Real Property Law

AppDiv, First Dept.

(memorandum opinion)

In an action by landowner against a neighbor for trespass and unjust enrichment resulting from a sign protruding onto landowner's airspace, landowner appealed from Supreme Court's grant of summary judgment to defendant neighbor. The Appellate Division modified to deny the motion with respect to the trespass and unjust enrichment claims, holding that plaintiff's complaint raised issues of fact.

Neighboring building owner leased the western wall of its building for purposes of posting an advertising sign. The sign and its four-inch bolts protruded onto landowner's airspace, but neighbor never sought landowner's permission. Moreover, neighbor also encroached when it hung scaffolding to put up the sign. Landowner brought this action for trespass and unjust enrichment, but Supreme Court awarded summary judgment to the neighboring building owner. Landowner appealed.

In holding that neighboring building owner was not entitled to summary judgment, the court first held that an invasion of property or airspace need not be more than de minimis in order to constitute a trespass. The court then concluded that Supreme Court had properly dismissed landowner's claim with regard to the temporary use of airspace to hang scaffolding, noting that landowner had never sought an injunction against use of the airspace for that purpose, and had not asserted damage to its property interest that would require injunctive relief. Finally, the court held that issues of fact remained with respect to the unjust enrichment claim because of landowner's allegation that neighbors earned income through use of the air space, for which landowner should be compensated.

COMMENT

When a trespasser derives profits from use of a landowner's airspace, the First Department has previously held that the landowner is entitled to recover all of the trespasser's profits. In Sakele Brothers, LLC v. Safdie, 302 A.D.2d 20, the court held that a landowner was entitled to collect all of the license fees a trespasser had collected for use of landowner's airspace to erect an advertising sign. Landowner and trespasser had shared a party wall, and when landowner demolished the upper stories of its building as a result of a fire, the party wall remained intact. When the trespasser licensed use of the wall for sign purposes, landowner obtained injunctive relief, plus all of the license fees the trespasser had collected. The court noted that landowner owned the part of the wall on which the sign was located, and held that “the proper measure of the damages for the trespass is the gain the trespasser has derived from its wrongful conduct.” The court further explained that any other rule would place a premium on trespassing.

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Access to Neighbor's Property

MK Realty Holding LLC v. Scneider

NYLJ 4/18/13

Supreme Ct., Queens Cty.

(Agate, J.)

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Landowner brought a special proceeding to obtain access to neighbor's property to repair a wall on its building. The court granted landowner's application for a license, holding that landowner's need for access outweighed any inconvenience to neighbor.

The west wall of landowner's building leaks when it rains. The wall is only two feet from neighbor's wall, and landowner cannot obtain adequate access to make the repairs without using neighbor's property. Landowner brought this application pursuant to RPAPL section 881 to obtain access to neighbor's land.

In granting landowner the requested relief, the court balanced the interests of the parties, and noted that landowner agreed to compensate the neighbor with $1,000 to permit landowner to conduct the necessary repairs. The court also required landowner not to interfere with neighbor's access to her property, to obtain insurance, to take necessary precautions to avoid damages to neighbor's property, and remain liable for any damages that might occur.

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Refinance Application

Valley National Bank v. 58 VLIMP, LLC

NYLJ 5/9/13

Supreme Ct., Suffolk Cty.

(Whalen, J.)

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In a mortgage foreclosure action, mortgagee bank moved for summary judgment on its complaint and summary judgment dismissing counterclaims asserted by mortgagor and guarantor. The court granted mortgagee's motions, holding that mortgagee's failure to process a refinance application did not excuse mortgagor's default on the mortgage.

In 2005, mortgagee made $4.6 million available to mortgagor under the terms of a mortgage consolidation and extension agreement. By the terms of these documents, mortgagor and guarantor waived all claims, defenses, and setoffs they might have against the mortgagee. In January 2012, mortgagors defaulted on their payments, and the defaults have not been cured. In August 2012, mortgagee brought this foreclosure action. As a defense, mortgagor raised mortgagee's failure to extend further credit as contemplated by a loan application mortgagor submitted in April 2011, together with mortgagee's issuance of an acceptance letter by which mortgagee purportedly agreed to refinance the existing mortgage loan.

In granting summary judgment to mortgagee, the court first noted that, by its terms, the April 2011 did not constitute a commitment to lend money. As a result, it did not constitute an enforceable obligation by the bank. The court then held that even if the April 2011 letter had created a contract obligation, any breach by the mortgagee constituted a breach of a collateral agreement and would not excuse mortgagor and guarantor from their defaults under the terms of the mortgage loan documents.'

