Real Property Law

AppDiv, First Dept

(Opinion by Sullivan, J.)

In an action by a runner injured when he tripped over guy wires owned and maintained by utility companies, servient landowner appealed from Supreme Court's denial of its motion for summary judgment dismissing the complaint. The Appellate Division affirmed, holding that questions of fact remained about whether servient owner could be liable for failure to warn of the danger presented by the guy wire.

Plaintiff runner tripped and fell over guy wires run from a utility pole to the ground. The pole is owned by Con Edison; the two guy wires were owned by Cablevision and Verizon. The pole and wires were located on the parking lot of a 55-acre housing complex. The lot is owned by Edgewater Park Owners Cooperative (EPOC), whose predecessor had conveyed an easement to Con Edison's predecessor in 1936. The easement permitted lines of poles, together with necessary guys and anchors. When plaintiff runner brought this action against the utilities and against EPOC, EPOC sought summary judgment dismissing the complaint, contending that as servient owner, it had no duty to maintain the easement, and, indeed, had a duty to refrain from interfering with servient owner. Supreme Court denied EPOC's summary judgment motion, and EPOC appealed.

In affirming, the Appellate Division conceded that EPOC did not control the utility pole and guy wire, and had no duty to plaintiff to remedy the allegedly dangerous condition. The court did note, however, that landowners generally owe a duty to maintain property in safe condition, a duty that includes warning of dangerous conditions on the premises. EPOC's status as a servient owner did not relieve it of its general duty to warn. Hence, EPOC was not entitled to summary judgment.

Deficiency Judgment Barred As Untimely

Arbor National Commercial Mortgage, LLC v. Carmans Plaza, LLC

NYLJ 6/2/03, p. 25, col. 4

AppDiv, Second Dept

(memorandum opinion)

In an action to foreclose a mortgage, mortgagee bank appealed from Supreme Court's denial of its motion for leave to enter a deficiency judgment, and from Supreme Court's grant of mortgagor's cross-motion to dismiss the motion as untimely. The Appellate Division affirmed, holding that RPAPL 1371(2) operates as a 90-day statute of limitation running from the referee's delivery of the deed to the successful bidder.

After the foreclosure sale, the successful bidder assigned its bid and redelivered the deeds to its assignee. Mortgagee later moved for a deficiency judgment pursuant to RPAPL 1371(2), which authorizes a mortgagee to move for leave to enter a deficiency judgment 'simultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser.' In this case, mortgagee made the motion more than 90 days after the referee's delivery of a deed to the successful bidder, but fewer than 90 days after the bidder assigned and redelivered the deeds.

In holding that mortgagor was entitled to dismissal of the motion for leave to enter the deficiency judgment, the court noted that courts have uniformly treated the statute's 90-day period as a statute of limitations, so that failure to serve notice within the period is a complete bar to entry of a deficiency judgment. The court went on to hold that the period runs from the initial delivery of the referee's deed, and that, as a result, the proceeds of the sale would be deemed in full satisfaction of the mortgage debt.

Transfer to Related Entity Does Not Trigger First Refusal Right

New York Tile Wholesale Corp. v. Thomas Fatato Realty Corp.

NYLJ 6/4/03, p. 19, col. 4

Supreme Ct., Kings Cty

(Barasch, J.)

In an action by tenant for specific performance of a lease provision granting tenant a right of first refusal, tenant and landlord both moved for summary judgment. The court granted landlord's motion, holding that landlord's transfer of its interest to a related entity did not trigger tenant's first refusal right.

In 1986, tenant leased part of the subject property from Fatato, a real estate company, for a 5-year term. The lease provided that in the event of sale or lease of the property, tenant would have a 'first right of refusal.' The lease was continually renewed and extended, always with the same right of first refusal. In 2000, Fatato decided to redevelop the property by constructing residential rental apartments. In order to obtain financing and construction expertise, Fatato formed a new LLC, Garden. Fatato held a majority interest of 60% in Garden, with the rest held by a real estate developer and a construction company. As its capital contribution to Garden, Fatato transferred the subject property to the new LLC. Because the market value of the property significantly exceeded Fatato's proportionate contribution to the new entity, Garden agreed to repay Fatato in the amount of $2,295,000. Tenant contends that this transfer constituted a sale of the property within the meaning of its first refusal right, and sought a judgment rescinding the transfer to Garden and specific performance of Fatato's agreement to transfer the property to tenant on the same terms as the agreement with Garden. Tenant also sought damages against both Fatato and Garden. All parties sought summary judgment.

