Real Property Law

Supreme Ct., Suffolk Cty

(Burke, J.)

In an action for a judgment quieting title to land by adverse possession, the state moved for summary judgment dismissing the complaint. The court granted the state's summary judgment motion, holding both that claimant had not established the requisites necessary to support an adverse possession claim, and that lands held by the state in its governmental capacity are not subject to loss by adverse possession.

Since at least 1962, plaintiff yacht club has been using the subject land, bounded by the confluence of two canals cut from a river, for the mooring and docking of boats. The land occupied by the club is currently improved with a barge secured to the shoreline and a large access ramp. The club has also erected a gate dissecting the road used by club members to reach the club's facilities. The club, however, has no paper title to the land. The state, by contrast, traces title to an 1895 deed from the Supervisor of Kings County, which conveyed to the state the land and the asylum that later became Kings Park Psychiatric Center, which was ultimately closed in 1997. At that time, the subject land was transferred to other state agencies, and is now under the jurisdiction of the state Office of Parks, Recreation, and Historic Preservation.

Although the yacht club contended that it had been using the subject parcel since the 1940s, the state's submissions established that in or about May, 1962, state hospital officials granted the club permission to move their float to the point at which the two canals joined, and that the club moved its installation to that point in the summer of 1962. Moreover, in 1971, hospital officials granted the club permission to permanently secure the barge with chains, and to improve the barge with electricity and toilet facilities by backfilling the land between the barge and the shore. In 1985, state hospital officials authorized the club to put up the gate across the access road. Moreover, in several other writings, the club acknowledged that the state was the owner of the land.

In awarding summary judgment to the state, the court emphasized that the club's repeated acknowledgments of the state's ownership rights precluded any claim to title by adverse possession. The club's possession was permissive and not hostile in light of the club's numerous requests, granted by the hospital, to use the subject acreage. These difficulties also precluded the club's claim for an easement by prescription. The court also offered an alternative basis for its grant of summary judgment: lands held by the state in its governmental capacity may not be lost by adverse possession. The court rejected the club's claim that the state's sale of neighboring acres established that the parcel was held by the state in a proprietary capacity rather than a public or governmental capacity.

COMMENT

Land owned by a state or municipality is not generally subject to adverse possession claims unlessthe land is held by government in its proprietary capacity rather than its governmental capacity.

When a state or municipality sells a disputed parcel of land or makes it available for purchase, courts have considered that land to be held in a proprietary capacity. Thus, in Monthie v. Boyle Road Associates, 281 A.D.2d 15, a school district placed undeveloped governmental land on the market in 1986. In 1998, a developer purchased the land and sought to prevent adjoining homeowners from using portions of the land on which they had been encroaching. The court held that once the school district placed the land on the market in 1986, the school district held the property in its proprietary capacity, even if the sale did not take place until 12 years later. As a result, the homeowners were not precluded from acquiring title by adverse possession.

Even if the state or municipality has not sold the particular property in dispute or put it up for sale, courts have held that once portions of the larger tract of land have been sold or made available for sale the entire parcel, including the disputed property, loses its governmental character. Thus, in Lewis v. Village of Lyons, 54 A.D.2d 488, the plaintiffs remodeled a professional office, and expanded a parking lot in the back of the building onto lands held by the county. In the plaintiffs' adverse possession action, the court held that the property was susceptible to adverse possession claims the disputed land upon which the plaintiffs had built the parking lot was part of a parcel of land from which the Village had previously made three conveyances to private individuals. According to the court, these conveyances were sufficient to conclude that the village held the entire parcel in its proprietary. Similarly, in the Matter of the City of New York (Mileau), 72 A.D.2d 745, the claimant maintained that the governmental character of city land held under water was vitiated when the city conveyed a portion of the land contiguous to the claimant's property. The court concluded that the city held the underwater lands, including the land in dispute, in its proprietary capacity, subjecting those lands to the adverse possession claim. And in City of Tonawanda v. Ellicott Homeowners Association, Inc., 86 A.D.2d 118, creek-front property claimed to be adversely possessed was part of a larger tract of land conveyed to the city by Erie County in 1972. Between 1972 and 1975, the city discussed the sale, public auction, or leasing of the land with private citizens, and these actions, the court concluded, established the proprietary character of the city's ownership of the entire tract, including the property at issue in the adverse possession dispute. Id. at 122.