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Bank Entitled to Equitable Mortgage Lien

Alexandre v. Duvivier

NYLJ 5/8/13

Supreme Ct., Richmond Cty.

(McMahon, J.)

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In an action by former owners for a determination that they are the sole owners of the subject premises, defendant mortgagee bank sought summary judgment dismissing the complaint against it, and, in the alternative, a declaration that it holds an equitable first mortgage lien on the subject property. The court determined that former owners hold title because their transfer was the product of fraud, but found that mortgagee bank held an equitable mortgage lien on the property.

Former owners purchased their home in 2004 with the help of a $265,000 mortgage loan. They refinanced the mortgage in 2005, borrowing a larger amount, and then, in 2006, they entered into the disputed transaction. According to the papers former owners signed, they executed a deed to the property to Duvivier, who, in turn executed a loan agreement with New Century, which lent Duvivier $488,000, and took a mortgage to secure that loan. The note and mortgage was later assigned to U.S. Bankcorp. When the latter brought a foreclosure action, it named both Duvivier and former plaintiffs as defendants, and both defaulted, resulting in a judgment of foreclosure and sale. Former owners then brought this action, contending that the 2006 deed they executed to the Duviviers was the product of fraud.

The court cited the testimony of former owners that they were unaware that they were transferring ownership to Duvivier. The court noted that this testimony was credible because former owners walked out of the closing with $30,000 in cash, some of which they invested in the repair of the subject premises. The court also noted that former owners made payments on the mortgage loan, payments they were unlikely to make if they had understood that they no longer held title to the premises. Moreover, the court noted that the bank had presented no evidence to controvert the testimony by former owners, other than conclusory assertions that former owners must have known what they were signing. The court therefore held that the deed was the product of fraud. But the court also noted that former owners had benefited from the 2006 mortgage extended to them, because much of the proceeds of that mortgage loan was applied to pay off prior mortgages former owners executed by former owners. On those facts, the court held that mortgagee bank was entitled to an equitable mortgage lien on the subject premises, in an amount to be determined after a hearing.

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Intruding Advertising Sign

Standard Realty Associates, Inc. v. Chelsea Gardens Corp.

NYLJ 4/15/13, p. 20, col. 4

AppDiv, First Dept.

(memorandum opinion)

In an action by landowner against a neighbor for trespass and unjust enrichment resulting from a sign protruding onto landowner's airspace, landowner appealed from Supreme Court's grant of summary judgment to defendant neighbor. The Appellate Division modified to deny the motion with respect to the trespass and unjust enrichment claims, holding that plaintiff's complaint raised issues of fact.

Neighboring building owner leased the western wall of its building for purposes of posting an advertising sign. The sign and its four-inch bolts protruded onto landowner's airspace, but neighbor never sought landowner's permission. Moreover, neighbor also encroached when it hung scaffolding to put up the sign. Landowner brought this action for trespass and unjust enrichment, but Supreme Court awarded summary judgment to the neighboring building owner. Landowner appealed.

In holding that neighboring building owner was not entitled to summary judgment, the court first held that an invasion of property or airspace need not be more than de minimis in order to constitute a trespass. The court then concluded that Supreme Court had properly dismissed landowner's claim with regard to the temporary use of airspace to hang scaffolding, noting that landowner had never sought an injunction against use of the airspace for that purpose, and had not asserted damage to its property interest that would require injunctive relief. Finally, the court held that issues of fact remained with respect to the unjust enrichment claim because of landowner's allegation that neighbors earned income through use of the air space, for which landowner should be compensated.

COMMENT

When a trespasser derives profits from use of a landowner's airspace, the First Department has previously held that the landowner is entitled to recover all of the trespasser's profits. In Sakele Brothers, LLC v. Safdie, 302 A.D.2d 20, the court held that a landowner was entitled to collect all of the license fees a trespasser had collected for use of landowner's airspace to erect an advertising sign. Landowner and trespasser had shared a party wall, and when landowner demolished the upper stories of its building as a result of a fire, the party wall remained intact. When the trespasser licensed use of the wall for sign purposes, landowner obtained injunctive relief, plus all of the license fees the trespasser had collected. The court noted that landowner owned the part of the wall on which the sign was located, and held that “the proper measure of the damages for the trespass is the gain the trespasser has derived from its wrongful conduct.” The court further explained that any other rule would place a premium on trespassing.