In awarding summary judgment to Fatato and Garden, the court relied on the absence of any change in the substance of the control of the premises as a result of the transfer from Fatato to Garden. The court also observed that the transfer to Garden was not the subject of an arm's-length negotiation with a third party for the market value of the property. Neither the payment of transfer tax nor the fact that Fatato received payment at the closing were enough to make the transfer a 'sale' within the meaning of the first refusal right in the lease agreement. Hence, the transfer never triggered that first refusal right.

Prescriptive Easement Runs to Successors-in-Interest

Gelmart Industries, Inc. v. Hubert

NYLJ 5/21/03, p. 20, col. 4

Supreme Ct., Queens Cty

(Grays. J.)

In an action by servient owner for declaratory and injunctive relief, dominant owners sought summary judgment dismissing the complaint. The court granted the motion in part, holding that the prescriptive easement previously established over the servient land ran to dominant owners' successors in interest, but holding that question of fact remained about alleged misuse of the easement.

A 1984 judgment established that Hubert and Agnelli held prescriptive easements over Gelmart's parking lot to reach the rear of their properties from a curb cut on the street. In this action, Gelmart sought to establish that the easement was limited to the named plaintiffs in the earlier action, and that if the easement was not terminated, Gelmart had the right to relocate the easement without the consent of the dominant owners. Gelmart also alleged that dominant owners park their cars in his parking lot, and sought an injunction against parking of vehicles on its property.

In granting dominant owners summary judgment with respect to the continued existence of the easement, the court first noted that prescriptive easements inure to successors-in-interest even if the judgment establishing the existence of the easement is silent about succession rights. The court then noted that in 1997, Gelmart had sought unsuccessfully to modify the judgment to relocate the easement, and the court held that the 1997 determination was res judicata with respect to the current attempt to relocate the easement. Moreover, the court indicated that the right or a servient owner to relocate an easement is limited to easements created by grant or reservation, and does not include easements by prescription. The court did hold, however, that Gelmart had raised questions of fact about dominant owners' use of the easement for impermissible purposes. On that question, the court held that summary judgment was inappropriate.

Arbor National Commercial Mortgage, LLC v. Carmans Plaza, LLC
NYLJ 6/2/03, p. 25, col. 4
AppDiv, Second Dept
(memorandum opinion)

In an action to foreclose a mortgage, mortgagee bank appealed from Supreme Court's denial of its motion for leave to enter a deficiency judgment, and from Supreme Court's grant of mortgagor's cross-motion to dismiss the motion as untimely. The Appellate Division affirmed, holding that RPAPL 1371(2) operates as a 90-day statute of limitation running from the referee's delivery of the deed to the successful bidder.

After the foreclosure sale, the successful bidder assigned its bid and redelivered the deeds to its assignee. Mortgagee later moved for a deficiency judgment pursuant to RPAPL 1371(2), which authorizes a mortgagee to move for leave to enter a deficiency judgment 'simultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser.' In this case, mortgagee made the motion more than 90 days after the referee's delivery of a deed to the successful bidder, but fewer than 90 days after the bidder assigned and redelivered the deeds.

In holding that mortgagor was entitled to dismissal of the motion for leave to enter the deficiency judgment, the court noted that courts have uniformly treated the statute's 90-day period as a statute of limitations, so that failure to serve notice within the period is a complete bar to entry of a deficiency judgment. The court went on to hold that the period runs from the initial delivery of the referee's deed, and that, as a result, the proceeds of the sale would be deemed in full satisfaction of the mortgage debt.

New York Tile Wholesale Corp. v. Thomas Fatato Realty Corp.
NYLJ 6/4/03, p. 19, col. 4
Supreme Ct., Kings Cty
(Barasch, J.)

In an action by tenant for specific performance of a lease provision granting tenant a right of first refusal, tenant and landlord both moved for summary judgment. The court granted landlord's motion, holding that landlord's transfer of its interest to a related entity did not trigger tenant's first refusal right.

In 1986, tenant leased part of the subject property from Fatato, a real estate company, for a 5-year term. The lease provided that in the event of sale or lease of the property, tenant would have a 'first right of refusal.' The lease was continually renewed and extended, always with the same right of first refusal. In 2000, Fatato decided to redevelop the property by constructing residential rental apartments. In order to obtain financing and construction expertise, Fatato formed a new LLC, Garden. Fatato held a majority interest of 60% in Garden, with the rest held by a real estate developer and a construction company. As its capital contribution to Garden, Fatato transferred the subject property to the new LLC. Because the market value of the property significantly exceeded Fatato's proportionate contribution to the new entity, Garden agreed to repay Fatato in the amount of $2,295,000. Tenant contends that this transfer constituted a sale of the property within the meaning of its first refusal right, and sought a judgment rescinding the transfer to Garden and specific performance of Fatato's agreement to transfer the property to tenant on the same terms as the agreement with Garden. Tenant also sought damages against both Fatato and Garden. All parties sought summary judgment.