In Kings Park Yacht Club, the court's discussion of adverse possession appears inconsistent with New York law because various portions of the larger parcel of government held land had been sold. However, the inconsistency played no role in the court's ultimate decision, because the court rejected the adverse possession claim on other, independent grounds.

No Summary Judgment in Adverse Possession Claim By Co-Tenant

Blanchard v. Blanchard

NYLJ 9/24/04, p. 20, col. 1

Supreme Ct., Bronx Cty

(Renwick, J.)

In a former wife's action for partition and sale of a residence, the husband counterclaimed for a declaration that he had acquired sole title by adverse possession. The court denied summary judgment motions by both parties, holding that questions of fact remained about the husband's satisfaction of the hostility requirement for title by adverse possession.

In 1958, the husband and wife purchased the subject three-family house for $15,000, procuring a 15-year mortgage. When the parties divorced in 1972, the divorce judgment made no provision for division of the property. The husband maintained exclusive possession of the premises for 30 years. In 2002, the husband's lawyer wrote a letter to the former wife, indicating that he had found a purchaser for the property, and offering to pay the wife $15,000 “to resolve [her] interest in the property,” which is currently worth about $345,000. The wife ignored this overture, and subsequently brought this action for partition and sale. The husband counterclaimed, asserting title by adverse possession. Both parties moved for summary judgment.

In denying both summary judgment motions, the court started by noting that the parties' divorce had transformed their tenancy-by-the-entirety interest into a tenancy in common. The court then noted that RPAPL section 541 provides that after 10 years of continuous exclusive occupancy by one tenant-in-common, that tenant-in-common's continued occupation can give rise to an adverse possession claim. The court concluded, however, that the occupying tenant-in-common must still satisfy the requisites of an adverse possession claim; in particular, the occupying tenant must demonstrate hostile, rather than permissive, possession of the premises. In this case, the court concluded that the $15,000 offer raised questions of fact about husband's hostility, and precluded award of summary judgment.

Collapsed Pool Might Make Title Unmarketable

Sabbagh v. Pizzuro

NYLJ 9/1/04, p. 20, col. 1

Supreme Ct., Nassau Cty

(LaMarca, J.)

In an action by a homeowner against the prior owner, the town, and title insurer for damages resulting from collapse of a hidden in-ground pool, the title insurer sought summary judgment dismissing the complaint. The court denied the motion, holding that the hidden pool might have constituted a title defect covered by the title insurance policy.

The homeowner purchased the home in 1999, and installed an above-ground pool the following year. In 2002, the pool collapsed into a previously undisclosed in-ground pool that had been covered and hidden. The homeowner then brought this action against the prior owner, against the town (alleging negligent inspection of the abandonment and refilling of the pool), against a title abstract company for negligent examination of the town's public records, and against the title insurance company. The abstract company, the town, and the title insurance company sought summary judgment dismissing the complaint.

The court dismissed the action against the town, concluding that the homeowner had demonstrated no special duty the town owed to her. The court also dismissed the action against the abstract company, holding that the hidden pool and the improper filling of the pool are not the types of title difficulties that would be uncovered by an exhaustive search of the town records. With respect to the title insurance company, however, the court held that summary judgment was inappropriate. The court emphasized that the title insurer's liability is based on contract, not on negligence, and that the title insurer had insured against “unmarketability of title.” The court concluded that an illegal in-ground structure for which a building permit has been canceled could constitute a title defect covered by the policy, even though the defect could not have been uncovered by a comprehensive search of land records.

