Real Property Law

Purchaser-Lawyer Owed Fiduciary Duty to Estate of Former Client

Cavaliere v. Plaza Apartments, Inc.

NYLJ 5/10/11, p. 30, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by administrators of two estates to rescind a sale of an interest in an apartment complex, both the administrators and the purchasers appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division affirmed, holding that the purchaser, who had acted as decedent's lawyer, owed a fiduciary duty to the decedent, but that the administrators had not established prima facie entitlement to judgment as a matter of law.

On Oct. 5, 1999, decedent Tripodo's brother, acting as her attorney-in-fact, agreed to sell her one-third interest in an apartment complex to Avallone, who (with his father, also a lawyer) had represented Tripodo and the brother in other transactions, and who had drafted wills for both Tripodo and her brother. After Tripodo died in November 1999, Tripodo's administrator and her brother (the sole residuary beneficiary of Tripodo's estate) executed documents completing the transfer to Avallone. Pursuant to the terms of the deal, the brother, as estate beneficiary, continued to receive income derived from the property. After the brother's death, the administrator of the brother's estate and the successor administrator of Tripodo's estate brought this action to rescind the sale, contending that Avallone had breached his fiduciary duty by failing to inform Tripodo and the brother of the inherent conflict of interest in the sale of Tripodo's interest to Avallone.

In affirming Supreme Court's denial of both parties' summary judgment motions, the Appellate Division first held that Avallone owed a fiduciary duty to Tripodo and her brother even though Avallone had not represented them in the sale transaction itself. The court emphasized the Avallones' past representation of the parties, and their subsequent representation of the executor of Tripodo's estate, for which each Avallone received a check for $93,587.50. The court held, however, that questions of fact remained about whether the Avallones had breached that fiduciary duty, noting that the brother and the administrator might have ratified the transaction by subsequent actions. The court also noted questions of fact about whether the breach had caused any damages.

Possession Not Sufficient to Establish Title Under New Adverse Possession Statute

Hartman v. Goldman

NYLJ 5/10/11, p. 37, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action for a judgment declaring that possessors had acquired title to a boundary strip by adverse possession, possessors appealed from Supreme Court's grant of summary judgment to true owner with respect to a number of claims. The Appellate Division affirmed, applying the 2008 amendments to the RPAPL and concluding that many of the acts of possession alleged by the possessor would not suffice to establish title under the new statute.

Possessor's complaint, filed in April 2009, alleged that based on a survey they obtained in 1987, possessor installed driveway lights, planted foliage and shrubbery, and installed a drainage system on or under the disputed strip. Based on these acts, possessor asserted title by adverse possession. Supreme Court granted summary judgment to true owner dismissing the complaint with respect to the driveway lights, foliage, and any lawn maintenance, but denied summary judgment with respect to the drainage system. Possessor appealed.

In affirming, the Appellate Division first noted that the 2008 amendments to article 6 of the RPAPL applied to all claims filed on or after July 7, 2008. The court then turned to RPAPL section 543, which precludes findings of adverse possession based on non-structural encroachments. The court held that the driveway lights, lawn maintenance, and planting of shrubbery fell within the statute's ambit, and barred adverse possession claims based on those actions. With respect to remaining allegations in the complaint, triable issues of fact precluded summary judgment.

Purchaser May Not Invoke Mortgage Contingency Clause

Duryee v. Kangeiser

NYLJ 4/7/11, p. 31, col. 1

AppTerm, 9th & 10th Districts

(memorandum opinion)

In purchaser's action to recover a down payment, seller appealed from District Court's denial of its summary judgment motion on its counterclaim for 10% of the contract price. The Appellate Term reversed, holding that purchaser was not entitled to invoke the mortgage contingency clause of the sale contract.

Purchaser contracted to buy a legal two-family building for which there was no certificate of occupancy. Seller immediately obtained one after execution of the sale contract. The sale contract included a 45-day mortgage contingency clause. Purchaser applied for a mortgage, stating in the application that the building was a single-family house. Based on that application, purchaser obtained a mortgage commitment. The bank subsequently learned that the building was a two-family house, and allegedly informed purchaser that it would offer less financing at a higher rate. Purchaser then brought this action to recover its $10,000 down payment. Seller counterclaimed for $49,000, 10% of the contract price, pursuant to the contract's liquidated damages provision. District Court denied seller's summary judgment motion, concluding that triable issues of fact precluded summary judgment.

In reversing, the Appellate Term emphasized that purchaser had failed to submit any proof that the mortgage commitment had been revoked, that the initial commitment was for a one-family dwelling, or that plaintiff had acted in good faith when identifying the subject property as a one-family home. As a result, the court concluded that seller was entitled to summary judgment on its counterclaim.

