Real Property Law

Supreme Ct., Suffolk Cty

(Klein, J.)

In an action to enjoin neighbor from constructing a fence along the common boundary, landowner sought a preliminary injunction. The court granted the preliminary injunction, holding that landowner had demonstrated a likelihood of success on his claim that he had acquired an easement by implication.

The disputing parties are brothers who own adjacent parcels of land, each acquired from a separate seller. Landowner Angelo acquired his parcel in 1986; neighbor Anthony acquired his in 1982. The brothers each owned 50% of the stock in a corporation selling brick and tile; the corporation had gross sales of $20,000,000 in 2000. The corporate business was conducted on the two adjacent parcels. Anthony operated the masonry business on his parcel, while Angelo operated the tile portion. The only curb cut permitting access to Angelo's tile business was on Anthony's parcel. Because of constant friction between the brothers, accompanied by accusations of theft, the brothers sought to dissolve the corporation. At an auction sale, Angelo bought both the brick and tile business. Anthony started a new brick business, which he conducted on his parcel. Anthony wrote Angelo a letter indicating that he would no longer permit access across his parcel, and that he would build a fence on the common boundary. Angelo then brought this action seeking injunctive relief. In separate proceedings, Angelo also sought permission from the town to install a curb on his own parcel.

In granting Angelo a preliminary injunction, the court accepted his easement by implication argument. The court had little difficulty concluding that it was obvious that the parties intended the easement to be permanent, and that the use was necessary for the beneficial enjoyment of Angelo's land, but acknowledged a problem establishing unity and subsequent separation of title, because the two parcels had never been in common ownership. The court held, however, that during the period that the corporation operated on both parcels as if they were not separately owned. As a result, the court concluded that the property should be treated as if there was unity of ownership that ended when the corporation was dissolved. At that point, the curb but was a pre-existing use necessary for the enjoyment of Angelo's land. As a result, the court found that Angelo had demonstrated a likelihood of success on the merits, entitling him to a preliminary injunction.

COMMENT

New York courts have articulated the general rule that to establish an easement by implication based upon prior usage, a landowner must show: 1) that there was a unity and subsequent separation of title; 2) that, prior to separation, the claimed easement was so long continued and so obvious as to show that it was meant to be permanent; and 3) that the use is necessary to the beneficial enjoyment of the land. See, Jacobson v. Luzon Lumber Co., 192 Misc 183, affd 276 AppDiv 787, affd 300 NY 697. In Jacobson, the court found that an implied easement existed when a driveway over land retained by a common grantor had, prior to severance, been used for the benefit of land conveyed by that same grantor. Kent v. Dutton, 122 AD2d 558, illustrates the general principle that a claimant can not prevail in an easement by implication action if he is unable to prove that common ownership once existed.

In U.S. v. O'Connell, 496 F.2d 1329, the Second Circuit held that the requirement of common ownership could be satisfied when several parcels, including both the servient and dominant parcel, were owned by different corporations owned by similar shareholders in such a manner that implied that those shareholders could use the land as they wanted, as if title to each parcel was held by the same entity. The court relied on Chief Judge Cardozo's statement in City of New York (Northern Blvd.), 258 NY 136, that “the question is one of intention, to be answered, like questions of intention generally, in the light of all the circumstances.” Id. at 147. However, City of New York was a condemnation case. The existence of an easement was relevant only for determining the value of the property before and after the condemnation. Moreover, in City of New York, the alleged easement arose not from prior use, but from a deed that referred to a map which included streets. Nevertheless, in O'Connell, the court cited Cardozo's dictum as support for the proposition that similar equitable ownership could be treated as the equivalent of common ownership.

In granting a preliminary injunction the Toscano court took a step beyond O'Connell, in holding that an equitable ownership theory could be applied to brothers who owned adjoining lots in their individual capacity. The court observed that although the brothers as individuals separately owned the lots, the brothers, as co-partners in a company operating on the land, had mutually agreed upon the development of the land to include only one curb cut out. The court held that their agreement to develop the parcel as such would likely fulfill the first requirement of unity in an implied easement claim, as the brothers together could be deemed to be equitable owners of the two parcels.

