Real Estate – Page 11 – New York Appellate Digest

PLAINTIFF DID NOT DEMONSTRATE HE WAS READY WILLING AND ABLE TO PURCHASE THE PROPERTY, SUMMARY JUDGMENT IN THIS SPECIFIC PERFORMANCE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff had not met the proof requirements for specific performance of a real estate contract:

“To prevail on a cause of action for specific performance of a contract for the sale of real property, a plaintiff purchaser must establish that it substantially performed its contractual obligations and was ready, willing, and able to perform its remaining obligations, that the vendor was able to convey the property, and that there was no adequate remedy at law” … . In moving for summary judgment on a complaint seeking specific performance of a contract, the plaintiff purchaser must submit evidence demonstrating financial ability to purchase the property in order to demonstrate that it was ready, willing, and able to purchase such property… . In the absence of such evidence, a plaintiff purchaser’s motion for summary judgment in its favor on a cause of action for specific performance should be denied due to the plaintiff purchaser’s failure to meet its initial burden … . “When a purchaser submits no documentation or other proof to substantiate that it had the funds necessary to purchase the property, it cannot prove, as a matter of law, that it was ready, willing, and able to close” … .

Here, the plaintiff failed to establish, prima facie, that he was ready, willing, and able to purchase the subject property, since he did not submit any evidence demonstrating his financial ability to close the transaction … . Grunbaum v Nicole Brittany, Ltd., 2017 NY Slip Op 06638, Second Dept 9-27-17

REAL ESTATE (PLAINTIFF DID NOT DEMONSTRATE HE WAS READY WILLING AND ABLE TO PURCHASE THE PROPERTY, SUMMARY JUDGMENT IN THIS SPECIFIC PERFORMANCE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CONTRACT LAW (REAL ESTATE, SPECIFIC PERFORMANCE, PLAINTIFF DID NOT DEMONSTRATE HE WAS READY WILLING AND ABLE TO PURCHASE THE PROPERTY, SUMMARY JUDGMENT IN THIS SPECIFIC PERFORMANCE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/SPECIFIC PERFORMANCE (REAL ESTATE, PLAINTIFF DID NOT DEMONSTRATE HE WAS READY WILLING AND ABLE TO PURCHASE THE PROPERTY, SUMMARY JUDGMENT IN THIS SPECIFIC PERFORMANCE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))

September 27, 2017

Appeals, Civil Procedure, Evidence, Real Estate

LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS, ALTHOUGH NOT RAISED BELOW THE DOCUMENTARY EVIDENCE ISSUE WAS A PROPER BASIS FOR REVERSAL ON APPEAL (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the letters evincing a “time of the essence” notification in the underlying real estate transaction did not constitute “documentary evidence” which would support a motion to dismiss. Although he “documentary evidence” argument was not raised below, the court properly considered it as the basis for reversal as a matter of law:

“A motion pursuant to CPLR 3211(a)(1) to dismiss based on documentary evidence may be appropriately granted only where the documentary evidence utterly refutes the plaintiff’s factual allegations, thereby conclusively establishing a defense as a matter of law”… . “The evidence submitted in support of such motion must be documentary or the motion must be denied” … . “In order for evidence submitted in support of a CPLR 3211(a)(1) motion to qualify as documentary evidence,’ it must be unambiguous, authentic, and undeniable'”… .

“[J]udicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper case” … . “At the same time, [n]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211(a)'” … .

Here, the letters submitted by the defendant did not constitute documentary evidence within the meaning of CPLR 3211(a)(1), and should not have been relied upon by the Supreme Court as a basis for granting the defendant’s motion to dismiss the complaint. The only documentary evidence submitted in support of the defendant’s motion was the purchase agreement, which did not “utterly refute” the plaintiffs’ allegations or conclusively establish a defense as a matter of law. Contrary to the defendant’s contention, the issue of whether the letters constitute documentary evidence within the intendment of CPLR 3211(a)(1) can be raised for the first time on appeal because it is one of law which appears on the face of the record and could not have been avoided if it had been raised at the proper juncture … . Feldshteyn v Brighton Beach 2012, LLC, 2017 NY Slip Op 06160, Second Dept 8-16-17

