New York Court Lacked Jurisdiction to Enjoin Sale of Real Estate in Another State

On December 17, 2019, the First Department issued a decision in Clark Tower, LLC v. Wells Fargo Bank, N.A., 2019 NY Slip Op. 08975, holding that a New York court lacked jurisdiction to enjoin the sale of real estate in another state, explaining:

The courts of one State may not decide issues directly affecting title to real property located in another State. Although a court with personal jurisdiction over the parties may adjudicate their rights with respect to foreign realty, plaintiffs cite no authority allowing an out-of-state foreclosure sale to be enjoined. Contrary to plaintiff's argument, its one-sided agreement to submit to personal jurisdiction in New York does not confer upon the New York courts a contractual right to enjoin an out-of-state foreclosure sale.

In any event, plaintiff did not clearly show that its rights are being or will be violated, as required to demonstrate a probability of success on the merits. The claim that defendants unreasonably withheld consent to refinancing is belied by the record, which shows that defendants requested details concerning the new lender's appraisal, plaintiff's request to assign Note B to an entity sharing common ownership with it, and plaintiff's tardy admission that the refinancing package was also to be secured by a second property for which plaintiff had not provided an appraisal. Contrary to plaintiff's contention, defendants did not initially consent by issuing loan payoff estimates that expired the same day they were issued. Issues of fact concerning whether defendants unreasonably withheld consent, or waived the requirement to pay rents into the lockbox, are not sufficient under Tennessee law to warrant an injunction.

(Internal quotations and citations omitted).

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.