Bloomingdales Inc. v. New York City Transit Authority
NYLJ 5/20/08, p. 26, col. 1
AppDiv, First Dept.
(3-2 decision; majority opinion by Lippman, P.J; dissenting opinion by Sweeny, J.)
In an action by Bloomingdales against the transit authority and for trespass, negligence, and private nuisance, Bloomingdales appealed from the Supreme Court's award of summary judgment to the transit authority on the ground that the action was time-barred. A divided Appellate Division reversed, holding that the continuing trespass doctrine required reinstatement of Bloomingdales' claim.
In 1999, the transit authority performed excavation work on Third Avenue between 59th and 60th streets, outside Bloomingdales' store. In late 2000 or early 2001, Bloomingdales would experience flooding in its lower level. In February 2002, Bloomingdales hired a contractor to repair a storm drainpipe on the assumption that a stoppage in the pipe caused the flooding. The contractor discovered that the drainpipe had been cut and that a concrete duct was now bisecting the pipe, causing water to back up into the store. In April 2002, Bloomingdales filed a notice of claim against the transit authority, and in January 2003, brought this action asserting causes of action for negligence, trespass, and nuisance. The transit authority then filed a third-party action against a contractor, who, in turn, commenced third-party actions against subcontractors. One of the subcontractors then moved to dismiss on statute of limitations grounds, and the transit authority and other contractors also moved for dismissal on the same ground. The Supreme Court granted the motions and dismissed the complaint, concluding that the negligence cause of action was barred because it was not commenced within one year and 90 days of severance of the drainpipe in September 1999. The court also rejected the nuisance cause of action, rejecting Bloomingdales' argument that the transit authority had committed a continuous tort.
In reversing, the Appellate Division majority held that because the concrete duct interrupted the drainpipe and continuously interfered with Bloomingdales' easement, the interference constituted a continuing trespass and resulted in successive causes of action. As a result, the action was timely commenced. The court also rejected the argument that the notice of claim statute (General Municipal Law, section 50-I) barred the action. The court conceded that the statute of limitations for a property damage claim against a municipality begins to run within one year and 90 days after the happening of the event, regardless of when the action accrued, but concluded that the “event” in this case was, by nature not discrete.
Justice Sweeny, dissenting, argued that the continuing trespass doctrine was inapplicable in this case because the transit authority had not left a permanent encroachment on Bloomingdales' property or interfered with Bloomingdales' use of its easement. The dissenters contended that the negligent cutting of the drainpipe constituted a single discrete act that triggered the running of the statute of limitations and the notice of claims statute.
COMMENT
When the statute of limitations would otherwise bar a landowner's claim arising from an encroaching structure, continuing trespass doctrine allows the landowner to avoid the statute's bar. Thus, in 509 Sixth Avenue v. New York City Transit Authority, 15 NY2d 48, the Court of Appeals upheld a damage award to a developer on whose property a subway line encroached at a depth of 30 feet, even though the subway line had been installed over 20 years before suit was filed.
Courts have held, however, that continuing trespass doctrine is available only when a physical structure continues to encroach on landowner's parcel. Thus, the court in Nebbia v. Monroe County, 92 A.D.2d 724, held that an action for a severed pipe was time-barred, even though damage from flooding was extensive and ongoing. The court reasoned that the presence of a physical structure infringing on a real property interest owned by the landowner was a threshold requirement for the application of continuous trespass doctrine. Because there was no such encroaching structure, landowner could not invoke continuing trespass doctrine.
In Bloomingdales, the dissenters relied on Nebbia to assert that continuing trespass doctrine was unavailable because no encroaching structure remained in place after the store's drainage pipe was severed. The majority, by contrast, rejected the principle that continuous trespass doctrine requires the continued presence of a physical structure, and indicated that continuous interference with landowner's property right was sufficient to permit landowner to rely on continuous trespass doctrine, even in the absence of a physical structure.
