Real Property Law

No Misrepresentation Claim When Purchaser's Reliance Was Not Reasonable

Daly v. Kochanowicz

NYLJ 8/25/09, p. 25, col. 3

AppDiv, Second Dept.

(Opinion by Dickerson, J.)

In an action by home purchaser against seller, the selling real estate agent and the listing agent for damages suffered when their home flooded after the sale, purchaser appealed from Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that even if seller or the agents had made misrepresentations, any reliance by the purchaser was not reasonable.

Before contracting to purchase the subject property, purchaser hired an inspector, who discovered evidence of water intrusion in the basement. Purchaser contends that the inspector inquired of the sellers about any history of water problems, and contends that sellers denied any such problems. Purchaser contends that the representation was false and made to induce her to purchase the home. She contended that she relied on the misrepresentation by entering into a contract of sale and closing on the property. Less than a year later, the property flooded, causing severe damage. Purchaser then brought this action against seller and all of the involved real estate agents. Supreme Court granted defendants' motions to dismiss, and purchaser appealed.

In affirming, the court emphasized that the inspection revealed the presence of water damage. In light of that fact, purchaser was in a weak position to prevail on a fraud claim even if purchaser could establish that seller or the various agents had made affirmative misrepresentations. The court noted that because of the visible damage, purchaser could not establish that the alleged defect was peculiarly within the knowledge of the seller. Moreover, because of the same visible damage, purchase could not establish that any reliance on representations was reasonable. As a result, purchaser could not establish the applicability of an exceptions to the doctrine of caveat emptor, and could not escape the force of the disclaimer clause in the contract of sale.

COMMENT

A real estate purchaser's reliance upon a seller's misrepresentation about the condition of the premises is reasonable, and can serve as the basis of a fraud claim, if a purchaser could not ascertain the truth of the representation without a burdensome inspection. Thus, in Schooley v. Mannion, 241 A.D.2d 677, the court denied a motion to dismiss a fraud claim based on alleged defects in insulation because purchaser alleged that the condition of the insulation was peculiarly within seller's knowledge. The court noted that the condition of the insulation could not have been verified without destructive testing of property that the seller had recently gutted and renovated. On the other hand, if a purchaser acquires actual knowledge of a defect during an inspection of the property, he cannot prevail on a claim that he reasonably relied on a seller's contrary misrepresentations. For example, in Marshall v. Gallinger Real Estate Co., Inc., 222 A.D.2d 1101, the court held that a purchaser's fraud claim could not survive since the defendant knew about the defective living room ceiling when defendant visited the property and hired an engineer to inspect the premises.

When the alleged defect is neither known to the purchaser nor peculiarly within the seller's knowledge, purchaser cannot claim that any reliance was reasonable unless purchaser made adequate effort to verify seller's representation. Thus, in Cudemo v. Al & Lou Const. Co., Inc., 54 A.D.2d 995, the court concluded that the purchaser could not reasonably have relied on alleged misrepresentations about the size of a garage because purchaser could easily have ascertained whether the garage was large enough for her automobile.

When purchaser makes efforts to verify seller's statements, but those efforts do not uncover the misrepresentation, courts typically hold that questions of fact about the adequacy of the investigation preclude summary judgment. In Dimatos v. Michel, 553 160 A.D.2d 1083, the court denied the seller's motion for summary judgment, concluding that a triable issue of fact existed as to whether the purchaser had acted reasonably in relying on seller's representations that the well water servicing the property was of excellent quality. The purchaser conducted bacteriological tests of the water before purchase, but the alleged defects with the water had nothing to do with bacteria. On these facts, the court concluded that the seller was not entitled to summary judgment, and the concurrence emphasized that a critical question was whether purchaser had conducted a full ordinary inspection. Similarly, in Casey v. Masullo Brothers Builders, Inc., 218 A.D.2d 907, the court denied defendant's motion for summary judgment, when seller's misrepresentation about the school district in which the property was located had been confirmed by conversations with the realtor. The court concluded that an issue of fact existed as to whether a reasonable inquiry by townhouse purchasers would have correctly revealed the school district in which the property was located.

Parties' Conduct Evinces Intent to Keep Deadline Open

Knight v. Barteau

NYLJ 8/31/09, p. 26, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action by purchaser for return of its down payment, purchaser appealed from Supreme Court's award of summary judgment to sellers. The Appellate Division affirmed, holding that purchaser had wrongfully failed to close after sellers agreed to purchaser's modified contract terms.