Foreclosing Mortgagee Need Not Obtain Leave of Court to Enforce Mortgage Debt

Wells Fargo Bank Minnesota, N.A. v. Cohn

NYLJ 7/23/03, p. 19, col. 2

Supreme Ct., N.Y. Cty

(Cahn, J.)

In an action to enforce a guarantee of payment of a mortgage, defendant guarantors moved to dismiss on the ground that the action was barred by mortgagee's commencement of proceedings to foreclose the mortgage without obtaining leave of the court to proceed separately against guarantor. The court denied the motion, holding that RPAPL 1301(3), which would generally require leave of the foreclosure court to proceed in a separate action to enforce the mortgage debt, does not apply where the mortgage indebtedness is secured by property outside the state of New York.

Defendant guarantors executed a guarantee of a mortgage note in the principal amount of $5,630,000, dated October 3, 2000. The borrower used the proceeds to purchase two hotels, one in New Mexico and one in Maine, and the out-of-state properties were the security for the mortgage. In March and July 2002, borrower defaulted on its payment obligations. Mortgagee then gave borrower and guarantors notice of the default and demanded cure by September 2002. When borrower failed to cure, mortgagee accelerated the amount due and brought an action to foreclose the mortgage on the New Mexico property. Mortgagee also served notice of intention to foreclose on the Maine property. Borrower filed a voluntary petition in bankruptcy, staying the foreclosure proceedings. Mortgagee brought this action on the guarantee. Guarantors moved to dismiss on the ground that by failing to obtain leave of the New Mexico and Maine courts to proceed on the guarantee, mortgagee had lost its right to proceed on the mortgage debt. They relied on RPAPL 1301(3), which provides that while a foreclosure proceeding is pending, “no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court in which the former action was brought.”

In rejecting guarantors' argument, the court noted that New York courts have long interpreted the statute to have no application to mortgages on real property located outside of New York. The court also noted that both Maine and New Mexico follow the common law rule that permit concurrent actions to foreclosure on the mortgage and to recover on the mortgage debt. As a result, the court denied guarantors' summary judgment motion.

Partition of Two-Family House

Sciavillo v. Sciavillo

NYLJ 7/25/03, p. 23, col. 1

Supreme Ct., Westchester Cty

(Lefkowitz, J.)

Married couple, who shared ownership of a two-family home with husband's brother and sister-in-law, sought partition of the house. The court dismissed the action, holding that partition was an equitable remedy and could prejudice sister-in-law, who was in the midst of a divorce proceeding and who had few resources to find alternative housing.

Daniel and Lesa Sciavillo, as tenants by the entirety, own a half-interest in the subject home. Eugene and Sally Sciavillo own the other half, also as tenants by the entirety. The two couples and their families had lived in the home from 1985 until 2001, when Eugene moved out and brought a divorce action against Sally. While that action is pending, Daniel and Lesa have brought a partition action. Eugene defaulted, and Sally has opposed partition, contending that the parties had an oral agreement not to partition.

The court started by rejecting Sally's reliance on an oral agreement, holding that the statute of frauds applies and bars enforcement of the alleged oral agreement. The court then noted that although Sally and Eugene were tenants by the entirety between themselves, they were tenants in common with Daniel and Lesa, so partition would ordinarily be available. The court went on to note, however, that partition could affect Sally's equitable distribution rights, and went on to dismiss the action without prejudice to renewal either before the justice presiding in matrimonial part, or before another justice, at some later time, especially after the divorce proceedings conclude. The court held that no one would be prejudiced by the delay, which takes account of Sally's dire financial straits.

Language and Circumstances Can Create Implied Contract

Joseph P. Day Realty Corp. v. Chera

NYLJ 7/15/03, p. 18, col. 1

AppDiv, First Dept

(Opinion by Gonzalez, J.)

