IN RE: STERLING NATIONAL BANK (2022)

Judgment, Supreme Court, New York County (Andrea Masley, J.), entered on or about July 9, 2020, to the extent appealed from as limited by the briefs, denying petitioner's motion for a summary determination that its interest in certain collateral consisting of limited liability companies (the Real Estate Entities), included the Real Estate Entities’ underlying real property, and declining to void respondent Citibank's levies of attachment on the underlying real property, unanimously affirmed, without costs.  Appeal from order, same court and Justice, entered on or about June 15, 2020, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

The motion court correctly determined that petitioner's collateral, i.e., its perfected security interest in the Real Estate Entities, did not extend directly to the real property owned by the Real Estate Entities.  As defined in the petition, petitioner's collateral consists of its secured interest in the Real Estate Entities themselves, pursuant to its agreement with respondent Evgeny Freidman.  That interest is personal property, not the underlying real property (see Limited Liability Company Law § 601).

Petitioner's reliance on (Matter of Gliklad v. Chernoi, 129 A.D.3d 604, 12 N.Y.S.3d 65 [1st Dept. 2015], lv denied 26 N.Y.3d 918, 2016 WL 634989 [2016]) and (Kassover v. Prism Ventures Partners, LLC, 2017 N.Y. Slip Op. 31933[U], 2017 WL 4011218 [Sup. Ct., N.Y. County 2017], affd 169 A.D.3d 525, 92 N.Y.S.3d 634 [1st Dept. 2019]) for the proposition that it owned the properties as part of its collateral is misplaced.  Neither of those cases involved an interest pursuant to a perfected security interest in a limited liability company.  Rather, they involved judgment creditors who had direct liens on property (Matter of Gliklad, 129 A.D.3d 604, 12 N.Y.S.3d 65 [personal property];  Kassover, 2017 N.Y. Slip Op. 31933[U] [real property].  Moreover, we take judicial notice of the motion court's subsequent order deciding petitioner's motion to reargue, in which the court clarified that, as shareholder of the Real Estate Entities, petitioner would be entitled to sell the underlying properties and take money from the sale, subject to the interests of any creditors.

The motion court also correctly declined to void the attachment levies filed by Citibank against the real property held by the Real Estate Entities.  Pursuant to CPLR 5239, petitioner sought, among other things, a determination that its interest in its collateral took priority over other parties’ interests in the same collateral.  It did not seek to void the creditors’ liens (see generally Carter v. Johnson, 110 A.D.3d 656, 658, 973 N.Y.S.2d 650 [2d Dept. 2013]).  Moreover, the validity of Citibank's attachment liens is currently the subject of an action, in which petitioner has intervened, to determine whether the Real Estate Entities were Evgeny Freidman's alter egos (Citibank, N.A. v. East 65th Street Owners LLC, 2022 WL 19732 [N.Y. County Index No. 651089/2019]).

We have considered petitioner's remaining arguments and find them unavailing.