Upon executing the sale contract, purchaser paid a down payment. The contract provided that if purchaser provided seller with valid grounds for refusing to close, sellers could either elect to cancel the sale contract or adjourn the closing for 60 days to remedy the purported defect. Purchaser's title report identified a number of exceptions, including encroachment of a fence onto adjoining land. As a result, the parties did not close on the scheduled closing date. On June 27, 2008, 62 days after the adjourned closing, purchaser proposed that the parties obtain a boundary line agreement with the owners of the adjoining property, and offered money to assist in the process. Purchaser submitted to sellers a proposed boundary line agreement drafted by purchaser's title insurer. Two and a half months later, sellers provided purchaser with a boundary line agreement signed by the adjoining owner. At the same time, sellers unilaterally scheduled a closing about three weeks later, and notified purchaser that time was of the essence. Purchaser did not appear at the closing. Sellers then declared purchaser in default, retained the down payment as liquidated damages, and sold the property to a third party, using the executed boundary line agreement. Purchaser then brought this action for return of the down payment, contending that sellers had not complied with the contract terms in a timely manner. Supreme Court awarded summary judgment to sellers, and purchaser appealed.

In affirming, the Appellate Division held that the purchaser's proposal that sellers obtain a boundary line agreement constituted an offer to the sellers to modify the deadline for providing marketable title. Although the offer did not include a material term ' the deadline for providing the agreement ' the parties' conduct established their willingness to keep the deadline open, and purchaser's June 27 letter implicitly waived the sale contract provision limiting seller to a 60 day adjournment to remedy title defects. The court concluded that the sellers accepted purchaser's offer by providing purchaser with the executed boundary agreement purchaser had requested. Thus, when purchaser failed to appear at the scheduled closing, sellers were entitled to declare purchaser in default and to retain the down payment.

Six-Foot Wall Is Not an Unlawful Spite Fence

419 Seventh Avenue Associates, Ltd v. Ghuneim

NYLJ 8/3/09, p. 30, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action by landowner against neighbor to recover damages for nuisance and for injury to property, neighbor appealed from Supreme Court's denial of neighbor's summary judgment motion. The Appellate Division modified to award neighbor summary judgment dismissing landowner's spite fence claim, holding that neighbor's six-foot wall did not constitute a spite fence within the meaning of RPAPL 843.

Landowner installed windows on the first floor of a shared wall that directly overlooked neighbor's backyard. Neighbor responded by building a six-foot high wall that blocked landowner's windows. Landowner then brought this action seeking damages for nuisance and for injury to property. Landowner contended that the wall deprived landowner of light and air, and that negligent design and construction caused water damage to landowner's building. Supreme Court granted neighbor's summary judgment motion, and landowner appealed.

In modifying, the Appellate Division acknowledged that RPAPL 843 creates a cause of action for landowners who are deprived of light and air by construction of a spite fence or a spite wall. The court held, however, that such a fence must exceed ten feet in height and must have been erected in bad faith. In this case, the fence did not exceed ten feet, and was erected to protect neighbor's privacy and safety. As a result, landowner was entitled to summary judgment on the spite fence claim. On the other hand, neighbor had never addressed landowner's contention that the wall's negligent design and construction had caused water damage to landowner's building. As a result, neighbor was not entitled to summary judgment on that claim.

COMMENT

In order to have a fence or structure adjudged a private nuisance under Section 843 of the RPAPL, a neighbor must prove that a landowner or lessee of land built “a fence or a structure in the nature of a fence,” which stands “over ten feet in height,” to “exclude the adjoining landowner from the enjoyment of light or air.” However, section 843 provides a defense to a landowner who can show she erected the structure in good faith.