Preliminary Injunction Denied for De Minimis Encroachment
3333 Boston Road LLC v. Fix Realty Corp.
NYLJ 5/21/08, p. 27, col. 1
Supreme Ct., Bronx Cty
(Salerno, J.)
In an action by a landowner alleging encroachment by neighbor's building, landowner sought preliminary injunctive relief. The court denied landowner's motion, concluding that landowner had not established a clear legal right, and had not established the likelihood of irreparable harm.
Landowner operates a Toyota dealership. Neighbor is in the process of building a competing automobile dealership. Landowner contends that neighbor's building unlawfully encroaches on Toyota's land (by about two feet), that the rear wall of the building is unstable because the footing depth is inadequate, and seeks to prevent issuance of a certificate of occupancy for the building. Landowner sought preliminary injunctive relief.
In denying that relief, the court first noted that the alleged encroachment was de minimis, and suggested that removal of the building was not an appropriate remedy for the encroachment. The court also rejected landowner's argument that preliminary injunctive relief is necessary because the Building Department in the Bronx inadequately enforces the building code. The court noted that landowner had not provided adequate support for that contention. Because landowner had not demonstrated that an award of money damages would be inadequate to compensate them, the court denied the preliminary injunction.
COMMENT
When a landowner faces an encroachment on his property from a neighbor, RPAPL section 871 authorizes a court to provide injunctive relief directing the trespasser to remove the encroachment, or to assess and award damages. The statute directs courts to choose the appropriate remedy “as the facts justify.” A key consideration for courts is the trespassing party's state of mind. The less 'innocent' the trespass, the more likely a court is to enjoin the trespasser.
Typically, when the encroachment is willful, courts direct the trespasser to remove the encroaching structure, regardless of any potential hardship to the trespasser. In Moran v. Gray, 257 A.D. 999, the court ordered the removal of a wall that hung over the top of plaintiff's wall. Because the plaintiff's wall was present when the defendant built his structure, there could be no question that the defendant knew his structure would encroach. The court awarded injunctive relief even though the damages incurred by the plaintiff were slight, and the expense to the trespasser was significant.
However, where a trespass is apparently innocent, damages are the typical remedy unless they would be inadequate to compensate the aggrieved party. Thus, in Christopher v. Rosse, 91 A.D.2d 768, the Third Department held that damages were more equitable than an injunction where defendant's eaves encroached approximately two feet onto the plaintiff's property, describing injunctive relief as “drastic.” The court emphasized that the result would have been different had the trespass been other than innocent. When, as in Christopher, diminution of value is slight, a liability rule encourages early settlement by reducing the possibility that litigation will produce a windfall for the plaintiff. Although awarding injunctive relief may reduce the incentive to commit willful trespasses, incentives are less important in cases of innocent encroachment. As a result, courts have little reason to provide a windfall to the property owner when innocent encroachment has caused little damage.
Where the trespasser was innocent, but reasonably should have known that his structure would encroach, courts have more latitude, but frequently award injunctive relief. For example, in Robert v. Kohs, 35 A.D.3d 178, 826 N.Y.S.2d 220 (1st Dept. 2006), the defendant's pediment hung over the plaintiff's property by three inches. The court held that money damages were inadequate as a matter of law, and directed that the defendant remove the entire archway at his expense. Notably, the defendant in Robert was an architect; the court likely concluded that he had considerable control over the precise dimensions of the structure, and given his background should have understood that it would encroach. The specter of injunctive relief in the event of encroachment provides considerable incentive to property owners to take care in building improvements. This countervailing interest justifies the potential windfall an injunction would provide to the complaining party.
Right of First Refusal Does Not Violate Rule Against Perpetuities
Sanko v. Mark
NYLJ 6/5/08, p. 36, col. 1
AppDiv, First Dept.
(memorandum opinion)
In an action by a co-tenant for partition, the other co-tenants appealed from the Supreme Court's grant of summary judgment awarding partition. The Appellate Division reversed, holding that a right of first refusal created in an agreement among the co-tenants did not violate the Rule Against Perpetuities, and that the right of first refusal precluded plaintiff co-tenant's partition action.