In awarding summary judgment to Fatato and Garden, the court relied on the absence of any change in the substance of the control of the premises as a result of the transfer from Fatato to Garden. The court also observed that the transfer to Garden was not the subject of an arm's-length negotiation with a third party for the market value of the property. Neither the payment of transfer tax nor the fact that Fatato received payment at the closing were enough to make the transfer a 'sale' within the meaning of the first refusal right in the lease agreement. Hence, the transfer never triggered that first refusal right.

Gelmart Industries, Inc. v. Hubert
NYLJ 5/21/03, p. 20, col. 4
Supreme Ct., Queens Cty
(Grays. J.)

In an action by servient owner for declaratory and injunctive relief, dominant owners sought summary judgment dismissing the complaint. The court granted the motion in part, holding that the prescriptive easement previously established over the servient land ran to dominant owners' successors in interest, but holding that question of fact remained about alleged misuse of the easement.

A 1984 judgment established that Hubert and Agnelli held prescriptive easements over Gelmart's parking lot to reach the rear of their properties from a curb cut on the street. In this action, Gelmart sought to establish that the easement was limited to the named plaintiffs in the earlier action, and that if the easement was not terminated, Gelmart had the right to relocate the easement without the consent of the dominant owners. Gelmart also alleged that dominant owners park their cars in his parking lot, and sought an injunction against parking of vehicles on its property.

In granting dominant owners summary judgment with respect to the continued existence of the easement, the court first noted that prescriptive easements inure to successors-in-interest even if the judgment establishing the existence of the easement is silent about succession rights. The court then noted that in 1997, Gelmart had sought unsuccessfully to modify the judgment to relocate the easement, and the court held that the 1997 determination was res judicata with respect to the current attempt to relocate the easement. Moreover, the court indicated that the right or a servient owner to relocate an easement is limited to easements created by grant or reservation, and does not include easements by prescription. The court did hold, however, that Gelmart had raised questions of fact about dominant owners' use of the easement for impermissible purposes. On that question, the court held that summary judgment was inappropriate.

Servient Owner May Be Liable for Breach of Duty to Warn

Piluso v. Bell Atlantic Corp.

NYLJ 5/13/03, p. 18, col. 1

AppDiv, First Dept

(Opinion by Sullivan, J.)

In an action by a runner injured when he tripped over guy wires owned and maintained by utility companies, servient landowner appealed from Supreme Court's denial of its motion for summary judgment dismissing the complaint. The Appellate Division affirmed, holding that questions of fact remained about whether servient owner could be liable for failure to warn of the danger presented by the guy wire.

Plaintiff runner tripped and fell over guy wires run from a utility pole to the ground. The pole is owned by Con Edison; the two guy wires were owned by Cablevision and Verizon. The pole and wires were located on the parking lot of a 55-acre housing complex. The lot is owned by Edgewater Park Owners Cooperative (EPOC), whose predecessor had conveyed an easement to Con Edison's predecessor in 1936. The easement permitted lines of poles, together with necessary guys and anchors. When plaintiff runner brought this action against the utilities and against EPOC, EPOC sought summary judgment dismissing the complaint, contending that as servient owner, it had no duty to maintain the easement, and, indeed, had a duty to refrain from interfering with servient owner. Supreme Court denied EPOC's summary judgment motion, and EPOC appealed.

In affirming, the Appellate Division conceded that EPOC did not control the utility pole and guy wire, and had no duty to plaintiff to remedy the allegedly dangerous condition. The court did note, however, that landowners generally owe a duty to maintain property in safe condition, a duty that includes warning of dangerous conditions on the premises. EPOC's status as a servient owner did not relieve it of its general duty to warn. Hence, EPOC was not entitled to summary judgment.

Deficiency Judgment Barred As Untimely

Arbor National Commercial Mortgage, LLC v. Carmans Plaza, LLC

NYLJ 6/2/03, p. 25, col. 4

AppDiv, Second Dept

(memorandum opinion)

In an action to foreclose a mortgage, mortgagee bank appealed from Supreme Court's denial of its motion for leave to enter a deficiency judgment, and from Supreme Court's grant of mortgagor's cross-motion to dismiss the motion as untimely. The Appellate Division affirmed, holding that RPAPL 1371(2) operates as a 90-day statute of limitation running from the referee's delivery of the deed to the successful bidder.

