Real Property Law

Landowner Not Liable for Injuries When Alteration of Natural Flow of Water Proved Ineffective

O'Connor v. Consolidated Edison Co.

NYLJ 10/14/08, p. 25, col. 6

AppDiv, First Dept.

(memorandum opinion)

In an action for personal injuries suffered in a slip and fall on an ice patch, injury victim appealed from the Supreme Court's grant of summary judgment to landowner. The Appellate Division affirmed, holding that landowner had not duty to prevent the flow of surface waters on its own property to the public roadway on which the victim was injured.

Landowner had erected log structures to manage the flow of rainwater down its sloping vacant lot. The structures did not prevent water from running down the slope into the road, where water froze and victim was injured. Victim then brought this action against landowner, but Supreme Court awarded summary judgment to landowner.

In affirming, the Appellate Division emphasized that victim's expert did not establish that the log structures resulted in any change in the flow of water that would have resulted if the water had taken its natural course. Because landowner had not duty to alter the natural flow of water in the first place, landowner could not be held liable for adopting measures that were ineffective to alter that natural flow.

Record Notice Defeats Claim Of Subsequent Purchaser

Washington Temple Church of God v. Global Properties

NYLJ 10/20/08, p. 36, col. 5

AppDiv, Second Dept.

(memorandum opinion).

In an action by the church for a judgment declaring that it owns the subject real property, Global Properties appealed from a Supreme Court order and judgment declaring the church to be the owner and granting the City of New York summary judgment dismissing Global Crossing's cross claim against the city. The Appellate Division affirmed, holding that Global Crossing was on record notice of the city's prior deed to the church.

After the church was the successful bidder at an auction sale conducted by the city, the city conveyed the subject property to the church by deed dated Sept. 27, 1976, and recorded Oct. 21, 1976. Several months later, the city conveyed the same property at an auction to Shavers. In August 1977, the city notified Shavers of the mistake, and told Shavers that the deed it had given him, and which Shavers had recorded, was of no effect. Shavers died in 2001, and in 2004 or 2005, Shavers' heirs purported to transfer title to Global Properties. Global obtained title insurance, and after Global posted a sign threatening to tow parked cars, the church brought this declaratory judgment action. Global asserted a cross claim against the city. The Supreme Court awarded a declaratory judgment to the church, and dismissed the cross claim against the city.

In affirming, the Appellate Division first noted that Kings County has a block and lot index system, and Global was therefore on record notice of all matters indexed under the parcel's block and lot, even if the information did not appear in its direct chain of title. Here, because the deed to the church was recorded before any deed was issued to Shavers, Global was on record notice of the church's claim. The court then held that Global could not prevail on a negligence claim against the city because a thorough title search would have revealed the existence of the deed to the church, and Global's failure to conduct that thorough search was a superseding cause of Global's purchase. That superseding cause broke any causal link between the city's conduct and Global's damages.

Contract Vendee Waived Title Defects

Beagle Developers, LLC v. Long Island Beagle Club II Inc.

NYLJ 10/2/08, p. 26, col. 1

Supreme Ct., N.Y. Cty

(Cahn, J.)

In an action by contract vendee for return of its down payment, seller and contract vendee each sought summary judgment. The court granted seller's summary judgment motion, holding that contract vendee had waived defects in title.

On March 22, 2005, seller, LIBC II, contracted to sell the parcel to contract vendee for $16 million. Contract vendee planned to subdivide the parcel into residential lots, and to build single family homes. Contract vendee deposited $750,000 into escrow. The contract gave contract vendee a 60-day period, later extended to 75 days, to perform environmental, engineering, zoning, and abstract studies to determine the suitability of the property for contract vendee's use, and gave contract vendee an absolute right to cancel within that period. The contract also provided that seller would convey good and marketable title, subject to specified permitted encumbrances. If contract vendee's title report contained other exceptions, the contract provided ' in a seemingly contradictory clause ' that seller “shall take such action as shall be necessary to cure or dispose of title objections in a manner reasonably acceptable to Purchaser', but, except as described below, Seller shall not be obligated to make any effort or expend any amounts to dispose of Title Objections.” The clause went on to provide that if seller failed to cure or dispose of title objections within 30 days after notice from contract vendee, contract vendee had the right to terminate the contract or to accept such title as seller is able to convey.

