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THE CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY ISSUED BY THE FEDERAL ENERGY REGULATORY COMMISSION (FERC) EXEMPTED THE GAS PIPELINE COMPANY FROM ANY REVIEW REQUIREMENTS OF THE EMINENT DOMAIN PROCEDURE LAW (EDPL); THE COMPANY WAS FREE TO EXERCISE EMINENT DOMAIN OF THE LAND IN DISPUTE (CT APP).

The Court of Appeals, reversing the Appellate Division, in a full-fledged opinion by Judge Stein, over a two-judge dissent, determined that the certificate of public convenience and necessity issued to petitioner, National Fuel Gas Supply, for construction of a gas pipeline, exempted National Fuel from any requirements of the Eminent Domain Procedure Law (EDPL). Therefore National Fuel did not need to comply with the notice and hearing requirements of the EDPL before exercising eminent domain of the land in dispute:

In 2017, the Federal Energy Regulatory Commission issued a certificate of public convenience and necessity to petitioner National Fuel Gas Supply for its proposed construction of a 99-mile natural gas pipeline spanning from Pennsylvania to Western New York. … [t]his certificate …—which did not condition National Fuel’s eminent domain power on receipt of a water quality certification and which remained valid and operative at all relevant times despite the New York State Department of Environmental Conservation’s intervening denial of National Fuel’s application for such a certification—exempted National Fuel from the public notice and hearing provisions of article 2 of the Eminent Domain Procedure Law (EDPL) in accordance with EDPL 206 (A). …

The question before us distills to whether the certificate of public convenience and necessity issued by the Federal Energy Regulatory Commission (FERC) to National Fuel satisfies EDPL 206 (A) so as to entitle National Fuel to exercise eminent domain over the land in dispute without undertaking additional review of the pipeline’s public benefit. If satisfied, EDPL 206 (A) excuses compliance with various provisions of EDPL article 2 where a proposed condemnor has successfully completed a review of the project’s public benefit and use before a state, federal, or local agency. * * *

… [W]here, as here, a gas company holds a valid certificate of public convenience or necessity from FERC for the proposed construction of a pipeline and that certificate places no relevant conditions on the eminent domain power and has not been stayed or revoked by FERC or a federal court properly reviewing its issuance, compliance with article 2 is excused under EDPL 206 (A). Matter of National Fuel Gas Supply Corp. v Schueckler, 2020 NY Slip Op 03563, CtApp 6-25-20

SUMMARY OF THE FOURTH DEPARTMENT DECISION REVERSED BY THE COURT OF APPEALS ON JUNE 25, 2020

ALTHOUGH THE FEDERAL ENERGY REGULATORY COMMISSION (FERC) APPROVED THE GAS PIPELINE, THE STATE DID NOT ISSUE A WATER QUALITY CERTIFICATION (WQC) FOR THE PROJECT, THEREFORE THE PIPELINE COMPANY CAN NOT SEEK EASEMENTS OVER PRIVATE LAND PURSUANT TO THE EMINENT DOMAIN PROCEDURE LAW (EDPL) TO INSTALL THE PIPELINE (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice NeMoyer, over a two-justice dissent, considering a matter of first impression, reversing Supreme Court, determined that a gas supply company could not acquire easements over private property by eminent domain for the installation of a pipeline for which the state denied a permit:

In February 2017, the FERC [Federal Energy Regulatory Commission] granted petitioner’s application for a certificate of public convenience and necessity to construct and operate a 97-mile natural gas pipeline from Pennsylvania into western New York. The pipeline’s proposed route travels directly across respondents’ land … . Within the voluminous certificate, the FERC found that petitioner’s “proposed [pipeline] project is consistent with the Certificate Policy Statement,” i.e., the public interest. “Based on this finding and the environmental review for the proposed project,” the FERC further found “that the public convenience and necessity require approval and certification of the project.” …

… [T]he New York State Department of Environmental Conservation (DEC) denied petitioner’s application for a WQC [water quality certification]. The WQC application, held the DEC, “fails to demonstrate compliance with New York State water quality standards.” Petitioner has taken various steps to challenge the WQC denial, including the filing of a petition for judicial review in the Second Circuit pursuant to 15 USC § 717r (d). It appears that those challenges have not yet been finally resolved. It is undisputed, however, that if the WQC denial is ultimately upheld, the pipeline cannot be built … . * * *