After the foreclosure sale, the successful bidder assigned its bid and redelivered the deeds to its assignee. Mortgagee later moved for a deficiency judgment pursuant to RPAPL 1371(2), which authorizes a mortgagee to move for leave to enter a deficiency judgment 'simultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser.' In this case, mortgagee made the motion more than 90 days after the referee's delivery of a deed to the successful bidder, but fewer than 90 days after the bidder assigned and redelivered the deeds.

In holding that mortgagor was entitled to dismissal of the motion for leave to enter the deficiency judgment, the court noted that courts have uniformly treated the statute's 90-day period as a statute of limitations, so that failure to serve notice within the period is a complete bar to entry of a deficiency judgment. The court went on to hold that the period runs from the initial delivery of the referee's deed, and that, as a result, the proceeds of the sale would be deemed in full satisfaction of the mortgage debt.

Transfer to Related Entity Does Not Trigger First Refusal Right

New York Tile Wholesale Corp. v. Thomas Fatato Realty Corp.

NYLJ 6/4/03, p. 19, col. 4

Supreme Ct., Kings Cty

(Barasch, J.)

In an action by tenant for specific performance of a lease provision granting tenant a right of first refusal, tenant and landlord both moved for summary judgment. The court granted landlord's motion, holding that landlord's transfer of its interest to a related entity did not trigger tenant's first refusal right.

In 1986, tenant leased part of the subject property from Fatato, a real estate company, for a 5-year term. The lease provided that in the event of sale or lease of the property, tenant would have a 'first right of refusal.' The lease was continually renewed and extended, always with the same right of first refusal. In 2000, Fatato decided to redevelop the property by constructing residential rental apartments. In order to obtain financing and construction expertise, Fatato formed a new LLC, Garden. Fatato held a majority interest of 60% in Garden, with the rest held by a real estate developer and a construction company. As its capital contribution to Garden, Fatato transferred the subject property to the new LLC. Because the market value of the property significantly exceeded Fatato's proportionate contribution to the new entity, Garden agreed to repay Fatato in the amount of $2,295,000. Tenant contends that this transfer constituted a sale of the property within the meaning of its first refusal right, and sought a judgment rescinding the transfer to Garden and specific performance of Fatato's agreement to transfer the property to tenant on the same terms as the agreement with Garden. Tenant also sought damages against both Fatato and Garden. All parties sought summary judgment.

In awarding summary judgment to Fatato and Garden, the court relied on the absence of any change in the substance of the control of the premises as a result of the transfer from Fatato to Garden. The court also observed that the transfer to Garden was not the subject of an arm's-length negotiation with a third party for the market value of the property. Neither the payment of transfer tax nor the fact that Fatato received payment at the closing were enough to make the transfer a 'sale' within the meaning of the first refusal right in the lease agreement. Hence, the transfer never triggered that first refusal right.

Prescriptive Easement Runs to Successors-in-Interest

Gelmart Industries, Inc. v. Hubert

NYLJ 5/21/03, p. 20, col. 4

Supreme Ct., Queens Cty

(Grays. J.)

In an action by servient owner for declaratory and injunctive relief, dominant owners sought summary judgment dismissing the complaint. The court granted the motion in part, holding that the prescriptive easement previously established over the servient land ran to dominant owners' successors in interest, but holding that question of fact remained about alleged misuse of the easement.

A 1984 judgment established that Hubert and Agnelli held prescriptive easements over Gelmart's parking lot to reach the rear of their properties from a curb cut on the street. In this action, Gelmart sought to establish that the easement was limited to the named plaintiffs in the earlier action, and that if the easement was not terminated, Gelmart had the right to relocate the easement without the consent of the dominant owners. Gelmart also alleged that dominant owners park their cars in his parking lot, and sought an injunction against parking of vehicles on its property.

In granting dominant owners summary judgment with respect to the continued existence of the easement, the court first noted that prescriptive easements inure to successors-in-interest even if the judgment establishing the existence of the easement is silent about succession rights. The court then noted that in 1997, Gelmart had sought unsuccessfully to modify the judgment to relocate the easement, and the court held that the 1997 determination was res judicata with respect to the current attempt to relocate the easement. Moreover, the court indicated that the right or a servient owner to relocate an easement is limited to easements created by grant or reservation, and does not include easements by prescription. The court did hold, however, that Gelmart had raised questions of fact about dominant owners' use of the easement for impermissible purposes. On that question, the court held that summary judgment was inappropriate.