In 1991, plaintiff co-tenant purchased an undivided one-third interest of the subject property as a tenant in common. The following year, the tenants in common agreed that each would occupy a certain portion of the premises, and that each would have a fight of first refusal with respect to the sale of any other co-tenant's one-third share and occupied space. The right of first refusal was, by its terms, applicable to successors and assigns. When plaintiff co-tenant brought this partition action against successors-in-interest to the original co-tenants, those successors in interest contended that the right of first refusal precluded a partition action. Plaintiff co-tenant contended that the right violated the Rule Against Perpetuities.
The Appellate Division started by noting that in the context of condominium ownership, the rule against perpetuities does not invalidate a condominium's right to repurchase units before sale to third parties, because application of the rule would contravene the rule's purpose, which is to ensure productive use of property. Although the subject property is not held in condominium ownership, the court noted that the co-tenant effectively operated the commercial premises as a condominium or co-operative. As a result, the court held that enforcing the right of first refusal would foster development of the premises. Hence, the court held that the Rule Against Perpetuities was not applicable to the right of first refusal. The court did hold, however, that the right of first refusal was subject to the common law rule against unreasonable restraints on alienation, but the court held that the restraint imposed was not unreasonable. As a result, the right was enforceable, and precluded plaintiff co-tenant's partition action.
Purchasers Entitled Both to Specific Performance and to Adjustment of Purchase Price
Flowers v. 73rd Townhouse LLC
NYLJ 5/19/08, p. 18 col. 1
AppDiv, First Dept.
(Opinion by Saxe, J.)
In an action by home purchasers for specific performance of the contract of sale, purchasers and seller both appealed from the Supreme Court's order directing specific performance without adjustment of the purchase price to reflect the cost of completing the work. The Appellate Division modified, holding that purchasers were entitled to specific performance and to an adjustment of the purchase price.
Purchasers contracted to buy a Manhattan townhouse for $17 million. The contract acknowledged that seller was in the process of renovating the house, and the contract provided that those renovations would be completed in accordance with plans and specifications provided by the architect, subject to a variety of particulars to be selected by purchasers. The contract did not, however, set out a timetable for purchasers' selection of those particulars. The contract obligated purchasers to close even if the work was not completed, and made provision for seller to place a deposit in escrow to cover the cost of work not completed. Discord arose when purchasers wanted to make a number of changes, and seller concluded that many of purchasers' changes would make it impossible to complete the work in a timely fashion. Closing was adjourned on a number of occasions. Seller eventually entered into a contract to sell the property to a third-party purchaser for $18 million, and sent purchasers a notice declaring that purchasers were in default. Purchasers then brought this action for specific performance, seeking both completion of the work and transfer of the property for the contract price. The Supreme Court awarded specific performance to the purchasers, without the price abatement purchasers sought to cover work not completed. A court-ordered closing took place in November 2006, and purchasers resold the townhouse for $23 million in April 2007. Both parties appealed from the Supreme Court's order, seller contesting the award of specific performance and purchasers seeking a price abatement.
The Appellate Division started by noting that both parties had contributed to the impasse. The court held, however, that seller could not claim that purchasers had defaulted on their obligation to pay for change-order work because seller had never made the demand for such payment required by the contract. As a result, seller could point to no breach by purchasers, and sellers purported termination of the contract was ineffective. The court went on to hold that purchasers were entitled to specific performance. The court then noted that there is no inconsistency between a purchaser seeking both specific performance and an abatement in the contract price when the subject of the contract is not delivered as promised in the contract. The court declined to take into account the profit purchasers made in reselling the property after the court-ordered closing, holding that the subsequent sale was irrelevant to the rights between the parties. As a result, because the townhouse was not completed as required by the contract, purchasers were entitled to an abatement reflecting the cost of completion. At the hearing to determine that amount, seller would have the right to challenge the assessment by purchasers' expert of the proper abatement amount.
