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Mortgagee in Possession Has a Duty to Care for the Property/Criteria for Determining a Motion to Dismiss for Failure to State a Cause of Action, Where Documentary Evidence Is Submitted, Explained

In the context of a motion to dismiss for failure to state a cause of action (where documentary evidence was submitted), the Second Department determined a mortgagee in possession of property (here because the property owner went bankrupt) has a duty to care for the property which is identical a property owner’s duty.  Here plaintiffs alleged the property, which had been damaged by fire, was allowed to deteriorate to the extent that plaintiffs’ neighboring property was damaged. The causes of action for nuisance, negligence and trespass survived the motion to dismiss.  The court noted its role when documentary evidence is submitted in support of a motion to dismiss for failure to state a cause of action:

A motion to dismiss pursuant to CPLR 3211(a)(1) may be appropriately granted “only where the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” … . While the documentary evidence submitted by One West established that it did not own the defendants’ property at any relevant time … , that evidence did not “utterly refute” the plaintiffs’ contention that One West had a duty based on its status as a mortgagee in possession. In fact, the documents, which establish ownership, did not address the plaintiffs’ contention regarding One West’s alleged status as a mortgagee in possession … . Accordingly the Supreme Court erred in granting the motion insofar as it sought dismissal of the complaint pursuant to CPLR 3211(a)(1).

In considering a motion to dismiss pursuant to CPLR 3211(a)(7), the court should accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” … . “Where, as here, evidentiary material is submitted and considered on a motion pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact claimed by the plaintiff to be one is not a fact at all, and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate” … .

The plaintiffs’ contention that [defendant] was a mortgagee in possession has not been shown to be “not a fact at all” … . If [defendant] were, in fact, a mortgagee in possession, it was “bound to employ the same care and supervision over the mortgaged premises that a reasonably prudent owner would exercise in relation to his [or her] own property; he [or she] is bound to make reasonable and needed repairs, and is responsible for any loss or damage occasioned by his willful default or gross neglect in this regard” … . Thus, the complaint, as augmented by the affidavit of the plaintiff Emeta Allen, which was submitted in opposition to the motion to dismiss …, properly set forth causes of action alleging nuisance, negligence, and trespass, and the plaintiffs have causes of action sounding in nuisance, negligence, and trespass. Allen v Echeverria, 2015 NY Slip Op 04075, 2nd Dept 5-13-15

 

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A Forged Deed Is Void Ab Initio and Any Encumbrance on Real Property Based Upon a Forged Deed Is Null and Void—Action Based Upon a Forged Deed Is Not Therefore Subject to the Six-Year Statute of Limitations for Fraud

The Court of Appeals, in a full-fledged opinion by Judge Rivera, over a three-judge dissent, determined that a forged deed is void ab initio and neither a forged deed nor a mortgage interest based upon a forged deed is valid at any time.  Therefore, the six-year statute of limitations for fraud does not apply and the action was not time-barred: “The legal question raised in this appeal is whether plaintiff … is time-barred under CPLR 213 (8) from seeking to set aside and cancel, as null and void, defendant Bank of America's mortgage interest in real property conveyed on the authority of a forged deed. Under our prior case law it is well-settled that a forged deed is void ab initio, meaning a legal nullity at its inception. As such, any encumbrance upon real property based on a forged deed is null and void. Therefore, the statute of limitations set forth in CPLR 213 (8) does not foreclose plaintiff's claim against defendant. ” Faison v Lewis. 2015 NY Slip Op 04026, CtApp 5-12-15

 

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City’s Annexation of Town Land Was in the Overall Public Interest

The Fourth Department determined the annexation of vacant town land by the city was demonstrated to be in the overall public interest, despite the loss of tax revenue to the town:

The municipality seeking an article 17 annexation has the burden of proving that the annexation is in the overall public interest” (…see General Municipal Law § 712…). “A reviewing court must weigh[ ] the benefit or detriment to the annexing municipality, the territory proposed to be annexed, and the remaining governmental unit from which the territory would be taken” … . “Benefit and detriment are customarily defined in terms of municipal services such as police and fire protection, health regulations, sewer and water service, public utilities and public education” … . “Another factor to consider is whether the municipality seeking the annexation and the territory proposed to be annexed have the requisite unity of purpose and facilities to constitute a community’ ” … .  Matter of City of Fulton v Town of Grandby, 2014 NY Slip Op 03371, 4th Dept 5-9-14

 