CIVIL PROCEDURE (MOTION TO DISMISS, LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS (SECOND DEPT))/EVIDENCE (MOTION TO DISMISS, LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS (SECOND DEPT))/APPEALS (LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS, ALTHOUGH NOT RAISED BELOW THE DOCUMENTARY EVIDENCE ISSUE WAS A PROPER BASIS FOR REVERSAL ON APPEAL (SECOND DEPT))/REAL ESTATE (LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS, ALTHOUGH NOT RAISED BELOW THE DOCUMENTARY EVIDENCE ISSUE WAS A PROPER BASIS FOR REVERSAL ON APPEAL (SECOND DEPT))/DISMISS, MOTION TO (CIVIL PROCEDURE, (LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS (SECOND DEPT))/DOCUMENTARY EVIDENCE (CIVIL PROCEDURE, MOTION TO DISMISS, LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS (SECOND DEPT))/EVIDENCE (MOTION TO DISMISS, LETTERS PURPORTING TO CONSTITUTE TIME OF THE ESSENCE NOTICE DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH CAN SUPPORT A MOTION TO DISMISS (SECOND DEPT))

August 16, 2017

Contract Law, Real Estate

THE EMAIL EXCHANGE IN WHICH THE PURCHASE PRICE WAS AGREED TO DID NOT SATISFY THE STATUTE OF FRAUDS, SELLER WAS FREE TO BACK OUT AND SEEK A HIGHER PRICE.

The Second Department, reversing (modifying) Supreme Court, determined the exchange of emails concerning the sale of defendant’s property did not satisfy the statute of frauds. Plaintiff’s complaint seeking specific performance should have been dismissed. After defendant agreed via email on a purchase price he learned he could get substantially more for the property and he put the brakes on the sale to plaintiff:

… [T]he defendant was informed by a real estate broker that the property could be sold for a significantly higher amount; accordingly, the defendant asked the plaintiff to “wait” on moving forward with the execution of a formal contract. The plaintiff insisted that the parties were already bound by their emails, commenced this action for specific performance of the alleged agreement, and filed a notice of pendency on the property. The defendant moved (1) to dismiss the complaint pursuant to CPLR 3211(a)(1), (5), and (7), on the ground that the emails failed to satisfy the statute of frauds, (2) to cancel the notice of pendency pursuant to CPLR 6514(a), (3) for an award of costs and expenses pursuant to CPLR 6514(c), and (4) for an award of sanctions and attorney’s fees pursuant to 22 NYCRR 130-1.1. The Supreme Court denied that branch of the defendant’s motion which was to dismiss the complaint, and, in effect, denied the remainder of the relief sought. We modify.

The emails relied upon by the plaintiff to establish the alleged agreement among the parties for the purchase of the defendant’s apartment were insufficient to satisfy the statute of frauds, as they left for future negotiations essential terms of the contemplated contract, such as a down payment, the closing date, the quality of title to be conveyed, the risk of loss during the sale period, and adjustments for taxes and utilities, and were subject to the execution of a more formal contract of sale… . Contrary to the plaintiff’s contention, in the emails exchanged by and between the parties and the defendant’s attorney, the parties expressly anticipated the execution of a formal contract … . Saul v Vidokle, 2017 NY Slip Op 04485, 2nd Dept 6-7-17

REAL ESTATE (CONTRACT LAW, STATUTE OF FRAUDS, THE EMAIL EXCHANGE IN WHICH THE PURCHASE PRICE WAS AGREED TO DID NOT SATISFY THE STATUTE OF FRAUDS, SELLER WAS FREE TO BACK OUT AND SEEK A HIGHER PRICE)/STATUTE OF FRAUDS (REAL ESTATE, HE EMAIL EXCHANGE IN WHICH THE PURCHASE PRICE WAS AGREED TO DID NOT SATISFY THE STATUTE OF FRAUDS, SELLER WAS FREE TO BACK OUT AND SEEK A HIGHER PRICE)/CONTRACT LAW (REAL ESTATE, STATUTE OF FRAUDS, THE EMAIL EXCHANGE IN WHICH THE PURCHASE PRICE WAS AGREED TO DID NOT SATISFY THE STATUTE OF FRAUDS, SELLER WAS FREE TO BACK OUT AND SEEK A HIGHER PRICE)

June 7, 2017

Abuse of Process, Attorneys, Contract Law, Real Estate

ABUSE OF PROCESS AND ATTORNEY’S FEES COUNTERCLAIMS PROPERLY DISMISSED IN THIS DISPUTE BETWEEN BROKERS OVER A COMMISSION, CRITERIA FOR BOTH COUNTERCLAIMS EXPLAINED.

