Real Property Law

Questions of Fact Preclude Summary Judgment on Claim For Subsidence of Land

DeStefano v. Piccolomini

NYLJ 12/14/2020

Supreme Ct., Richmond Cty.

(Maltese, J.)

In an action by uphill landowners for negligence by downhill landowners in causing subsidence of the uphill land, both parties sought summary judgment. The court denied both summary judgment motions, holding that questions of fact remained about responsibility for maintaining a retaining wall, about downhill owners responsibility for their contractor's negligence, and about causation.

The two adjoining lots meet at the respective rear lot lines. In 2006, downhill lot owners perceived cracks in a concrete retaining wall at the rear of their lot, and hired Cambridge Construction to replace the wall. Downhill owners specified that the new wall be built with interlocking concrete blocks. Cambridge finished replacing the wall on Dec. 6, 2006, and the new wall collapsed on Dec. 20. Cambridge returned to build a new wall in July 2007, but the new wall was never completed, and downhill owners ultimately hired a different contractor to complete the wall. Uphill owners then brought this action, contending that they had suffered no visible erosion before Cambridge began work, and that after the failure of the retaining wall, obvious erosion was visible. They sought summary judgment, contending that downhill owners owed them an absolute, non-delegable duty to provide lateral support. Downhill owners cross-moved for summary judgment, arguing that hiring an independent contractor to build the wall immunized downhill owners from liability.

In denying uphill owners' summary judgment motion, the court first indicated that an owner who fails to provide lateral support is not strictly liable for harm caused to an adjacent owner. Instead, the court indicated that a finding of negligence is required. The court then rejected the argument that downhill owners' action constituted negligence per se because downhill owners had violated the New York City Administrative Code by failing to examine the retaining wall and file reports at intervals to the Department of Buildings. The court held that violation of the administrative code did not constitute negligence per se. Moreover, the court held that questions of fact remained about whether the hillside would have collapsed even without any action by downhill owners. The court then held that downhill owners were not entitled to summary judgment because it was not clear whether they had sufficient opportunity to supervise the contractor's work to warrant imposing vicarious liability on the downhill owners. If they did exercise supervisory control, then the downhill owners would not be entitled to avoid liability by casting blame on an independent contractor Moreover, the court held that if the very fact of replacing the retaining wall created an inherent risk, downhill owner might be liable even if Cambridge was an independent contractor. Because all of these issues raised questions of fact, neither party was entitled to summary judgment.

No Summary Judgment in Adverse Possession,
Misrepresentation Claims

Bernardi v. Harrison

NYLJ 12/15/10, p. 32., col. 2

AppDiv, Second Dept.

(memorandum opinion)

In landowner's two related actions, one to determine claims to real property and the other for fraudulent misrepresentation and legal malpractice, landowner appealed from Supreme Court's denial of its summary judgment motions in both actions. The Appellate Division modified to grant the summary judgment motion with respect to a claim against seller for failure to provide a property condition disclosure form, but otherwise affirmed, holding that questions of fact precluded summary judgment.

Landowner purchased a parcel of waterfront property with a single-family home and a bulkhead. After purchasing the property, landowner discovered that a neighbor was encroaching on the parcel, and also discovered that the bulkhead was deteriorated and that the home had suffered water damage. Landowner then brought one action against the neighbor to establish title to the land on which neighbor was encroaching, and a second action against the seller and the lawyer who had represented landowner during the purchase, alleging that the seller had actively concealed the property defects and failed to provide a property disclosure form, and that the lawyer had committed malpractice by failing to advise landowner to obtain a survey. Neighbor responded by advancing an adverse possession claim, while the seller and lawyer sought summary judgment dismissing landowner's claims. Landowner also sought summary judgment. Supreme Court denied all summary judgment motions, and landowner appealed.

The Appellate Division concluded that because seller, in deposition testimony, denied knowledge of any defects or any attempt to conceal them, and also denied stopping landowner's inspector from inspecting the premises, questions of fact precluded summary judgment on landowner's fraudulent misrepresentation claim. With respect to landowner's legal malpractice claim, the court noted that landowner's lawyer testified that she had advised landowner that he could obtain an updated survey, but landowner refused, raising questions of fact on the malpractice claim. On the adverse possession claim, the court also indicated that questions of fact precluded summary judgment. Finally, because it was undisputed that seller had failed to provide a property condition disclosure form at closing, landowner was entitled to summary judgment on that claim, and to an award of $500.

