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QUESTION OF FACT WHETHER AGREEMENT TO ARBITRATE WAS VOID PURSUANT TO REAL PROPERTY LAW 265-b; NOT CLEAR WHETHER DEFENDANT LAW FIRM WAS ACTING AS A CONSULTANT IN A MATTER CONCERNING A DISTRESSED HOME LOAN; IF SO, THE DEFENDANT CAN VOID THE AGREEMENT TO ARBITRATE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there was a question of fact whether defendant law firm was acting as a consultant in matters related to distressed home loans such that any related agreement to arbitrate was void pursuant to Real Properly Law 265-b. Supreme Court had granted the law firm’s motion to compel arbitration:

Real Property Law § 265-b governs the conduct of distressed property consultants. “Distressed property consultant” or “consultant” is defined as “an individual or a corporation, partnership, limited liability company or other business entity that, directly or indirectly, solicits or undertakes employment to provide consulting services to a homeowner for compensation or promise of compensation with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes” … .  A consultant does not include, inter alia, “an attorney admitted to practice in the state of New York when the attorney is directly providing consulting services to a homeowner in the course of his or her regular legal practice” … . Real Property Law § 265-b further provides, in part, that “[a]ny provision in a contract which attempts or purports to require arbitration of any dispute arising under this section shall be void at the option of the homeowner” … .

Here, the plaintiff raised a question of fact as to whether the Donado defendants directly provided consulting services to the plaintiff in the course of the Donado defendants’ regular legal practice … . The plaintiff asserted in his affidavit, among other things, that he never met with an attorney from Donado Law Firm, P.C. … . Inasmuch as the plaintiff raised a question of fact as to whether the Donado defendants were consultants within the meaning of former Real Property Law § 265-b[1][e][i], there is a question of fact as to whether the plaintiff would be allowed to void the arbitration provision … , and a hearing is required. Ventura v Donado Law Firm, P.C., 2020 NY Slip Op 00888, Second Dept 2-5-20

 

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UNRESOLVED QUESTIONS OF FACT CONCERNING WHETHER THE CONSTRUCTION OF A WHOLE FOODS STORE IN THE VICINITY OF A RECREATIONAL TRAIL AND A PUBLIC USE EASEMENT VIOLATES THE PUBLIC TRUST DOCTRINE (FOURTH DEPT). ​

The Fourth Department, reversing (modifying) Supreme Court, determined petitioner’s violation of the public trust doctrine causes of action should not have been dismissed. The action relates to the construction of a Whole Foods store in the vicinity of a recreational trail and a public use easement:

… [T]he court erred by granting a declaration in favor of respondents on petitioner’s … causes of action … which allege violations of the public trust doctrine, because there are unresolved factual issues concerning the impact of the Whole Foods development on a recreational trail known as the Auburn Trail, including whether the development would require the constructive abandonment of the existing public use easements for that trail ,,, , Matter of Brighton Grassroots, LLC v Town of Brighton, 2020 NY Slip Op 00754, Fourth Dept 1-31-20

 

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QUESTION OF FACT WHETHER THE ENCROACHMENT OF A FIRE ESCAPE HOVERING OVER A PORTION OF DEFENDANT’S PROPERTY WAS HOSTILE AND CONTINUOUS FOR THE PRESCRIPTIVE PERIOD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion for summary judgment in this prescriptive easement action should not have been granted. A fire escape on plaintiff’s building hovers over a portion of defendant’s land, which had been used as parking lot. The defendant argued the encroachment by the fire escape was permissive, not hostile, because the fire escape did not interfere with the use of the parking lot. The Second Department held that was question of fact whether a prescriptive easement had been created before the alleged permissive use:

The defendant, in moving, inter alia, for summary judgment declaring that the plaintiff does not have a prescriptive easement, established, prima facie, that the fire escape on the rear of plaintiff’s building that encroaches several feet above the defendant’s property was not hostile, but permissive … . Specifically, the defendant submitted evidence that the fire escape did not interfere with the operation of a parking lot on its property from June 1, 1991, to October 15, 2014. In opposition, however, the plaintiff raised triable issues of fact as to whether the use of the subject fire escape, which hovers over a portion of the defendant’s property, has been adverse, open and notorious, and continuous for the prescriptive period … . The plaintiff asserted that the subject fire escape has been in place since at least 1902, and that the period of prescription could have been satisfied and the easement created by the time of the alleged permissive use … . Barrett v A&P Pac. Owner, LLC, 2020 NY Slip Op 00396, Second Dept 1-22-20

 

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UPON LEARNING THE STATE, BY EFFECTIVELY MISLEADING THE COURT, OBTAINED A JUDGMENT DETERMINING IT OWNED LAND IN THE ADIRONDACK PARK, THE COURT PROPERLY EXERCISED ITS DISCRETION TO VACATE THE JUDGMENT PURSUANT TO CPLR 5015 (THIRD DEPT).