COMMENT

New York courts will generally hold a property owner's title unmarketable when the title is subject to a claim by another. For instance, in Gundel v. Grady, 184 A.D.2d 548, an easement granting an adjoining landowner egress and ingress to the property rendered the title unmarketable. Similarly, in Kera v. DeFellippo, 290 A.D.2d 287, the title was unmarketable due to wooden decks that encroached almost 10 feet onto the adjacent property. Conversely, a title is not unmarketable so long as it is free from claim by another, even when damages or defects to the land advserely affect the market value of the property or cause losses to the owner. Thus, in Vandevort v. Higginbotham, 222 A.D.2d 831, the title was not rendered unmarketable by the existence of an underground petroleum tank that discharged oil into the ground and required the the subsequent purchaser to pay for a costly cleanup. The court's conclusion in Sabbagh is difficult to reconcile with Vandevort.

Installment Sale Purchaser Acquires Title By Adverse Possession

Glantzis v. Padilla

NYLJ 9/1/04, p. 18, col. 3

Supreme Ct., Kings Cty

(Douglass, J.)

In an action by a purchaser to evict an occupant of a building, the occupant moved to dismiss the complaint based on an adverse possession claim. The court dismissed the complaint, holding that the occupant had acquired title by adverse possession, and that the purchaser was on notice of that claim.

In 1973, the occupant learned that a vacant dilapidated building was for sale, and a lawyer drew a sale contract providing for a price of $16,000, $3000 to be paid in cash, together with a 10-year mortgage, with monthly payments of $154.32 plus escrow deposits, for a total of $225 per month. No closing every took place, but the occupant made monthly payments to the lawyer for several years, moved into the premises, and made extensive repairs. In the seventh year, when the occupant sought to make his regular payment, he was informed that the lawyer had been murdered. The occupant then consulted a second lawyer, and began to make the payments to him, who in turn sent the money to the Estate of Almodovar, the original seller of the building. In 1979, the estate brought an action in landlord-tenant court to evict the occupant. The occupant's third lawyer obtained a stay pending a final determination of the rights of the parties, with a direction that occupant continue to pay monthly payments to “landlord.” The occupant then attempted, unsuccessfully, to induce the estate to transfer title. Then, in 1989, the occupant brought an action for specific performance of the 1973 sale contract, or for a declaration that he was the rightful owner by adverse possession. Both that action and the landlord's eviction proceeding appear to have been abandoned.

In 2002, the purchaser bought the building from the estate for $330,000. The purchaser was aware that the property was occupied at the time, but he never examined the building's interior. Moreover, a rider to the sale contract recited that purchase acknowledges receiving notice of two actions filed in Supreme Court. The purchaser then brought this action to evict the occupant from the building.

In dismissing the complaint, the court relied on the occupant's 30 years of continuous possession of the building. The court rejected the purchaser's argument that the occupation was unlawful and could not, therefore, ripen into adverse possession, concluding instead that the initial occupation was done pursuant to the sale contract and, in any event, was ratified by the estate when it accepted monthly payments. The court also rejected the argument that the 1980 stay in the eviction action precluded acquisition of title by adverse possession, noting that the owner had taken no steps to challenge occupant's continued open possession, and instead had abandoned the underlying action. Hence, the court concluded that the occupant had established title by adverse possession.

COMMENT

In holding that the landlord's 1979 action did not toll the adverse possession period, the Padilla court adopted an approach taken in other statute of limitations cases. New York courts have held, in other contexts, that the statute of limitations is not tolled when one of the parties obtain a stay pending arbitration and then the parties fail to arbitrate their dispute. Thus, In the Matter of the Arbitration between Robert C. Finkelstein and Stanley Harris, 17 A.D.2d 137, 139 the First Department determined that the court-ordered stay pending arbitration did not toll the statute of limitations for a breach of contract action when the parties subsequently abandoned their efforts to arbitrate the dispute. Noting that both parties had abandoned their initial efforts to arbitrate the contract dispute, the First Department stated that an abandonment of an action staying a prior proceeding is to be “treated the same as a voluntary discontinuance,” and that a voluntary discontinuance has no tolling effect on a statute of limitations. Id. Similarly, in Padilla, the stay obtained during the 1979 action to evict the possessor was apparently abandoned. As a result, neither the action nor the stay tolled the adverse possession period, which ran from 1973-1983.