In a dispute between real estate brokers over plaintiff’s entitlement to a percentage of a commission, the Second Department determined defendants’ counterclaims for abuse of process, prima facie tort, tortious interference with prospective business relations, and attorney’s fees were properly dismissed. The (unsuccessful) claim for attorney’s fees was based upon language in a real estate policy and procedure manual the language of which was deemed too vague to supplant the general rule that parties are responsible for their own attorney’s fees. With regard to the abuse of process and attorney’s fees claims, the court explained:

“The three essential elements of the tort of abuse of process are (1) regularly issued process, either civil or criminal, (2) an intent to do harm without excuse or justification, and (3) use of the process in a perverted manner to obtain a collateral objective'” … . “[T]he gist of the tort is the improper use of process after it is issued’ by an unlawful interference with one’s person or property'”… . Here, the gravamen of the first counterclaim was that the plaintiff initiated this lawsuit with the intent to harm the defendants, knowing that the brokerage community would find out about the lawsuit, which would damage the defendants’ ability to do business in that community. However, “the institution of a civil action by summons and complaint is not legally considered process capable of being abused” … . Moreover, there was no allegation that the plaintiff improperly used process after it was issued. Furthermore, “a malicious motive alone does not give rise to a cause of action to recover damages for abuse of process” … . * * *

In the fourth counterclaim the defendants sought to recover attorneys’ fees incurred in defending this action pursuant to a provision in their “Policy & Procedure Manual,” which states, inter alia, that “[i]f a dispute arises due to a commission and a legal action is commenced as a result thereof, the costs of the legal action will be deducted from the fee collected,” and “[i]f [a] suit is a result of an agent’s action, he/she will be responsible for payment of damages incurred as a result.” Since “a promise by one party to a contract to indemnify the other for attorney’s fees incurred in litigation between them is contrary to the well-understood rule that parties are responsible for their own attorney’s fees, the court should not infer a party’s intention to waive the benefit of the rule unless the intention to do so is unmistakably clear from the language of the promise” … . Here, the provision relied upon by the defendants is vague, and a promise by the plaintiff to indemnify the defendants for attorneys’ fees incurred in litigation between them cannot be clearly implied from the language and purpose of the entire manual. Goldman v Citicore I, LLC, 2017 NY Slip Op 03156, 2nd Dept 4-26-17

REAL ESTATE (ABUSE OF PROCESS AND ATTORNEY’S FEES COUNTERCLAIMS PROPERLY DISMISSED IN THIS DISPUTE BETWEEN BROKERS OVER A COMMISSION, CRITERIA FOR BOTH COUNTERCLAIMS EXPLAINED)/INTENTIONAL TORTS (ABUSE OF PROCESS AND ATTORNEY’S FEES COUNTERCLAIMS PROPERLY DISMISSED IN THIS DISPUTE BETWEEN BROKERS OVER A COMMISSION, CRITERIA FOR BOTH COUNTERCLAIMS EXPLAINED)/ABUSE OF PROCESS (ABUSE OF PROCESS AND ATTORNEY’S FEES COUNTERCLAIMS PROPERLY DISMISSED IN THIS DISPUTE BETWEEN BROKERS OVER A COMMISSION, CRITERIA FOR BOTH COUNTERCLAIMS EXPLAINED)/COMMISSIONS (REAL ESTATE, ABUSE OF PROCESS AND ATTORNEY’S FEES COUNTERCLAIMS PROPERLY DISMISSED IN THIS DISPUTE BETWEEN BROKERS OVER A COMMISSION, CRITERIA FOR BOTH COUNTERCLAIMS EXPLAINED)

April 26, 2017

Appeals, Contract Law, Real Estate

BUYER NOT ENTITLED TO RETURN OF DEPOSIT, BUYER DID NOT COMPLY WITH THE MORTGAGE CONTINGENCY PROVISIONS OF THE PURCHASE AGREEMENT AND DID NOT ACT IN GOOD FAITH, APPELLATE COURT SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO SELLERS.