'

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Access to Neighbor's Property

MK Realty Holding LLC v. Scneider

NYLJ 4/18/13

Supreme Ct., Queens Cty.

(Agate, J.)

'

Landowner brought a special proceeding to obtain access to neighbor's property to repair a wall on its building. The court granted landowner's application for a license, holding that landowner's need for access outweighed any inconvenience to neighbor.

The west wall of landowner's building leaks when it rains. The wall is only two feet from neighbor's wall, and landowner cannot obtain adequate access to make the repairs without using neighbor's property. Landowner brought this application pursuant to RPAPL section 881 to obtain access to neighbor's land.

In granting landowner the requested relief, the court balanced the interests of the parties, and noted that landowner agreed to compensate the neighbor with $1,000 to permit landowner to conduct the necessary repairs. The court also required landowner not to interfere with neighbor's access to her property, to obtain insurance, to take necessary precautions to avoid damages to neighbor's property, and remain liable for any damages that might occur.

'

Refinance Application

Valley National Bank v. 58 VLIMP, LLC

NYLJ 5/9/13

Supreme Ct., Suffolk Cty.

(Whalen, J.)

'

In a mortgage foreclosure action, mortgagee bank moved for summary judgment on its complaint and summary judgment dismissing counterclaims asserted by mortgagor and guarantor. The court granted mortgagee's motions, holding that mortgagee's failure to process a refinance application did not excuse mortgagor's default on the mortgage.

In 2005, mortgagee made $4.6 million available to mortgagor under the terms of a mortgage consolidation and extension agreement. By the terms of these documents, mortgagor and guarantor waived all claims, defenses, and setoffs they might have against the mortgagee. In January 2012, mortgagors defaulted on their payments, and the defaults have not been cured. In August 2012, mortgagee brought this foreclosure action. As a defense, mortgagor raised mortgagee's failure to extend further credit as contemplated by a loan application mortgagor submitted in April 2011, together with mortgagee's issuance of an acceptance letter by which mortgagee purportedly agreed to refinance the existing mortgage loan.

In granting summary judgment to mortgagee, the court first noted that, by its terms, the April 2011 did not constitute a commitment to lend money. As a result, it did not constitute an enforceable obligation by the bank. The court then held that even if the April 2011 letter had created a contract obligation, any breach by the mortgagee constituted a breach of a collateral agreement and would not excuse mortgagor and guarantor from their defaults under the terms of the mortgage loan documents.'

'

Bank Entitled to Equitable Mortgage Lien

Alexandre v. Duvivier

NYLJ 5/8/13

Supreme Ct., Richmond Cty.

(McMahon, J.)

'

In an action by former owners for a determination that they are the sole owners of the subject premises, defendant mortgagee bank sought summary judgment dismissing the complaint against it, and, in the alternative, a declaration that it holds an equitable first mortgage lien on the subject property. The court determined that former owners hold title because their transfer was the product of fraud, but found that mortgagee bank held an equitable mortgage lien on the property.

Former owners purchased their home in 2004 with the help of a $265,000 mortgage loan. They refinanced the mortgage in 2005, borrowing a larger amount, and then, in 2006, they entered into the disputed transaction. According to the papers former owners signed, they executed a deed to the property to Duvivier, who, in turn executed a loan agreement with New Century, which lent Duvivier $488,000, and took a mortgage to secure that loan. The note and mortgage was later assigned to U.S. Bankcorp. When the latter brought a foreclosure action, it named both Duvivier and former plaintiffs as defendants, and both defaulted, resulting in a judgment of foreclosure and sale. Former owners then brought this action, contending that the 2006 deed they executed to the Duviviers was the product of fraud.

The court cited the testimony of former owners that they were unaware that they were transferring ownership to Duvivier. The court noted that this testimony was credible because former owners walked out of the closing with $30,000 in cash, some of which they invested in the repair of the subject premises. The court also noted that former owners made payments on the mortgage loan, payments they were unlikely to make if they had understood that they no longer held title to the premises. Moreover, the court noted that the bank had presented no evidence to controvert the testimony by former owners, other than conclusory assertions that former owners must have known what they were signing. The court therefore held that the deed was the product of fraud. But the court also noted that former owners had benefited from the 2006 mortgage extended to them, because much of the proceeds of that mortgage loan was applied to pay off prior mortgages former owners executed by former owners. On those facts, the court held that mortgagee bank was entitled to an equitable mortgage lien on the subject premises, in an amount to be determined after a hearing.

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