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Village’s Opting to Remove Petitioner’s Land from the Land Available for Purchase by New York City to Maintain the City’s Drinking-Water Watershed Was Not a Regulatory Taking

The Third Department determined the village had acted appropriately when it opted to exclude portions of land within the village from New York City’s watershed acquisition program.  Petitioner was attempting to sell an easement for her land to the City.  When the village opted to exclude petitioner’s land from the City’s acquisition program, the petitioner brought an action claiming the village had exceeded its authority by improperly restricting the ownership and transferability of her property. Petitioner further argued that the village’s action constituted a de facto regulatory taking of her property for which she was entitled to compensation:

Through voluntary agreement and accepting DEC [Department of Environmental Conservation] conditions, the City consented not to be a potential purchaser of some upstate property if the local municipalities opted to exclude the property from land acquisition by the City. This was part of a delicate balance designed to protect the watershed and save the City significant money while safeguarding the economic vitality of upstate communities … . It was not an improper attempt by a local municipality to regulate who owns or occupies property … , but, in essence, the withdrawal of one potential purchaser who received a significant benefit. * * *

Where, as here, “the contested [resolution] falls short of eliminating all economically viable uses of the encumbered property, the Court looks to several factors to determine whether a taking occurred, including ‘the [resolution’s] economic effect on the landowner, the extent to which the [resolution] interferes with reasonable investment-backed expectations, and the character of the government action'” … . The resolution’s result was that one potential purchaser — who had not made any offer during the years when an easement on petitioner’s farm could have been purchased — no longer remained a potential purchaser. Petitioner has since found another willing purchaser. The resolution did not hinder the use that was being made of the property as a farming operation. The purpose of the resolution was to protect the Town’s potential for growth and economic sustainability, which was one of the many goals of the various parties involved … and consistent with an overriding purpose of maintaining a safe, ample and relatively inexpensive drinking water supply for the City. Petitioner “did not meet [her] heavy burden of showing that the [resolution] resulted in a regulatory taking”… .  Matter of Nelson v City of New York, 2014 NY Slip Op 03319, 3rd Dept 5-8-14

 

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Former Parishioners Did Not Have Standing to Challenge Sale of Church Property Which Had Been Authorized by Supreme Court Pursuant to the Religious Corporation Law

The Third Department determined former parishioners of a church should not have brought an action for declaratory judgment contesting the church’s (court-ordered) authorization to sell church property pursuant to the Religious Corporation Law.  The proper procedure would have been to bring a motion to intervene pursuant to CPLR 5015 (a).  The  court went on to determine that the parishioners did not have standing to challenge the sale because they were not members of the religious corporation:

Plaintiffs’ action was an impermissible collateral attack on the authorization order. The proper procedure would have been to move to vacate that order pursuant to CPLR 5015, which permits “any interested person” to move for such relief (CPLR 5015 [a]), rather than commencing a second plenary action collaterally attacking an order in a prior action … . …

Additionally, Supreme Court properly dismissed the complaint because plaintiffs lack standing to challenge the sale of the property. Plaintiffs may have been members of the congregation or “ecclesiastical body” of St. Patrick’s, but that does not make them members of the religious corporation … . “Member” is defined for religious corporation purposes as “one having membership rights in a corporation in accordance with the provisions of its certificate of incorporation or by-laws” (N-PCL 102 [a] [9]; see Religious Corporations Law § 2-b [1]). Pursuant to the incorporation documents and bylaws of St. Patrick’s and the relevant statutes, St. Patrick’s is managed by a five-member board of trustees consisting of the diocesan bishop, the vicar general of the diocese, the rector of the church and two laypersons selected by the other trustees (see Religious Corporations Law §§ 90, 91)[FN3]. Religious Corporations Law § 5 “vests the custody and control of a religious corporation’s [*3]real property in the board of trustees” … . As plaintiffs are not members of the religious corporation, they lack standing to challenge decisions concerning the transfer of the corporation’s property … . Citizens for St Patrick’s v Saint Patrick’s Church of W Troy, 2014 NY Slip Op 03314, 3rd Dept 5-8-14

 

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Attorney-in-Fact Used His Power to Create a Gift (by Deed) to Himself and/or Third Parties—Deed Declared Null and Void

The Fourth Department determined the deed purporting to transfer a life estate to the attorney-in-fact was null and void. Essentially, the attorney-in-fact used his power to make a gift to himself and/or third parties, which created an unrebutted presumption of impropriety:

It is well settled that “[a] power of attorney . . . is clearly given with the intent that the attorney-in-fact will utilize that power for the benefit of the principal” … . “The relationship of an attorney-in-fact to his principal is that of agent and principal . . . and, thus, the attorney-in-fact must act in the utmost good faith and undivided loyalty toward the principal, and must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing’ . . . Consistent with this duty, an agent may not make a gift to himself or a third party of the money or property which is the subject of the agency relationship” … . “In the event such a gift is made, there is created a presumption of impropriety [that can] be rebutted [only] with a clear showing that the principal intended to make the gift” …, or that the gift was in the principal’s best interest … . Borders v Borders, 2015 NY Slip Op 04022, 4th Dept 5-8-15

 

Co-Tenant Acquired Entire Parcel by Adverse Possession

The Second Department determined a co-tenant of land owned by tenants in common had adversely possessed the entire parcel for the required 20-year period.  The court explained the applicable legal principles:

“Adverse possession must be proven by clear and convincing evidence” … . “To establish a claim of adverse possession, the following five elements must be proved: Possession must be (1) hostile and under claim of right; (2) actual; (3) open and notorious; (4) exclusive; and (5) continuous for the required period” … . ” [A]n inference of hostile possession or a claim of right will be drawn [where] the other elements of adverse possession are established, unless, prior to the vesting of title, the party in possession has admitted that title belongs to another'” … . Moreover, under the law existing at the time title allegedly vested here, in the absence of an overt acknowledgment during the statutory period that ownership rested with another party, actual knowledge of the true owner, or co-owner as is the case here, did not destroy the element of claim of right … . “Where, as here, the party claiming adverse possession is a tenant-in-common in exclusive possession, the statutory period required by RPAPL 541 is 20 years of continuous exclusive possession before a cotenant may acquire full title by adverse possession” … . Galli v Galli, 2014 NY Slip Op 03231, 2nd Dept 5-7-14

 

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“Agreement to Agree” Insufficient to Sever a Joint Tenancy

The Third Department noted that a joint tenancy with right of survivorship can be severed by written agreement, but determined the email correspondence, which evinced the parties’ intent to sever the joint tenancy, did not accomplish the severance because material terms, including price, were not addressed: “Real Property Law § 240-c (3) (a) allows for the severance of a joint tenancy “pursuant to a written agreement of all joint tenants.” However, “a contract must be definite in its material terms in order to be enforceable” … . For this reason, an agreement to agree, where such terms are left to future negotiations, is unenforceable …”. Matter of Wyman (Riddle), 2015 NY Slip Op 03908, 3rd Dept 5-7-15

 

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Owner of Land through Which Power Lines Pass Pursuant to a Utility Easement (Servient Owner) Does Not Have a Duty to Maintain the Easement—Servient Owner Not Liable for Damage to Abutting Property Stemming from a Vegetation Fire Started by Sparks from the Power Lines

The Second Department determined the easement which allowed the power company’s lines to pass through the owner’s property did not impose a duty to maintain the easement on property owner.  Vegetation around the power lines caught fire causing damage to an abutting landowner’s property. The plaintiff insurer paid the claim and sued the owner of the land through which the power lines passed (the servient owner). The Second Department explained that “a servient owner has no duty to maintain an easement to which its property is subject. Indeed, a servient owner has a passive duty to refrain from interfering with the rights of the dominant owner” … .  Encompass Ins. Co. of Am. v Long Is. Power Auth., 2015 NY Slip Op 03800, 2nd Dept 5-6-15

 

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Emergency Power to Demolish a Building Properly Exercised

The Second Department determined the city properly exercised its emergency power to demolish plaintiff’s building due to exigent circumstances:

“A municipality may demolish a building without providing notice and an opportunity to be heard if there are exigent circumstances which require immediate demolition of the building to protect the public from imminent danger” … . “[W]here there is competent evidence allowing the official to reasonably believe that an emergency does in fact exist, or that affording pre-deprivation process would be otherwise impractical, the discretionary invocation of an emergency procedure results in a constitutional violation only where such invocation is arbitrary or amounts to an abuse of discretion” … . Here, contrary to the defendant’s contention, there exists a valid line of reasoning and permissible inferences by which the jury could have rationally concluded that the defendant’s determination that immediate demolition of the building was required in order to protect the public from imminent danger was arbitrary … . Rapps v City of New York, 2015 NY Slip Op 02743, 2nd Dept 4-1-15

 

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