… [P]etitioner is trying to expropriate respondents’ land in furtherance of a pipeline project that, as things currently stand, cannot legally be built. Such an effort turns the entire concept of eminent domain on its head. If the State’s WQC denial is finally annulled or withdrawn, then petitioner can file a new vesting petition. But until that time, petitioner cannot commence a vesting proceeding to force a sale without going through the entire EDPL [Eminent Domain Procedure Law] article 2 process. Matter of National Fuel Gas Supply Corp. v Schueckler, 2018 NY Slip Op 07550, Fourth Dept 11-9-18

 

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THE TITLE INSURANCE POLICY GAVE THE INSURER THE RIGHT TO PROSECUTE A TITLE CLAIM BUT NOT THE OBLIGATION TO PROSECUTE A TITLE CLAIM; THEREFORE PLAINTIFF’S COMPLAINT ALLEGING DEFENDANT BREACHED THE POLICY BY NOT PROSECUTING THE CLAIM SHOULD HAVE BEEN DISMISSED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff’s action against a title insurance company should have been dismissed based upon the language of the policy. Plaintiff had requested that defendant take action against a party plaintiff believed was using plaintiff’s land. Defendant refused. The title insurance policy gave defendant the right but not the obligation to bring such an action:

A dismissal of a complaint pursuant to CPLR 3211 (a) (1) is warranted if “the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law” … . Plaintiffs alleged that defendant breached section 5 (b) of the policy, which provides, in relevant part, that defendant “shall have the right . . . to institute and prosecute any action or proceeding or to do any other act that in its opinion may be necessary or desirable to establish the Title, as insured, or to prevent or reduce loss or damage to the Insured.” Defendant’s “right” to prosecute an action is not equivalent to an “obligation” … . Inasmuch as the policy submitted by defendant on the motion did not require defendant to prosecute the action against the property owner, defendant is entitled to dismissal of the complaint insofar as it sought attorneys’ fees and costs that plaintiffs had already incurred for the prosecution of that action … . We further conclude that defendant is entitled to a declaration that it is not obligated to pay for the attorneys’ fees and costs necessary to prosecute that action in the future … . Irma Straus Realty Corp. v Old Republic Natl. Tit. Ins. Co., 2020 NY Slip Op 03307, Fourth Dept 6-12-20

 

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THE HOLDER OF A DEED INTENDED AS SECURITY IN THE NATURE OF A MORTGAGE MUST PROCEED BY FORECLOSURE TO EXTINGUISH THE MORTGAGOR’S INTEREST; HERE THE SUBSEQUENT GOOD FAITH PURCHASERS OF THE PROPERTY WERE ENTITLED TO SUMMARY JUDGMENT DISMISSING THE MORTGAGEE’S CAUSES OF ACTION SEEKING RESCISSION OF THEIR DEED AND A DECLARATION THEIR DEED WAS NULL AND VOID (SECOND DEPT).

The Second Department determined a deed which facially appears to evidence an absolute conveyance was actually intended as security in the nature of a mortgage. The holder of such a deed (here American Lending) must proceed by foreclosure to extinguish the mortgagor’s interest. The subsequent purchasers of the property (the Romond defendants) were good faith purchasers. Therefore the Romond defendants were entitled to dismissal of American Lending’s complaint seeking rescission of the Romond deed and a declaration the deed was null and void:

In 2009, the defendant Dana Grigg sought to purchase certain property … . When financing for the transaction fell through, Grigg entered into an … agreement with the plaintiff, American Lending Corp. … to borrow … $385,000. The terms of the loan, which were memorialized in a note, included a provision that after 90 days, if the loan had not been repaid in full, American Lending would be authorized to file a joint deed in the property records and to “seek a Summary Judgment instead of following a regular foreclosure proceedings [sic].” In June 2009, Grigg purchased the subject property and executed … a deed from himself to himself and American Lending (… the joint deed). Grigg subsequently defaulted under the terms of the loan. * * *

Real Property Law § 320 provides, in pertinent part, that a “deed conveying real property, which, by any other written instrument, appears to be intended only as a security in the nature of a mortgage, although an absolute conveyance in terms, must be considered a mortgage” … .  … “The holder of a deed given as security must proceed in the same manner as any other mortgagee—by foreclosure and sale—to extinguish the mortgagor’s interest” … .