The Second Department, reversing Supreme Court, searched the record and awarded summary judgment to the defendants-sellers in this action to recover the deposit for a home purchase. The court found the buyer did not comply with the mortgage contingency provisions of the purchase agreement and misled the sellers, not informing them of the rejection of his mortgage applications:

… [T]he Supreme Court erred in determining that the buyer had made a prima facie showing of entitlement to judgment as a matter of law. The correspondence submitted by the buyer on renewal demonstrated, among other things, that the seller agreed to the buyer’s initial request to extend the commitment date but refused to consider his request for a second extension of the commitment date until the buyer provided copies of his loan applications and declinations. Additionally, this new evidence demonstrated that when the buyer sought an extension of the commitment date, he did not advise the seller of the fact that he had already been rejected by more than one lender. Contrary to the buyer’s contention, the evidence demonstrated that the buyer failed to comply with several provisions of the mortgage contingency clause in the contract … , and acted in bad faith in obtaining an extension of the commitment date by misleading the seller about the fact that multiple lenders rejected his mortgage loan applications based on his “delinquent credit obligations” and the lenders’ inability to verify his income. * * *

This Court has the authority to search the record and award summary judgment to a nonmoving party with respect to issues that were the subject of the motion before the Supreme Court … . Under the unique and compelling circumstances of this case, and given the wealth of evidence which supports judgment in favor of the defendants, we search the record and award summary judgment to the defendants dismissing the complaint … . Kweku v Thomas, 2016 NY Slip Op 08051, 2nd Dept 11-30-16

REAL ESTATE (BUYER NOT ENTITLED TO RETURN OF DEPOSIT, BUYER DID NOT COMPLY WITH THE MORTGAGE CONTINGENCY PROVISIONS OF THE PURCHASE AGREEMENT AND DID NOT ACT IN GOOD FAITH, APPELLATE COURT SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO SELLERS)/CONTRACT LAW (REAL ESTATE PURCHASE CONTRACT, BUYER NOT ENTITLED TO RETURN OF DEPOSIT, BUYER DID NOT COMPLY WITH THE MORTGAGE CONTINGENCY PROVISIONS OF THE PURCHASE AGREEMENT AND DID NOT ACT IN GOOD FAITH, APPELLATE COURT SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO SELLERS)/APPEALS (SUMMARY JUDGMENT, BUYER NOT ENTITLED TO RETURN OF DEPOSIT, BUYER DID NOT COMPLY WITH THE MORTGAGE CONTINGENCY PROVISIONS OF THE PURCHASE AGREEMENT AND DID NOT ACT IN GOOD FAITH, APPELLATE COURT SEARCHED THE RECORD AND AWARDED SUMMARY JUDGMENT TO SELLERS)

November 30, 2016

Evidence, Real Estate

HOMEOWNERS ASSOCIATION’S EXERCISE OF RIGHT OF FIRST REFUSAL PROPER UNDER THE BUSINESS JUDGMENT RULE.

The Second Department determined Supreme Court properly rejected plaintiffs’ challenge of defendant homeowners association’s exercise of a right of first refusal. Plaintiffs had entered a purchase contract for a home within the association, but, pursuant the provisions of the purchase contract and the association’s declaration and restrictive covenants (Declaration), the association purchased the property. Applying the business judgment rule, the Second Department held the association had the authority to purchase the home:

In reviewing the actions of a homeowners’ association, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the association … . The business judgment doctrine does not apply when a board acts outside the scope of its authority … . * * *

The contract … specifically provided that the purchaser acknowledged that the transaction was subject to the waiver, or deemed waiver, of the right of first refusal held by the Association as set forth in the Declaration. Further, the Board, on behalf of the Association, exercised the right of first refusal within the time period set forth in the Declaration. 19 Pond, Inc. v Goldens Bridge Community Assn., Inc., 2016 NY Slip Op 05979, 2nd Dept 9-14-16