In addition, the Padilla court's holding that payment under the terms of a contract to purchase did not prevent possessor's adverse possession claim, is consistent with New York law. In Cypress Estates v. Wilshire, 237 NE2d 78, the Court of Appeals held that payment under the terms of a contract is consistent with an adverse possession claim so long as the purchaser established ownership under a claim of right for the required period of time. In Wilshire, the purchaser entered into an installment contract and performed under the terms of that agreement for 9 years, one payment shy of its terms. Thereafter, the purchaser maintained and occupied the property as the apparent owner for an additional 11 years. The court included the period of time where the possessor paid under the installment terms as part of the then required 15-year statutory period of possession, holding that such possession was both hostile and exclusive despite the monthly payment. Id.

In both Padilla and Wilshire, the purchasers entered into a contract to purchase prior to the accounting of the statutory possession period, even though the terms of the agreement required continued payment through the 10-year possession term. This continued payment of a contractual obligation is distinguishable from cases in which the possessor interrupts the occupation of property to inquire with the record-holder as to a potential purchase. In such cases, courts have held that the possessor cannot establish the requisite claim of right. Thus, in Guariglia v. Blima Homes, Inc., 224 A.D.2d 388, 389, the claimants sought to declare title by adverse possession of a vegetable garden, cultivated in an adjoining parcel. During the 10-year period statutory period in question, the claimants made attempts to purchase the parcel from the title owner, at one point executing a contract of sale for the disputed property. The Guariglia court reasoned that such a contract “negates the essential element of a claim of right.” See also Manhattan School of Music v. Solow, 175 AD2d 106. This 'seeking out' of the record-owner would reflect a conscious acquiescence of another's rightful ownership in the property, where the continued payment evident in Padilla and Wilshire could be considered analogous to a purchase money mortgage agreement, under which continued possession is entirely consistent with the possessor's claim of ownership.

Statute Of Limitations Precludes Claim for Cost of Cleaning Up Petroleum Contamination

Union Turnpike Associates, LLC v. Getty Realty Corp.

NYLJ 9/15/04, p. 21, col. 1

Supreme Ct., Nassau Cty

(Bucaria, J.)

In an action by a landowner against a former tenant for damages arising out of petroleum contamination of the property, the tenant sought to dismiss based on the statute of limitations. The court granted the motion, concluding that the landowner had not exercised due diligence in discovering the contamination.

The father of the current landowner's principals leased the premises to a predecessor of the tenant, Getty, in 1961, for a 20-year period with a 5-year option. Pursuant to the terms of the lease, Getty's predecessor installed underground storage tanks (USTs).Getty then sublet the premises to a succession of operators for use as a service station. Getty exercised the option, and when the lease expired in 1987, the landowner (now a corporate entity in which the original owner's sons are principals) entered into a new lease with a tenant who did not intend to operate a service station. Getty then hired a contractor to empty the USTs and fill them with water. The landowner's new lease, however, required the landowner to fill the tanks with sand or concrete, and the landowner engaged Getty's contractor to fill the tanks with concrete. When the 1987 lease expired in 2000, the landowner entered into a lease with a new entity. That new entity conducted an environmental site assessment that revealed the presence of petroleum-contaminated soil. As a result, the new tenant's contractor removed 700 tons of contaminated soil from the site. The landowner then brought this action against Getty for damages suffered as a result of this contamination. The landowner invoked article 12 of the Navigation Law, commonly known as the oil spill act.

In dismissing the complaint, the court relied on CPLR 214-c(2), which provides that an action to recover damages for injury to property must be brought within 3 years from the date of discovery or from the date when, through the exercise of reasonable diligence, the injury should have been discovered. The court held that the landowner should have discovered the contamination by 1987, when the landowner arranged for refilling of the USTs. Hence, the claim was time-barred. The court also rejected the landowner's claim for contribution and indemnification. The court noted that under Navigaton Law section 172(8), the landowner was liable as a discharger of contaminants. The court then cited Navigation Law section 172(3) for the proposition that a person responsible for a discharge is precluded from claims for indemnification or contribution.