Award of Exclusive Possession Pursuant to Divorce Judgment Limited To Reasonable Duration

Pando v. Tapia

NYLJ 12/28/10, p. 21, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In a partition action, out-of-possession co-tenant appealed from Supreme Court's denial of his summary judgment motion. The Appellate Division reversed and awarded summary judgment, holding that an award of exclusive possession pursuant to a divorce judgment should be deemed limited to a reasonable duration.

Tapia and her husband acquired title to the subject property as tenants by the entirety in 1973. They divorced in 1979, and the divorce judgment awarded exclusive possession to Tapia. As a result of the divorce judgment, the tenancy by the entirety was converted to a tenancy in common. Tapia's former husband died in 2005, and his son and daughter from a prior marriage succeeded to his interest in the property. In 2008, they sold their interest to Pando, the current out-of-possession co-tenant. Pando brought this partition action, and moved for summary judgment. Supreme Court denied the summary judgment motion, relying on the award of exclusive possession pursuant to the divorce judgment.

In reversing, the Appellate Division acknowledged that the divorce judgment set no limit on Tapia's right to exclusive occupancy, but concluded that in the absence of such a limit, the right to exclusive occupancy and the consequent restriction on partition should be deemed to be limited to a reasonable duration, absent an implicit or explicit agreement to the contrary. Here, the court concluded that Tapia had raised no triable question of fact about the existence of an agreement to the contrary, and had raised no questions of fact about the reasonableness of a period of exclusive possession that had already lasted for 30 years. As a result, Pando was entitled to summary judgment.

Mortgagee on Inquiry Notice of Mortgagor's Fraud

Thomas v. LaSalle Bank National Association

NYLJ 12/28/10, p. 1, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action by homeowner to rescind a mortgage transaction between a subsequent purchaser and that purchaser's mortgagee, the mortgage appealed from Supreme Court's denial of its motion to dismiss the complaint. The Appellate Division modified, holding that mortgagee was entitled to dismissal of the fraud and negligence claims, but not to dismissal of the claim alleging that mortgagee was not a bona fide purchaser for value.

Homeowner alleged that when she was unable to make her mortgage payments and was facing foreclosure, she was induced to sign documents conveying her home to Luscavage as part of a scheme to “help” her. Mortgagee financed Luscavage's purchase, and the money advanced by mortgagee was used to pay off homeowner's mortgage. Luscavage later defaulted, and mortgagee foreclosed. Homeowner then brought this action seeking rescission of all agreements she made with Luscavage and the mortgagee. Mortgagee moved to dismiss. Supreme Court denied the motion, and mortgagee appealed.

In modifying, the Appellate Division upheld Supreme Court's conclusion that homeowner had stated a cause of action on the theory that mortgagee was not a bona fide encumbrancer for value. The court noted that a mortgagee is under a duty to make inquiry when facts would lead a reasonable mortgagee to inquire about potential fraud affecting title of the mortgagor. Here, there was documentary evidence that would lead a reasonably prudent lender to make inquiry into the transaction. As a result, homeowner's complaint stated a cause of action. The Appellate Division, however, dismissed the fraud and negligence claims against mortgagee, rejecting the premise that the attorney at the closing was their agent and that his fraud should be imputed to them, and observing that a mortgagee does not owe a duty to the seller of real estate to prevent a fraudulent conveyance, making it impossible for homeowner to prevail on a negligence claim premised on breach of that duty.

COMMENT

When a mortgagor seeks financing for a home occupied by someone whose possession appears inconsistent with the mortgagor's claim of title, an ordinarily prudent lender has a duty to inquire about the circumstances of the transaction. A mortgagee who fails to make such an inquiry will not be treated as a bona fide encumbrancer for value. Thus, in Ward v. Ward, 52 AD2d 919, a judgment for divorce deemed the marital residence to be marital property to be equitably distributed between the parties, and awarded the husband sole possession of the property until it was sold. The husband brought an action to nullify a mortgage executed by the wife, who held record title. The Third Department denied the mortgagee's summary judgment motion, noting that the mortgagee had not produced documents relevant to ascertaining whether the mortgagee should have known of the husband's interest in the property.