The Third Department determined Supreme Court properly vacated a judgment pursuant to CPLR 5015 in the interests of substantial justice because plaintiff (the State of New York) had misled the court in proceedings leading to the judgment that it owned land in the Adirondack Park:

Plaintiff argued at trial that, although it could not identify the specific instrument that gave it a superior claim to the parcel at issue, several instruments granted it title to most of Township 40 and that the parcel “was not included within the bounds of any exception” …  Plaintiff was aware that the success of this argument would threaten the claims of hundreds of individuals to land in Township 40, and misrepresented to Supreme Court that it would rely upon a judgment in this action to bring RPAPL article 15 actions against those individuals. Upon succeeding, plaintiff instead enforced the 2001 judgment against defendants alone … . It … became evident that plaintiff sought the 2001 judgment despite the doubts … regarding its ownership claims in Township 40 … . Plaintiff subjected defendants to selectively harsh treatment under a judgment about which it harbored doubts, in other words, and Supreme Court stated that it would not have granted the judgment had plaintiff taken the legal position it later adopted. Supreme Court did not abuse its discretion in finding that these circumstances afforded sufficient reason to vacate the 2001 judgment in the interest of substantial justice … . State of New York v Moore, 2020 NY Slip Op 00008, Third Dept 1-2-10

 

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THE JURY WAS WRONGLY INSTRUCTED ON THE INFERENCE WHICH CAN BE DRAWN ABOUT THE LOCATION OF A BOUNDARY LINE FROM A SURVEY MAP FILED FOR MORE THAN 10 YEARS; VERDICT FINDING PLAINTIFF HAD WRONGLY SET THE PROPERTY BOUNDARY REVERSED (THIRD DEPT).

The Third Department, reversing the jury verdict finding that plaintiff had incorrectly set the western boundary of his property, held that the jury was wrongly instructed:

The jury received defective instructions as to the application of CPLR 4522. In that regard, Supreme Court charged the jury that “[a] 2002 survey map prepared by Surveyor Dickinson is in evidence. The survey was filed in 2002 with the Rensselaer County Clerk. The law provides that a map which has been on file with the County [Clerk] for more than [10] years is presumed to be accurate unless rebutted by other credible survey or expert opinion. In deciding whether the presumption of accuracy of the 2002 survey has been rebutted by other evidence you will apply the rules that I have already given you and will continue to give you about the evaluation of evidence.”

CPLR 4522 states that “[a]ll maps, surveys and official records affecting real property, which have been on file in the state in the office of . . . any county clerk . . . for more than [10] years, are prima facie evidence of their contents.” In analyzing similar statutory language from another hearsay exception contained in the same article of the CPLR, the Court of Appeals held that “[p]resumptive evidence[] is, . . . like the prima facie evidence to which CPLR 4518 (c) refers, evidence which permits but does not require the trier of fact to find in accordance with the presumed fact, even though no contradictory evidence has been presented. It is, in short, not a presumption which must be rebutted but rather an inference, like the inference of negligence denominated res ipsa loquitor” … .

Supreme Court’s charge required the jury to locate the western boundary of plaintiff’s property as depicted in the 2002 survey unless plaintiff offered evidence that rebutted the survey’s presumed accuracy. The jury should have been instructed that, in the absence of contradictory evidence, it was permitted but not required to adopt the western boundary as depicted in the 2002 survey. Hence, Supreme Court committed reversible error because the effect of the charge was to improperly require plaintiff to disprove the alleged accuracy of the 2002 survey map … . Kennedy v Nimons, 2019 NY Slip Op 09332, Third Dept 12-26-19

 

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CLAIMANT COULD NOT SEEK COMPENSATION FOR PERIODIC FLOODING OF HIS LOT UNDER THE EMINENT DOMAIN PROCEDURE LAW; THERE WAS NO DE JURE TAKING BY THE CITY, AND THE CRITERIA FOR INVERSE CONDEMNATION WERE NOT MET (FIRST DEPT).