Acknowledgment of State Ownership Rights Precludes Adverse Possession Claim

Kings Park Yacht Club, Inc. v. State of New York

NYLJ 9/8/04, p. 20, col. 1

Supreme Ct., Suffolk Cty

(Burke, J.)

In an action for a judgment quieting title to land by adverse possession, the state moved for summary judgment dismissing the complaint. The court granted the state's summary judgment motion, holding both that claimant had not established the requisites necessary to support an adverse possession claim, and that lands held by the state in its governmental capacity are not subject to loss by adverse possession.

Since at least 1962, plaintiff yacht club has been using the subject land, bounded by the confluence of two canals cut from a river, for the mooring and docking of boats. The land occupied by the club is currently improved with a barge secured to the shoreline and a large access ramp. The club has also erected a gate dissecting the road used by club members to reach the club's facilities. The club, however, has no paper title to the land. The state, by contrast, traces title to an 1895 deed from the Supervisor of Kings County, which conveyed to the state the land and the asylum that later became Kings Park Psychiatric Center, which was ultimately closed in 1997. At that time, the subject land was transferred to other state agencies, and is now under the jurisdiction of the state Office of Parks, Recreation, and Historic Preservation.

Although the yacht club contended that it had been using the subject parcel since the 1940s, the state's submissions established that in or about May, 1962, state hospital officials granted the club permission to move their float to the point at which the two canals joined, and that the club moved its installation to that point in the summer of 1962. Moreover, in 1971, hospital officials granted the club permission to permanently secure the barge with chains, and to improve the barge with electricity and toilet facilities by backfilling the land between the barge and the shore. In 1985, state hospital officials authorized the club to put up the gate across the access road. Moreover, in several other writings, the club acknowledged that the state was the owner of the land.

In awarding summary judgment to the state, the court emphasized that the club's repeated acknowledgments of the state's ownership rights precluded any claim to title by adverse possession. The club's possession was permissive and not hostile in light of the club's numerous requests, granted by the hospital, to use the subject acreage. These difficulties also precluded the club's claim for an easement by prescription. The court also offered an alternative basis for its grant of summary judgment: lands held by the state in its governmental capacity may not be lost by adverse possession. The court rejected the club's claim that the state's sale of neighboring acres established that the parcel was held by the state in a proprietary capacity rather than a public or governmental capacity.

COMMENT

Land owned by a state or municipality is not generally subject to adverse possession claims unlessthe land is held by government in its proprietary capacity rather than its governmental capacity.

When a state or municipality sells a disputed parcel of land or makes it available for purchase, courts have considered that land to be held in a proprietary capacity. Thus, in Monthie v. Boyle Road Associates, 281 A.D.2d 15, a school district placed undeveloped governmental land on the market in 1986. In 1998, a developer purchased the land and sought to prevent adjoining homeowners from using portions of the land on which they had been encroaching. The court held that once the school district placed the land on the market in 1986, the school district held the property in its proprietary capacity, even if the sale did not take place until 12 years later. As a result, the homeowners were not precluded from acquiring title by adverse possession.

Even if the state or municipality has not sold the particular property in dispute or put it up for sale, courts have held that once portions of the larger tract of land have been sold or made available for sale the entire parcel, including the disputed property, loses its governmental character. Thus, in Lewis v. Village of Lyons, 54 A.D.2d 488, the plaintiffs remodeled a professional office, and expanded a parking lot in the back of the building onto lands held by the county. In the plaintiffs' adverse possession action, the court held that the property was susceptible to adverse possession claims the disputed land upon which the plaintiffs had built the parking lot was part of a parcel of land from which the Village had previously made three conveyances to private individuals. According to the court, these conveyances were sufficient to conclude that the village held the entire parcel in its proprietary. Similarly, in the Matter of the City of New York (Mileau), 72 A.D.2d 745, the claimant maintained that the governmental character of city land held under water was vitiated when the city conveyed a portion of the land contiguous to the claimant's property. The court concluded that the city held the underwater lands, including the land in dispute, in its proprietary capacity, subjecting those lands to the adverse possession claim. And in City of Tonawanda v. Ellicott Homeowners Association, Inc., 86 A.D.2d 118, creek-front property claimed to be adversely possessed was part of a larger tract of land conveyed to the city by Erie County in 1972. Between 1972 and 1975, the city discussed the sale, public auction, or leasing of the land with private citizens, and these actions, the court concluded, established the proprietary character of the city's ownership of the entire tract, including the property at issue in the adverse possession dispute. Id. at 122.