In an action by real estate broker to recover a commission, broker appealed from Supreme Court's denial of its summary judgment motion and grant of landlord's summary judgment motion. The Appellate Division modified to deny both summary judgment motions, holding that questions of fact remained on broker's implied contract claim.

In September 1998, vice president of broker Joseph P. Day Realty Corp. (Day) arranged a conference with landlord and landlord's attorney and told them that Beth Israel Medical Center was interested in leasing space in their building. Landlord allegedly approved broker's discussions with Beth Israel as a prospective tenant. On January 15, 1999, broker sent a letter to landlord indicating that it had been authorized to submit an offer on behalf of Beth Israel for a 10-year lease with specified rental provisions and brokerage commissions. On February 8, 1999, broker sent another letter to landlord setting forth “the basic terms of the lease,” (most of which were incorporated into the lease), and stating that the offer was subject to broker receiving its full commission. Landlord and tenant eventually signed a lease. By the terms of the lease, tenant covenants that it did not engage the services of any broker except Day. Tenant agreed to hold landlord harmless against any claims for a brokerage commission arising out of tenant's conversations with any broker other than Day; landlord agreed to hold tenant harmless against broker claims arising out of any negotiations landlord had with any broker including Day. When landlord refused to pay Day a commission on the lease, broker Day brought this action. Supreme Court granted summary judgment to landlord.

In holding that neither party was entitled to summary judgment, the court first noted that broker had not advanced an express contract claim. The court nevertheless held that a broker can prevail on an implied contract claim, which sometimes can be established “by the mere acceptance of the labors of a broker.” The court rejected broker's claim that the language in the lease, by itself, established an implied agreement by landlord to pay the brokerage commission, holding that the lease language itself was simply an indemnification agreement between landlord and Beth Israel. Nevertheless, the court held that the lease language, together with the letters, established that the broker intended to be compensated for its services. Questions of fact remained, however, about whether that compensation was to be paid by landlord or by tenant, and the court held that those questions precluded a grant of summary judgment to either party.

Ownership By Brothers Can Be Treated As Common Ownership

Toscano v. Toscano

NYLJ 7/9/03, p. 24, col. 1

Supreme Ct., Suffolk Cty

(Klein, J.)

In an action to enjoin neighbor from constructing a fence along the common boundary, landowner sought a preliminary injunction. The court granted the preliminary injunction, holding that landowner had demonstrated a likelihood of success on his claim that he had acquired an easement by implication.

The disputing parties are brothers who own adjacent parcels of land, each acquired from a separate seller. Landowner Angelo acquired his parcel in 1986; neighbor Anthony acquired his in 1982. The brothers each owned 50% of the stock in a corporation selling brick and tile; the corporation had gross sales of $20,000,000 in 2000. The corporate business was conducted on the two adjacent parcels. Anthony operated the masonry business on his parcel, while Angelo operated the tile portion. The only curb cut permitting access to Angelo's tile business was on Anthony's parcel. Because of constant friction between the brothers, accompanied by accusations of theft, the brothers sought to dissolve the corporation. At an auction sale, Angelo bought both the brick and tile business. Anthony started a new brick business, which he conducted on his parcel. Anthony wrote Angelo a letter indicating that he would no longer permit access across his parcel, and that he would build a fence on the common boundary. Angelo then brought this action seeking injunctive relief. In separate proceedings, Angelo also sought permission from the town to install a curb on his own parcel.

In granting Angelo a preliminary injunction, the court accepted his easement by implication argument. The court had little difficulty concluding that it was obvious that the parties intended the easement to be permanent, and that the use was necessary for the beneficial enjoyment of Angelo's land, but acknowledged a problem establishing unity and subsequent separation of title, because the two parcels had never been in common ownership. The court held, however, that during the period that the corporation operated on both parcels as if they were not separately owned. As a result, the court concluded that the property should be treated as if there was unity of ownership that ended when the corporation was dissolved. At that point, the curb but was a pre-existing use necessary for the enjoyment of Angelo's land. As a result, the court found that Angelo had demonstrated a likelihood of success on the merits, entitling him to a preliminary injunction.