… [T]he Romond defendants established … that the joint deed was given as security for the loan from American Lending to Grigg. Therefore, pursuant to Real Property Law § 320, the joint deed must be considered a mortgage, and American Lending’s sole remedy for Grigg’s breach of its terms was to commence an action sounding in foreclosure. Moreover, under the circumstances at bar, the Romond defendants established that they were good faith purchasers of the subject property (see Real Property Law § 290 …). American Lending Corp. v Grigg, 2020 NY Slip Op 03211, Second Dept 6-10-20

 

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PUBLIC VERSUS PRIVATE NUISANCE EXPLAINED; BECAUSE DEFENDANTS SOLD THEIR PROPERTY, THE APPEAL RELATED TO THE INJUNCTION CAUSE OF ACTION WAS MOOT (THIRD DEPT).

The Third Department determined plaintiffs’ private nuisance cause of action should not have been dismissed, but the public nuisance cause of action was properly dismissed. The Third Department noted that, because defendants’ property had been sold, the injunction aspect of the case was moot. The defendants had put in a parking area and a retaining wall which plaintiffs’ alleged blocked their view of oncoming traffic making it dangerous for plaintiffs’ to pull out from their driveway:

Plaintiffs’ complaint alleges that defendants paved a significant area of their front yard and proceeded to park cars and trucks thereon, and, as a result, their view of oncoming traffic was significantly hindered when they used their driveway. As a consequence, they claimed that they suffered great anxiety, as they continually worried about being in a traffic accident. What plaintiffs can ultimately prove, or whether damages of this sort are recoverable, is not our concern when determining a motion to dismiss for failure to state a cause of action … . Rather, “the dispositive inquiry is whether plaintiffs have a cause of action and not whether one has been stated, i.e., whether the facts as alleged fit within any cognizable legal theory” … . Here, after applying the strict standards of a pre-answer motion to dismiss, we conclude that Supreme Court erred in dismissing plaintiffs’ cause of action for private nuisance.

… “A public nuisance is actionable by a private person only if it is shown that the person suffered special injury beyond that suffered by the community at large” … . Plaintiffs have not alleged that defendants interfered with the use of a public place or public rights. The complaint alleges that plaintiffs and the public (pedestrian, cyclist or motorist) are at risk of suffering a collision. “[W]here the claimed injury is common to the entire community, a private right of action is barred” … . Moreover, we find without merit plaintiffs’ claim that they suffer a special damage in that they will suffer liability as a result of any collision that might occur. Even were we to conclude that this claim is not completely speculative, the injury proposed by plaintiffs is not different in kind, but merely in degree, to that which may be suffered by the public as a whole. As such, it does not qualify as a “special injury” so as to allow plaintiffs to bring a public nuisance cause of action … . Duffy v Baldwin, 2020 NY Slip Op 02836, Third Dept 5-14-20

 

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GENERAL OBLIGATIONS LAW 5-703 GIVES AN EQUITY COURT THE POWER TO ENFORCE AN ORAL CONTRACT FOR THE PURCHASE OF REAL PROPERTY; THE CAUSES OF ACTION SEEKING TO ENFORCE AN ALLEGED ORAL AGREEMENT GIVING PLAINTIFFS THE OPTION TO PURCHASE THE PROPERTY UPON THE OWNER’S DEATH SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, held that the general statute of frauds statute, General Obligations Law (GOL) 5-701, did not apply to the alleged oral agreement to give plaintiffs the option to buy the decedent’s property upon her death. Rather GOL 5-703, which carves out an exception for specific performance of a real estate contract, applied. Decedent owned a two-unit property and plaintiffs rented the second unit. Plaintiffs alleged decedent asked them to care for her in exchange for the option to purchase. Plaintiffs did in fact care for decedent until her death. The executor refused to honor the alleged oral agreement and plaintiffs sued:

General Obligations Law § 5-701, the general statute of frauds provision outlining which agreements must be in writing, contains no explicit statutory authority for a court, exercising its equitable powers, to grant specific performance of an oral agreement insufficiently memorialized in writing so as to satisfy the statute of frauds. Notably, in Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group (93 NY2d 229, 234 n 1), the Court of Appeals clarified that New York has not adopted a judicially created common-law exception to General Obligations Law § 5-701, which would permit a court to direct specific performance of an oral agreement in cases of part performance.