Similarly, the Second Department, in Maiorano v. Garson, 65 A.D.3d 1300, affirmed the denial of the mortgagee's summary judgment motion, by holding that a triable issue of fact was presented where the former owner of the property, who was in possession of the property, had informed the mortgagee's appraiser that he, and not the mortgagor, was the “owner” of the property and was “considering doing a refinance.” This information was transmitted to the lender by means of an appraisal report noting that the underlying transaction was a refinance rather than a purchase. These facts were held sufficient to raise a triable issue as to whether the lender had knowledge of the facts sufficient to put it “on inquiry” as to conflicting claims.

Assignee from MERS Lacked Standing to Foreclose

LNV Corp. v. Madison Real Estate, LLC

NYLJ 12/20/10

Supreme Ct., N.Y. Cty.

(York, J.)

In a mortgage foreclosure action, mortgagor moved to dismiss, asserting that mortgagee lacked standing. The court granted the motion, holding that in the absence of evidence that mortgagee had succeeded to ownership of the note underlying the mortgage, mortgagee lacked standing to foreclose.

Mortgagor executed a note agreeing to pay $513,000 plus interest to Wall Street as mortgagee. Mortgagor also executed and delivered a mortgage for the property in the amount of the debt. The mortgage agreement provided that Mortgage Electronic Registration Systems (MERS) holds legal title to the rights granted in the mortgage, but if necessary to comply with law, MERS also had the right to “take any action required of lender, including but not limited to, releasing and cancelling this Security Instrument.” Subsequently, MERS executed documents transferring the mortgage and underlying note to current mortgagee, on behalf of Wall Street. Mortgagee then brought this foreclosure action based on mortgagor's failure to pay principal and interest due on March 1, 2009. Mortgagor moved to dismiss for lack of standing.

In dismissing the foreclosure action, the court emphasized that the language of the mortgage assignment contract provided that MERS had legal title in the mortgage, but never indicated that MERS had acquired legal title to the note. The court then held that to foreclose on a mortgage, the foreclosing mortgagee must have legal title to both the note and the mortgage. Because mortgagee in this case could not establish legal title to the note, it was not entitled to foreclose.

Noise Nuisance Claims Raise Triable Issues of Fact

Broxmeyer v. United Capital Corp.

NYLJ 12/20/10, p. 27, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action by apartment owners against owner of a neighboring commercial building for negligence, nuisance, and violation of the village code by making excessive noise, apartment owners appealed from Supreme Court's grant of summary judgment to the commercial owner. The Appellate Division modified to reinstate the negligence and nuisance claims, holding that apartment owners' affidavits raised triable questions of fact on those claims.

AFP, a subsidiary of United Capital, purchased a commercial building at a foreclosure sale and replaced HVAC units located on the building's roof. Unit owners in a neighboring residential building, and the son of one of the unit owners complained to the village about the noise, but the village mayor determined that the HVAC units did not violate the village code provisions concerning noise limits. Plaintiff unit owners then brought this action for a judgment declaring that AFP and UCC violated the village noise code, and also sought damages for private nuisance and negligence. Supreme Court granted summary judgment to defendants, and plaintiffs appealed.

In modifying, the Appellate Division concluded that Supreme Court had properly granted summary judgment to defendants on the village code claim, holding that the noise studies plaintiffs had submitted were not in admissible form. The court also agreed with Supreme Court that defendants had established a prima facie entitlement to judgment on the negligence and nuisance claims by establishing that their HVAC units did not violate the village noise ordinance. The Appellate Division held, however, that plaintiffs' affidavits describing the way the noise affected enjoyment of their units were sufficient to raise questions of fact precluding summary judgment on the nuisance and negligence claims. The court also held that plaintiffs had raised triable questions of fact about whether UCC exerted such dominion and control over AFP that it should be held accountable for any harm to plaintiffs. Finally, the court held that defendants were entitled to judgment against one unit owner's son, because he lacked the requisite property interest necessary to support the nuisance and negligence claims.