COMMENT

New York courts have articulated the general rule that to establish an easement by implication based upon prior usage, a landowner must show: 1) that there was a unity and subsequent separation of title; 2) that, prior to separation, the claimed easement was so long continued and so obvious as to show that it was meant to be permanent; and 3) that the use is necessary to the beneficial enjoyment of the land. See, Jacobson v. Luzon Lumber Co., 192 Misc 183, affd 276 AppDiv 787, affd 300 NY 697. In Jacobson, the court found that an implied easement existed when a driveway over land retained by a common grantor had, prior to severance, been used for the benefit of land conveyed by that same grantor. Kent v. Dutton, 122 AD2d 558, illustrates the general principle that a claimant can not prevail in an easement by implication action if he is unable to prove that common ownership once existed.

In U.S. v. O'Connell, 496 F.2d 1329, the Second Circuit held that the requirement of common ownership could be satisfied when several parcels, including both the servient and dominant parcel, were owned by different corporations owned by similar shareholders in such a manner that implied that those shareholders could use the land as they wanted, as if title to each parcel was held by the same entity. The court relied on Chief Judge Cardozo's statement in City of New York (Northern Blvd.), 258 NY 136, that “the question is one of intention, to be answered, like questions of intention generally, in the light of all the circumstances.” Id. at 147. However, City of New York was a condemnation case. The existence of an easement was relevant only for determining the value of the property before and after the condemnation. Moreover, in City of New York, the alleged easement arose not from prior use, but from a deed that referred to a map which included streets. Nevertheless, in O'Connell, the court cited Cardozo's dictum as support for the proposition that similar equitable ownership could be treated as the equivalent of common ownership.

In granting a preliminary injunction the Toscano court took a step beyond O'Connell, in holding that an equitable ownership theory could be applied to brothers who owned adjoining lots in their individual capacity. The court observed that although the brothers as individuals separately owned the lots, the brothers, as co-partners in a company operating on the land, had mutually agreed upon the development of the land to include only one curb cut out. The court held that their agreement to develop the parcel as such would likely fulfill the first requirement of unity in an implied easement claim, as the brothers together could be deemed to be equitable owners of the two parcels.

Foreclosing Mortgagee Need Not Obtain Leave of Court to Enforce Mortgage Debt

Wells Fargo Bank Minnesota, N.A. v. Cohn

NYLJ 7/23/03, p. 19, col. 2

Supreme Ct., N.Y. Cty

(Cahn, J.)

In an action to enforce a guarantee of payment of a mortgage, defendant guarantors moved to dismiss on the ground that the action was barred by mortgagee's commencement of proceedings to foreclose the mortgage without obtaining leave of the court to proceed separately against guarantor. The court denied the motion, holding that RPAPL 1301(3), which would generally require leave of the foreclosure court to proceed in a separate action to enforce the mortgage debt, does not apply where the mortgage indebtedness is secured by property outside the state of New York.

Defendant guarantors executed a guarantee of a mortgage note in the principal amount of $5,630,000, dated October 3, 2000. The borrower used the proceeds to purchase two hotels, one in New Mexico and one in Maine, and the out-of-state properties were the security for the mortgage. In March and July 2002, borrower defaulted on its payment obligations. Mortgagee then gave borrower and guarantors notice of the default and demanded cure by September 2002. When borrower failed to cure, mortgagee accelerated the amount due and brought an action to foreclose the mortgage on the New Mexico property. Mortgagee also served notice of intention to foreclose on the Maine property. Borrower filed a voluntary petition in bankruptcy, staying the foreclosure proceedings. Mortgagee brought this action on the guarantee. Guarantors moved to dismiss on the ground that by failing to obtain leave of the New Mexico and Maine courts to proceed on the guarantee, mortgagee had lost its right to proceed on the mortgage debt. They relied on RPAPL 1301(3), which provides that while a foreclosure proceeding is pending, “no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court in which the former action was brought.”