During the 75-day period, contract vendee obtained a title report and sent letters to seller's law firm advising it of title exceptions and objections. Although seller did not address some of those objections, contract vendee did not cancel the contract, but instead paid an additional $250,000, as required by the contract at the expiration of the period. As closing approached, contact vendee's title insurer requested additional information about LIBC II's 2003 acquisition of title, which was the result of the merger between it and a not-for-profit corporation. Title insurer wanted to make sure that every member of the not-for-profit corporation received notice of the meeting at which the merger was approved, and to make sure that the merger was approved by a vote of two-thirds of the membership. At closing, seller did not provide the required information, and contract vendee left the closing and subsequently brought this action for return of its down payment. Both parties sought summary judgment.

In awarding summary judgment to seller, the court held that contract vendee's failure to raise the marketable title issues within the 75-day period constituted waiver of their right to terminate the transfer for failure to deliver marketable title. The court rejected contract vendee's argument that the 75-day period was designed to deal only with environmental due diligence, and not with title issues, noting that although the agreement originally referred only to environmental and engineering issues, the parties had added “zoning and abstract studies” to the matters subject to the contingency period. As a result, the court held that failure to object within that period waived objections to title as well as objections to environmental issues.

Court Rejects Association's Challenge to Garbage Collection Taxes

Harbor View at Port Washington Home Owners Association v. Town of

North Hempstead

NYLJ 9/16/08, p. 30, col. 1

Supreme Ct., Nassau Cty

(Austin, J.)

In an action by a homeowners association to declare ad valorem taxes for garbage collection invalid, the town sought summary judgment. The court granted the town's motion, holding that the record established that it had agreed to provide garbage removal service upon the association's request.

In 1998, the town and the developer entered into a development agreement pursuant to which the town agreed that the premises would be included in a municipal garbage district. The offering plan for the project, which included both single-family homes and a six-story condominium building, specified that refuse collection would be handled privately, and would be a common expense included in monthly association assessments. The association retained private refuse haulers and expended about $40,000 per year to do so. In 2007, the association brought this action against the town and the garbage district, seeking to be relieved from paying garbage collection taxes. The town sought summary judgment dismissing the complaint.

In granting the town's motion, the court noted that special ad valorem taxes are imposed on real property to defray the cost of a special improvement or service. The court then noted that an ad valorem tax will not be deemed invalid unless the taxpayer's benefit received from imposition of the tax is reduced to the point where it is, in effect, non-existent. In this case, the court noted that the association had made no demand for service because they had voluntarily elected to supply unit owners with privately contracted refuse removal. Moreover, after commencement of this action, the association did make a demand for service, and the town did agree to supply front curb collection service, although not the rear collection service unit owners had previously enjoyed. The court held that even if that collection service was less convenient to unit owners, the service would not be tantamount to an illusory or “nonexistent” benefit. As a result, the town was entitled to summary judgment.

COMMENT

A municipality may impose a special ad valorem tax on a property, so long as the services funded by the tax generate some benefit for the taxpayer. The benefit, however, need not be equal to the benefit received by other taxpayers. Thus, in Sysco Corp. v. Town of Hempstead, 227 A.D.2d 544, the Second Department upheld the validity of a special ad valorem tax levied for garbage collection, despite a commercial owner's complaint about town-imposed restrictions on waste removal that reduced the value of waste removal services to the landowner. The court held that the restrictions ' a higher per-pound cost of solid waste removal for commercial and industrial, not residential, users and curb-side, not on-site, pickup for commercial users ' did not reduce the benefit to the taxpayer to nothing. Although the court in Sysco did not discuss specific prices or volumes of waste removal, the court's conclusion appears to reflect a belief that the provision of municipal waste services, even at higher prices, still left landowner better off than if landowner had to contract to have all waste removed privately.

