Matter of Sterling Natl. Bank v. Freidman

Summary

The Appellate Division, First Department, affirmed the denial of Sterling National Bank's motion seeking a determination that its perfected security interest in certain limited liability companies extended directly to the real property owned by those entities. The court held that the bank's interest was personal property and did not itself encompass the underlying real estate. It also declined to void Citibank's attachment levies, noting that the bank had sought priority determinations rather than invalidation of the liens and that the validity of the levies was being litigated separately.

Holdings

1. A perfected security interest in limited liability companies constitutes an interest in personal property and does not extend directly to real property owned by those entities.
2. Sterling was not entitled in this proceeding to void Citibank's attachment levies because it sought a determination of priority in collateral, not an order invalidating the creditors' liens, and the validity of the levies was being litigated in a separate action.
3. The appeal from the related order was dismissed as subsumed in the appeal from the judgment.

Questions Presented

1. Whether a perfected security interest in limited liability companies extends directly to real property owned by those entities.
2. Whether Sterling was entitled under CPLR 5239 to have Citibank's attachment levies against the entities' real property voided or invalidated.
3. Whether the appeal from the related order should be dismissed as subsumed in the appeal from the judgment.

Disposition

affirmed