In rejecting guarantors' argument, the court noted that New York courts have long interpreted the statute to have no application to mortgages on real property located outside of New York. The court also noted that both Maine and New Mexico follow the common law rule that permit concurrent actions to foreclosure on the mortgage and to recover on the mortgage debt. As a result, the court denied guarantors' summary judgment motion.

Partition of Two-Family House

Sciavillo v. Sciavillo

NYLJ 7/25/03, p. 23, col. 1

Supreme Ct., Westchester Cty

(Lefkowitz, J.)

Married couple, who shared ownership of a two-family home with husband's brother and sister-in-law, sought partition of the house. The court dismissed the action, holding that partition was an equitable remedy and could prejudice sister-in-law, who was in the midst of a divorce proceeding and who had few resources to find alternative housing.

Daniel and Lesa Sciavillo, as tenants by the entirety, own a half-interest in the subject home. Eugene and Sally Sciavillo own the other half, also as tenants by the entirety. The two couples and their families had lived in the home from 1985 until 2001, when Eugene moved out and brought a divorce action against Sally. While that action is pending, Daniel and Lesa have brought a partition action. Eugene defaulted, and Sally has opposed partition, contending that the parties had an oral agreement not to partition.

The court started by rejecting Sally's reliance on an oral agreement, holding that the statute of frauds applies and bars enforcement of the alleged oral agreement. The court then noted that although Sally and Eugene were tenants by the entirety between themselves, they were tenants in common with Daniel and Lesa, so partition would ordinarily be available. The court went on to note, however, that partition could affect Sally's equitable distribution rights, and went on to dismiss the action without prejudice to renewal either before the justice presiding in matrimonial part, or before another justice, at some later time, especially after the divorce proceedings conclude. The court held that no one would be prejudiced by the delay, which takes account of Sally's dire financial straits.

Language and Circumstances Can Create Implied Contract

Joseph P. Day Realty Corp. v. Chera

NYLJ 7/15/03, p. 18, col. 1

AppDiv, First Dept

(Opinion by Gonzalez, J.)

In an action by real estate broker to recover a commission, broker appealed from Supreme Court's denial of its summary judgment motion and grant of landlord's summary judgment motion. The Appellate Division modified to deny both summary judgment motions, holding that questions of fact remained on broker's implied contract claim.

In September 1998, vice president of broker Joseph P. Day Realty Corp. (Day) arranged a conference with landlord and landlord's attorney and told them that Beth Israel Medical Center was interested in leasing space in their building. Landlord allegedly approved broker's discussions with Beth Israel as a prospective tenant. On January 15, 1999, broker sent a letter to landlord indicating that it had been authorized to submit an offer on behalf of Beth Israel for a 10-year lease with specified rental provisions and brokerage commissions. On February 8, 1999, broker sent another letter to landlord setting forth “the basic terms of the lease,” (most of which were incorporated into the lease), and stating that the offer was subject to broker receiving its full commission. Landlord and tenant eventually signed a lease. By the terms of the lease, tenant covenants that it did not engage the services of any broker except Day. Tenant agreed to hold landlord harmless against any claims for a brokerage commission arising out of tenant's conversations with any broker other than Day; landlord agreed to hold tenant harmless against broker claims arising out of any negotiations landlord had with any broker including Day. When landlord refused to pay Day a commission on the lease, broker Day brought this action. Supreme Court granted summary judgment to landlord.

In holding that neither party was entitled to summary judgment, the court first noted that broker had not advanced an express contract claim. The court nevertheless held that a broker can prevail on an implied contract claim, which sometimes can be established “by the mere acceptance of the labors of a broker.” The court rejected broker's claim that the language in the lease, by itself, established an implied agreement by landlord to pay the brokerage commission, holding that the lease language itself was simply an indemnification agreement between landlord and Beth Israel. Nevertheless, the court held that the lease language, together with the letters, established that the broker intended to be compensated for its services. Questions of fact remained, however, about whether that compensation was to be paid by landlord or by tenant, and the court held that those questions precluded a grant of summary judgment to either party.