By contrast, when a town's restrictions on a taxpayer's use of a municipal service are so severe so as to force the taxpayer to privately contract for the services ostensibly funded by the special ad valorem tax, the taxpayer is more likely to succeed in an attack on the tax. Thus, in Matter of Sperry Rand Corp. v. Town of North Hempstead, 23 N.Y.2d 666, the Court of Appeals held that the owner of a large industrial plant was entitled to a refund of a special valorem tax imposed upon him when the town had limited the volume of garbage collected from commercial and industrial users to 40 pounds, three times a week. Because the plant generated 4,500 pounds of waste daily, the plant had no choice but to hire a private contractor to remove its waste. The Court held the town's waste disposal restrictions reduced the benefit to the taxpayer to nothing; the town's restrictions permitted removal of less than 1% of the industrial plant's daily waste and provided no publicly-funded alternative for the removal of the remainder. As a result, municipal waste disposal resulted in no savings for landowner, because the municipality's willingness to remove 120 pounds a week was unlikely to have any impact on the price the landowner was forced to pay to a private contractor.

To succeed in declaring a special ad valorem tax invalid, a taxpayer must establish that it made a formal demand for service prior to commencement of action seeking a refund, unless prior actions of the municipality made it clear that such a demand would have been futile. Thus, in J.C. Penney v. Town of Oyster Bay, 302 A.D.2d 561, a commercial property owner unsuccessfully sought refund of past special valorem taxes, after using private garbage collection for 20 years. The Second Department affirmed dismissal, finding no evidence that J.C. Penney had ever made a formal demand to the township for garbage collection services. See also, M. Fortunoff of Westbury Corp. v. Town of Hempstead, 309 A.D.2d 906. On the other hand, no formal demand is necessary when a municipality has previously required the landowner to waive any claim to the services at issue. Thus, in Applebaum v. Town of Oyster Bay, 81 N.Y.2d 733, the Court of Appeals invalidated a special ad valorem tax despite the absence of a formal demand for services, when the property owner's predecessor in title, as a condition for the town's zoning and planning approval, covenanted that homeowners in the development would provide garbage disposal at their own expense and never request such services from the town. Although the Court of Appeals never addressed the absence of a formal demand for services, the outcome in Applebaum suggests that an explicit prior arrangement between township and taxpayer renders the need for formal demand moot.

Landowner Not Liable for Injuries When Alteration of Natural Flow of Water Proved Ineffective

O'Connor v. Consolidated Edison Co.

NYLJ 10/14/08, p. 25, col. 6

AppDiv, First Dept.

(memorandum opinion)

In an action for personal injuries suffered in a slip and fall on an ice patch, injury victim appealed from the Supreme Court's grant of summary judgment to landowner. The Appellate Division affirmed, holding that landowner had not duty to prevent the flow of surface waters on its own property to the public roadway on which the victim was injured.

Landowner had erected log structures to manage the flow of rainwater down its sloping vacant lot. The structures did not prevent water from running down the slope into the road, where water froze and victim was injured. Victim then brought this action against landowner, but Supreme Court awarded summary judgment to landowner.

In affirming, the Appellate Division emphasized that victim's expert did not establish that the log structures resulted in any change in the flow of water that would have resulted if the water had taken its natural course. Because landowner had not duty to alter the natural flow of water in the first place, landowner could not be held liable for adopting measures that were ineffective to alter that natural flow.

Record Notice Defeats Claim Of Subsequent Purchaser

Washington Temple Church of God v. Global Properties

NYLJ 10/20/08, p. 36, col. 5

AppDiv, Second Dept.

(memorandum opinion).

In an action by the church for a judgment declaring that it owns the subject real property, Global Properties appealed from a Supreme Court order and judgment declaring the church to be the owner and granting the City of New York summary judgment dismissing Global Crossing's cross claim against the city. The Appellate Division affirmed, holding that Global Crossing was on record notice of the city's prior deed to the church.

After the church was the successful bidder at an auction sale conducted by the city, the city conveyed the subject property to the church by deed dated Sept. 27, 1976, and recorded Oct. 21, 1976. Several months later, the city conveyed the same property at an auction to Shavers. In August 1977, the city notified Shavers of the mistake, and told Shavers that the deed it had given him, and which Shavers had recorded, was of no effect. Shavers died in 2001, and in 2004 or 2005, Shavers' heirs purported to transfer title to Global Properties. Global obtained title insurance, and after Global posted a sign threatening to tow parked cars, the church brought this declaratory judgment action. Global asserted a cross claim against the city. The Supreme Court awarded a declaratory judgment to the church, and dismissed the cross claim against the city.