In Kings Park Yacht Club, the court's discussion of adverse possession appears inconsistent with New York law because various portions of the larger parcel of government held land had been sold. However, the inconsistency played no role in the court's ultimate decision, because the court rejected the adverse possession claim on other, independent grounds.

No Summary Judgment in Adverse Possession Claim By Co-Tenant

Blanchard v. Blanchard

NYLJ 9/24/04, p. 20, col. 1

Supreme Ct., Bronx Cty

(Renwick, J.)

In a former wife's action for partition and sale of a residence, the husband counterclaimed for a declaration that he had acquired sole title by adverse possession. The court denied summary judgment motions by both parties, holding that questions of fact remained about the husband's satisfaction of the hostility requirement for title by adverse possession.

In 1958, the husband and wife purchased the subject three-family house for $15,000, procuring a 15-year mortgage. When the parties divorced in 1972, the divorce judgment made no provision for division of the property. The husband maintained exclusive possession of the premises for 30 years. In 2002, the husband's lawyer wrote a letter to the former wife, indicating that he had found a purchaser for the property, and offering to pay the wife $15,000 “to resolve [her] interest in the property,” which is currently worth about $345,000. The wife ignored this overture, and subsequently brought this action for partition and sale. The husband counterclaimed, asserting title by adverse possession. Both parties moved for summary judgment.

In denying both summary judgment motions, the court started by noting that the parties' divorce had transformed their tenancy-by-the-entirety interest into a tenancy in common. The court then noted that RPAPL section 541 provides that after 10 years of continuous exclusive occupancy by one tenant-in-common, that tenant-in-common's continued occupation can give rise to an adverse possession claim. The court concluded, however, that the occupying tenant-in-common must still satisfy the requisites of an adverse possession claim; in particular, the occupying tenant must demonstrate hostile, rather than permissive, possession of the premises. In this case, the court concluded that the $15,000 offer raised questions of fact about husband's hostility, and precluded award of summary judgment.

Collapsed Pool Might Make Title Unmarketable

Sabbagh v. Pizzuro

NYLJ 9/1/04, p. 20, col. 1

Supreme Ct., Nassau Cty

(LaMarca, J.)

In an action by a homeowner against the prior owner, the town, and title insurer for damages resulting from collapse of a hidden in-ground pool, the title insurer sought summary judgment dismissing the complaint. The court denied the motion, holding that the hidden pool might have constituted a title defect covered by the title insurance policy.

The homeowner purchased the home in 1999, and installed an above-ground pool the following year. In 2002, the pool collapsed into a previously undisclosed in-ground pool that had been covered and hidden. The homeowner then brought this action against the prior owner, against the town (alleging negligent inspection of the abandonment and refilling of the pool), against a title abstract company for negligent examination of the town's public records, and against the title insurance company. The abstract company, the town, and the title insurance company sought summary judgment dismissing the complaint.

The court dismissed the action against the town, concluding that the homeowner had demonstrated no special duty the town owed to her. The court also dismissed the action against the abstract company, holding that the hidden pool and the improper filling of the pool are not the types of title difficulties that would be uncovered by an exhaustive search of the town records. With respect to the title insurance company, however, the court held that summary judgment was inappropriate. The court emphasized that the title insurer's liability is based on contract, not on negligence, and that the title insurer had insured against “unmarketability of title.” The court concluded that an illegal in-ground structure for which a building permit has been canceled could constitute a title defect covered by the policy, even though the defect could not have been uncovered by a comprehensive search of land records.