REAL ESTATE (HOMEOWNERS ASSOCIATION’S EXERCISE OF RIGHT OF FIRST REFUSAL PROPER UNDER THE BUSINESS JUDGMENT RULE)/EVIDENCE (HOMEOWNERS ASSOCIATION’S EXERCISE OF RIGHT OF FIRST REFUSAL PROPER UNDER THE BUSINESS JUDGMENT RULE)/BUSINESS JUDGMENT RULE (HOMEOWNERS ASSOCIATION’S EXERCISE OF RIGHT OF FIRST REFUSAL PROPER UNDER THE BUSINESS JUDGMENT RULE)

September 14, 2016

Civil Procedure, Contract Law, Real Estate

ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH.

The First Department determined the down payment bearing interest at the rate agreed to in the (real estate) contract was the exclusive remedy. The court should not have awarded interest at the statutory rate:

The contract's terms, requiring that the down payment be placed in an interest-bearing account, so that the party entitled to the down payment would receive compensation for the deprivation of its use of the money in the form of accrued interest, were sufficiently clear to establish that interest paid at the statutory rate was not contemplated by the parties at the time the contract was formed and that the amount escrowed, including interest earned, should be the exclusive remedy to the wronged party … . Ithilien Realty Corp. v 176 Ludlow, LLC, 2016 NY Slip Op 04002, 1st Dept 5-24-16

CIVIL PROCEDURE (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)/CONTRACT LAW (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)/REAL ESTATE (ERROR TO IMPOSE PRE-JUDGMENT INTEREST AT THE STATUTORY RATE WHEN CONTRACT PROVIDED THAT THE INTEREST-BEARING DOWNPAYMENT WAS THE EXCLUSIVE REMEDY FOR BREACH)

May 24, 2016

Contract Law, Real Estate

ACTION TO RESCIND A PURCHASE CONTRACT CONSTITUTED AN ANTICIPATORY BREACH OF THE CONTRACT WHICH RELIEVED SELLERS OF ANY FURTHER OBLIGATIONS AND ENTITLED SELLERS TO RETAIN THE DEPOSIT.

The First Department, in a full-fledged opinion by Justice Acosta, determined plaintiff-buyer’s action to rescind a real estate purchase contract before the final closing date constituted an anticipatory breach which relieved defendants-sellers of any further obligations called for by the purchase contract, including the acquisition of development approvals. The case raised two questions of first impression: (1) whether a rescission action by a buyer constitutes an anticipatory breach or repudiation of a purchase contract; and (2) whether such a breach relieves the seller of having to demonstrate it was ready, willing and able to close on the closing date. Both questions were answered in the affirmative and the sellers were entitled to retain the deposit and certain additional fees called for by the contract:

We … agree with the motion court that, by “commencing this lawsuit [before the Final Closing Date] and seeking the particular relief of rescission of the Amendment and abatement of the purchase price, [plaintiff] unequivocally notified the … defendants of its intention to renounce its contractual duties” … . Plaintiff did not simply seek to define its rights under the parties’ agreement; it sought to nullify the agreement entirely. * * *

The contract required defendants to obtain the development approvals as a condition precedent to closing, but defendants were absolved of that obligation upon plaintiff’s anticipatory breach. Whether defendants were in fact “on track” to obtain the approvals by the closing date is of no moment; the record demonstrates that they had been engaged in significant efforts to obtain the approvals until plaintiff’s repudiation, and it was possible, however unlikely, that they could have obtained the approvals before the Final Outside Closing Date (which the parties had been extending on a monthly basis). They were not required to continue to pursue the approvals after plaintiff repudiated the contract by commencing the instant action seeking rescission … . Once plaintiff commenced the instant action, it would have been futile and wasteful for defendants to continue to seek the approvals in preparation for a closing that plaintiff was tirelessly seeking to avoid. Princes Point LLC v Muss Dev. L.L.C., 2016 NY Slip Op 00783, 1st Dept 2-4-16

CONTRACT LAW (RESCISSION ACTION IS AN ANTICIPATORY BREACH)/REAL ESTATE (BUYER’S ACTION TO RESCIND A PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH WHICH RELIEVES SELLER OF ANY FUTHER CONTRACTUAL OBLIGATIIONS)/RESCISSION (ACTION TO RESCIND A REAL ESTATE PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)/ANTICIPATORY BREACH (ACTION TO RESCIND A REAL ESTATE PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)/PURCHASE AGREEMENT, REAL ESTATE (ACTION TO RESCIND PURCHASE AGREEMENT IS AN ANTICIPATORY BREACH)

February 4, 2016

Real Estate

BROKER NOT ENTITLED TO COMMISSION, MOTION TO SET ASIDE PLAINTIFF’S VERDICT SHOULD HAVE BEEN GRANTED.