The absence of any one factor required by RPAPL ' 843 prevents a neighbor from prevailing under the statute. In Blair v. 305-313 East 47th Street Associates, 474 N.Y.S.2d 353, the court dismissed a section 843 claim because tenant was unable prove that an elevator tower to be built by adjoining landowner constituted a fence or a structure in the nature of a fence. (See also Downe v. Rothman, 215 A.D.2d 716). A neighbor in Paul v. Catani, 52 Misc.2d 72 was unable to prevail for failure to meet the height requirement under the statute when he argued that a six-foot fence erected by his neighbor blocked the windows of his home. In the Matter of Cross County Square Associates, 133 B.R. 569, a neighbor could not prevail because landowner's chain-link fence allow light and air to pass. A landowner who establishes a reason other than spite for erecting the fence satisfies the “good faith” requirement necessary to defeat a claim under section 843. Thus, in Great Atlantic & Pacific Tea Co. v. New York World's Fair 1964-1965, 249 N.Y.S.2d 256, the court dismissed a claim by a neighbor who sought to enjoin the New York World's Fair from erecting a large screen on fair grounds. Although the screen would effectively block a large neon advertisement on neighbor's roof, the court found defendant had a good faith reason for building the screen, namely that, “the bright red neon of the plaintiff's sign would result in a jarring effect upon the beauty of the fountain show ' an exhibit on the Fair grounds.” RPAPL ' 843's predecessor was enacted against the background of New York's common law rule that permits a landowner, regardless of motive, to erect any structure on her property so long as she does not infringe on a legal right of the adjoining landowner. See Phelps v. Nowlen, 72 N.Y. 39. As a result, section 843 provides the exclusive remedy for a neighbor aggrieved by a spite fence.

Encroachment Constitutes Continuing Trespass for Statute of Limitations Purposes

Chan v. 2368 West 12th Street, LLC

NYLJ 9/9/09, p. 26, col. 3

Supreme Ct., Kings Cty

(Saitta, J.)

In an action by landowner for removal of an encroaching wall, and for damages, encroaching neighbor moved for summary judgment. The court granted the motion in part, holding that because the wall had been in place for a year before suit was brought, RPAPL Section 611(2) precluded the award of injunctive relief.

The parties own adjacent parcels. In 2007, while landowner was in China, neighbor built an exterior wall that encroached on landowner's parcel by four inches. Although the wall was completed at the time landowner returned from China, the rest of the building was not. Landowner brought this action on April 28, 2008, more than a year after the wall was completed, but less than a year after completion of the remainder of the building. RPAPL Section 611(2) provides that when the real property “consists of a strip of land not exceeding six inches in width upon which there sands the exterior wall of a building,” any action to recover the real property is barred unless the action is commenced within “one year after the completion of the erection of such wall.” The statute goes on to provide that an action for damages may be maintained if brought within the further period of one year, and upon satisfaction of the judgment for damages, title to the encroachment should vest in the encroacher.

In light of the statute's focus on the wall rather than the building, the court concluded that the encroacher's claim for injunctive relief was time-barred. The court then turned to neighbor's argument that it was not liable in damages because it did not own the encroaching parcel at the time the encroaching wall was built. The court rejected that argument, noting that an encroachment is a continuing trespass, and the encroaching owner is therefore liable for the encroachment for the period the encroaching owner owned the property. As a result, the encroaching owner in this case is liable in damages for the period starting when they acquired title to their parcel.

Assignee Who Took Assignment Before  Mortgage Cannot Foreclose

Option One Mortgage Corp. v. Duke

NYLJ 8/21/09, Supreme Ct.

Kings Cty.

(Schack, J.)

In a mortgage foreclosure action, assignee of the mortgage sought appointment of a referee to determine the amount due, and sought to amend the caption to reflect a subsequent assignment. The court denied the motion and dismissed the foreclosure action with prejudice, concluding that because the mortgage was assigned before it was executed, the assignee acquired no interest in the mortgage, and was not, therefore, entitled to foreclose.

Mortgagor borrowed $357,000 from Contour on March 18, 2006, and executed a mortgage to Contour on that date. The day before, on March 17, Contour assigned the mortgage to assignee Option One. The mortgage was recorded on April 21, 2006, and the assignment was recorded on April 23, 2007. Mortgagor defaulted on Aug. 1, 2007, and assignee Option One brought this foreclosure action. Eleven days after bringing the action, Option One assigned the defaulted mortgage to Deutsche Bank. Option One the sought appointment of a referee and amendment of the caption to reflect the assignment to Deutsche Bank.

In dismissing the foreclosure action, the court held that the assignment from Contour to Option One was invalid because Contour did not yet have any mortgage to assign. As a result, Option One did not become the owner of the mortgage, and had no right to bring the foreclosure action. Because Deutsche Bank acquired no more rights than Option One had, Deutsche Bank, too, had no right to foreclose. As a result, the court dismissed the action and cancelled the notice of pendency.