COMMENT

New York courts will generally hold a property owner's title unmarketable when the title is subject to a claim by another. For instance, in Gundel v. Grady, 184 A.D.2d 548, an easement granting an adjoining landowner egress and ingress to the property rendered the title unmarketable. Similarly, in Kera v. DeFellippo, 290 A.D.2d 287, the title was unmarketable due to wooden decks that encroached almost 10 feet onto the adjacent property. Conversely, a title is not unmarketable so long as it is free from claim by another, even when damages or defects to the land advserely affect the market value of the property or cause losses to the owner. Thus, in Vandevort v. Higginbotham, 222 A.D.2d 831, the title was not rendered unmarketable by the existence of an underground petroleum tank that discharged oil into the ground and required the the subsequent purchaser to pay for a costly cleanup. The court's conclusion in Sabbagh is difficult to reconcile with Vandevort.

Installment Sale Purchaser Acquires Title By Adverse Possession

Glantzis v. Padilla

NYLJ 9/1/04, p. 18, col. 3

Supreme Ct., Kings Cty

(Douglass, J.)

In an action by a purchaser to evict an occupant of a building, the occupant moved to dismiss the complaint based on an adverse possession claim. The court dismissed the complaint, holding that the occupant had acquired title by adverse possession, and that the purchaser was on notice of that claim.

In 1973, the occupant learned that a vacant dilapidated building was for sale, and a lawyer drew a sale contract providing for a price of $16,000, $3000 to be paid in cash, together with a 10-year mortgage, with monthly payments of $154.32 plus escrow deposits, for a total of $225 per month. No closing every took place, but the occupant made monthly payments to the lawyer for several years, moved into the premises, and made extensive repairs. In the seventh year, when the occupant sought to make his regular payment, he was informed that the lawyer had been murdered. The occupant then consulted a second lawyer, and began to make the payments to him, who in turn sent the money to the Estate of Almodovar, the original seller of the building. In 1979, the estate brought an action in landlord-tenant court to evict the occupant. The occupant's third lawyer obtained a stay pending a final determination of the rights of the parties, with a direction that occupant continue to pay monthly payments to “landlord.” The occupant then attempted, unsuccessfully, to induce the estate to transfer title. Then, in 1989, the occupant brought an action for specific performance of the 1973 sale contract, or for a declaration that he was the rightful owner by adverse possession. Both that action and the landlord's eviction proceeding appear to have been abandoned.

In 2002, the purchaser bought the building from the estate for $330,000. The purchaser was aware that the property was occupied at the time, but he never examined the building's interior. Moreover, a rider to the sale contract recited that purchase acknowledges receiving notice of two actions filed in Supreme Court. The purchaser then brought this action to evict the occupant from the building.

In dismissing the complaint, the court relied on the occupant's 30 years of continuous possession of the building. The court rejected the purchaser's argument that the occupation was unlawful and could not, therefore, ripen into adverse possession, concluding instead that the initial occupation was done pursuant to the sale contract and, in any event, was ratified by the estate when it accepted monthly payments. The court also rejected the argument that the 1980 stay in the eviction action precluded acquisition of title by adverse possession, noting that the owner had taken no steps to challenge occupant's continued open possession, and instead had abandoned the underlying action. Hence, the court concluded that the occupant had established title by adverse possession.

COMMENT

In holding that the landlord's 1979 action did not toll the adverse possession period, the Padilla court adopted an approach taken in other statute of limitations cases. New York courts have held, in other contexts, that the statute of limitations is not tolled when one of the parties obtain a stay pending arbitration and then the parties fail to arbitrate their dispute. Thus, In the Matter of the Arbitration between Robert C. Finkelstein and Stanley Harris, 17 A.D.2d 137, 139 the First Department determined that the court-ordered stay pending arbitration did not toll the statute of limitations for a breach of contract action when the parties subsequently abandoned their efforts to arbitrate the dispute. Noting that both parties had abandoned their initial efforts to arbitrate the contract dispute, the First Department stated that an abandonment of an action staying a prior proceeding is to be “treated the same as a voluntary discontinuance,” and that a voluntary discontinuance has no tolling effect on a statute of limitations. Id. Similarly, in Padilla, the stay obtained during the 1979 action to evict the possessor was apparently abandoned. As a result, neither the action nor the stay tolled the adverse possession period, which ran from 1973-1983.