Purchaser-Lawyer Owed Fiduciary Duty to Estate of Former Client

Cavaliere v. Plaza Apartments, Inc.

NYLJ 5/10/11, p. 30, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by administrators of two estates to rescind a sale of an interest in an apartment complex, both the administrators and the purchasers appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division affirmed, holding that the purchaser, who had acted as decedent's lawyer, owed a fiduciary duty to the decedent, but that the administrators had not established prima facie entitlement to judgment as a matter of law.

On Oct. 5, 1999, decedent Tripodo's brother, acting as her attorney-in-fact, agreed to sell her one-third interest in an apartment complex to Avallone, who (with his father, also a lawyer) had represented Tripodo and the brother in other transactions, and who had drafted wills for both Tripodo and her brother. After Tripodo died in November 1999, Tripodo's administrator and her brother (the sole residuary beneficiary of Tripodo's estate) executed documents completing the transfer to Avallone. Pursuant to the terms of the deal, the brother, as estate beneficiary, continued to receive income derived from the property. After the brother's death, the administrator of the brother's estate and the successor administrator of Tripodo's estate brought this action to rescind the sale, contending that Avallone had breached his fiduciary duty by failing to inform Tripodo and the brother of the inherent conflict of interest in the sale of Tripodo's interest to Avallone.

In affirming Supreme Court's denial of both parties' summary judgment motions, the Appellate Division first held that Avallone owed a fiduciary duty to Tripodo and her brother even though Avallone had not represented them in the sale transaction itself. The court emphasized the Avallones' past representation of the parties, and their subsequent representation of the executor of Tripodo's estate, for which each Avallone received a check for $93,587.50. The court held, however, that questions of fact remained about whether the Avallones had breached that fiduciary duty, noting that the brother and the administrator might have ratified the transaction by subsequent actions. The court also noted questions of fact about whether the breach had caused any damages.

Possession Not Sufficient to Establish Title Under New Adverse Possession Statute

Hartman v. Goldman

NYLJ 5/10/11, p. 37, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action for a judgment declaring that possessors had acquired title to a boundary strip by adverse possession, possessors appealed from Supreme Court's grant of summary judgment to true owner with respect to a number of claims. The Appellate Division affirmed, applying the 2008 amendments to the RPAPL and concluding that many of the acts of possession alleged by the possessor would not suffice to establish title under the new statute.

Possessor's complaint, filed in April 2009, alleged that based on a survey they obtained in 1987, possessor installed driveway lights, planted foliage and shrubbery, and installed a drainage system on or under the disputed strip. Based on these acts, possessor asserted title by adverse possession. Supreme Court granted summary judgment to true owner dismissing the complaint with respect to the driveway lights, foliage, and any lawn maintenance, but denied summary judgment with respect to the drainage system. Possessor appealed.

In affirming, the Appellate Division first noted that the 2008 amendments to article 6 of the RPAPL applied to all claims filed on or after July 7, 2008. The court then turned to RPAPL section 543, which precludes findings of adverse possession based on non-structural encroachments. The court held that the driveway lights, lawn maintenance, and planting of shrubbery fell within the statute's ambit, and barred adverse possession claims based on those actions. With respect to remaining allegations in the complaint, triable issues of fact precluded summary judgment.

Purchaser May Not Invoke Mortgage Contingency Clause

Duryee v. Kangeiser

NYLJ 4/7/11, p. 31, col. 1

AppTerm, 9th & 10th Districts

(memorandum opinion)

In purchaser's action to recover a down payment, seller appealed from District Court's denial of its summary judgment motion on its counterclaim for 10% of the contract price. The Appellate Term reversed, holding that purchaser was not entitled to invoke the mortgage contingency clause of the sale contract.

Purchaser contracted to buy a legal two-family building for which there was no certificate of occupancy. Seller immediately obtained one after execution of the sale contract. The sale contract included a 45-day mortgage contingency clause. Purchaser applied for a mortgage, stating in the application that the building was a single-family house. Based on that application, purchaser obtained a mortgage commitment. The bank subsequently learned that the building was a two-family house, and allegedly informed purchaser that it would offer less financing at a higher rate. Purchaser then brought this action to recover its $10,000 down payment. Seller counterclaimed for $49,000, 10% of the contract price, pursuant to the contract's liquidated damages provision. District Court denied seller's summary judgment motion, concluding that triable issues of fact precluded summary judgment.

In reversing, the Appellate Term emphasized that purchaser had failed to submit any proof that the mortgage commitment had been revoked, that the initial commitment was for a one-family dwelling, or that plaintiff had acted in good faith when identifying the subject property as a one-family home. As a result, the court concluded that seller was entitled to summary judgment on its counterclaim.