Arbor National Commercial Mortgage, LLC v. Carmans Plaza, LLC
NYLJ 6/2/03, p. 25, col. 4
AppDiv, Second Dept
(memorandum opinion)

In an action to foreclose a mortgage, mortgagee bank appealed from Supreme Court's denial of its motion for leave to enter a deficiency judgment, and from Supreme Court's grant of mortgagor's cross-motion to dismiss the motion as untimely. The Appellate Division affirmed, holding that RPAPL 1371(2) operates as a 90-day statute of limitation running from the referee's delivery of the deed to the successful bidder.

After the foreclosure sale, the successful bidder assigned its bid and redelivered the deeds to its assignee. Mortgagee later moved for a deficiency judgment pursuant to RPAPL 1371(2), which authorizes a mortgagee to move for leave to enter a deficiency judgment 'simultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser.' In this case, mortgagee made the motion more than 90 days after the referee's delivery of a deed to the successful bidder, but fewer than 90 days after the bidder assigned and redelivered the deeds.

In holding that mortgagor was entitled to dismissal of the motion for leave to enter the deficiency judgment, the court noted that courts have uniformly treated the statute's 90-day period as a statute of limitations, so that failure to serve notice within the period is a complete bar to entry of a deficiency judgment. The court went on to hold that the period runs from the initial delivery of the referee's deed, and that, as a result, the proceeds of the sale would be deemed in full satisfaction of the mortgage debt.

New York Tile Wholesale Corp. v. Thomas Fatato Realty Corp.
NYLJ 6/4/03, p. 19, col. 4
Supreme Ct., Kings Cty
(Barasch, J.)

In an action by tenant for specific performance of a lease provision granting tenant a right of first refusal, tenant and landlord both moved for summary judgment. The court granted landlord's motion, holding that landlord's transfer of its interest to a related entity did not trigger tenant's first refusal right.

In 1986, tenant leased part of the subject property from Fatato, a real estate company, for a 5-year term. The lease provided that in the event of sale or lease of the property, tenant would have a 'first right of refusal.' The lease was continually renewed and extended, always with the same right of first refusal. In 2000, Fatato decided to redevelop the property by constructing residential rental apartments. In order to obtain financing and construction expertise, Fatato formed a new LLC, Garden. Fatato held a majority interest of 60% in Garden, with the rest held by a real estate developer and a construction company. As its capital contribution to Garden, Fatato transferred the subject property to the new LLC. Because the market value of the property significantly exceeded Fatato's proportionate contribution to the new entity, Garden agreed to repay Fatato in the amount of $2,295,000. Tenant contends that this transfer constituted a sale of the property within the meaning of its first refusal right, and sought a judgment rescinding the transfer to Garden and specific performance of Fatato's agreement to transfer the property to tenant on the same terms as the agreement with Garden. Tenant also sought damages against both Fatato and Garden. All parties sought summary judgment.

In awarding summary judgment to Fatato and Garden, the court relied on the absence of any change in the substance of the control of the premises as a result of the transfer from Fatato to Garden. The court also observed that the transfer to Garden was not the subject of an arm's-length negotiation with a third party for the market value of the property. Neither the payment of transfer tax nor the fact that Fatato received payment at the closing were enough to make the transfer a 'sale' within the meaning of the first refusal right in the lease agreement. Hence, the transfer never triggered that first refusal right.

Gelmart Industries, Inc. v. Hubert
NYLJ 5/21/03, p. 20, col. 4
Supreme Ct., Queens Cty
(Grays. J.)

In an action by servient owner for declaratory and injunctive relief, dominant owners sought summary judgment dismissing the complaint. The court granted the motion in part, holding that the prescriptive easement previously established over the servient land ran to dominant owners' successors in interest, but holding that question of fact remained about alleged misuse of the easement.

A 1984 judgment established that Hubert and Agnelli held prescriptive easements over Gelmart's parking lot to reach the rear of their properties from a curb cut on the street. In this action, Gelmart sought to establish that the easement was limited to the named plaintiffs in the earlier action, and that if the easement was not terminated, Gelmart had the right to relocate the easement without the consent of the dominant owners. Gelmart also alleged that dominant owners park their cars in his parking lot, and sought an injunction against parking of vehicles on its property.

In granting dominant owners summary judgment with respect to the continued existence of the easement, the court first noted that prescriptive easements inure to successors-in-interest even if the judgment establishing the existence of the easement is silent about succession rights. The court then noted that in 1997, Gelmart had sought unsuccessfully to modify the judgment to relocate the easement, and the court held that the 1997 determination was res judicata with respect to the current attempt to relocate the easement. Moreover, the court indicated that the right or a servient owner to relocate an easement is limited to easements created by grant or reservation, and does not include easements by prescription. The court did hold, however, that Gelmart had raised questions of fact about dominant owners' use of the easement for impermissible purposes. On that question, the court held that summary judgment was inappropriate.