No Misrepresentation Claim When Purchaser's Reliance Was Not Reasonable

Daly v. Kochanowicz

NYLJ 8/25/09, p. 25, col. 3

AppDiv, Second Dept.

(Opinion by Dickerson, J.)

In an action by home purchaser against seller, the selling real estate agent and the listing agent for damages suffered when their home flooded after the sale, purchaser appealed from Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that even if seller or the agents had made misrepresentations, any reliance by the purchaser was not reasonable.

Before contracting to purchase the subject property, purchaser hired an inspector, who discovered evidence of water intrusion in the basement. Purchaser contends that the inspector inquired of the sellers about any history of water problems, and contends that sellers denied any such problems. Purchaser contends that the representation was false and made to induce her to purchase the home. She contended that she relied on the misrepresentation by entering into a contract of sale and closing on the property. Less than a year later, the property flooded, causing severe damage. Purchaser then brought this action against seller and all of the involved real estate agents. Supreme Court granted defendants' motions to dismiss, and purchaser appealed.

In affirming, the court emphasized that the inspection revealed the presence of water damage. In light of that fact, purchaser was in a weak position to prevail on a fraud claim even if purchaser could establish that seller or the various agents had made affirmative misrepresentations. The court noted that because of the visible damage, purchaser could not establish that the alleged defect was peculiarly within the knowledge of the seller. Moreover, because of the same visible damage, purchase could not establish that any reliance on representations was reasonable. As a result, purchaser could not establish the applicability of an exceptions to the doctrine of caveat emptor, and could not escape the force of the disclaimer clause in the contract of sale.

COMMENT

A real estate purchaser's reliance upon a seller's misrepresentation about the condition of the premises is reasonable, and can serve as the basis of a fraud claim, if a purchaser could not ascertain the truth of the representation without a burdensome inspection. Thus, in Schooley v. Mannion, 241 A.D.2d 677, the court denied a motion to dismiss a fraud claim based on alleged defects in insulation because purchaser alleged that the condition of the insulation was peculiarly within seller's knowledge. The court noted that the condition of the insulation could not have been verified without destructive testing of property that the seller had recently gutted and renovated. On the other hand, if a purchaser acquires actual knowledge of a defect during an inspection of the property, he cannot prevail on a claim that he reasonably relied on a seller's contrary misrepresentations. For example, in Marshall v. Gallinger Real Estate Co., Inc., 222 A.D.2d 1101, the court held that a purchaser's fraud claim could not survive since the defendant knew about the defective living room ceiling when defendant visited the property and hired an engineer to inspect the premises.

When the alleged defect is neither known to the purchaser nor peculiarly within the seller's knowledge, purchaser cannot claim that any reliance was reasonable unless purchaser made adequate effort to verify seller's representation. Thus, in Cudemo v. Al & Lou Const. Co., Inc., 54 A.D.2d 995, the court concluded that the purchaser could not reasonably have relied on alleged misrepresentations about the size of a garage because purchaser could easily have ascertained whether the garage was large enough for her automobile.

When purchaser makes efforts to verify seller's statements, but those efforts do not uncover the misrepresentation, courts typically hold that questions of fact about the adequacy of the investigation preclude summary judgment. In Dimatos v. Michel, 553 160 A.D.2d 1083, the court denied the seller's motion for summary judgment, concluding that a triable issue of fact existed as to whether the purchaser had acted reasonably in relying on seller's representations that the well water servicing the property was of excellent quality. The purchaser conducted bacteriological tests of the water before purchase, but the alleged defects with the water had nothing to do with bacteria. On these facts, the court concluded that the seller was not entitled to summary judgment, and the concurrence emphasized that a critical question was whether purchaser had conducted a full ordinary inspection. Similarly, in Casey v. Masullo Brothers Builders, Inc., 218 A.D.2d 907, the court denied defendant's motion for summary judgment, when seller's misrepresentation about the school district in which the property was located had been confirmed by conversations with the realtor. The court concluded that an issue of fact existed as to whether a reasonable inquiry by townhouse purchasers would have correctly revealed the school district in which the property was located.

Parties' Conduct Evinces Intent to Keep Deadline Open

Knight v. Barteau

NYLJ 8/31/09, p. 26, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action by purchaser for return of its down payment, purchaser appealed from Supreme Court's award of summary judgment to sellers. The Appellate Division affirmed, holding that purchaser had wrongfully failed to close after sellers agreed to purchaser's modified contract terms.