In addition, the Padilla court's holding that payment under the terms of a contract to purchase did not prevent possessor's adverse possession claim, is consistent with New York law. In Cypress Estates v. Wilshire, 237 NE2d 78, the Court of Appeals held that payment under the terms of a contract is consistent with an adverse possession claim so long as the purchaser established ownership under a claim of right for the required period of time. In Wilshire, the purchaser entered into an installment contract and performed under the terms of that agreement for 9 years, one payment shy of its terms. Thereafter, the purchaser maintained and occupied the property as the apparent owner for an additional 11 years. The court included the period of time where the possessor paid under the installment terms as part of the then required 15-year statutory period of possession, holding that such possession was both hostile and exclusive despite the monthly payment. Id.

In both Padilla and Wilshire, the purchasers entered into a contract to purchase prior to the accounting of the statutory possession period, even though the terms of the agreement required continued payment through the 10-year possession term. This continued payment of a contractual obligation is distinguishable from cases in which the possessor interrupts the occupation of property to inquire with the record-holder as to a potential purchase. In such cases, courts have held that the possessor cannot establish the requisite claim of right. Thus, in Guariglia v. Blima Homes, Inc., 224 A.D.2d 388, 389, the claimants sought to declare title by adverse possession of a vegetable garden, cultivated in an adjoining parcel. During the 10-year period statutory period in question, the claimants made attempts to purchase the parcel from the title owner, at one point executing a contract of sale for the disputed property. The Guariglia court reasoned that such a contract “negates the essential element of a claim of right.” See also Manhattan School of Music v. Solow, 175 AD2d 106. This 'seeking out' of the record-owner would reflect a conscious acquiescence of another's rightful ownership in the property, where the continued payment evident in Padilla and Wilshire could be considered analogous to a purchase money mortgage agreement, under which continued possession is entirely consistent with the possessor's claim of ownership.

Statute Of Limitations Precludes Claim for Cost of Cleaning Up Petroleum Contamination

Union Turnpike Associates, LLC v. Getty Realty Corp.

NYLJ 9/15/04, p. 21, col. 1

Supreme Ct., Nassau Cty

(Bucaria, J.)

In an action by a landowner against a former tenant for damages arising out of petroleum contamination of the property, the tenant sought to dismiss based on the statute of limitations. The court granted the motion, concluding that the landowner had not exercised due diligence in discovering the contamination.

The father of the current landowner's principals leased the premises to a predecessor of the tenant, Getty, in 1961, for a 20-year period with a 5-year option. Pursuant to the terms of the lease, Getty's predecessor installed underground storage tanks (USTs).Getty then sublet the premises to a succession of operators for use as a service station. Getty exercised the option, and when the lease expired in 1987, the landowner (now a corporate entity in which the original owner's sons are principals) entered into a new lease with a tenant who did not intend to operate a service station. Getty then hired a contractor to empty the USTs and fill them with water. The landowner's new lease, however, required the landowner to fill the tanks with sand or concrete, and the landowner engaged Getty's contractor to fill the tanks with concrete. When the 1987 lease expired in 2000, the landowner entered into a lease with a new entity. That new entity conducted an environmental site assessment that revealed the presence of petroleum-contaminated soil. As a result, the new tenant's contractor removed 700 tons of contaminated soil from the site. The landowner then brought this action against Getty for damages suffered as a result of this contamination. The landowner invoked article 12 of the Navigation Law, commonly known as the oil spill act.

In dismissing the complaint, the court relied on CPLR 214-c(2), which provides that an action to recover damages for injury to property must be brought within 3 years from the date of discovery or from the date when, through the exercise of reasonable diligence, the injury should have been discovered. The court held that the landowner should have discovered the contamination by 1987, when the landowner arranged for refilling of the USTs. Hence, the claim was time-barred. The court also rejected the landowner's claim for contribution and indemnification. The court noted that under Navigaton Law section 172(8), the landowner was liable as a discharger of contaminants. The court then cited Navigation Law section 172(3) for the proposition that a person responsible for a discharge is precluded from claims for indemnification or contribution.