pendency, namely the claim for specific performance of the term sheet. Sharon M.J. Gianelli granted the cancellation motion in an order entered June 10, 2025, and Limitless Automotive appealed.

The appellate panel began with the text of the statute. CPLR 6514(b) allows a court, in its discretion, "upon motion of any person aggrieved and upon such notice as it may require," to "direct any county clerk to cancel a notice of pendency, if the plaintiff has not commenced or prosecuted the action in good faith."

The panel also acknowledged a limit on that review. Quoting the Court of Appeals' decision in 5303 Realty Corp. v. O & Y Equity Corp., the panel wrote that "the likelihood of success on the merits is irrelevant to determining the validity of the notice of pendency."

The court then set out two tests side by side. A preliminary injunction requires, among other things, "the prospect of irreparable injury if the provisional relief is withheld," the panel wrote, quoting Doe v. Axelrod. A claim for specific performance, the panel wrote, quoting Valinoti v. Greenman, requires a showing "that there was no adequate remedy at law," meaning that money damages would not be enough.

Those two tests overlapped in this case, the panel reasoned. "Here, however, since it has been determined that monetary damages would be sufficient, i.e., there is an adequate remedy at law, there has already been a determination that Limitless Automotive is not entitled to specific performance," the court wrote.

The panel did not fault Limitless Automotive for filing the notice in the first place. The notice "was placed on the property as a matter of course when Limitless Automotive's action for specific performance was commenced and was not placed on the property in bad faith," the decision states.

The injunction ruling changed that analysis, according to the panel. "However, once Limitless Automotive was relegated to monetary damages, maintaining the notice of pendency carries indicia of bad faith," the court wrote. The panel rejected Limitless Automotive's other arguments in a single sentence, writing that its "remaining contentions are without merit."

Lawyers for Limitless Automotive included Jonathan I. Edelstein of Edelstein & Grossman, of counsel to Gordon & Haffner LLP. Marchese Associates was represented by Catherine H. Friesen and Jeffrey I. Carton of Denlea & Carton LLP.

The Second Department's order leaves in place, with costs, the June 2025 order directing cancellation of the notice of pendency. The panel treated the June 2024 injunction ruling as a determination that Limitless Automotive is not entitled to specific performance.