Upon executing the sale contract, purchaser paid a down payment. The contract provided that if purchaser provided seller with valid grounds for refusing to close, sellers could either elect to cancel the sale contract or adjourn the closing for 60 days to remedy the purported defect. Purchaser's title report identified a number of exceptions, including encroachment of a fence onto adjoining land. As a result, the parties did not close on the scheduled closing date. On June 27, 2008, 62 days after the adjourned closing, purchaser proposed that the parties obtain a boundary line agreement with the owners of the adjoining property, and offered money to assist in the process. Purchaser submitted to sellers a proposed boundary line agreement drafted by purchaser's title insurer. Two and a half months later, sellers provided purchaser with a boundary line agreement signed by the adjoining owner. At the same time, sellers unilaterally scheduled a closing about three weeks later, and notified purchaser that time was of the essence. Purchaser did not appear at the closing. Sellers then declared purchaser in default, retained the down payment as liquidated damages, and sold the property to a third party, using the executed boundary line agreement. Purchaser then brought this action for return of the down payment, contending that sellers had not complied with the contract terms in a timely manner. Supreme Court awarded summary judgment to sellers, and purchaser appealed.

In affirming, the Appellate Division held that the purchaser's proposal that sellers obtain a boundary line agreement constituted an offer to the sellers to modify the deadline for providing marketable title. Although the offer did not include a material term ' the deadline for providing the agreement ' the parties' conduct established their willingness to keep the deadline open, and purchaser's June 27 letter implicitly waived the sale contract provision limiting seller to a 60 day adjournment to remedy title defects. The court concluded that the sellers accepted purchaser's offer by providing purchaser with the executed boundary agreement purchaser had requested. Thus, when purchaser failed to appear at the scheduled closing, sellers were entitled to declare purchaser in default and to retain the down payment.

Six-Foot Wall Is Not an Unlawful Spite Fence

419 Seventh Avenue Associates, Ltd v. Ghuneim

NYLJ 8/3/09, p. 30, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action by landowner against neighbor to recover damages for nuisance and for injury to property, neighbor appealed from Supreme Court's denial of neighbor's summary judgment motion. The Appellate Division modified to award neighbor summary judgment dismissing landowner's spite fence claim, holding that neighbor's six-foot wall did not constitute a spite fence within the meaning of RPAPL 843.

Landowner installed windows on the first floor of a shared wall that directly overlooked neighbor's backyard. Neighbor responded by building a six-foot high wall that blocked landowner's windows. Landowner then brought this action seeking damages for nuisance and for injury to property. Landowner contended that the wall deprived landowner of light and air, and that negligent design and construction caused water damage to landowner's building. Supreme Court granted neighbor's summary judgment motion, and landowner appealed.

In modifying, the Appellate Division acknowledged that RPAPL 843 creates a cause of action for landowners who are deprived of light and air by construction of a spite fence or a spite wall. The court held, however, that such a fence must exceed ten feet in height and must have been erected in bad faith. In this case, the fence did not exceed ten feet, and was erected to protect neighbor's privacy and safety. As a result, landowner was entitled to summary judgment on the spite fence claim. On the other hand, neighbor had never addressed landowner's contention that the wall's negligent design and construction had caused water damage to landowner's building. As a result, neighbor was not entitled to summary judgment on that claim.

COMMENT

In order to have a fence or structure adjudged a private nuisance under Section 843 of the RPAPL, a neighbor must prove that a landowner or lessee of land built “a fence or a structure in the nature of a fence,” which stands “over ten feet in height,” to “exclude the adjoining landowner from the enjoyment of light or air.” However, section 843 provides a defense to a landowner who can show she erected the structure in good faith.