The First Department, reversing Supreme Court, determined claimant’s action for damages based upon the periodic flooding claimant’s lot, over which the city had an easement, should have been dismissed. Claimant alleged the city had appropriated the easement by causing flooding:

… Claimant filed a notice of claim pursuant to Eminent Domain Procedure Law (EDPL) § 503, asserting a claim for appropriation of an easement over its lot. In 2015, claimant alleged for the first time that the bridge construction was causing flooding of its property. In 2017, claimant submitted the appraisal at issue in this appeal, prepared by Cushman & Wakefield, which determined that during a 31-month period from November 2014 through May 2017, claimant’s property and the non-exclusive access easement became flooded after rainfall. It attributed the flooding to a drainage pipe in the access easement area that became blocked by cement during construction of the new bridge. The appraisal provides that subsequent to the discovery of the flooding, claimant leased out its property and received rental income. Claimant’s alleged flooding damages, as set forth in the appraisal, consist of reduced rental income and the inability to develop residential towers on the property. * * *

Because claimant’s property was not subject to a de jure taking by the City, it may not pursue a claim to recover just compensation or consequential damages resulting from the flooding in this eminent domain valuation proceeding … . * * *

“In a modern inverse condemnation action, an owner whose property has been taken de facto may sue the entity that took it to obtain just compensation, and if the action is successful the defendant has no choice in the matter — the compensation must be paid” … .

The claim here for inverse condemnation is legally flawed, since the interference with claimant’s property rights, as set forth in its own appraisal report, is not sufficiently permanent to constitute a de facto taking as a matter of law … . Matter of Willis Ave. Bridge Replacement, 2019 NY Slip Op 08162, First Dept 11-12-19

 

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THE ESTATE OF A JOINT TENANT WAS NOT A NECESSARY PARTY IN THE FORECLOSURE ACTION BECAUSE THE INTEREST IN THE PROPERTY PASSED UPON DEATH, THE ESTATE’S MOTION TO INTERVENE PROPERLY DENIED (SECOND DEPT).

The Second Department determined the estate’s motion to intervene in a foreclosure proceeding was properly denied. When Sydney Burt, a joint tenant with right of survivorship, died, his interest in the property subject to the foreclosure action passed to the joint tenant, Karyn Berkley, and not to Sydney’s estate. Therefore the estate did not have the right to intervene in the foreclosure:

… [T]he issue of whether the proposed intervenor was a necessary party in the action was determined on the merits by the Supreme Court in its order … , wherein it denied the defendant’s motion, inter alia, to dismiss the complaint for failure to join the proposed intervenor. Thus, the parties had a full and fair opportunity to litigate the issue of whether the proposed intervenor was a necessary party. … [W]e agree with the Supreme Court’s determination to deny intervention. New York defines a joint tenancy as “an estate held by two or more persons jointly, with equal rights to share in its enjoyment during their lives, and creating in each joint tenant a right of survivorship” … . “The right of survivorship has been defined as a right of automatic inheritance’ where, upon the death of one joint tenant, the property does not pass through the rules of intestate succession, but is automatically inherited by the remaining tenant” … . Therefore, when one joint tenant dies, the other joint tenants automatically inherit the property. This is in marked contrast to tenancies in common which allow a decedent’s share of property to pass under the rules of inheritance … . Thus, here, upon the Sydney Burt’s death, his interest in the property did not pass to his estate, the proposed intervenor; rather, it automatically passed to the remaining joint tenants, the defendant and Berkley. Therefore, the proposed intervenor was not a necessary party and did not have the right to intervene in the foreclosure action. PHH Mtge. Corp. v Burt, 2019 NY Slip Op 07802, Second Dept 10-30-19

 

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THE DEATH OF A PARTY TO THIS FORECLOSURE ACTION AFFECTED THE MERITS OF THE CASE; SUPREME COURT DID NOT HAVE JURISDICTION TO DETERMINE DEFENDANT’S MOTION AND THE RELATED ORDER IS A NULLITY; THE APPEAL THEREFORE MUST BE DISMISSED (THIRD DEPT).

The Third Department determined the death of a party to this foreclosure proceeding deprived the court of jurisdiction. Therefore the court should not have considered defendant’s motion and the related order was a nullity:

In 2003, defendant Sharon A. Harris (hereinafter defendant) and defendant Marion D. Schubnel executed a note in favor of plaintiff that was secured by a mortgage on real property located in Albany County. Defendant and Schubnel owned the subject property as joint tenants with rights of survivorship. …

… [P]laintiff commenced this mortgage foreclosure action against defendant and Schubnel, among others. Defendant served an answer but Schubnel failed to do so. In November 2016, Schubnel died. In July 2017, defendant moved for leave to serve an amended answer and, as relevant here, sought to add a statute of limitations affirmative defense. In an amended order entered November 2017, Supreme Court granted the motion and sua sponte dismissed the complaint as time-barred. …

The death of a party generally stays an action until a personal representative is substituted for the deceased party … . Strict adherence to this rule, however, is unnecessary where a party’s demise does not affect the merits of the case … .