The Second Department determined the motion to set aside the jury verdict finding plaintiff was entitled to a broker’s commission for the sale of defendant’s property should have been granted. The court explained the relevant criteria:

To prevail on a cause of action to recover a commission, the broker must establish (1) that it is duly licensed, (2) that it had a contract, express or implied, with the party to be charged with paying the commission, and (3) that it was the procuring cause of the sale … . “[T]he duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue” … . To establish that a broker was the procuring cause of a transaction, the broker must establish that there was “a direct and proximate link, as distinguished from one that is indirect and remote, between the bare introduction and the consummation” … . Where, as here, the broker is not involved in the negotiations leading up to the completion of the deal, the broker must establish that it ” created an amicable atmosphere in which negotiations proceeded or that [it] generated a chain of circumstances that proximately led to the sale'” … . * * *

Here, there was no valid line of reasoning which could have led to the conclusion that the plaintiff was the procuring cause of the sale. Douglas Elliman, LLC v Silver, 2016 NY Slip Op 00675, 2nd Dept 2-3-16

REAL ESTATE (BROKER NOT ENTITLED TO COMMISSION)/BROKERS, REAL ESTATE (NOT ENTITLED TO COMMISSION)/COMMISSIONS, REAL ESTATE (BROKER NOT ENTITLED TO COMMISSION)

February 3, 2016

Civil Procedure, Fraud, Real Estate

AIDING AND ABETTING FRAUD CAUSE OF ACTION AGAINST TITLE INSURANCE COMPANY PROPERLY DISMISSED, THE ALLEGATIONS WERE CONCLUSORY WITH NO SUPPORTING DETAIL.

The Second Department determined a petition to set aside a deed was properly dismissed as against the title insurance company (Fidelity). Fidelity issued a policy to the purchaser of real property which was part of an estate. The petition alleged Fidelity aided and abetted fraud, in that the sale of the insured property was done without the consent of the administrator or Surrogate’s Court. The Second Department held that, absent fraud, a third party could not sue Fidelity for negligence and the allegations of aiding and abetting fraud did not meet pleading requirements:

“[A] title company hired by one party is not, absent evidence of fraud, collusion, or other special circumstance, subject to suit for negligent performance by one other than the party who contracted for its services” … . Contrary to the administrator’s contention, the petition fails to state a cause of action against Fidelity to recover damages for aiding and abetting fraud … . “To plead a cause of action to recover damages for aiding and abetting fraud,” the pleading “must allege the existence of an underlying fraud, knowledge of the fraud by the aider and abettor, and substantial assistance by the aider and abettor in the achievement of the fraud” … . Here, the petition consists of bare, conclusory allegations, without any supporting detail, which do not meet the specificity requirements of CPLR 3016(b) to sufficiently plead the existence of an underlying fraud, knowledge thereof on the part of Fidelity, or substantial assistance in achievement of the fraud … . Matter of Woodson (Clarke), 2016 NY Slip Op 00698, 2nd Dept 2-3-16

FRAUD (CONCLUSORY ALLEGATIONS OF AIDING AND ABETTING FRAUD INSUFFICIENT)/CIVIL PROCEDURE (CONCLUSORY ALLEGATIONS OF AIDING AND ABETTING FRAUD INSUFFICIENT)/REAL ESTATE (TITLE INSURANCE COMPANY HIRED BY ONE PARTY, ABSENT FRAUD, CAN NOT BE SUED FOR NEGLIGENCE BY THIRD PARTY)/TITLE INSURANCE (TITLE INSURANCE COMPANY HIRED BY ONE PARTY, ABSENT FRAUD, CAN NOT BE SUED FOR NEGLIGENCE BY THIRD PARTY)