The absence of any one factor required by RPAPL ' 843 prevents a neighbor from prevailing under the statute. In Blair v. 305-313 East 47th Street Associates, 474 N.Y.S.2d 353, the court dismissed a section 843 claim because tenant was unable prove that an elevator tower to be built by adjoining landowner constituted a fence or a structure in the nature of a fence. (See also Downe v. Rothman, 215 A.D.2d 716). A neighbor in Paul v. Catani, 52 Misc.2d 72 was unable to prevail for failure to meet the height requirement under the statute when he argued that a six-foot fence erected by his neighbor blocked the windows of his home. In the Matter of Cross County Square Associates, 133 B.R. 569, a neighbor could not prevail because landowner's chain-link fence allow light and air to pass. A landowner who establishes a reason other than spite for erecting the fence satisfies the “good faith” requirement necessary to defeat a claim under section 843. Thus, in Great Atlantic & Pacific Tea Co. v. New York World's Fair 1964-1965, 249 N.Y.S.2d 256, the court dismissed a claim by a neighbor who sought to enjoin the New York World's Fair from erecting a large screen on fair grounds. Although the screen would effectively block a large neon advertisement on neighbor's roof, the court found defendant had a good faith reason for building the screen, namely that, “the bright red neon of the plaintiff's sign would result in a jarring effect upon the beauty of the fountain show ' an exhibit on the Fair grounds.” RPAPL ' 843's predecessor was enacted against the background of New York's common law rule that permits a landowner, regardless of motive, to erect any structure on her property so long as she does not infringe on a legal right of the adjoining landowner. See Phelps v. Nowlen, 72 N.Y. 39. As a result, section 843 provides the exclusive remedy for a neighbor aggrieved by a spite fence.

Encroachment Constitutes Continuing Trespass for Statute of Limitations Purposes

Chan v. 2368 West 12th Street, LLC

NYLJ 9/9/09, p. 26, col. 3

Supreme Ct., Kings Cty

(Saitta, J.)

In an action by landowner for removal of an encroaching wall, and for damages, encroaching neighbor moved for summary judgment. The court granted the motion in part, holding that because the wall had been in place for a year before suit was brought, RPAPL Section 611(2) precluded the award of injunctive relief.

The parties own adjacent parcels. In 2007, while landowner was in China, neighbor built an exterior wall that encroached on landowner's parcel by four inches. Although the wall was completed at the time landowner returned from China, the rest of the building was not. Landowner brought this action on April 28, 2008, more than a year after the wall was completed, but less than a year after completion of the remainder of the building. RPAPL Section 611(2) provides that when the real property “consists of a strip of land not exceeding six inches in width upon which there sands the exterior wall of a building,” any action to recover the real property is barred unless the action is commenced within “one year after the completion of the erection of such wall.” The statute goes on to provide that an action for damages may be maintained if brought within the further period of one year, and upon satisfaction of the judgment for damages, title to the encroachment should vest in the encroacher.

In light of the statute's focus on the wall rather than the building, the court concluded that the encroacher's claim for injunctive relief was time-barred. The court then turned to neighbor's argument that it was not liable in damages because it did not own the encroaching parcel at the time the encroaching wall was built. The court rejected that argument, noting that an encroachment is a continuing trespass, and the encroaching owner is therefore liable for the encroachment for the period the encroaching owner owned the property. As a result, the encroaching owner in this case is liable in damages for the period starting when they acquired title to their parcel.

Assignee Who Took Assignment Before  Mortgage Cannot Foreclose

Option One Mortgage Corp. v. Duke

NYLJ 8/21/09, Supreme Ct.

Kings Cty.

(Schack, J.)

In a mortgage foreclosure action, assignee of the mortgage sought appointment of a referee to determine the amount due, and sought to amend the caption to reflect a subsequent assignment. The court denied the motion and dismissed the foreclosure action with prejudice, concluding that because the mortgage was assigned before it was executed, the assignee acquired no interest in the mortgage, and was not, therefore, entitled to foreclose.

Mortgagor borrowed $357,000 from Contour on March 18, 2006, and executed a mortgage to Contour on that date. The day before, on March 17, Contour assigned the mortgage to assignee Option One. The mortgage was recorded on April 21, 2006, and the assignment was recorded on April 23, 2007. Mortgagor defaulted on Aug. 1, 2007, and assignee Option One brought this foreclosure action. Eleven days after bringing the action, Option One assigned the defaulted mortgage to Deutsche Bank. Option One the sought appointment of a referee and amendment of the caption to reflect the assignment to Deutsche Bank.

In dismissing the foreclosure action, the court held that the assignment from Contour to Option One was invalid because Contour did not yet have any mortgage to assign. As a result, Option One did not become the owner of the mortgage, and had no right to bring the foreclosure action. Because Deutsche Bank acquired no more rights than Option One had, Deutsche Bank, too, had no right to foreclose. As a result, the court dismissed the action and cancelled the notice of pendency.