It is true that defendant, as the surviving joint tenant, obtained Schubnel’s interest in the subject property upon Schubnel’s death. Notwithstanding this transfer of interest, Schubnel’s estate can still be held liable for any deficiency in the event that a sale of the subject property fails to satisfy the debt. Indeed, the complaint specifically requests that such relief be granted should it be necessary … . In the absence of a substitution of Schubnel, a discontinuance of the action insofar as asserted against Schubnel or a representation by plaintiff that it would be waiving its right to seek a deficiency judgment against Schubnel, the death of Schubnel affects the merits of the case … . Because an automatic stay was in effect upon Schubnel’s death, Supreme Court was without jurisdiction to consider defendant’s motion and, therefore, the November 2017 amended order is a nullity … . Wells Fargo Bank, N.A. v Schubnel, 2019 NY Slip Op 07462, Third Dept 10-17-19

 

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ACTION AGAINST GAS COMPANY FOR CONTAMINATION OF REAL PROPERTY ACCRUED WHEN INJURY SHOULD HAVE BEEN DISCOVERED AND WAS TIME BARRED; ACTION FOR NUISANCE RELATING TO REMEDIATION EFFORTS, HOWEVER, IS SUBJECT TO A DIFFERENT STATUTE OF LIMITATIONS PROVISION AND WAS NOT TIME-BARRED (SECOND DEPT).

The Second Department determined the causes of action against a gas company to recover damages for contamination of real property were time-barred, but the nuisance actions stemming from remediation efforts were not time-barred:

“Generally, an action to recover damages for personal injury or injury to property must be commenced within three years of the injury” … . “[T]he three year period within which an action to recover damages for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances,” however, “shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier” (CPLR 214-c[2] …). “For purposes of CPLR 214-c, discovery occurs when, based upon an objective level of awareness of the dangers and consequences of the particular substance, the injured party discovers the primary condition on which the claim is based'” … .  …

… [T]he defendants here demonstrated that they undertook extensive efforts beginning in 1999 to inform and engage with property owners potentially affected by the contamination and remediation by conducting, among other things, door-to-door canvassing, direct mailings of newsletters and fact sheets, numerous public meetings, and highly visible and disruptive remediation work. The defendants also inspected the subject property twice in 2005 to determine whether certain remediation work between those inspections caused any damage, and mailed the results of their inspections to the plaintiff in 2006. … The defendants … established, prima facie, that the plaintiff should have discovered, through the exercise of reasonable diligence, the primary condition upon which its exposure-related claims were based prior to January 22, 2007 … . …

We disagree, however, with the Supreme Court’s determination that the causes of action to recover damages for public and private nuisance allegedly arising from the defendants’ remediation work were time-barred … . These causes of action are subject to the limitations period in CPLR 214(4) rather than CPLR 214-c(2) because they do not seek “to recover damages for personal injury or injury to property caused by the latent effects of exposure” … .  Here, the papers submitted in support of the defendants’ motion demonstrated that there was no dispute that the defendants conducted remediation work in close proximity to the subject property shortly after new tenants signed a lease to occupy the space in 2008 … . Onder Realty, Inc. v Keyspan Corp., 2019 NY Slip Op 07406, Second Dept 10-16-19

 

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ALTHOUGH THE EASEMENT WAS NOT RECORDED IN PLAINTIFF’S DIRECT CHAIN OF TITLE, IT WAS INDEXED UNDER A BLOCK AND LOT NUMBER SYSTEM, THEREFORE PLAINTIFF HAD CONSTRUCTIVE NOTICE OF THE EASEMENT AND WAS NOT A BONA FIDE PURCHASER (FIRST DEPT). ​

The First Department, in a detailed opinion by Justice Friedman, determined a reasonable title search would have turned up an easement on the subject property. Therefore, plaintiff was not a bona fide purchaser of the empty lot (57 Crosby). The interesting opinion is too detailed to fairly summarize here. The following excerpt provides the flavor of the reasoning:

The question presented … is whether plaintiff, when it purchased 57 Crosby in 2011, had constructive notice of the 1981 easement, notwithstanding that the indexing of the easement had not been changed by the City Register when 57 Crosby was subdivided from Lot 30 in 1984 and reassigned its previous designation of Lot 9.

… [T]he answer to the foregoing question does not turn on whether the 1981 easement would have been found in a search in 2011 of the direct chain of title to 57 Crosby. Almost 40 years ago, the Court of Appeals held that “the rule limiting constructive notice to recorded conveyances that are within the purchaser’s direct chain of title” does not apply “to instances in which the purchaser had access to a block and lot’ or tract indexing system,” such as the one in use in New York City … . … “[I]n counties using a block and lot’ indexing system, a purchaser is charged with record notice of all matters indexed under the block and lot numbers corresponding to the purchaser’s property, regardless of whether such information also appears in his or her direct chain of title” … . Thus, although … the 1981 easement was not recorded within plaintiff’s direct chain of title, that circumstance has no bearing on the outcome of this appeal … . Akasa Holdings, LLC v 214 Lafayette House, LLC, 2019 NY Slip Op 06447, First Dept 9-3-19

 

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