By contrast, General Obligations Law § 5-703, the more specific statute of frauds provision relating to contracts concerning real property, contains an explicit carve-out, which provides that “[n]othing contained in [General Obligations Law § 5-703] abridges the powers of courts of equity to compel specific performance of agreements in cases of part performance”… .

Here, the plaintiffs’ allegations that they entered into an oral option agreement … to purchase the subject property from her estate describe, in sum and substance, “[a] contract to devise real property . . . or any interest therein or right with reference thereto” … , and therefore, this action is governed by General Obligations Law § 5-703 … . Accordingly, since the action is governed by General Obligations Law § 5-703, the plaintiffs are not foreclosed, as a matter of law, from obtaining the remedy of specific performance … . Korman v Corbett, 2020 NY Slip Op 02637, Second Dept 5-6-20

 

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THE APPEAL WAS RENDERED MOOT BY DEFENDANT’S TRANSFER OF THE PROPERTY AFTER SUPREME COURT RULED DEFENDANT HAD TITLE TO THE PROPERTY (THIRD DEPT).

The Third Department dismissed the appeal as moot. Property which had been validly foreclosed by defendant was transferred to a third party. Plaintiff had brought an action pursuant to Real Property Actions and Proceedings Law (RPAPL) Article 15 to determine its rights to a portion of the foreclosed property. Supreme Court granted defendant’s motion for summary judgment on its counterclaim for strict foreclosure (RPAPL 1352) and plaintiff appealed. The appeal was deemed moot and dismissed because defendant had a right to transfer the property after Supreme Court’s ruling:

[T]he jurisdiction of this Court extends only to live controversies and, as such, an appeal will be considered moot unless an adjudication of the merits will result in immediate and practical consequences to the parties” … . “Since the ability to transfer clear title is a natural incident of [property] ownership, it follows that when a complaint involving title to or the right to possess and enjoy real property has been dismissed on the merits and there is no outstanding notice of pendency or stay, the property owner has a right to transfer or otherwise dispose of the property unrestricted by the dismissed claim” … . “‘[A] purchaser’s actual knowledge of litigation and a pending appeal is not legally significant and[,] absent a validly recorded notice of pendency, an owner has the ability to transfer clear title'” … .

Here, Supreme Court canceled plaintiff’s notice of pendency and this Court denied his motion for a stay pending appeal. Therefore, defendants had the right to transfer the property when they did, and the purchaser obtained clear title despite its knowledge of the pending appeals. Govel v Trustco Bank, 2020 NY Slip Op 02306, Third Dept 4-16-20

 

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QUESTIONS OF FACT PRECLUDED SUMMARY JUDGMENT IN THIS CONSTRUCTIVE TRUST AND UNJUST ENRICHMENT ACTION (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that summary judgment was not available in this dispute about ownership of land and personal property. Plaintiff alleged that land, personal property and the the proceeds of the timber business were his, despite the fact that the land, personal property and bank account, based upon the documentary evidence, appeared to belong to defendant. There were questions of fact whether a constructive trust had been created and whether defendant had been unjustly enriched:

“The elements of a constructive trust are a confidential relationship, a promise, a transfer in reliance on that promise and unjust enrichment. As a constructive trust is an equitable remedy, courts do not rigidly apply the elements but use them as flexible guidelines. In this flexible spirit, the promise need not be express, but may be implied based on the circumstances of the relationship and the nature of the transaction. Similarly, courts have extended the transfer element to include instances where funds, time and effort were contributed in reliance on a promise to share in some interest in property, even though no transfer actually occurred” … . Here, both parties concede that they had a confidential relationship. However, it is sharply disputed whether there was a promise, a transfer or unjust enrichment. * * *

“A person is unjustly enriched when his [or her] retention of the benefit received would be unjust considering the circumstances of the transfer and the relationship of the parties” … . Plaintiff claims this is his business, that he worked full time and utilized all funds earned in the business to purchase the equipment, personal property and the vacant land. On the other hand, defendant argues it was their business, she held title to all assets, paid for all assets and debts and paid for plaintiff’s services by paying his expenses, housing and cash. Baker v Harrison, 2020 NY Slip Op 01233, Third Dept 2-20-20

 

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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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