Questions of Fact Preclude Summary Judgment on Claim For Subsidence of Land

DeStefano v. Piccolomini

NYLJ 12/14/2020

Supreme Ct., Richmond Cty.

(Maltese, J.)

In an action by uphill landowners for negligence by downhill landowners in causing subsidence of the uphill land, both parties sought summary judgment. The court denied both summary judgment motions, holding that questions of fact remained about responsibility for maintaining a retaining wall, about downhill owners responsibility for their contractor's negligence, and about causation.

The two adjoining lots meet at the respective rear lot lines. In 2006, downhill lot owners perceived cracks in a concrete retaining wall at the rear of their lot, and hired Cambridge Construction to replace the wall. Downhill owners specified that the new wall be built with interlocking concrete blocks. Cambridge finished replacing the wall on Dec. 6, 2006, and the new wall collapsed on Dec. 20. Cambridge returned to build a new wall in July 2007, but the new wall was never completed, and downhill owners ultimately hired a different contractor to complete the wall. Uphill owners then brought this action, contending that they had suffered no visible erosion before Cambridge began work, and that after the failure of the retaining wall, obvious erosion was visible. They sought summary judgment, contending that downhill owners owed them an absolute, non-delegable duty to provide lateral support. Downhill owners cross-moved for summary judgment, arguing that hiring an independent contractor to build the wall immunized downhill owners from liability.

In denying uphill owners' summary judgment motion, the court first indicated that an owner who fails to provide lateral support is not strictly liable for harm caused to an adjacent owner. Instead, the court indicated that a finding of negligence is required. The court then rejected the argument that downhill owners' action constituted negligence per se because downhill owners had violated the New York City Administrative Code by failing to examine the retaining wall and file reports at intervals to the Department of Buildings. The court held that violation of the administrative code did not constitute negligence per se. Moreover, the court held that questions of fact remained about whether the hillside would have collapsed even without any action by downhill owners. The court then held that downhill owners were not entitled to summary judgment because it was not clear whether they had sufficient opportunity to supervise the contractor's work to warrant imposing vicarious liability on the downhill owners. If they did exercise supervisory control, then the downhill owners would not be entitled to avoid liability by casting blame on an independent contractor Moreover, the court held that if the very fact of replacing the retaining wall created an inherent risk, downhill owner might be liable even if Cambridge was an independent contractor. Because all of these issues raised questions of fact, neither party was entitled to summary judgment.

No Summary Judgment in Adverse Possession,
Misrepresentation Claims

Bernardi v. Harrison

NYLJ 12/15/10, p. 32., col. 2

AppDiv, Second Dept.

(memorandum opinion)

In landowner's two related actions, one to determine claims to real property and the other for fraudulent misrepresentation and legal malpractice, landowner appealed from Supreme Court's denial of its summary judgment motions in both actions. The Appellate Division modified to grant the summary judgment motion with respect to a claim against seller for failure to provide a property condition disclosure form, but otherwise affirmed, holding that questions of fact precluded summary judgment.

Landowner purchased a parcel of waterfront property with a single-family home and a bulkhead. After purchasing the property, landowner discovered that a neighbor was encroaching on the parcel, and also discovered that the bulkhead was deteriorated and that the home had suffered water damage. Landowner then brought one action against the neighbor to establish title to the land on which neighbor was encroaching, and a second action against the seller and the lawyer who had represented landowner during the purchase, alleging that the seller had actively concealed the property defects and failed to provide a property disclosure form, and that the lawyer had committed malpractice by failing to advise landowner to obtain a survey. Neighbor responded by advancing an adverse possession claim, while the seller and lawyer sought summary judgment dismissing landowner's claims. Landowner also sought summary judgment. Supreme Court denied all summary judgment motions, and landowner appealed.

The Appellate Division concluded that because seller, in deposition testimony, denied knowledge of any defects or any attempt to conceal them, and also denied stopping landowner's inspector from inspecting the premises, questions of fact precluded summary judgment on landowner's fraudulent misrepresentation claim. With respect to landowner's legal malpractice claim, the court noted that landowner's lawyer testified that she had advised landowner that he could obtain an updated survey, but landowner refused, raising questions of fact on the malpractice claim. On the adverse possession claim, the court also indicated that questions of fact precluded summary judgment. Finally, because it was undisputed that seller had failed to provide a property condition disclosure form at closing, landowner was entitled to summary judgment on that claim, and to an award of $500.