In affirming, the Appellate Division first noted that Kings County has a block and lot index system, and Global was therefore on record notice of all matters indexed under the parcel's block and lot, even if the information did not appear in its direct chain of title. Here, because the deed to the church was recorded before any deed was issued to Shavers, Global was on record notice of the church's claim. The court then held that Global could not prevail on a negligence claim against the city because a thorough title search would have revealed the existence of the deed to the church, and Global's failure to conduct that thorough search was a superseding cause of Global's purchase. That superseding cause broke any causal link between the city's conduct and Global's damages.

Contract Vendee Waived Title Defects

Beagle Developers, LLC v. Long Island Beagle Club II Inc.

NYLJ 10/2/08, p. 26, col. 1

Supreme Ct., N.Y. Cty

(Cahn, J.)

In an action by contract vendee for return of its down payment, seller and contract vendee each sought summary judgment. The court granted seller's summary judgment motion, holding that contract vendee had waived defects in title.

On March 22, 2005, seller, LIBC II, contracted to sell the parcel to contract vendee for $16 million. Contract vendee planned to subdivide the parcel into residential lots, and to build single family homes. Contract vendee deposited $750,000 into escrow. The contract gave contract vendee a 60-day period, later extended to 75 days, to perform environmental, engineering, zoning, and abstract studies to determine the suitability of the property for contract vendee's use, and gave contract vendee an absolute right to cancel within that period. The contract also provided that seller would convey good and marketable title, subject to specified permitted encumbrances. If contract vendee's title report contained other exceptions, the contract provided ' in a seemingly contradictory clause ' that seller “shall take such action as shall be necessary to cure or dispose of title objections in a manner reasonably acceptable to Purchaser', but, except as described below, Seller shall not be obligated to make any effort or expend any amounts to dispose of Title Objections.” The clause went on to provide that if seller failed to cure or dispose of title objections within 30 days after notice from contract vendee, contract vendee had the right to terminate the contract or to accept such title as seller is able to convey.

During the 75-day period, contract vendee obtained a title report and sent letters to seller's law firm advising it of title exceptions and objections. Although seller did not address some of those objections, contract vendee did not cancel the contract, but instead paid an additional $250,000, as required by the contract at the expiration of the period. As closing approached, contact vendee's title insurer requested additional information about LIBC II's 2003 acquisition of title, which was the result of the merger between it and a not-for-profit corporation. Title insurer wanted to make sure that every member of the not-for-profit corporation received notice of the meeting at which the merger was approved, and to make sure that the merger was approved by a vote of two-thirds of the membership. At closing, seller did not provide the required information, and contract vendee left the closing and subsequently brought this action for return of its down payment. Both parties sought summary judgment.

In awarding summary judgment to seller, the court held that contract vendee's failure to raise the marketable title issues within the 75-day period constituted waiver of their right to terminate the transfer for failure to deliver marketable title. The court rejected contract vendee's argument that the 75-day period was designed to deal only with environmental due diligence, and not with title issues, noting that although the agreement originally referred only to environmental and engineering issues, the parties had added “zoning and abstract studies” to the matters subject to the contingency period. As a result, the court held that failure to object within that period waived objections to title as well as objections to environmental issues.

Court Rejects Association's Challenge to Garbage Collection Taxes

Harbor View at Port Washington Home Owners Association v. Town of

North Hempstead

NYLJ 9/16/08, p. 30, col. 1

Supreme Ct., Nassau Cty

(Austin, J.)

In an action by a homeowners association to declare ad valorem taxes for garbage collection invalid, the town sought summary judgment. The court granted the town's motion, holding that the record established that it had agreed to provide garbage removal service upon the association's request.

In 1998, the town and the developer entered into a development agreement pursuant to which the town agreed that the premises would be included in a municipal garbage district. The offering plan for the project, which included both single-family homes and a six-story condominium building, specified that refuse collection would be handled privately, and would be a common expense included in monthly association assessments. The association retained private refuse haulers and expended about $40,000 per year to do so. In 2007, the association brought this action against the town and the garbage district, seeking to be relieved from paying garbage collection taxes. The town sought summary judgment dismissing the complaint.

In granting the town's motion, the court noted that special ad valorem taxes are imposed on real property to defray the cost of a special improvement or service. The court then noted that an ad valorem tax will not be deemed invalid unless the taxpayer's benefit received from imposition of the tax is reduced to the point where it is, in effect, non-existent. In this case, the court noted that the association had made no demand for service because they had voluntarily elected to supply unit owners with privately contracted refuse removal. Moreover, after commencement of this action, the association did make a demand for service, and the town did agree to supply front curb collection service, although not the rear collection service unit owners had previously enjoyed. The court held that even if that collection service was less convenient to unit owners, the service would not be tantamount to an illusory or “nonexistent” benefit. As a result, the town was entitled to summary judgment.

COMMENT

A municipality may impose a special ad valorem tax on a property, so long as the services funded by the tax generate some benefit for the taxpayer. The benefit, however, need not be equal to the benefit received by other taxpayers. Thus, in Sysco Corp. v. Town of Hempstead, 227 A.D.2d 544, the Second Department upheld the validity of a special ad valorem tax levied for garbage collection, despite a commercial owner's complaint about town-imposed restrictions on waste removal that reduced the value of waste removal services to the landowner. The court held that the restrictions ' a higher per-pound cost of solid waste removal for commercial and industrial, not residential, users and curb-side, not on-site, pickup for commercial users ' did not reduce the benefit to the taxpayer to nothing. Although the court in Sysco did not discuss specific prices or volumes of waste removal, the court's conclusion appears to reflect a belief that the provision of municipal waste services, even at higher prices, still left landowner better off than if landowner had to contract to have all waste removed privately.

By contrast, when a town's restrictions on a taxpayer's use of a municipal service are so severe so as to force the taxpayer to privately contract for the services ostensibly funded by the special ad valorem tax, the taxpayer is more likely to succeed in an attack on the tax. Thus, in Matter of Sperry Rand Corp. v. Town of North Hempstead, 23 N.Y.2d 666, the Court of Appeals held that the owner of a large industrial plant was entitled to a refund of a special valorem tax imposed upon him when the town had limited the volume of garbage collected from commercial and industrial users to 40 pounds, three times a week. Because the plant generated 4,500 pounds of waste daily, the plant had no choice but to hire a private contractor to remove its waste. The Court held the town's waste disposal restrictions reduced the benefit to the taxpayer to nothing; the town's restrictions permitted removal of less than 1% of the industrial plant's daily waste and provided no publicly-funded alternative for the removal of the remainder. As a result, municipal waste disposal resulted in no savings for landowner, because the municipality's willingness to remove 120 pounds a week was unlikely to have any impact on the price the landowner was forced to pay to a private contractor.

To succeed in declaring a special ad valorem tax invalid, a taxpayer must establish that it made a formal demand for service prior to commencement of action seeking a refund, unless prior actions of the municipality made it clear that such a demand would have been futile. Thus, in J.C. Penney v. Town of Oyster Bay, 302 A.D.2d 561, a commercial property owner unsuccessfully sought refund of past special valorem taxes, after using private garbage collection for 20 years. The Second Department affirmed dismissal, finding no evidence that J.C. Penney had ever made a formal demand to the township for garbage collection services. See also , M. Fortunoff of Westbury Corp. v. Town of Hempstead, 309 A.D.2d 906. On the other hand, no formal demand is necessary when a municipality has previously required the landowner to waive any claim to the services at issue. Thus, in Applebaum v. Town of Oyster Bay, 81 N.Y.2d 733, the Court of Appeals invalidated a special ad valorem tax despite the absence of a formal demand for services, when the property owner's predecessor in title, as a condition for the town's zoning and planning approval, covenanted that homeowners in the development would provide garbage disposal at their own expense and never request such services from the town. Although the Court of Appeals never addressed the absence of a formal demand for services, the outcome in Applebaum suggests that an explicit prior arrangement between township and taxpayer renders the need for formal demand moot.