Award of Exclusive Possession Pursuant to Divorce Judgment Limited To Reasonable Duration

Pando v. Tapia

NYLJ 12/28/10, p. 21, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In a partition action, out-of-possession co-tenant appealed from Supreme Court's denial of his summary judgment motion. The Appellate Division reversed and awarded summary judgment, holding that an award of exclusive possession pursuant to a divorce judgment should be deemed limited to a reasonable duration.

Tapia and her husband acquired title to the subject property as tenants by the entirety in 1973. They divorced in 1979, and the divorce judgment awarded exclusive possession to Tapia. As a result of the divorce judgment, the tenancy by the entirety was converted to a tenancy in common. Tapia's former husband died in 2005, and his son and daughter from a prior marriage succeeded to his interest in the property. In 2008, they sold their interest to Pando, the current out-of-possession co-tenant. Pando brought this partition action, and moved for summary judgment. Supreme Court denied the summary judgment motion, relying on the award of exclusive possession pursuant to the divorce judgment.

In reversing, the Appellate Division acknowledged that the divorce judgment set no limit on Tapia's right to exclusive occupancy, but concluded that in the absence of such a limit, the right to exclusive occupancy and the consequent restriction on partition should be deemed to be limited to a reasonable duration, absent an implicit or explicit agreement to the contrary. Here, the court concluded that Tapia had raised no triable question of fact about the existence of an agreement to the contrary, and had raised no questions of fact about the reasonableness of a period of exclusive possession that had already lasted for 30 years. As a result, Pando was entitled to summary judgment.

Mortgagee on Inquiry Notice of Mortgagor's Fraud

Thomas v. LaSalle Bank National Association

NYLJ 12/28/10, p. 1, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action by homeowner to rescind a mortgage transaction between a subsequent purchaser and that purchaser's mortgagee, the mortgage appealed from Supreme Court's denial of its motion to dismiss the complaint. The Appellate Division modified, holding that mortgagee was entitled to dismissal of the fraud and negligence claims, but not to dismissal of the claim alleging that mortgagee was not a bona fide purchaser for value.

Homeowner alleged that when she was unable to make her mortgage payments and was facing foreclosure, she was induced to sign documents conveying her home to Luscavage as part of a scheme to “help” her. Mortgagee financed Luscavage's purchase, and the money advanced by mortgagee was used to pay off homeowner's mortgage. Luscavage later defaulted, and mortgagee foreclosed. Homeowner then brought this action seeking rescission of all agreements she made with Luscavage and the mortgagee. Mortgagee moved to dismiss. Supreme Court denied the motion, and mortgagee appealed.

In modifying, the Appellate Division upheld Supreme Court's conclusion that homeowner had stated a cause of action on the theory that mortgagee was not a bona fide encumbrancer for value. The court noted that a mortgagee is under a duty to make inquiry when facts would lead a reasonable mortgagee to inquire about potential fraud affecting title of the mortgagor. Here, there was documentary evidence that would lead a reasonably prudent lender to make inquiry into the transaction. As a result, homeowner's complaint stated a cause of action. The Appellate Division, however, dismissed the fraud and negligence claims against mortgagee, rejecting the premise that the attorney at the closing was their agent and that his fraud should be imputed to them, and observing that a mortgagee does not owe a duty to the seller of real estate to prevent a fraudulent conveyance, making it impossible for homeowner to prevail on a negligence claim premised on breach of that duty.

COMMENT

When a mortgagor seeks financing for a home occupied by someone whose possession appears inconsistent with the mortgagor's claim of title, an ordinarily prudent lender has a duty to inquire about the circumstances of the transaction. A mortgagee who fails to make such an inquiry will not be treated as a bona fide encumbrancer for value. Thus, in Ward v. Ward, 52 AD2d 919, a judgment for divorce deemed the marital residence to be marital property to be equitably distributed between the parties, and awarded the husband sole possession of the property until it was sold. The husband brought an action to nullify a mortgage executed by the wife, who held record title. The Third Department denied the mortgagee's summary judgment motion, noting that the mortgagee had not produced documents relevant to ascertaining whether the mortgagee should have known of the husband's interest in the property.

Similarly, the Second Department, in Maiorano v. Garson, 65 A.D.3d 1300, affirmed the denial of the mortgagee's summary judgment motion, by holding that a triable issue of fact was presented where the former owner of the property, who was in possession of the property, had informed the mortgagee's appraiser that he, and not the mortgagor, was the “owner” of the property and was “considering doing a refinance.” This information was transmitted to the lender by means of an appraisal report noting that the underlying transaction was a refinance rather than a purchase. These facts were held sufficient to raise a triable issue as to whether the lender had knowledge of the facts sufficient to put it “on inquiry” as to conflicting claims.

Assignee from MERS Lacked Standing to Foreclose

LNV Corp. v. Madison Real Estate, LLC

NYLJ 12/20/10

Supreme Ct., N.Y. Cty.

(York, J.)

In a mortgage foreclosure action, mortgagor moved to dismiss, asserting that mortgagee lacked standing. The court granted the motion, holding that in the absence of evidence that mortgagee had succeeded to ownership of the note underlying the mortgage, mortgagee lacked standing to foreclose.

Mortgagor executed a note agreeing to pay $513,000 plus interest to Wall Street as mortgagee. Mortgagor also executed and delivered a mortgage for the property in the amount of the debt. The mortgage agreement provided that Mortgage Electronic Registration Systems (MERS) holds legal title to the rights granted in the mortgage, but if necessary to comply with law, MERS also had the right to “take any action required of lender, including but not limited to, releasing and cancelling this Security Instrument.” Subsequently, MERS executed documents transferring the mortgage and underlying note to current mortgagee, on behalf of Wall Street. Mortgagee then brought this foreclosure action based on mortgagor's failure to pay principal and interest due on March 1, 2009. Mortgagor moved to dismiss for lack of standing.

In dismissing the foreclosure action, the court emphasized that the language of the mortgage assignment contract provided that MERS had legal title in the mortgage, but never indicated that MERS had acquired legal title to the note. The court then held that to foreclose on a mortgage, the foreclosing mortgagee must have legal title to both the note and the mortgage. Because mortgagee in this case could not establish legal title to the note, it was not entitled to foreclose.

Noise Nuisance Claims Raise Triable Issues of Fact

Broxmeyer v. United Capital Corp.

NYLJ 12/20/10, p. 27, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action by apartment owners against owner of a neighboring commercial building for negligence, nuisance, and violation of the village code by making excessive noise, apartment owners appealed from Supreme Court's grant of summary judgment to the commercial owner. The Appellate Division modified to reinstate the negligence and nuisance claims, holding that apartment owners' affidavits raised triable questions of fact on those claims.

AFP, a subsidiary of United Capital, purchased a commercial building at a foreclosure sale and replaced HVAC units located on the building's roof. Unit owners in a neighboring residential building, and the son of one of the unit owners complained to the village about the noise, but the village mayor determined that the HVAC units did not violate the village code provisions concerning noise limits. Plaintiff unit owners then brought this action for a judgment declaring that AFP and UCC violated the village noise code, and also sought damages for private nuisance and negligence. Supreme Court granted summary judgment to defendants, and plaintiffs appealed.

In modifying, the Appellate Division concluded that Supreme Court had properly granted summary judgment to defendants on the village code claim, holding that the noise studies plaintiffs had submitted were not in admissible form. The court also agreed with Supreme Court that defendants had established a prima facie entitlement to judgment on the negligence and nuisance claims by establishing that their HVAC units did not violate the village noise ordinance. The Appellate Division held, however, that plaintiffs' affidavits describing the way the noise affected enjoyment of their units were sufficient to raise questions of fact precluding summary judgment on the nuisance and negligence claims. The court also held that plaintiffs had raised triable questions of fact about whether UCC exerted such dominion and control over AFP that it should be held accountable for any harm to plaintiffs. Finally, the court held that defendants were entitled to judgment against one unit owner's son, because he lacked the requisite property interest necessary to support the nuisance and negligence claims.